15 November 2024
LAND
SECURITIES GROUP PLC ("Landsec")
Results
for the half year ended 30 September 2024
Strong operational
execution drives upgrade in EPS outlook and increase in portfolio
value
Mark Allan, Chief Executive of Landsec,
commented:
"Our
operational outperformance continues, with further growth in
occupancy and positive rental uplifts across our retail and London
portfolio, which is translating into accelerated income growth.
Combined with our focus on cost efficiencies, we therefore raise
our outlook for EPRA EPS and now expect FY25 to be in line with
last year's level despite £0.5bn of net disposals over the past
year, and for this outperformance to flow through into
FY26.
At the same
time, property values have stabilised, with growth in rental values
driving a modest increase in capital values, resulting in a
positive total return on equity. We expect these trends to persist,
as customer demand for our best-in-class space remains robust and
investment market activity has started to pick up. We have
continued to reposition our portfolio towards higher-return
opportunities and are confident of deploying further capital
towards this in the second half. Having managed our balance sheet
well as markets corrected, we are now well placed to deliver growth
and attractive returns."
Financial highlights
|
|
30 Sep
2024
|
Prior
(1) period
|
|
30 Sep
2024
|
Prior
(1) period
|
|
EPRA earnings (£m)(2)(3)
|
186
|
198
|
Profit/(loss) before tax (£m)
|
243
|
(193)
|
|
EPRA EPS (pence)(2)(3)
|
25.0
|
26.7
|
Basic EPS (pence)
|
32.8
|
(24.4)
|
|
EPRA NTA per share (pence)(2)(3)
|
871
|
859
|
Net assets per share (pence)
|
873
|
863
|
|
Total return on equity (%)(2)(3)
|
3.9
|
(2.4)
|
Dividend per share (pence)
|
18.6
|
18.2
|
|
Group LTV ratio (%)(2)(3)
|
34.9
|
35.0
|
Net debt (£m)
|
3,573
|
3,594
|
¾ EPRA earnings
of £186m, up £1m vs prior period after adjusting for £13m lower
surrender receipts
¾ EPRA EPS at
top end of expectations at 25.0p, as better than expected 3.4% LFL
net income growth and 2.2ppt improvement in operating margin offset
earnings impact from non-core asset disposals
¾ Total
dividend up 2.2% to 18.6p per share, in line with guidance of low
single digit percentage growth
¾ Profit before
tax up to £243m, as 2.1% ERV growth resulted in £91m or 0.9% uplift
in portfolio value
¾ Total return
on equity of 3.9% over six months, with 1.4% increase in EPRA NTA
per share to 871p
¾ Maintained
strong balance sheet with 7.4x net debt/EBITDA and a 34.9% Group
LTV
¾ Upgrade in
EPS outlook due to higher LFL income growth and cost efficiencies,
with FY25 EPRA EPS now expected to be in line with the 50.1 pence
delivered in FY24 and FY26 expected to be ahead of this, before any
upside from potential future acquisitions
Operational highlights
Strategic focus on creating best-in-class
portfolio pays off, with 6% uplifts on
relettings/renewals across London and Major Retail, 40bps increase
in occupancy, 3.4% growth in like-for-like net rental income, and
property valuations returning to modest growth as rental values
rise 2.1% and yields stabilise. Well placed to deliver the 8-10%
annual return on equity we target over time, with current annual
income return at NTA of 5.8%, continued growth in like-for-like
income and further rental value growth.
Central London income and capital values grow,
as investment market stabilises
¾ Delivered
5.5% LFL net rental income growth, with occupancy up 60bps to
97.9%, £16m of lettings signed or in solicitors' hands 3% above ERV
and relettings/renewals 7% above previous rent
¾ Drove 2.2%
ERV growth over first six months as customer demand remains focused
on high-quality space in best locations, on track vs FY guidance of
low to mid single digit percentage growth
¾ Portfolio
valuation up 0.8%, as yields stabilised and investment market
activity starts to pick up
¾ Progressing
two on-site developments in Victoria and Southbank, with expected
completion in late 2025 and attractive 7.1% gross yield on cost and
11% yield on capex
Major Retail assets reversion and capital
values grow, as leading brands expand in best locations
¾ Delivered
3.1% LFL net income growth, with LFL occupancy up 70bps to 96.0%
and £26m of lettings signed or in solicitors' hands 7% above ERV
and 4% ahead of previous rent for relettings/renewals, underpinning
growing reversionary potential
¾ Capitalised
on continued focus from brands on fewer, bigger, better stores,
with significant upsizes and lettings with leading brands such as
Primark, Pull&Bear, Bershka, Sephora and JD Sports
¾ Delivered ERV
growth of 1.7%, on track vs FY guidance of low to mid single digit
percentage growth, supporting 2.8% increase in portfolio valuation,
as activity levels in investment markets pick up
¾ Acquired an
additional £120m stake in Bluewater at attractive 8.5% yield, with
confidence in deploying further capital in major retail at
accretive returns in second half of the year
Further progress in unlocking substantial
residential development pipeline
¾ Started on
site with infrastructure works and secured vacant possession for
first phase of consented 1,800-homes Finchley Road scheme, ahead of
potential start of main development in 2026
¾ Renegotiated
development agreement at Mayfield, Manchester, which already
benefits from outline consent, unlocking option to start delivery
of c. 1,700 new homes from 2026 onwards
¾ Submitted
planning application for masterplan in Lewisham, covering 1,700
homes plus over 1,000 student beds and co-living homes, with
potential start on site in 2027
¾ Growing
visibility on overall pipeline of 6,000+ homes with expected IRRs
in the low double-digits
Returns underpinned by strong capital base and
continued improvement in efficiency
¾ Realised 10%
reduction in overhead costs, with further efficiencies expected
next year
¾ Executed on
£690m of transactions since March, including £464m of non-core
disposals in line with Mar-24 book value and £226m of acquisitions,
improving future return prospects
¾ Capitalised
on sector-leading access to credit, with AA/AA- credit ratings, via
£350m 10-year bond issue at 4.625% coupon and refinancing of
£2.25bn revolving credit facilities at existing low
margins
¾ Maintained
strong capital base, with 10.0-year average debt maturity, £2bn
cash and undrawn facilities, 7.4x net debt/EBITDA and 34.9% LTV,
providing capacity to grow at attractive time
1. Prior period measures are for the six months
ended 30 September 2023 other than EPRA NTA per share, net assets
per share, Group LTV ratio and net debt, which are as at 31 March
2024.
