REG - British Land Co PLC - Half-year Report- Part 2 <Origin Href="QuoteRef">BLND.L</Origin> - Part 2
16/11/2016 07:07
- Part 2: For the preceding part double click ID:nRSP2740Pa
buildings. Operating result
is the net of net rental income, fee income and administrative expenses. No
customer exceeded 10% of the Group's revenues in either period.
Segment result
Six months ended 30 September
Offices and residential Retail and leisure Canada Water Other/unallocated Total
2016£m 2015£m 2016£m 2015£m 2016£m 2015£m 2016£m 2015£m 2016£m 2015£m
Gross rental income
British Land Group 70 66 142 150 5 3 - - 217 219
Share of joint ventures and funds 60 54 50 51 - - - 2 110 107
Total 130 120 192 201 5 3 - 2 327 326
Net rental income
British Land Group 67 61 136 142 4 3 - - 207 206
Share of joint ventures and funds 58 52 47 49 - - - 2 105 103
Total 125 113 183 191 4 3 - 2 312 309
Operating result
British Land Group 66 51 129 133 3 3 (26) (26) 172 161
Share of joint ventures and funds 56 54 49 50 - - - 2 105 106
Total 122 105 178 183 3 3 (26) (24) 277 267
Reconciliation to Underlying Profit before taxation Six months ended 30 September 2016£m Six months ended 30 September 2015£m
Operating result 277 267
Net financing costs (78) (96)
Underlying Profit 199 171
Reconciliation to profit on ordinary activities before taxation
Underlying Profit 199 171
Capital and other (411) 644
Underlying Profit attributable 7 8
to non-controlling interests
Total (loss) profit on ordinary activities before taxation (205) 823
Of the gross rental income above, £nil (six months ended 30 September 2015:
£2m) was derived from outside the UK.
Segment assets
Offices and residential Retail and leisure Canada Water Total
30 September 2016£m 31 March 2016£m 30 September 2016£m 31 March 2016£m 30 September 2016£m 31 March 2016£m 30 September 2016£m 31 March 2016£m
Property assets
British Land Group 4,143 4,181 4,889 5,323 289 283 9,321 9,787
Share of funds and joint ventures 2,676 2,843 1,922 2,018 - - 4,598 4,861
Total 6,819 7,024 6,811 7,341 289 283 13,919 14,648
Reconciliation to net assets
British Land Group 30 September 2016£m 31 March 2016£m
Property assets 13,919 14,648
Other non-current assets 146 138
Non-current assets 14,065 14,786
Other net current liabilities (247) (257)
Adjusted net debt (4,463) (4,765)
Other non-current liabilities (101) (90)
EPRA net assets (undiluted) 9,254 9,674
Convertible dilution - 400
EPRA net assets (diluted) 9,254 10,074
Non-controlling interests 249 277
EPRA adjustments (322) (732)
Net assets 9,181 9,619
13 Related party transactions
There have been no material changes in the related party transactions
described in the last annual report.
14 Contingent liabilities
The Group, joint ventures and funds have contingent liabilities in respect of
legal claims, guarantees and warranties arising in the ordinary course of
business. It is not anticipated that any material liabilities will arise from
contingent liabilities.
15 Share capital and reserves
£m Ordinary shares
of 25p each
Issued, called and fully paid
At 1 April 2016 260 1,040,562,323
Issues - 357,689
At 30 September 2016 260 1,040,920,012
At 30 September 2016, of the issued 25p ordinary shares, 2,685 shares were
held in the ESOP trust (31 March 2016: 627), 11,266,245 shares were held as
treasury shares (31 March 2016: 11,266,245 ) and 1,029,651,082 shares were in
free issue (31 March 2016: 1,029,295,451). No treasury shares were acquired by
the ESOP trust during the year. All issued shares are fully paid.
