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British Land Co PLC  -  BLND   

Half-year Report - Part 1

Released 07:00 16-Nov-2017

RNS Number : 6456W
British Land Co PLC
16 November 2017




The British Land Company PLC Half Year Results

16 November 2017




·       A strong first half of successful leasing activity:

-        1.3m sq ft of lettings and renewals 6.8% ahead of ERV, securing £32m of additional future rent

-        At 98%, portfolio is effectively full on both sides of the business

-        Secured the largest West End pre-let in over 20 years at 1 Triton Square


·       Good financial performance:

-        Profit maintained at £198m despite £1.5bn of sales since March 2016

-        NAV up 2.6% to 939p, with valuations up 1.4%

-        Half year dividend increase of 3% to 15.04p


·       A balanced approach to development risk; well positioned for future growth:

-        Committed pipeline, representing £55m ERV, increased by 760,000 sq ft in the half

-        Speculative exposure at 4%, with 57% of committed pipeline pre-let or under offer

-        1.8m sq ft of planning approvals including Paddington Gateway, Meadowhall Leisure extension


·       Continued focus on capital discipline and further diversifying our sources of finance:

-        LTV reduced by 300 bps to 26.9% with WAIR at 3.0%

-        Successfully issued £300m Sterling Bond

-        £156m of £300m share buyback undertaken: on track for completion by end of financial year



Chris Grigg, Chief Executive said: "British Land has delivered a strong first half performance as a result of our high level of successful activity and firm capital discipline. Net asset value is up 2.6%; profit and EPS remain steady despite considerable recent disposals; and we've increased the size of our committed development pipeline while reducing LTV further.


"Our strategic focus on creating outstanding environments is driving healthy demand for our space in a market that continues to polarise. Leasing activity was strong at good pricing, in spite of external uncertainty, and we secured the largest West End office pre-let in 22 years at 1 Triton Square. In development, we have maintained speculative exposure at 4% while extending the committed pipeline to 1.5 million sq ft, supported by continued leasing success.


"This pace is mirrored in our financing activity, where we reduced costs by another £12 million and further diversified our sources of debt. We further reduced LTV and extended average debt maturity to almost nine years. Our balance sheet is well positioned, providing flexibility as we create new lettable space through development.


"We have deliberately created a portfolio consisting of the high-quality assets and development opportunities required to succeed in today's environment. As a result we continue to achieve valuable leasing success and strong pricing, enabling us to increase the dividend by 3%, while progressing our unique development opportunities to create long-term value for shareholders."





Balance sheet

31 March 17

30 September 2017


Portfolio at valuation (proportionally consolidated)




EPRA Net Asset Value per share²




IFRS net assets



Loan to value ratio (proportionally consolidated)



Income statement

 HY 2016/17

 HY 2017/18

Underlying profit 2




Diluted underlying earnings per share 2,3




IFRS (loss) / profit before tax



IFRS basic earnings per share



Dividend per share




Total accounting return ²



Operational Statistics

 HY 2016/17

HY 2017/18

Leasing and renewals, sq ft


1.3 million




Committed development, sq ft


1.5 million

Sustainability Performance


AAA rating

AAA rating


5* and Green Star

5* and Green Star

1 Valuation movement during the period (after taking account of capex) of properties held at the balance sheet date, including developments (classified by end use), purchases and sales

2See Glossary on pages 69 to 75 for definition

2 See Note 2 to the condensed interim financial statements



Results Presentation and Investor Conference Call

A presentation of the results will take place at 9.30am today, 16 November 2017, and will be broadcast live via webcast ( and conference call.  The details for the conference call are as follows:


UK Toll Free Number:

0808 109 0700


British Land


A dial in replay will be available later in the day and will be available for 7 days. The details are as follows:


Replay number:                     

0208 196 1998



A video replay of the event will be available online at from 2pm on 16 November 2017.


For Information Contact


Investor Relations



Cressida Curtis, British Land

020 7467 2938





Pip Wood, British Land 

020 7467 2838

Guy Lamming, Finsbury

020 7251 3801

Gordon Simpson, Finsbury

020 7251 3801


Forward-looking statements


This Press Release contains certain 'forward-looking' statements. Such statements reflect current views on, among other things, our markets, activities, projections, objectives and prospects. Such 'forward-looking' statements can sometimes, but not always, be identified by their reference to a date or point in the future or the use of 'forward-looking' terminology, including terms such as 'believes', 'estimates', 'anticipates', 'expects', 'forecasts', 'intends', 'due', 'plans', 'projects', 'goal', 'outlook', 'schedule', 'target', 'aim', 'may', 'likely to', 'will', 'would', 'could', 'should' or similar expressions or in each case their negative or other variations or comparable terminology. By their nature, forward-looking statements involve inherent risks, assumptions and uncertainties because they relate to future events and depend on circumstances which may or may not occur and may be beyond our ability to control or predict. Forward-looking statements should be regarded with caution as actual results may differ materially from those expressed in or implied by such statements.


Important factors that could cause actual results, performance or achievements of British Land to differ materially from any outcomes or results expressed or implied by such forward-looking statements include, among other things: (a) general business and political, social and economic conditions globally, (b) the consequences of the referendum on Britain leaving the EU, (c) industry and market trends (including demand in the property investment market and property price volatility), (d) competition, (e) the behaviour of other market participants, (f) changes in government and other regulation, including in relation to the environment, health and safety and taxation (in particular, in respect of British Land's status as a Real Estate Investment Trust), (g) inflation and consumer confidence, (h) labour relations and work stoppages, (i) natural disasters and adverse weather conditions, (j) terrorism and acts of war, (k) British Land's overall business strategy, risk appetite and investment choices in its portfolio management, (l) legal or other proceedings against or affecting British Land, (m) reliable and secure IT infrastructure, (n) changes in occupier demand and tenant default, (o) changes in financial and equity markets including interest and exchange rate fluctuations, (p) changes in accounting practices and the interpretation of accounting standards and (q) the availability and cost of finance. The Company's principal risks are described in greater detail in the section of this Press Release headed Risk Management and Principal Risks. Forward-looking statements in this Press Release, or the British Land website or made subsequently, which are attributable to British Land or persons acting on its behalf should therefore be construed in light of all such factors.


Information contained in this Press Release relating to British Land or its share price or the yield on its shares are not guarantees of, and should not be relied upon as an indicator of, future performance, and nothing in this Press Release should be construed as a profit forecast or profit estimate. Any forward-looking statements made by or on behalf of British Land speak only as of the date they are made. Such forward-looking statements are expressly qualified in their entirety by the factors referred to above and no representation, assurance, guarantee or warranty is given in relation to them (whether by British Land or any of its associates, directors, officers, employees or advisers), including as to their completeness, accuracy or the basis on which they were prepared.


Other than in accordance with our legal and regulatory obligations (including under the UK Financial Conduct Authority's Listing Rules and Disclosure Rules, Transparency Rules, and the Market Abuse Regulation), British Land does not intend or undertake to update or revise forward-looking statements to reflect any changes in British Land's expectations with regard thereto or any changes in information, events, conditions or circumstances on which any such statement is based. This document shall not, under any circumstances, create any implication that there has been no change in the business or affairs of British Land since the date of this document or that the information contained herein is correct as at any time subsequent to this date.


Presentation of financial information

The Group financial statements are prepared under IFRS where the Group's interests in joint ventures and funds are shown as a single line item on the income statement and balance sheet and all subsidiaries are consolidated at 100%.


Management considers the business principally on a proportionally consolidated basis when setting the strategy, determining annual priorities, making investment and financing decisions and reviewing performance. This includes the Group's share of joint ventures and funds on a line-by-line basis and excludes non-controlling interests in the Group's subsidiaries. The financial key performance indicators are also presented on this basis. Refer to the Financial Review for a discussion of the IFRS results.


Notes to Editors:


About British Land

Our portfolio of high quality UK commercial property is focused on Retail around the UK and London Offices.  We own or manage a portfolio valued at £18.1 billion (British Land share: £13.5 billion) as at 30 September 2017 making us one of Europe's largest listed real estate investment companies.


Our strategy is to provide places which meet the needs of our customers and respond to changing lifestyles - Places People Prefer.  We do this by creating great environments both inside and outside our buildings and use our scale and placemaking skills to enhance and enliven them.  This expands their appeal to a broader range of occupiers, creating enduring demand and driving sustainable, long term performance.


Our Retail portfolio is focused on Regional and Local multi-let centres, and accounts for 49% of our portfolio.  Our Offices portfolio comprises three office-led campuses in central London as well as high quality standalone buildings and accounts for 49% of our portfolio.  Increasingly our focus is on providing a mix of uses and this is most evident at Canada Water, our 46 acre redevelopment opportunity where we have plans to create a new neighbourhood for London. 


Sustainability is embedded throughout our business. Our places, which are designed to meet high sustainability standards, become part of local communities, provide opportunities for skills development and employment and promote wellbeing.  Our industry-leading sustainability performance led to British Land being awarded a five star rating in the 2017 Global Real Estate Sustainability Benchmark for the second year running.


In April 2016 British Land received the Queen's Award for Enterprise: Sustainable Development, the UK's highest accolade for business success for economic, social and environmental achievements over a period of five years.


Further details can be found on the British Land website at  



Our strong financial results for the first half of the year reflect the effectiveness of our Places People Prefer strategy. We focus on creating outstanding environments through investment, development and ongoing management, and these have proved attractive to a broad range of occupiers despite continued economic and political uncertainty.