2. An alternative performance measure. The
Group uses a number of financial measures to assess and explain its
performance, some of which are considered to be alternative
performance measures as they are not defined under IFRS. For
further details, see the Financial review and table 13 in the
Business analysis section.
3. Including our proportionate share of
subsidiaries and joint ventures, as explained in the Financial
review. The condensed consolidated preliminary financial
information is prepared under UK adopted international accounting
standards (IFRSs and IFRICs) where the Group's interests in joint
ventures are shown collectively in the income statement and balance
sheet, and all subsidiaries are consolidated at 100%. Internally,
management reviews the Group's results on a basis that adjusts for
these forms of ownership to present a proportionate share. These
metrics, including the Combined Portfolio, are examples of this
approach, reflecting our economic interest in our properties
regardless of our ownership structure. For further details, see
table 13 in the Business analysis section.
A live video webcast of the
presentation will be available at 9.00am
GMT. A downloadable copy of the webcast will then be available by
the end of the day.
We will also be offering an audio conference
call line, details are available in the link below. Due to the
large volume of callers expected, we
recommend that you dial into the call 10 minutes before the start
of the presentation.
Please note that there will be an interactive
Q&A facility on both the webcast and conference call
line.
Webcast link: https://webcast.landsec.com/2024-half-year-results
Call title: Landsec
Half Year Results 2024
Conference call:
https://webcast.landsec.com/2024-half-year-results/vip_connect
Forward-looking statements
These full year results, the latest Annual
Report and Landsec's website may contain certain 'forward-looking
statements' with respect to Land Securities Group PLC (the Company)
and the Group's financial condition, results of its operations and
business, and certain plans, strategies, objectives, goals and
expectations with respect to these items and the economies and
markets in which the Group operates.
Forward-looking statements are sometimes, but
not always, identified by their use of a date in the future or such
words as 'anticipates', 'aims', 'due', 'could', 'may', 'should',
'expects', 'believes', 'intends', 'plans', 'targets', 'goal' or
'estimates' or, in each case, their negative or other variations or
comparable terminology. Forward-looking statements are not
guarantees of future performance. By their very nature
forward-looking statements are inherently unpredictable,
speculative and involve risk and uncertainty because they relate to
events and depend on circumstances that will occur in the future.
Many of these assumptions, risks and uncertainties relate to
factors that are beyond the Group's ability to control or estimate
precisely. There are a number of such factors that could cause
actual results and developments to differ materially from those
expressed or implied by these forward-looking statements. These
factors include, but are not limited to, changes in the political
conditions, economies and markets in which the Group operates;
changes in the legal, regulatory and competition frameworks in
which the Group operates; changes in the markets from which the
Group raises finance; the impact of legal or other proceedings
against or which affect the Group; changes in accounting practices
and interpretation of accounting standards under IFRS, and changes
in interest and exchange rates.
Any forward-looking statements made in these
full year results, the latest Annual Report or Landsec's website,
or made subsequently, which are attributable to the Company or any
other member of the Group, or persons acting on their behalf, are
expressly qualified in their entirety by the factors referred to
above. Each forward-looking statement speaks only as of the date it
is made. Except as required by its legal or statutory obligations,
the Company does not intend to update any forward-looking
statements.
Nothing contained in these full year results,
the latest Annual Report or Landsec's website should be construed
as a profit forecast or an invitation to deal in the securities of
the Company.
Chief Executive's statement
Strong operational performance drives upgrade
in EPS and return to valuation growth
Owning the right real estate has never been
more important. Irrespective of sector, there is a clear focus from
customers on best-in-class space and as this space remains in short
supply, rents are growing. Our success in positioning Landsec for
this is reflected in our 3.4% like-for-like income growth; a 40bp
rise in occupancy to 96.6%, significantly outperforming market
averages; and a 0.9% rise in property values, driven by a 2.1%
increase in rental values, outperforming the MSCI All Property UK
average.
Alongside an improvement in operating margin,
this means our EPRA EPS for the first half of the year is at the
top end of expectations at 25.0 pence. Whilst 1.7 pence below the
prior period, this reflects the fact that the prior half year
benefitted from £13m, or 1.7 pence, higher surrender receipts than
the last six months. The net divestment of non-core assets further
reduced earnings by £10m yet this was fully offset by an
acceleration in operational growth. Whilst six months ago we
expected our EPS to be slightly below last year's level because of
our significant non-core disposals, we now expect FY25 EPS to be in
line with last year's 50.1 pence and FY26 to be ahead of this,
before any potential benefit from future
acquisitions.
Six months ago we also said that we expected
yields to stabilise and values for the best assets to return to
growth. This is what happened, so combined with our attractive
income return, we delivered a 3.9% total return on equity for the
six months to September and NTA per share increased 1.4%. Our
interim dividend is up 2.2%, in line with our guidance for the full
year.
We expect the trends in customer demand that
underpinned our positive performance over the last six months to
persist for the foreseeable future. We continue to see signs that
investment market activity is picking up, with selective
competition emerging for the best offices and retail assets. The
good availability of credit remains supportive to this, although we
are mindful that changes in longer-term interest rates will likely
influence the pace at which momentum improves from here. Meanwhile,
our balance sheet remains strong, with net debt/EBITDA at a low
7.4x and an LTV of 34.9%, so given where we are in the cycle, this
provides further capacity to grow at an attractive point in
time.
Table 1: Highlights
|
|
Sep 2024
|
Sep 2023
|
Change %
|
|
EPRA earnings (£m)(1)
|
186
|
198
|
(6.1)
|
|
Profit/(loss) before tax (£m)
|
243
|
(193)
|
n/a
|
|
Total return on equity (%)
|
3.9
|
(2.4)
|
6.3
|
|
|
|
|
|
|
Basic earnings/(loss) per share
(pence)
|
32.8
|
(24.4)
|
n/a
|
|
EPRA earnings per share (pence)(1)
|
25.0
|
26.7
|
(6.4)
|
|
Dividend per share (pence)
|
18.6
|
18.2
|
2.2
|
|
|
|
|
|
|
|
Sep 2024
|
Mar 2024
|
Change %
|
|
Combined portfolio (£m)(1)
|
9,957
|
9,963
|
(0.1)
|
|
IFRS net assets (£m)
|
6,545
|
6,447
|
1.5
|
|
EPRA Net Tangible Assets per share
(pence)(1)
|
871
|
859
|
1.4
|
|
|
|
|
|
|
Adjusted net debt (£m)(1)
|
3,510
|
3,517
|
(0.2)
|
|
Group LTV ratio (%)(1)
|
34.9
|
35.0
|
(0.1)
|
|
|
|
|
|
|
Proportion of portfolio rated EPC A - B
(%)
|
52
|
49
|
|
|
Average upfront embodied carbon reduction
development pipeline (%)
|
41
|
40
|
|
|
Energy intensity reduction vs 2020
(%)
|
19
|
18
|
|
1. Including our proportionate share of
subsidiaries and joint ventures, as explained in the Presentation
of financial information in the Financial Review.
