TIDMBLND
RNS Number : 1869T
British Land Co PLC
13 November 2019
The British Land Company PLC Half Year Results
13 November 2019
Chris Grigg, Chief Executive said: "Our operational performance
has been good and we made further progress on our mixed use
strategy, including a resolution to grant planning for a new urban
centre at Canada Water in London. We continue to deliver space that
our customers want, with 1.3m sq ft of leasing activity across
existing and new space, so occupancy remains high at 97% and
developments are now 87% pre let or under offer generating GBP63m
of rent when fully let. In a tough market, we have capitalised on
opportunities to make retail sales, disposing of GBP236m of assets
ahead of book value.
Looking forward, we expect our markets to remain uneven, but we
have kept debt levels low, our balance sheet is strong and flexible
and we have a broad spread of expertise across our business. We
expect retail to remain challenging, so we'll focus on driving
operational performance and maintaining occupancy. We see early
signs that some liquidity may be returning to parts of the market,
and our focus will remain on thoughtfully progressing our strategy
to reduce exposure. In London, we expect the market to remain good,
with supply relatively constrained and high quality space, in
well-connected, vibrant parts of town continuing to attract demand
from a range of businesses. These dynamics are highly supportive of
our Campus approach."
Financial summary
-- Financial performance
-- Underlying EPS down 6.4% to 16.1p following GBP1.2bn of
income producing sales since April 2018, partially mitigated by
buybacks contributing 0.5p
-- Development programme will add 4.6p to annualised EPS when fully let
-- Portfolio value down 4.3%; Retail down 10.7%, Offices up 0.4% and developments up 4.6%
-- EPRA NAV down 5.4% at 856p due to valuation declines, with
buybacks contributing positive 8p
-- Half year dividend up 3.0% at 15.97p; total accounting return -3.7%
-- Strong and flexible balance sheet
-- GBP289m of asset sales, including GBP194m superstore
portfolio, overall ahead of book value
-- GBP125m share buyback completed, bringing cumulative buyback to GBP625m since July 2017
-- Maintained low LTV at 30.8% (March 2019: 28.1%), weighted
average interest rate reduced to 2.7%
Progress on strategy: Becoming the specialist in mixed use
-- Campus-focused London Offices: A compelling, customer-focused offer
-- 671,000 sq ft of leasing activity representing GBP29m of headline rents; 97% occupancy
-- Under offer on a further 74,000 sq ft and in negotiations on a further 242,000 sq ft
-- Lettings and renewals on the investment portfolio overall 11% ahead of ERV
-- Committed developments 87% pre-let/under offer, generating
GBP63m of future rent when fully let
-- Significant future optionality within the portfolio. 2.1m sq
ft near and medium term development pipeline, including Norton
Folgate, where enabling works have commenced
-- Storey operational across 297,000 sq ft; further 91,700 sq ft identified
-- Smaller, more focused Retail: Driving operational outperformance in a challenging market
-- 605,000 sq ft of leasing activity; 1% ahead of passing rents; 96% occupancy
-- Significantly outperforming benchmarks: footfall 440 bps ahead; LFL sales 420 bps ahead
-- GBP236m off-strategy assets sold since April 2019, 6% ahead of book value
-- Two thirds of store vacancies since April 2017 following CVA
or administration are either re-let, under offer or in
negotiations
-- Secured resolution to grant planning for our Canada Water Masterplan: valuation up 12%
-- 53 acre mixed use regeneration scheme including plans for 3,000 homes
-- Headlease drawdown expected Spring 2020
-- Continued strong performance on Sustainability benchmarks
-- GRESB 4* and awarded a green star rating for the 10th consecutive year
-- AAA MSCI rating, ranking within the top 9% overall
Summary
Income statement HY 2018/19 HY 2019/20 Change
Income statement
Underlying earnings per share
(2) 17.2p 16.1p (6.4)%
Underlying Profit GBP169m GBP152m (10.1)%
IFRS profit/(loss) after tax GBP(48)m GBP(404)m
IFRS basic earnings per share (4.9)p (42.9)p
Dividend per share 15.50p 15.97p 3.0%
---------------------------------------- ------------- ------------- ----------
Total accounting return (2) (1.3)% (3.7)%
---------------------------------------- ------------- ------------- ----------
Balance sheet 31 Mar 2019 30 Sept 2019
Portfolio at valuation (proportionally
consolidated) GBP12,316m GBP11,723m (4.3)%(1)
EPRA Net Asset Value per share(2) 905p 856p (5.4)%
IFRS net assets GBP8,689m GBP7,971m
Loan to value ratio (proportionally
consolidated) 28.1% 30.8%
---------------------------------------- ------------- ------------- ----------
Operational Statistics HY 2018/19 HY 2019/20
Lettings and renewals 0.9m sq ft 1.3m sq ft
Gross investment activity GBP1.1bn GBP0.5bn
Committed and recently completed 1.6m sq ft 1.6m sq ft
development
---------------------------------------- ------------- ------------- ----------
Sustainability Performance
MSCI ESG AAA rating AAA rating
GRESB 4* and Green 4* and Green
Star Star
---------------------------------------- ------------- ------------- ----------
(1) Valuation movement during the period (after taking account
of capex) of properties held at the balance sheet date, including
developments (classified by end use), purchases and sales
(2) See Note 2 to the condensed interim set of financial
statements
Results Presentation Conference Call
A presentation of the results will be broadcast via conference
call and slides to accompany the call will be displayed along with
a live audio broadcast via the website (Britishland.com) at 8.30am
on 13 November 2019. The details for the conference call and
weblink are as follows:
UK Toll Free
Number: 0808 109 0700
Password: British Land
Click for access: Audio weblink
A dial in replay will be available later in the day for 7 days.
The details are as follows:
Replay number: 020 8196 1998
Passcode: 0248302
The accompanying slides will be made available at
britishland.com just prior to the event starting.
For Information Contact
Investor Relations
David Walker, British Land 020 7486 4466
Media
Claire Scicluna, British Land 07469 855 603
Guy Lamming/Gordon Simpson,
Finsbury 020 7251 3801
CHIEF EXECUTIVE'S REVIEW
Our operational performance has been good, and we have made
further progress with our mixed use strategy, including a
resolution to grant planning for a new urban centre at Canada
Water. We continue to deliver space that our customers want, with
1.3m sq ft of leasing across existing and new space, so occupancy
remains high at 97%. In a tough market, we continue to capitalise
on opportunities to make retail sales, disposing of GBP236m of
assets ahead of book value.
Leasing & Operational Performance
Our campus strategy is really resonating with businesses and
their employees alike and with occupancy of 97% across our London
campuses and 96% in retail, our portfolio remains effectively full.
In London, we signed 671,000 sq ft of lettings and renewals. Our
developments are now 87% pre-let or under offer, securing GBP55m pa
of future rental income. We are also successfully repurposing
existing space to appeal to a broader range of occupier, with
lettings to tech companies Monzo and Skyscanner at Broadgate and
Regent's Place respectively (post period end) and a renewal to
Visa, our biggest occupier at Paddington. Overall, offices values
were up 0.4%.
We are committed to ensuring our offer meets the needs of a
broad range of occupiers. In London, office customers can choose
from a range of product, varied in terms of fit out, flexibility
and price. Importantly, customers can tailor their requirements
across these products depending on their specific need, as well as
change their requirements over time as their businesses evolve.
Storey Club, which provides high quality ad hoc meeting and events
space is now fully operational at Paddington and we will soon
launch our second standalone Storey building in Haggerston. The
breadth of this customer offer, underpinned by our campuses, is key
to our leasing success.
The retail market remained tough, and we saw this reflected in
valuations which were down 10.7%. However, our portfolio delivered
positive like for like retailer sales with footfall flat, compared
to a market where both metrics were negative. Long term deals were
on average 15% ahead of previous passing rent, but we have been
pragmatic in our approach, to keep occupancy high and support
operational performance. Shorter-term deals are often an effective
way to secure a new occupier for space which has become vacant
unexpectedly through a CVA or administration. More generally, this
trend towards more flexible leasing is reflective of the broader
market as occupiers seek seasonal or pop-up sites in different
locations on a shorter term basis. We continue to be proactive in
our response to CVAs: Over two thirds of store closures since April
2017 are either re-let, under offer or in negotiations. Overall,
leasing was 1% ahead of previous passing rent excluding rates
mitigation deals and assets being readied for development.
At Canada Water, our valuation increased 12.4% after Southwark
Council's Planning Committee unanimously supported our masterplan.
This means we have a resolution to grant outline planning
permission for our 53-acre mixed use scheme, including detailed
permission on the first three buildings. This is a major milestone
for our process and is the culmination of five years masterplanning
and engagement with the local community, including over 120 public
consultations attracting more than 5,000 people. The next key
milestone will be the drawdown of the headlease, which we are
hopeful will happen in Spring 2020 meaning the earliest possible
start on site would be mid-next year.
Capital Allocation & Investments
We have a clear and consistent strategy to build an increasingly
mixed use business, focused on three core areas. As part of this,
we plan to reduce retail to 30-35% of our portfolio over the medium
term and we made further progress with the sale of 12 Sainsbury
superstores for GBP429m (our share GBP194m). Today, Retail
represents 41% of our business and looking forward, we see early
signs that some liquidity may be returning to the market, as we
commented in our FY2019 results in May. We have a structured
approach to disposals and a clear view of the value of our assets,
so will remain patient and opportunistic to benefit from pockets of
demand.
Our financial position is strong. Despite valuation falls our
leverage has remained low with disposals funding a GBP125m share
buyback and investment in developments. We have established a
unique network of campuses, to capitalise on good demand for high
quality space, in well-connected, vibrant parts of town, and we
expect this to continue. We have a clear long term strategy,
unmatched development opportunities with optionality built in, and
the financial strength and expertise across our team to navigate
today's uneven markets and thrive long term.
MARKET BACKDROP
Macro-economic context
The market backdrop remained uneven and volatile across the half
as the Brexit process continued. UK GDP contracted in the second
quarter of 2019 for the first time since 2012 with only services
providing a positive, albeit slowing, contribution to growth.
Consumer confidence has remained subdued, but unemployment remains
low at under 4%. In recent months, the likelihood of a no-deal
Brexit appears to have reduced, but we now face a General Election
in December so the outlook remains uncertain.
London market
The London investment market saw GBP4.2bn of transactions over
the period, below the long term average of GBP7.4bn. Overseas
investors remained understandably cautious pending greater clarity
on Brexit before investing in the London office market while
vendors continue to seek premia to asset values. However,
fundamentals continue to favour London as yields in central London
remain attractive compared to many other European markets and
cross-border investors benefit from the currency effect.
The occupational market continued to be supportive, with take up
in our markets up 7% on last year, and just ahead of the long term
average. To help attract the best talent, businesses are seeking
high quality space in exceptional environments located in the
best-connected areas. For this space, rents were stable at c.GBP70
psf in the City and up to GBP110 psf in the West End, with
incentives holding steady. Flexibility remains a key theme, with
landlords offering a wider variety of space. Flexible office take
up continued to be strong at 21% of take up, and is estimated to
account for c. 6% of the London office market. Supply remained
constrained, particularly for larger space requirements and it is
now common for occupiers to start looking for new space up to two
years before the end of a ten-year lease. As a result, nearly 60%
of development under construction has already been pre-let.
Retail market
Retail investment markets remained challenging, with volumes
low, reflecting negative sentiment and a number of sellers are
under pressure, encouraging more opportunistic pricing. A number of
relatively small retail parks exchanged hands in recent months,
although there have been very few transactions for larger lot size
assets. In this context, domestic and overseas buyers have started
to recognise the value opportunity in the sector, however there
remains a gap in pricing expectations where vendors are well
positioned. Assets with attractive alternative use potential
continue to trade well.
The occupational market remains tough and this has been
reflected in the number of operators entering CVA or
administration, particularly over the last 18 months. In addition,
retailers continue to focus on optimising their store networks in a
number of ways, not limited to store closures or rental reductions.
Retailers are increasingly focused on their distribution and supply
chain capability, where possible utilising existing store networks
to ship from store to reduce delivery times. At the same time, many
are enlivening existing space with concessions or events to drive
footfall or are expanding into areas of high footfall such as
transport interchanges. As a result, polarisation continues to
accelerate, with assets able to support or enhance these
characteristics typically less impacted by the broader
challenges.
OUR STRATEGY
Progress on our strategy
Strategic Indicative Progress
priority 5-year business
mix
Campus 55-60%
focused Of which Storey * Progressing development on our campuses and
London c.5% de-risking through pre-lets with 87% of our recently
Offices completed and committed developments now let or under
offer to a broad range of occupiers
* Creating options with 567,000 sq ft of planning
consents submitted
* Storey operational across 297,000 sq ft on all three
campuses with further 91,700 sq ft identified
* Smart Places team trialling space utilisation
technology at our head office and piloting similar
technology for a customer
----------------- -------------------------------------------------------------
Refocused 30-35%
Retail * GBP236m assets sold since April 2019, 6% above book
value
----------------- -------------------------------------------------------------
Residential c.10%
* Sales at Clarges Mayfair nearly complete; four units
completed in the half year and a further unit
completed post period end, bringing total completed
units to 30, with two further exchanged, one under
offer and one remaining
* Achieved resolution to grant planning at Canada Water
where we have plans for 3,000 homes
* Aldgate Phase 2, a BTR scheme delivering 160 units
added to our near term pipeline
----------------- -------------------------------------------------------------
A Mixed Use Specialist
We have a clear long term strategy to build an increasingly
mixed-use business.
Why mixed use?
We recognise that the way people use real estate is changing and
that the most effective way to drive enduring demand for our space
is to evolve our offer in line with those trends. Central to this
is the blurring of boundaries between work and leisure time.
Increasingly people expect to be able to socialise, exercise or be
entertained near to their office and they want office space which
reflects more flexible work patterns. There is also a growing
expectation that businesses and places of work have a positive
impact on both the environment and the local community. These
preferences are an important driver of people's decisions around
which companies they work for, the places they shop and spend time.
Workspaces which meet these expectations help businesses attract
and retain talent and support productivity and effectiveness.
How does it deliver value?
A successful mixed-use strategy is fully aligned to the evolving
needs of our customers and how people use our places. By helping
drive enduring demand for our space, it supports the delivery of
long term sustainable value through rental growth and high
occupancy. This makes our income streams more resilient, increasing
the value of our assets. At our campuses and multi-let spaces we
control not just the buildings, but the spaces between them. As
such, investment we make into the broader environment has a
positive impact on the value of our individual assets. As long term
owners and managers of space, we are also fully incentivised to
invest in the local areas and support the local communities in
which we operate; we believe that by playing a role within a
thriving local community, our places are better able to succeed.
Our scale and unique network also mean we have the flexibility to
re-allocate uses within our places over time to better reflect the
needs of our customers as they change and ensure that we always
make the best use of our space.
How are we delivering it?
We have a clear and consistent plan to reshape our business to
comprise three core, complementary elements as part of an
increasingly mixed use business:
-- Campus focused London offices: with a blend of core and
flexible space, including the further build out of Storey,
integrated alongside a world-class retail and leisure offering
-- A smaller, more focused Retail portfolio: high quality, well
located assets focused on a smaller number of on average larger,
multi-let places, especially those with mixed use potential
-- Residential: plans for 3,000 homes at Canada Water with
further opportunities within our portfolio
Campus-focused London offices
At our London campuses, we create and manage some of the best
connected, most accessible space in London. Located in vibrant and
exciting neighbourhoods, they provide world-class, modern and
sustainable offices alongside public spaces, with a range of places
to spend time outside of work. These unique campus benefits are the
result of specific investment over many years and represent a clear
attraction to businesses seeking to hire and retain the best
people.
Increasingly what differentiates our space is the range of
product and depth of services we provide. We have evolved our offer
to attract a much broader range of industries and occupiers and to
cater to their changing needs over time. Our menu of products spans
more traditional core space, typically on long term lease, with a
range of services priced on a bespoke basis; to fully fitted and
furnished, generally on a short to medium term lease, with a basic
package of services; to Storey, our fully serviced, flexible
workspace offer.
Storey is deliberately differentiated from other flexible
offerings in allowing occupiers to personalise their space through
their own branding while benefitting from the shared amenities in
the building and on our campuses. It has helped attract new types
of occupier to our campuses, particularly tech and creative
businesses who benefit from being located around some of the
world's leading financial, legal and professional companies. Storey
has also become a valued service for existing occupiers on our
campuses, providing overflow or project space, and through Storey
Club at Paddington, we offer ad hoc meeting and events space to all
our Paddington occupiers.
Retail plays an increasingly prominent role within our campuses,
notably at Broadgate, where our development pipeline will deliver
an additional 395,000 sq ft of non-office space, focused on retail,
leisure and dining space. This will predominately be at ground
floor, so although the total allocation will be just 12%, it makes
a highly visible contribution to the campus, and has been
instrumental in helping us sign a more diverse range of
occupier.
A smaller, more focused Retail portfolio
In the context of rapid and fundamental structural change in
retail, we have a plan to reduce this part of our business to
30-35% of the total portfolio over the medium term. Retail will
remain a significant part of British Land reflecting our longer
term view that the right assets in the right locations can succeed
as part of an increasingly mixed use business.
This view, set out at our recent investor day is based upon the
application of realistic assumption ranges about how the UK retail
market may evolve. These assumptions are informed by a range of
independent, third party forecasts and current operating data. It
demonstrates that it is reasonable to expect our retail portfolio
will deliver positive like for like sales growth, which could be of
the order of 1 - 6% per annum, on a ten year view. This analysis is
summarised below; it is a high level, directional range around how
the market might evolve, so is not intended as a forecast or
prediction.
-- Retail Sales will grow: We assume total retail sales in the
UK will grow between 2.5% and 4.5% per year on average. This
assumption is based on a range of industry forecasts, from
Euromonitor at the most pessimistic (2.6%) to CACI at the most
optimistic (4.3%)
-- Online penetration will increase: We assume online sales will
absorb the majority of this sales growth, and internet penetration
of retail sales will increase from the current level of 19% to a
level of between 35% and 50%
-- Applying these assumptions we derive a long term growth rate
for physical retail sales of between -2% and +2% per year
-- Physical retail space will shrink benefiting trading
densities: We assume that the amount of physical retail floorspace
in the UK will decline over time as stores close, existing schemes
are repurposed to alternate uses and few, if any, new schemes are
developed. We assume a reduction of retail floorspace of between 1%
to 2% per annum (in line with agents predictions, with JLL at
-1.5%)
-- Taking all of these assumptions together, we derive a level
of physical retail sales per sq ft growth (trading density growth)
of -1% to +4% per annum for the market as a whole
-- British Land will continue to outperform: Importantly, our
portfolio has consistently outperformed the industry in terms of
the retail sales growth operators achieve at our assets.
-- Taking our average outperformance for FY16-FY19 of 190 bps
and applying it to the derived industry trading density growth
suggests that on a long term view, our portfolio could deliver
retailer sales per sq ft growth of between 1 - 6% per annum
Over the last 12 months we have made retail disposals of
GBP550m, including GBP236m in the first half. Underpinning this is
a highly structured approach, which involves assessing every asset
against a clear set of criteria to determine whether it is one we
will invest and grow, maintain or sell. These criteria include
external factors such as population trends, catchment quality,
local competition and critical mass of the scheme, as well as
factors specific to the asset, such as the potential we see for
development, particularly mixed use and fulfilment (i.e. last mile
delivery). Our assessment generates a score for each asset which
represents its alignment to strategy. Generally, assets in London
and the South East are most in line with our strategy, so we would
expect to make sales from our Solus and Local Retail portfolio
(outside of London), with some sales potentially from our Regional
portfolio.
However, the retail investment market is currently challenging,
and is likely to remain so for the short to medium term. In this
context, we will remain patient and opportunistic in our approach,
and only progress disposals at the right price, which deliver value
and progress our long term strategy.
Residential
Residential is complementary to our existing expertise and
longer term will be additive to our mixed use strategy. We see most
potential to build exposure in this market at Canada Water where we
have potential to deliver 3,000 homes with other opportunities in
our portfolio, including Aldgate Phase 2, in our near term
pipeline. Building this business organically is the most effective
way of ensuring that our product is high quality, reflects our
strategy, adheres to the highest standards of safety and
sustainability criteria but inevitably means that it will be
delivered over a longer time frame.