As a result of our portfolio's strong appeal, we secured an additional £32 million of future rent in the period by leasing 1.3 million sq ft of space at net effective rents 6.8% ahead of ERV. In the investment market, prime prices remain firm. We have used this continuing strong demand to dispose of £992 million of dry and off-strategy assets at an average premium to book value of 13%. The proceeds have been used initially to reduce LTV further, while we continue to invest in our own high-quality portfolio through a £300 million share buyback and progress the best opportunities in our committed development portfolio, 57% of which is pre-let or under offer.


Our strong leasing performance, continued capital recycling and de-risking of significant mixed-use development opportunities have enabled us to create long-term shareholder value. 


Financial Results

We maintained underlying profit for the six months at £198 million: a one-off surrender premium from Royal Bank of Scotland at 135 Bishopsgate partly off-set a reduction in income that resulted from recent disposals and lease expiries in our development pipeline. Diluted underlying EPS was also in line with the prior year, at 19.2 pence per share. As indicated previously, we have increased the second quarter dividend by 3.0% to 7.52 pence per share, reflecting the Board's confidence in the strategy and bringing the dividend for the half year to 15.04 pence (2016: 14.6 pence).


Our focus on capital discipline remains strong. During the period we reduced LTV by 300 bps to 26.9% through disposals, despite doubling our committed development programme to 1.5 million sq ft. This level of LTV enables us to create value through our de-risked development programme while retaining substantial headroom and operational optionality.


The £300 million share buyback programme announced in July enables us to invest in our own high-quality portfolio at an attractive price and is aligned to our commitment to deploying resources in the way that creates best long-term value for shareholders. We are on course to complete the programme by the end of the financial year.


The 2.6% increase in our EPRA net asset value to 939 pence per share reflects the resilience of our assets, as well as our actions to improve and manage our portfolio for growth. Valuations were up 1.4% overall at 30 September 2017. London Offices were up 2.6%, driven by our leasing and capital activity, and Retail was up 0.3%, with ERV growth offsetting some yield expansion. 


London Offices

British Land's continuing focus on three major London campuses has underpinned strong occupier demand during the period. In total, we signed 741,000 sq ft of leases and renewals, capturing an 8% market share of all Central London letting activity and securing £29 million of additional future rent, 2.8% ahead of ERV.


This strong performance reflects the quality of space we create through our campus approach. By maintaining a campus rather than asset focus, we can combine retail and leisure brands, amenities and first class work space across a highly attractive environment. This approach creates a superior experience before, during and after the working day for employees, creating incremental occupier demand in turn. The resulting 2.6% uplift in valuation during the period meant that our office portfolio outperformed its IPD benchmark.


We launched Storey this summer to capitalise on the trend toward flexible working. In contrast to co-working space, we have designed Storey to meet the needs of SMEs as well as larger businesses that require project or short-term space. The median headcount of Storey occupiers is approximately 50 people. 68% of Storey's 85,000 sq ft of space is now let or under offer, at terms in line with our business plan and we are now fitting out the next 50,000 sq ft across Paddington Central and Regent's Place, which will mean that Storey is operational across all three campuses.


In the wider London office market, occupiers are more thoughtful about their requirements as a result of political and economic uncertainty. However, we continue to see both international and British companies leasing well in London, confident in its enduring ability to evolve with changing circumstances and attract talent from around the world.



In Retail, we saw strong demand for our space during the period, maintaining occupancy at 98% through 578,000 sq ft of lettings and renewals at an average net effective rent 11.9% ahead of ERV. This belies the pressure on rents we have seen in the wider market, driven by lower growth in retail sales as well as a structural shift in retailers' models as they increasingly adopt an omni-channel approach.

We have achieved this healthy performance by ensuring our assets remain directly relevant to consumers. Our success is evidenced by the continued growth of footfall at our centres, which outperformed the benchmark by 340 bps in the period.

We also continued to outperform the retail sales benchmark by 50 bps, although in-store sales were down 1.1% overall. These figures exclude click & collect activity, instore browsing and the return of online purchases to physical locations, which are areas where we see increasing activity and growing symbiosis between physical and digital retail.

Our data demonstrate that although digital shopping is changing the role of the store, physical retail remains core to most retailers' propositions. As part of an omni-channel strategy, retailers need the store portfolio to perform three functions: a showroom where customers can discover which product they want to buy; a location for transactions; and as a site from which purchases can be fulfilled. At present, the industry only measures the quantity of transactions taking place in a particular store, but research shows that a quarter of all online purchases are first browsed in store, helping customers to narrow their range of options and become comfortable with a purchasing decision. In addition, 13% of online purchases are now fulfilled through in-store Click & Collect, and we see this reflected at our Local centres where 30% of shoppers use them to collect online purchases, up from 19% just three years ago. Importantly, 67% of these collectors make an additional purchase while doing so, on average spending twice as much as someone shopping through physical retail alone. 39% of unwanted online purchases are returned by consumers through a store, with 80% of these returners making an additional purchase at our centres while doing so. As landlord, our role is to drive the footfall that helps retailers maximise their margins in an omni-channel environment.

The value of our Retail portfolio rose 0.3% during the period, with ERV growth of 1.0% across the portfolio, driven by multi-lets. With increasing focus on high-quality, well-located space that can function as showroom and fulfilment hub, some assets are unsuited to an omni-channel network. Consequently, over the last three years we have sold £1.7 billion of retail assets, £298 million of which transacted in the period. We expect to make additional disposals of approximately £500 million over the next 12 months to ensure our portfolio remains positioned to perform in this new environment.


Among our core assets, we have continued to invest in improvements to ensure they remain modern and support the requirements of omni-channel retailing. An important example is Meadowhall, where we have just completed a £60 million refurbishment. Already, this has had a significant positive impact on the centre: 73 retailers have invested £38 million upgrading their stores to match the new contemporary feel; over the last 18 months, 30 new brands signed in anticipation of increased footfall and spend. We also built-in to the refurbishment programme measurable direct economic and social benefits for the Sheffield community. This optimisation of the project for regional benefit built a healthier economy for our shoppers and contributed to unanimous support from the Planning Committee for our 330,000 sq ft leisure extension, which subsequently received Resolution to Grant consent. Subject to completion of the process, we expect to start this step in Meadowhall's transformation during 2019.


Investment Activity

Gross investment activity since the start of the year has been over £1.2 billion. Sales were on average 13% above book value, with £417 million of disposals in addition to our £575 million share of proceeds from the sale of the Leadenhall Building. Our £92 million of acquisitions in the period include the £49 million purchase of 10-40 The Broadway, adjacent to our Local retail centre in Ealing, which provides a significant development opportunity to capitalise on the impact of Crossrail's arrival. Although we will continue to make acquisitions where we see potential for the right returns, we also expect to make further sales in the second half, and to be a net divestor overall.  


Development Activity

Development is a key part of our value-creation strategy, which we approach in a highly considered manner. Our development pipeline amounts to 10.7 million sq ft overall and has been assembled in line with our focus on creating Places People Prefer.


While prime pricing in the investment market has remained firm, we have been able to double our committed development pipeline from 0.7 million sq ft at 31 March to 1.5 million sq ft today, without a meaningful increase in speculative exposure. We have achieved this through significant progress in planning, with 1.8 million sq ft of consents secured during the period, and substantial pre-letting success, including the 310,000 sq ft agreement for lease of 1 Triton Square, the largest pre-let in the West End for 22 years.


Risk is sensibly managed: 57% of the ERV within the committed pipeline is now pre-let or under offer. Therefore, despite this substantial increase in development activity during the period, we have only incurred a minor increase in speculative exposure, which now stands at 4.0% of the portfolio's GAV (March 2017: 3.7%). 85% of committed construction costs are covered by residential receipts to come of £381 million and valuer estimates put future rent from this committed development pipeline at approximately £55 million.


We have also progressed our near-term pipeline, adding 236,000 sq ft, ready for activation subject to progressing pre-lets. This pipeline currently totals 562,000 sq ft and has an ERV of £21 million, 21% of which is currently pre-let or under offer. To manage exposure, we will continue to secure substantial pre-lets before committing to opportunities.


Looking further ahead, we have also achieved significant development milestones in our medium-term pipeline. In addition to the Leisure Hall extension at Meadowhall, which is held in joint venture and will create an additional 330,000 lettable sq ft, we have agreed Heads of Terms for a long-term partnership with London Borough of Southwark, simplifying the structure and bringing our combined landholdings together under a 500 year lease. We are now finalising designs for Phase 1 of Canada Water. This will create 1.8 million sq ft of mixed-use space next to a station in Zone 2 of London. We expect to submit a planning application seeking outline consent for the masterplan together with detailed consent for several buildings in the Spring, ahead of a potential start on site during 2019.


The scale of our development pipeline is a significant advantage for British Land. Interest remains healthy in the type of space we create and we have a range of potential opportunities to progress. 



Sustainability is integral to how we do business, and six indices now recognise British Land as an international leader in this field: for the second consecutive year we were awarded a five star rating by GRESB (the Global ESG Benchmark for Real Estate Assets); we remain AAA-rated by MSCI; we achieved a Gold Award from EPRA sBPR; we rank in the 98% percentile of Sustainalytics; and for the fourth consecutive year we rank in the top 10% of the DJSI World Index and the FTSE4Good. This solid external recognition reflects the significant effort and care we invest in maximising benefit for all our stakeholders.


Alongside our focus on creating value for shareholders, I am proud that British Land has created a leading stance on sustainability, recognised by global ESG indices. The management of environmental, social and governance issues directly supports our vision to create Places People Prefer and is embedded at the heart of our day to day operations. As demonstrated so clearly at Meadowhall during the period, this strengthens the economic foundations of the communities in which we work while creating long-term value for investors.



