REG - Land Sec. Group PLC - Half-year Report 2016 <Origin Href="QuoteRef">LAND.L</Origin> - Part 2
15/11/2016 07:06
- Part 2: For the preceding part double click ID:nRSO1493Pa
Market cyclicality
Volatility and speed of change of asset valuations and market conditions. Reduces liquidity of assets and relative asset performance Fall in values. Large multi-asset portfolio Monitor asset concentration (our largest asset is only 5.7% of the total portfolio) Average Increased Recognised in 2016 Annual Report that there was an increased risk of a fall in asset values due to economic and political uncertainty. Outcome of vote on European Union referendum has compounded this uncertainty and values have declined this period.
investment property lot size of £117.9m Generally favour full control and ownership of assets (12.1% of assets currently in
joint ventures) Average unexpired lease term of 8.9 years with a maximum of 7.9% of gross rental income expiring or subject to
break clauses in any one of the next five years.
Statement of Directors' Responsibilities
Each of the Directors, whose names and functions appear below, confirm to the best of their knowledge that the condensed
consolidated interim financial statements have been prepared in accordance with IAS 34, 'Interim Financial Reporting', as
issued by the IASB and adopted by the European Union and that the interim management report herein includes a fair review
of the information required by the Disclosure and Transparency Rules (DTR), namely:
· DTR 4.2.7 (R): an indication of important events that have occurred during the six month period ended 30 September
2016 and their impact on the condensed interim financial statements, and a description of the principal risks and
uncertainties for the remaining six months of the financial year; and
· DTR 4.2.8 (R): any related party transactions in the six month period ended 30 September 2016 that have materially
affected, and any changes in the related party transactions described in the 2016 Annual Report that could materially
affect, the financial position or performance of the enterprise during that period.
The Directors of Land Securities Group PLC as at the date of this announcement are as set out below:
Dame Alison Carnwath*, Chairman
Robert Noel, Chief Executive
Martin Greenslade, Chief Financial Officer
Edward Bonham Carter*, Senior Independent Director
Kevin O'Byrne*
Chris Bartram*
Simon Palley*
Stacey Rauch*
Cressida Hogg CBE*
*Non-executive Directors
A list of the current Directors is maintained on the Land Securities Group PLC website at: www.landsecurities.com.
The Directors are responsible for the maintenance and integrity of the corporate and financial information included on the
Company's website. Legislation in the United Kingdom governing the preparation and dissemination of financial information
differs from legislation in other jurisdictions.
By order of the Board
Tim Ashby
Group General Counsel and Company Secretary
14 November 2016
Independent review report to Land Securities Group PLC
Introduction
We have been engaged by the Company to review the condensed set of consolidated financial statements in the half-yearly
financial report for the six months ended 30 September 2016 which comprises the consolidated income statement, the
consolidated statement of comprehensive income, the consolidated balance sheet, the consolidated statement of changes in
equity, the consolidated statement of cash flows and the related notes to the financial statements 1 to 17. We have read
the other information contained in the half-yearly financial report and considered whether it contains any apparent
misstatements or material inconsistencies with the information in the condensed set of financial statements.
This report is made solely to the Company in accordance with guidance contained in International Standard on Review
Engagements 2410 (UK and Ireland) "Review of Interim Financial Information Performed by the Independent Auditor of the
Entity" issued by the Auditing Practices Board. To the fullest extent permitted by law, we do not accept or assume
responsibility to anyone other than the Company for our work, for this report, or for the conclusions we have formed.
Directors' responsibilities
The half-yearly financial report is the responsibility of, and has been approved by, the directors. The directors are
responsible for preparing the half-yearly financial report in accordance with the Disclosure and Transparency Rules of the
United Kingdom's Financial Conduct Authority. As disclosed in note 1, the annual consolidated financial statements of the
group are prepared in accordance with IFRSs as adopted by the European Union. The condensed set of financial statements
included in this half-yearly financial report has been prepared in accordance with International Accounting Standard 34,
"Interim Financial Reporting", as adopted by the European Union.
Our responsibility
Our responsibility is to express to the Company a conclusion on the condensed set of financial statements in the
half-yearly financial report based on our review.