Well positioned to deliver further
growth
Over the past four years, we have actively
shaped a high-quality portfolio and pipeline that is poised for
growth. We sold £3.1bn of assets where forward returns and our
ability to add value were low, including £464m in the first half of
this year, and we reinvested £2.3bn in our key places in Central
London, high-return major retail destinations, and opportunities
which offer future development upside. This strategy has paid off,
as demand for modern, sustainable office space in London remains
strong and in retail, brands continue to focus on fewer, but bigger
and better stores in key locations. As supply of both is
constrained, rents continue to increase.
Across our Central London portfolio, office
utilisation continues to grow. Customers are now planning for c.
25% more space per person than five years ago, so c. 80% of our
lettings over the past year have seen customers grow or keep the
same space. This means our occupancy is up 60bps to a high 97.9%,
with £16m of lettings completed or in solicitors' hands, on average
3% above ERV. Our London portfolio is now 9%
reversionary and ERVs continue to grow, up 2.2% in the first half.
With 7% rental uplifts on relettings/renewals, this drove 5.5%
like-for-like income growth and underpins our future income
growth.
In retail, brands remain focused on the best
access to consumer spend. The top 1% of all UK shopping
destinations provide access to 30% of the country's in-store retail
spend and as 95% of the locations in this top 1% are shopping
centres, city centres and outlets, these are the dominant focus for
brands. This means leading brands continue to take more space with
us, such as Primark who are expanding their store at White Rose
from 37,000 to 71,000 sq ft and JD Sports, who are moving into St.
David's from elsewhere in the city centre. As such, our occupancy
is now higher than it was before Covid, up 70bps to 96.0%, with
£26m of leases signed or in solicitors' hands, 7% ahead of ERV. In
addition, relettings and renewals were 4% above previous passing
rent and like-for-like net rental income was up 3.1%. ERVs were up
1.7% and with further growth ahead, we expect strong like-for-like
income growth in the future.
The attractive growth potential in our existing
portfolio is complemented by our significant development pipeline.
Our two on-site projects in Victoria and Southbank are expected to
complete in late 2025 and are expected to deliver £61m of ERV once
fully let, reflecting a 7.1% yield on cost and high 11% yield on
total capex. We have optionality over a further c. £2.2bn of London
office developments with a potential ERV of c. £160m. Having made
significant progress on planning and other preparations, we now
also have growing visibility on a pipeline of over 6,000 homes
across three sites in Manchester and London. This could allow us to
invest over £1bn in this structural growth sector by 2030 and c.
£3bn over the next decade, with expected IRRs in the low teens and
a potential start of the first phase in 2026.
Capital allocation and enhancing
returns
Recognising the normalisation in cost of
capital, over the past two years we have consistently said we are
targeting to deliver a total return on equity of 8-10% p.a. over
time, comprising a combination of income and capital returns,
driven by rental value growth and selective development upside. We
also said we would not be exactly in this range each individual
year, as valuation yield movements are outside of our control on a
short term basis. A softening in yields affected returns over the
past two years but this has now changed, as yields stabilised in
the first half of the year. As our current annual income return at
NTA is already an attractive 5.8% and rents continue to grow, the
outlook for our return on equity is positive.
The resilience of our returns is underpinned by
our success in preserving our strong capital base. This provides a
clear competitive advantage in terms of finance cost, as shown in
our 10-year bond issue at a 97bps margin and the refinancing of
£2.25bn revolving credit facilities at stable margins. We continue
to focus on operating efficiently, with a 10% reduction in overhead
costs during the first half and further meaningful savings expected
over the next two years, partly due to our data and technology
investments.
In terms of capital allocation, we still see
the most attractive risk-adjusted returns in major retail, where
income returns are in the high single digits and rents are growing.
Capital values are roughly half of their replacement cost, so new
supply is non-existent, and for the best assets, such as those in
our portfolio, capex which does not add value is low, at c. 20bps
of the overall asset value p.a. This is very different for
investors who own secondary assets with high vacancy that have
limited opportunity to price on costs through service charges or
increased rents, highlighting the importance of quality. All this
offers the potential for double-digit ungeared IRRs and following
the acquisition of an additional £120m stake in Bluewater in June,
we are confident in deploying further capital at accretive returns
in the second half.
Rents for highly sustainable, best-in-class
offices continue to grow, yet returns on development need to
compensate for the fact that costs and exit yields have increased.
Supply chains are still dealing with the effects of the spike in
inflation just over a year ago, so we continue to carefully weigh
risks and returns on new developments, also relative to the returns
on those assets we choose to sell to fund these. Given the
attractive returns in major retail we will focus our investment for
the remainder of this year on this, rather than making any new
office commitments. Outside of Central London, over the past 12-18
months we have successfully adjusted plans for parts of our
pipeline and focused this mostly on residential, where return
prospects remain attractive on a risk-adjusted basis, with low
double-digit IRRs. As borrowing costs and our cost of capital have
increased, we remain firmly focused on enhancing our return on
capital employed and overall income growth.
Outlook
Whilst global geopolitical uncertainty has
increased, for the UK the general election over the summer has
created an element of political stability that has eluded the
country for nearly a decade, ever since the EU referendum. Whilst
political decisions always require an element of compromise, we are
mindful of the risk that the cost of increased taxes could slow
down business decision-making. The new Government's ambition to
drive growth is admirable though and unlocking urban residential
development appears a key part of its focus, which should bode well
for the prospects of our growing residential pipeline.
In line with the view we set out in May,
investment activity has picked up in London and retail and values
have begun to return to growth for the best assets. Credit
availability remains supportive, so we expect this trend to
persist, although changes in long term interest rates will likely
influence the pace at which momentum continues to improve from
here. Customer demand for our best-in-class space remains robust
and as supply is limited, we continue to expect ERVs for our London
and retail portfolio to grow by a low to mid single digit
percentage this year.
