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Capital and other items
Valuation and profits on disposals
Profit on disposal of investment properties 20 79
Loss on disposal of investment in joint venture (2) -
Profit on disposal of other investment 13 -
Net (deficit)/surplus on revaluation of investment properties (147) 907
Movement in impairment of trading properties 12 16
Profit on disposal of trading properties 36 41
(68) 1,043
Net finance expense
Fair value movement on interest-rate swaps (8) (11)
Amortisation of bond-exchange de-recognition adjustment (24) (23)
Other (2) (5)
(34) (39)
Exceptional items
Head office relocation 1 (6)
Premium payable on redemption of medium term notes (170) (27)
(169) (33)
Other 1 3
Profit before tax 112 1,336
3. 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 year 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 year.
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 2017 2016
Profit for the financial year EPRA earnings Adjusted earnings Profit for the financial year EPRA earnings Adjusted earnings
£m £m £m £m £m £m
Profit attributable to owners of the parent 113 113 113 1,338 1,338 1,338
Taxation - (1) (1) - (2) (2)
Valuation and profits on disposal - 68 68 - (1,043) (1,043)
Net finance expense(1) - 10 34 - 16 39
Exceptional items(2) - 170 169 - 27 33
Other - (1) (1) - (3) (3)
Profit used in per share calculation 113 359 382 1,338 333 362
IFRS EPRA Adjusted IFRS EPRA Adjusted
Basic earnings per share 14.3p 45.4p 48.4p 169.4p 42.2p 45.9p
Diluted earnings per share 14.3p 45.4p 48.3p 168.8p 42.0p 45.7p
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 relates to the head office relocation costs,
which are included in EPRA earnings, but excluded from adjusted earnings.
Net assets per share 2017 2016
Net assets EPRA net assets(1) Adjusted net assets Net assets EPRA net assets(1) Adjusted net assets
£m £m £m £m £m £m
Net assets attributable to owners of the parent 11,516 11,516 11,516 11,699 11,699 11,699
Fair value of interest-rate swaps - Group - 2 2 - 32 32
- Joint ventures - 2 2 - 2 2
Bond exchange de-recognition adjustment - - (314) - - (368)
Deferred tax liability arising on business combination - 4 4 - 5 5
Goodwill on deferred tax liability - (4) (4) - (5) (5)
Net assets used in per share calculation 11,516 11,520 11,206 11,699 11,733 11,365
IFRS EPRA Adjusted IFRS EPRA Adjusted
Net assets per share 1,458p n/a 1,418p 1,482p n/a 1,439p
Diluted net assets per share 1,456p 1,456p 1,417p 1,476p 1,481p 1,434p
1. For EPRA triple net assets, see table 16.
Number of shares 2017 2016
Weighted average 31 March Weighted average 31 March
million million million million
Ordinary shares 801 801 801 801
Treasury shares (10) (10) (10) (10)
Own shares (1) (1) (1) (1)
Number of shares - basic 790 790 790 790
Dilutive effect of share options 1 1 3 3
Number of shares - diluted 791 791 793 793
Total business return 2017 2016
pence pence
(Decrease)/increase in adjusted diluted net assets per share (17) 141
Dividend paid per share in the year (note 7) 37 32
Total return (a) 20 173
Adjusted diluted net assets per share at the beginning of the year (b) 1,434 1,293
Total business return (a/b) 1.4% 13.4%
4. 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 which is presented in the 'Capital and other items' column. Also included in the 'Capital and
other items' column is the non-owned element of the Group's subsidiaries which is excluded from revenue profit.
2017 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) 541 2 543 571 3 574
Adjustment for lease incentives 44 - 44 29 - 29
Rental income 585 2 587 600 3 603
Service charge income 92 2 94 94 - 94
Other property related income 32 - 32 36 - 36
Trading property sales proceeds - 62 62 - 195 195
Finance lease interest 10 - 10 10 - 10
Other income 2 - 2 4 - 4
Revenue per the income statement 721 66 787 744 198 942
The following table reconciles revenue per the income statement to the individual components of revenue presented in note
2.
