- Part 3: For the preceding part double click ID:nRSN3778Wb
327 290 24 - 314
Service charge income 46 4 - 50 43 4 - 47
Other property related income 16 2 - 18 14 1 - 15
Trading property sales proceeds 29 56 - 85 23 2 - 25
Finance lease interest 4 - - 4 5 - - 5
Other income 1 - - 1 1 - - 1
Revenue in the segmental information note 396 90 (1) 485 376 31 - 407
1. This represents the interest in X-Leisure which we do not own, but which is consolidated in the Group numbers.
6. 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, head office relocation costs, and the non-owned element of the
Group's subsidiaries which are presented in the Capital and other items column.
Six months ended Six months ended
30 September 2017 30 September 2016
Revenue Capital and other items Total Revenue Capital and other items Total
profit profit
£m £m £m £m £m £m
Rents payable 5 - 5 5 - 5
Service charge expense 49 - 49 44 - 44
Direct property expenditure 30 - 30 26 - 26
Indirect property expenditure 39 - 39 37 - 37
Cost of trading property disposals - 22 22 - 21 21
Movement in impairment of trading properties(1) - (1) (1) - (10) (10)
Head office relocation(2) - - - - (2) (2)
Amortisation of intangible assets - 1 1 - 1 1
Costs per the income statement 123 22 145 112 10 122
1. The movement in impairment of trading properties in the six months ended 30 September 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 period.
2. The net credit of £2m in respect of the head office relocation in the prior period 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.
The following table reconciles costs per the income statement to the individual components of costs presented in note 3.
Six months ended Six months ended
30 September 2017 30 September 2016
Group Joint ventures Total Group Joint Total
ventures
£m £m £m £m £m £m
Rents payable 5 1 6 5 - 5
Service charge expense 49 6 55 44 5 49
Direct property expenditure 30 5 35 26 3 29
Indirect property expenditure 39 1 40 37 - 37
Trading property disposals 22 47 69 21 2 23
Movement in impairment of trading properties (1) 2 1 (10) - (10)
Head office relocation - - - (2) - (2)
Amortisation of intangible asset 1 - 1 1 - 1
Costs in the segmental information note 145 62 207 122 10 132
The Group's costs include employee costs for the period of £31m (2016: £30m), of which £3m (2016: £4m) is within service
charge expense and £28m (2016: £26m) is within indirect property expenditure, of which £13m relates to Group services
(2016: £10m).
7. Net finance expense
Six months ended Six months ended
30 September 2017 30 September 2016
Revenueprofit Capital and other items Total Revenue profit Capital and other items Total
£m £m £m £m £m £m
Finance income
Interest receivable from joint ventures 19 - 19 17 - 17
Fair value movement on interest-rate swaps - 5 5 1 - 1
19 5 24 18 - 18
Finance expense
Bond and debenture debt (57) - (57) (73) - (73)
Bank and other short-term borrowings (7) - (7) (8) - (8)
Fair value movement on interest-rate swaps - - - - (17) (17)
Amortisation of bond exchange de-recognition adjustment - (10) (10) - (12) (12)
Redemption of MTNs - (173) (173) - (10) (10)
Amortisation of bond exchange de-recognition adjustment on redeemed MTNs - (57) (57) - (7) (7)
Redemption of QAG Bond - (62) (62) - - -
Revaluation of redemption liabilities - (1) (1) - (1) (1)
Other interest payable (1) (2) (3) (1) (3) (4)
(65) (305) (370) (82) (50) (132)
Interest capitalised in relation to properties under development 1 - 1 3 - 3
(64) (305) (369) (79) (50) (129)
Net finance expense (45) (300) (345) (61) (50) (111)
Joint venture net finance expense (16) (8)
Net finance expense included in revenue profit (61) (69)
During the period, the Group redeemed the QAG Bond in its entirety. In September 2017, the Group repurchased £502m of
medium term notes. Further details are given in note 14.
Finance lease interest payable of £1m (2016: £nil) is included within rents payable as detailed in note 3.
8. Dividends
Ordinary dividends paid Six months ended 30 September
Pence per share 2017 2016
Payment date PID Non-PID Total £m £m
For the year ended 31 March 2016:
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:
Third interim 7 April 2017 8.95 - 8.95 71
Final 27 July 2017 11.70 - 11.70 92
Gross dividends 163 147
Dividends in statement of changes in equity 163 147
Timing difference on payment of withholding tax (13) (11)
Dividends in the statement of cash flows 150 136
On 6 October 2017, the Company paid a first interim dividend in respect of the current financial year of 9.85p per ordinary
share, wholly as a Property Income Distribution (PID), representing £78m in total (2016: 8.95p or £71m in total).
The Board has declared a second interim dividend of 9.85p per ordinary share to be payable wholly as an ordinary dividend
(2016: 8.95p) on 5 January 2018 to shareholders registered at the close of business on 1 December 2017.
A Dividend Reinvestment Plan (DRIP) has been available in respect of all dividends paid during the period.
