REG - British Land Co PLC - Half-year Report - Part 2 <Origin Href="QuoteRef">BLND.L</Origin> - Part 2
16/11/2017 07:07
- Part 2: For the preceding part double click ID:nRSP6459Wa
70 140 142 4 5 - - 212 217
Share of joint ventures and funds 60 60 44 50 - - - - 104 110
Total 128 130 184 192 4 5 - - 316 327
Net rental income
British Land Group 62 67 133 136 4 4 - - 199 207
Share of joint ventures and funds 57 58 41 47 - - - - 98 105
Total 119 125 174 183 4 4 - - 297 312
Operating result
British Land Group 61 66 129 129 2 3 (23) (26) 169 172
Share of joint ventures and funds 56 56 39 49 - - - - 95 105
Total 117 122 168 178 2 3 (23) (26) 264 277
Reconciliation to Underlying Profit before taxation Six months ended 30 September 2017£m Six months ended 30 September 2016£m
Operating result 264 277
Net financing costs (66) (78)
Underlying Profit 198 199
Reconciliation to profit on ordinary activities before taxation
Underlying Profit 198 199
Capital and other 34 (411)
Underlying Profit attributable 6 7
to non-controlling interests
Total profit (loss) on ordinary activities before taxation 238 (205)
Of the gross rental income above, £nil (six months ended 30 September 2016:
£nil) was derived from outside the UK.
Segment assets
Offices Retail Canada Water Total
30 September 2017£m 31 March 2017£m 30 September 2017£m 31 March 2017£m 30 September 2017£m 31 March 2017£m 30 September 2017£m 31 March 2017£m
Property assets
British Land Group 4,366 4,223 4,866 4,716 270 271 9,502 9,210
Share of funds and joint ventures 2,287 2,792 1,726 1,938 - - 4,013 4,730
Total 6,653 7,015 6,592 6,654 270 271 13,515 13,940
Reconciliation to net assets
British Land Group 30 September 2017£m 31 March 2017£m
Property assets 13,515 13,940
Other non-current assets 162 156
Non-current assets 13,677 14,096
Other net current liabilities (340) (364)
Adjusted net debt (3,691) (4,223)
Other non-current liabilities - (11)
EPRA net assets (undiluted) 9,646 9,498
Non-controlling interests 254 255
EPRA adjustments (268) (277)
Net assets 9,632 9,476
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 2017 260 1,041,035,058
Issues - 189,904
Repurchased and cancelled (3) (10,671,074)
At 30 September 2017 257 1,030,553,888
At 30 September 2017, of the issued 25p ordinary shares, 8,003 shares were
held in the ESOP trust (31 March 2017: 7,783), 11,266,245 shares were held as
treasury shares (31 March 2017: 11,266,245) and 1,019,279,640 shares were in
free issue (31 March 2017: 1,029,761,030). 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 2017, the Company repurchased 10,724,362
ordinary shares, of which 10,671,074 were cancelled. The weighted average
share price of repurchases was 607 pence. During the period from 1 October
2017 to 15 November 2017, a further 15,114,663 shares were repurchased, of
which 12,842,709 were cancelled. The weighted average share price of these
repurchases was 599 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 2017
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 2017 Six months ended 30 September 2016
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 222 103 (9) 316 224 113 (10) 327
Property operating expenses (15) (4) - (19) (10) (5) - (15)
Net rental income 207 99 (9) 297 214 108 (10) 312
Administrative expenses (40) (1) - (41) (42) (2) 1 (43)
Net fees and other income 7 - 1 8 7 - 1 8
Ungeared Income Return 174 98 (8) 264 179 106 (8) 277
Net financing costs (34) (34) 2 (66) (41) (38) 1 (78)
Underlying Profit 140 64 (6) 198 138 68 (7) 199
Underlying taxation - - - - - - - -
Underlying Profit after taxation 140 64 (6) 198 138 68 (7) 199
Valuation movement 167 (462)
Other capital and taxation (net)1 100 (411)
Capital and other 267 (873)
Total return 465 (674)
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