2017 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 587 53 (2) 638 603 50 (3) 650
Service charge income 94 9 (2) 101 94 8 - 102
Other property related income 32 2 - 34 36 2 - 38
Trading property sales proceeds 62 72 - 134 195 - - 195
Finance lease interest 10 - - 10 10 - - 10
Other income 2 - - 2 4 - - 4
Revenue in the segmental information note 787 136 (4) 919 942 60 (3) 999
1. This represents the interest in X-Leisure which we do not own, but which is consolidated in the Group numbers.
5. Costs
All costs are classified within the 'Revenue profit' column of the income statement, with the exception of the cost of sale
of trading properties, amortisation of intangible assets and head office relocation costs which are presented in the
'Capital and other items' column. Also included in the 'Capital and other items' column is the non-owned element of the
Group's subsidiaries which is excluded from revenue profit.
2017 2016
Revenue Capital and other items Total Revenue Capital and other items Total
profit profit
£m £m £m £m £m £m
Rents payable 10 - 10 11 - 11
Service charge expense 95 1 96 96 - 96
Direct property expenditure 58 - 58 72 - 72
Indirect property expenditure 79 - 79 80 - 80
Cost of trading property disposals - 33 33 - 154 154
Movement in impairment of trading properties(1) - (12) (12) - (11) (11)
Head office relocation(2) - (1) (1) - 6 6
Amortisation of intangible assets - 2 2 - 1 1
Impairment of goodwill - 1 1 - 1 1
Costs per the income statement 242 24 266 259 151 410
1. The movement in impairment of trading properties in the years ended 31 March 2017 and 2016 relates to the reversal of
previous impairment charges related to residential land, where the valuer's assessment of net realisable value increased
over the year.
2. The net credit of £1m in respect of the head office relocation comprises the £2m release of an onerous lease
provision following the assignment of the lease on the Group's previous head office at lower net cost than originally
anticipated, together with relocation costs of £1m. The cost of £6m in the prior year reflects the creation of the
provision in respect of the onerous lease and relocation costs committed to at that time.
The following table reconciles costs per the income statement to the individual components of costs presented in note 2.
2017 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
Rents payable 10 1 - 11 11 1 - 12
Service charge expense 96 11 (1) 106 96 9 - 105
Direct property expenditure 58 8 - 66 72 7 - 79
Indirect property expenditure 79 2 - 81 80 2 - 82
Trading property disposals 33 65 - 98 154 - - 154
Movement in impairment of trading properties (12) - - (12) (11) (5) - (16)
Head office relocation (1) - - (1) 6 - - 6
Amortisation of intangible asset 2 - - 2 1 - - 1
Impairment of goodwill 1 - - 1 1 - - 1
Costs in the segmental information note 266 87 (1) 352 410 14 - 424
1. This represents the interest in X-Leisure which we do not own, but which is consolidated in the Group numbers.
6. Net finance expense 2017 2016
Revenueprofit Capital and other items Total Revenue profit Capital and other items Total
£m £m £m £m £m £m
Finance income
Other interest receivable 2 - 2 1 - 1
Interest receivable from joint ventures 35 - 35 34 - 34
37 - 37 35 - 35
Finance expense
Bond and debenture debt (144) - (144) (169) - (169)
Bank and other short-term borrowings (15) - (15) (20) - (20)
Fair value movement on interest-rate swaps - (8) (8) - (11) (11)
Amortisation of bond exchange de-recognition adjustment - (24) (24) - (23) (23)
Redemption of medium term notes - (170) (170) - (27) (27)
Revaluation of redemption liabilities - (3) (3) - (5) (5)
Other interest payable (1) 1 - - - -
(160) (204) (364) (189) (66) (255)
Interest capitalised in relation to properties under development 5 - 5 11 - 11
(155) (204) (359) (178) (66) (244)
Net finance expense (118) (204) (322) (143) (66) (209)
Joint venture net finance expense (21) (21)
Net finance expense included in revenue profit (139) (164)
During the year, the Group purchased medium term notes (MTNs) with a nominal value of £690m (2016: £400m) for a premium of
£137m (2016: £26m). The redemption premium and £30m (2016: £nil) of the bond exchange de-recognition adjustment associated
with the purchased bonds have been expensed to the income statement in the year, as an exceptional item, along with £1m
(2016: £nil) of bank tender fees and the £2m (2016: £1m) write-off of unamortised issue costs. Further details are given in
note 13.