We recently announced that, after 6 years as Chief Financial Officer, Lucinda Bell intends to step down from the Board and leave British Land next April. Lucinda has been instrumental in strengthening the balance sheet and played a key role in the Company's transition into a modern, strategically-focused REIT. Equally important has been her leadership of our sustainability programme, to which she has brought unmatched focus, rigour and energy. We wish her well for the future and thank her for her considerable contribution. A search for her successor is underway.



British Land is well positioned. Although the wider operating environment is uncertain, we are generating healthy leasing interest at good pricing across our portfolio, and prime capital values remain firm.


We have deliberately built a portfolio of the high quality assets required to succeed in today's market. These closely reflect the evolving demands of our customers. We benefit from long-term, secure rental income, with 98% of our portfolio occupied. Our financial capacity, flexibility and optionality enable us to adjust quickly to evolving conditions. We have a resilient balance sheet, appropriate leverage and a well-funded, diverse development pipeline that will underpin future growth and returns. These strengths, combined with the market-leading expertise we maintain across our business, position us well to drive enduring value for shareholders.



Chris Grigg

Chief Executive




6 months to 

30 September 2016

30 September 2017

Underlying Profit1,2



Underlying earnings per share1



IFRS profit before tax



Dividend per share



Total accounting return1,3



As at

31 March 2017

30 September 2017

EPRA net asset value per share1,2



IFRS net assets



LTV 1,4,5



Weighted average interest rate 5



1 See Glossary for definitions

2 See Table B within supplementary disclosure for reconciliations to IFRS metrics

3 See Note 2 within condensed interim financial statements for calculation

4 See Note 10 within condensed interim financial statements for calculation and reconciliation to IFRS metrics

5 On a proportionally consolidated basis including the Group's share of joint ventures and funds



Our strategy is designed to create enduring shareholder value and we have structured our finances to ensure this can be maximised.


We have continued to take significant actions to increase our financial flexibility and capacity. We have maintained capital discipline, demonstrated by selling well and launching our share buyback programme, and we have enhanced our debt position by both diversifying our sources and extending the maturity of our facilities. The result is a robust balance sheet, even lower financing costs, improved interest cover and an LTV which is within our target range for the prevailing conditions.


Our interim results are good with Underlying Profit maintained at £198 million and underlying earnings per share (EPS) at 19.2 pence. EPRA net asset value per share (NAV) increased by 2.6% reflecting a portfolio valuation gain of 1.4% on a proportionally consolidated basis. 


We have undertaken £1.2 billion of gross capital activity (£0.8 billion of net capital activity) since 1 April 2017. This comprises £1.0 billion of disposals of primarily single-let Retail assets and our 50% interest in The Leadenhall Building which exchanged last financial year, representing 7% of the total portfolio. Sales were made at an average yield of 4%.


The net proceeds from this activity provide capacity for reinvestment into our portfolio, particularly through the development opportunities we are now progressing with a forecast yield on cost comfortably over 6%, as well as through our £300 million share buyback programme, announced in July 2017. In the current conditions, investing in our own shares represents an attractive use of funds and the programme is on course to complete by the end of the financial year. As at 30 September 2017, we had purchased £65 million of shares which increased NAV by 4 pence and had a marginal impact on EPS. Based on share price at the period end, NAV would increase by a further 13 pence and EPS by around 0.3 pence for the full year to 31 March 2018 upon completion of the buyback. During the period we have also reinvested £0.1 billion in our developments and capital expenditure across the portfolio, and made £0.1 billion of acquisitions.


The impact on profit of net sales and lease expiries ahead of development has been offset by like-for-like rental growth and financing activity, as well as a one-off surrender premium received from Royal Bank of Scotland. IFRS profit before tax for the period of £238 million is higher than the prior period loss of £205 million, primarily due to the positive property valuation movement in the period.


Our financial metrics are strong; we have reduced both the proportionally consolidated loan to value (LTV) and weighted average interest rate and improved interest cover. We have decreased LTV by a further 300 bps to 26.9% from 29.9% at 31 March 2017, primarily through net disposals. This provides us with the financial capacity to progress the substantially de-risked development pipeline whilst retaining significant headroom to our covenants.


Creating high and secure cash dividends for shareholders remains a priority. As indicated in the 2016/17 Full Year results, we intend to increase the dividend once again by 3% to 30.08 pence for the year ending 31 March 2018, reflecting the Board's confidence in the strategy. In line with this intention, the second quarter dividend at 7.52 pence brings the total for the half year to 15.04 pence.


As announced in the annual report, we have introduced a valuer appointment policy which restricts the engagement of individual valuers on an asset to ten years. 45% of the portfolio was therefore subject to a change in valuer in the period, with no material impact on its performance at an overall or sector level. Details of our valuation policy can be found in the Governance section of our website.


Presentation of financial information

The Group financial statements are prepared under IFRS where the Group's interests in joint ventures and funds are shown as a single line item on the income statement and balance sheet and all subsidiaries are consolidated at 100%.


Management considers the business principally on a proportionally consolidated basis when setting the strategy, determining annual priorities, making investment and financing decisions and reviewing performance. This includes the Group's share of joint ventures and funds on a line-by-line basis and excludes non-controlling interests in the Group's subsidiaries. The financial key performance indicators are also presented on this basis.


A summary income statement and summary balance sheet which reconcile the Group income statements to British Land's interests on a proportionally consolidated basis are included in Table A within the supplementary disclosures.


Management monitors Underlying Profit as this more accurately reflects the Group's financial performance and the underlying recurring performance of our core property rental activity, as opposed to IFRS metrics which include the non-cash valuation movement on the property portfolio. It is based on the Best Practices Recommendations of the European Public Real Estate Association (EPRA) which are widely used alternate metrics to their IFRS equivalents.


Management also monitors EPRA NAV as this provides a transparent and consistent basis to enable comparison between European property companies. Linked to this, the use of Total Accounting Return allows management to monitor return to shareholders based on movements in a consistently applied metric, being EPRA NAV, and dividends paid.


Loan to value (proportionally consolidated) is also monitored by management as a key measure of the level of debt employed by the Group to meet its strategic objectives, along with a measurement of risk.  It also allows comparison to other property companies who similarly monitor and report this measure.


Income statement


1.     Underlying Profit

Underlying Profit is the measure that is used internally to assess income performance. No company adjustments have been made in the current or prior period and therefore this is the same as the pre-tax EPRA earnings measure which includes a number of adjustments to the IFRS reported profit before tax. This is presented below on a proportionally consolidated basis:


1 EPRA adjustments consist of investment and development property revaluations, gains/losses on investment and trading property disposals, changes in the fair value of financial instruments and associated close out costs.  These items are presented in the 'capital and other' column of the consolidated income statement.


1.1   Net rental income


Net rental income for the six months ended 30 September 2016


Net divestment




Expiries on developments




RBS surrender




Development lettings




Like-for-like rental growth




Net rental income for the six months ended 30 September 2017



The £15 million decrease in net rental income during the period was the result of divestment activity and lease expiries partially offset by a one-off surrender premium, leasing of developments and like-for-like growth.


Net income producing asset sales of £1.5 billion over the last 18 months have reduced rents by £22 million in the period.


Lease expiries relating to properties in our development pipeline reduced net rents by £15 million, including £4 million at 100 Liverpool Street where we are on site and progressing well with development, £4 million at the substantially pre-let 1 Triton Square scheme and £3 million at 1 Finsbury Avenue where we started on site in August 2017. Also included in this figure is £2 million at our near-term development 135 Bishopsgate; Royal Bank of Scotland surrendered their lease in June 2017 ahead of expiry in 2019 and we recognised a one-off surrender premium of £15 million in the period, the impact of which offsets the development lease expiries.


As well as development lettings at 4 Kingdom Street and Clarges contributing £2 million to rents, like-for-like rental income grew by 1.8% excluding the impact of surrender premia. Retail growth was 1.7% (4.0% including the impact of surrender premia). This was driven by asset management activities, such as splitting units, as well as leasing of vacant space. Office and Residential like-for-like growth was 1.9% driven by fixed uplifts at rent reviews as well as leasing of completed developments that are now in the like-for-like portfolio.


1.2   Administrative expenses

Administrative expenses decreased by £2 million this period as a result of lower variable pay. The Group's operating cost ratio increased by 120 bps to 16.2% (H1 2016/17: 15.0%).


1.3   Net financing costs


Net financing costs for six months ended 30 September 2016


Financing activity


Net divestment




Developments and other




Net financing costs for six months ended 30 September 2017



We reduced financing costs by a further £12 million this half year.


Debt transactions undertaken over the last 18 months reduced financing costs by £8 million in the period.  This includes the early repayment of BLT debt following the net sales of five properties and exit from the joint venture in April 2017, as well as repayment of our 6.75% 2020 debentures. Prior year activity includes the early repayment of the £295 million TBL Properties Limited secured loan and close-out of related swaps. Our liability management over the last six months, which is NPV positive, reduced EPRA NAV by 3 pence.


In September 2017, the 1.5% convertible bond was cash settled using existing bank facilities. This has proven to be highly efficient financing since its issue in September 2012: we estimate that it has saved £40 million in financing costs compared to a fixed rate Sterling bond at the time. Pricing in the Sterling bond market has moved considerably over the last year and we took advantage of this by issuing a debut £300 million unsecured Sterling bond for 12 years at a coupon of 2.375%. This is the lowest for UK real estate companies in this market and we were pleased with the level of support from a range of debt investors. As well as diversifying both our sources of funding and our maturity profile, it also established a benchmark in the Sterling market.  


Net divestment activity reduced costs by a further £7 million, the impact of which is partially offset by development spend.  


At 30 September we had interest rate hedging on 76% of our debt (spot), and on 60% of our projected debt on average over the next five years.


