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Sector
Financials
Size
Large Cap
Market Cap £7.38bn
Enterprise Value £11.19bn
Revenue £748.0m
Position in Universe 126th / 1833

Land Sec. Group PLC - Half-yearly results - Part 2

Tue 14th November, 2017 7:00am
- Part 2: For the preceding part double click  ID:nRSN3778Wa 

and thus leasing activity has slowed. Despite this, the catering and leisure elements within all our destinations
remain virtually fully let, and we recently completed a transaction with Cine UK in which they committed to upgrade and
refurbish their cinemas and increased their lease lengths to 25 years at four of our centres. 
 
We are delivering a number of innovations across our portfolio to add to the customer and consumer experience. Initiatives
include introducing 'smart' parking to our centre car parks, installing more energy efficient LED lighting systems, and
digital innovations such as Bluewater's new online shopping portal are underway throughout our portfolio. At White Rose,
Leeds, we completed the installation of the biggest solar photovoltaic (PV) system at a retail site in the UK, and the
3,000 rooftop panels will supply 39% of the daytime electricity used in the centre's common parts, enhancing White Rose's
sustainability credentials and reducing occupational costs. 
 
Our voids remain low and have decreased slightly to 2.6%. These voids are mainly within our shopping centres, as our retail
parks, hotels and leisure destinations remain almost fully let. 
 
Sell 
 
There were no major disposals during the period. 
 
Net rental income 
 
Table 14: Net rental income(1) 
 
                                      30 September 2017  30 September 2016  Change  
                                      £m                 £m                 £m      
 Like-for-like investment properties  146                147                (1)     
 Proposed developments                -                  -                  -       
 Development programme                -                  -                  -       
 Completed developments               -                  -                  -       
 Acquisitions since 1 April 2016      9                  -                  9       
 Sales since 1 April 2016             -                  7                  (7)     
 Non-property related income          4                  5                  (1)     
 Net rental income                    159                159                -       
 
 
1.    On a proportionate basis. 
 
Net rental income at £159m is in line with the comparative period. The acquisition of three outlet centres has resulted in
a £9m increase to net rental income which is largely offset by a £7m reduction from assets sold. These include our 50%
share of The Junction Centre, Clapham and three Accor hotels this period, and The Cornerhouse, Nottingham, Printworks,
Manchester and four Accor hotels all sold in the second half of last year. The £1m reduction in our like-for-like portfolio
is mainly due to lower surrender receipts and an increase in car park rates, partly offset by additional income following
the opening of the White Rose leisure extension and a reduction in bad debt provisions. 
 
Outlook 
 
We have continued to strengthen our portfolio: launching Westgate Oxford; enhancing and expanding space at our regionally
dominant centres; and acquiring earnings accretive assets with the potential for growth. Consumers and retailers continue
to face an uncertain outlook as rising costs put pressure on disposable incomes and retail margins. Achieving rental growth
will be challenging while these conditions continue, but we believe the best destinations will be more resilient as they
enable retailers to develop and deliver their multichannel offer and to engage with their customers. 
 
Principal risks and uncertainties 
 
The principal risks of the business are set out on pages 44-45 of the 2017 Annual Report alongside their potential impact
and related mitigations. These risks fall into nine categories: customers; market cyclicality; disruption; people and
skills; major health and safety incident; security threat or attack; cyber threat or attack; sustainability; and
development. 
 
The Board has reviewed the principal risks in the context of the second half of the current financial year. The Board
believes there has been no material change to the risks outlined in the 2017 Annual Report and that the existing mitigation
actions remain appropriate to manage them. 
 
