REG - British Land Co PLC - Half Yearly Report - Part 2 <Origin Href="QuoteRef">BLND.L</Origin> - Part 2
17/11/2015 07:02
- Part 2: For the preceding part double click ID:nRSQ9197Fa
- - (102) (102) - - (99) (99)
Assets - (112) (102) (214) - (139) (99) (238)
Interest rate and currency derivative liabilities - 112 - 112 - 126 - 126
Convertible bonds 839 - - 839 493 - - 493
Liabilities 839 112 - 951 493 126 - 619
Total 839 - (102) 737 493 (13) (99) 381
There have been no transfers between levels in the period. A £3m valuation gain in relation to the investment held for
trading has been recorded in the six months ended 30 September 2015. Further disclosures in relation to the valuation of
the investment held for trading are included within Note 9.
11 Dividend
The 2016 second quarter dividend of 7.09 pence per share, totalling £73m, is payable on 12 February 2016 to shareholders on
the register at close of business on 8 January 2016.
The Board will announce the availability of the Scrip Dividend Alternative via the Regulatory News Service and on its
website (www.britishland.com), no later than 4 business days before the ex-dividend date of 7 January 2016. The Board
expects to announce the split between PID and non-PID income at that time. A Scrip Dividend Alternative will not be
enhanced. PID dividends are paid, as required by REIT legislation, after deduction of withholding tax at the basic rate
(currently 20%), where appropriate. Certain classes of shareholders may be able to elect to receive dividends gross. Please
refer to our website (www.britishland.com) for details.
The 2015 first quarter dividend of 7.09 pence per share, totalling £73m, was paid on 6 November 2015. 30% of shareholders
opted for the Scrip Dividend Alternative. Both the cash dividend and Scrip Dividend Alternative were treated as PIDs. The
total cash paid by the Group was £53m, being £43m paid to shareholders, £8m of withholding tax on the cash dividend and £2m
of withholding tax on the Scrip Dividend Alternative.
The Consolidated Statement of Changes in Equity shows total dividends in the six months to 30 September 2015 of £141m, £70m
being the third quarter 2015 PID dividend of 6.92 pence per share paid on 6 May 2015, and the fourth quarter 2015 PID
dividend of 6.92 pence per share, paid on 7 August 2015, totalling £71m. A scrip alternative was offered in lieu of cash
for the fourth quarter dividend, which was 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 two principal sectors are currently Offices and Retail. The Office sector includes residential, as this is
often incorporated into Office schemes, and Retail includes leisure, for a similar rationale.
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 whch 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 administration expenses. No customer exceeded 10% of the Group's revenues in either year.
Segment result
Six months ended 30 September
Offices & residential Retail & leisure Other / unallocated Total
2015£m 2014£m 2015£m 2014£m 2015£m 2014£m 2015£m 2014£m
Gross rental income
British Land Group 66 59 153 129 - - 219 188
Share of joint ventures and funds 54 43 51 73 2 5 107 121
Total 120 102 204 202 2 5 326 309
Net rental income
British Land Group 61 55 145 122 - - 206 177
Share of joint ventures and funds 52 41 49 70 2 4 103 115
Total 113 96 194 192 2 4 309 292
Operating result
British Land Group 51 50 136 115 (26) (27) 161 138
Share of joint ventures and funds 54 43 50 71 2 6 106 120
Total 105 93 186 186 (24) (21) 267 258
Six months ended 30 September 2015£m Six months ended 30 September 2014£m
Reconciliation to underlying profit before taxation
Operating result 267 258
Net financing costs (96) (103)
Underlying profit before taxation 171 155
Reconciliation to profit before taxation
Underlying profit before taxation 171 155
Capital and other 644 880
Underlying profit attributable to non-controlling interests 8 8
Total profit on ordinary activities before taxation 823 1,043
Of the total gross rental income above, £2m (Six months ended 30 September 2014: £5m) was derived from outside the UK.