BUSINESS REVIEW
Key metrics
As at: 31 Mar 2019 30 Sept 2019
-------------
Portfolio valuation GBP12,316m GBP11,723m
Occupancy 97.2%(1) 96.8%(1)
Weighted average lease length 6.4 yrs 5.8 yrs
to first break
6 months to: 30 Sept 2018 30 Sept 2019
------------------------------- ------------- -------------
Total property return +0.2% (2.3)%
+7 bps +17 bps
* Yield shift
* ERV growth (0.8)% (2.3)%
* Valuation movement (1.9)% (4.3)%
Lettings/renewals (sq ft) 888,000 1,289,000
Lettings/renewals vs ERV +5.3% +9.2%
Gross investment activity GBP1,115m GBP517m
GBP142m GBP51m
* Acquisitions
GBP(842)m GBP(292)m
* Disposals
GBP131m GBP174m
* Capital investment
Net investment/(divestment) GBP(569)m GBP(67)m
------------------------------- ------------- -------------
On a proportionally consolidated basis including the Group's
share of joint ventures and funds
(1) Where occupiers have entered CVA or administration but are
still liable for rates, these are treated as occupied. If units
expected to become vacant are treated as vacant, then the occupancy
rate would reduce from 96.8% to 96.4%
Portfolio performance
At 30 September Valuation Valuation ERV movement Yield Total property
2019 GBPm movement % shift return
% bps %
---------- ------------- -------
Offices 6,439 0.4 0.9 - 2.1
Retail 4,790 (10.7) (4.8) +37 (8.4)
Residential 147 (2.1) na na (0.8)
Canada Water 347 12.4 na na 14.4
----------------- ---------- ---------- ------------- ------- ---------------
Total 11,723 (4.3) (2.3) +17 (2.3)
----------------- ---------- ---------- ------------- ------- ---------------
The portfolio value was down 4.3% overall, with Retail
valuations down 10.7%. Offices were up 0.4%, driven by developments
which were up 4.9%. ERV growth in offices was positive reflecting
an uplift in the City portfolio, while yields were flat overall,
with contraction in the City offsetting mild yield expansion in the
West End. All reporting segments were down in retail with the
multi-let portfolio declining 12.3% overall reflecting continued
negative sentiment, with limited transaction evidence, particularly
on larger lot sizes. The average yield movement on our largest 5
assets ranged between 25-50 bps.
Offices performed in line with the London Office benchmark and
the All Offices benchmark. Retail underperformed the Retail
benchmark, which saw values down overall. Lower-yielding larger
assets continue to outperform operationally but are not immune to
market yield movements when compared to the benchmark which
includes smaller assets which were typically less impacted. As a
result and reflecting the continued strength of industrials where
we have no exposure, the portfolio underperformed the IPD all
property total return index by 310 bps over the period.
Capital activity
From 1 April Offices Retail Residential Canada Water Total
2019
GBPm GBPm GBPm GBPm GBPm
------------------ -------- ------- ------------ ------------- ------
Purchases(1) 32 - 19 - 51
Sales(2) - (236) (56) - (292)
Development
Spend 125 8 - 5 138
Capital Spend 20 16 - - 36
------------------ -------- ------- ------------ ------------- ------
Net Investment 177 (212) (37) 5 (67)
------------------ -------- ------- ------------ ------------- ------
Gross Investment 177 260 75 5 517
------------------ -------- ------- ------------ ------------- ------
On a proportionally consolidated basis including the Group's
share of joint ventures and funds
(1) Includes purchase of 6 Orsman Road, Haggerston for GBP32m
which exchanged in period and completed post period end
(2) Includes Clarges residential sales of GBP56m, of which GBP6m
exchanged prior to FY20 and completed in the period and GBP3m of
which exchanged and completed post period end
The total gross value of our investment activity since 1 April
2019 was GBP517m with retail disposals accounting for GBP236m. Our
sale of 12 Sainsbury superstores to Realty Income Corporation in
April 2019 for GBP429m (our share GBP194m) was the largest single
component of this and was achieved at a modest premium to book. In
line with strategy, we have continued to make sales from our solus
portfolio, including a leisure asset more than 10% ahead of book
and we have exchanged on a Homebase ahead of book reflecting its
attractive alternative use potential.
At Clarges, we completed on the sale of four units in the half
year, and a further unit post period end, bringing total completed
units to 30 with receipts totalling GBP415m. Two of the four
remaining units have now exchanged and a further unit is under
offer, leaving one unit remaining, valued at GBP4m. This has been a
highly successful scheme for us, having delivered total profits of
GBP200m to date.
At Aldgate, we have acquired Barratt's 50% share in our Phase 2
build-to-rent residential-led scheme which has now been added to
our near term pipeline and post period end, have completed on the
purchase of 6 Orsman Road, Haggerston for Storey for GBP32m.
Data and insights
The insights we generate from data and research, help us to
understand the needs of our customers. This information can play a
real and fundamental role in decision making around leasing, asset
management and capital allocation helping to generate incremental
value for shareholders and our customers.
In the six months under review, we completed a second wave of
the London Office Benchmarking Survey, collating feedback from over
1,300 office workers on their experiences of working in a specific
location. We used this data to generate benchmarks from which we
could assess our own assets. This exercise provided insight into
worker preferences across various demographics to support our
leasing and asset management strategies. At Broadgate, we conducted
a mobile app analysis to understand how Broadgate functions as a
place - how it is used by workers and visitors, where else these
people go and how it compares to similar schemes. This exercise
highlighted the importance of campus amenities reinforcing our
focus on services as a key part of our offer as well as the
benefits of being located within an active neighbourhood. At
Regent's Place, we held one on one in depth interviews and focus
groups amongst existing occupiers, potential occupiers, community
partners, agents, and residents to inform our re-brand to ensure it
resonated with our target groups.
Smart Places
Our Smart Places team deliver digital placemaking across our
London campuses. Progress in the six months included piloting
phone-as-pass access controls and sensor-driven space utilisation
technology at our head office, where we have increased our
occupational density by 35% with minimal impact on the working
environment. We have developed and rolled out the StoreyPortal
across Storey and Storey Club allowing users to book meeting rooms,
arrange catering and simplify the entry procedure for guests to
streamline the overall experience. We are actively partnering with
our occupiers to help them achieve their goals: we developed the
"Smart fit out guide" to help occupiers understand how to make the
most of Smart technology in their buildings and are trialling
sensor technology for an occupier so we can work with them to
ensure they use their space most efficiently.
Sustainability
Sustainability is integral to how we manage our business. Our
activities can impact the environment, our customers and local
communities and we take seriously our responsibility to manage
these well. Improvements in these areas strengthen our relationship
with our customers and improve our places, helping us drive
sustainable demand for our space.
In September, we were delighted to make a ground-breaking
commitment to deliver a net zero carbon portfolio, as part of an
industry effort, led by the Better Buildings Partnership, to tackle
the challenge of climate change. Building on our 64% reduction in
carbon intensity achieved to date versus the 2009 baseline, next
year we will publish our pathway for achieving net zero across both
our developments and operational portfolio. As part of meeting our
more immediate 2020 target of a 55% energy intensity improvement,
we have undertaken audits of 40 energy intensive assets in our
portfolio and are currently implementing the saving opportunities
identified.
We have a good track record of delivering sustainable new
buildings, with 92% of new developments on track to receive a
minimum of BREEAM very good or excellent rating. At 1 Triton
Square, Regent's Place, we are saving 35,600 tonnes of embodied
carbon by retaining the existing structure. Through more efficient
design, we will also achieve a 40% reduction in operational
emissions compared to a typical UK building and are on track to
achieve a BREEAM rating of Outstanding. 100 Liverpool Street is on
track to achieve a BREEAM Excellent rating, Well Gold certification
and a WiredScore platinum rating for internet connectivity.
At Haggerston, Shoreditch, we are experimenting with the
management of a new Cross Laminated Timber building, which we
acquired for Storey. The development of CLT buildings can result in
a much lower embodied carbon footprint, and produce less
development waste with a quicker construction time. We are also
trialling a "circular" approach to furniture, using more recycled
materials. At 338 Euston Road, we re-manufactured and incorporated
246 items from the previous tenant into the new offices, avoiding
2,980 kg of waste and saving GBP72,000.
Our investment in the prosperity of the communities that host
our assets continues, and we have concluded our eighth consecutive
year with the National Literacy Trust, to improve reading skills,
particularly among the poorest readers. Our Young Readers Programme
has now reached 42,692 children, trained 561 teachers, and given
out over 128,000 books since its inception in 2011. In the half
year, we were delighted that 86 customers collaborated with British
Land on this programme and that 91% of teachers reported their
"reluctant readers" are showing increased enjoyment of reading with
77% reporting that reluctant readers are reading more often.
Our continued strong sustainability performance is reflected in
our rankings in ESG indices, including a green star rating for the
tenth consecutive year in our key index, the Global Real Estate
Sustainability Benchmark (GRESB), AAA rating in MSCI, and inclusion
in FTSE4Good and Dow Jones Sustainability Indices (DJSI) 2019. We
have been a signatory to the UN Global Compact since 2009 and will
continue to support human rights, fair labour practices, good
environmental performance and oppose corruption through our
strategy, governance and business operations.
REAL ESTATE PERFORMANCE REVIEW
Campus focused London Offices
Key metrics
As at: 31 Mar 2019 30 Sept 2019
--------------
Portfolio Valuation (BL share) GBP6,308m GBP6,439m
GBP5,047m GBP5,263m
* Of which campuses
Occupancy 97.7% 97.2%
Weighted average lease length 5.7 yrs 5.3 yrs
to first break
6 months to: 30 Sept 2018 30 Sept 2019
-------------------------------- -------------- --------------
Total property return +2.5% +2.1%
+1 bp 0 bps
* Yield shift
* ERV growth +0.2% +0.9%
* Valuation movement +0.7% +0.4%
Lettings/renewals (sq ft) 421,000 sq ft 671,000 sq ft
Lettings/renewals vs ERV +6.5% +11.1%
-------------------------------- -------------- --------------
On a proportionally consolidated basis including the Group's
share of joint ventures and funds
Campus operational and financial highlights
-- Portfolio value up 0.4%, with the City up 1.3% and the West End flat
-- Yields saw mild contraction in the City -3bps and mild expansion in the West End +2bps
-- ERV growth of 0.9% across the portfolio, with the City strong
(+2.9%) and the West End was flat
-- Activity generating like-for-like income growth of 1.1%
-- Leasing activity covering 671,000 sq ft representing GBP29m of future rents
-- Under offer on a further 74,000 sq ft and in negotiations on a further 242,000 sq ft
-- Investment lettings and renewals signed 11.1% ahead of ERV
-- 294,000 sq ft rent reviews agreed 7% ahead of passing rent adding GBP0.9m to rents
-- Occupancy of 97.2%
Campus operational review
80% of our Offices are located on our three central London
campuses, each benefitting from excellent transport connectivity
and vibrant local neighbourhoods which are an important part of
their appeal. Building on this, our strategy is focused on
expanding the mix of uses, to enhance the retail, dining and
entertainment offer, embedding our places more firmly within the
local community and appealing to a broader mix of occupier.
Enlivenment is an important part of our approach and in
September, for the fourth consecutive year, British Land was
Headline Partner of the London Design Festival, with both Broadgate
and Paddington Central playing host to landmark installations.
Broadgate
Momentum at Broadgate has continued, with leasing success at our
developments mirrored in the standing portfolio, where we are
successfully repurposing existing space. This demonstrates the
strength of the campus offer beyond newly delivered space.
Challenger bank Monzo will join the emerging fintech community at
Broadgate, taking 122,000 sq ft at Broadwalk House on a five and a
half year term (signed post period end).
At 100 Liverpool Street, Bank of Montreal committed to 60,000 sq
ft and Japanese Bank SMBCE increased their commitment by 22,000 sq
ft taking their total occupation to 184,000 sq ft. In addition, we
are allocating 45,000 sq ft to Storey. We have made good progress
on the retail side with 13 units now exchanged and a further four
in process; new additions in the half included Waterstones, Reiss,
L'Occitane and Tech Express. These join a line up including Watches
of Switzerland, Kiehls, Neom and Gant.
At 1 Finsbury Avenue (287,000 sq ft), which completed at the end
of FY19, Mimecast and Product Madness are already in occupation and
the Everyman cinema opened last month. Post period end, we
exchanged on a further 30,000 sq ft to Workday, which offers
cloud-based finance, HR and planning solutions. Storey accounts for
73,000 sq ft of which 15,000 sq ft has already been let. Retail
leasing has continued at pace, with lettings to high quality grab
and go lunch operators Farmer J, Nyokee and Butterscotch and
Baraka, a Turkish-style restaurant and bar in the half.
At 135 Bishopsgate, we are now under offer on a further 30,000
sq ft leaving only 7,000 sq ft of office space available to let.
With space already let to McCann, TP ICAP and Eataly, the building
is 97% pre-let or under offer.
Rent reviews were agreed on 41,000 sq ft nearly 15% ahead of
passing rent and the campus is virtually full, with occupancy of
97.7%. Overall, the campus saw a valuation uplift of 1.3%
reflecting ERV growth of 3.4% with yield contraction of 1bp.
Paddington Central
Existing space is also leasing well at Paddington Central, again
demonstrating the unique attractions of our campus proposition.
Visa recommitted to 196,000 sq ft at 1 Sheldon Square at a revised
rent, with the term extended by six years. We have continued to
focus on canal-side enlivenment, with a fourth barge, The Grand
Duchess floating restaurant launched and a fifth, The Cheese Bar in
the pipeline. Elsewhere on the campus, Pergola will be renewing
their lease at 5 Kingdom Street until 2022. This brings total
leasing activity at the campus to 200,000 sq ft.
The campus saw a valuation uplift of 2.0%, reflecting yield
contraction of 4bps. Although Visa's lease extension increased
rental income, the valuers changed their valuation approach from a
headline to a net effective basis, resulting in an overall ERV
decline for the campus of 1.3%. Occupancy is high at 97.0%.
Regent's Place
Reflecting trends at Broadgate and Paddington, existing space
has also let well at Regent's Place, with online travel operator
Skyscanner taking 45,000 sq ft of fitted space at 338 Euston Road
(post period end). Storey will act as the service provider, for
which they will receive a fee, demonstrating the broad range of
options we now offer to customers across our core, fitted and
Storey space.
In the coming twelve months, we will be delivering a programme
of public realm improvements, covering two-thirds of the campus.
This will include more green spaces and places to relax and sit or
work outside the office, enhancing the community feel. We have
opened a café, event and community space at 17-19 Triton Square
that is being delivered using sustainable materials and processes.
These include recycled wood, work surfaces made from recycled
materials including televisions and yoghurt pots, upcycled
furniture and re-used kitchen and tableware. It will also offer
bookable meeting and event space, and in the evening will host
"Sessions" - a series of evening classes based on a successful
programme at Meadowhall. Drawing on its location between the
Knowledge Quarter, Camden and Fitzrovia, and the significant
improvements we have delivered across the broader area, we will be
rebranding Regent's Place as a pioneering, responsible
neighbourhood, with deep community connections.
With ERVs marginally up and yields flat, the campus valuation
overall was flat. Occupancy is high at 97.9%.
Storey: our flexible workspace brand
Storey is now operational across 297,000 sq ft, with space at
each of our campuses with a further 91,700 sq ft identified. It was
launched more than two years ago as a response to changes in the
way people are working and is a deliberately differentiated
concept, providing occupiers with high quality workspace, they can
brand themselves on a shorter-term basis.
Consistent with this more flexible approach, our offer is
evolving and in April we launched Storey Club at 4 Kingdom Street,
Paddington. This is a new concept providing ad hoc workspace,
additional meeting rooms, private dining venues, event and workshop
spaces for all our Paddington occupiers. To date, 79% of Storey
occupiers at Paddington have made chargeable bookings alongside
other British Land customers and partners. We are looking to roll
out the concept to other campuses and standalone buildings,
including our 100 Liverpool Street development at Broadgate, where
we have allocated total Storey space of 45,000 sq ft. Storey are
also taking 73,000 sq ft at 1 Finsbury Avenue, with lettings
already to consultants Booz Allen Hamilton and digital financial
services company 11:FS who have taken occupation. Consistent with
our broader approach to flexibility, Storey can also provide
services on our core or fitted space as an additional option.
Storey has proved highly successful at attracting new and
different types of occupiers to our buildings. 72% are in the TMT
sector. The average lease length is 25 months term certain and
occupancy on the stabilised portfolio is 81%. This has fallen in
the half due to a material expiry, although the space has now been
re-let. We expect occupancy to trend around 90% longer term.
Smaller, more focused Retail
Key metrics
As at: 31 Mar 2019 30 Sept 2019
-------------
Portfolio valuation (BL share) GBP5,577m GBP4,790m
* Of which multi-let GBP4,737m GBP4,180m
Occupancy(1) 96.7% 96.3%
Weighted average lease length 7.0 yrs 6.1 yrs
to first break
6 months to: 30 Sept 2018 30 Sept 2019
-------------------------------- ------------- -------------
Total property return (2.1)% (8.4)%
+14 bps +37 bps
* Yield shift
* ERV growth (1.5)% (4.8)%
* Multi-let ERV growth (1.6)% (5.1)%
* Valuation movement (4.5)% (10.7)%
Lettings/renewals (sq ft) 457,000 605,000
Lettings/renewals vs ERV +5.0% +3.5%
-------------------------------- ------------- -------------
On a proportionally consolidated basis including the Group's
share of joint ventures and funds
(1) Where occupiers have entered CVA or administration but are
still liable for rates, these are treated as occupied. If units
expected to become vacant are treated as vacant, then the occupancy
rate for Retail would reduce from 96.3% to 95.6%
Retail operational and financial highlights
-- Total Retail portfolio value down 10.7% due to weaker
investor sentiment, with limited transactional evidence,
particularly for larger lot sizes which saw some significant
falls
-- Yield expansion of 37 bps overall
-- ERVs down 4.8%
-- Robust leasing activity with lettings/renewals covering
605,000 sq ft, 3.5% ahead of ERV, strong retention rate of 79%
-- Further 803,000 sq ft of rent reviews agreed 3.5% ahead of passing rent
-- High occupancy maintained at 96%
-- Like for like income down 3.2% including the impact of CVAs and administrations
-- Footfall marginally down 0.1%, 440 bps ahead of benchmark;
like for like sales up 0.5%, 420 bps ahead of benchmark; total
retailer sales down 1.0%, 280 bps ahead of benchmark
-- GBP236m non-core assets completed or exchanged since April 2019
Performance review
Leasing
In a challenging environment our business continues to perform.
Leasing activity has covered 605,000 sq ft, in line with our long
term average. Long term deals were, on average, 3.5% ahead of ERV,
15% ahead of passing rent with an average term of 7.0 years and
incentives stable at 6 months. This demonstrates that for the right
space, in the right location, retailers are still prepared to pay
good rents.
Our focus has been on maintaining high occupancy, so we have
been nimble and pragmatic in our approach to leasing space,
particularly where vacancies have arisen as a result of CVAs or
administration and have been more prepared to let space on a
shorter term basis or at a lower rent. In the majority of cases, no
incentives are given, but terms were typically below previous
passing rent. Overall our core leasing activity (excluding rates
mitigation, assets to be developed and commercialisation and car
park income) was 1% ahead of passing rent, and occupancy remained
high at 96%. Looking forward, the pipeline is healthy although on
average terms are below ERV.
We continue to benefit from the investment we have made into
Meadowhall, with 29 deals accounting for more than GBP1m of rent.
Here, long term deals were 2.7% ahead of ERV and we have attracted
new occupiers including Ritual and Lovisa with a renewal to Laura
Ashley. Elsewhere on the portfolio, we have completed 77 rent
reviews overall adding GBP0.6m to rent and continued to attract new
concepts, including Lost City Adventure Golf at Hull.
CVAs and administrations
Landlords have been increasingly prepared to vote against and in
some cases challenge opportunistic uses of the CVA structure and as
a result, we have seen terms improve. We have been pragmatic about
re-leasing space affected by CVAs or administrations and have
accepted discounts to passing rent where appropriate to maintain
occupancy, footfall and drive supply-demand tension. Over two
thirds of store closures since April 2017 are either re-let, under
offer or in negotiations.
Operational performance
Our focus on keeping the portfolio full with the right type of
occupiers has ensured the businesses continues to perform well
operationally, and we are expanding our outperformance on both
footfall and sales. For the half year, LFL sales were positive, up
0.5%, 420 bps ahead of benchmark and increasing our twelve-month
outperformance to 300 bps. Total sales, which captures both
additions and improvements we have made in the period as well as
the impact of store closures were down 1.0%, 280 bps ahead of
benchmark. These figures only capture instore sales and do not
consider online sales where the physical store plays a key role.
Footfall was down 0.1% in the half, 440 bps ahead of benchmark
increasing our twelve-month outperformance to 350 bps.
Capital activity
We have a clear plan to refine our Retail portfolio to deliver a
smaller, more focused business, representing 30-35% of the total
portfolio. This will comprise assets that meet our criteria
including strength of catchment, market position, potential for
rental growth and mixed use development.
We made good progress on this in the early part of the year,
with the sale of 12 Sainsbury superstores to Realty Income
Corporation for GBP429m (our share GBP194m) at a modest premium to
book and since then have sold or exchanged on two solus assets,
both at a premium to book.