We continue to drive occupancy growth and
positive leasing reversion across our London and major retail
portfolios. The latter turned positive for the first time last year
and has further improved since, hence we expect rental uplifts to
continue to grow. In May, we expected our like-for-like net rental
income growth for this year to be similar to last year's 2.8%, yet
we now expect this to be closer to 4%. Combined with our focus on
managing costs, this means we raise our guidance for EPRA EPS for
FY25 and now expect EPS to be in line with last year's 50.1 pence,
despite £0.5bn of net disposals over the past year. This supports
our expectation for our dividend to grow by a low single digit
percentage this year and we expect further like-for-like growth and
operational efficiencies to drive continued growth in EPRA EPS in
FY26.
Having been a net seller in the first half, we
expect to expand our high-quality retail portfolio in the second
half of the year, although we have not assumed any benefit from
this in our increased EPS outlook at this stage. With a current
income return at NTA of 5.8%, further growth in like-for-like
income, a strong capital base and capital values returning to
growth, the outlook for our return on equity and EPS is
positive.
Operating and portfolio review
Overview
Our combined portfolio was valued at £10.0bn as
of September, comprising the following segments:
¾ Central
London (65%): our well-connected, high-quality office (84%) and
retail and other commercial space (16%), located in the West End
(68%), City (23%) and Southwark (9%).
¾ Major retail
destinations (20%): our investments in six shopping centres and
three retail outlets, which are amongst the highest selling
locations for retailers in the UK.
¾ Mixed-use
urban neighbourhoods (7%): our investments in mixed-use urban
places in London and a small number of other major UK cities, with
future repositioning or residential development
potential.
¾ Subscale
(8%): assets in sectors where we have limited scale or competitive
advantage and which we are therefore likely to divest over time,
split broadly equally between retail parks and leisure.
Investment activity
Our overall investment and divestment activity
totalled £690m since March, which equates to 7% of our portfolio
value. In line with our strategy, we sold £464m of assets,
including our £400m hotel portfolio, a retail park in Taplow and
four small non-core assets, on average, in line with their March
2024 book values. The disposal of our hotel portfolio crystallised
the strong recovery in performance post Covid, yet as the income
was 100% turnover linked on long-term leases to Accor, there was no
opportunity for us to influence or enhance its future operational
performance.
In the first six months, acquisitions totalled
£140m and we spent £128m on development capex. We acquired an
additional 17.5% stake in Bluewater for £120m, increasing our
ownership in one of the UK's leading retail destinations to 66.25%.
With a yield of 8.5% and further income growth, this is expected to
deliver a double-digit unlevered return. We also bought a £15m
block opposite Buchanan Galleries. This means we now own c. 30% of
the retail frontage of the prime high street in Glasgow, which is
the city with the highest total retail spend outside London, ahead
of a repositioning of our existing centre.
Since the period-end, we also acquired the
remaining 25% interest in MediaCity from Peel, plus the 218-bed
hotel and studio operations at the estate which were wholly owned
by Peel. The cash consideration was £23m and we assumed £61m of
debt, providing an overall consideration of £84m. This represents a
discount to the book value of our existing stake, reflecting the
value of future income from wrapper leases to Peel we agreed to
surrender. Adjusted for this, the deal is broadly in line with book
value and earnings neutral in the short term, but provides us with
full control of MediaCity and the ability to implement our plans
for this unique estate, including the potential for significant new
living space at its adjacent land.
Since late 2020, we have sold £3.1bn of the c.
£4bn assets we said we intended to sell over a period of c. 6 years
when we launched our updated strategy. We will continue to
selectively recycle capital over time, but having been a material
net seller over the past twelve months, our current focus is on
acquisitions and we are confident in making further progress on
deploying capital in major retail at accretive returns in the
second half. Our potential future investment in new developments is
likely to be funded principally through future disposals of mature
or standalone assets, alongside other, complementary sources of
capital.
Portfolio valuation
Following two years of softening, property
yields stabilised over the last six months. In line with the view
we set out six months ago, this means our overall portfolio value
increased 0.9%, as our successful leasing activity drove 2.1% ERV
growth.
Our Central London portfolio was up
0.8% over the period, as our 2.2% ERV growth was partially offset
by a small 7bps increase in yields, which overall remain at 5.4%.
West End office valuations were stable and our City offices saw
growth in valuations of 1.9%. Our West End offices, which are
practically full, saw 1.3% growth in ERVs. In the City, our asset
management activity drove 5.3% growth in ERVs. Retail and other
assets were down 0.4%, whilst development values were up 2.9% due
to increased ERVs, reflecting the strong demand and scarcity of
supply of best in class space.
Our high-quality Major retail
portfolio saw values increase 2.8%, driven by a 1.7% increase in
ERVs and a 17bps reduction in yields. This reflected the positive
impact of our investment and asset management activity and
improving occupational and investment market sentiment. With income
returns of 7-8% and rents having returned to growth, this remains
our preferred area for future investment and again was the best
performing segment in our portfolio, with a total return for the
period of 6.8% compared with Central London at 2.9% and mixed-use
at (0.7)%.
The value of our mixed-use assets
was down 3.7%. This reflected some yield softening at MediaCity, as
the return of investor interest in regional offices is still
trailing London. The shortening of income at our three existing
retail assets in Glasgow and London which so far have been managed
for flexibility for future redevelopment also weighed on values,
yet we expect this to turn a corner over the next c. 12 months, as
our future plans become more tangible. In subscale, the value of
our retail parks was up 5.6% as strong investor demand pushed
yields down 27bps. Our leisure assets were down 1.1%, primarily
reflecting a modest reduction in rent related to Cineworld's
restructuring at the end of the period.