Segment assets
Offices & residential Retail & leisure Other / unallocated Total
30 September 2015 31 March 2015 30 September 2015 31 March 2015 30 September 2015 31 March 2015 30 September 2015 31 March 2015
£m £m £m £m £m £m £m £m
Property assets
British Land Group 3,986 3,550 5,583 5,518 - - 9,569 9,068
Share of joint ventures and funds 2,755 2,530 2,060 2,039 43 40 4,858 4,609
Total 6,741 6,080 7,643 7,557 43 40 14,427 13,677
Reconciliation to net assets
30 September 2015 £m 31 March2015£m
British Land Group
Property assets 14,427 13,677
Other non-current assets 141 256
Non-current assets 14,568 13,933
Other net current liabilities (216) (307)
Adjusted net debt (4,908) (4,918)
Other non-current liabilities (89) (73)
EPRA net assets (undiluted) 9,355 8,635
Dilution for 2012 convertible bond 400 400
EPRA net assets (diluted) 9,755 9,035
Non-controlling interests 284 333
EPRA adjustments (786) (803)
Net assets 9,253 8,565
13 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.
14 Related party transactions
There have been no material changes in the related party transactions described in the last annual report.
15 Share capital
At 30 September 2015, of the issued 25p ordinary shares, 1m were held in the ESOP Trust (31 March 2015: 1m), 11m were held
as Treasury shares (31 March 2015: 11m) and 1,025m shares were in free issue (31 March 2015: 1,020m; 30 September 2014:
1,018m). All shares are fully paid.
£m Ordinary shares
of 25p each
Issued, called and fully paid
At 1 April 2015 258 1,031,788,286
Issues 1 5,443,183
At 30 September 2015 259 1,037,231,469
Supplementary Disclosures
Table A: Summary income statement and balance sheet
Summary income statement based on proportional consolidation for the six months ended 30 September 2015
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. The underlying profit before taxation and underlying profit after
taxation are the same as presented in the consolidated income statement.
Six months ended 30 September 2015 Six months ended 30 September 2014
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 230 110 (14) 326 198 125 (14) 309
Property operating expenses (13) (5) 1 (17) (13) (4) - (17)
Net rental income 217 105 (13) 309 185 121 (14) 292
Administrative expenses (47) (1) 1 (47) (39) (2) - (41)
Fees and other income 5 - - 5 7 - - 7
Ungeared Income Return 175 104 (12) 267 153 119 (14) 258
Net interest (59) (41) 4 (96) (54) (55) 6 (103)
Underlying profit before taxation 116 63 (8) 171 99 64 (8) 155
Underlying taxation - -
Underlying profit after taxation 116 63 (8) 171 99 64 (8) 155
Underlying earnings per share - diluted basis 16.0p 15.3p
Valuation movement and profit on disposal 642 826
Other capital and taxation (net)* 3 17
Capital and other 645 843
Total return 816 998
See note 2 for the basis of calculation of underlying EPS.
* 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 2015
The following pro forma information is unaudited and does not form part of the consolidated primary statements or the notes
thereto. It presents the composition of the EPRA net assets of the Group, with its share of the net assets of the joint
ventures' and funds' assets and liabilities included on a line-by-line basis and excluding non-controlling interests, and
assuming full dilution.