1.4   Underlying Earnings Per Share

Underlying EPS was 19.2 pence (H1 2016/17: 19.3 pence) based on Underlying Profit after tax of £198 million (H1 2016/17: £199 million). The share buyback programme had a minimal impact on EPS in the period and is expected to have a 0.3 pence impact for the full year to 31 March 2018.


2.     IFRS profit before tax

The main difference between IFRS profit before tax and Underlying Profit is that it includes the valuation movement on investment and development properties and the fair value movements of financial instruments. In addition, the Group's investments in joint ventures and funds are equity accounted in the IFRS income statement but are included on a proportionally consolidated basis within Underlying Profit.


The IFRS profit before tax for the period was £238 million, compared to a loss before tax for the prior period of £205 million. This reflects the positive valuation movement on the Group's properties which was £398 million more than the prior period and the valuation movement on the properties held in joint ventures and funds which was £231 million more than the prior period, in both cases resulting from stable yields and ERV growth of 1% in the current period. This was partially offset by higher capital financing costs of £159 million more than the prior period due to recycling of cumulative losses within the hedging and translation reserve in relation to a hedging instrument which is no longer hedge accounted. The recognition of these amounts in capital financing charges in the income statement has a limited impact on EPRA NAV, with liability management activity undertaken in the period leading to a 3 pence reduction in EPRA NAV per share.


IFRS basic EPS was 23.2 pence per share, compared to negative 19.0 pence per share in the prior period, driven principally by positive property valuation movements. The basic weighted average number of shares in issue during the period was 1,028 million (H1 2016/17: 1,029 million).


3.     Dividends

As indicated in May 2017, we increased the dividend by 3.0% for the 6 months to 30 September 2017 to 15.04 pence and propose a full year dividend to 31 March 2018 of 30.08 pence.


The second interim dividend payment for the quarter ended 30 September 2017 will be 7.52 pence. Payment will be made on 9 February 2018 to shareholders on the register at close of business on 5 January 2018. The second interim dividend will be a Property Income Distribution and no SCRIP alternative will be offered.


This results in a dividend pay-out ratio of 78% for the period (H1 2016/17: 76%).


Balance sheet



 FY 2016/17

H1 2017/18



Properties at valuation



Other non-current assets





Other net current liabilities



Adjusted net debt




Other non-current liabilities



EPRA net assets



EPRA NAV per share




Non-controlling interests



Other EPRA adjustments1



IFRS net assets





1 EPRA net assets exclude the mark-to-market on effective cash flow hedges and related debt adjustments, the mark-to-market on the convertible bonds as well as deferred taxation on property and derivative revaluations. They include the valuation surplus on trading properties and are adjusted for the dilutive impact of share options. No dilution adjustment is made for the £350 million zero coupon convertible bond maturing in 2020. Details of the EPRA adjustments are included in Table B within the supplementary disclosures.


4.   EPRA net asset value per share


EPRA NAV per share at 31 March 2017


Valuation performance


Underlying Profit




Liability management costs


Share buyback


EPRA NAV per share at 30 September 2017



The 2.6% increase in EPRA NAV per share reflects a valuation increase of 1.4%. This is primarily due to stable yields and ERV growth of 1.0% resulting from healthy leasing activity and investor appetite for long term, secure income streams. In addition, property performance includes the benefit of completing the sale of The Leadenhall Building ahead of book value, which contributed £32 million to capital profit.


Retail valuations were up 0.3% with marginal outward yield movement of 5 bps and ERV growth of 1.0%: the multi-let portfolio, which accounts for 79% of our Retail assets, was down 0.4% but saw ERV growth of 1.1%. Further information on Retail valuation performance can be found on pages 25 and 26.


Office and Residential valuations were up 2.6% driven by inward yield movement of 6 bps and ERV growth of 1.2%. The campuses account for 79% of the Offices portfolio and all delivered strong performance, reflecting the attractiveness of campus approach. Further information on Office & Residential valuation performance can be found on page 20.


The 3 pence impact of liability management costs primarily relates to early repayment of debentures, term debt and termination of interest rate swaps. Included in this is the NAV impact of the redemption of the BLD debenture on which we gave notice to repay in the period and repaid on 3rd October. Our share buyback programme has also contributed 4 pence to EPRA NAV.


5.     IFRS net assets

IFRS net assets at 30 September 2017 were £9,632 million, an increase of £156 million from 31 March 2017. This was primarily due to IFRS profit before tax of £238 million and the other comprehensive profit of £134 million, partially offset by £150 million of dividends paid as well as £65 million of share purchases under the share buyback scheme.


Cash flow, net debt and financing


6.   Adjusted net debt1


Adjusted net debt at 31 March 2017










Development and capex




Net cash from operations




Share buyback




Adjusted net debt at 30 September 2017


1 Adjusted net debt is a proportionally consolidated measure. It represents the Group net debt as disclosed in Note 10 and the Group's share of joint venture and funds' net debt excluding the mark-to-market on derivatives, related debt adjustments and non-controlling interests. A reconciliation between the Group net debt and adjusted net debt is included in Table A within the supplementary disclosures.


Net divestment reduced debt by £0.7 billion in the period. Completed disposals during the period included the sale of The Leadenhall Building for £575 million (BL share) and, in line with our strategy of focusing on multi-let assets, 16 superstores totalling £242 million (BL share).


Other investments included development expenditure of £84 million and capital expenditure of £34 million related to asset management on the standing portfolio. The value of committed developments is £810 million, with £446 million costs to come. Speculative development exposure is 4.0% of the portfolio after taking into account residential pre-sales. There are 562,000 sq ft of developments in our near term pipeline with anticipated cost of £218 million.


As at 30 September 2017, we had purchased £65 million of shares under our share buyback programme which was announced in July 2017. 



7.     Financing


Proportionally consolidated

31 March 2017

30 September 2017

31 March 2017

30 September 2017

Net debt / adjusted net debt 1





Principal amount of gross debt





Loan to value





Weighted average interest rate





Interest cover





Weighted average debt maturity

6.9 years

8.3 years

7.7 years

8.9 years

1 Group data as presented in note 10 of the condensed interim financial statements. The proportionally consolidated figures include the Group's share of joint venture and funds' net debt and exclude the mark-to-market on effective cash flow hedges and related debt adjustments and non-controlling interests.  


Our balance sheet remains resilient. LTV and weighted average interest on drawn debt have been reduced and interest cover improved during the period. At 30 September 2017, our proportionally consolidated LTV was 26.9%, down 300 bps from 29.9% at 31 March 2017 due to disposals. This is positioned to support investment into our development pipeline as well as maintain significant headroom. Note 10 of the condensed interim financial statements sets out the calculation of the Group and proportionally consolidated LTV.


The strength of the Group's balance sheet is reflected in British Land's senior unsecured credit rating which continues to be rated by Fitch at A- with a 'Positive' Outlook.


We also maintain a sharp focus on ensuring our debt is cost effective. We reduced our proportionally consolidated weighted average interest rate to 3.0% at 30 September 2017 from 3.1% at 31 March 2017 and improved interest cover to 4.0x at 30 September 2017 from 3.6x at 31 March 2017.


Our weighted average debt maturity is almost 9 years following issuance of the £300 million unsecured Sterling bond.


British Land has £1.7 billion of committed unsecured revolving banking facilities. These facilities have maturities of more than two years, of which £1.5 billion was undrawn at 30 September 2017. Based on our current commitments, these facilities and debt maturities, we have no requirement to refinance until early 2021.


Further information on our approach to financing is provided in the financial policies and principles section of the audited annual report for the year ended 31 March 2017.



After six years as CFO, I am proud that British Land's financial platform is structured to maximise value for shareholders. In this time, we have reduced LTV from 44.7% to 26.9% and WAIR by 1.9% to 3.0%, driving a 38% reduction in financing costs and almost doubling interest cover from 2.2x to 4.0x.


This keen focus on capital discipline is most clearly illustrated by comparing the healthy 10% increase in net rental income we secured between September 2011 and September 2017 with the 50% increase in underlying profits we delivered over the same period. At the same time, dividend payout has improved from 89% to under 80% while the dividend has continued to grow.


The extensive financial capacity and flexibility we have secured for British Land position the Company to deliver long-term value for shareholders. Our de-risked development pipeline and balance sheet strength enable us to unlock accretive opportunities and continue to grow the dividend while keeping risk at a sensible level.


Lucinda Bell

Chief Financial Officer





Strategy and Market

Our strategy is designed to create strong alignment between our portfolio and the evolution of our chosen markets.  Across the business, our focus is on creating outstanding places; curating not just our buildings, but the spaces between them.  Our investment is led by our understanding of the consumer, which is grounded in data and analysis. This enables us to design our places to fit changing lifestyles, driving enduring demand for, and value from, our space. Our focus on campuses and multi-let retail enables us to create attractive environments with a mix of uses, services and occupiers that enhance the experience. However, there remains a role for standalone properties, as these provide liquidity and enhance shareholder returns through opportunistic development and trading. We have also assembled substantial development opportunities, enabling us to enhance our portfolio to maintain and extend our advantage.   


The economic outperformance which followed the EU referendum has moderated. GDP growth has slowed and there is uncertainty regarding the level of future growth. Unemployment is now at its lowest level in more than 40 years, though inflation is running ahead of wage growth, impacting consumer spending. Despite this, areas of the real estate market aligned to long-term trends continue to perform, and IPD shows a total property return of 5.0% for the period.