Table 2: Valuation analysis
|
|
Market value 30 Sep 2024
|
Surplus / (Deficit)
|
Valuation change
|
LFL rental value change(1)
|
Net initial
yield
|
Topped up net initial
yield
|
Equivalent
yield
|
LFL equivalent yield change
|
|
|
£m
|
£m
|
%
|
%
|
%
|
%
|
%
|
bps
|
|
West End offices
|
3,083
|
1
|
0.0
|
1.3
|
3.9
|
5.7
|
5.3
|
4
|
|
City offices
|
1,251
|
22
|
1.9
|
5.3
|
4.3
|
5.3
|
6.1
|
7
|
|
Retail and other
|
1,028
|
(4)
|
(0.4)
|
(0.3)
|
4.2
|
4.6
|
5.0
|
11
|
|
Developments
|
1,080
|
30
|
2.9
|
n/a
|
(0.2)
|
(0.1)
|
5.4
|
n/a
|
|
Total Central London
|
6,442
|
49
|
0.8
|
2.2
|
4.1(2)
|
5.4(2)
|
5.4
|
7
|
|
Shopping centres
|
1,413
|
57
|
4.2
|
1.4
|
7.7
|
8.3
|
7.9
|
(22)
|
|
Outlets
|
611
|
(2)
|
(0.3)
|
2.2
|
6.3
|
6.4
|
6.9
|
(10)
|
|
Total Major retail
|
2,024
|
55
|
2.8
|
1.7
|
7.3
|
7.7
|
7.6
|
(17)
|
|
London
|
189
|
(11)
|
(5.6)
|
3.7
|
4.4
|
4.2
|
6.6
|
6
|
|
Major regional cities
|
516
|
(16)
|
(3.0)
|
2.4
|
6.6
|
6.7
|
8.1
|
33
|
|
Total Mixed-use urban
|
705
|
(27)
|
(3.7)
|
2.7
|
6.1 (2)
|
6.1(2)
|
7.5
|
25
|
|
Leisure
|
420
|
(5)
|
(1.1)
|
(0.2)
|
8.4
|
8.6
|
8.7
|
(8)
|
|
Retail parks
|
366
|
19
|
5.6
|
1.1
|
5.8
|
6.6
|
6.6
|
(27)
|
|
Total Subscale sectors
|
786
|
14
|
2.0
|
0.3
|
7.2
|
7.7
|
7.7
|
(20)
|
|
Total Combined Portfolio
|
9,957
|
91
|
0.9
|
2.1
|
5.2(2)
|
6.2(2)
|
6.2
|
1
|
1. Rental value change excludes units
materially altered during the period.
2. Excluding developments / land.
Looking ahead, the good
availability and attractive pricing of credit for high-quality
assets is supportive to a further pick-up in investment market
activity. We have started to see competition for selective assets
in both retail and London offices from investors who are attracted
by historically attractive yields for assets with demonstrable
rental growth, although the outlook for longer-term interest rates
will likely influence the pace at which momentum continues to
improve from here. Values for the best assets have started to
return to modest growth, yet we expect assets where the
sustainability of income is questionable to remain under pressure.
Reflecting continued customer demand, we still expect that ERVs for
our London and retail portfolio will grow by a low to mid single
digit percentage this year.
Leasing and operational performance
Central London
Office customer demand continues to
focus on buildings with the best sustainability credentials, local
amenities and transport connectivity, particularly proximity to
overground rail stations. Such assets remain scarce, hence rental
values continue to increase. Having sold virtually all of our
long-term, single-let HQ buildings since late 2020, our portfolio
is now almost exclusively focused on multi-let assets in a small
number of key areas in London, such as Victoria where market rents
have already exceeded the record levels we set with our newly
completed n2 project last year.
The appeal of our offer is
underlined by the fact that we continue to see growth in daily
turnstile tap-ins in our buildings. The rate of growth will
naturally plateau over time as customers near full capacity, yet
September saw average daily tap-ins reach the highest level on
record. Our customers are now planning for
c. 25% more space per person than they did five years ago, so c.
80% of our lettings over the last twelve months have seen customers
grow or keep the same space.
This translates into continued
growth in operational performance. Our occupancy increased 60bps to
97.9%, significantly outperforming the London market as a whole at
91.5%. We completed 21 lettings and renewals during the half year,
totalling £9m of rent, on average 4% ahead of ERV, with a further
£8m in solicitors' hands, 3% above ERV. Our relettings/renewals
reflected a 7% uplift to previous passing rents, resulting in 5.5%
LFL rental income growth. With our London portfolio now 9%
reversionary, we expect continued growth in rental
income.
Our two established Myo flex office
locations in Victoria and Liverpool Street, which combined make up
2% of our London portfolio, saw a reduction in occupancy from 91%
to 79% due to a small number of larger lease expiries, but we
expect most of this to recover in the second half. Our four
recently opened Myo locations are in lease-up and are currently 45%
let or under offer, with a further c. 20% in negotiations and rents
on average in line with our underwrites.
Major retail destinations
We continue to see growing demand
for physical retail space in the very best locations. For brands,
the attraction of our major retail destinations sits in the fact
that these offer the best access to consumer spend, with the top 1%
of all UK shopping destinations providing access to 30% of the
country's in-store, non-food retail spend, resulting in higher
sales densities and productivity than other formats.
As such, brands continue to focus
on 'fewer, bigger, better' stores, such as for example at White
Rose, where we agreed a deal with Primark to expand their store
from 37,000 to 71,000 sq ft; in Bluewater, where we are seeing new
openings of e.g. Bershka, Pull&Bear and Sephora; and at St.
David's in Cardiff, where JD Sports are moving into a major new
store as they relocate from elsewhere in the city centre. Over the
last six months, 22 existing brands increased their space, 23 new
brands opened in our centres and 38 existing brands opened stores
in new locations within our portfolio.
As a result, like-for-like
occupancy was up 70bps to 96.0%, which means occupancy is now
higher than it was before the pandemic. We signed 105 leases
totalling £12m, on average 5% above ERV and have a further £14m of
lettings in solicitors' hands on average 9% ahead of ERV. Overall,
relettings and renewals were 4% above previous passing rent and
like-for-like net rental income increased 3.1%, adding further to
our attractive income returns.
Overall retail sales in the UK were
relatively subdued during Spring, which from our conversations with
brands was mostly attributed to the weather, as brands typically
expect a strong final quarter to 2024. Across our portfolio, total
sales are up 2.5% year-to-date. Like-for-like sales and footfall
are down 0.7% and 1.3%, partly reflecting the timing of Easter,
which fell in March this year.
Like-for-like net rental income
increased 3.1%, which adds further to the attractive 7%+ income
yield of our high-quality major retail destinations. We are
progressing a number of accretive investments to further enhance
our existing assets, such as the creation of new public/leisure
space at Cardiff, a new F&B destination at Trinity, Leeds and a
new waterfront F&B offer at Gunwharf Quays. With c. £100m capex
over the next 2-3 years, this is expected to deliver low-risk
double-digit IRRs and a high single digit / low double digit yield
on cost. For well-maintained, high-quality shopping centres and
outlets such as our portfolio, maintenance capex is limited to, on
average, c. 20bps of the overall asset value p.a. although this
will be far higher for those investors who own secondary assets
which lack rental tension and hence the ability to recover costs
through service charge or increased rents.