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 2017
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 2017 that have materially
affected, and any changes in the related party transactions described in the 2017 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* 
 
Chris Bartram* 
 
Simon Palley* 
 
Stacey Rauch* 
 
Cressida Hogg* 
 
Nicholas Cadbury* 
 
*Non-executive Directors 
 
A list of the current Directors is maintained on the Land Securities Group PLC website at: www.landsec.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 
 
13 November 2017 
 
Independent review report to Land Securities Group PLC 
 
Introduction 
 
We have been engaged by the Company to review the condensed set of financial statements in the half-yearly financial report
for the six months ended 30 September 2017 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 Guidance and Transparency
Rules of the United Kingdom's Financial Conduct Authority. 
 
As disclosed in note 1, the annual financial statements of the Group are prepared in accordance with IFRS 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
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 2017 is not prepared, in all material
respects, in accordance with International Accounting Standard 34 as adopted by the European Union and the Disclosure
Guidance and Transparency Rules of the United Kingdom's Financial Conduct Authority. 
 
Ernst & Young LLP 
 
London 
 
13 November 2017 
 
Financial statements 
 
 Unaudited income statement                                       Six months ended    Six months ended30 September 2016  
                                                                  30 September 2017                                      
                                                                  Revenue             Capital and other items            Total   Revenue   Capital and other items  Total    
                                                                  profit                                                          profit                                     
                                                           Notes  £m                  £m                                 £m      £m        £m                       £m       
 Revenue                                                   5      366                 30                                 396     353       23                       376      
 Costs                                                     6      (123)               (22)                               (145)   (112)     (10)                     (122)    
                                                                  243                 8                                  251     241       13                       254      
 Profit on disposal of investment properties                      -                   1                                  1       -         9                        9        
 Profit/(loss) on disposal of investment in joint venture         -                   66                                 66      -         (2)                      (2)      
 Net deficit on revaluation of investment properties       10     -                   (29)                               (29)    -         (278)                    (278)    
 Operating profit/(loss)                                          243                 46                                 289     241       (258)                    (17)     
 Share of post-tax profit from joint ventures              12     5                   18                                 23      13        20                       33       
 Finance income                                            7      19                  5                                  24      18        -                        18       
 Finance expense                                           7      (64)                (305)                              (369)   (79)      (50)                     (129)    
 Loss before tax                                                  203                 (236)                              (33)    193       (288)                    (95)     
 Taxation                                                         -                   (1)                                (1)     -         (1)                      (1)      
 Loss attributable to shareholders                         203    (237)               (34)                               193     (289)     (96)                     
                                                                                                                                                                             
 Earnings per share attributable to shareholders:                                                                                                                   
 Basic loss per share                                      4                                                             (4.3)p                                     (12.1)p  
 Diluted loss per share                                    4                                                             (4.3)p                                     (12.1)p  
 
 
 Unaudited statement of comprehensive income                                Six months ended    Six months ended30 September 2016  
                                                                            30 September 2017                                      
                                                                                                                                   Total    Total  
                                                                                                                                   £m       £m     
 Loss attributable to shareholders                                                                                                 (34)     (96)   
                                                                                                                                                   
 Items that may be subsequently reclassified to the income statement:                                                                              
 Fair value gain on cash flow hedges arising during the period                                                                     19       -      
                                                                                                                                                   
 Items that will not be subsequently reclassified to the income statement:                                                                         
 Net re-measurement loss on defined benefit pension scheme                                                                         (1)      (11)   
 Deferred tax credit on re-measurement above                                                                                       -        2      
                                                                                                                                                   
 Other comprehensive income/(loss) attributable to shareholders                                                                    18       (9)    
                                                                                                                                                   
 Total comprehensive loss attributable to shareholders                                                                             (16)     (105)  
 
 
 Unaudited balance sheet                                   30 September  31 March  
                                                           2017          2017      
                                                    Notes  £m            £m        
 Non-current assets                                                                
 Investment properties                              10     12,503        12,144    
 Intangible assets                                         35            36        
 Net investment in finance leases                          164           165       
 Investments in joint ventures                      12     1,147         1,734     
 Trade and other receivables                               150           123       
 Other non-current assets                                  51            51        
 Total non-current assets                                  14,050        14,253    
                                                                                   