Portfolio performance

As at:

31 March 2017

30 September 2017

Portfolio valuation






Weighted average lease length to first break

8.3 yrs

8.0 yrs

6 months to:

31 March 2017

30 September 2017

Total property return



-        Yield shift

-5 bps

0 bps

-        ERV growth



-        Valuation movement



Lettings/renewals (sq ft)



Lettings/renewals vs ERV



Gross investment activity1



-       Acquisitions



-       Disposals1



-       Capital investment



Net investment/(divestment)



On a proportionally consolidated basis including the Group's share of joint ventures and funds

1Current period figures include £575 million Leadenhall Building disposal that exchanged during the year ended 31 March 2017 and completed this financial year


6 months to

30 September 2017



Valuation movement


ERV growth





Total property return








Offices & Residential






Canada Water










Our portfolio showed a valuation increase of 1.4% over the period, with good ERV growth across the business and inward yield shift on the office portfolio offsetting slight outward yield shift in retail.  As announced in the annual report, we have introduced a valuer appointment policy, which restricts to ten years the engagement of valuers to individual assets. As a result, 45% of the portfolio was subject to a change in valuer in the period: there were a number of moving parts at the individual asset level but no material impact at subsector level and, therefore, overall. Details of this policy can be found in the Governance section of our website.


Overall, our portfolio underperformed the IPD all property index by 120 bps, largely reflecting the continued strength of the industrial sector, where we have no exposure. Our London Office portfolio outperformed by 70 bps and Retail underperformed by 40 bps.


Investment and development

From 1 April 2017




Canada Water



















Development Spend






Capital Spend






Net Investment






Gross Investment






On a proportionally consolidated basis including the Group's share of joint ventures and funds

1 Includes £575 million Leadenhall Building disposal exchanged during the year ended 31 March 2017 and completed this period


The gross value of our investment activity since 1 April 2017, as measured by our share of acquisitions, disposals, capital spend on developments and other capital projects was over £1 billion.  This includes the completion of the £1.15 billion sale of The Leadenhall Building (our share £575 million). Excluding this, we completed £417 million of sales 2% above book value, and £92 million of purchases. 


Development activity

At 30 September 2017

Sq ft

Current Value

Cost to complete



let/under offer

Resi Exchanged














Near term







Medium term


Canada Water Phase 11


On a proportionally consolidated basis including the Group's share of joint ventures and funds (except area which is shown at 100%)

1Total site area is 5.5 million sq ft

² of which £66m exchanged post period end


Development is a key component of our value creation activity and, over the medium term, we have the potential to develop over 10.7 million sq ft of opportunities, subject to market conditions. These are predominantly located in and around our investment portfolio, enabling us to enhance our existing campus and multi-let assets through adjacent development projects in line with creating Places People Prefer.


When considering an opportunity for development, we balance phasing, potential returns and risk. 37% of sites are currently income producing and a further 26% are held at low carrying value within our medium term pipeline. In a strong investment market, where prices for standing assets substantially dilute potential returns, it is a distinct competitive advantage to be able to create growth through considered development. Consequently, while carefully managing our risk profile, we are progressing the projects that offer the best long-term growth prospects.


We will shortly complete the final phase of our mixed-use development at Clarges, comprising office space and high end residential. The development generated substantial interest with £344 million of apartments pre-sold.


Development spend in the period totalled £84 million with the majority relating to 100 Liverpool Street at Broadgate. Capital expenditure in the period of £39 million relates to income enhancing investment in our assets including Teesside and Meadowhall. 85% of the £446 million of costs to come from the committed pipeline will be funded through £381 million of receipts still to come from residential sales.


We take a careful approach to development risk, maintaining exposure at a comfortable level through our pre-let programme. 57% of the £55 million ERV from our committed development pipeline is pre-let or under offer and our speculative development exposure is comfortable at 4.0% (March: 3.7%). In addition, 21% of the £21 million ERV from our near-term pipeline is pre-let or under offer.


Construction cost forecasts continue to suggest that the rate of growth will moderate this year and next, with input costs increasing slightly before levelling out in late 2018. Whilst our experience suggests that cost inflation is marginally lower than it has been over the last two years, this may not be consistent throughout all trade contractors. To manage this, 89% of the costs on our committed development programme have been fixed and we maintain allowances within project budgets to reflect specific sectors and locations.


With the investment market precluding accretive acquisitions, we have focused resources on progressing our unique development programme in a de-risked manner that offers consecutive, significant opportunities for growth over the next decade. This positions us well to increase value for shareholders through a range of channels as the market evolves.


More details on the portfolio, property performance, individual developments and assets sold and acquired during the year can be found in the detailed supplementary tables on pages 60 to 68.



London Offices


Key metrics

As at:

31 March 2017

30 September 2017

Portfolio Valuation (BL share)



-       Of which campuses






Weighted average lease length to first break

7.8 yrs

7.7 yrs

6 months to:

31 March 2017

30 September 2017

Total property return



-       Yield shift

-6 bps

-6 bps

-       ERV growth



-       Valuation movement




211,000 sq ft

741,000 sq ft

Lettings/renewals vs ERV



On a proportionally consolidated basis including the Group's share of joint ventures and funds



Our campus strategy focuses on how our customers want to spend their time. As a result, we focus on the quality and opportunity of the wider neighbourhood rather than isolated buildings. We enhance and enliven the whole environment to create places where people can move seamlessly between work and leisure activities before, during and after their working day. From surveys to online discussion platforms, we are engaging with the people working within our buildings, enabling us to respond to their needs with space that is more flexible, events and activities that are more attractive and a growing mix of food and retail.  It is our focus on the overall campus that makes this mix possible. For employers looking to attract and retain key talent, as well as the growing number of small and medium sized businesses who want affordable and well connected space in a vibrant location, our offer is proving compelling.  



Investment markets have been mixed, with the London office market continuing to be buoyant, particularly in the City where overseas demand for trophy assets has remained strong and deals have transacted on tight yields, ahead of valuation. The market for secondary assets has been slower. 

As expected, occupier take up is diversifying. In particular, we are seeing more flexible workspace, which accounted for 17% of new leasing in the six months. Vacancy rates in Central London have increased slowly, and are now slightly above their long term average at 4.6%. Supply of new build is reflecting changing market conditions with supply continuing to be pushed back, helping to balance the market. There is a growing focus on attractive design, quality and environments, with employers actively targeting space that helps them attract and retain talent: increasingly "prime" is about the quality of the space and its proximity to first class amenities rather than traditional locations, and on these spaces rents have proved robust. Although we expect rental growth across the market to be flat-to-down over the next 12 months, we believe that this polarisation by occupiers towards the best space will continue to be to our advantage.  


Portfolio Performance

Office values were up 2.6% during the period, with total inward yield shift of 6 bps. This was weighted towards the West End, which saw yield compression of 11 bps compared to expansion of 1 bp at our City properties. Both portfolios experienced similar ERV growth, at or above 1%. Paddington Central was our strongest performing campus, experiencing inward yield shift of 15 bps and ERV growth of 3.8%. This reflects our recent investment into the public realm, and successful leasing of the speculative 4 Kingdom Street development. 


Operational Performance

We were delighted to complete 741,000 sq ft of lettings and renewals in the half year, adding £29 million to future rent, with investment lettings and renewals 2.8% ahead of ERV. We are under offer, or in advanced negotiations on a further 570,000 sq ft. This demonstrates the resilience of the market for the best available space. We have completed rent reviews on 123,000 sq ft, 9.2% ahead of passing rent, benefitting from the success of our leasing, to raise the rental tone across our campuses. Overall, this activity has supported like-for-like income growth of 1.9%. 



We currently have three operational campuses, Broadgate, Regents Place and Paddington Central, all located to benefit from vibrant neighbourhoods and excellent transport links.



At Broadgate, we are working to transform this 30 acre campus into a world class, seven day, mixed-use London destination with potential to generate substantial returns for shareholders. During the period under review, we have attracted a broader range of occupiers to the location and continued to create new space suitable for different uses, bringing us closer to realising this vision.


At 2 Finsbury Avenue, we signed new technology occupiers for Broadgate with Starling Bank, the first mobile-only bank to launch a current account, and Innovate Finance, the UK membership association for the global FinTech community, in total taking 16,000 sq ft of space. These new occupiers join the digital team from Kingfisher, which leased 25,000 sq ft of space for a two year term through our flexible workspace brand, Storey, within the building, reinforcing this location's emerging reputation as a technology and creative hub.


Our re-development of neighbouring 1 Finsbury Avenue will introduce a cinema, retail and restaurants on the ground floor and we are delighted to be under offer to technology company, Mimecast, for 78,000 sq ft - close to one third of the office space. 


At 100 Liverpool Street, we are under offer to a single occupier on 37% of the office space. This building, which will open soon after Crossrail services begin running through neighbouring Liverpool Street Station, will bring 90,000 sq ft of retail and restaurants to Broadgate as well as 430,000 sq ft of office space. The floors are highly divisible, catering for businesses of various sizes.


We have also made progress de-risking our near term pipeline, where plans for the redevelopment of 135 Bishopsgate have resulted in 125,000 sq ft of the office space going under offer. The development includes a substantial retail allocation, and we are under offer to a global brand for a 43,000 sq ft flagship presence across the ground and first floors, which would increase the attractiveness of the overall campus while improving permeability with neighbouring Spitalfields. We will commit to this redevelopment once we have secured these substantial pre-lets on the space.


In these three buildings we are delivering over 1 million sq ft of space at Broadgate, 36% of this space is now let or under offer. 16% of this new space will be retail, restaurants and leisure, broadening Broadgate's appeal, as shown during the period, to a wider range of occupiers.


These development opportunities will enhance the attractiveness of our existing space at Broadgate, which is effectively full. We expect the campus to benefit further when Crossrail starts through services in 2019, enabling occupiers to reach Heathrow in just 35 minutes.