As we indicated in our FY 2019 results in May, we have seen
early signs that some liquidity may be returning to certain parts
of the market, however, sentiment is generally weak and is likely
to remain so. In this context, we will remain patient and
opportunistic in our approach, and only progress disposals at the
right price, which deliver value and progress our long term
strategy. We have a good track record on delivering on our
strategic goals having reduced our standalone superstore exposure
from 11% of the total portfolio in 2014 to 1% today with just six
standalone stores remaining. Retail disposals since April 2014
total GBP3.0bn.
DEVELOPMENT
At 31 September Sq ft Current Cost to ERV ERV
2019 Value complete let/under
offer
'000 GBPm GBPm GBPm GBPm
-------------------- ------ -------- ---------- ----- ------------
Recently completed 287 171 - 8.3 6.5
-------------------- ------ -------- ---------- ----- ------------
Committed 1,329 874 159 54.7 48.2
-------------------- ------ -------- ---------- ----- ------------
Near term 1,013 211 533 48.0 -
-------------------- ------ -------- ---------- ----- ------------
Medium term 7,255
-------------------- ------ -------- ---------- ----- ------------
On a proportionally consolidated basis including the Group's
share of joint ventures and funds (except area which is shown at
100%)
Portfolio
Developments are a key element of our investment case as a
fundamental driver of sustainable value and growth for the long
term. In the current market, there are limited opportunities to
acquire assets with development potential, so the capacity to
develop is an important competitive advantage. Critical to our
approach is the flexibility and optionality we have created, with
the majority of space in our development pipeline either income
producing or held at low cost, so we have attractive options we can
progress as and when appropriate.
We actively manage our development risk and pre-letting our
space is an important part of that approach. Reflecting our
continued successful leasing activity, 87% of our recently
completed and committed developments are pre-let or under offer and
speculative exposure remains low at 1.1% of portfolio gross asset
value. Including our near term pipeline, this will be 6%, below our
internal risk threshold for speculative development of 8%.
Construction cost forecasts continue to suggest that the rate of
growth has moderated from the level in recent years given the
continued market uncertainty. However, there is a risk that a
prolonged delay to Brexit increases material costs and reduces
labour supply in 2020/21 potentially increasing cost inflation
above the expected 2-4% per annum. To mitigate this risk, 96% of
the costs on our committed development programme have been
fixed.
Campus developments: further enhancing the mix of uses
Development is an important driver of value, enabling us to
refresh our offer through new and refurbished space so we are
consistently meeting the needs of today's occupiers. This has a
positive impact, beyond the individual building and is reflected in
our strong leasing performance on existing space as well as
developments.
Completed developments
We reached practical completion at 1 Finsbury Avenue (287,000 sq
ft) at the end of FY19 and are now 78% let or under offer by ERV,
rising to 97% including the unlet space allocated to Storey.
Committed developments
Our committed office development pipeline covers 1.2m sq ft, of
which Broadgate developments account for over two-thirds. These
include 100 Liverpool Street (520,000 sq ft), which is 77% let or
under offer, following commitments in the half from Bank of
Montreal and SMBCE. The building is on track to achieve a BREEAM
excellent rating, a Well Gold certification for Wellbeing and a
WiredScore platinum rating for internet connectivity.
Sustainability has been integral to the design and delivery of this
building; by retaining half of the existing structure we have saved
7,200 tonnes of embodied carbon and are on track to save a further
4,100 tonnes through carbon-efficient design and use of low-carbon
materials. More than half of the construction spend has been with
businesses in the City and neighbouring boroughs, ensuring local
people benefit from our development. At 135 Bishopsgate (335,000 sq
ft), we went under offer on a further 30,000 sq ft in H1, so we are
now 97% let or under offer by ERV, with just 7,000 sq ft
remaining.
At 1 Triton Square, Regent's Place, we are fully pre-let on the
office space to Dentsu Aegis Network on a 20-year lease. The
building topped out in the period and we expect to complete in late
2020.
Near Term pipeline
Our near term pipeline now covers more than 1m sq ft. At Norton
Folgate we have consent for a 335,000 sq ft scheme comprising
257,000 sq ft of office space alongside retail and residential
space, to create a mixed use development which is in keeping with
the historic fabric of the area. Our plans envisage a mix of
floorplates, to appeal to small and growing businesses as well as
more established organisations, particularly in the technology and
creative sectors and we are already seeing good interest. We have
commenced enabling works and would expect to begin construction
next year.
At 1 Broadgate, we have consent for a 532,000 sq ft scheme,
including 153,000 sq ft of retail, leisure and dining space,
connecting Finsbury Avenue Square with retail at 100 Liverpool
Street and the Broadgate Circle, creating a 350,000 sq ft retail,
leisure and dining hub.
The most recent addition to the near term pipeline is Phase 2,
Aldgate Place, a build-to-rent residential scheme delivering 160
homes with 20,000 sq ft of office space. We are refining our
planning consent, subject to which we expect to start on site in
Autumn 2020.
Medium Term Pipeline
We have three campus developments in the medium term pipeline,
together covering more than 1m sq ft. These buildings progress our
mixed use campus vision and support future income growth.
The most significant scheme is 2-3 Finsbury Avenue at Broadgate
where our plans add 374,000 sq ft to the existing space to deliver
a 563,000 sq ft office-led scheme. The building is currently
generating an income through short term, more flexible lettings,
including 51,000 sq ft allocated to Storey.
At 5 Kingdom Street, Paddington Central, we have submitted a
revised planning application which would increase our consented
scheme from 240,000 sq ft to 429,000 sq ft and are awaiting a
decision. The scheme includes the opportunity to develop a former
Crossrail works site which reverts to British Land on completion of
Crossrail, providing 80,000 sq ft of community, retail, leisure and
cultural facilities, reflecting feedback from focus groups and
residents who we consulted on how this space could best be used. At
the Gateway Building, Paddington, we have consent for a 105,000 sq
ft premium hotel.
Retail development: enhancing and repositioning our portfolio
for the future
In line with our disciplined approach to capital allocation and
reflecting our longer term view on the role of retail within our
portfolio, we do not expect to undertake significant retail
development in the near term. We do however maintain a range of
opportunities across our portfolio which preserve our optionality
but would only commit to projects which are aligned with our
strategy, most likely comprising a mixed use element, and when
market conditions are supportive.
Committed developments
At Drake Circus, Plymouth, our 108,000 sq ft leisure extension
completed post period end. It adds a 12-screen cinema and 14
restaurants and is 69% let or under offer.
Medium term pipeline
Our medium term pipeline is focused on mixed use opportunities.
At Ealing Broadway, we are working up plans for an exciting new
292,000 sq ft office led mixed use scheme that will sit adjacent to
our Ealing Broadway shopping centre, outside the new Crossrail
entrance. At Eden Walk, Kingston (jointly owned with USS) our
consented mixed use development plans include 380 new homes,
alongside shops, restaurants and 35,000 sq ft of flexible office
space. At Meadowhall, we have consent for a 333,000 sq ft leisure
extension but are undertaking a review of our plans which is
expected to conclude towards the end of the year.
Canada Water: 53 acre masterplan for a new urban centre in
Central London
Highlights
-- Secured resolution to grant planning permission for the
Canada Water Masterplan, a 5m sq ft mixed use scheme, unanimously
supported by Southwark Council
-- Expect to drawdown the headlease in Spring 2020
-- Net valuation movement up 12.4% to GBP347m reflecting progress on planning
At Canada Water, we are working with the London Borough of
Southwark to deliver a 5m sq ft mixed use scheme, including 3,000
new homes alongside a mix of commercial, retail and community
space. The site is located on the Jubilee line and the London
Overground, making it easily accessible from London Bridge, the
West End, Canary Wharf, Shoreditch and South West London. It will
also be an indirect beneficiary of Crossrail, which will reduce
pressure on the Jubilee Line between Canary Wharf and Bond Street.
It covers 53 acres including the dock area, providing 48 acres of
developable land.
In September we received a resolution to grant outline planning
on the entire 5m sq ft masterplan from Southwark Council, including
detailed consent on the first three buildings, covering 576,000 sq
ft. Following the completion of the S106 Agreement and issue of
planning permission, we will be in a position to draw down the
headlease in the Spring of next year, under the terms of the Master
Development Agreement signed with Southwark Council in May 2018.
This will combine the ownership of our assets at Canada Water into
a single 500-year headlease, with Southwark Council as the Lessor.
At that point, British Land will own 80% of the scheme with
Southwark Council owning the remaining 20% and going forward, they
will be able to participate in the development, up to a maximum of
20% with returns pro-rated accordingly.
The resolution to grant planning decision, which was unanimously
agreed by Southwark Council, is a positive endorsement of our
programme of engagement with the local community, which has
included over 120 public consultations and local outreach events,
attracting over 5,000 individuals. As part of this, we worked with
Southwark Council, to develop a Social Regeneration Charter which
captures local residents' priorities for the benefits of the
development, and proposals for how these will be delivered.
Sustainability has been integral to our approach from the start,
and we are committed to a strategy that ensures the masterplan will
support low carbon living. In total, a minimum of 35% of the 53
acres will be public open space and we will be planting more than
1,200 additional trees, both on and offsite. Our plans will also
benefit the existing and growing local community, with investment
into education, health and community facilities in the local
area.
The first three buildings will deliver 265 homes, of which 35%
will be affordable (split 70:30 between social rent and
intermediate housing), as well as a new leisure centre, new public
spaces and improved pedestrian connections. Building K1 will be
solely residential while building A1 will provide a mix of
residential and workspace and building A2 will provide workspace
and the new leisure centre. Both A1 and A2 will include retail
provision at ground floor.
Potential funding structures will be explored in the new year,
ahead of which, we are seeing interest in the space from a range of
sectors and discussions are underway on several buildings. In the
meantime, the Printworks has become an established live music
venue, frequently hosting crowds of up to 5,000 and helping to
drive footfall and raise awareness of the area.
The net valuation movement for Canada Water over the half year
showed an uplift of 12.4% reflecting the progress made on planning,
more than offsetting design costs incurred in masterplanning the
scheme.
FINANCE REVIEW
Six months to 30 September 2018 30 September 2019
------------------
Underlying earnings per
share(1) 17.2p 16.1p
Underlying Profit(1,2) GBP169m GBP152m
IFRS profit/(loss) after GBP(48)m GBP(404)m
tax
Dividend per share 15.50p 15.97p
Total accounting return(1,3) (1.3%) (3.7%)
------------------------------ ------------------ ------------------
As at 31 March 2019 30 September 2019
EPRA net asset value
per share(1,2) 905p 856p
IFRS net assets GBP8,689m GBP7,971m
------------------------------ ------------------ ------------------
LTV (1,4,5) 28.1% 30.8%
Weighted average interest
rate (5) 2.9% 2.7%
------------------------------ ------------------ ------------------
(1) See Glossary on website for definitions. (2) See Table B
within supplementary disclosure for reconciliations to IFRS
metrics. (3) See Note 2 within condensed interim financial
statements for calculation. (4) See Note 10 within condensed
interim financial statements for calculation and reconciliation to
IFRS metrics. (5) On a proportionally consolidated basis including
the Group's share of joint ventures and funds.
Overview
Financial performance for the period has been resilient in the
context of significant sales over the last 18 months, an especially
challenging retail environment and an unpredictable UK political
backdrop. Underlying earnings per share (EPS) are down 6.4% at
16.1p, while Underlying Profit is down 10.1% at GBP152m. The impact
of lower profits on EPS has been partially mitigated by the impact
of share buybacks which added 0.5p this period.
Capital activity (sales net of acquisitions and share buybacks)
decreased EPS by 1.1p in the period. Setting this aside, earning
were flat, with like-for-like rental growth and financing
activities offsetting the impact of CVAs and administrations.
Proceeds from sales have been deployed into share buybacks and our
value accretive development programme. The recently completed and
committed schemes are expected to generate EPS accretion of 4.6p
once fully let based on ERV of GBP63m, of which 87% is already
pre-let or under offer.
Since April 2019, we have completed GBP0.5bn of gross capital
activity. This includes GBP236m sales of income producing assets,
primarily the sale of 12 Sainsbury superstores to Realty Income
Corporation in April 2019 for GBP429m (our share GBP194m). We also
completed on GBP56m of residential sales at Clarges, Mayfair, GBP6m
of which exchanged prior to this financial period and GBP3m of
which exchanged and completed post period end. We have bought back
GBP125m shares in the period, at an average price of 525p adding 8p
to NAV.
Valuations have reduced by 4.3% on a proportionally consolidated
basis although this was partially offset by the impact of the
shares bought back in the period resulting in an overall EPRA net
asset value (NAV) per share decline of 5.4%.
Our financial position remains strong. LTV has increased by
270bps during the period to 30.8% with valuation declines
contributing 120bps and development spend contributing 110bps.
These movements are partially offset by the impact of capital
activity which reduced LTV by 40bps. Our weighted average interest
rate reduced to a new low of 2.7%.
Presentation of financial information
The Group financial statements are prepared under IFRS where the
Group's interests in joint ventures and funds are shown as a single
line item on the income statement and balance sheet and all
subsidiaries are consolidated at 100%.
Management considers the business principally on a
proportionally consolidated basis when setting the strategy,
determining annual priorities, making investment and financing
decisions and reviewing performance. This 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
financial key performance indicators are also presented on this
basis.
A summary income statement and summary balance sheet which
reconcile the Group income statement and balance sheet to British
Land's interests on a proportionally consolidated basis are
included in Table A within the supplementary disclosures.
Management monitors Underlying Profit as this more accurately
reflects the underlying recurring performance of our core property
rental activity, as opposed to IFRS metrics which include the
non-cash valuation movement on the property portfolio. It is based
on the Best Practices Recommendations of the European Public Real
Estate Association (EPRA) which are widely used alternate metrics
to their IFRS equivalents.
Management also monitors EPRA NAV as this provides a transparent
and consistent basis to enable comparison between European property
companies. Linked to this, the use of Total Accounting Return
allows management to monitor return to shareholders based on
movements in a consistently applied metric, being EPRA NAV, and
dividends paid.
Loan to value (proportionally consolidated) is also monitored by
management as a key measure of the level of debt employed by the
Group to meet its strategic objectives, along with a measurement of
risk. It also allows comparison to other property companies who
similarly monitor and report this measure.
Income statement
1. Underlying Profit
Underlying Profit is the measure that is used internally to
assess income performance. This is presented below on a
proportionally consolidated basis. No company adjustments have been
made in the current or prior period and therefore this is the same
as the pre-tax EPRA earnings measure which includes a number of
adjustments to the IFRS reported profit before tax.
Six months to Section 30 September 30 September
2018 2019
GBPm GBPm
----------------------------------------- -------- -------------- -------------
Gross rental income 291 275
Property operating expenses (24) (32)
----------------------------------------- -------- -------------- -------------
Net rental income 1.2 267 243
Net fees and other income 6 7
Administrative expenses 1.3 (42) (41)
Net financing costs 1.4 (62) (57)
----------------------------------------- -------- -------------- -------------
Underlying Profit 169 152
----------------------------------------- -------- -------------- -------------
Non-controlling interests in Underlying
Profit 6 6
EPRA adjustments(1) (223) (562)
----------------------------------------- -------- -------------- -------------
IFRS profit/(loss) after tax 2 (48) (404)
----------------------------------------- -------- -------------- -------------
Underlying EPS 1.1 17.2p 16.1p
IFRS basic EPS 2 (4.9)p (42.9)p
Dividend per share 3 15.50p 15.97p
----------------------------------------- -------- -------------- -------------
(1) EPRA adjustments consist of investment and development
property revaluations, gains/losses on investment and trading
property disposals, changes in the fair value of financial
instruments and associated close out costs. These items are
presented in the 'capital and other' column of the consolidated
income statement.
1.1 Underlying EPS
Underlying EPS is 16.1p, a decline of 6.4% on the prior period.
This reflects Underlying Profit decline of 10.1%, partially offset
by the impact of share buybacks which added 0.5p in the period.
1.2 Net rental income
GBPm
Net rental income for the six months ended 30 September 2018 267
Sales (20)
Acquisitions 2
Retail like-for-like rent (5)
Offices like-for-like rent 1
Developments (2)
Net rental income for the six months ended 30 September 2019 243
Net sales of income producing assets over the last 18 months was
GBP0.9bn. This has reduced rents by GBP18m in the period, including
GBP4m from the sale of 5 Broadgate in June 2018, GBP5m from the
sale of the Spirit Pubs portfolio in March 2019 and GBP5m from
superstore sales. As well as funding share buybacks we have
completed over the last 18 months, proceeds from these sales are
being reinvested in the development pipeline which is expected to
deliver GBP63m in rents in future years and is already 87% pre-let
or under offer (GBP55m).
Retail like-for-like net rental decline is 3.2% in the period,
primarily reflecting the impact of CVAs and administrations. The
offices portfolio saw like-for-like growth of 1.1% which is lower
than the historic run-rate due to material lease expiries. These
contributed a 3% decrease to net rents however the space has either
been re-let or is to be refurbished. Expiries have been offset by
the impact of leasing activity in the period, including a rent
review with Visa at 1 Sheldon Square.
1.3 Administrative expenses
Administrative expenses have decreased by 2% this period. The
Group's operating cost ratio has increased by 220 bps to 21.7% (H1
2018/19: 19.5%) as a result of lower rental income following sales
activity.
1.4 Net financing costs
GBPm
Net financing costs for the six months ended
30 September 2018 (62)
Financing activity 2
Net divestment 4
Developments 1
Share buybacks (2)
Net financing costs for the six months ended
30 September 2019 (57)
Financing activity undertaken over the last 18 months has
reduced costs by GBP2m in the period, including the issuance of a
new GBP100m 2034 USPP note following prepayment of a GBP98m 2027
note, as well as repayment of GBP111m (BL share) of secured
Broadgate bonds in October 2018.
The reduction in finance costs as a result of proceeds from net
divestment and investment in developments has been partially offset
by share buybacks.
We have a risk managed approach to interest rates on debt. At 30
September 2019, on average over the next 5 years the interest rate
on 75% of our debt is hedged, based on current commitments. On a
spot basis we are 83% hedged. Our use of caps as well as swaps
means we also benefit if market rates remain low.
2. IFRS profit before tax
The main difference between IFRS profit before tax and
Underlying Profit is that IFRS includes the valuation movement on
investment and trading properties, fair value movements on
financial instruments and capital financing costs. In addition, the
Group's investments in joint ventures and funds are equity
accounted in the IFRS income statement but are included on a
proportionally consolidated basis within Underlying Profit.
The IFRS loss after tax for the year was GBP404m, compared with
a loss after tax for the prior period of GBP48m. As a result, IFRS
basic EPS was (42.9)p per share, compared to (4.9)p per share in
the prior period. This primarily reflects an increase in downward
valuation movement on the Group's properties of GBP184m, and an
increase in the capital and other income loss from joint ventures
and funds of GBP128m, both driven principally by outward yield
shift of 37 bps and ERV decline of 4.8% in the Retail portfolio. In
addition, prior period sales of Clarges generated profits of GBP65m
compared GBP10m in this period.
The basic weighted average number of shares in issue during the
period was 941m (H1 2018/19: 981m).
3. Dividends
As previously announced, we have increased the dividend by 3.0%
for the six months to 30 September 2019 to 15.97p and propose a
full year dividend to 31 March 2020 of 31.93p. The dividend payout
ratio is 99%.
The second interim dividend payment for the quarter ended 30
September 2019 will be 7.9825p. Payment will be made on 7 February
2020 to shareholders on the register at close of business on 3
January 2020. The second interim dividend will be a Property Income
Distribution and no SCRIP alternative will be offered.
Balance sheet
As at Section 31 March 30 September
2019 2019
GBPm GBPm
------------------------------- -------- --------- -------------
Properties at valuation 12,316 11,723
Other non-current assets 151 170
------------------------------- -------- --------- -------------
12,467 11,893
Other net current liabilities (297) (224)
Adjusted net debt 6 (3,521) (3,685)
Other non-current liabilities - -
------------------------------- -------- --------- -------------
EPRA net assets 8,649 7,984
------------------------------- -------- --------- -------------
EPRA NAV per share 4 905p 856p
------------------------------- -------- --------- -------------
Non-controlling interests 211 168
Other EPRA adjustments(1) (171) (181)
------------------------------- -------- --------- -------------
IFRS net assets 5 8,689 7,971
------------------------------- -------- --------- -------------
Proportionally consolidated basis
(1) EPRA net assets exclude the mark-to-market on derivatives
and related debt adjustments, the mark-to-market on the convertible
bond as well as deferred taxation on property and derivative
revaluations. They include the trading properties at valuation
(rather than lower of cost and net realisable value) and are
adjusted for the dilutive impact of share options. No dilution
adjustment is made for the GBP350m zero coupon convertible bond
maturing in 2020. Details of the EPRA adjustments are included in
Table B within the supplementary disclosures.