 Current assets                                                                    
 Trading properties                                 11     111           122       
 Trade and other receivables                               490           418       
 Monies held in restricted accounts and deposits           9             21        
 Cash and cash equivalents                                 205           30        
 Total current assets                                      815           591       
                                                                                   
 Total assets                                              14,865        14,844    
                                                                                   
                                                                                   
 Current liabilities                                                               
 Borrowings                                         14     (349)         (404)     
 Trade and other payables                                  (792)         (302)     
 Other current liabilities                                 (5)           (7)       
 Total current liabilities                                 (1,146)       (713)     
                                                                                   
 Non-current liabilities                                                           
 Borrowings                                         14     (2,789)       (2,545)   
 Trade and other payables                                  (24)          (25)      
 Other non-current liabilities                             (6)           (9)       
 Redemption liability                                      (37)          (36)      
 Total non-current liabilities                             (2,856)       (2,615)   
                                                                                   
 Total liabilities                                         (4,002)       (3,328)   
                                                                                   
 Net assets                                                10,863        11,516    
                                                                                   
                                                                                   
 Equity                                                                            
 Capital and reserves attributable to shareholders                                 
 Ordinary shares                                           80            80        
 Share premium                                      15     317           791       
 Capital redemption reserve                                31            31        
 Own shares                                                (11)          (9)       
 Share-based payments                                      9             8         
 Retained earnings                                         10,437        10,615    
 Total equity                                              10,863        11,516    
 
 
The financial statements on pages 21 to 42 were approved by the Board of Directors on 13 November 2017 and were signed on
its behalf by: 
 
 R M Noel   M F Greenslade  
 Directors                  
 
 
 Unaudited statement of changes in equity             Attributable to shareholders  
                                                      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 2016                                      80                            790            31                          (14)     11                    10,801             11,699   
                                                                                                                                                                                          
 Total comprehensive loss for the financial period    -                             -              -                           -        -                     (105)              (105)    
 Transactions with shareholders:                                                                                                                                                          
 Share-based payments                                 -                             -              -                           8        (5)                   1                  4        
 Dividends paid to shareholders                       -                             -              -                           -        -                     (147)              (147)    
 Acquisition of own shares                            -                             -              -                           (5)      -                     -                  (5)      
 Total transactions with shareholders                 -                             -              -                           3        (5)                   (146)              (148)    
                                                                                                                                                                                          
 At 30 September 2016                                 80                            790            31                          (11)     6                     10,550             11,446   
                                                                                                                                                                                          
 Total comprehensive income for the financial period  -                             -              -                           -        -                     208                208      
 Transactions with shareholders:                                                                                                                                                          
 Share-based payments                                 -                             1              -                           3        2                     (1)                5        
 Dividends paid to shareholders                       -                             -              -                           -        -                     (142)              (142)    
 Acquisition of own shares                            -                             -              -                           (1)      -                     -                  (1)      
 Total transactions with shareholders                 -                             1              -                           2        2                     (143)              (138)    
                                                                                                                                                                                          
 At 31 March 2017                                     80                            791            31                          (9)      8                     10,615             11,516   
                                                                                                                                                                                          
 Total comprehensive loss for the financial period    -                             -              -                           -        -                     (16)               (16)     
 Transactions with shareholders:                                                                                                                                                          
 Share-based payments                                 -                             1              -                           3        1                     1                  6        
 Capital distribution                                 -                             (475)          -                           -        -                     -                  (475)    
 Dividends paid to shareholders                       -                             -              -                           -        -                     (163)              (163)    
 Acquisition of own shares                            -                             -              -                           (5)      -                     -                  (5)      
 Total transactions with shareholders                 -                             (474)          -                           (2)      1                     (162)              (637)    
                                                                                                                                                                                          
 At 30 September 2017                                 80                            317            31                          (11)     9                     10,437             10,863   
 