Group£m Share of joint ventures & funds£m Less non-controlling interest£m Share Deferred Mark-to-market on effective cash flow hedges and related debt adjustments£m Head Convertible bond adjustment£m Valuation surplus on trading properties£m EPRANet assets 30 September 2015£m EPRANet assets 31March2015£m
options£m tax£m leases£m
Retail properties 5,933 2,143 (400) - - - (33) - - 7,643 7,557
Office properties 3,909 2,749 - - - - (14) - 97 6,741 6,080
Other properties - 43 - - - - - - - 43 40
Total properties 9,842 4,935 (400) - - - (47) - 97 14,427 13,677
Investments in joint ventures and funds 3,281 (3,281) - - - - - - - - -
Other investments 143 (2) - - - - - - - 141 256
Other net (liabilities) assets (273) (137) 3 43 12 - 47 - - (305) (380)
Net debt (3,740) (1,515) 113 - - 234 - - - (4,908) (4,918)
Dilution due to 2012 convertible bond - - - - - - - 400 - 400 400
Net assets 9,253 - (284) 43 12 234 - 400 97 9,755 9,035
EPRA NAV 891p 829p
per share (note 2)
EPRA Net Assets Movement
30 September 2015 31 March 2015
£m Pence per share £m Pence per share
Opening EPRA NAV 9,035 829 7,027 688
Income return 171 16 313 31
Capital return 662 59 1,523 145
Dividend paid (113) (13) (228) (27)
Dilution due to 2012 convertible bond - - 400 (8)
Closing EPRA NAV 9,755 891 9,035 829
Table B: EPRA Performance measures
EPRA Performance measures summary table
Six months ended Six months ended
30 September 2015 30 September 2014
£m Pence £m Pence
per share per share
EPRA Earnings - basic 171 16.7 155 15.3
- diluted 174 16.0 158 14.7
EPRA Net Initial Yield 4.1% 4.4%
EPRA 'topped-up' Net Initial Yield 4.6% 5.0%
EPRA Vacancy Rate 2.6% 4.3%
30 September 2015 31 March 2015
£m Pence £m Pence
per share per share
EPRA NAV 9,755 891 9,035 829
EPRA NNNAV 9,220 842 8,359 767
Calculation and reconciliation of EPRA/IFRS earnings and EPRA/IFRS earnings per share
Six months ended 30 September 2015£m Six months ended 30 September 2014£m
Profit attributable to the shareholders of the Company 816 998
Exclude:
Group - taxation (7) 2
Joint ventures and funds - taxation - 1
Group - net valuation movement (397) (511)
Group - profit on disposal of investment properties and investments (26) (7)
Group - profit on disposal of trading properties (8) (1)
Joint ventures and funds - net valuation movement (including result on disposals) (219) (342)
Net financing costs - capital 6 (21)
Financing break costs on property disposals - 1
Non-controlling interests in respect of the above 6 35
EPRA and underlying earnings (basic) 171 155
Dilutive effect of 2012 converitble bond 3 -
Underlying earnings (diluted) 174 155
Dilutive effect of 2012 convertible bond - 3
EPRA earnings (diluted) 174 158
Profit attributable to the shareholders of the Company 816 998
Dilutive effect of 2012 convertible bond 3 -
IFRS earnings (diluted) 819 998
Six months ended 30 September Six months ended 30 September2014Numbermillion
2015Numbermillion
Weighted average number of shares 1,033 1,024
Adjustment for Treasury shares (11) (11)
IFRS and EPRA weighted average number of shares (basic) 1,022 1,013
Dilutive effect of share options 2 2
Dilutive effect of ESOP shares 4 4
Dilutive effect of 2012 convertible bond 58 -
IFRS weighted average number of shares (diluted) 1,086 1,019
Dilutive effect of 2012 convertible bond - 58
EPRA weighted average number of shares (diluted) 1,086 1,077
Net assets per share
30 September 2015 31 March 2015
£m Pence £m Pence
per share per share
Balance sheet net assets 9,253 8,565
Deferred tax arising on revaluation movements 12 13
Mark-to-market on effective cash flow hedges and related debt adjustments 234 257
Dilution effect of share options 43 37
Surplus on trading properties 97 96
Convertible bond adjustment 400 400
Less non-controlling interests (284) (333)
EPRA NAV 9,755 891 9,035 829
Deferred tax arising on revaluation movements (12) (13)
Mark-to-market on effective cash flow hedges and related debt adjustments (234) (257)
Mark-to-market on debt (289) (406)
EPRA NNNAV 9,220 842 8,359 767