SUPPLEMENTARY DISCLOSURES
UNAUDITED
Table A: Summary income statement and balance sheet
Summary income statement based on proportional consolidation for the six
months ended 30 September 2016
The following pro forma information is unaudited and does not form part of the
consolidated primary statements or the notes thereto. It presents the results
of the Group, with its share of the results of joint ventures and funds
included on a line by line basis and excluding non-controlling interests.
Six months ended 30 September 2016 Six months ended 30 September 2015
Group£m Joint ventures and funds£m Less non-controlling interests£m Proportionally consolidated£m Group£m Joint ventures and funds£m Less non-controlling interests£m Proportionally consolidated£m
Gross rental income 224 113 (10) 327 230 110 (14) 326
Property operating expenses (10) (5) - (15) (13) (5) 1 (17)
Net rental income 214 108 (10) 312 217 105 (13) 309
Administrative expenses (42) (2) 1 (43) (49) (1) 1 (49)
Net fees and other income 7 - 1 8 7 - - 7
Ungeared Income Return 179 106 (8) 277 175 104 (12) 267
Net financing costs (41) (38) 1 (78) (59) (41) 4 (96)
Underlying Profit 138 68 (7) 199 116 63 (8) 171
Underlying taxation - - - - - - - -
Underlying Profit after taxation 138 68 (7) 199 116 63 (8) 171
Valuation movement (462) 642
Other capital and taxation (net)1 (411) 3
Capital and other (873) 645
Total return (674) 816
1 Includes other comprehensive income, movement in dilution of share options
and the movement in items excluded for EPRA NAV.
Summary balance sheet based on proportional consolidation as at 30 September
2016
The following pro forma information is unaudited and does not form part of the
consolidated primary statements or the notes thereto. It presents the results
of the Group, with its share of the results of joint ventures and funds
included on a line-by-line basis and excluding non-controlling interests.
Group£m Share of joint ventures Less non-controlling interests£m Share Deferred Mark-to-market on effective cash flow hedges and related debt adjustments£m Head Valuation surplus on trading properties£m EPRA Net assets 30 September 2016£m EPRA Net assets31 March 2016£m
& funds£m options£m tax£m leases£m
Retail properties 5,213 2,007 (371) - - - (38) - 6,811 7,341
Office properties 4,084 2,675 - - - - (16) 76 6,819 7,024
Canada Water properties 298 - - - - - (9) - 289 283
Total properties 9,595 4,682 (371) - - - (63) 76 13,919 14,648
Investments in joint ventures and funds 3,145 (3,145) - - - - - - - -
Other investments 149 (3) - - - - - - 146 138
Other net (liabilities) assets (336) (119) 3 39 2 - 63 - (348) (347)
Net debt (3,372) (1,415) 119 - - 205 - - (4,463) (4,765)
Dilution due to 1.5% convertible bond - - - - - - - - - 400
Net assets 9,181 - (249) 39 2 205 - 76 9,254 10,074
EPRA NAV per share (note 2) 891p 919p
30 September 2016 31 March 2016
£m Pence per share £m Pence per share
Opening EPRA NAV 10,074 919 9,035 829
Income return 199 18 365 34
Capital return (473) (43) 909 77
Dividend paid (146) (13) (235) (21)
Remove dilution of 1.5% convertible bond (400) 10 - -
Closing EPRA NAV 9,254 891 10,074 919
Table B: EPRA Performance measures
EPRA Performance measures summary table
Six months ended Six months ended
30 September 2016 30 September 2015
£m Pence per share £m Pence per share
EPRA Earnings - basic 199 19.3 171 16.7
- diluted 199 19.3 174 16.0
EPRA Net Initial Yield 4.3% 4.1%
EPRA 'topped-up' Net Initial Yield 4.7% 4.6%
EPRA Vacancy Rate 2.7% 2.6%
30 September 2016 31 March 2016
Net assets £m Net asset Net assets £m Net asset
value per share pence value per share pence
EPRA NAV 9,254 891 10,074 919
EPRA NNNAV 8,623 830 9,640 880
Calculation and reconciliation of EPRA/IFRS earnings and EPRA/IFRS earnings
per share