Mixed-use urban neighbourhoods
Our mixed-use portfolio principally
comprises our MediaCity estate in Greater Manchester and a number
of assets with future redevelopment potential, including our
investment in Mayfield, Manchester and three existing shopping
centres in London and Glasgow. In recent years these had been
managed to maximise future development flexibility by working to
full vacant possession dates, which resulted in a shortening of
income. We have changed our approach to parts of this, which will
result in lower capex, a greater retention and improvement of the
existing income and, ultimately, better overall risk-adjusted
returns.
Subscale sectors
Our retail parks saw a small
decrease in occupancy to 94.7%, whilst occupancy across our leisure
assets was down marginally to 96.6%. We completed or are in
solicitor's hands on £5m of lettings on average in line with ERV.
During the period, Cineworld announced a restructuring plan which
resulted in a rent reduction in five of their 13 cinemas in our
portfolio, although the loss of income is limited to 0.2% of our
overall rent and all of their venues continue to trade.
Table 3: Operational performance
analysis
|
|
Annualised rental income
|
Net estimated rental value
|
EPRA occupancy(1)
|
LFL occupancy change(1)
|
WAULT(1)
|
|
|
£m
|
£m
|
%
|
ppt
|
Years
|
|
West End offices
|
158
|
188
|
98.7
|
(0.9)
|
6.4
|
|
City offices
|
71
|
98
|
96.5
|
2.8
|
7.4
|
|
Retail and other
|
41
|
55
|
98.1
|
0.9
|
5.4
|
|
Developments
|
9
|
100
|
n/a
|
n/a
|
n/a
|
|
Total Central London
|
279
|
441
|
97.9
|
0.6
|
6.5
|
|
Shopping centres
|
139
|
139
|
96.0
|
1.0
|
4.3
|
|
Outlets
|
47
|
50
|
95.9
|
(0.2)
|
2.9
|
|
Total Major retail
|
186
|
189
|
96.0
|
0.7
|
3.9
|
|
London
|
11
|
16
|
88.5
|
(1.7)
|
7.5
|
|
Major regional cities
|
37
|
41
|
94.9
|
1.4
|
6.9
|
|
Total Mixed-use urban
|
48
|
57
|
93.2
|
0.6
|
7.0
|
|
Leisure
|
44
|
42
|
96.6
|
(0.4)
|
10.5
|
|
Retail parks
|
25
|
27
|
94.7
|
(2.5)
|
5.6
|
|
Total Subscale sectors
|
69
|
69
|
95.8
|
(1.2)
|
8.6
|
|
Total Combined Portfolio
|
582
|
756
|
96.6
|
0.4
|
6.1
|
1. Excluding developments.
Development pipeline
We have created a significant pipeline of
development opportunities in areas of strong structural demand. In
Central London, we have the potential to deliver 1.6m sq ft of
highly sustainable office space with the potential to generate
around £160m of rental income. In addition, we now have increasing
visibility on a pipeline of more than 6,000 homes across a select
number of mixed-use schemes in Manchester and London. This could
potentially deliver over £200m of annualised income in the next
decade.
As demand for the best space continues to
outweigh supply, rents continue to grow across both sectors. In
London, space under construction increased 6% since March to 14.2m
sq ft, of which 45% is pre-let or under
offer. As a result, speculative office space completing over the
next two years is roughly half of the long-term average new-build
office take-up. In residential, the forecast for population growth
of c. 6 million people by 2036 and continued urbanisation creates a
structural need for more homes in major cities.
That said, the build cost inflation over the
past few years, continued challenges in supply chains and an
increase in exit yields have put pressure on development returns,
despite growing rents. This has affected offices more than
residential, and regional offices more than London. We continue to
make good progress on adjusting our plans by e.g. changing scope,
increasing massing, or reducing cost to manage the impact of this.
Still, we will continue to carefully weigh risks and returns on any
new commitments, also relative to the returns on those assets we
choose to sell to fund our investments in this.
In terms of our two committed office
developments, we are on track to deliver both by late 2025.
At Timber Square, we are starting to see early
customer interest in our highly-sustainable offices which benefit
from strong transport links and lively local amenities. Building on
the success at n2, we will now add clubrooms which are accessible
to all customers to both the Print Building and Ink Building. This
will drive additional rent, yet combined with some design
refinements and a sub-contractor insolvency, overall costs are up
£31m and the expected gross yield on cost reduced slightly from
7.1% to 7.0%.
In Victoria, Thirty High will see us deliver
299,000 sq ft of space in a sub-market where our adjacent 2.6
million sq ft of existing space is 98.3% let and prime rents
continue to break new records, now well over £100 per sq ft.
Given the smaller floorplates, leasing is planned
closer to completion to enable us to capture a premium for the
unique views the building offers. We are already in solicitors'
hands with an operator for the top floor restaurant and our
expected gross yield on cost is 7.2%.
Table 4: Committed London pipeline
|
Project
|
Sector
|
Size
sq ft
'000
|
Estimated completion
date
|
Net income/ ERV
£m
|
Market value
£m
|
Costs to complete
£m
|
TDC
£m
|
Gross yield on TDC
%
|
|
Thirty High, SW1
|
Office
|
299
|
Oct-25
|
30
|
300
|
151
|
416
|
7.2%
|
|
Timber Square, SE1
|
Office
|
383
|
Dec-25
|
31
|
205
|
224
|
442
|
7.0%
|
|
Total
|
|
682
|
|
61
|
505
|
375
|
858
|
7.1%
|
In terms of our future pipeline, we
do not envisage making any new commitments to start schemes for the
remainder of the financial year, as we focus our investment
activity in the near term on major retail. We expect to complete
the deconstruction of the existing building at Red Lion Court
towards the end of this year. At Liberty of Southwark, we are
reviewing the impact of the new Building Safety Act on the small
residential component of the scheme, which has pushed back the
earliest start date to 2026.
We continue to progress our
mixed-use pipeline, which we are increasingly focusing on its
significant residential potential. At
Finchley Road, in zone two London, we have started the demolition
of the former Homebase, utilities works are now on site and we have
secured vacant possession for the first phase. We have an existing
detailed consent in place and, subject to some small planning
variations, we could potentially start the first phase of 600 homes
in 2026. We expect the investment for this to be roughly around
£350m, which is expected to deliver a low double-digit
IRR.