We continue to forge links with local communities through Broadgate Connect, part of our Bright Lights skills and employment programme. 67 East London jobseekers have been engaged through the programme in the half year, 20 of whom have secured jobs and apprenticeships with Broadgate suppliers and occupiers in the half year, bringing the total supported into employment since 2012 to 250.



Regent's Place

Regent's Place is at the heart of London's Knowledge Quarter: within 1 mile of the campus there are 3,000 scientists, 8 universities and 30,000 employees working at world renowned organisations such as Wellcome Trust, the Francis Crick Institute and the British Library. This proximity to exceptional talent is highly attractive to occupiers.


Our greatest leasing success during the half year was the 310,000 sq ft pre-let of all the office space within 1 Triton Square. This is the largest pre-let in the West End for over 20 years and will increase the lettable area by 127,000 sq ft. Dentsu Aegis Network, the brand, media and digital communication specialist, has taken a 20 year lease on the entire office space, enabling us to commit to the re-development of the 366,000 sq ft building which stands at the heart of Regent's Place and, after re-development, will feature retail on the ground floor. We anticipate a start on site in March 2018. As part of this letting, Dentsu Aegis have an option to return their existing space at 10 Triton Street to British Land in 2021. If this option is exercised, there would be a compensating adjustment covering the rent free period of the letting at 1 Triton Square.


Facebook have also increased their total occupation at Regent's Place to nearly 185,000 sq ft. This follows an extension to the original 107,000 sq ft agreed earlier in the year, and demonstrates their continued commitment to the campus.  


Paddington Central

We bought Paddington Central in 2013, and over the last four years have invested in the public realm and canal side, adding more retail and catering as well as committing to development. The campus will benefit from the arrival of Crossrail which will run cross-London services from 2019.


Our completed speculative development of 4 Kingdom Street (147,000 sq ft), is substantially let, with Vertex (pharmaceuticals), Finastra (software), Sasol (energy and chemicals) and Mars (food products) together taking over 100,000 sq ft in the period, at average rents 5% ahead of pre-referendum ERV. We allocated the remaining space to Storey where we are in active negotiations on 9,000 sq ft, representing two thirds of their space in the building. 


We have also made great progress with the Gateway Building, which will become a 20 storey premium boutique hotel covering 105,000 sq ft of space, with retail on the ground floor. We have now secured a resolution to grant planning consent and are in advanced negotiations for a pre-let of this space, ahead of construction.


The opening this year of Pergola, the restaurant concept, has proved a resounding success. The attraction drew 130,000 people to Paddington Central over the Summer, and the line-up of catering is now being refreshed ahead of the Christmas season, giving people another reason to visit.


A review by independent consultancy Happy City has highlighted the positive impact of our £10 million investment to improve the public realm. Wellbeing and productivity are benefitting from the introduction of pocket parks; while new social spaces, walkways and games areas encourage active living and promote social relationships.


With occupiers focused on attracting and retaining key talent this review demonstrates how we are achieving the new rental tone at the campus, 40% higher than the best rents achieved when we acquired the campus four years ago.



To ensure we closely match our customers' evolving requirements, we launched our branded flexible workspace, Storey, this summer.


Unlike co-working facilities, the median headcount of Storey occupiers is around 50 people. Now operating across 85,000 sq ft in three buildings (2 Finsbury Avenue and Appold Studios at Broadgate and International House at Ealing) we are pleased to have let 59,000 sq ft since its launch in June. Occupiers joining Kingfisher Digital include WiredScore and Platform 360, diversifying further the range of occupiers signing for space at Broadgate.


Supported by this good take-up, we are now fitting out a further 50,000 sq ft of space split between Paddington Central and Regent's Place for delivery early next year, so Storey will shortly be available campus-wide.



In Residential, all units at the Hempel have been sold, overall achieving prices ahead of our investment case assumptions. Following further successful sales activity at Clarges, Mayfair, we have only £127 million remaining to sell and marketing is expected to commence following its completion next spring.


London Office Development

Development is an important method of value creation for British Land, enabling us to enhance the quality of the overall campus while increasing its lettable area. With the office portfolio effectively full, we have focused resources on progressing the planning status of our development opportunities, securing pre-lets to de-risk the pipeline and committing to further development on all three campuses.


Committed Pipeline

Since 1 April, we have secured 1.1 million sq ft of positive planning resolutions. These include 1 Triton Square at Regents' Place, 1 Finsbury Avenue and 135 Bishopsgate at Broadgate and the Gateway Building at Paddington Central.


The total ERV of our committed office development pipeline is now £50 million, 59% of which is pre-let or under offer.


Our most significant office commitment is 100 Liverpool Street, at Broadgate, where work has now started on the steel frame: costs to come currently stand at £136 million, of which 87% are fixed. 37% of the office space is now under offer to an international financial institution.


In addition, we have now committed to the development of 1 Triton Square where the entire 310,000 sq ft of office space is pre-let to Dentsu Aegis Network on a 20 year lease, and we are on-site with a 288,000 sq ft refurbishment of 1 Finsbury Avenue, where nearly 30% of the office space is under offer to Mimecast, a technology company.


Near-Term Pipeline

Our near-term office development pipeline now amounts to 430,000 sq ft.


At Broadgate we are under offer for a substantial pre-let at 135 Bishopsgate, which will enable us to commit to its £57 million redevelopment, amounting to 325,000 sq ft.


At Paddington Central, we expect to commit to the premium hotel on the Gateway site once terms of the lease are agreed and start on site during 2018.


Medium-Term Pipeline

Our medium-term development pipeline covers 1.7 million sq ft.


At Broadgate, we have resolution to grant planning consent for a 563,000 sq ft re-development of 2&3 Finsbury Avenue which would increase the existing space by 374,000 sq ft. To drive income and retain flexibility over the timing of its redevelopment, the space is fully occupied on a short term basis and 64,000 sq ft has been allocated to Storey. UBS remain in occupation at 3 Finsbury Avenue, with a lease break late in 2018. 


At 1-2 Broadgate, we are currently undergoing feasibility works for a significant scheme here which would increase the retail element at Broadgate, enhancing the attractive retail and leisure options across the campus. 


At Paddington Central, following the leasing success at 4 Kingdom Street, we expect to submit a planning application for an office-led scheme at 5 Kingdom Street. The site is currently let on a short term basis to Pergola, an 850-capacity pop up dining concept which attracted 130,000 visitors in the first 3 months, driving footfall to the campus and broadening the mix of visitors.


Canada Water

Our most significant mixed use scheme will be at Canada Water in central London located in Zone 2, on which we are working closely with the London Borough of Southwark, the Greater London Authority, Transport for London and the local community.


The gross valuation was broadly unchanged, but net values fell 4.5% reflecting feasibility costs in connection with our masterplanning work, which are irrecoverable through the valuation.


In September 2017, Heads of Terms for the 46 acre site were agreed for a long-term partnership with the London Borough of Southwark, simplifying the structure and bringing our combined land holdings together in a single 500-year lease.  We are now finalising Phase 1, which covers 1.8 million sq ft of the 5.5 million sq ft development, with 1 million sq ft of offices and 250,000 sq ft of retail and leisure around the Canada Water Dock and station as well as approximately 650 homes. 


We expect to submit a planning application in the Spring, seeking outline permission for the masterplan as well as detailed permission for a number of the Phase 1 buildings, to expedite our start on site. The earliest we could be on site is 2019, and potential funding structures relating to the development will be explored when we have greater visibility on timing. We are already seeing interest from a range of sectors and have active discussions underway on several buildings.


In the meantime, we are driving income and building awareness through an exciting new events space we have created at the Printworks (formerly Harmsworth Quays), which provides over 119,000 sq ft of space with capacity for 5,000 people. A year after opening, this was named by the London Venue Awards as the Best New Venue 2017 and Best London Venue 2017, beating The O2, Alexandra Palace and Battersea Evolution. It has attracted over 180,000 visitors to the area since it launched, hosting major music events including the Gorrillaz album launch, festivals including Beavertown Brewery, and film sets including "Avengers: Age of Ultron" and "Lucky Man".  The Printworks is also home to The Paper Garden, run by educational charity Global Generation. This aims to connect local young people with the development of the public realm and is one of our early plans to ensure our investment in Canada Water generates an enduring social and economic contribution to the surrounding community.





Key metrics

As at:

31 March 2017

30 September 2017

Portfolio valuation (BL share)



-       Of which multi-let






Weighted average lease length to first break

8.6 yrs

8.3 yrs

6 months to:

31 March 2017

30 September 2017

Total property return



-       Yield shift

-3 bps

+5 bps

-       ERV growth



-       Multi-let ERV growth



-       Valuation movement




616,000 sq ft

578,000 sq ft

Lettings/renewals vs ERV



On a proportionally consolidated basis including the Group's share of joint ventures and funds



Our retail strategy starts with the consumer. We are re-shaping our portfolio based on our data-driven understanding of why, how and where they want to shop.  As a result, our centres attract consistently superior footfall, creating a healthy market for our occupiers.


Our core Regional and Local centres are within easy reach of 59% of the UK population: we know that consumers shop for multiple reasons and the extensive reach of our network enables a retailer to optimise their store portfolio to capture the balance of these motivations - from leisure through to convenience - that works best for their brand.


At Regional centres, our data show that eating or drinking increases retail spend by an average of 25%. People who visit these centres to dine and watch a film tend to spend 56% more on the catering than those visiting only to eat or drink. This growing consumer data set has anchored our decisions on tenant mix. Further, analysis of the positive impact of the 2013 leisure extension at Glasgow Fort resulted in our commitment to similar developments at Whiteley, Broughton and Fort Kinnaird. Equally positive results from these three developments resulted in our current commitments to leisure expansion at New Mersey, Speke and Drake Circus, Plymouth.