4. EPRA net asset value per share
pence
EPRA NAV per share at 31 March 2019 905
Valuation performance (55)
Underlying Profit 16
Dividends (15)
Financing activity (2)
Share buyback 8
Other (1)
EPRA NAV per share at 30 September 2019 856
The 5.4% decrease in EPRA NAV per share reflects a valuation
decrease of 4.3% across the portfolio. Valuation gains in the
Office portfolio and Canada Water have been more than offset by a
fall in Retail values.
Office valuations were up 0.4% driven by strong leasing at our
developments which were up 4.9%, including 100 Liverpool Street
where values were up 13%, with ERV growth of 0.9% across the
standing investments and stable yields.
Valuations in Retail are down 10.7%, with outward yield shift of
37 bps and ERV decline of 4.8%, reflecting weaker occupational
demand as well as low transaction volumes, particularly for larger
lot sizes. Across our five largest assets, yields have moved
between 25-50bps. For smaller retail parks, a number of assets have
transacted or gone under offer around the period end which have
provided some valuation evidence.
While financing activity has decreased NAV by 2p, it will
deliver future interest cost savings. It includes the early
repayment of GBP83m (BL share) of bonds related to the sale of 12
Sainsburys superstores. Completion of the GBP125m share buyback
programme during the period has contributed 8p to EPRA NAV.
5. IFRS net assets
IFRS net assets at 30 September 2019 were GBP7,971m, a decrease
of GBP718m from 31 March 2019. This was primarily due to IFRS loss
after tax of GBP404m, along with GBP147m of dividends paid and
GBP125m of share purchases under the share buyback programme.
Cash flow, net debt and financing
6. Adjusted net debt(1)
GBPm
Adjusted net debt at 31 March 2019 (3,521)
Disposals 218
Acquisitions (19)
Development and capex (185)
Net cash from operations 185
Dividends (152)
Share buyback (125)
Other (86)
------------------------------------------ --------
Adjusted net debt at 30 September 2019 (3,685)
------------------------------------------ --------
(1) Adjusted net debt is a proportionally consolidated measure.
It represents the Group net debt as disclosed in Note 10 to the
interim financial statements and the Group's share of joint venture
and funds' net debt excluding the mark-to-market on derivatives,
related debt adjustments and non-controlling interests. A
reconciliation between the Group net debt and adjusted net debt is
included in Table A within the supplementary disclosures.
Net sales reduced debt by GBP199m whilst development spend
totalled GBP157m with a further GBP28m on capital expenditure
related to asset management on the standing portfolio. The value of
recently completed and committed developments is GBP1,046m, with
GBP159m costs to come. Speculative development exposure is 1.1% of
the portfolio. There are 1,013,000 sq ft of developments in our
near term pipeline with anticipated cost of GBP533m.
7. Financing
Group Proportionally consolidated
31 March 30 September 31 March 30 September
2019 2019 2019 2019
Net debt / adjusted net debt GBP2,765m GBP3,026m GBP3,521m GBP3,685m
(1)
Principal amount of gross GBP2,881m GBP3,039m GBP3,895m GBP3,940m
debt
Loan to value 22.2% 25.4% 28.1% 30.8%
Weighted average interest
rate 2.2% 2.1% 2.9% 2.7%
Interest cover 4.9 4.6 3.8 3.7
Weighted average maturity 7.3 years 7.1 years 8.1 years 7.9 years
of drawn debt
---------- ------------- ------------- ---------------
(1) Group data as presented in note 10 of the condensed interim
financial statements. The proportionally consolidated figures
include the Group's share of joint venture and funds' net debt and
exclude the mark-to-market on derivatives and related debt
adjustments and non-controlling interests.
At 30 September 2019, our proportionally consolidated LTV was
30.8%, up 270 bps from 28.1% at 31 March 2019. Valuation declines
contributed 120 bps of this increase, and development spend
contributed 110bps. This was partially offset by the impact of
capital activity (sales net of acquisitions and share buybacks)
which had reduced LTV by 40 bps. Note 10 of the condensed interim
financial statements sets out the calculation of the Group and
proportionally consolidated LTV.
During the period, we issued a new GBP100m 2034 USPP note
following prepayment of a GBP98m 2027 note, extending debt maturity
and delivering future interest cost savings. We also extended
GBP810m of committed bank facilities by a further 1 year. The
portfolio sale of 12 Sainsburys superstores triggered partial
repayment of GBP83m of bonds (BL share).
Our liability and debt management activity has enabled us to
reduce our weighted average interest rate to a new low of 2.7%. Our
weighted average debt maturity is 7.9 years.
At 30 September 2019, British Land had GBP1.8bn of committed
unsecured revolving bank facilities, GBP1.4bn undrawn. Based on our
current commitments, these facilities and debt maturities, we have
no requirement to refinance until late 2022.
The current uncertain environment reinforces the importance of a
strong balance sheet and we have capacity to progress opportunities
when the time is right.
Simon Carter
Chief Financial Officer
Notes to Editors
About British Land
Our portfolio of high quality UK commercial property is focused
on London Offices and Retail around the UK. We own or manage a
portfolio valued at GBP15.4bn (British Land share: GBP11.7bn) as at
30 September 2019 making us one of Europe's largest listed real
estate investment companies.
Our strategy is to provide places which meet the needs of our
customers and respond to changing lifestyles - Places People
Prefer. We do this by creating great environments both inside and
outside our buildings and use our scale and placemaking skills to
enhance and enliven them. This expands their appeal to a broader
range of occupiers, creating enduring demand and driving
sustainable, long term performance.
Our Offices portfolio comprises three office-led campuses in
central London as well as high quality standalone buildings and
accounts for 55% of our portfolio. Our Retail portfolio is focused
on Regional and Local multi-let centres, and accounts for 41% of
our portfolio. Increasingly our focus is on providing a mix of uses
and this is most evident at Canada Water, our 53 acre redevelopment
opportunity where we have plans to create a new neighbourhood for
London.
Sustainability is embedded throughout our business. Our places,
which are designed to meet high sustainability standards, become
part of local communities, provide opportunities for skills
development and employment and promote wellbeing. In April 2016
British Land received the Queen's Award for Enterprise: Sustainable
Development, the UK's highest accolade for business success for
economic, social and environmental achievements over a period of
five years.
Further details can be found on the British Land website at
www.britishland.com
RISK MANAGEMENT AND PRINCIPAL RISKS
For British Land, effective risk management is a cornerstone of
delivering our strategy and integral to the achievement of our
objective of delivering sustainable long term value. The Group's
risk appetite and its integrated approach to managing risk remains
as set out on pages 54-55 of the Annual Report and Accounts
published in May 2019.
The Board believes that since the publication of the Annual
Report and Accounts published in May 2019 there has been no
material change to the Group's principal risks and the existing
mitigating factors and actions remain appropriate (as set out on
pages 58-61 of the 2019 Annual Report and Accounts). However, not
surprisingly several principal risks continue to be elevated (as
set out in the 2019 Annual Report & Accounts), as a result of
the challenging external environment, with the increased level of
political and economic uncertainty associated with the UK's
departure from the European Union ('Brexit') and pending general
election, alongside the continued challenging trading conditions in
retail.
Whilst it is not possible to predict fully the impact Brexit
will have on our business and our markets, the Board has undertaken
a comprehensive Brexit review to understand the key risks to our
business and taken appropriate action to ensure our business is
both resilient and responsive in the short term, and well
positioned for the long term. The key operational steps taken
include working with our development contractors to minimise cost
and delay risk to our development programme, increasing stocks of
spare parts to ensure the continued operation of our assets and
updating our Crisis Management Plans to improve our response to
unpredictable events.
We are mindful of the continued uncertainty; in this context we
will benefit from the resilience of our business, the quality of
our portfolio and the strength of our finances.
A summary of the Group's principal risks for the second half of
the year is provided below.
Principal External Risks
Economic outlook - The UK economic climate and future movements
in interest rates present risks and opportunities in property and
financing markets and the businesses of our occupiers which can
impact both the delivery of our strategy and our financial
performance.
Political and regulatory outlook - Significant political events
and regulatory changes, including the UK's decision to leave the
EU, bring risks both in terms of uncertainty until the outcome is
known, and the impact of policies introduced. This could impact the
businesses of our occupiers and the wider investment case for the
UK.
Commercial property investor demand - Reduction in investor
demand for UK real estate may result in falls in asset valuations
and could arise from variations in the health of the UK economy,
the attractiveness of investment in the UK, availability of finance
and the relative attractiveness of other asset classes.
Occupier demand and tenant default - Underlying income, rental
growth and capital performance could be adversely affected by
weakening occupier demand and occupier failures resulting from
variations in the health of the UK economy and corresponding
weakening of consumer confidence, business activity and investment.
Changing consumer and business practices including the growth of
internet retailing, flexible working practices and demand for
energy efficient buildings, new technologies, new legislation and
alternative locations may result in earlier than anticipated
obsolescence of our buildings if evolving occupier and regulatory
requirements are not met.
Availability and cost of finance - Reduced availability of
finance may adversely impact British Land's ability to refinance
debt and/or drive up cost. These factors may also result in weaker
investor demand for real estate. Regulation and capital costs of
lenders may increase cost of finance.
Catastrophic business event - An external event such as a civil
emergency, including a large-scale terrorist attack, cyber crime,
extreme weather occurrence, environmental disaster or power
shortage could severely disrupt global markets (including property
and finance) and cause significant damage and disruption to British
Land's portfolio and operations.
Principal Internal Risks
Investment strategy - In order to meet our strategic objectives,
we aim to invest in and exit from the right properties at the right
time. Underperformance could result from changes in market
sentiment as well as inappropriate determination and execution of
our property investment strategy, including sector selection and
weighting; timing of investment and divestment decisions; exposure
to developments; asset, tenant, region concentration; and
co-investment arrangements.
Development strategy - Development provides an opportunity for
outperformance but usually brings with it elevated risk. This is
reflected in our decision-making process around which schemes to
develop, the timing of the development, as well as the execution of
these projects. Development strategy addresses several development
risks that could adversely impact underlying income and capital
performance including: development letting exposure; construction
timing and costs (including construction cost inflation); major
contractor failure; and adverse planning judgements.
Capital structure - leverage - Our capital structure recognises
the balance between performance, risk and flexibility. Leverage
magnifies capital returns, both positive and negative. An increase
in leverage increases the risk of a breach of covenants on
borrowing facilities and may increase finance costs.
Finance strategy - Finance strategy addresses risks both to
continuing solvency and profits generated. Failure to manage
refinancing requirements may result in a shortage of funds to
sustain the operations of the business or repay facilities as they
fall due.
People - A number of critical business processes and decisions
lie in the hands of a few people. Failure to recruit, develop and
retain staff and Directors with the right skills and experience may
result in significant underperformance or impact the effectiveness
of operations and decision making, in turn impacting business
performance.
Income sustainability - We are mindful of maintaining
sustainable income streams which underpin a stable and growing
dividend and provide the platform from which to grow the business.
We consider sustainability of our income streams in: execution of
investment strategy and capital recycling, notably timing of
reinvestment of sale proceeds; nature and structure of leasing
activity; and nature and timing of asset management and development
activity.
Statement of directors' responsibilities
The directors confirm that these condensed interim financial
statements have been prepared in accordance with International
Accounting Standard 34, 'Interim Financial Reporting', as adopted
by the European Union and that the interim management report
includes a fair review of the information required by DTR 4.2.7 and
DTR 4.2.8, namely:
-- An indication of important events that have occurred during
the first six months and their impact on the condensed set of
financial statements, and a description of the principal risks and
uncertainties for the remaining six months of the financial year;
and
-- Material related party transactions in the first six months and any material changes in the related-party transactions described in the last annual report.
The directors of British Land plc are listed on the company
website www.britishland.com
By order of the Board
Simon Carter
Chief Financial Officer
12(th) November 2019
Independent review report to The British Land Company PLC
Report on the condensed interim financial statements
Our conclusion
We have reviewed The British Land Company PLC's condensed
interim financial statements (the "interim financial statements")
in the Half year results for the six months ended 30 September 2019
of The British Land Company PLC for the 6 month period ended 30
September 2019. Based on our review, nothing has come to our
attention that causes us to believe that the interim financial
statements are not prepared, in all material respects, in
accordance with International Accounting Standard 34, 'Interim
Financial Reporting', as adopted by the European Union and the
Disclosure Guidance and Transparency Rules sourcebook of the United
Kingdom's Financial Conduct Authority.
What we have reviewed
The interim financial statements comprise:
-- the Consolidated balance sheet as at 30 September 2019;
-- 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 interim financial statements.
The interim financial statements included in the Half year
results for the six months ended 30 September 2019 have been
prepared in accordance with International Accounting Standard 34,
'Interim Financial Reporting', as adopted by the European Union and
the Disclosure Guidance and Transparency Rules sourcebook of the
United Kingdom's Financial Conduct Authority.
As disclosed in note 1 to the interim financial statements, 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.
Responsibilities for the interim financial statements and the
review
Our responsibilities and those of the directors
The Half year results for the six months ended 30 September
2019, including the interim financial statements, is the
responsibility of, and has been approved by, the directors. The
directors are responsible for preparing the Half year results for
the six months ended 30 September 2019 in accordance with the
Disclosure Guidance and Transparency Rules sourcebook of the United
Kingdom's Financial Conduct Authority.
Our responsibility is to express a conclusion on the interim
financial statements in the Half year results for the six months
ended 30 September 2019 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 Guidance and
Transparency Rules sourcebook of the United Kingdom's 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.
What a review of interim 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,
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 year
results for the six months ended 30 September 2019 and considered
whether it contains any apparent misstatements or material
inconsistencies with the information in the interim financial
statements.
PricewaterhouseCoopers LLP
Chartered Accountants
London
12 November 2019
Financial Statements
Consolidated Income Statement
For the six months ended 30 September 2019
Six months ended Six months ended
30 September 2019 30 September 2018
Unaudited Unaudited
================================ ===============================
Note Underlying Capital Total Underlying Capital Total
pre-tax(1) and GBPm pre-tax(1) and GBPm
GBPm other GBPm other
GBPm GBPm
================================= ===== ============ ======== ======== ============ ======== =======
Revenue 3 275 53 328 282 217 499
----- ------------ -------- -------- ------------ -------- -------
Costs 3 (81) (43) (124) (75) (152) (227)
--------------------------------- ----- ------------ -------- -------- ------------ -------- -------
Operating profit 3 194 10 204 207 65 272
----- ------------ -------- -------- ------------ -------- -------
Joint ventures and
funds
(see also below) 8 38 (154) (116) 42 (26) 16
----- ------------ -------- -------- ------------ -------- -------
Administrative expenses (41) - (41) (41) - (41)
----- ------------ -------- -------- ------------ -------- -------
Valuation movement 4 - (436) (436) - (252) (252)
----- ------------ -------- -------- ------------ -------- -------
Profit (loss) on
disposal of investment
properties and investments - 10 10 - (6) (6)
----- ------------ -------- -------- ------------ -------- -------
Net financing costs
----- ------------ -------- -------- ------------ -------- -------
- financing income 5 - 3 3 - 4 4
----- ------------ -------- -------- ------------ -------- -------
- financing charges 5 (33) (31) (64) (33) (2) (35)
----- ------------ -------- -------- ------------ -------- -------
(33) (28) (61) (33) 2 (31)
--------------------------------- ----- ------------ -------- -------- ------------ -------- -------
Profit (loss) on
ordinary activities
before taxation 158 (598) (440) 175 (217) (42)
----- ------------ -------- -------- ------------ -------- -------
Taxation 6 (1) (1) - (19) (19)
--------------------------------- ----- ------------ -------- -------- ------------ -------- -------
Loss for the period
after taxation (441) (61)
--------------------------------- ----- ------------ -------- -------- ------------ -------- -------
Attributable to non-controlling
interests 6 (43) (37) 6 (19) (13)
----- ------------ -------- -------- ------------ -------- -------
Attributable to shareholders
of the Company 152 (556) (404) 169 (217) (48)
--------------------------------- ----- ------------ -------- -------- ------------ -------- -------
Earnings per share:
----- ------------ -------- -------- ------------ -------- -------
- basic 2 (42.9p) (4.9p)
----- ------------ -------- -------- ------------ -------- -------
- diluted 2 (42.9p) (4.9p)
----- ------------ -------- -------- ------------ -------- -------
All results derive from continuing operations.
Six months ended Six months ended
30 September 2019 30 September 2018
Unaudited Unaudited
============================== ==============================
Note Underlying Capital Total Underlying Capital Total
pre-tax(1) and GBPm pre-tax(1) and GBPm
GBPm other GBPm other
GBPm GBPm
============================ ===== ============ ======== ====== ============ ======== ======
Results of joint
ventures and funds
accounted for using
the equity method
----- ------------ -------- ------ ------------ -------- ------
Underlying Profit 38 - 38 42 - 42
----- ------------ -------- ------ ------------ -------- ------
Valuation movement 4 - (140) (140) - (13) (13)
----- ------------ -------- ------ ------------ -------- ------
Capital financing
costs - (15) (15) - (19) (19)
----- ------------ -------- ------ ------------ -------- ------
Profit on disposal
of investment properties,
trading properties
and investments - 1 1 - 6 6
----- ------------ -------- ------ ------------ -------- ------
Taxation - - - - - -
---------------------------- ----- ------------ -------- ------ ------------ -------- ------
8 38 (154) (116) 42 (26) 16
---------------------------- ----- ------------ -------- ------ ------------ -------- ------
1. See definition in note 2.
Consolidated Statement
of Comprehensive Income
For the six months ended 30 September 2019
Six months Six months
ended ended
30 September 30 September
2019 2018
Unaudited Unaudited
GBPm GBPm
========================================================== ============== ==============
Loss for the period after taxation (441) (61)
-------------- --------------
Other comprehensive (expense) income:
-------------- --------------
Items that will not be reclassified subsequently to
profit or loss:
-------------- --------------
Net actuarial gain on pension scheme 1 -
-------------- --------------
Valuation movements on owner-occupied properties (2) 4
-------------- --------------
(1) 4
-------------- --------------
Items that may be reclassified subsequently to profit
or loss:
-------------- --------------
Gains on cash flow hedges
-------------- --------------
- -
* Group
-------------- --------------
- -
* Joint ventures and funds
-------------- --------------
- -
-------------- --------------
Items recycled through the consolidated income statement
(cash flow hedges)
-------------- --------------
* Interest rate derivatives - joint ventures (1) 18
-------------- --------------
(1) 18
-------------- --------------
Deferred tax on items of other comprehensive income - -
-------------- --------------
Other comprehensive (expense) income for the period (2) 22
---------------------------------------------------------- -------------- --------------
Total comprehensive expense for the period (443) (39)
---------------------------------------------------------- -------------- --------------
Attributable to non-controlling interests (37) (13)
-------------- --------------
Attributable to shareholders of the Company (406) (26)
---------------------------------------------------------- -------------- --------------
Consolidated balance sheet
As at 30 September 2019
Note 30 September 31 March
2019 2019
Unaudited Audited
GBPm GBPm
==================================================== ===== ============= =========
ASSETS
----- ------------- ---------
Non-current assets
----- ------------- ---------
Investment and development properties 7 8,686 8,931
----- ------------- ---------
Owner-occupied property 7 71 73
----- ------------- ---------
8,757 9,004
----- ------------- ---------
Other non-current assets
----- ------------- ---------
Investments in joint ventures and funds 8 2,380 2,560
----- ------------- ---------
Other investments 9 136 129
----- ------------- ---------
Property, plant and equipment 34 22
----- ------------- ---------
Deferred tax assets 2 1
----- ------------- ---------
Interest rate and currency derivative assets 10 227 154
----- ------------- ---------
11,536 11,870
----- ------------- ---------
Current assets
----- ------------- ---------
Trading properties 7 45 87
----- ------------- ---------
Debtors 84 57
----- ------------- ---------
Cash and short-term deposits 10 160 242
----- ------------- ---------
289 386
---------------------------------------------------- ----- ------------- ---------
Total assets 11,825 12,256
---------------------------------------------------- ----- ------------- ---------
LIABILITIES
----- ------------- ---------
Current liabilities
----- ------------- ---------
Short-term borrowings and overdrafts 10 (671) (99)
----- ------------- ---------
Creditors (255) (289)
----- ------------- ---------
Corporation tax (23) (25)
----- ------------- ---------
(949) (413)
----- ------------- ---------
Non-current liabilities
----- ------------- ---------
Debentures and loans 10 (2,573) (2,932)
----- ------------- ---------
Other non-current liabilities (163) (92)
----- ------------- ---------
Interest rate and currency derivative liabilities 10 (169) (130)
----- ------------- ---------
(2,905) (3,154)
---------------------------------------------------- ----- ------------- ---------
Total liabilities (3,854) (3,567)
---------------------------------------------------- ----- ------------- ---------
Net assets 7,971 8,689
---------------------------------------------------- ----- ------------- ---------
EQUITY
----- ------------- ---------
Share capital 234 240
----- ------------- ---------
Share premium 1,305 1,302
----- ------------- ---------
Merger reserve 213 213
----- ------------- ---------
Other reserves 34 37
----- ------------- ---------
Retained earnings 6,017 6,686
---------------------------------------------------- ----- ------------- ---------
Equity attributable to shareholders of the Company 7,803 8,478
---------------------------------------------------- ----- ------------- ---------
Non-controlling interests 168 211
----- ------------- ---------
Total equity 7,971 8,689
---------------------------------------------------- ----- ------------- ---------
EPRA NAV per share* 856p 905p
---------------------------------------------------- ----- ------------- ---------
* See definition in note 2.