Scope of review
We conducted our review in accordance with International Standard on Review Engagements (UK and Ireland) 2410, "Review of
Interim Financial Information Performed by the Independent Auditor of the Entity" issued by the Auditing Practices Board
for use in the United Kingdom. A review of interim financial information consists of making enquiries, primarily of persons
responsible for financial and accounting matters, and applying analytical and other review procedures. A review is
substantially less in scope than an audit conducted in accordance with International Standards on Auditing (UK and Ireland)
and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be
identified in an audit. Accordingly, we do not express an audit opinion.
Conclusion
Based on our review, nothing has come to our attention that causes us to believe that the condensed set of financial
statements in the half-yearly financial report for the six months ended 30 September 2016 is not prepared, in all material
respects, in accordance with International Accounting Standard 34 as adopted by the European Union and the Disclosure and
Transparency Rules of the United Kingdom's Financial Conduct Authority.
Ernst & Young LLP
London
14 November 2016
Financial statements
Unaudited income statement Six months ended Six months ended 30 September 2015
30 September 2016
Revenue Capital and other items Total Revenue Capital and other items Total
profit profit
Notes £m £m £m £m £m £m
Revenue 4 352.3 24.2 376.5 364.3 5.9 370.2
Costs 5 (111.6) (11.1) (122.7) (119.2) (4.7) (123.9)
240.7 13.1 253.8 245.1 1.2 246.3
Profit on disposal of investment properties - 9.0 9.0 - 5.8 5.8
Loss on disposal of investment in joint venture - (1.9) (1.9) - - -
Net (deficit)/surplus on revaluation of investment properties 11 - (277.4) (277.4) - 394.5 394.5
Operating (loss)/profit 240.7 (257.2) (16.5) 245.1 401.5 646.6
Share of post-tax profit from joint ventures 12 13.0 19.9 32.9 11.1 133.8 144.9
Interest income 6 17.5 - 17.5 16.5 2.2 18.7
Interest expense 6 (78.7) (48.6) (127.3) (88.5) (11.4) (99.9)
Revaluation of redemption liabilities - (1.6) (1.6) - (2.4) (2.4)
(Loss)/profit before tax 192.5 (287.5) (95.0) 184.2 523.7 707.9
Taxation - (0.8) (0.8) - 0.2 0.2
(Loss)/profit for the period attributable to owners of the parent 192.5 (288.3) (95.8) 184.2 523.9 708.1
Earnings per share attributable to owners of the parent (pence):
Basic (loss)/earnings per share 8 (12.1) 89.7
Diluted (loss)/earnings per share 8 (12.1) 89.3
Unaudited statement of comprehensive income Six months ended Six months ended30 September 2015
30 September 2016
Total Total
Notes £m £m
(Loss)/profit for the period attributable to owners of the parent (95.8) 708.1
Items that may be subsequently reclassified to the income statement:
Share of joint ventures' fair value movements on interest-rate swaps treated as cash flow hedges 12 (0.2) 0.3
Revaluation of other investments (0.2) 0.2
Items that will not be subsequently reclassified to the income statement:
Re-measurement (loss)/gain on defined benefit pension scheme (11.0) 5.0
Deferred tax on re-measurement loss/(gain) on defined benefit pension scheme 1.9 (0.9)
Other comprehensive (loss)/income for the period attributable to owners of the parent (9.5) 4.6
Total comprehensive (loss)/income for the period attributable to owners of the parent (105.3) 712.7
Unaudited balance sheet 30 September 31 March
2016 2016
Notes £m £m
Non-current assets
Investment properties 11 12,182.4 12,357.7
Intangible assets 36.6 38.1
Other property, plant and equipment 12.9 5.1
Net investment in finance leases 166.4 182.6
Investments in joint ventures 12 1,707.9 1,668.2
Other investments 13.6 13.8
Trade and other receivables 99.7 86.1
Pension surplus 14.4 25.2
Total non-current assets 14,233.9 14,376.8
Current assets
Trading properties and long-term development contracts 13 127.0 123.4
Trade and other receivables 420.5 445.4
Derivative financial instruments 5.3 -