2017
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 derivatives and related debt adjustments£m Head Valuation surplus on trading properties£m EPRA Net assets 30 September 2017£m EPRA Net assets31March 2017£m
& funds£m options£m tax£m leases£m
Retail properties 5,218 1,804 (384) - - - (46) - 6,592 6,654
Office properties 4,291 2,287 - - - - (15) 90 6,653 7,015
Canada Water properties 285 - - - - - (15) - 270 271
Total properties 9,794 4,091 (384) - - - (76) 90 13,515 13,940
Investments in joint ventures and funds 2,764 (2,764) - - - - - - - -
Other investments 158 (2) - - - - - - 156 151
Other net (liabilities) assets (375) (81) 5 36 5 - 76 - (334) (370)
Net debt (2,709) (1,244) 125 - - 137 - - (3,691) (4,223)
Net assets 9,632 - (254) 36 5 137 - 90 9,646 9,498
EPRA NAV per share (note 2) 939p 915p
30 September 2017 31 March 2017
£m Pence per share £m Pence per share
Opening EPRA NAV 9,498 915 10,074 919
Income return 198 19 390 36
Capital return 100 20 (670) (13)
Dividend Paid (150) (15) (296) (27)
Closing EPRA NAV 9,646 939 9,498 915
Table B: EPRA Performance measures
EPRA Performance measures summary table
Six months ended Six months ended
30 September 2017 30 September 2016
£m Pence per share £m Pence per share
EPRA Earnings - basic 198 19.3 199 19.3
- diluted 198 19.2 199 19.3
EPRA Net Initial Yield 4.3% 4.3%
EPRA 'topped-up' Net Initial Yield 4.6% 4.7%
EPRA Vacancy Rate 2.9% 2.7%
30 September 2017 31 March 2017
Net assets £m Net asset Net assets £m Net asset
value per share pence value per share pence
EPRA NAV 9,646 939 9,498 915
EPRA NNNAV 9,117 888 8,938 861
Calculation and reconciliation of EPRA/IFRS earnings and EPRA/IFRS earnings
per share
Six months ended 30 September 2017£m Six months ended 30 September 2016£m
Profit (loss) attributable to the shareholders of the Company 239 (195)
Exclude:
Group - taxation (7) (1)
Group - valuation movement (141) 257
Group - profit on disposal of investment properties and investments (20) (27)
Group - profit on disposal of trading properties (8) (3)
Joint ventures and funds - valuation movement (including result on disposals) (18) 193
Joint ventures and funds - capital financing costs 9 6
Changes in fair value of financial instruments and associated close-out costs 144 (15)
Non-controlling interests in respect of the above - (16)
EPRA earnings - basic 198 199
Dilutive effect of 1.5% convertible bond - -
EPRA earnings - diluted 198 199
Profit (loss) attributable to the shareholders of the Company 239 (195)
Dilutive effect of 1.5% convertible bond - (26)
IFRS earnings - diluted 239 (221)
Six months ended 30 September 2017Numbermillion Six months ended 30 September 2016Numbermillion
Weighted average number of shares 1,039 1,040
Adjustment for Treasury shares (11) (11)
IFRS/EPRA weighted average number of shares (basic) 1,028 1,029
Dilutive effect of share options 1 1
Dilutive effect of ESOP shares 2 3
Dilutive effect of 1.5% convertible bond - 58
IFRS weighted average number of shares (diluted) 1,031 1,091
Remove dilutive effect of 1.5% convertible bond - (58)
EPRA weighted average number of shares (diluted) 1,031 1,033
Net assets per share
30 September 2017 31 March 2017
£m Pence £m Pence
per share per share
Balance sheet net assets 9,632 9,476
Deferred tax arising on revaluation movements 5 3
Mark-to-market on derivatives and related debt adjustments 137 155
Dilution effect of share options 36 36
Surplus on trading properties 90 83
Less non-controlling interests (254) (255)
EPRA NAV 9,646 939 9,498 915
Deferred tax arising on revaluation movements (23) (19)
Mark-to-market on derivatives and related debt adjustments (137) (155)
Mark-to-market on debt (369) (386)
EPRA NNNAV 9,117 888 8,938 861