 
 Unaudited statement of cash flows                                       Six months ended  
                                                                         30 September      
                                                                         2017              2016   
                                                                  Notes  £m                £m     
                                                                                                  
 Cash flows from operating activities                                                             
 Net cash generated from operations                               9      159               217    
 Interest received                                                       11                9      
 Interest paid                                                           (68)              (83)   
 Capital expenditure on trading properties                               (12)              (6)    
 Disposal of trading properties                                          55                50     
 Other operating cash flows                                              (3)               -      
 Net cash inflow from operating activities                               142               187    
                                                                                                  
                                                                                                  
 Cash flows from investing activities                                                             
 Investment property development expenditure                             -                 (21)   
 Acquisition of investment properties                                    (331)             (14)   
 Other investment property related expenditure                           (49)              (39)   
 Disposal of investment properties                                       24                14     
 Disposal of investment in joint venture                                 633               4      
 Cash contributed to joint ventures                               12     (67)              (32)   
 Loan advances to joint ventures                                         (72)              (30)   
 Loan repayments by joint ventures                                12     -                 7      
 Cash distributions from joint ventures                           12     146               41     
 Other investing cash flows                                              -                 (7)    
 Net cash inflow/(outflow) from investing activities                     284               (77)   
                                                                                                  
                                                                                                  
 Cash flows from financing activities                                                             
 Proceeds from new borrowings (net of finance fees)                      23                324    
 Repayment of borrowings                                          14     (151)             (294)  
 Redemption of medium term notes                                  14     (502)             (10)   
 Premium paid on redemption of medium term notes                  14     (171)             -      
 Redemption of QAG Bond                                           14     (273)             -      
 Premium paid on redemption of QAG Bond                           14     (61)              -      
 Issue of medium term notes (net of finance fees)                 14     988               -      
 Net cash receipt from derivative financial instruments                  38                -      
 Dividends paid to shareholders                                   8      (150)             (136)  
 Other financing cash flows                                              8                 (2)    
 Net cash outflow from financing activities                              (251)             (118)  
                                                                                                  
                                                                                                  
 Increase/(decrease) in cash and cash equivalents for the period         175               (8)    
 Cash and cash equivalents at the beginning of the period                30                25     
 Cash and cash equivalents at the end of the period                      205               17     
 
 
Notes to the financial statements 
 
 1. Basis of preparation    
 
 
Basis of preparation 
 
This condensed consolidated interim financial information (financial statements) for the six months ended 30 September 2017
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. 
 
Consistent with the financial statements presented for the year ended 31 March 2017, the Group has reviewed the
presentation of the financial statements and has made some changes with the intention of simplifying the way in which the
Group's results are presented. One of the main changes from the previous half-yearly report is to move from reporting to
the nearest hundred thousand pounds to reporting to the nearest million pounds. Additionally, certain insignificant line
items that were previously presented separately in the financial statements have been aggregated. 
 
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 2017, presented in accordance with
International Financial Reporting Standards as adopted by the EU (IFRS), were approved by the Board of Directors on 17 May
2017 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 and should be read in conjunction with
the Group's annual financial statements for the year ended 31 March 2017. 
 
This condensed consolidated interim financial information was approved for issue on 13 November 2017. 
 
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 IFRS; 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 information. 
 
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 IFRS. 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 used internally by the Group. 
 
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    
 
 
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 2017, as amended where relevant to reflect the new standards, amendments and interpretations
which became effective in the period. These amendments have not had an impact on the interim financial information. 
 
A number of new standards and amendments have been issued but are not yet effective for the Group. These standards and
interpretations have not been early adopted by the Group. During the period, the Group has substantially completed its
detailed assessment of the impact of IFRS 9 Financial Instruments and IFRS 15 Revenue from Contracts with Customers, both
effective from 1 April 2018. 
 