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 March2015Number
2015Number million
million
Number of shares at period / year end 1,037 1,031
Adjustment for treasury shares (11) (11)
Number of shares (basic) 1,026 1,020
Dilutive effect of share options 4 4
Dilutive effect of ESOP shares 7 8
Dilutive effect of 2012 convertible bond 58 -
IFRS number of shares (diluted) 1,095 1,032
Dilutive effect of 2012 convertible bond - 58
EPRA number of shares (diluted) 1,095 1,090
EPRA Net Initial Yield and 'topped-up' Net Initial Yield
30 September 2015 30 September 2014
£m £m
Investment property - wholly-owned 9,569 7,708
Investment property - share of joint ventures and funds 4,815 5,093
Less developments, residential and land (805) (1,009)
Completed property portfolio 13,579 11,792
Allowance for estimated purchasers' costs 846 720
Gross up completed property portfolio valuation 14,425 12,512
Annualised cash passing rental income 594 564
Property outgoings (8) (8)
Annualised net rents 586 556
Rent expiration of rent-free periods and fixed uplifts1 76 68
'Topped-up' net annualised rent 662 624
EPRA Net Initial Yield 4.1% 4.4%
EPRA 'topped-up' Net Initial Yield 4.6% 5.0%
Including fixed/minimum uplifts received in lieu of rental growth 25 27
Total 'topped-up' net rents 687 651
Overall 'topped-up' Net Initial Yield 4.8% 5.2%
'Topped-up' net annualised rent 662 624
ERV vacant space 18 28
Reversions 25 2
Total ERV 705 654
Net Reversionary Yield 4.9% 5.2%
1 The weighted average period over which rent-free periods expire is 1 year (30 September 2014: 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 2015, 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 unrented, lettable space as a proportion of the total rental value of
the completed
property portfolio.
EPRA Vacancy Rate
30 September 2015£m 30 September2014£m
Annualised potential rental value of vacant premises 18 28
Annualised potential rental value for the completed property portfolio 708 657
EPRA Vacancy Rate 2.6% 4.3%
The above is stated for the UK portfolio only.
EPRA Cost Ratios
Six months ended Six months ended
30 September 2015£m 30 September 2014£m
Property outgoings 12 13
Administrative expenses 46 39
Share of joint ventures and funds expenses 6 6
Less: Performance & management fees (from joint ventures & funds) (3) (5)
Other fees and commission (2) (2)
Ground rent costs (1) (2)
EPRA Costs (including direct vacancy costs) (A) 58 49
Direct vacancy costs (5) (7)
EPRA Costs (excluding direct vacancy costs) (B) 53 42
Gross Rental Income less ground rent costs 218 170
Share of joint ventures and funds (GRI less ground rent costs) 107 137
Total Gross Rental Income (C) 325 307
EPRA Cost Ratio (including direct vacancy costs) (A/C) 17.8% 16.0%
EPRA Cost Ratio (excluding direct vacancy costs) (B/C) 16.3% 13.7%
Overhead and operating expenses capitalised (including share of joint ventures and funds) 2 -
In the current period, employee costs in relation to staff time on development projects are capitalised into the base cost
of relevant developments assets.
Table C: Gross rental income
Calculation of gross rental income
Six months ended 30 September2015£m Six months ended 30 September2014£m
Rent receivable 304 292
Spreading of tenant incentives and guaranteed rent increases 20 14
Surrender premia 2 3
Gross rental income 326 309
The current and prior period information is presented on a proportionally consolidated basis, excluding non-controlling
interests.
Table D: Property related capital expenditure
Six months ended 30 September 2015 Year ended 31 March 2015
Group£m Joint ventures and funds£m Total £m Group£m Joint ventures and funds£m Total£m
Acquisitions 238 - 238 147 - 147
Development 49 11 60 64 83 147
Like-for-like portfolio 47 4 51 67 23 90
Other 16 4 20 25 8 33
Total property related capex 350 19 369 303 114 417
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 £14m (Year ended 31 March 2015: £18m),
capitalised fees of £2m (Year ended 31 March 2015: £nil) and capitalised interest of £4m (Year ended 31 March 2015: £15m).