Monies held in restricted accounts and deposits 17.8 19.7
Cash and cash equivalents 16.9 24.7
Total current assets 587.5 613.2
Total assets 14,821.4 14,990.0
Current liabilities
Borrowings 15 (368.2) (18.7)
Trade and other payables (315.3) (289.3)
Provisions (3.3) (18.5)
Derivative financial instruments (0.6) (0.7)
Total current liabilities (687.4) (327.2)
Non-current liabilities
Borrowings 15 (2,578.9) (2,854.3)
Trade and other payables (29.6) (28.5)
Provisions - (5.5)
Derivative financial instruments (36.5) (31.2)
Redemption liabilities (35.7) (34.9)
Deferred tax (7.4) (9.5)
Total non-current liabilities (2,688.1) (2,963.9)
Total liabilities (3,375.5) (3,291.1)
Net assets 11,445.9 11,698.9
Equity
Capital and reserves attributable to owners of the parent
Ordinary shares 80.1 80.1
Share premium 790.6 790.2
Capital redemption reserve 30.5 30.5
Own shares (10.4) (13.8)
Share-based payments 6.3 11.1
Retained earnings 10,548.8 10,800.8
Total equity 11,445.9 11,698.9
The financial statements on pages 18 to 41 were approved by the Board of Directors on 14 November 2016 and were signed on
its behalf by:
R M Noel M F Greenslade
Directors
Unaudited statement of changes in equity Attributable to owners of the parent Group
Ordinary shares Share premium Capital redemption reserve Own Share- based payments Retained earnings Total
shares equity
£m £m £m £m £m £m £m
At 1 April 2015 80.1 789.4 30.5 (11.1) 8.7 9,708.7 10,606.3
Total comprehensive income for the period - - - - - 712.7 712.7
Transactions with owners:
Exercise of options - 0.6 - - - - 0.6
Dividends to owners of the parent - - - - - (126.6) (126.6)
Fair value of share-based payments - - - - 4.2 - 4.2
Release on exercise of share options - - - - (5.5) 5.5 -
Settlement and transfer of shares to employees on exercise of share options, net of proceeds - - - 14.4 - (11.0) 3.4
Acquisition of own shares - - - (12.4) - - (12.4)
Total transactions with owners of the parent - 0.6 - 2.0 (1.3) (132.1) (130.8)
At 30 September 2015 80.1 790.0 30.5 (9.1) 7.4 10,289.3 11,188.2
Total comprehensive income for the period - - - - - 640.5 640.5
Transactions with owners:
Exercise of options - 0.2 - - - - 0.2
Dividends to owners of the parent - - - - - (128.8) (128.8)
Fair value of share-based payments - - - - 3.7 - 3.7
Release on exercise of share options - - - - - - -
Settlement and transfer of shares to employees on exercise of share options, net of proceeds - - - 1.3 - (0.2) 1.1
Acquisition of own shares - - - (6.0) - - (6.0)
Total transactions with owners of the parent - 0.2 - (4.7) 3.7 (129.0) (129.8)
At 31 March 2016 80.1 790.2 30.5 (13.8) 11.1 10,800.8 11,698.9
Total comprehensive loss for the period - - - - - (105.3) (105.3)
Transactions with owners:
Exercise of options - 0.4 - - - - 0.4
Dividends to owners of the parent - - - - - (147.6) (147.6)
Fair value of share-based payments - - - - 2.3 - 2.3
Release on exercise of share options - - - - (7.1) 7.1 -
Settlement and transfer of shares to employees on exercise of share options, net of proceeds - - - 8.3 - (6.2) 2.1
Acquisition of own shares - - - (4.9) - - (4.9)
Total transactions with owners of the parent - 0.4 - 3.4 (4.8) (146.7) (147.7)
At 30 September 2016 80.1 790.6 30.5 (10.4) 6.3 10,548.8 11,445.9
Unaudited statement of cash flows Six months ended
30 September
2016 2015
Notes £m £m
Cash flows from operating activities
Net cash generated from operations 10 216.8 216.5
Interest received 8.9 1.0
Interest paid (83.4) (99.7)
Employer contributions to defined benefit pension scheme (0.4) (0.4)
Capital expenditure on trading properties (5.6) (20.1)
Disposal of trading properties 50.3 58.3
Corporation tax paid - (0.1)
Net cash inflow from operating activities 186.6 155.5
Cash flows from investing activities
Investment property development expenditure (21.4) (55.6)
Acquisition of investment properties and other investments (14.4) (94.8)
Other investment property related expenditure (38.7) (65.3)