9. Net cash generated from operations
Six months ended Six months ended
30 September 2017 30 September 2016
Reconciliation of operating profit/(loss) to net cash generated from operations £m £m
Operating profit/(loss) 289 (17)
Adjustments for:
Net deficit on revaluation of investment properties 29 278
Movement in impairment of trading properties (1) (10)
Profit on disposal of trading properties (7) (2)
Profit on disposal of investment properties (1) (9)
(Profit)/loss on disposal of investment in joint venture (66) 2
Share-based payment charge 4 2
Other 4 4
251 248
Changes in working capital:
Increase in receivables (75) (9)
Decrease in payables and provisions (17) (22)
Net cash generated from operations 159 217
10. Investment properties
Six months ended Six months ended Six months ended
30 September 2017 31 March 2017 30 September 2016
£m £m £m
Net book value at the beginning of the period 12,144 12,182 12,358
Acquisitions 348 1 13
Transfer from trading properties 1 - -
Capital expenditure: Investment portfolio 55 47 34
Developments - (7) 53
Capitalised interest 1 2 3
Disposals (17) (189) (16)
Net movement in finance leases - 17 15
Net (deficit)/surplus on revaluation of investment properties (29) 91 (278)
Net book value at the end of the period 12,503 12,144 12,182
The fair value of investment properties at 30 September 2017 was determined by the Group's external valuer, CBRE. The
valuations are in line with RICS standards and were arrived at by reference to market evidence of transactions for similar
properties. The valuations performed by the independent valuer are reviewed internally by senior management and relevant
people within the business. This includes discussions of the assumptions used by the external valuer, as well as a review
of the resulting valuations. Discussions of the valuation process and results are held between senior management, the audit
committee and the external valuer on a half-yearly basis.
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.
30 September 2017 31 March 2017
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 12,503 1,212 (35) 13,680 12,144 1,763 (34) 13,873
Plus: tenant lease incentives 330 21 (1) 350 311 57 (1) 367
Less: head leases capitalised (31) (8) - (39) (31) (8) - (39)
Plus: properties treated as finance leases 240 - - 240 238 - - 238
Market value 13,042 1,225 (36) 14,231 12,662 1,812 (35) 14,439
Net (deficit)/surplus on revaluation of investment properties (29) 10 - (19) (186) 40 (1) (147)
1. Refer to note 12 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.
11. Trading properties
Development land and infrastructure Residential Total
£m £m £m
At 1 April 2016 88 36 124
Capital expenditure 10 3 13
Disposals (9) (11) (20)
Movement in impairment 10 - 10
At 30 September 2016 99 28 127
Capital expenditure 6 (1) 5
Disposals - (13) (13)
Movement in impairment 3 - 3
31 March 2017 108 14 122
Capital expenditure 12 (1) 11
Disposals (15) (7) (22)
Transfer to investment properties - (1) (1)
Movement in impairment 1 - 1
At 30 September 2017 106 5 111
The cumulative impairment provision at 30 September 2017 in respect of Development land and infrastructure was £66m (31
March 2017: £67m); and in respect of Residential was £1m (31 March 2017: £1m).
12. Joint arrangements
The Group's joint arrangements are described below:
Joint ventures Percentage owned & voting rights Business Year end date(1) Joint venture partner
segment
Held at 30 September 2017
Nova, Victoria(2) 50% London 31 March Canada Pension Plan Investment Board
The Southside Limited Partnership(3) 50% Retail 31 March Invesco Real Estate European Fund
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 50% London 31 March Frogmore Real Estate Partners Limited Partnership
Harvest(4)(5) 50% Retail 31 March J Sainsbury plc
The Ebbsfleet Limited Partnership(5) 50% London 31 March Ebbsfleet Property Limited
West India Quay Unit Trust(5)(6) 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 liquidated in the six months ended 30 September 2017:
Joint venture Ownership interest Business segment Joint venture partner
Millshaw Property Co. Limited 50% Retail Evans Property Group Limited
The following joint arrangement was sold in the six months ended 30 September 2017:
Joint venture Ownership interest Business segment Joint venture partner
20 Fenchurch Street Limited Partnership(7) 50% London Canary Wharf Group 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 advised by Delancey Real Estate Asset Management Limited (Delancey)). On the same date Delancey sold its stake in
Metro to Invesco Real Estate European Fund. The partnership was subsequently renamed The Southside Limited Partnership.
4. Harvest includes Harvest 2 Limited Partnership, Harvest Development Management Limited, Harvest 2 Selly Oak Limited,
Harvest 2 GP Limited and Harvest GP Limited.
5. Included within Other in subsequent tables.
6. West India Quay Unit Trust is held in the X-Leisure Unit Trust (X-Leisure) in which the Group holds a 95% share.
7. On 24 August 2017, the Group disposed of its interest in 20 Fenchurch Street Limited Partnership for £633m, realising
a profit of £66m, after settling outstanding interest receivable of £36m.
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. 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 Southside Limited Partnership and West
India Quay Unit Trust which are registered in Jersey.