Six months ended 30 September 2016£m Six months ended 30 September 2015£m
(Loss) profit attributable to the shareholders of the Company (195) 816
Exclude:
Group - taxation (1) (7)
Group - valuation movement 257 (397)
Group - profit on disposal of investment properties and investments (27) (26)
Group - profit on disposal of trading properties (3) (8)
Joint ventures and funds - valuation movement (including result on disposals) 193 (219)
Joint ventures and funds - capital financing costs 6 -
Changes in fair value of financial instruments and associated close-out costs (15) 6
Non-controlling interests in respect of the above (16) 6
EPRA earnings - basic 199 171
Dilutive effect of 1.5% convertible bond - 3
EPRA earnings - diluted 199 174
(Loss) profit attributable to the shareholders of the Company (195) 816
Dilutive effect of 1.5% convertible bond (26) 3
IFRS earnings - diluted (221) 819
Six months ended 30 September 2016Numbermillion Six months ended 30 September 2015Numbermillion
Weighted average number of shares 1,040 1,033
Adjustment for Treasury shares (11) (11)
IFRS/EPRA weighted average number of shares (basic) 1,029 1,022
Dilutive effect of share options 1 2
Dilutive effect of ESOP shares 3 4
Dilutive effect of 1.5% convertible bond 58 58
IFRS weighted average number of shares (diluted) 1,091 1,086
Remove dilutive effect of 1.5% convertible bond (58) -
EPRA weighted average number of shares (diluted) 1,033 1,086
Net assets per share
30 September 2016 31 March 2016
£m Pence £m Pence
per share per share
Balance sheet net assets 9,181 9,619
Deferred tax arising on revaluation movements 2 5
Mark-to-market on effective cash flow hedges and related debt adjustments 205 198
Dilution effect of share options 39 36
Surplus on trading properties 76 93
1.5% convertible bond adjustment - 400
Less non-controlling interests (249) (277)
EPRA NAV 9,254 891 10,074 919
Deferred tax arising on revaluation movements (15) (24)
Mark-to-market on effective cash flow hedges and related debt adjustments (205) (153)
Mark-to-market on debt (411) (257)
EPRA NNNAV 8,623 830 9,640 880
EPRA NNNAV is the EPRA NAV adjusted to reflect the fair value of the debt and
derivatives and to include the deferred taxation on revaluations
and derivatives.
30 September 2016Numbermillion 31 March
2016Numbermillion
Number of shares at period/year end 1,041 1,040
Adjustment for treasury shares (11) (11)
IFRS/EPRA Number of shares (basic) 1,030 1,029
Dilutive effect of share options 3 2
Dilutive effect of ESOP shares 6 7
Dilutive effect of 1.5% convertible bond 58 58
IFRS number of shares (diluted) 1,097 1,096
Remove dilutive effect of 1.5% convertible bond (58) -
EPRA number of shares (diluted) 1,039 1,096
EPRA Net Initial Yield and 'topped-up' Net Initial Yield
30 September 2016£m 30 September
2015£m
Investment property - wholly-owned 9,321 9,569
Investment property - share of joint ventures and funds 4,598 4,815
Less developments, residential and land (951) (805)
Completed property portfolio 12,968 13,579
Allowance for estimated purchasers' costs 914 846
Gross up completed property portfolio valuation 13,882 14,425
Annualised cash passing rental income 610 594
Property outgoings (9) (8)
Annualised net rents 601 586
Rent expiration of rent-free periods and fixed uplifts1 50 76
'Topped-up' net annualised rent 651 662
EPRA Net Initial Yield 4.3% 4.1%
EPRA 'topped-up' Net Initial Yield 4.7% 4.6%
Including fixed/minimum uplifts received in lieu of rental growth 16 25
Total 'topped-up' net rents 667 687
Overall 'topped-up' Net Initial Yield 4.8% 4.8%
'Topped-up' net annualised rent 651 662
ERV vacant space 19 18
Reversions 31 25
Total ERV 701 705
Net Reversionary Yield 5.0% 4.9%
1 The weighted average period over which rent-free periods expire is 1 year
(30 September 2015: 1 year).