Disposal of investment properties 14.0 344.3
Expenditure on non-property related non-current assets (7.4) (2.7)
Receipt of long-term loan investment - 49.5
Disposal of investment in joint venture 3.6 -
Cash contributed to joint ventures 12 (31.6) (14.6)
Loan advances to joint ventures 12 (29.5) (63.1)
Loan repayments by joint ventures 12 7.4 6.4
Distributions from joint ventures 12 41.2 43.6
Net cash (outflow)/inflow from investing activities (76.8) 147.7
Cash flows from financing activities
Cash received on issue of shares arising from exercise of share options 2.1 4.0
Purchase of own shares and treasury shares (4.9) (12.4)
Proceeds from new loans (net of finance fees) 15 324.3 142.1
Repayment of loans 15 (293.7) (312.1)
Decrease in monies held in restricted accounts and deposits 1.9 3.0
Redemption of medium term notes (10.2) -
Decrease in finance leases payable (0.4) -
Dividends paid to owners of the parent 9 (135.8) (124.2)
Distributions paid by non-wholly owned subsidiaries (0.9) (1.2)
Net cash outflow from financing activities (117.6) (300.8)
(Decrease)/increase in cash and cash equivalents for the period (7.8) 2.4
Cash and cash equivalents at the beginning of the period 24.7 14.3
Cash and cash equivalents at the end of the period 16.9 16.7
Notes to the financial statements
1. Basis of preparation and consolidation
Basis of preparation
This condensed consolidated interim financial information for the six months ended 30 September 2016 has been prepared on a
going concern basis and in accordance with the Disclosure and Transparency Rules of the Financial Conduct Authority and IAS
34 'Interim Financial Reporting' as adopted by the European Union (EU). In order to satisfy themselves that the Group has
adequate resources to continue in operational existence for the foreseeable future, the Directors have reviewed an 18-month
cash flow forecast extracted from the Group's current five-year plan, which includes assumptions about future trading
performance and debt requirements, and an assessment of the potential impact of significant changes to those cash flows.
This, together with available market information and experience of the Group's property portfolio and markets, has given
the Directors sufficient confidence to adopt the going concern basis in preparing the financial statements.
The condensed consolidated interim financial information does not comprise statutory accounts within the meaning of section
434 of the Companies Act 2006. Statutory accounts for the year ended 31 March 2016, presented in accordance with
International Financial Reporting Standards as adopted by the EU (IFRSs), were approved by the Board of Directors on 16 May
2016 and delivered to the Registrar of Companies. The report of the auditor on those accounts was unqualified, did not
contain an emphasis of matter paragraph and did not contain any statement under section 498 of the Companies Act 2006. The
condensed consolidated interim financial information has been reviewed, not audited.
The condensed consolidated interim financial information should be read in conjunction with the Group's annual financial
statements for the year ended 31 March 2016, which have been prepared in accordance with IFRSs.
This condensed consolidated interim financial information was approved for issue on 14 November 2016.
Presentation of results
The Group income statement is presented in a columnar format, split into those items that relate to revenue profit and
capital and other items. The total column represents the Group's results presented in accordance with IFRSs; the other
columns provide additional information. This is intended to reflect the way in which the Group's senior management review
the results of the business and to aid reconciliation to the segmental reporting.
The presentation of individual cost items in the Income Statement has been reviewed in the period and some less significant
items are now aggregated within Costs.