Consolidated Statement of Cash Flows
For the six months ended 30 September 2019
Note Six months Six months
ended ended
30 September 30 September
2019 2018
Unaudited Unaudited
GBPm GBPm
============================================= ===== ============== ==============
Rental income received from tenants 211 203
----- -------------- --------------
Fees and other income received 30 25
----- -------------- --------------
Operating expenses paid to suppliers and
employees (90) (92)
----- -------------- --------------
Sale of trading properties 50 145
----- -------------- --------------
Cash generated from operations 201 281
----- -------------- --------------
Interest paid (40) (30)
----- -------------- --------------
Interest received 4 3
----- -------------- --------------
Corporation tax (payments) repayments (4) 7
----- -------------- --------------
Distributions and other receivables from
joint ventures and funds 8 24 27
----- -------------- --------------
Net cash inflow from operating activities 185 288
----- -------------- --------------
Cash flows from investing activities
----- -------------- --------------
Development and other capital expenditure (130) (87)
----- -------------- --------------
Purchase of investment properties - (97)
----- -------------- --------------
Sale of investment properties 21 99
----- -------------- --------------
Sale of investments 5 11
----- -------------- --------------
Purchase of investments (4) (4)
----- -------------- --------------
Purchase of remaining share of Aldgate JV (21) -
----- -------------- --------------
Investment in and loans to joint ventures
and funds (80) (81)
----- -------------- --------------
Capital distributions from joint ventures
and funds 90 260
----- -------------- --------------
Loan repayments from joint ventures and
funds - 247
----- -------------- --------------
Indirect taxes received (paid) in respect
of investing activities 4 (2)
----- -------------- --------------
Net cash (outflow) inflow from investing
activities (115) 346
----- -------------- --------------
Cash flows from financing activities
----- -------------- --------------
Issue of ordinary shares 4 2
----- -------------- --------------
Purchase of ordinary shares (125) (50)
----- -------------- --------------
Dividends paid (152) (148)
----- -------------- --------------
Dividends paid to non-controlling interests (7) (8)
----- -------------- --------------
Capital payments in respect of interest
rate derivatives (6) (6)
----- -------------- --------------
Decrease in bank and other borrowings (550) (829)
----- -------------- --------------
Drawdown on bank and other borrowings 684 416
----- -------------- --------------
Net cash outflow from financing activities (152) (623)
----- -------------- --------------
Net (decrease) increase in cash and cash
equivalents (82) 11
----- -------------- --------------
Cash and cash equivalents at 1 April 242 105
--------------------------------------------- ----- -------------- --------------
Cash and cash equivalents at 30 September 160 116
--------------------------------------------- ----- -------------- --------------
Cash and cash equivalents consists of:
----- -------------- --------------
Cash and short-term deposits 160 116
--------------------------------------------- ----- -------------- --------------
Consolidated Statement of Changes in Equity
For the six months ended 30 September 2019
Six month movements in equity
Share Share Hedging Re- Merger Retained Total Non-controlling Total
capital premium and valuation reserve earnings GBPm interests equity
GBPm GBPm translation reserve GBPm GBPm GBPm GBPm
reserve GBPm
GBPm
==================== ======== ======== ============ ========== ======== ========= ====== ================ =======
Balance at 1 April
2019 240 1,302 11 26 213 6,686 8,478 211 8,689
-------------------- -------- -------- ------------ ---------- -------- --------- ------ ---------------- -------
Total comprehensive
expense
for the period - - - (3) - (403) (406) (37) (443)
-------- -------- ------------ ---------- -------- --------- ------ ---------------- -------
Share issues - 3 - - - - 3 - 3
-------- -------- ------------ ---------- -------- --------- ------ ---------------- -------
Purchase of own
shares (6) - - - - (119) (125) - (125)
-------- -------- ------------ ---------- -------- --------- ------ ---------------- -------
Dividends paid in
period
(15.50p per share) - - - - - (147) (147) - (147)
-------- -------- ------------ ---------- -------- --------- ------ ---------------- -------
Dividends paid to
non-controlling
interests - - - - - - - (6) (6)
-------------------- -------- -------- ------------ ---------- -------- --------- ------ ---------------- -------
Balance at 30
September 2019 234 1,305 11 23 213 6,017 7,803 168 7,971
-------------------- -------- -------- ------------ ---------- -------- --------- ------ ---------------- -------
Balance at 1 April
2018 248 1,300 11 22 213 7,458 9,252 254 9,506
-------------------- -------- -------- ------------ ---------- -------- --------- ------ ---------------- -------
Total comprehensive
expense
for the period - - - 22 - (48) (26) (13) (39)
-------- -------- ------------ ---------- -------- --------- ------ ---------------- -------
Share issues - 2 - - - - 2 - 2
-------- -------- ------------ ---------- -------- --------- ------ ---------------- -------
Fair value of share
and share
option awards - - - - - (2) (2) - (2)
-------- -------- ------------ ---------- -------- --------- ------ ---------------- -------
Purchase of own
shares (1) - - - - (49) (50) - (50)
-------- -------- ------------ ---------- -------- --------- ------ ---------------- -------
Dividends paid in
period
(15.04p per share) - - - - - (148) (148) - (148)
-------- -------- ------------ ---------- -------- --------- ------ ---------------- -------
Dividends paid to
non-controlling
interests - - - - - - - (8) (8)
-------------------- -------- -------- ------------ ---------- -------- --------- ------ ---------------- -------
Balance at 30
September 2018 247 1,302 11 44 213 7,211 9,028 233 9,261
-------------------- -------- -------- ------------ ---------- -------- --------- ------ ---------------- -------
Prior year movements in equity
Share Share Hedging Re- Merger Retained Total Non-controlling Total
capital premium and valuation reserve earnings GBPm interests equity
GBPm GBPm translation reserve GBPm GBPm GBPm GBPm
reserve GBPm
GBPm
================= ======== ======== ============ ========== ======== ========= ====== ================ =======
Balance at 1
April 2018 248 1,300 11 22 213 7,458 9,252 254 9,506
----------------- -------- -------- ------------ ---------- -------- --------- ------ ---------------- -------
Total
comprehensive
expense
for the period - - - 4 - (274) (270) (29) (299)
-------- -------- ------------ ---------- -------- --------- ------ ---------------- -------
Share issues - 2 - - - - 2 - 2
-------- -------- ------------ ---------- -------- --------- ------ ---------------- -------
Fair value of
share and share
option awards - - - - - (4) (4) - (4)
-------- -------- ------------ ---------- -------- --------- ------ ---------------- -------
Purchase of own
shares (8) - - - - (196) (204) - (204)
-------- -------- ------------ ---------- -------- --------- ------ ---------------- -------
Dividends paid
in year (30.54p
per share) - - - - - (298) (298) - (298)
-------- -------- ------------ ---------- -------- --------- ------ ---------------- -------
Dividends paid
to
non-controlling
interests - - - - - - - (14) (14)
----------------- -------- -------- ------------ ---------- -------- --------- ------ ---------------- -------
Balance at 31
March 2019 240 1,302 11 26 213 6,686 8,478 211 8,689
----------------- -------- -------- ------------ ---------- -------- --------- ------ ---------------- -------
Notes to the Accounts
For the six months ended 30 September 2019
1 Basis of preparation
The financial information for the period ended 30 September 2019
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 2019 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, in accordance with IAS 34 Interim
Financial Reporting, and in accordance with the Disclosure and
Transparency Rules of the Financial Conduct Authority. 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 2019, 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,
with the exception of updating accounting policies to reflect
changes required by the adoption of IFRS 16 (see below), and the
tax policy, which for the interim period is as follows: The current
tax charge is calculated on profits arising in the period and in
accordance with legislation which has been enacted or substantially
enacted at the balance sheet date.
During the period the Group adopted the following standards:
IFRS 16 - Leases
The new standard results in almost all leases held as lessee
being recognised on the balance sheet, as the distinction between
operating and finance leases is removed. IFRS 16 applies to leases
previously classified as operating leases where the Group is
lessee. IFRS 16 has not impacted operating leases held by the Group
where the Group is lessor, therefore the standard does not have a
material impact on the Group. The accounting for lessors has not
significantly changed.
The cumulative quantitative impact for the period ended 30
September 2019 upon the adoption of this new accounting policy is
an increase in investment property of GBP43m and a corresponding
increase in liabilities of GBP50m. The transitional impact of IFRS
16 is a GBP17m increase in investment property and a corresponding
increase in liabilities of GBP17m. The impact of IFRS 16 relating
to new leases in the year is a GBP26m increase in investment
property and a GBP33m increase in liabilities. The difference is
due to a capital contribution. The net impact on profit/(loss)
after taxation is immaterial.
IFRS 16 outlines several options for initial recognition on
adoption of the standard. The Group has adopted IFRS 16 in
accordance with IFRS 16 C8. In accordance with this option,
comparative amounts are not restated and adjustments in opening
retained earnings have not been recognised. The lease liability is
calculated as the present value of the outstanding rental payments,
discounted using the Group's incremental borrowing rate at the date
of initial application. The right of use asset is then set as being
equal to the liability therefore the impact on net assets on
adoption is nil.
The adoption of IFRS 16 has a nil impact on net assets and an
immaterial impact on underlying profit/(loss) before tax. Therefore
the adoption of IFRS 16 will have an immaterial impact on
alternative performance measures.
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.
The general risk environment in which the Group operates has
heightened during the period, which is largely due to the continued
level of uncertainty associated with the future impact of the UK's
exit from the EU, the significant deterioration in the UK retail
market and weaker investment markets.
Having assessed the Principal Risks, 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
12 November 2019.
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 2015 convertible bond, as the
Company's share price was below the current exchange price of
991.08 pence. IFRS diluted earnings per share would include the
dilutive impact as IAS 33 ignores this hurdle to conversion,
however due to the loss for the period, this would be anti-dilutive
and therefore no adjustment has been made. In the prior period,
both measures exclude the dilutive impact of the 2015 convertible
bond, for the same reasons.
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 Six months ended 30
September 2019 September 2018
================================== ==================================
Relevant Relevant Earnings Relevant Relevant Earnings
earnings number per earnings number per
GBPm of shares share GBPm of shares share
million pence million pence
============== ========== =========== ========= ========== =========== =========
Underlying
---------- ----------- --------- ---------- ----------- ---------
Underlying
basic 152 941 16.2 169 981 17.2
---------- ----------- --------- ---------- ----------- ---------
Underlying
diluted 152 944 16.1 169 984 17.2
-------------- ---------- ----------- --------- ---------- ----------- ---------
EPRA
---------- ----------- --------- ---------- ----------- ---------
EPRA basic 152 941 16.2 169 981 17.2
---------- ----------- --------- ---------- ----------- ---------
EPRA diluted 152 944 16.1 169 984 17.2
-------------- ---------- ----------- --------- ---------- ----------- ---------
IFRS
---------- ----------- --------- ---------- ----------- ---------
Basic (404) 941 (42.9) (48) 981 (4.9)
---------- ----------- --------- ---------- ----------- ---------
Diluted (404) 941 (42.9) (48) 981 (4.9)
-------------- ---------- ----------- --------- ---------- ----------- ---------
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 derivatives 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 2019, EPRA NAV and NNNAV did not include the
dilutive impact of the 2015 convertible bond, as the Company's
share price was below the current exchange price of 991.08 pence.
IFRS net assets also does not include the convertible impact
following the treatment of IFRS earnings per share. In the prior
year period, EPRA and IFRS NAV measures excluded the dilutive
impact of the 2015 convertible bond, for the same reasons.
30 September 2019 31 March 2019
================================== ==================================
Relevant Relevant Net asset Relevant Relevant Net asset
net number value net number value
assets of shares per assets of shares per
GBPm million share GBPm million share
pence pence
============ ========= =========== ========== ========= =========== ==========
EPRA
--------- ----------- ---------- --------- ----------- ----------
EPRA NAV 7,984 933 856 8,649 956 905
--------- ----------- ---------- --------- ----------- ----------
EPRA NNNAV 7,412 933 794 8,161 956 854
------------ --------- ----------- ---------- --------- ----------- ----------
IFRS
--------- ----------- ---------- --------- ----------- ----------
Basic 7,971 927 860 8,689 949 916
--------- ----------- ---------- --------- ----------- ----------
Diluted 7,971 933 854 8,689 956 909
------------ --------- ----------- ---------- --------- ----------- ----------
Total accounting return
The Group also measures financial performance with reference to
total accounting return. This is calculated as the movement in EPRA
net asset value per share and dividend paid in the period as a
percentage of the EPRA net asset value per share at the start of
the period.
Six months ended 30 Six months ended 30
September 2019 September 2018
====================================== --------------------------------------
Decrease Dividend Total Decrease Dividend Total
in NAV per share accounting in NAV per share accounting
per share paid return per share paid return
pence pence pence pence
========================= =========== =========== ============ =========== =========== ============
Total accounting return (49) 15.50 (3.7%) (28) 15.04 (1.3%)
------------------------- ----------- ----------- ------------ ----------- ----------- ------------
3 Revenue and costs
Six months ended Six months ended
30 September 2019 30 September 2018
============================= =============================
Underlying Capital Total Underlying Capital Total
GBPm and GBPm GBPm and GBPm
other other
GBPm GBPm
================================= =========== ======== ====== =========== ======== ======
Rent receivable 221 - 221 223 - 223
----------- -------- ------ ----------- -------- ------
Spreading of tenant incentives
and guaranteed
rent increases (8) - (8) (3) - (3)
----------- -------- ------ ----------- -------- ------
Gross rental income 213 - 213 220 - 220
--------------------------------- ----------- -------- ------ ----------- -------- ------
Trading property sales proceeds - 53 53 - 217 217
----------- -------- ------ ----------- -------- ------
Service charge income 47 - 47 38 - 38
----------- -------- ------ ----------- -------- ------
Management and performance
fees 5 - 5 3 - 3
----------- -------- ------ ----------- -------- ------
(from joint ventures and
funds)
----------- -------- ------ ----------- -------- ------
Other fees and commissions 10 - 10 21 - 21
--------------------------------- ----------- -------- ------ ----------- -------- ------
Revenue 275 53 328 282 217 499
--------------------------------- ----------- -------- ------ ----------- -------- ------
Trading property cost of
sales - (43) (43) - (152) (152)
----------- -------- ------ ----------- -------- ------
Service charge expenses (47) - (47) (38) - (38)
----------- -------- ------ ----------- -------- ------
Property operating expenses (26) - (26) (19) - (19)
----------- -------- ------ ----------- -------- ------
Other fees and commissions
expenses (8) - (8) (18) - (18)
--------------------------------- ----------- -------- ------ ----------- -------- ------
Costs (81) (43) (124) (75) (152) (227)
--------------------------------- ----------- -------- ------ ----------- -------- ------
194 10 204 207 65 272
--------------------------------- ----------- -------- ------ ----------- -------- ------
4 Valuation movements on property
Six months Six months
ended ended
30 September 30 September
2019 2018
GBPm GBPm
====================================================== ============== ==============
Consolidated income statement
-------------- --------------
Revaluation of properties (436) (252)
-------------- --------------
Revaluation of properties held by joint ventures and
funds accounted for using the equity method (140) (13)
------------------------------------------------------ -------------- --------------
(576) (265)
------------------------------------------------------ -------------- --------------
Consolidated statement of comprehensive income
-------------- --------------
Revaluation of owner-occupied properties (2) 4
------------------------------------------------------ -------------- --------------
(578) (261)
------------------------------------------------------ -------------- --------------
5 Net financing costs
Six months Six months
ended ended
30 September 30 September
2019 2018
GBPm GBPm
======================================================== ============== ==============
Underlying
-------------- --------------
Financing charges
-------------- --------------
Bank loans and overdrafts (12) (11)
-------------- --------------
Derivatives 15 14
-------------- --------------
Other loans (38) (36)
-------------- --------------
Obligations under head leases (2) (1)
-------------- --------------
(37) (34)
-------------- --------------
Development interest capitalised 4 1
-------------- --------------
(33) (33)
-------------- --------------
Financing income
-------------- --------------
Deposits, securities and liquid investments - -
-------------------------------------------------------- -------------- --------------
Net financing charges - underlying (33) (33)
-------------------------------------------------------- -------------- --------------
Capital and other
-------------- --------------
Financing charges
-------------- --------------
Valuation movements on fair value debt (55) (14)
-------------- --------------
Valuation movements on fair value derivatives 56 15
-------------- --------------
Capital financing costs - (3)
-------------- --------------
Fair value movement on convertible bonds (3) -
-------------- --------------
Fair value movement on non-hedge accounted derivatives (29) -
-------------- --------------
(31) (2)
-------------- --------------
Financing income
-------------- --------------
Capital financing income 3 -
-------------- --------------
Fair value movement on non-hedge accounted derivatives - 4
-------------- --------------
3 4
-------------------------------------------------------- -------------- --------------
Net financing (charges) income - capital (28) 2
-------------------------------------------------------- -------------- --------------
Total financing income 3 4
-------------- --------------
Total financing charges (64) (35)
-------------------------------------------------------- -------------- --------------
Net financing costs (61) (31)
-------------------------------------------------------- -------------- --------------
Interest on development expenditure is capitalised at the
Group's weighted average interest rate of 2.1% (Six months ended 30
September 2018: 2.0%). The weighted average interest rate on a
proportionately consolidated basis at 30 September 2019 was 2.7%
(Six months ended 30 September 2018: 2.9%).
6 Taxation
Six months Six months
ended ended
30 September 30 September
2019 2018
GBPm GBPm
====================================================== ============== ==============
Taxation (expense) income
-------------- --------------
Current taxation
-------------- --------------
Current period UK corporation taxation (30 September
2019: 19%; 30 September 2018: 19%) (1) (20)
-------------- --------------
Adjustments in respect of prior periods - -
-------------- --------------
Total current taxation expense (1) (20)
-------------- --------------
Deferred taxation on revaluations and derivatives - 1
------------------------------------------------------ -------------- --------------
Group total taxation (1) (19)
-------------- --------------
Attributable to joint ventures and funds - -
------------------------------------------------------ -------------- --------------
Total taxation expense (1) (19)
------------------------------------------------------ -------------- --------------
Taxation expense attributable to Underlying Profits for the six
months ended 30 September 2019 was GBPnil (Six months ended 30
September 2018: GBPnil).
7 Property
Property reconciliation
Six months ended 30 September Year ended 31 March 2019
2019
================================================== ==================================================
Investment Trading Owner-occupied Total Investment Trading Owner-occupied Total
and properties Level GBPm and properties Level GBPm
development GBPm 3 development GBPm 3
properties GBPm properties GBPm
Level Level
3 3
GBPm GBPm
============================================================= ============ =========== =============== ====== ============ =========== =============== ======
Carrying value at the
start of the period/year 8,931 87 73 9,091 9,507 328 90 9,925
------------ ----------- --------------- ------ ------------ ----------- --------------- ------
Additions
------------ ----------- --------------- ------ ------------ ----------- --------------- ------
* property purchases 41 - - 41 185 - - 185
------------ ----------- --------------- ------ ------------ ----------- --------------- ------
* development expenditure 81 - - 81 172 11 - 183
------------ ----------- --------------- ------ ------------ ----------- --------------- ------
* capitalised interest and staff costs 4 - - 4 5 - - 5
------------ ----------- --------------- ------ ------------ ----------- --------------- ------
* capital expenditure on asset management initiatives 29 - - 29 42 - - 42
------------ ----------- --------------- ------ ------------ ----------- --------------- ------
* head lease assets and right of use assets 64 - - 64 36 - - 36
------------ ----------- --------------- ------ ------------ ----------- --------------- ------
219 - - 219 440 11 - 451
------------ ----------- --------------- ------ ------------ ----------- --------------- ------
Depreciation - - - - - - (1) (1)
------------ ----------- --------------- ------ ------------ ----------- --------------- ------
Disposals (19) (42) - (61) (412) (252) - (664)
------------ ----------- --------------- ------ ------------ ----------- --------------- ------
Reclassifications - - - - 19 - (19) -
------------ ----------- --------------- ------ ------------ ----------- --------------- ------
Revaluations included
in income statement (436) - - (436) (620) - - (620)
------------ ----------- --------------- ------ ------------ ----------- --------------- ------
Revaluations included
in OCI - - (2) (2) - - 3 3
------------ ----------- --------------- ------ ------------ ----------- --------------- ------
Movement in tenant
incentives and contracted
rent uplift balances (9) - - (9) (3) - - (3)
------------ ----------- --------------- ------ ------------ ----------- --------------- ------
Carrying value at the
end of the period/year 8,686 45 71 8,802 8,931 87 73 9,091
------------ ----------- --------------- ------ ------------ ----------- --------------- ------
Head lease liabilities (112) (92)
------------ ----------- --------------- ------ ------------ ----------- --------------- ------
Lease liabilities net (43) -
of capital contribution
------------ ----------- --------------- ------ ------------ ----------- --------------- ------
Valuation surplus on
trading properties 19 29
------------ ----------- --------------- ------ ------------ ----------- --------------- ------
Group property portfolio
valuation at the end
of the period/year 8,666 9,028
------------ ----------- --------------- ------ ------------ ----------- --------------- ------
Non-controlling interests (232) (267)
------------ ----------- --------------- ------ ------------ ----------- --------------- ------
Group property portfolio
valuation at the end
of the period/year
attributable to shareholders 8,434 8,761
------------------------------------------------------------- ------------ ----------- --------------- ------ ------------ ----------- --------------- ------
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 Real Estate 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.