The Group expects the adoption of IFRS 9 to result in a change to the value of the bond exchange de-recognition adjustment
recognised on the balance sheet as part of the carrying value of the Group's borrowings, and consequently the amounts
amortised to the income statement each period and the brought-forward retained earnings. The Group is in the process of
quantifying the adjustment required and expects to have completed this exercise by 31 March 2018. Any other impact on the
Group's reported results arising on adoption of the standard is not expected to be material. 
 
Consistent with the position disclosed in the 2017 Annual Report, based on the transactions impacting the current financial
period and future known transactions, the Group does not expect the adoption of IFRS 15 to have a material impact on the
Group's reported results. 
 
The Group continues to assess the impact of IFRS 16 Leases, effective from 1 April 2019. 
 
 3. Segmental information    
 
 
The Group's operations are organised into two operating segments, being the London Portfolio and the Retail 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), hotel and leisure assets and retail parks. 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
finance expenses (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. 
 
All items in the segmental information note are presented on a proportionate basis. A reconciliation from the Group income
statement to the information presented in the segmental information note is included in table 24. 
 
                                             Six months ended   Six months ended   
                                             30 September 2017  30 September 2016  
                                             RetailPortfolio    London Portfolio   Total  RetailPortfolio  LondonPortfolio  Total  
 Revenue profit                              £m                 £m                 £m     £m               £m               £m     
 Rental income                               176                151                327    172              142              314    
 Finance lease interest                      -                  4                  4      1                4                5      
 Gross rental income (before rents payable)  176                155                331    173              146              319    
 Rents payable(1)                            (5)                (1)                (6)    (4)              (1)              (5)    
 Gross rental income (after rents payable)   171                154                325    169              145              314    
 Service charge income                       27                 23                 50     25               22               47     
 Service charge expense                      (32)               (23)               (55)   (27)             (22)             (49)   
 Net service charge expense                  (5)                -                  (5)    (2)              -                (2)    
 Other property related income               10                 8                  18     10               5                15     
 Direct property expenditure                 (17)               (18)               (35)   (18)             (11)             (29)   
 Net rental income                           159                144                303    159              139              298    
 Indirect property expenditure               (11)               (8)                (19)   (11)             (7)              (18)   
 Depreciation                                -                  (1)                (1)    -                -                -      
 Segment profit before finance expense       148                135                283    148              132              280    
 Joint venture finance expense               (4)                (12)               (16)   (2)              (6)              (8)    
 Segment profit                              144                123                267    146              126              272    
 Group services - other income                                                     1                                        1      
 - expense                                                                         (20)                                     (19)   
 Finance income                                                                    19                                       18     
 Finance expense                                                                   (64)                                     (79)   
 Revenue profit                                                                    203                                      193    
 
 
1.    Included within rents payable is finance lease interest payable of £1m (2016: £nil) for the London Portfolio. 
 
 Reconciliation of revenue profit to loss before tax                       Six months ended   Six months ended   
                                                                           30 September 2017  30 September 2016  
                                                                           Total                                   Total  
                                                                           £m                                      £m     
                                                                                                                          
 Revenue profit                                                            203                                     193    
                                                                                                                          
 Capital and other items                                                                                                  
                                                                                                                          
 Valuation and profits on disposals                                                                                       
 Profit on disposal of investment properties                               2                                       11     
 Profit/(loss) on disposal of investment in joint venture                  66                                      (2)    
 Net deficit on revaluation of investment properties                       (19)                                    (260)  
 Movement in impairment of trading properties                              (1)                                     10     
 Profit on disposal of trading properties                                  16                                      2      
                                                                           64                                      (239)  
 Net finance expense                                                                                                      
 Fair value movement on interest-rate swaps                                5                                       (17)   
 Amortisation of bond exchange de-recognition adjustment                   (10)                                    (12)   
 Other                                                                     (3)                                     (4)    
                                                                           (8)                                     (33)   
 Exceptional items                                                                                                        
 Head office relocation                                                    -                                       2      
 Redemption of medium term notes (MTNs)                                    (173)                                   (10)   
 Amortisation of bond exchange de-recognition adjustment on redeemed MTNs  (57)                                    (7)    
 Redemption of QAG Bond                                                    (62)                                    -      
                                                                           (292)                                   (15)   
                                                                                                                          