Finance lease interest payable of £2m (2016: £1m) is included within rents payable as detailed in note 2.
7. Dividends
Pence per share 2017 2016
Ordinary dividends paid Payment date PID Non-PID Total £m £m
For the year ended 31 March 2015:
Third interim 10 April 2015 7.9 - 7.9 63
Final 24 July 2015 8.15 - 8.15 64
For the year ended 31 March 2016:
First interim 9 October 2015 8.15 - 8.15 64
Second interim 7 January 2016 - 8.15 8.15 64
Third interim 8 April 2016 8.15 - 8.15 64
Final 28 July 2016 10.55 - 10.55 83
For the year ended 31 March 2017:
First interim 7 October 2016 8.95 - 8.95 71
Second interim 6 January 2017 - 8.95 8.95 71
Gross dividends 289 255
Dividends in statement of changes in equity 289 255
Timing difference on payment of withholding tax - 7
Dividends in the statement of cash flows 289 262
A third quarterly interim dividend of 8.95p per ordinary share, or £71m in total (2016: 8.15p or £64m in total), was paid
on 7 April 2017 as a Property Income Distribution (PID). The Board has recommended a final dividend for the year ended 31
March 2017 of 11.7p per ordinary share (2016: 10.55p) to be paid as a PID. This final dividend will result in a further
estimated distribution of £92m (2016: £83m). Subject to shareholders' approval at the Annual General Meeting, the final
dividend will be paid on 27 July 2017 to shareholders registered at the close of business on 23 June 2017. The total
dividend paid and recommended in respect of the year ended 31 March 2017 is therefore 38.55p per ordinary share (2016:
35.0p).
A Dividend Reinvestment Plan (DRIP) has been available in respect of all dividends paid during the year.
8. Net cash generated from operations
2017 2016
Reconciliation of operating profit to net cash generated from operations £m £m
Operating profit 365 1,346
Adjustments for:
Net deficit/(surplus) on revaluation of investment properties 186 (739)
Movement in impairment of trading properties (12) (11)
Profit on disposal of trading properties (29) (41)
Profit on disposal of investment properties (19) (75)
Profit on disposal of other investment (13) -
Loss on disposal of investment in joint venture 2 -
Share-based payment charge 5 8
Other 8 6
493 494
Changes in working capital:
Increase in receivables (17) (33)
Decrease in payables and provisions (12) (10)
Net cash generated from operations 464 451
9. Investment properties
2017 2016
£m £m
Net book value at the beginning of the year 12,358 12,158
Acquisitions 14 157
Capital expenditure: Investment portfolio 80 91
Developments 46 104
Capitalised interest 5 9
Disposals (205) (900)
Net movement in finance leases 32 -
Net (deficit)/surplus on revaluation of investment properties (186) 739
Net book value at 31 March 12,144 12,358
The market value of the Group's investment properties, as determined by the Group's external valuer, differs from the net
book value presented in the balance sheet due to the Group presenting lease incentives, tenant finance leases and head
leases separately. The following table reconciles the net book value of the investment properties to the market value.