During the current financial period, the Group adopted the new
accounting standard IFRS 16, Leases. The right-of-use asset
recognised on adoption is included within the investment and
development property line item. The value of right-of-use assets
included within the line is GBP43m. An adjustment is made to strip
out the value of head lease liabilities and lease liabilities net
of capital. This is done in order to reconcile the carrying value
of investment and development properties to the Group property
portfolio valuation at the end of the period.
The general risk environment in which the Group operates has
heightened during the period, which is largely due to the continued
level of uncertainty associated with the future impact of the UK's
exit from the EU, the significant deterioration in the UK retail
market and weaker investment markets. This environment could have a
significant impact upon property valuations.
Additional property covenant information
Properties valued at GBP1,019m (year ended 31 March 2019:
GBP1,019m) were subject to a security interest and other properties
of non-recourse companies amounted to GBP966m (year ended 31 March
2019: GBP1,115m), totalling GBP1,985m (year ended 31 March 2019:
GBP2,134m).
8 Joint ventures and funds
Summary movement for the period of the investments in joint
ventures and funds
Joint Funds Total Equity Loans Total
ventures GBPm GBPm GBPm GBPm GBPm
GBPm
================================ ========== ====== ====== ======= ====== ======
At 1 April 2019 2,330 230 2,560 2,112 448 2,560
---------- ------ ------ ------- ------ ------
Additions 85 2 87 4 83 87
---------- ------ ------ ------- ------ ------
Disposals (22) - (22) (22) - (22)
---------- ------ ------ ------- ------ ------
Share of loss after taxation (93) (23) (116) (116) - (116)
---------- ------ ------ ------- ------ ------
Distributions and dividends:
---------- ------ ------ ------- ------ ------
- Capital (91) - (91) (91) - (91)
---------- ------ ------ ------- ------ ------
- Revenue (31) (6) (37) (37) - (37)
---------- ------ ------ ------- ------ ------
Hedging and exchange movements (1) - (1) (1) - (1)
-------------------------------- ---------- ------ ------ ------- ------ ------
At 30 September 2019 2,177 203 2,380 1,849 531 2,380
-------------------------------- ---------- ------ ------ ------- ------ ------
Summary income statement for the period of the investments in
joint ventures and funds
Six months ended Six months ended
30 September 30 September
2019 2018
=================== ===================
GBPm GBPm GBPm GBPm
100% BL Share 100% BL Share
============================================== ======= ========== ======= ==========
Revenue 198 99 196 98
------- ---------- ------- ----------
Costs (72) (37) (50) (25)
---------------------------------------------- ------- ---------- ------- ----------
126 62 146 73
------- ---------- ------- ----------
Net financing costs (48) (24) (62) (31)
------- ---------- ------- ----------
Underlying Profit before taxation 78 38 84 42
------- ---------- ------- ----------
Valuation movement (280) (140) (26) (13)
------- ---------- ------- ----------
Capital financing costs (30) (15) (38) (19)
------- ---------- ------- ----------
Profit on disposal of investment properties,
trading properties and investments 2 1 12 6
------- ---------- ------- ----------
(Loss) profit on ordinary activities before
taxation (230) (116) 32 16
------- ---------- ------- ----------
Taxation - - - -
------- ---------- ------- ----------
(Loss) profit on ordinary activities after
taxation (230) (116) 32 16
---------------------------------------------- ------- ---------- ------- ----------
(Loss) profit split between controlling
and non-controlling interests
------- ---------- ------- ----------
Attributable to non-controlling interests (5) (3)
------- ---------- ------- ----------
Attributable to shareholders of the Company (111) 19
---------------------------------------------- ------- ---------- ------- ----------
Operating cash flows of joint ventures and funds (Group
share)
Six months Six months
ended ended
30 September 30 September
2019 2018
GBPm GBPm
===================================================== ============== ==============
Rental income received from tenants 68 76
-------------- --------------
Operating expenses paid to suppliers and employees (17) (13)
-------------- --------------
Cash generated from operations 51 63
-------------- --------------
Interest paid (30) (38)
----------------------------------------------------- -------------- --------------
UK corporation tax paid (2) -
----------------------------------------------------- -------------- --------------
Cash inflow from operating activities 19 25
----------------------------------------------------- -------------- --------------
Cash inflow from operating activities deployed as:
-------------- --------------
Cash deficit following revenue distributions (5) (2)
-------------- --------------
Revenue distributions per consolidated statement of
cash flows 24 27
-------------- --------------
Revenue distributions split between controlling and
non-controlling interests
----------------------------------------------------- -------------- --------------
Attributable to non-controlling interests 1 1
-------------- --------------
Attributable to shareholders of the Company 23 26
----------------------------------------------------- -------------- --------------
9 Other investments
30 September 31 March
2019 2019
GBPm GBPm
=================================== ============= =========
Fair value through profit or loss 121 114
------------- ---------
Amortised cost 4 5
------------- ---------
Intangible assets 11 10
----------------------------------- ------------- ---------
136 129
----------------------------------- ------------- ---------
Included within fair value through profit or loss is GBP102m
comprising interests as a trust beneficiary. The trust's assets
comprise freehold reversions in a pool of commercial properties,
comprising Sainsburys 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. The remaining
amount included in the fair value through profit or loss relate to
private equity/venture capital investments (GBP2m) which are
categorised as Level 3 in the fair value hierarchy and government
bonds (GBP17m) which are classified as Level 1. The fair value of
private equity/venture capital investments are determined by the
Directors.
10 Net debt
10.1 Fair value and book value of net debt
30 September 2019 31 March 2019
============================= =============================
Fair Book Difference Fair Book Difference
value value GBPm value value GBPm
GBPm GBPm GBPm GBPm
============================== ======= ======= =========== ======= ======= ===========
Debentures and unsecured
bonds 2,121 1,963 158 2,036 1,910 126
------- ------- ----------- ------- ------- -----------
Convertible bonds 346 346 - 343 343 -
------- ------- ----------- ------- ------- -----------
Bank debt and other floating
rate debt 942 935 7 784 778 6
------------------------------ ------- ------- ----------- ------- ------- -----------
Gross debt 3,409 3,244 165 3,163 3,031 132
------------------------------ ------- ------- ----------- ------- ------- -----------
Interest rate and currency
derivative liabilities 169 169 - 130 130 -
------- ------- ----------- ------- ------- -----------
Interest rate and currency
derivative assets (227) (227) - (154) (154) -
------- ------- ----------- ------- ------- -----------
Cash and short-term deposits (160) (160) - (242) (242) -
------------------------------ ------- ------- ----------- ------- ------- -----------
Net debt 3,191 3,026 165 2,897 2,765 132
------------------------------ ------- ------- ----------- ------- ------- -----------
Net debt attributable to
non-controlling interests (106) (106) - (105) (104) (1)
------- ------- ----------- ------- ------- -----------
Net debt attributable to
shareholders of the Company 3,085 2,920 165 2,792 2,661 131
------------------------------ ------- ------- ----------- ------- ------- -----------
The fair values of debentures, unsecured bonds and the
convertible bonds have been established by obtaining quoted market
prices from brokers. The bank debt and other floating rate debt has
been valued assuming it 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 31 March
2019 2019
GBPm GBPm
============================================================== ============= =========
Group loan to value (LTV) 25.4% 22.2%
-------------------------------------------------------------- ------------- ---------
Principal value of gross debt 3,039 2,881
------------- ---------
Less debt attributable to non-controlling interests (120) (112)
------------- ---------
Less cash and short-term deposits (balance sheet) (160) (242)
------------- ---------
Plus cash attributable to non-controlling interests 14 9
-------------------------------------------------------------- ------------- ---------
Total net debt for LTV calculation 2,773 2,536
-------------------------------------------------------------- ------------- ---------
Group property portfolio valuation (note 7) 8,666 9,028
------------- ---------
Investments in joint ventures and funds (note 8) 2,380 2,560
------------- ---------
Other investments (note 9) and property, plant and equipment 170 151
------------- ---------
Less property attributable to non-controlling interests (281) (317)
-------------------------------------------------------------- ------------- ---------
Total assets for LTV calculation 10,935 11,422
-------------------------------------------------------------- ------------- ---------
Proportionally consolidated loan to value (LTV)
------------- ---------
30 September 31 March
2019 2019
GBPm GBPm
============================================================== ============= =========
Proportionally consolidated loan to value (LTV) 30.8% 28.1%
-------------------------------------------------------------- ------------- ---------
Principal value of gross debt 4,060 4,007
------------- ---------
Less attributable to non-controlling interests (120) (112)
------------- ---------
Less cash and short-term deposits (288) (402)
------------- ---------
Plus cash attributable to non-controlling interests 16 9
-------------------------------------------------------------- ------------- ---------
Total net debt for proportional LTV calculation 3,668 3,502
-------------------------------------------------------------- ------------- ---------
Group property portfolio valuation (note 7) 8,666 9,028
------------- ---------
Share of property of joint ventures and funds 3,338 3,605
------------- ---------
Other investments (note 9) and property, plant and equipment 170 151
------------- ---------
Less property attributable to non-controlling interests (281) (317)
-------------------------------------------------------------- ------------- ---------
Total assets for proportional LTV calculation 11,893 12,467
-------------------------------------------------------------- ------------- ---------
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 31 March
2019 2019
GBPm GBPm
================================================================ ============= =========
Net Borrowings not to exceed 175% of Adjusted Capital
and Reserves 34% 29%
---------------------------------------------------------------- ------------- ---------
Principal amount of gross debt 3,039 2,881
------------- ---------
Less the relevant proportion of borrowings of the partly-owned
subsidiary / non-controlling interests (120) (112)
------------- ---------
Less cash and deposits (balance sheet) (160) (242)
------------- ---------
Plus the relevant proportion of cash and deposits of
the partly-owned subsidiary / non-controlling interests 14 9
---------------------------------------------------------------- ------------- ---------
Net Borrowings 2,773 2,536
---------------------------------------------------------------- ------------- ---------
Share capital and reserves (balance sheet) 7,971 8,689
------------- ---------
EPRA deferred tax adjustment (EPRA Table A) 6 5
------------- ---------
Trading property surpluses (EPRA Table A) 19 29
------------- ---------
Exceptional refinancing charges (see below) 210 216
------------- ---------
Fair value adjustments of financial instruments (EPRA
Table A) 137 113
------------- ---------
Less reserves attributable to non-controlling interests
(balance sheet) (168) (211)
---------------------------------------------------------------- ------------- ---------
Adjusted Capital and Reserves 8,175 8,841
---------------------------------------------------------------- ------------- ---------
In calculating Adjusted Capital and Reserves for the purpose of
the unsecured debt financial covenants, there is an adjustment of
GBP210m (31 March 2019: GBP216m) to reflect the cumulative net
amortised exceptional items relating to refinancing in the years
ended 31 March 2005, 2006 and 2007.
30 September 31 March
2019 2019
GBPm GBPm
============================================================== ============= =========
Net Unsecured Borrowings not to exceed 70% of Unencumbered
Assets 25% 21%
-------------------------------------------------------------- ------------- ---------
Principal amount of gross debt 3,039 2,881
------------- ---------
Less cash and deposits not subject to a security interest
(being GBP152m less the relevant proportion of cash
and deposits of the partly owned subsidiary of GBP12m) (140) (221)
------------- ---------
Less principal amount of secured and non-recourse borrowings (1,190) (1,158)
-------------------------------------------------------------- ------------- ---------
Net Unsecured Borrowings 1,709 1,502
-------------------------------------------------------------- ------------- ---------
Properties (note 7) 8,666 9,028
------------- ---------
Investments in joint ventures (note 8) 2,380 2,560
------------- ---------
Other investments (note 9) and property, plant and equipment 170 151
------------- ---------
Less investments in joint ventures (note 8) (2,380) (2,560)
------------- ---------
Less encumbered assets (note 7) (1,985) (2,134)
-------------------------------------------------------------- ------------- ---------
Unencumbered Assets 6,851 7,045
-------------------------------------------------------------- ------------- ---------
10.4 Convertible bond
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 GBP350
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. Bondholders may exercise their conversion right at any time
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 a threshold amount in
pence-per-ordinary-share. As at 30 September 2019 the exchange
price was 991.08 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 2019 31 March 2019
============================== ==============================
Level Level Level Total Level Level Level Total
1 2 3 GBPm 1 2 3 GBPm
GBPm GBPm GBPm GBPm GBPm GBPm
============================ ====== ====== ====== ====== ====== ====== ====== ======
Interest rate and currency
derivative assets - (227) - (227) - (154) - (154)
------ ------ ------ ------ ------ ------ ------ ------
Other investments -
fair value through profit
and loss (17) - (104) (121) (14) - (100) (114)
---------------------------- ------ ------ ------ ------ ------ ------ ------ ------
Assets (17) (227) (104) (348) (14) (154) (100) (268)
---------------------------- ------ ------ ------ ------ ------ ------ ------ ------
Interest rate and currency
derivative liabilities - 169 - 169 - 130 - 130
------ ------ ------ ------ ------ ------ ------ ------
Convertible bonds 346 - - 346 343 - - 343
---------------------------- ------ ------ ------ ------ ------ ------ ------ ------
Liabilities 346 169 - 515 343 130 - 473
---------------------------- ------ ------ ------ ------ ------ ------ ------ ------
Total 329 (58) (104) 167 329 (24) (100) 205
---------------------------- ------ ------ ------ ------ ------ ------ ------ ------
There have been no transfers between levels in the period. A
GBP5m revaluation gain in relation to other investments held at
fair value through profit has been recorded in the six months ended
30 September 2019 (30 September 2018: no gain or loss). Further
disclosures in relation to the valuation of the other investments
are included within note 9.
11 Dividend
The 2020 second quarter dividend of 7.9825 pence per share is
payable on 7 February 2020 to shareholders on the register at close
of business on 3 January 2020.
The second interim dividend will be a Property Income
Distribution ('PID') and no SCRIP alternative will be offered. 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 2020 first quarter dividend of 7.9825 pence per share,
totalling GBP74m was paid on 8 November 2019. The whole of the
first quarter dividend was a PID and no scrip alternative was
offered. GBP63m was paid to shareholders, and GBP11m of withholding
tax was retained.
The Consolidated Statement of Changes in Equity shows total
dividends in the six months to 30 September 2019 of GBP147m, GBP74m
being the third quarter 2019 PID dividend of 7.75 pence per share
paid on 3 May 2019, and the fourth quarter 2019 half PID, half
non-PID dividend of 7.75 pence per share, paid on 2 August 2019,
totalling GBP73m. No scrip alternatives were offered for the third
or fourth quarters and the fourth quarter dividend was half PID and
half non-PID.
12 Segment information
Operating segments
The Group allocates resources to investment and asset management
according to the sectors it expects to perform over the medium
term. Its three principal sectors are Offices, Retail and Canada
Water. The Retail sector includes leisure, as this is often
incorporated into Retail schemes. The Other /unallocated sector
includes residential properties.
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 Retail Canada Water Other/unallocated Total
============== ============== =============== ==================== ==============
2019 2018 2019 2018 2019 2018 2019 2018 2019 2018
GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
===================== ====== ====== ====== ====== ======= ====== ========= ========= ====== ======
Gross rental income
------ ------ ------ ------ ------- ------ --------- --------- ------ ------
British Land Group 82 74 117 132 4 5 2 2 205 213
------ ------ ------ ------ ------- ------ --------- --------- ------ ------
Share of joint
ventures and funds 34 36 36 42 - - - - 70 78
--------------------- ------ ------ ------ ------ ------- ------ --------- --------- ------ ------
Total 116 110 153 174 4 5 2 2 275 291
--------------------- ------ ------ ------ ------ ------- ------ --------- --------- ------ ------
Net rental income
------ ------ ------ ------ ------- ------ --------- --------- ------ ------
British Land Group 69 67 106 120 4 4 2 3 181 194
------ ------ ------ ------ ------- ------ --------- --------- ------ ------
Share of joint
ventures and funds 29 34 33 39 - - - - 62 73
--------------------- ------ ------ ------ ------ ------- ------ --------- --------- ------ ------
Total 98 101 139 159 4 4 2 3 243 267
--------------------- ------ ------ ------ ------ ------- ------ --------- --------- ------ ------
Operating result
------ ------ ------ ------ ------- ------ --------- --------- ------ ------
British Land Group 69 67 107 117 2 2 (25) (23) 153 163
------ ------ ------ ------ ------- ------ --------- --------- ------ ------
Share of joint
ventures and funds 26 31 30 37 - - - - 56 68
--------------------- ------ ------ ------ ------ ------- ------ --------- --------- ------ ------
Total 95 98 137 154 2 2 (25) (23) 209 231
--------------------- ------ ------ ------ ------ ------- ------ --------- --------- ------ ------
Reconciliation to Underlying Profit before taxation Six months Six months
ended ended
30 September 30 September
2019 2018
GBPm GBPm
============================================================= ============== ==============
Operating result 209 231
-------------- --------------
Net financing costs (57) (62)
------------------------------------------------------------- -------------- --------------
Underlying Profit 152 169
------------------------------------------------------------- -------------- --------------
Reconciliation to profit on ordinary activities before
taxation
------------------------------------------------------------- -------------- --------------
Underlying Profit 152 169
-------------- --------------
Capital and other (598) (217)
-------------- --------------
Underlying Profit attributable to non-controlling interests 6 6
-------------- --------------
Total loss on ordinary activities before taxation (440) (42)
------------------------------------------------------------- -------------- --------------
Of the operating result above, GBPnil (six months ended 30
September 2018: GBPnil) was derived from outside the UK.
Segment assets
Offices Retail Canada Water Other / unallocated Total
==================== =================== =================== ===================== ===================
30 31 30 31 30 31 30 31 March 30 31
September March September March September March September 2019 September March
2019 2019 2019 2019 2019 2019 2019 GBPm 2019 2019
GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
========== ========== ======== ========== ======= ========== ======= ========== ========= ========== =======
Property
assets
---------- -------- ---------- ------- ---------- ------- ---------- --------- ---------- -------
British
Land
Group 4,322 4,296 3,618 4,053 347 303 147 109 8,434 8,761
---------- -------- ---------- ------- ---------- ------- ---------- --------- ---------- -------
Share of
funds
and
joint
ventures 2,117 2,012 1,172 1,524 - - - 19 3,289 3,555
---------- ---------- -------- ---------- ------- ---------- ------- ---------- --------- ---------- -------
Total 6,439 6,308 4,790 5,577 347 303 147 128 11,723 12,316
---------- ---------- -------- ---------- ------- ---------- ------- ---------- --------- ---------- -------
Reconciliation to net assets - Unaudited
British Land Group 30 September 31 March
2019 2019
GBPm GBPm
=============================== ============= =========
Property assets 11,723 12,316
------------- ---------
Other non-current assets 170 151
------------------------------- ------------- ---------
Non-current assets 11,893 12,467
------------------------------- ------------- ---------
Other net current liabilities (224) (297)
------------- ---------
Adjusted net debt (3,685) (3,521)
------------- ---------
Other non-current liabilities - -
------------------------------- ------------- ---------
EPRA net assets 7,984 8,649
------------------------------- ------------- ---------
Non-controlling interests 168 211
------------- ---------
EPRA adjustments (181) (171)
------------------------------- ------------- ---------
Net assets 7,971 8,689
------------------------------- ------------- ---------
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
GBPm Ordinary
shares
of 25p
each
=============================== ===== =============
Issued, called and fully paid
----- -------------
At 1 April 2019 240 960,589,072
----- -------------
Issues - 1,091,064
----- -------------
Repurchased and cancelled (6) (23,795,110)
------------------------------- ----- -------------
At 30 September 2019 234 937,885,026
------------------------------- ----- -------------
At 30 September 2019, of the issued 25p ordinary shares, 7,376
shares were held in the ESOP trust (31 March 2019: 7,376),
11,266,245 shares were held as treasury shares (31 March 2019:
11,266,245) and 926,611,405 shares were in free issue (31 March
2019: 949,315,451). No treasury shares were acquired by the ESOP
trust during the year. All issued shares are fully paid.