A number of the financial measures used internally by the Group to measure performance include the results of partly-owned
subsidiaries and joint ventures on a proportionate basis. Measures that are described as being on a proportionate basis
include the Group's share of joint ventures on a line-by-line basis and are adjusted to exclude the non-owned elements of
our subsidiaries. These measures are non-GAAP measures and therefore not presented in accordance with IFRSs. This is in
contrast to the condensed consolidated interim financial information presented in these half-yearly results, where the
Group applies equity accounting to its interest in joint ventures, presenting its interest as one line on the income
statement and balance sheet, and consolidating all subsidiaries at 100% with any non-owned element being adjusted as a
non-controlling interest or redemption liability, as appropriate. Our joint operations are presented on a proportionate
basis in all financial measures.
Revenue profit is the Group's measure of underlying pre-tax profit. It excludes all items of a capital nature, such as
valuation movements and profits and losses on the disposal of investment properties, as well as exceptional items. The
Group believes that revenue profit better represents the results of the Group's operational performance to shareholders and
other stakeholder groups. A full definition of revenue profit is given in the glossary. The components of revenue profit
are presented on a proportionate basis in note 3. Revenue profit is a non-GAAP measure.
2. Significant accounting policies
Except as described below, the condensed consolidated interim financial information has been prepared on the basis of the
accounting policies, significant judgements, key assumptions and estimates as set out in the notes to the Group's annual
financial statements for the year ended 31 March 2016. Taxes on income in the interim periods are accrued using the tax
rate that would be applicable to expected total annual earnings.
The following accounting standards or interpretations were effective for the financial year beginning 1 April 2016:
· IFRS 11 (amendment) 'Accounting for Acquisitions of Interest in Joint Operations'
· IAS 1 (amendment) 'Disclosure Initiative'
· IAS 16 and IAS 38 (amendments) 'Clarification of Acceptable Methods of Depreciation and Amortisation'
· IAS 27 (amendment) 'Equity Method in Separate Financial Statements'
None of the standards above have impacted the Group's reporting.
The following accounting standards and interpretations which are relevant to the Group have been issued, but are not yet
effective:
· IFRS 2 (amendment) 'Classification and Measurement of Share-based Payment Transactions'
· IFRS 9 'Financial Instruments'
· IFRS 15 'Revenue from Contracts with Customers'
· IFRS 16 'Leases'
· IAS 7 (amendment) 'Disclosure Initiative'
· IAS 12 (amendment) Recognition of Deferred Tax Assets for Unrealised Losses
· Annual Improvements 2012-2014 (various standards)
These standards and interpretations have not been early adopted by the Group. The Group is in the process of assessing the
impact of these new standards and interpretations on its financial reporting.
3. Segmental information
The Group's operations are organised into two operating segments, being the Retail Portfolio and the London Portfolio. The
London Portfolio includes all our London offices and central London shops and the Retail Portfolio includes all our
shopping centres and shops (excluding central London shops), hotels and leisure assets and retail park properties. All of
the Group's operations are in the UK.
Management has determined the Group's operating segments based on the information reviewed by senior management to make
strategic decisions. During the period, the chief operating decision maker was the Executive Committee (ExecCom), which
comprised the Executive Directors, the managing directors of the Retail and London portfolios, the Group General Counsel
and Company Secretary, the Group HR Director and the Corporate Affairs and Sustainability Director. The information
presented to ExecCom includes reports from all functions of the business as well as strategy, financial planning,
succession planning, organisational development and Group-wide policies.
The Group's primary measure of underlying profit before tax is revenue profit. However, segment profit is the lowest level
to which the profit arising from the on-going operations of the Group is analysed between the two segments. The Group
manages its financing structure, with the exception of joint ventures, on a pooled basis and, as such, debt facilities and
interest charges (other than those relating to joint ventures) are not specific to a particular segment. Unallocated income
and expenses (Group services) are items incurred centrally which are neither directly attributable nor can be reasonably
allocated to individual segments.
The Group's performance is not impacted by seasonal fluctuations.