Our data illustrate that proximity and ease of access are increasingly important. As a result we invest in centres with extensive catchments, making them convenient for many people to reach and shop. This demonstrably increases retail spend, as seen at six centres where we undertook a recent programme of improvement: here our data show the work resulted in an 11.4% increase in consumers' satisfaction with the overall shopping experience, and also a 5.3% increase in retail spend.


Our research supports a growing awareness in the market of how the line between digital and physical retail is blurring. Any purchasing journey has three stages: discovery; the financial transaction; and its fulfilment, when the shopper receives the goods. In an omni-channel environment, our research shows that we can play a role by focusing on the discovery and fulfilment stages. We know that 89% of retail sales touch the physical store in some way: a quarter of online sales are first browsed instore before the consumer commits, and 13% of online purchases are picked up from a physical store rather than delivered. Last mile delivery continues to suppress retailers' margins while consumers want certainty over delivery, speed of fulfilment and a low or zero cost. With fulfilment of an ecommerce order costing at least twice as much to deliver to the home than fulfil through in-store Click & Collect, many retailers are incentivising customers, through low or no cost, to pick up their packages from physical stores. This dovetails lower costs for retailers with consumers' desire for predictability. This is reflected in our data, which show that the proportion of shoppers at our Local centres using Click & Collect has grown from 19% to over 30% in the last three years. Importantly, 67% of our shoppers make an additional purchase while doing so, a rate that has now stayed at around this level for three years, so our retailers benefit from lower fulfilment costs and additional sales.


Retailers are also seeking to reduce the cost of returns by making it easy for consumers to complete the return and refund through their store networks. CACI data show that 39% of online purchases returned by shoppers are now accepted through a store. We have this year started to measure the proportion of those who made a new purchase in store while returning an online purchase: the initial results are powerful, with 80% of people at our centres going on to buy an additional product when making an online return.


At our Local centres the frequency of Click & Collect is almost 50% higher than the national average, which suggests that British Land's focus on designing these centres for convenience is helping retailers lower their fulfilment costs and capture additional sales, leading to more healthy margins.


We have also begun to explore the impact of physical stores on online sales. The results of our research show that when a physical store opens, traffic to the retailer's website from the surrounding postal area increases by an average of 52% within 6 weeks of opening. Importantly, it then stays around this level, demonstrating that a physical store has a significant, positive and sustained impact on the brand.


These data demonstrate that physical retail centres continue to play an important role in both the discovery and fulfilment stages of a consumer purchase, regardless of where the financial transaction takes place. Consumers want a seamless purchasing experience across their chosen channels and we believe this is reflected in the growing number of previously pure-play ecommerce retailers who are now taking physical space, such as Joe Browns which opened its first store in Meadowhall in October.


Our space is also affordable, with an occupancy cost ratio of 16%, falling to under 14% once the estimated benefit of online sales is included. Reflecting the combination of these factors, our total occupancy remains high at 98%.



Investment demand for retail assets during the period has increasingly focused on lot sizes below £50 million with secure income streams. We have also seen a resurgence of activity in supermarkets where they offer long index-linked income, which is reflected in a tightening of yields. There has been limited equivalent transactional evidence in prime, with little quality stock brought to market beyond the non-controlling stake in Bluewater.

With retailer margins under pressure due to rising costs and structural change, polarisation of occupier demand has accelerated sharply. The focus now is on rightsizing store networks. As a result, retailers are targeting the best space in the strongest locations, as illustrated by recent data showing that more than 60% of UK shopping centre lettings this year have been on new or refurbished space. In view of tightening retail margins, over the next 12 months we expect rents across the market as a whole to be flat or slightly down, with the best space attracting the strongest demand as retailers optimise their portfolios.  


Portfolio Performance

The value of our Retail portfolio rose 0.3% during the period, with ERV growth of 1.0%, primarily in multi lets. Regional and Local centres performed in line, though values were offset by yield shift. As a result, Locals were down 0.9% whilst Regionals were up 0.1%. Many of our solus properties saw valuation gains as a result of the long term nature of their leases. Our work on planning and asset management has realised underlying land values generating some very strong individual performances, for example at Richmond, where our Homebase store saw a valuation gain of 60%. Although outside the core Retail business, many of our solus properties have attractive alternative use value and will remain a part of the portfolio, delivering income for the Group, until this value has been maximised. 


Capital spend in the period was £43 million of which c.60% were initiatives delivering an immediate increase in income, with the remainder delivering longer term benefits for our assets.


Capital Activity

Over the last three years we have sold £1.7 billion of off-strategy assets, £298 million of which were during the period. These included B&Q stores in Bury and Grimsby for £56 million.


We acquired 10-40 The Broadway, Ealing, for £49 million, which links our Ealing Broadway Local retail centre to the new Crossrail station, and offers significant mixed-use development potential. 


Over the next 12 months, we expect to sell an additional £500 million of retail assets while investing in several of our Regional centres where we will create leisure extensions, and in our Locals through amenity improvements.


Operational Performance

Our Retail strategy has positioned us to benefit from polarisation and the growing symbiosis between digital and physical retail, and this is reflected in our performance, with strong leasing and ERV growth, and footfall and sales all ahead of benchmark. 


We signed 578,000 sq ft of lettings and renewals in the half year, with investment lettings and renewals on average 11.9% ahead of ERV.  Our Regional centres, which represent 58% by value, accounted for around two-thirds of this activity, with both Regionals and Locals achieving terms similarly ahead of ERV. Rent reviews covered over 500,000 sq ft, and were completed on average 4.0% ahead of passing rent and ahead of valuation assumptions. In total, this activity has supported like-for-like income growth of 1.7%. 


Our centres outperformed their benchmarks on footfall and sales in the period by 340 bps and 50 bps respectively. At our Regional centres, footfall was up 1.3% with some very strong individual performances, including Teesside (+11.4%), benefitting from a newly reconfigured car park, and Bath, SouthGate (+6.1%) where "Umbrella Street" an art installation featuring 1,000 umbrellas proved highly attractive: footfall grew by a million people over the last twelve months. Footfall at our Local centres rose 0.4%. Sales, which are calculated on a like-for-like basis and therefore do not include the notable positive impact of new signings or click and collect, were down 1.4% and 0.5% at our Regional and Local centres respectively but still ahead of the benchmark.


In line with our strategy of introducing a better balance of activities to our locations, 72,000 sq ft of food, beverage and leisure lettings were made in the period, including Gourmet Burger Kitchen at Meadowhall, Bills at Plymouth and Pure Gym at Fort Kinnaird: food and beverage was our strongest performing category in the period, with sales up 0.9%.


In addition, we are using our insight to demonstrate to premium operators the benefits of opening in non-traditional locations. During the period Hotel Chocolat and Lush opened their first out of town stores at Teesside and Glasgow Fort respectively, and Footasylum, who opened their first new concept store out of town at Broughton, Chester. Disney and Joules have also opened pop-up stores at Glasgow, their first out of town space, providing them the flexibility to trial this format whilst enabling us to refresh our offering more regularly. 


We achieved notable success through HUT at Fort Kinnaird, where extensive work has been undertaken to enhance the environment and introduce new brands. 135,000 sq ft of lettings and regears brought 13 new brands to the site, including Schuh, Starbucks and Waterstones, which opened a 3,800 sq ft concept store.


Following our successful planning application, we are also undertaking a £30 million refurbishment of our Regional Teesside centre. This will create modern, bespoke units for retailers, with improved customer facilities and an enhanced public realm as well as an additional 120,000 sq ft of lettable space. New leases agreed at Teesside in the period partly drove ERV growth of 3.7% across the asset.


The refurbishment programme at Meadowhall stimulated existing occupiers to invest a further £38 million on the redesign and refit of their stores to match the modern contemporary feel of the centre. Our investment has created an environment appealing to premium / lifestyle retailers including Joe Browns and Godiva who signed in the period. They join 30 new brands taking space since the refurbishment was announced, on terms ahead of ERV. The refurbishment also created direct economic and social benefit for the local community, with one in three of the construction jobs filled by people living in Sheffield, creating over 200,000 hours of employment. 70% of construction spend also went to local firms, boosting the regional economy by £32 million.


As part of our focus on ensuring our assets directly benefit the local community, we also support our occupiers with local training and recruitment.  Launched in 2016, our Bright Lights 'Starting Out' training programme helps unemployed young people build valuable skills that help them secure work in the retail and hospitality industry.  This free programme has now been rolled out across 13 Local and Regional retail centres, building on the success of last year's pilot which placed 75% of participating graduates in employment. Our research with CACI reveals that people who feel a strong community association with a retail centre visit at least 30% more often and are over 50% more likely to recommend it to friends. We have therefore also expanded our Young Readers Programme with the National Literacy Trust to take place at 28 predominantly retail assets, with over 7,500 children participating in the half year, helping to foster strong community associations with our places.


Retail Development

Our increasing focus on mixed use development means that retail often forms part of a wider scheme, as seen at Eden Walk and Canada Water. Within our operational London campuses we are also improving the retail and leisure mix, particularly at Broadgate where 100 Liverpool Street will include 90,000 sq ft, and at 135 Bishopsgate where the whole ground floor will enhance the attractiveness of the overall location by introducing new retail and leisure space.


Outside London, we are progressing extensions to some existing schemes where an enhanced offering is designed to augment the performance of the asset. During the period, we secured 20 planning approvals for retail schemes amounting to 739,000 sq ft of space.