SUPPLEMENTARY TABLES
(Data includes Group's share of Joint Ventures and Funds)
Portfolio Valuation
At 30 September 2015 Group JVs & Total Change²
Funds1
£m £m £m % £m
Shopping parks 2,213 1,102 3,315 1.1 36
Shopping centres 1,157 1,125 2,282 3.9 86
Superstores 221 685 906 (1.6) (15)
Department stores 609 1 610 2.9 17
Leisure 527 3 530 2.8 15
Retail & Leisure3 4,727 2,916 7,643 1.8 139
Of which Multi-let 3,119 2,236 5,355 2.2 121
West End 3,669 - 3,669 8.1 285
City 104 2,709 2,813 8.5 221
Provincial 3 - 3 2.6 -
Offices 3,776 2,709 6,485 8.3 506
Residential4 210 46 256 6.5 17
Offices & Residential3 3,986 2,755 6,741 8.2 523
Total 8,713 5,671 14,384 4.7 662
Standing Investments 8,050 5,618 13,668 4.5 602
Developments 663 53 716 8.5 60
Table shows UK total, excluding assets held in Europe. Total portfolio valuation including Europe of £14.4bn at year end, +4.7% valuation movement.
1 Group's share of properties in joint ventures and funds including HUT at ownership share
2 Valuation movement during the period (after taking account of capital expenditure) of properties held at the balance sheet date, including developments (classified by end use), purchases and sales
³ Including committed developments
4 Stand-alone residential
Portfolio Yield & ERV Movements1,2
At 30 September 2015 EPRA net initial yield % EPRA topped up net initial yield %3 Overall topped up net initial yield %4 Net equivalent yield % Net equivalent yield compression5 Net reversionary yield % ERV Growth %5 6
Shopping parks 4.7 5.0 5.1 5.1 5 5.1 0.9
Shopping centres 4.5 4.7 4.8 4.9 14 5.0 1.9
Superstores 5.3 5.3 5.3 5.2 (5) 5.2 (0.9)
Department stores 4.0 4.0 5.9 4.4 12 3.7 0.0
Leisure 4.9 4.9 6.1 5.3 22 4.0 0.3
Retail & Leisure 4.7 4.9 5.1 5.0 8 4.9 0.9
Of which Multi-let 4.5 4.8 4.8 4.9 9 5.0 1.4
West End 3.3 4.0 4.0 4.4 24 4.6 4.1
City 3.2 4.5 4.5 4.4 16 5.2 5.1
Offices 3.3 4.2 4.3 4.4 20 4.9 4.5
Total 4.1 4.6 4.8 4.7 13 4.9 2.3
Table shows UK total, excluding assets held in Europe.
1 Including notional purchaser's costs
2 Excluding developments under construction and assets held for development
3 Including rent contracted from expiry of rent-free periods and contracted uplifts not in lieu of growth
4 Including fixed/minimum uplifts (excluded from EPRA definition)
5 6 months to 30 September 2015
6 As calculated by IPD
Total Property Return (as calculated by IPD, excluding Europe)
6 mths to 30 September 2015 Retail Offices Total
% British Land IPD British Land IPD British Land IPD
Capital Return 1.8 1.9 8.3 7.2 4.7 4.4
- ERV Growth 0.9 0.8 4.5 4.4 2.3 2.2
- Yield Compression1 8 bps 11 bps 20 bps 12 bps 13 bps 15 bps
Income Return 2.6 2.5 1.6 2.0 2.1 2.4
Total Property Return 4.4 4.4 10.0 9.3 6.9 6.8
1 Net equivalent yield movement
Portfolio Weighting
At 30 September 2014 2015 2015 2015
(current) (current) (pro-forma1)
% % £m %
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