In the six months ended 30 September 2019, the Company
repurchased and cancelled 23,795,110 ordinary shares. The weighted
average share price of repurchases was 525 pence.
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 2019
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 Six months ended 30 September
2019 2018
==================================================== ====================================================
Group Joint Less Proportionally Group Joint Less Proportionally
GBPm ventures non-controlling consolidated GBPm ventures non-controlling consolidated
and interests GBPm and interests GBPm
funds GBPm funds GBPm
GBPm GBPm
================ ====== ========= ================ =============== ====== ========= ================ ===============
Gross rental
income 213 70 (8) 275 220 80 (9) 291
------ --------- ---------------- --------------- ------ --------- ---------------- ---------------
Property
operating
expenses (26) (8) 2 (32) (19) (7) 2 (24)
------ --------- ---------------- --------------- ------ --------- ---------------- ---------------
Net rental
income 187 62 (6) 243 201 73 (7) 267
------ --------- ---------------- --------------- ------ --------- ---------------- ---------------
Administrative
expenses (41) - - (41) (41) - (1) (42)
------ --------- ---------------- --------------- ------ --------- ---------------- ---------------
Net fees and
other
income 7 - - 7 6 - - 6
------ --------- ---------------- --------------- ------ --------- ---------------- ---------------
Ungeared Income
Return 153 62 (6) 209 166 73 (8) 231
------ --------- ---------------- --------------- ------ --------- ---------------- ---------------
Net financing
costs (33) (24) - (57) (33) (31) 2 (62)
---------------- ------ --------- ---------------- --------------- ------ --------- ---------------- ---------------
Underlying
Profit 120 38 (6) 152 133 42 (6) 169
---------------- ------ --------- ---------------- --------------- ------ --------- ---------------- ---------------
Underlying - - - - - - - -
taxation
---------------- ------ --------- ---------------- --------------- ------ --------- ---------------- ---------------
Underlying
Profit
after taxation 120 38 (6) 152 133 42 (6) 169
---------------- ------ --------- ---------------- --------------- ------ --------- ---------------- ---------------
Summary balance sheet based on proportional consolidation as at
30 September 2019
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 Share Less Share Deferred Mark-to-market Head Valuation EPRA EPRA
GBPm of non-controlling options tax on derivatives leases surplus Net Net
joint interests GBPm GBPm and GBPm on trading assets assets
ventures GBPm related properties 30 31
& funds debt GBPm September March
GBPm adjustments 2019 2019
GBPm GBPm GBPm
=============== ======== ========= ================ ======== ========= =============== ======= =========== ========== ========
Retail
properties 3,905 1,237 (281) - - - (71) - 4,790 5,577
-------- --------- ---------------- -------- --------- --------------- ------- ----------- ---------- --------
Office
properties 4,367 2,112 - - - - (59) 19 6,439 6,308
-------- --------- ---------------- -------- --------- --------------- ------- ----------- ---------- --------
Canada Water
properties 383 - - - - - (36) - 347 303
-------- --------- ---------------- -------- --------- --------------- ------- ----------- ---------- --------
Other
properties 147 - - - - - - - 147 128
-------- --------- ---------------- -------- --------- --------------- ------- ----------- ---------- --------
Total
properties 8,802 3,349 (281) - - - (166) 19 11,723 12,316
-------- --------- ---------------- -------- --------- --------------- ------- ----------- ---------- --------
Investments
in joint
ventures
and funds 2,380 (2,380) - - - - - - - -
-------- --------- ---------------- -------- --------- --------------- ------- ----------- ---------- --------
Other
investments 136 - - - - - - - 136 130
-------- --------- ---------------- -------- --------- --------------- ------- ----------- ---------- --------
Other net
(liabilities)
assets (321) (68) 8 19 6 - 166 - (190) (276)
-------- --------- ---------------- -------- --------- --------------- ------- ----------- ---------- --------
Net debt (3,026) (901) 105 - - 137 - - (3,685) (3,521)
--------------- -------- --------- ---------------- -------- --------- --------------- ------- ----------- ---------- --------
Net assets 7,971 - (168) 19 6 137 - 19 7,984 8,649
--------------- -------- --------- ---------------- -------- --------- --------------- ------- ----------- ---------- --------
EPRA NAV per
share (note
2) 856p 905p
--------------- -------- --------- ---------------- -------- --------- --------------- ------- ----------- ---------- --------
30 September 31 March
2019 2019
=============== ===============
GBPm Pence GBPm Pence
per per
share share
======================== ====== ======= ====== =======
Opening EPRA NAV 8,649 905 9,560 967
------ ------- ------ -------
Income return 152 16 340 35
------ ------- ------ -------
Capital return (545) (58) (749) (77)
------ ------- ------ -------
Dividend paid (147) (15) (298) (30)
------ ------- ------ -------
Purchase of own shares (125) 8 (204) 10
------------------------ ------ ------- ------ -------
Closing EPRA NAV 7,984 856 8,649 905
------------------------ ------ ------- ------ -------
Table B: EPRA Performance measures
EPRA Performance measures summary table
Six months Six months
ended ended
30 September 30 September
2019 2018
================ ================
GBPm Pence GBPm Pence
per per
share share
====================== =============== ====== ======== ====== ========
EPRA Earnings - basic 152 16.2 169 17.2
--------------- ------ -------- ------ --------
- diluted 152 16.1 169 17.2
-------------------------------------- ------ -------- ------ --------
EPRA Net Initial Yield 4.5% 4.4%
------ -------- ------ --------
EPRA 'topped-up' Net Initial Yield 4.8% 4.7%
------ -------- ------ --------
EPRA Vacancy Rate 5.6% 2.7%
--------------------------------------- ------ -------- ------ --------
30 September 31 March
2019 2019
================= =================
Net Net Net Net
assets asset assets asset
GBPm value GBPm value
per per
share share
pence pence
============ ======== ======= ======== =======
EPRA NAV 7,984 856p 8,649 905
-------- ------- -------- -------
EPRA NNNAV 7,412 794p 8,161 854
------------ -------- ------- -------- -------
Calculation and reconciliation of EPRA/IFRS earnings and
EPRA/IFRS earnings per share
Six months Six months
ended ended
30 September 30 September
2019 2018
GBPm GBPm
=============================================================== ============== ==============
Loss attributable to the shareholders of the Company (404) (48)
-------------- --------------
Exclude:
-------------- --------------
Group - taxation 1 19
-------------- --------------
Group - valuation movement 436 252
-------------- --------------
Group - (profit) loss on disposal of investment properties
and investments (10) 6
-------------- --------------
Group - profit on disposal of trading properties (10) (65)
-------------- --------------
Joint ventures and funds - valuation movement (including
result on disposals) 139 7
-------------- --------------
Joint ventures and funds - capital financing costs 15 19
-------------- --------------
Changes in fair value of financial instruments and associated
close-out costs 28 (2)
-------------- --------------
Non-controlling interests in respect of the above (43) (19)
--------------------------------------------------------------- -------------- --------------
EPRA earnings - basic 152 169
--------------------------------------------------------------- -------------- --------------
Dilutive effect of 0% convertible bond - -
--------------------------------------------------------------- -------------- --------------
EPRA earnings - diluted 152 169
--------------------------------------------------------------- -------------- --------------
Loss attributable to the shareholders of the Company (404) (48)
-------------- --------------
Dilutive effect of 0% convertible bond - -
--------------------------------------------------------------- -------------- --------------
IFRS earnings - diluted (404) (48)
--------------------------------------------------------------- -------------- --------------
Six months Six months
ended ended
30 September 30 September
2019 2018
Number Number
million million
======================================================= ============== ==============
Weighted average number of shares 952 992
-------------- --------------
Adjustment for Treasury shares (11) (11)
------------------------------------------------------- -------------- --------------
IFRS/EPRA weighted average number of shares (basic) 941 981
------------------------------------------------------- -------------- --------------
Dilutive effect of share options - 1
-------------- --------------
Dilutive effect of ESOP shares 3 2
------------------------------------------------------- -------------- --------------
EPRA weighted average number of shares (diluted) 944 984
------------------------------------------------------- -------------- --------------
Remove dilutive effect of anti-dilutive share options (3) (3)
------------------------------------------------------- -------------- --------------
IFRS weighted average number of shares (diluted) 941 981
------------------------------------------------------- -------------- --------------
Net assets per share
30 September 31 March
2019 2019
=============== ===============
GBPm Pence GBPm Pence
per per
share share
================================================ ====== ======= ====== =======
Balance sheet net assets 7,971 8,689
------------------------------------------------ ------ ------- ------ -------
Deferred tax arising on revaluation movements 6 5
------ ------- ------ -------
Mark-to-market on derivatives and related debt
adjustments 137 113
------ ------- ------ -------
Dilution effect of share options 19 24
------ ------- ------ -------
Surplus on trading properties 19 29
------ ------- ------ -------
Less non-controlling interests (168) (211)
------------------------------------------------ ------ ------- ------ -------
EPRA NAV 7,984 856 8,649 905
------------------------------------------------ ------ ------- ------ -------
Deferred tax arising on revaluation movements (9) (11)
------ ------- ------ -------
Mark-to-market on derivatives and related debt
adjustments (137) (113)
------ ------- ------ -------
Mark-to-market on debt (426) (364)
------------------------------------------------ ------ ------- ------ -------
EPRA NNNAV 7,412 794 8,161 854
------------------------------------------------ ------ ------- ------ -------
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 31 March
2019 2019
Number Number
million million
======================================= ============= =========
Number of shares at period/year end 938 960
------------- ---------
Adjustment for treasury shares (11) (11)
--------------------------------------- ------------- ---------
IFRS/EPRA Number of shares (basic) 927 949
--------------------------------------- ------------- ---------
Dilutive effect of share options 3 2
------------- ---------
Dilutive effect of ESOP shares 3 5
--------------------------------------- ------------- ---------
IFRS/ EPRA number of shares (diluted) 933 956
--------------------------------------- ------------- ---------
EPRA Net Initial Yield and 'topped-up' Net Initial Yield
30 September 30 September
2019 2018
GBPm GBPm
========================================================= ============= =============
Investment property - wholly-owned 8,434 9,314
------------- -------------
Investment property - share of joint ventures and funds 3,289 3,542
------------- -------------
Less developments, residential and land (1,255) (1,158)
------------- -------------
Completed property portfolio 10,468 11,698
------------- -------------
Allowance for estimated purchasers' costs 673 760
--------------------------------------------------------- ------------- -------------
Gross up completed property portfolio valuation (A) 11,141 12,458
--------------------------------------------------------- ------------- -------------
Annualised cash passing rental income 521 565
------------- -------------
Property outgoings (17) (11)
--------------------------------------------------------- ------------- -------------
Annualised net rents (B) 504 554
--------------------------------------------------------- ------------- -------------
Rent expiration of rent-free periods and fixed uplifts 35 27
--------------------------------------------------------- ------------- -------------
'Topped-up' net annualised rent (C) 539 581
------------- -------------
EPRA Net Initial Yield (B/A) 4.5% 4.4%
------------- -------------
EPRA 'topped-up' Net Initial Yield (C/A) 4.8% 4.7%
--------------------------------------------------------- ------------- -------------
Including fixed/minimum uplifts received in lieu of
rental growth 5 11
--------------------------------------------------------- ------------- -------------
Total 'topped-up' net rents (D) 544 592
------------- -------------
Overall 'topped-up' Net Initial Yield (D/A) 4.9% 4.8%
--------------------------------------------------------- ------------- -------------
'Topped-up' net annualised rent 539 581
------------- -------------
ERV vacant space 34 17
------------- -------------
Reversions 22 29
--------------------------------------------------------- ------------- -------------
Total ERV (E) 595 627
------------- -------------
Net Reversionary Yield (E/A) 5.3% 5.0%
--------------------------------------------------------- ------------- -------------
1. The weighted average period over which rent-free periods
expire is 1 year (30 September 2018: 1 year).
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 2019, 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 30 September
2019 2018
GBPm GBPm
====================================================== ============= =============
Annualised potential rental value of vacant premises 34 17
------------- -------------
Annualised potential rental value for the completed
property portfolio 605 636
------------- -------------
EPRA Vacancy Rate 5.6% 2.7%
------------------------------------------------------ ------------- -------------
EPRA Cost Ratios
Six months Six months
ended ended
30 September 30 September
2019 2018
GBPm GBPm
============================================================ ============== ==============
Property operating expenses 24 17
-------------- --------------
Administrative expenses 41 42
-------------- --------------
Share of joint ventures and funds expenses 8 7
-------------- --------------
Less: Performance & management fees (from joint ventures
& funds) (5) (3)
-------------- --------------
Other fees and commissions (2) (3)
-------------- --------------
Ground rent costs and operating expenses de facto included
in rents (8) (4)
------------------------------------------------------------ -------------- --------------
EPRA Costs (including direct vacancy costs) (A) 58 56
-------------- --------------
Direct vacancy costs (12) (8)
------------------------------------------------------------ -------------- --------------
EPRA Costs (excluding direct vacancy costs) (B) 46 48
-------------- --------------
Gross Rental Income less ground rent costs and operating
expenses de facto included in rents 197 209
-------------- --------------
Share of joint ventures and funds (Gross Rental Income
less ground rent costs and operating expenses de facto
included in rents) 70 78
------------------------------------------------------------ -------------- --------------
Total Gross Rental Income (C) 267 287
-------------- --------------
EPRA Cost Ratio (including direct vacancy costs) (A/C) 21.7% 19.5%
-------------- --------------
EPRA Cost Ratio (excluding direct vacancy costs) (B/C) 17.2% 16.7%
-------------- --------------
Overhead and operating expenses capitalised (including
share of joint ventures and funds) 3 3
------------------------------------------------------------ -------------- --------------
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 Six months
ended ended
30 September 30 September
2019 2018
GBPm GBPm
============================================================== ============== ==============
Rent receivable 284 297
-------------- --------------
Spreading of tenant incentives and guaranteed rent increases (10) (7)
-------------- --------------
Surrender premia 1 1
-------------------------------------------------------------- -------------- --------------
Gross rental income 275 291
-------------------------------------------------------------- -------------- --------------
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 Year ended 31 March
30 September 2019 2019
========================== ==========================
Group Joint Total Group Joint Total
ventures ventures
and and
funds funds
============================== ====== ========== ====== ====== ========== ======
Acquisitions 41 - 41 185 15 200
------ ---------- ------ ------ ---------- ------
Development 81 57 138 183 91 274
------ ---------- ------ ------ ---------- ------
Like-for-like portfolio 24 12 36 35 19 54
------ ---------- ------ ------ ---------- ------
Other 9 7 16 12 8 20
------------------------------ ------ ---------- ------ ------ ---------- ------
Total property related capex 155 76 231 415 133 548
------------------------------ ------ ---------- ------ ------ ---------- ------
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
GBP8m (31 March 2019: GBP7m), letting fees of GBP1m (31 March 2019:
GBP5m), capitalised staff costs of GBP3m (31 March 2019: GBP6m) and
capitalised interest of GBP4m (31 March 2019: GBP3m).
SUPPLEMENTARY TABLES
Data includes Group's share of Joint Ventures and Funds
(includes Hercules Unit Trust)
Since 1 April 2019 Price Price Annual Passing
(100%) (BL Share) Rent
Sales Sector GBPm GBPm GBPm(1)
-------------------------------- ------------ ------- ----------- --------------
Completed
Portfolio of Sainsbury's stores Retail 429 194 12
David Lloyd Croydon Retail 22 22 1
Clarges(2) Residential 56 56 -
Exchanged
Homebase Walton on Thames Retail 20 20 1
Total 527 292 14
------- -----------
(1) BL share of annualised rent topped up for rent frees
(2) GBP6m of which exchanged prior to HY20 and completed in the
period and GBP3m of which exchanged and completed post period
end
Since 1 April 2019 Price Price Annual Passing
(100%) (BL Share) Rent
Purchases Sector GBPm GBPm GBPm(1)
----------------------------- ------------ ------- ----------- --------------
Completed
Aldgate Place, Phase 2 Residential 19 19 -
6 Orsman Road, Haggerston(2) Offices 32 32 -
Total 51 51 -
------- -----------
(1) BL share of annualised rent topped up for rent frees
(2) Exchanged in period and completed post period end
Portfolio Valuation by Sector
----------------------------------------------------------------------------
At 30 September 2019 Group JVs & Total H1 Change(1)
Funds
GBPm GBPm GBPm % GBPm
West End 4,066 - 4,066 (0.1) (4)
City 256 2,117 2,373 1.3 30
Offices 4,322 2,117 6,439 0.4 26
Regional 649 1,536 2,185 (13.2) (334)
Local 1,673 322 1,995 (11.1) (250)
Multi-let 2,322 1,858 4,180 (12.3) (584)
Department Stores and Leisure 301 - 301 (0.1) -
Superstores 84 50 134 (1.5) (5)
Solus and Other 175 - 175 (5.4) (10)
Retail 2,882 1,908 4,790 (10.7) (599)
---------------------------------- ------ ------- ------- ------- -----
Residential(2) 147 - 147 (2.1) (3)
---------------------------------- ------ ------- ------- ------- -----
Canada Water 347 - 347 12.4 38
---------------------------------- ------ ------- ------- ------- -----
Total 7,698 4,025 11,723 (4.3) (538)
Standing Investments 6,993 3,514 10,507 (5.2) (591)
Developments 705 511 1,216 4.6 53
---------------------------------- ------ ------- ------- ------- -----
(1) 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
(2) Stand-alone residential
Retail Portfolio Valuation - Previous Classification Basis
---------------------------------------------------------------------------
At 30 September 2019 Group JVs & Total H1 Change(1)
Funds
GBPm GBPm GBPm % GBPm
Shopping Parks 1,384 899 2,283 (12.4) (322)
Shopping Centres 927 942 1,869 (11.8) (250)
Superstores 84 50 134 (1.5) (5)
Department Stores 62 - 62 (10.5) (7)
High Street 153 1 154 (9.7) (17)
Leisure 272 16 288 0.8 2
Retail 2,882 1,908 4,790 (10.7) (599)
----------------------------- ------- --------- ------ -------- ------
(1) 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
Gross Rental Income(1)
----------------------------------------------------------------------------------------------------------------------
Accounting Basis GBPm 6 months to 30 September 2019 Annualised as at 30 September 2019
Group JVs & Total Group JVs & Total
Funds Funds
------------------------------------------- --------- ------------ -------- ------------ ------------- ---------
West End 75 - 75 140 - 140
City 7 34 41 12 63 75
Offices 82 34 116 152 63 215
------------------------------------------- --------- ------------ -------- ------------ ------------- ---------
Regional 32 45 77 58 85 143
Local 44 12 56 89 22 111
Multi-let 76 57 133 147 107 254
Department Stores and Leisure 8 - 8 21 - 21
Superstores 3 3 6 5 3 8
Solus and Other 6 - 6 12 - 12
Retail 93 60 153 185 110 295
------------------------------------------- --------- ------------ -------- ------------ ------------- ---------
Residential(2) 2 - 2 4 - 4
------------------------------------------- --------- ------------ -------- ------------ ------------- ---------
Canada Water 4 - 4 8 - 8
------------------------------------------- --------- ------------ -------- ------------ ------------- ---------
Total 181 94 275 349 173 522
------------------------------------------- --------- ------------ -------- ------------ ------------- ---------
(1) Gross rental income will differ from annualised valuation rents due to accounting adjustments
for fixed & minimum contracted rental uplifts and lease incentives
(2) Stand-alone residential
Portfolio Net
Yields(1,2)
----------------------------------------------------------------------------
As at 30 EPRA net EPRA topped Overall Net Net Net ERV
September 2019 initial yield up net topped up equivalent equivalent reversionary Growth
% initial net initial yield yield yield %(5)
yield yield % movement bps %
%(3) %(4)
------------- ------------ ----------- ------------ ------------ ------------ -------
West End 3.7 4.1 4.1 4.3 2 4.8 (0.2)
City 3.4 4.0 4.0 4.7 (3) 5.5 2.9
Offices 3.6 4.0 4.0 4.4 - 5.0 0.9
---------------- ------------- ------------ ----------- ------------ ------------ ------------ -------
Regional
Lifestyle 5.3 5.5 5.6 5.7 41 5.8 (5.5)
Local Lifestyle 5.9 6.1 6.2 6.3 39 6.1 (4.7)
Multi-let 5.6 5.8 5.9 6.0 40 6.0 (5.1)
Department
Stores &
Leisure 5.7 5.7 6.1 5.6 15 5.0 1.1
Superstores 5.8 5.8 5.8 5.2 3 5.1 (6.6)
Solus & Other 6.5 6.7 6.7 5.8 20 4.6 (5.1)
Retail 5.6 5.8 5.9 5.9 37 5.8 (4.8)
---------------- ------------- ------------ ----------- ------------ ------------ ------------ -------
Canada Water 3.3 3.3 3.3 4.0 11 4.0 (2.9)
---------------- ------------- ------------ ----------- ------------ ------------ ------------ -------
Total 4.5 4.8 4.9 5.1 17 5.3 (2.3)
---------------- ------------- ------------ ----------- ------------ ------------ ------------ -------
On a proportionally consolidated basis including the Group's share of joint ventures and funds
(1) Including notional purchaser's costs
(2) Excluding committed developments, assets held for development and residential assets
(3) Including rent contracted from expiry of rent-free periods and fixed uplifts not in lieu
of rental growth
(4) Including fixed/minimum uplifts (excluded from EPRA definition)
(5) As calculated by IPD
Total Property Return (as calculated by IPD)
-------------------------------------------------------------------------------
6 months to 30 September Offices Retail Total
2019
% British IPD British IPD British IPD
Land Land Land
--------------------------- -------- ------ -------- ------ ------- -----
Capital Return 0.5 0.2 (11.0) (5.3) (4.3) (1.3)
- ERV Growth 0.9 1.3 (4.8) (2.1) (2.3) 0.0
- Yield Movement(1) 0 bps 3 bps 37 bps 14 bps 17 bps 5 bps
Income Return 1.6 1.9 2.9 2.6 2.1 2.2
Total Property Return 2.1 2.1 (8.4) (2.8) (2.3) (0.8)
-------- ------ -------- ------ -------
On a proportionally consolidated basis including the Group's share
of joint ventures and funds
(1) Net equivalent yield movement
Top 20 Tenants by Sector
--------------------------------------------------------------------------
As at 30 September % of retail % of office
2019 rent rent
-------------------- ------------ ------------------------ ------------
Retail Offices
-------------------- ------------ ------------------------ ------------
Tesco(1) 7.6 Government 6.9
Next 4.8 Facebook(2) 4.9
Kingfisher 3.4 Dentsu Aegis(3) 4.8
Walgreens (Boots) 3.4 Visa 4.4
Sainsbury's 3.1 Debenhams(2) 4.1
Marks & Spencer 3.1 Herbert Smith Freehills 3.5
Debenhams 2.8 Gazprom 2.8
Dixons Carphone 2.8 Microsoft 2.5
TJX (TK Maxx) 2.1 Vodafone 2.2
JD Sports 2.0 Deutsche Bank 2.1
Arcadia 2.0 Reed Smith 1.9
Sports Direct 1.9 Henderson 1.8
New Look 1.9 Mayer Brown 1.6
Asda 1.7 Mimecast 1.4
Virgin 1.6 Aramco 1.3
Homebase 1.5 Credit Agricole 1.3
Steinhoff 1.5 Kingfisher 1.3
TGI Fridays 1.4 Misys 1.1
CK Hutchinson 1.3 Capula 1.1
H&M 1.3 Accor 1.1
-------------------- ------------ ------------------------ ------------
(1) Includes GBP3.4m at Surrey Quays Shopping Centre
(2) Debenhams reduces to 0% following vacancy of 10 Brock Street
and Facebook increases to 9.9% once they assume occupancy in
November 2019
(3) Taking into account their pre-let of 310,000 sq ft at 1
Triton Square, % of contracted rent would rise to 13.0%. As part of
this new letting, Dentsu Aegis have an option to return their
existing space at 10 Triton Street in 2021. If this option is
exercised, there is an adjustment to the rent free period in
respect of the letting at 1 Triton Square to compensate British
Land.