Six months ended 30 September 2016
Retail Portfolio London Portfolio Total
Revenue profit Group£m Joint ventures£m Total£m Group£m Joint ventures£m Total£m Group(1)£m Joint ventures£m Total£m
Rental income 157.5 14.9 172.4 132.1 9.9 142.0 289.6 24.8 314.4
Finance lease interest 0.6 - 0.6 4.4 - 4.4 5.0 - 5.0
Gross rental income (before rents payable) 158.1 14.9 173.0 136.5 9.9 146.4 294.6 24.8 319.4
Rents payable(2) (3.2) (0.5) (3.7) (1.3) - (1.3) (4.5) (0.5) (5.0)
Gross rental income (after rents payable) 154.9 14.4 169.3 135.2 9.9 145.1 290.1 24.3 314.4
Service charge income 23.2 2.2 25.4 19.5 1.6 21.1 42.7 3.8 46.5
Service charge expense (24.6) (2.7) (27.3) (19.4) (2.1) (21.5) (44.0) (4.8) (48.8)
Net service charge expense (1.4) (0.5) (1.9) 0.1 (0.5) (0.4) (1.3) (1.0) (2.3)
Other property related income 9.3 0.3 9.6 4.4 0.5 4.9 13.7 0.8 14.5
Direct property expenditure (16.0) (2.1) (18.1) (10.0) (0.4) (10.4) (26.0) (2.5) (28.5)
Net rental income 146.8 12.1 158.9 129.7 9.5 139.2 276.5 21.6 298.1
Indirect property expenditure (9.8) (0.5) (10.3) (7.1) (0.3) (7.4) (16.9) (0.8) (17.7)
Depreciation and amortisation (0.2) - (0.2) (0.4) - (0.4) (0.6) - (0.6)
Segment profit before interest 136.8 11.6 148.4 122.2 9.2 131.4 259.0 20.8 279.8
Joint venture net interest expense - (2.1) (2.1) - (5.7) (5.7) - (7.8) (7.8)
Segment profit 136.8 9.5 146.3 122.2 3.5 125.7 259.0 13.0 272.0
Group services - other income 1.3 - 1.3
- expense (19.6) - (19.6)
Interest income 17.5 - 17.5
Interest expense (78.7) - (78.7)
Revenue profit 179.5 13.0 192.5
1. Group income figures shown in this column are included in note 4 and agree to the revenue figure included in the
revenue profit column in the income statement.
2. Included within rents payable is finance lease interest payable of £0.3m and £0.2m for the Retail and London
portfolios, respectively.
Reconciliation of revenue profit to loss before tax Total
Group£m Joint ventures£m Total£m
Revenue profit 179.5 13.0 192.5
Capital and other items
Valuation and profits on disposals
Net (deficit)/surplus on revaluation of investment properties (277.4) 17.8 (259.6)
Movement in impairment of trading properties 9.6 - 9.6
Profit on disposal of trading properties 1.8 - 1.8
Profit on disposal of investment properties 9.0 2.0 11.0
Loss on disposal of investment in joint venture (1.9) - (1.9)
Net interest expense
Fair value movement on foreign exchange swaps 23.4 - 23.4
Foreign exchange movement on borrowings (23.4) - (23.4)
Fair value movement on interest-rate swaps (16.7) - (16.7)
Fair value movement in long-term liabilities (2.2) - (2.2)
Amortisation of bond exchange de-recognition adjustment (12.4) - (12.4)
Impairment of unamortised finance costs (0.7) - (0.7)
Exceptional items
Head office relocation(3) 1.7 - 1.7
Redemption of medium term notes(4) (16.6) - (16.6)
Other
Revaluation of redemption liabilities (1.6) - (1.6)
Impairment of goodwill (0.1) - (0.1)
Amortisation of intangible asset (0.8) - (0.8)
Adjustment for non-wholly owned subsidiaries(5) 0.9 0.1 1.0
Loss before tax (127.9) 32.9 (95.0)
3. The net credit in respect of the head office relocation comprises the £2.4m release of an onerous lease provision
following the assignment of the lease on the Group's current head office at a lower net cost than originally anticipated,
together with relocation costs of £0.7m.
4. The Group purchased medium term notes (MTNs) with a nominal value of £45.8m at a premium of £10.2m. The redemption
premium and £6.4m of the bond exchange de-recognition adjustment associated with the purchased bonds have been expensed to
the income statement in the period.