Six months ended 30 September 2017
Joint ventures 20 Fenchurch Street Limited Partnership Nova, Victoria The Southside Limited Partnership(1) 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(2) 21 123 9 21 4 - 89 1 90
Gross rental income (after rents payable) 16 9 7 17 3 - 26 1 27
Net rental income 16 5 6 13 2 - 21 1 22
Segment profit before finance expense 16 4 6 13 2 - 20 1 21
Finance expense (8) (16) (3) - (10) - (19) - (19)
Capitalised interest - - - - 5 - 3 - 3
Net finance expense (8) (16) (3) - (5) - (16) - (16)
Revenue profit/(loss) 8 (12) 3 13 (3) - 4 1 5
Capital and other items
Net surplus/(deficit) on revaluation of investment properties - 16 2 (19) 12 - 6 4 10
Impairment of trading properties - (4) - - - - (2) - (2)
Profit on disposal of investment properties - - - - - 1 1 - 1
Profit on disposal of trading properties - 18 - - - - 9 - 9
Profit/(loss) before tax 8 18 5 (6) 9 1 18 5 23
Post-tax profit/(loss) 8 18 5 (6) 9 1 18 5 23
Total comprehensive income/(loss) 8 18 5 (6) 9 1 18 5 23
50% 50% 50% 50% 50% 50% - - -
Group share of total comprehensive income/(loss) 4 9 3 (3) 4 1 18 5 23
1. Previously called Metro Shopping Fund Limited Partnership.
2. Revenue includes gross rental income (before rents payable), service charge income, other property related income and
trading properties disposal proceeds.
Six months ended 30 September 2016
Joint ventures 20 Fenchurch Street Limited Partnership Nova, The Southside Limited Partnership(1) 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(2) 22 1 10 22 1 - 28 3 31
Gross rental income (after rents payable) 19 1 9 17 1 - 24 - 24
Net rental income 17 1 7 14 1 - 20 1 21
Segment profit before finance expense 17 - 8 13 1 - 20 1 21
Finance expense (10) (18) (4) - (5) - (19) - (19)
Capitalised interest - 17 - - 5 - 11 - 11
Net finance expense (10) (1) (4) - - - (8) - (8)
Revenue profit/(loss) 7 (1) 4 13 1 - 12 1 13
Capital and other items
Net (deficit)/surplus on revaluation of investment properties (16) 73 (1) (15) - (4) 19 (1) 18
Profit on disposal of investment properties - - 1 - - 3 2 - 2
(Loss)/profit before tax (9) 72 4 (2) 1 (1) 33 - 33
Post-tax (loss)/profit (9) 72 4 (2) 1 (1) 33 - 33
Total comprehensive (loss)/income (9) 72 4 (2) 1 (1) 33 - 33
50% 50% 50% 50% 50% 50%
Group share of total comprehensive (loss)/income (4) 36 2 (1) - - 33 - 33
1. Previously called Metro Shopping Fund Limited Partnership.
2. Revenue includes gross rental income (before rents payable), service charge income, other property related income,
trading properties disposal proceeds and income from long-term development contracts
30 September 2017
Joint ventures 20 Fenchurch Street Limited Partnership Nova, Victoria The Southside Limited Partnership(1) St. David's Limited Partnership Westgate Oxford Alliance Partnership The Oriana Limited Partnership Individually material JVs Other Total
(Group share)
Balance sheet 100% 100% 100% 100% 100% 100% 50% Group share Group share
£m £m £m £m £m £m £m £m £m
Investment properties(2) - 825 298 689 516 - 1,164 48 1,212
Non-current assets - 825 298 689 516 - 1,164 48 1,212
Cash and cash equivalents - 9 2 6 12 14 22 12 34
Other current assets - 104 9 20 24 33 95 14 109
Current assets - 113 11 26 36 47 117 26 143
Total assets - 938 309 715 552 47 1,281 74 1,355
Trade and other payables and provisions - (150) (6) (12) (47) (6) (111) (9) (120)
Current liabilities - (150) (6) (12) (47) (6) (111) (9) (120)
Non-current liabilities - - (143) (16) - (17) (88) - (88)
Non-current liabilities - - (143) (16) - (17) (88) - (88)
Total liabilities - (150) (149) (28) (47) (23) (199) (9) (208)
Net assets - 788 160 687 505 24 1,082 65 1,147
Market value of investment properties(2) - 841 301 687 524 - 1,177 48 1,225
Net cash/(debt) - 9 2 (11) 12 14 13 13 26
31 March 2017
Joint ventures 20 Fenchurch Street Limited Partnership Nova, Victoria The Southside Limited Partnership(1) St. David's Limited Partnership Westgate Oxford Alliance Partnership The Oriana Limited Partnership Individually material Other Total
JVs (Group share)
Balance sheet 100% 100% 100% 100% 100% 100% 50% Group share Group share
£m £m £m £m £m £m £m £m £m
Investment properties(2) 1,046 809 376 708 412 93 1,722 41 1,763
Non-current assets 1,046 809 376 708 412 93 1,722 41 1,763
Cash and cash equivalents 16 43 6 4 10 13 46 3 49
Other current assets 93 195 7 21 15 28 180 14 194
Current assets 109 238 13 25 25 41 226 17 243
Total assets 1,155
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