Committed Pipeline

We have two leisure extensions in our committed pipeline which will create a higher quality of experience for our visitors in those locations. Our leisure development at Speke, which completes next calendar year is 86% let or under offer. It will add an 11-screen cinema, pre-let to Cineworld and six restaurant units, of which half are pre-let. At Drake Circus, Plymouth, we have received consent for our 107,000 sq ft leisure scheme and started on site.

Near-Term Pipeline

We expect to start on site at two leisure extensions in the second half of 2018, subject to planning: at Bradford we will submit a revised planning application for a 49,000 sq ft leisure extension by the end of the year; and at Teesside, where a resolution to grant has been secured for an 83,000 sq ft extension. 


Medium-term Pipeline

Our medium-term pipeline currently includes two retail development extensions for existing assets.


At Serpentine Green in Peterborough, we have submitted planning permission for a leisure extension. Subject to successful outcome, we would expect to start construction towards the end of 2019.


Our most substantial retail opportunity is the leisure extension at Meadowhall, for which we secured a resolution to grant planning consent in September 2017. The extension, which is designed to complete Meadowhall's transformation into a flagship regional centre, will increase the lettable area by 330,000 sq ft and the public realm by 300,000 sq ft. It will feature a new high quality dining destination beneath a dramatic transparent roof that links the two wings of the existing centre to improve visitor flow and enable year-round use of the new space. Exceptional new entertainment options, including a new cinema, café court, gym, open air terrace, foodstore and space for leisure, event and community uses, will create additional reasons for consumers to visit and we expect income to be enhanced through both the 20% expansion in Meadowhall's lettable area and washover to ERVs within the existing scheme.  Detailed designs will commence in the New Year, with a view to starting on site in 2019, pending a significant pre-let and subject to finalising planning. When we commit to this scheme, we will also commit to its sustainable delivery, furthering the local economic and social benefits achieved with the refurbishment we have just completed.


Our portfolio is increasingly mixed-use: future such opportunities in London include Eden Walk, Kingston, where we have planning consent for a 533,000 sq ft regeneration scheme, and 10-40 The Broadway at Ealing, covering nearly 300,000 sq ft. Our plans at Eden Walk, which we own in joint venture with USS, include 40 new retail and restaurant units, 380 homes and 35,000 sq ft of high quality, modern and flexible office space; we are progressing plans to secure vacant possession of the site, and would expect to commence development in 2019, subject to significant pre-lets. At Ealing, our plans are still at an early stage, but we envisage a broad mix of uses next to the station, where Crossrail trains will run a full service from December 2019.






For British Land, effective risk management is a cornerstone of delivering our strategy and integral to the achievement of our objective of delivering sustainable long term value. The Group's risk appetite and its integrated approach to managing risk remains as set out on pages 46-48 of the Annual Report and Accounts for the year to 31 March 2017.

The Board has updated its assessment of the principal risks facing the Group for the remaining six months of the financial year, including those that would impact the business model, future performance, solvency or liquidity.  Whilst, we consider there has been no material change to the Group's principal risks, as set out on pages 50-53 of the Annual Report and Accounts published in May 2017, several risks are elevated as a result of the increased level of political and economic uncertainty following the EU referendum vote last year and the recent UK general election results.


As a result of the increased economic and political risk, other principal risks that are considered to be impacted whilst operating in an uncertain environment are; occupier demand, catastrophic business event, execution of investment strategy and income sustainability.


We have continued to see healthy activity and interest in our portfolio, but are mindful of the continued uncertainty; in this context we will benefit from the resilience of our business, the quality of our portfolio and the strength of our finances. 


Our principal risks and uncertainties which may impact the business over the remaining six months of the year are summarised below.


Principal External Risks              

Economic outlook - The UK economic climate and future movements in interest rates present risks and opportunities in property and financing markets and the businesses of our occupiers which can impact both the delivery of our strategy and our financial performance.

Political and regulatory outlook - Significant political events and regulatory changes, including the UK's decision to leave the EU, bring risks both in terms of uncertainty until the outcome is known, and the impact of policies introduce. This could impact the businesses of our occupiers and the wider investment case for the UK.

Commercial property investor demand - Reduction in investor demand for UK real estate may result in falls in asset valuations and could arise from variations in the health of the UK economy, the attractiveness of investment in the UK, availability of finance and the relative attractiveness of other asset classes.

Occupier demand and tenant default - Underlying income, rental growth and capital performance could be adversely affected by weakening occupier demand and occupier failures resulting from variations in the health of the UK economy and corresponding weakening of consumer confidence, business activity and investment. Changing consumer and business practices including the growth of internet retailing, flexible working practices and demand for energy efficient buildings, new technologies, new legislation and alternative locations may result in earlier than anticipated obsolescence of our buildings if evolving occupier and regulatory requirements are not met.

Availability and cost of finance - Reduced availability of finance may adversely impact British Land's ability to refinance debt and/or drive up cost. These factors may also result in weaker investor demand for real estate. Regulation and capital costs of lenders may increase cost of finance.

Catastrophic business event - An external event such as a civil emergency, including a large-scale terrorist attack, cyber crime, extreme weather occurrence, environmental disaster or power shortage could severely disrupt global markets (including property and finance) and cause significant damage and disruption to British Land's portfolio and operations.

Principal Internal Risks

Investment strategy - In order to meet our strategic objectives we aim to invest in and exit from the right properties at the right time. Underperformance could result from changes in market sentiment as well as inappropriate determination and execution of our property investment strategy, including: sector selection and weighting; timing of investment and divestment decisions; exposure to developments; asset, tenant, region concentration; and co-investment arrangements.

Development strategy - Development provides an opportunity for outperformance but usually brings with it elevated risk.  This is reflected in our decision-making process around which schemes to develop, the timing of the development, as well as the execution of these projects. Development strategy addresses several development risks that could adversely impact underlying income and capital performance including: development letting exposure; construction timing and costs (including construction cost inflation); major contractor failure; and adverse planning judgements.

People - A number of critical business processes and decisions lie in the hands of a few people. Failure to recruit, develop and retain staff and Directors with the right skills and experience may result in significant underperformance or impact the effectiveness of operations and decision making, in turn impacting business performance.

Capital structure - leverage - Our capital structure recognises the balance between performance, risk and flexibility. Leverage magnifies capital returns, both positive and negative. An increase in leverage increases the risk of a breach of covenants on borrowing facilities and may increase finance costs.

Finance strategy - Finance strategy addresses risks both to continuing solvency and profits generated. Failure to manage refinancing requirements may result in a shortage of funds to sustain the operations of the business or repay facilities as they fall due.

Income sustainability - We are mindful of maintaining sustainable income streams which underpin a stable and growing dividend and provide the platform from which to grow the business.  We consider sustainability of our income streams in: execution of investment strategy and capital recycling, notably timing of reinvestment of sale proceeds; nature and structure of leasing activity; and nature and timing of asset management and development activity.


Statement of directors' responsibilities

The directors' confirm that these condensed interim financial statements have been prepared in accordance with International Accounting Standard 34, 'Interim Financial Reporting', as adopted by the European Union and that the interim management report includes a fair review of the information required by DTR 4.2.7 and DTR 4.2.8, namely:


·      an indication of important events that have occurred during the first six months 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;


·      material related-party transactions in the first six months and any material changes in the related-party transactions described in the last annual report.


The directors of The British Land Company plc are listed on the Company website


By order of the Board




Lucinda Bell

Chief Financial Officer 15 November 2017



Independent review report to The British Land Company PLC

Report on the condensed interim financial statements


Our conclusion

We have reviewed The British Land Company PLC's condensed interim financial statements (the "interim financial statements") in the half year results of The British Land Company PLC for the six month period ended 30 September 2017. Based on our review, nothing has come to our attention that causes us to believe that the interim financial statements are not prepared, in all material respects, in accordance with International Accounting Standard 34, 'Interim Financial Reporting', as adopted by the European Union and the Disclosure Guidance and Transparency Rules sourcebook of the United Kingdom's Financial Conduct Authority.


What we have reviewed

The interim financial statements comprise:

·      the consolidated balance sheet as at 30 September 2017;

·      the consolidated income statement and consolidated statement of comprehensive income for the period then ended;

·      the consolidated statement of cash flows for the period then ended;

·      the consolidated statement of changes in equity for the period then ended; and

·      the explanatory notes to the interim financial statements.


The interim financial statements included in the half year results have been prepared in accordance with International Accounting Standard 34, 'Interim Financial Reporting', as adopted by the European Union and the Disclosure Guidance and Transparency Rules sourcebook of the United Kingdom's Financial Conduct Authority.


As disclosed in note 1 to the interim financial statements, the financial reporting framework that has been applied in the preparation of the full annual financial statements of the Group is applicable law and International Financial Reporting Standards (IFRSs) as adopted by the European Union.


Responsibilities for the interim financial statements and the review


Our responsibilities and those of the directors

The half year results, including the interim financial statements, are the responsibility of, and have been approved by, the directors. The directors are responsible for preparing the half year results in accordance with the Disclosure Guidance and Transparency Rules sourcebook of the United Kingdom's Financial Conduct Authority.


Our responsibility is to express a conclusion on the interim financial statements in the half year results based on our review. This report, including the conclusion, has been prepared for and only for the company for the purpose of complying with the Disclosure Guidance and Transparency Rules sourcebook of the United Kingdom's Financial Conduct Authority and for no other purpose.  We do not, in giving this conclusion, accept or assume responsibility for any other purpose or to any other person to whom this report is shown or into whose hands it may come save where expressly agreed by our prior consent in writing.


What a review of interim financial statements involves

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.


We have read the other information contained in the half year results and considered whether it contains any apparent misstatements or material inconsistencies with the information in the interim financial statements.



PricewaterhouseCoopers LLP
Chartered Accountants
15 November 2017



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Half-year Report - Part 1 - RNS