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 2017Numbermillion 31 March
2017Numbermillion
Number of shares at period/year end 1,030 1,040
Adjustment for treasury shares (11) (11)
IFRS/EPRA Number of shares (basic) 1,019 1,029
Dilutive effect of share options 2 3
Dilutive effect of ESOP shares 6 6
Dilutive effect of 1.5% convertible bond - 58
IFRS number of shares (diluted) 1,027 1,098
Remove dilutive effect of 1.5% convertible bond - (58)
EPRA number of shares (diluted) 1,027 1,038
EPRA Net Initial Yield and 'topped-up' Net Initial Yield
30 September 2017£m 30 September
2016£m
Investment property - wholly-owned 9,502 9,321
Investment property - share of joint ventures and funds 4,013 4,598
Less developments, residential and land (1,242) (951)
Completed property portfolio 12,273 12,968
Allowance for estimated purchasers' costs 813 914
Gross up completed property portfolio valuation (A) 13,086 13,882
Annualised cash passing rental income 581 610
Property outgoings (13) (9)
Annualised net rents (B) 568 601
Rent expiration of rent-free periods and fixed uplifts1 32 50
'Topped-up' net annualised rent (C) 600 651
EPRA Net Initial Yield (B/A) 4.3% 4.3%
EPRA 'topped-up' Net Initial Yield (C/A) 4.6% 4.7%
Including fixed/minimum uplifts received in lieu of rental growth 11 16
Total 'topped-up' net rents (D) 611 667
Overall 'topped-up' Net Initial Yield (D/A) 4.7% 4.8%
'Topped-up' net annualised rent 600 651
ERV vacant space 19 19
Reversions 32 31
Total ERV (E) 651 701
Net Reversionary Yield (E/A) 5.0% 5.0%
1 The weighted average period over which rent-free periods expire is 1 year
(30 September 2016: 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 2017, 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 2017£m 30 September
2016£m
Annualised potential rental value of vacant premises 19 19
Annualised potential rental value for the completed property portfolio 662 710
EPRA Vacancy Rate 2.9% 2.7%
EPRA Cost Ratios
Six months ended 30 September 2017£m Six months ended 30 September 2016£m
Property operating expenses 15 10
Administrative expenses 40 41
Share of joint ventures and funds expenses 5 7
Less: Performance & management fees (from joint ventures & funds) (3) (4)
Other fees and commission (5) (4)
Ground rent costs (1) (1)
EPRA Costs (including direct vacancy costs) (A) 51 49
Direct vacancy costs (10) (6)
EPRA Costs (excluding direct vacancy costs) (B) 41 43
Gross Rental Income less ground rent costs 212 215
Share of joint ventures and funds (Gross Rental Income less ground rent costs) 103 111
Total Gross Rental Income (C) 315 326
EPRA Cost Ratio (including direct vacancy costs) (A/C) 16.2% 15.0%
EPRA Cost Ratio (excluding direct vacancy costs) (B/C) 13.0% 13.2%
Overhead and operating expenses capitalised (including share of joint ventures and funds) 3 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 2017£m Six months ended 30 September 2016£m
Rent receivable 304 317
Spreading of tenant incentives and guaranteed rent increases (8) 8
Surrender premia 20 2
Gross rental income 316 327
The current and prior period information is presented on a proportionally
consolidated basis, excluding non-controlling interests.
Table D: Property related capital expenditure
Acquisitions 141 - 141 88 - 88
Development 50 16 66 131 14 145
Like-for-like portfolio 34 15 49 67 47 114
Other 8 2 10 20 2 22
Total property related capex 233 33 266 306 63 369
20
2
22
Total property related capex
233
33
266
306
63
369
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 £2m (31 March 2017: £7m),
letting fees of £2m (31 March 2017: £3), capitalised staff costs of £3m (31
March 2017: £5m) and capitalised interest of £3m (31 March 2017: £7m).
This information is provided by RNS
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