The above is stated for the UK portfolio only.
EPRA Net Initial Yield (NIY) basis of calculation
EPRA NIY is calculated as the annualised net rent (on a cash flow basis),
divided by the gross value of the completed property portfolio. The valuation
of our completed property portfolio is determined by our external valuers as
at 30 September 2016, plus an allowance for estimated purchaser's costs.
Estimated purchaser's costs are determined by the relevant stamp duty
liability, plus an estimate by our valuers of agent and legal fees on notional
acquisition. The net rent deduction allowed for property outgoings is based on
our valuers' assumptions on future recurring non-recoverable revenue
expenditure.
In calculating the EPRA 'topped-up' NIY, the annualised net rent is increased
by the total contracted rent from expiry of rent-free periods and
future contracted rental uplifts where defined as not in lieu of growth.
Overall 'topped-up' NIY is calculated by adding any other contracted future
uplift to the 'topped-up' net annualised rent.
The net reversionary yield is calculated by dividing the total estimated
rental value (ERV) for the completed property portfolio, as determined
by our external valuers, by the gross completed property portfolio valuation.
The EPRA vacancy rate is calculated as the ERV of the un-rented, lettable
space as a proportion of the total rental value of the completed
property portfolio.
EPRA Vacancy Rate
30 September 2016£m 30 September
2015£m
Annualised potential rental value of vacant premises 19 18
Annualised potential rental value for the completed property portfolio 710 708
EPRA Vacancy Rate 2.7% 2.6%
The above is stated for the UK portfolio only.
EPRA Cost Ratios
Six months ended 30 September 2016£m Six months ended 30 September 2015£m
Property operating expenses 10 12
Administrative expenses 41 48
Share of joint ventures and funds expenses 7 6
Less: Performance & management fees (from joint ventures & funds) (4) (3)
Other fees and commission (4) (4)
Ground rent costs (1) (1)
EPRA Costs (including direct vacancy costs) (A) 49 58
Direct vacancy costs (6) (5)
EPRA Costs (excluding direct vacancy costs) (B) 43 53
Gross Rental Income less ground rent costs 215 218
Share of joint ventures and funds (Gross Rental Income less ground rent costs) 111 107
Total Gross Rental Income (C) 326 325
EPRA Cost Ratio (including direct vacancy costs) (A/C) 15.0% 17.8%
EPRA Cost Ratio (excluding direct vacancy costs) (B/C) 13.2% 16.3%
Overhead and operating expenses capitalised (including share of joint ventures and funds) 2 2
In the current and prior periods employee costs in relation to staff time on
development projects are capitalised into the base cost of relevant
development assets.
Table C: Gross rental income
Six months ended 30 September 2016£m Six months ended 30 September 2015£m
Rent receivable 317 304
Spreading of tenant incentives and guaranteed rent increases 8 20
Surrender premia 2 2
Gross rental income 327 326
The current and prior period information is presented on a proportionally
consolidated basis, excluding non-controlling interests.
Table D: Property related capital expenditure
Acquisitions 74 - 74 238 - 238
Development 72 11 83 104 58 162
Like-for-like portfolio 35 23 58 99 6 105
Other 9 1 10 25 15 40
Total property related capex 190 35 225 466 79 545
25
15
40
Total property related capex
190
35
225
466
79
545
The above is presented on a proportionally consolidated basis, excluding
non-controlling interests and business combinations. The 'Other' category
contains amounts owing to tenant incentives of £4m (31 March 2016: £27m),
capitalised staff costs of £2m (31 March 2016: £4m) and capitalised interest
of £4m (31 March 2016: £9m).
This information is provided by RNS
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