 Other                                                                     -                                       (1)    
 Loss before tax                                                           (33)                                    (95)   
                                                                                                                            
 
 
 4. Performance measures    
 
 
Three of the Group's key financial performance measures are adjusted diluted earnings per share, adjusted diluted net
assets per share and total business return. In the tables below we present earnings per share and net assets per share
calculated in accordance with IFRS, together with our own adjusted measures and certain measures required by EPRA. We also
present the calculation of total business return. 
 
Adjusted earnings, which is a tax adjusted measure of revenue profit, is the basis for the calculation of adjusted earnings
per share. We believe adjusted earnings and adjusted earnings per share better represent the results of the Group's
operational performance to stakeholders as they focus on the rental income performance of the business and exclude Capital
and other items which can vary significantly from year to year. 
 
Adjusted net assets excludes the fair value of interest-rate swaps used for hedging purposes and the bond exchange
de-recognition adjustment. We believe this better reflects the underlying net assets attributable to shareholders as it
more accurately reflects the future cash flows associated with our debt instruments. 
 
Total business return is calculated as the cash dividends paid in the period plus the change in adjusted diluted net assets
per share, divided by the opening adjusted diluted net assets per share. We consider this to be a useful measure for
shareholders as it gives an indication of the total return on investment over the period. 
 
EPRA measures for both earnings per share and net assets per share have been included to assist comparison between European
property companies. 
 
 Earnings per share                           Six months ended30 September 2017  Six months ended30 September 2016  
                                              Loss for the financial period      EPRA earnings                      Adjusted earnings  Loss for the financial period  EPRA earnings  Adjusted earnings  
                                              £m                                 £m                                 £m                 £m                             £m             £m                 
 Loss attributable to shareholders            (34)                               (34)                               (34)               (96)                           (96)           (96)               
 Taxation                                     -                                  1                                  1                  -                              1              1                  
 Valuation and profits on disposal            -                                  (64)                               (64)               -                              239            239                
 Net finance expense(1)                       -                                  (2)                                8                  -                              21             33                 
 Exceptional items(2)                         -                                  292                                292                -                              17             15                 
 Other                                        -                                  -                                  -                  -                              1              1                  
 (Loss)/profit used in per share calculation  (34)                               193                                203                (96)                           183            193                
                                                                                                                                                                                                        
                                              IFRS                               EPRA                               Adjusted           IFRS                           EPRA           Adjusted           
 Basic (loss)/earnings per share              (4.3)p                             24.5p                              25.7p              (12.1)p                        23.0p          24.4p              
 Diluted (loss)/earnings per share            (4.3)p                             24.5p                              25.7p              (12.1)p                        23.0p          24.3p              
 
 
1.    The difference in the adjustment for EPRA earnings and adjusted earnings relates to the amortisation of the bond
exchange de-recognition adjustment, which is included in EPRA earnings, but excluded from adjusted earnings. 
 
2.    The difference in the adjustment for EPRA earnings and adjusted earnings in 2016 relates to the head office
relocation costs, which are included in EPRA earnings, but excluded from adjusted earnings. 
 