Major Holdings
----------------------------------------------------------------------------------------------------------------------
As at 30 September 2019 BL Share Sq ft Rent (100%) Occupancy Lease
% '000 GBPm pa(1,4) rate %(2,4) length yrs(3,4)
----------------------------------------------------- ----------- ------ ------------ ----------- ---------------
Broadgate 50 4,133 138 97.7 5.8
Regent's Place 100 1,740 77 97.9 3.9
Paddington Central 100 958 45 97.0 6.2
Meadowhall, Sheffield 50 1,500 85 97.4 5.2
Drake's Circus, Plymouth 100 1,082 19 96.0 5.6
Glasgow Fort 78 510 21 98.0 5.8
Ealing Broadway 100 540 15 92.7 4.3
Portman Square 100 134 10 98.2 5.9
Teesside, Stockton 100 569 16 94.6 4.3
New Mersey, Speke 68 502 14 92.8 6.1
----------------------------------------------------- ----------- ------ ------------ ----------- ---------------
(1) Annualised EPRA contracted rent including 100% of Joint Ventures & Funds
(2) Includes accommodation under offer or subject to asset management
(3) Weighted average to first break
(4) Excludes committed and near term developments
Lease Length & Occupancy
-----------------------------------------------------------------------------------------------------------
As at 30 September 2019 Average lease length yrs Occupancy rate %
To expiry To break EPRA Occupancy Occupancy(1,2,3)
-------------------------------------- ------------- ----------- ----------------- --------------------
West End 6.2 5.0 97.0 97.3
City 7.0 5.9 84.8 97.1
Offices 6.5 5.3 92.6 97.2
-------------------------------------- ------------- ----------- ----------------- --------------------
Regional 6.9 5.6 95.4 96.1
Local 6.6 5.3 95.0 95.8
Multi-let 6.8 5.4 95.2 95.9
Department Stores and Leisure 14.8 12.3 99.5 99.5
Superstores 9.2 9.1 100.0 100.0
Solus and Other 10.1 10.1 100.0 100.0
Retail 7.5 6.1 95.7 96.3
-------------------------------------- ------------- ----------- ----------------- --------------------
Canada Water 5.2 5.1 99.7 99.9
-------------------------------------- ------------- ----------- ----------------- --------------------
Total 7.0 5.8 94.3 96.8
-------------------------------------- ------------- ----------- ----------------- --------------------
(1) Space allocated to Storey is shown as occupied where there is a Storey tenant in place
otherwise it is shown as vacant. Total occupancy would rise from 96.8% to 97.3% if Storey
space were assumed to be fully let.
(2) Includes accommodation under offer or subject to asset management
(3) Where occupiers have entered administration or CVA but are still liable for rates, these
are treated as occupied. Reflecting units currently occupied but expected to become vacant,
then the occupancy rate for Retail would reduce from 96.3% to 95.6%, and total occupancy would
reduce from 96.8% to 96.4%
Portfolio Weighting
As at 30 September 2018 2019 2019
% % GBPm
---------------------------- ----- ----- ------
West End 31.9 34.7 4,066
City 15.8 20.2 2,373
Offices 47.7 54.9 6,439
---------------------------- ----- ----- ------
Regional Lifestyle 22.9 18.7 2,185
Local Lifestyle 17.2 17.0 1,995
Multi-let 40.1 35.7 4,180
Department Stores & Leisure 4.2 2.6 301
Superstores 2.8 1.1 134
Solus & Other 1.9 1.5 175
Retail 49.0 40.9 4,790
---------------------------- ----- ----- ------
Residential(1) 1.0 1.2 147
---------------------------- ----- ----- ------
Canada Water 2.3 3.0 347
---------------------------- ----- ----- ------
Total 100.0 100.0 11,723
---------------------------- ----- ----- ------
London Weighting 58% 65% 7,623
---------------------------- ----- ----- ------
(1) Stand-alone residential
Annualised Rent & Estimated Rental Value (ERV)
-----------------------------------------------------------------------------------------------------------------
As at 30 September 2019 Annualised rent ERV GBPm Average rent GBPpsf
(valuation basis) GBPm(1)
------------------------------------------------
Group JVs & Funds Total Total Contracted(2) ERV
------------------------------------------------ ------- ------------- ------ -------- --------------- ----
West End(3) 141 - 141 183 60.8 67.4
City(3) 7 57 64 104 50.5 58.7
Offices(3) 148 57 205 287 57.0 64.0
------------------------------------------------ ------- ------------- ------ -------- --------------- ----
Regional Lifestyle 44 87 131 142 30.3 31.7
Local Lifestyle 110 24 134 139 22.8 23.1
Multi-let 154 111 265 281 26.0 26.7
Department Stores & Leisure 18 - 18 16 15.0 13.3
Superstores 4 4 8 7 22.3 19.8
Solus & Other 13 - 13 9 20.5 14.7
Retail 189 114 304 313 24.6 24.7
------------------------------------------------ ------- ------------- ------ -------- --------------- ----
Residential(4) 4 - 4 4 45.2 37.7
------------------------------------------------ ------- ------------- ------ -------- --------------- ----
Canada Water(5) 8 - 8 9 18.0 21.1
Total 349 172 521 613 30.6 33.8
------- ------------- ------ -------- ---------------
(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) Annualised rent, plus rent subject to rent free
(3) GBPpsf metrics shown for office space only
(4) Stand-alone residential
(5) Reflects standing investment only
Rent Subject to Open Market Rent Review
-------------------------------------------------------------------
For period to 31 2020 2021 2022 2023 2024 2020-22 2020-24
March
As at 30 September GBPm GBPm GBPm GBPm GBPm GBPm GBPm
2019
------------------- ---- ---- ---- ---- ---- ------- -------
West End 7 10 9 23 7 26 56
City 2 9 - - 15 11 26
Offices 9 19 9 23 22 37 82
------------------- ---- ---- ---- ---- ---- ------- -------
Regional 5 18 12 11 8 35 54
Local 5 12 6 17 5 23 45
Multi-let 10 30 18 28 13 58 99
Department Stores
and Leisure - - - - 2 - 2
Superstores 3 - - 2 1 3 6
Solus and Other - - - - - - -
Retail 13 30 18 30 16 61 107
------------------- ---- ---- ---- ---- ---- ------- -------
Residential - - 1 - - 1 1
------------------- ---- ---- ---- ---- ---- ------- -------
Canada Water(1) - - - - - - -
------------------- ---- ---- ---- ---- ---- ------- -------
Total 22 49 28 53 38 99 190
------------------- ---- ---- ---- ---- ---- ------- -------
On a proportionally consolidated basis including the Group's
share of joint ventures and funds
(1) Reflects standing investment only
Rent Subject to Lease Break or Expiry(1)
-------------------------------------------------------------------------------------------------------------
For period to 31 March 2020 2021 2022 2023 2024 2020-22 2020-24
As at 30 September 2019 GBPm GBPm GBPm GBPm GBPm GBPm GBPm
------------------------------------------- ------- ------- ------ ------ ------ ---------- ----------
West End 15 17 22 16 15 54 85
City 2 13 2 4 12 17 33
Offices 17 30 24 20 27 71 118
------------------------------------------- ------- ------- ------ ------ ------ ---------- ----------
Regional Lifestyle 11 12 13 18 20 36 74
Local Lifestyle 11 11 14 12 19 36 67
Multi-let 22 23 27 30 39 72 141
Department Stores & Leisure - - 3 - - 3 3
Superstores - - - 2 - - 2
Solus & Other 1 - - - - 1 1
Retail 23 23 30 32 39 76 147
------------------------------------------- ------- ------- ------ ------ ------ ---------- ----------
Residential - 3 - - - 3 3
------------------------------------------- ------- ------- ------ ------ ------ ---------- ----------
Canada Water - 1 - 1 2 1 4
---------- ----------
Total 40 57 54 53 68 151 272
% of contracted rent 7.3 10.3 9.9 9.6 12.3 27.5 49.4
------------------------------------------- ------- ------- ------ ------ ------ ----------
On a proportionally consolidated basis including the Group's share of joint ventures and funds
(1) Reflects standing investment only
Recently Completed and Committed Developments
--------------------------------------------------------------------------------------------------------------------
As at Sector BL Share 100% PC Calendar Current Value Cost to come ERV Let & Under
30 September sq ft Year Offer
2019
--------------- --------------
% '000 GBPm GBPm(1) GBPm(2) GBPm
--------------- ------- --------- ------ -------------- -------------- ------------- -------- --------------
1 Finsbury
Avenue Office 50 287 Q1 2019 171 - 8.3 6.5
--------------- ------- --------- ------ -------------- -------------- ------------- -------- --------------
Total Recently Completed 287 171 - 8.3 6.5
----------------------------------- ------ -------------- -------------- ------------- -------- --------------
100 Liverpool
Street Office 50 520 Q1 2020 317 55 19.2 14.9
135 Bishopsgate Office 50 335 Q1 2020 184 22 9.7 9.4
1 Triton
Square(3) Office 100 366 Q4 2020 340 77 22.7 21.8
Plymouth
(Leisure) Retail 100 108 Q4 2019 33 6 3.1 2.1
Total Committed 1,329 874 159 54.7 48.2
--------- ------ -------------- -------------- ------------- --------
Retail Capital
Expenditure(4) 65
------------------------ --------- ------ -------------- -------------- ------------- -------- --------------
(1) From 1 October 2019. Cost to come excludes notional interest as interest is capitalised
individually on each development at our capitalisation rate
(2) Estimated headline rental value net of rent payable under head leases (excluding tenant
incentives)
(3) ERV let & under offer of GBP21.8m represents space taken by Dentsu Aegis. As part of this
letting, Dentsu Aegis have an option to return their existing space at 10 Triton Street in
2021. If this option is exercised, there is an adjustment to the rent free period in respect
of the letting at 1 Triton Square to compensate British Land
(4) Capex committed and underway within our investment portfolio relating to leasing and asset
management
Near Term Development Pipeline
----------------------------------------------------------------------------------------------------------------------
As at Sector BL Share 100% Expected Current Cost to ERV Let & Planning
30 sq ft Start On Value Come Under Status
September Site Offer
2019
----------- ------------ ------------
% '000 GBPm GBPm(1) GBPm(2) GBPm
----------- ------------ --------- ------ ---------- ----------- ----------- ------- ----------- ------------
Norton
Folgate Office 100 335 Q1 2020 83 243 23.0 - Consented
1 Broadgate Office 50 532 Q4 2020 91 204 19.0 - Consented
Aldgate
Place,
Phase 2 Residential 100 146 Q4 2020 37 86 6.0 Consented
Total Near Term 1,013 211 533 48.0 -
------------------------- --------- ------ ---------- ----------- ----------- ------- ----------- ------------
Retail Capex (3) 45
------------------------- --------- ------ ---------- ----------- ----------- ------- ----------- ------------
(1) From 1 October 2019. Cost to come excludes notional interest as interest is capitalised
individually on each development at our capitalisation rate
(2) Estimated headline rental value net of rent payable under head leases (excluding tenant
incentives)
(3) Forecast capital commitments within our investment portfolio over the next 12 months relating
to leasing and asset enhancement
Medium Term Development Pipeline
---------------------------------------------------------------------------------
As at Sector BL Share 100% Planning Status
30 September 2019 % Sq ft
---------------------------------- ----------------- ------------- ----------------------------
'000
--------------------------------- ----------------- ------------- ------------ ----------------------------
2-3 Finsbury Avenue Office 50 563 Consented
Gateway Building Leisure 100 105 Consented
5 Kingdom Street(1) Office 100 429 Consented
Meadowhall (Leisure) Retail 50 333 Consented
Ealing - 10-40 The Broadway Retail 100 292 Pre-submission
Eden Walk Retail & Residential Mixed Use 50 533 Consented
Canada Water(2) Mixed Use 100 5,000 Resolution to grant planning
---------------------------------- ----------------- ------------- ------------ ----------------------------
Total Medium Term 7,255
----------------------------------------------------- ------------- ------------ ----------------------------
(1) Planning consent for previous 240,000 sq ft scheme
(2) On drawdown of the Master Development Agreement, ownership reduces to 80%
with LBS owning
20%. LBS ownership will adjust over time depending on level of investment by
Southwark
Forward-looking statements
This Press Release has been prepared in relation to the
financial results for the six month period ending on 30 September
2019. This information is not audited and does not contain
sufficient detail to allow a full understanding of the results of
the British Land group.
This Press Release contains certain 'forward-looking'
statements. These forward-looking statements include all matters
that are not historical fact. Such statements reflect current
views, expectations and beliefs of British Land on, among other
things, our markets, activities, projections, strategy, plans,
objectives, performance, financial condition and prospects, as well
as assumptions about future events. Such 'forward-looking'
statements can sometimes, but not always, be identified by their
reference to a date or point in the future, the future tense, or
the use of 'forward-looking' terminology, including terms such as
'believes', 'considers', 'estimates', 'anticipates', 'expects',
'forecasts', 'intends', 'continues', 'due', 'potential',
'possible', 'plans', 'seeks', 'projects', 'goal', 'outlook',
'schedule', 'budget', 'target', 'aim', 'may', 'likely to', 'will',
'would', 'could', 'should' or similar expressions or in each case
their negative or other variations or comparable terminology. By
their nature, forward-looking statements involve inherent known and
unknown risks, assumptions and uncertainties because they relate to
future events and circumstances and depend on circumstances which
may or may not occur and may be beyond our ability to control,
predict or estimate. Forward-looking statements should be regarded
with caution as actual outcomes or results, or plans or objectives,
may differ materially from those expressed in or implied by such
statements. Recipients should not place reliance on, and are
cautioned about relying on, any forward-looking statements.
Important factors that could cause actual results (including the
payment of dividends), performance or achievements of British Land
to differ materially from any outcomes or results expressed or
implied by such forward-looking statements include, among other
things: (a) general business and political, social and economic
conditions globally, (b) the consequences of the referendum on
Britain leaving the EU, (c) industry and market trends (including
demand in the property investment market and property price
volatility), (d) competition, (e) the behaviour of other market
participants, (f) changes in government and other regulation
including in relation to the environment, health and safety and
taxation (in particular, in respect of British Land's status as a
Real Estate Investment Trust), (g) inflation and consumer
confidence, (h) labour relations and work stoppages, (i) natural
disasters and adverse weather conditions, (j) terrorism and acts of
war, (k) British Land's overall business strategy, risk appetite
and investment choices in its portfolio management, (l) legal or
other proceedings against or affecting British Land, (m) reliable
and secure IT infrastructure, (n) changes in occupier demand and
tenant default, (o) changes in financial and equity markets
including interest and exchange rate fluctuations, (p) changes in
accounting practices and the interpretation of accounting standards
and (q) the availability and cost of finance. The Company's
principal risks are described in greater detail in the "Risk
Management
and Principal Risks" section of the Company's latest annual
report and accounts (which can be found at www.britishland.com) at
pages 29 to 35 (inclusive) (as updated or supplemented by the
section of this Press Release headed "Risk Management and Principal
Risks"). Forward-looking statements in this Press Release, the
latest annual report and accounts, or the British Land website or
made subsequently, which are attributable to British Land or
persons acting on its behalf, should therefore be construed in
light of all such factors.
Information contained in this Press Release relating to British
Land or its share price or the yield on its shares are not
guarantees of, and should not be relied upon as an indicator of,
future performance, and nothing in this Press Release should be
construed as a profit forecast or profit estimate, or be taken as
implying that the earnings of British Land for the current year or
future years will necessarily match or exceed the historical or
published earnings of British Land. Any forward-looking statements
made by or on behalf of British Land speak only as of the date they
are made. Such forward-looking statements are expressly qualified
in their entirety by the factors referred to above and no
representation, assurance, guarantee or warranty is given in
relation to them (whether by British Land or any of its associates,
directors, officers, employees or advisers), including as to their
completeness, accuracy, fairness, reliability, or the basis on
which they were prepared, or their achievement or
reasonableness.
Other than in accordance with our legal and regulatory
obligations (including under the UK Financial Conduct Authority's
Listing Rules, Disclosure Guidance and Transparency Rules, the EU
Market Abuse Regulation and the requirements of the Financial
Conduct Authority and the London Stock Exchange), British Land does
not intend or undertake any obligation to update or revise publicly
forward-looking statements to reflect any changes in British Land's
expectations with regard thereto or any changes in information,
events, conditions, circumstances or other information on which any
such statement is based. This document shall not, under any
circumstances, create any implication that there has been no change
in the business or affairs of British Land since the date of this
document or that the information contained herein is correct as at
any time subsequent to this date.
Nothing in this document shall constitute, in any jurisdiction,
an offer or solicitation to sell or purchase any securities or
other financial instruments, nor shall it constitute a
recommendation, invitation or inducement, or advice, in respect of
any securities or other financial instruments or any other
matter.
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
IR KLLFFKFFXFBL
(END) Dow Jones Newswires
November 13, 2019 02:00 ET (07:00 GMT)
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