At Mayfield, adjacent to
Manchester's main train station, we have agreed with our JV
partners to optimise the development strategy for this exciting
24-acre site, unlocking significant residential potential. The
first c. £250m phase of the scheme consists of two offices
buildings plus a multi-storey car park. Manchester office demand is
strong and of the current 843,000 sq ft committed pipeline, 83% is
already pre-let, with prime rents up 13% over the past two years.
Whilst we would not pursue office development in isolation, the
returns on this look acceptable and, importantly, delivery of this
would unlock the opportunity to invest c. £1bn into delivering
c.1,700 homes across multiple phases around Manchester's newest,
6-acre park. Manchester has seen one of the highest levels of
residential rental growth in the UK, with a 5-year annual growth
rate of 7%, so returns in this sector are very
attractive.
At Lewisham, south-east London, we
submitted a planning application last month for our new masterplan,
which has the potential to deliver up to 1,700 homes with a further
445 co-living homes and 660 student beds over the next decade
across multiple phases. The plans have been developed after
substantial consultation, with over 2,500 visitors to our
engagement hub, and will see the creation of eight acres of new
public space, a new pedestrianised high street with shops, bars,
restaurants and cafes, a new music venue, and new pedestrianised
walking routes.
Given the strong demand for stores
in the best locations, we have changed our plans for Buchanan
Galleries, which sits at the top of Glasgow's prime high street.
Instead of a decade-long office-led regeneration scheme, we are now
progressing a less disruptive and more quickly delivered
redevelopment of the existing retail centre. This will create a new
food hall and open the existing centre up to the high street.
Combined with our recent acquisition of a retail block opposite our
centre, this means we effectively control both sides of the top of
Glasgow's prime retail pitch. We are already seeing strong interest
from leading international brands in our plans, which could start
on site in 2026.
Table 5: Future development pipeline
|
Project
|
|
Proposed sq ft
'000
|
Indicative TDC
£m
|
Indicative ERV
£m
|
Gross yield on TDC(1)
%
|
Potential
start date
|
Planning status
|
|
Office-led
|
|
|
|
|
|
|
|
|
Red Lion Court, SE1
|
|
250
|
|
|
|
2025
|
Consented
|
|
Old Broad Street, EC2
|
|
290
|
|
|
|
2025
|
Consented
|
|
Liberty of Southwark, SE1
|
|
220
|
|
|
|
2026
|
Consented
|
|
Hill House, EC4
|
|
380
|
|
|
|
2026
|
Consented
|
|
Nova Place, SW1
|
|
60
|
|
|
|
2025
|
Design
|
|
Southwark Bridge Road, SE1
|
|
150
|
|
|
|
2026
|
Design
|
|
Timber Square Phase 2, SE1
|
|
290
|
|
|
|
2026
|
Design
|
|
Total
|
|
1,640
|
2,250
|
160
|
7.1
|
|
|
|
Residential-led
|
|
|
|
|
|
|
|
|
Mayfield, Manchester
|
|
1,820
|
|
|
|
2025
|
Consented
|
|
Finchley Road, NW3
|
|
1,400
|
|
|
|
2026
|
Consented
|
|
Lewisham, SE13
|
|
1,900
|
|
|
|
2027
|
Design
|
|
Total
|
|
5,120
|
3,100-3,900
|
200-260
|
c. 6-7
|
|
|
|
Total future pipeline
|
|
6,760
|
|
|
|
|
|
1. Indicative figures.
Delivering in a sustainable way
In 2023, we were one of the first
real estate companies in the world to align our carbon reduction
targets to the Science Based Targets Initiative's (SBTi) new
Net-Zero Standard. We target to reduce direct and indirect
greenhouse gas emissions by 47% by 2030 versus a 2019/20 base year
and to reach net zero by 2040. Importantly, this not only includes
all of our Scope 1 and 2 emissions, but also all of our reported
Scope 3 emissions. We have reduced our
emissions by 27% vs our 2019/20 baseline. To support the
achievement of our science-based target, we have an energy
intensity target, to reduce energy intensity by 52% by 2030 from a
2019/20 baseline. The reduction in the six months was 2%, which
means we are currently tracking a 19% reduction versus our
baseline.
Our fully-funded net zero
transition investment plan, launched in 2021, will ensure we
deliver our near-term science-based target and meet the proposed
Minimum Energy Efficiency Standard of EPC 'B' by 2030, although it
appears likely the originally proposed date for this minimum
standard will be pushed back. Still, the expected cost to deliver
this plan is already reflected in our current portfolio valuation.
We have made further progress in the first half of the year, as 52%
of our portfolio is already rated 'B' or higher, including 43% of
our office portfolio, up from 49% at March. We are now on site at
four offices to retrofit air source heat pumps and plan to start
work on a fifth building by the end of March.
We are completing the installation
of an additional 1,350 solar panels at Gunwharf Quays which will be
operational later this month. This new 550kWp solar PV system
combined with the already existing one will generate over 670,000
kWh per year, representing 23% of landlord total electricity
demand. Increasing on-site renewable energy generation through
installation of solar PVs helps us to achieve our energy and carbon
targets while supporting the UK electricity grid decarbonise. It
also enhances the value of our assets and we have already seen the
positive impact of this project in the valuation of Gunwharf
Quays.
We design developments not only
with energy efficiency in mind, but also to minimise upfront
embodied carbon. To this end, our target is to reduce upfront
embodied carbon by 50% vs a typical development by 2030, to below
500kgCO2e/sqm for offices and 400kgCO2e/sqm
for residential. We have made good progress on this, with our
future pipeline currently tracking a 41% reduction. Our two
committed schemes, Timber Square and Thirty High, are exemplary due
to the high levels of retention of existing structures, with
upfront embodied carbon intensities of 522kgCO2e/sqm and
347kgCO2e/sqm respectively.
Our Landsec Futures fund
will invest £20m over 2023-2033 to improve
social mobility in real estate and to tackle
issues local to our assets. To date, it has created career pathways
for 18 interns and supported 12 real estate bursaries. This work
contributes to our 2030 target to create £200m of social value and
empower 30,000 people towards the world of work. From our 2019/20
baseline, we have so far created £69m of social value and empowered
12,014 people.
Financial review
Overview
External market conditions remain
supportive in terms of customer demand. Moreover, investment
activity has started to pick up and property yields have begun to
stabilise for the best assets, with continued rental value growth
driving modest capital growth. This is in line with the view we set
out six months ago and as we expect these trends to persist, our
high-quality portfolio, operational outperformance and robust
capital base provide a solid foundation for future
growth.