 Net assets per share                                    30 September 2017  31 March 2017       
                                                         Net assets         EPRA net assets(1)  Adjusted net assets  Net assets  EPRA net  assets(1)  Adjusted net assets  
                                                                            £m                  £m                   £m          £m                   £m                   
 Net assets attributable to shareholders                 10,863             10,863              10,863               11,516      11,516               11,516               
 Fair value of interest-rate swaps - Group               -                  (3)                 (3)                  -           2                    2                    
 - Joint ventures                                        -                  -                   -                    -           2                    2                    
 Bond exchange de-recognition adjustment                 -                  -                   (247)                -           -                    (314)                
 Deferred tax liability arising on business combination  -                  4                   4                    -           4                    4                    
 Goodwill on deferred tax liability                      -                  (4)                 (4)                  -           (4)                  (4)                  
 Net assets used in per share calculation                10,863             10,860              10,613               11,516      11,520               11,206               
                                                                                                                                                                           
                                                         IFRS               EPRA                Adjusted             IFRS        EPRA                 Adjusted             
 Net assets per share                                    1,468p             n/a                 1,434p               1,458p      n/a                  1,418p               
 Diluted net assets per share                            1,466p             1,466p              1,432p               1,456p      1,456p               1,417p               
 
 
1.    EPRA diluted triple net assets per share at 30 September 2017 were 1,376p (31 March 2017: 1,328p). 
 
 4. Performance measures continued    
 
 
 Number of shares                     Six months ended30 September 2017Weighted average  30 September 2017  Six months ended30 September 2016Weighted average  31 March 2017  
                                      million                                            million            million                                            million        
 Ordinary shares                      800                                                751                801                                                801            
 Treasury shares                      (10)                                               (10)               (10)                                               (10)           
 Own shares                           (1)                                                (1)                (1)                                                (1)            
 Number of shares - basic             789                                                740                790                                                790            
 Dilutive effect of share options(1)  -                                                  1                  1                                                  1              
 Number of shares - diluted           789                                                741                791                                                791            
 
 
1.    Share options are excluded from the calculation of the weighted average diluted number of shares because they are not
dilutive in the period ended 30 September 2017. 
 
 Total business return                                                     Six months ended   Six months ended   
                                                                           30 September 2017  30 September 2016  
                                                                           pence              pence              
 Increase/(decrease) in adjusted diluted net assets per share              15                 (26)               
 Dividend paid per share in the period (note 8)                            21                 19                 
 Total return (a)                                                          36                 (7)                
 Adjusted diluted net assets per share at the beginning of the period (b)  1,417              1,434              
 Total business return (a/b)                                               2.5%               (0.5%)             
 
 
 5. Revenue    
 
 
All revenue is classified within the Revenue profit column of the income statement, with the exception of proceeds on the
sale of trading properties and the non-owned element of the Group's subsidiaries which are presented in the Capital and
other items column. 
 
                                                            Six months ended30 September 2017  Six months ended30 September 2016  
                                                            Revenue                            Capital and other items            Total  Revenue  Capital and other items  Total  
                                                             profit                                                                      profit                                   
                                                            £m                                 £m                                 £m     £m       £m                       £m     
 Rental income (excluding adjustment for lease incentives)  282                                1                                  283    271      -                        271    
 Adjustment for lease incentives                            17                                 -                                  17     19       -                        19     
 Rental income                                              299                                1                                  300    290      -                        290    
 Service charge income                                      46                                 -                                  46     43       -                        43     
 Other property related income                              16                                 -                                  16     14       -                        14     
 Trading property sales proceeds                            -                                  29                                 29     -        23                       23     
 Finance lease interest                                     4                                  -                                  4      5        -                        5      
 Other income                                               1                                  -                                  1      1        -                        1      
 Revenue per the income statement                           366                                30                                 396    353      23                       376    
 
 
The following table reconciles revenue per the income statement to the individual components of revenue presented in note
3. 
 
                                            Six months ended30 September 2017  Six months ended30 September 2016  
                                            Group                              Joint ventures                     Adjustment for non-wholly owned subsidiaries(1)  Total  Group  Joint       Adjustment for non-wholly owned subsidiaries(1)  Total  
                                                                                                                                                                                  ventures                                                           
                                            £m                                 £m                                 £m                                               £m     £m     £m          £m                                               £m     
 Rental income                              300                                28                                 (1)                                      

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