2017 2016
Group Joint ventures(1) Adjustment for proportionate share(2) Combined Portfolio Group Joint Adjustment for proportionate share(2) Combined Portfolio
(excl. joint ventures) (excl. joint ventures) ventures(1)
£m £m £m £m £m £m £m £m
Net book value 12,144 1,763 (34) 13,873 12,358 1,630 (34) 13,954
Plus: tenant lease incentives 311 57 (1) 367 268 43 - 311
Less: head leases capitalised (31) (8) - (39) (14) - - (14)
Plus: properties treated as finance leases 238 - - 238 220 - - 220
Market value 12,662 1,812 (35) 14,439 12,832 1,673 (34) 14,471
Net (deficit)/surplus on revaluation of investment properties (186) 40 (1) (147) 739 171 (3) 907
1. Refer to note 11 for a breakdown of this amount by entity.
2. This represents the interest in X-Leisure which we do not own, but which is consolidated in the Group numbers.
The net book value of leasehold properties where head leases have been capitalised is £1,169m (2016: £968m).
Investment properties include capitalised interest of £206m (2016: £201m). The average rate of interest capitalisation for
the year is 4.7% (2016: 5.0%). The historical cost of investment properties is £6,713m (2016: £6,720m).
10. Trading properties
Development land and infrastructure Residential Total
£m £m £m
At 1 April 2015 85 137 222
Capital expenditure 10 17 27
Capitalised interest - 2 2
Disposals (19) (119) (138)
Movement in impairment 12 (1) 11
At 31 March 2016 88 36 124
Capital expenditure 17 2 19
Disposals (9) (24) (33)
Movement in impairment 12 - 12
At 31 March 2017 108 14 122
The cumulative impairment provision at 31 March 2017 in respect of Development land and infrastructure was £67m (31 March
2016: £79m); and in respect of Residential was £1m (31 March 2016: £1m).
11. Joint arrangements
The Group's joint arrangements are described below:
Joint ventures Percentage owned & Business Year end date(1) Joint venture partner
voting rights segment
Held at 31 March 2017
20 Fenchurch Street Limited Partnership 50% London 31 March Canary Wharf Group plc
Nova, Victoria(2) 50% London 31 March Canada Pension Plan Investment Board
Metro Shopping Fund Limited Partnership(3) 50% Retail 31 March Delancey Real Estate Partners Limited
St. David's Limited Partnership 50% Retail 31 December Intu Properties plc
Westgate Oxford Alliance Limited Partnership 50% Retail 31 March The Crown Estate Commissioners
The Oriana Limited Partnership(4) 50% London 31 March Frogmore Real Estate Partners Limited Partnership
Harvest(5)(6) 50% Retail 31 March J Sainsbury plc
The Ebbsfleet Limited Partnership(6) 50% London 31 March Ebbsfleet Property Limited
Millshaw Property Co. Limited(6)(7) 50% Retail 31 March Evans Property Group Limited
West India Quay Unit Trust(6)(8) 50% Retail 31 March Schroder Exempt Property Unit Trust
Joint operation Ownership interest Business Joint operation partners
segment
Bluewater, Kent 30% Retail M&G Real Estate and GICLend Lease Retail PartnershipHermes and Aberdeen Asset Management
The following joint arrangement was sold in the year ended 31 March 2017:
Joint ventures
Countryside Land Securities (Springhead) Limited 50% London Countryside Properties PLC
1. The year end date shown is the accounting reference date of the joint venture. In all cases the Group's accounting is
performed using financial information for the Group's own reporting period and reporting date.
2. Nova, Victoria includes the Victoria Circle Limited Partnership, Nova Residential Limited Partnership and Victoria
Circle Developer Limited.
3. On 13 April 2017, Metro Shopping Fund Limited Partnership (Metro) completed the sale of one of its assets to DV4 (a
fund owned by Delancey Real Estate Asset Management Limited (Delancey)). On the same date Delancey sold their stake in
Metro to Invesco Real Estate European Fund. The partnership was subsequently renamed "The Southside Limited Partnership."
4. On 23 September 2016, The Oriana Limited Partnership disposed of its interest in 26-32 Oxford Street, W1.
5. Harvest includes Harvest 2 Limited Partnership, Harvest Development Management Limited, Harvest 2 Selly Oak Limited,
Harvest 2 GP Limited and Harvest GP Limited.