5. All items in the segment note are presented on a proportionate basis (see note 1). This adjustment represents the
non-owned element of the Group's subsidiaries which is excluded from the numbers presented in the tables above. Included
within the £1.0m adjustment above is revenue of £1.4m, joint venture profits in non-wholly owned subsidiaries of £0.1m,
less costs of £0.5m.
Six months ended 30 September 2015
Retail Portfolio London Portfolio Total
Revenue profit Group£m Joint ventures£m Total£m Group£m Joint ventures£m Total£m Group(1)£m Joint ventures£m Total£m
Rental income 166.6 15.3 181.9 132.6 9.3 141.9 299.2 24.6 323.8
Finance lease interest 0.7 - 0.7 4.5 - 4.5 5.2 - 5.2
Gross rental income (before rents payable) 167.3 15.3 182.6 137.1 9.3 146.4 304.4 24.6 329.0
Rents payable(2) (3.7) (0.5) (4.2) (1.4) - (1.4) (5.1) (0.5) (5.6)
Gross rental income (after rents payable) 163.6 14.8 178.4 135.7 9.3 145.0 299.3 24.1 323.4
Service charge income 22.5 2.3 24.8 19.7 1.7 21.4 42.2 4.0 46.2
Service charge expense (23.4) (2.6) (26.0) (20.1) (2.1) (22.2) (43.5) (4.7) (48.2)
Net service charge expense (0.9) (0.3) (1.2) (0.4) (0.4) (0.8) (1.3) (0.7) (2.0)
Other property related income 9.8 0.3 10.1 6.1 0.4 6.5 15.9 0.7 16.6
Direct property expenditure (17.5) (2.2) (19.7) (12.7) (0.8) (13.5) (30.2) (3.0) (33.2)
Net rental income 155.0 12.6 167.6 128.7 8.5 137.2 283.7 21.1 304.8
Indirect property expenditure (12.3) (0.5) (12.8) (8.4) (0.3) (8.7) (20.7) (0.8) (21.5)
Depreciation (0.1) - (0.1) (0.4) - (0.4) (0.5) - (0.5)
Segment profit before interest 142.6 12.1 154.7 119.9 8.2 128.1 262.5 20.3 282.8
Joint venture net interest expense - (1.6) (1.6) - (7.6) (7.6) - (9.2) (9.2)
Segment profit 142.6 10.5 153.1 119.9 0.6 120.5 262.5 11.1 273.6
Group services - other income 1.8 - 1.8
- expense (19.2) - (19.2)
Interest income 16.5 - 16.5
Interest expense (88.5) - (88.5)
Revenue profit 173.1 11.1 184.2
1. Group income figures shown in this column are included in note 4 and agree to the revenue figure included in the
revenue profit column in the income statement.
2. Included within rents payable is finance lease interest payable of £0.3m and £0.2m for the Retail and London
portfolios, respectively.
Reconciliation of revenue profit to profit before tax Total
Group£m Joint ventures£m Total£m
Revenue profit 173.1 11.1 184.2
Capital and other items
Valuation and profits on disposals
Net surplus on revaluation of investment properties 393.6 125.7 519.3
Movement in impairment of trading properties 1.2 4.4 5.6
Impairment of long-term development contracts (0.1) (0.1) (0.2)
Loss on disposal of trading properties (0.2) - (0.2)
Profit on disposal of investment properties 5.8 4.0 9.8
Net interest expense
Fair value movement on foreign exchange swaps 9.5 - 9.5
Foreign exchange movement on borrowings (9.5) - (9.5)
Fair value movement on interest-rate swaps 2.2 - 2.2
Amortisation of bond exchange de-recognition adjustment (11.4) - (11.4)
Other
Revaluation of redemption liabilities (2.4) - (2.4)
Impairment of goodwill (0.2) - (0.2)
Amortisation of intangible asset (0.8) - (0.8)
Joint venture taxation - (0.2) (0.2)
Adjustment for non-wholly owned subsidiaries(3) 2.2 - 2.2
Profit before tax 563.0 144.9 707.9
3. All items in the segment note are presented on a proportionate basis (see note 1). This adjustment represents the
non-owned element of the Group's subsidiaries which is excluded from the numbers presented in the tables above. Included
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