6. Included within Other in subsequent tables.
7. At 31 March 2017, the Millshaw Property Co. Limited was in the process of being liquidated.
8. West India Quay Unit Trust is held in the X-Leisure Unit Trust (X-Leisure) in which the Group holds a 95% share.
All of the Group's joint arrangements have their principal place of business in the United Kingdom. All of the Group's
joint arrangements own and operate investment property with the exception of The Ebbsfleet Limited Partnership which holds
development land as trading properties, and Millshaw Property Co. Limited which disposed of its only property interest in
the prior year. The Westgate Oxford Alliance Limited Partnership, Nova, Victoria and The Oriana Limited Partnership are
also engaged in the development of investment and trading properties. The activities of all the Group's joint arrangements
are therefore strategically important to the business activities of the Group.
All joint ventures are registered in England and Wales with the exception of the Metro Shopping Fund Limited Partnership
and West India Quay Unit Trust which are registered in Jersey.
2017
Joint ventures 20 Fenchurch Street Limited Partnership Nova, Victoria Metro Shopping Fund Limited Partnership St. David's Limited Partnership Westgate Oxford Alliance Partnership The Oriana Limited Partnership Individually material JVs (Group share) Other Total
Comprehensive income statement 100% 100% 100% 100% 100% 100% 50% Group share Group share
£m £m £m £m £m £m £m £m £m
Revenue(1) 48 147 21 43 3 - 131 5 136
Gross rental income (after rents payable) 39 7 17 35 3 - 50 2 52
Net rental income 37 2 15 29 2 - 43 1 44
Segment profit before finance expense 36 1 15 27 2 - 41 1 42
Finance expense (22) (36) (8) - (11) - (39) - (39)
Capitalised interest - 25 - - 10 - 18 - 18
Net finance expense (22) (11) (8) - (1) - (21) - (21)
Revenue profit 14 (10) 7 27 1 - 20 1 21
Capital and other items
Net surplus/(deficit) on revaluation of investment properties 43 41 - (22) 19 (1) 40 - 40
Profit on disposal of investment properties - - 2 - - - 1 - 1
Profit on disposal of trading properties - 14 - - - - 7 - 7
Profit/(loss) before tax 57 45 9 5 20 (1) 68 1 69
Taxation - - - - - - - - -
Post-tax profit/(loss) 57 45 9 5 20 (1) 68 1 69
Other comprehensive income - - - - - - - - -
Total comprehensive income 57 45 9 5 20 (1) 68 1 69
50% 50% 50% 50% 50% 50% - - -
Group share of total comprehensive income 28 23 5 3 10 (1) 68 1 69
1. Revenue includes gross rental income (before rents payable), service charge income, other property related income and
trading properties disposal proceeds.
2016
Joint ventures 20 Fenchurch Street Limited Partnership Nova, Metro Shopping Fund Limited Partnership St. David's Limited Partnership Westgate Oxford Alliance Partnership The Oriana Limited Partnership Individually material Other Total
Victoria JVs (Group share)
Comprehensive income statement 100% 100% 100% 100% 100% 100% 50% Group share Group share
£m £m £m £m £m £m £m £m £m
Revenue(1) 45 - 19 45 3 1 57 3 60
Gross rental income (after rents payable) 36 - 15 37 3 1 46 3 49
Net rental income/(expense) 35 (1) 15 30 1 1 41 2 43
Segment profit/(loss) before finance expense 33 (1) 14 29 1 1 39 2 41
Finance expense (33) (29) (7) - (6) - (38) - (38)
Capitalised interest - 28 - - 6 - 17 - 17
Net finance expense (33) (1) (7) - - - (21) - (21)
Revenue profit - (2) 7 29 1 1 18 2 20
Capital and other items
Net surplus on revaluation of investment properties 86 87 56 73 19 19 170 1 171
Movement in impairment of trading properties - - - - - -
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