EPRA earnings for the first half
were at the top end of expectations at £186m. Our continued focus
on improving efficiencies saw overhead costs reduce by 10%,
offsetting a small rise in financing costs, whilst like-for-like
net rental income was up 3.4%. Our occupancy increased 40bps to
96.6%, whilst we agreed relettings and renewals 6% above previous
passing rents.
Whereas we initially expected
like-for-like growth for the full year to be broadly in line with
last year's 2.8%, we now expect this to be closer to 4%. As such,
we raise our outlook for FY25 EPRA EPS and now expect this to be in
line with last year's level of 50.1 pence, despite our significant
non-core disposals over the past twelve months. As this flows
through to future years, we expect FY26 to be ahead of this. This
increase in EPS outlook does not reflect any benefit from potential
future acquisitions. Our interim dividend is up 2.2% to 18.6p, in
line with our guidance of low single digit percentage growth, and
we continue to target a dividend cover of 1.2-1.3x on an annual
basis.
Driven by our strong leasing
activity, ERV growth was 2.1%. As yields were stable, this resulted
in 0.9% growth in the valuation of our portfolio. Combined with our
EPRA earnings, this drove an overall IFRS profit before tax of
£243m and basic EPS of 32.8 pence, compared with a loss before tax
of £193m for the first half of last year. As a result, EPRA NTA per
share increased 1.4% to 871 pence. Including dividends paid, this
means our total return on equity was 3.9%, reflecting a 2.9% income
return and 1.7% upside from ERV growth and developments, as the
impact from yield movements was minimal.
In September, we issued a £350m
10-year Green bond at a 4.625% coupon and last month we refinanced
£2.25bn revolving credit facilities, further strengthening our
solid capital base. Net debt was stable at £3.5bn and we remain
comfortably within our operating guidelines. Net debt/EBITDA is low
at 7.4x vs our target of below 8x; our LTV is at 34.9%, or 34.4%
adjusted for an element of deferred sales proceeds, comfortably
within our target range of 25-40%; and our interest cover is a
healthy 3.8x. Our average debt maturity is long, at 10.0 years and
we have no need to refinance any debt until 2027, so with £2bn of
cash and undrawn facilities, we have capacity to invest in future
growth.
Presentation of financial
information
The condensed consolidated
preliminary financial information is prepared under UK adopted
international accounting standards (IFRSs and IFRICs) where the
Group's interests in joint ventures are shown collectively in the
income statement and balance sheet, and all subsidiaries are
consolidated at 100%. Internally, management reviews the Group's
results on a basis that adjusts for these forms of ownership to
present a proportionate share. The Combined Portfolio, with assets
totalling £10.0bn, is an example of this approach, reflecting our
economic interest in our properties regardless of our ownership
structure.
Our key measure of underlying
earnings performance is EPRA earnings, which represents the
underlying financial performance of the Group's property rental
business, which is our core operating activity. A full definition
of EPRA earnings is given in the Glossary. This measure is based on
the Best Practices Recommendations of the European Public Real
Estate Association (EPRA) which are metrics widely used across the
industry to aid comparability and includes our proportionate share
of joint ventures' earnings. Similarly, EPRA Net Tangible Assets
per share is our primary measure of net asset value.
Measures presented on a
proportionate basis are alternative performance measures as they
are not defined under IFRS. This presentation provides additional
information to stakeholders on the activities and performance of
the Group, as it aggregates the results of all the Group's property
interests which under IFRS are required to be presented across a
number of line items in the statutory financial statements. For
further details see table 13 in the Business analysis
section.
Income statement
Our high-quality portfolio of
scarce assets and strong leasing performance continue to deliver
robust like-for-like income growth. This partly offset the fact
that our material net disposals over the past year, including our
£400m hotel portfolio in May, reduced rental income by £20m and
surrender receipts were down £13m, to £4m. Finance costs increased
due to higher interest rates but this was more than offset by
reductions in other expenses, so as a result, EPRA earnings are at
the top end of expectations at £186m.
Table 6: Income statement(1)
|
|
|
Six months ended
30 September 2024
|
Six months ended
30 September 2023
|
|
|
|
|
|
Central London
|
Major retail
|
Mixed-use urban
|
Subscale sectors
|
Total
|
Central London
|
Major retail
|
Mixed-use urban
|
Subscale sectors
|
Total
|
|
Change
|
|
|
|
£m
|
£m
|
£m
|
£m
|
£m
|
£m
|
£m
|
£m
|
£m
|
£m
|
|
£m
|
|
Gross rental income(2)
|
|
146
|
90
|
24
|
42
|
302
|
146
|
92
|
29
|
56
|
323
|
|
(21)
|
|
Net service charge expense
|
|
(2)
|
(3)
|
(1)
|
-
|
(6)
|
(3)
|
(4)
|
(1)
|
(2)
|
(10)
|
|
4
|
|
Net direct property expenditure
|
|
(10)
|
(16)
|
(4)
|
(6)
|
(36)
|
(11)
|
(12)
|
(5)
|
(8)
|
(36)
|
|
-
|
|
Movement in bad/doubtful debts
provisions
|
|
-
|
4
|
3
|
2
|
9
|
-
|
4
|
-
|
1
|
5
|
|
4
|
|
Segment net rental income
|
|
134
|
75
|
22
|
38
|
269
|
132
|
80
|
23
|
47
|
282
|
|
(13)
|
|
Net administrative expenses
|
|
|
|
|
|
(34)
|
|
|
|
|
(38)
|
|
4
|
|
EPRA earnings before interest
|
|
|
|
|
|
235
|
|
|
|
|
244
|
|
(9)
|
|
Net finance expense
|
|
|
|
|
|
(49)
|
|
|
|
|
(46)
|
|
(3)
|
|
EPRA earnings
|
|
|
|
|
|
186
|
|
|
|
|
198
|
|
(12)
|
|
Capital/other items
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Valuation surplus/(deficit)
|
|
|
|
|
|
91
|
|
|
|
|
(375)
|
|
466
|
|
Loss on disposals
|
|
|
|
|
|
(10)
|
|
|
|
|
(3)
|
|
(7)
|
|
Impairment charges
|
|
|
|
|
|
(6)
|
|
|
|
|
(4)
|
|
(2)
|
|
Fair value movement on interest rate
swaps
|
|
|
|
|
|
(15)
|
|
|
|
|
2
|
|
(17)
|
|
Other
|
|
|
|
|
|
(2)
|
|
|
|
|
1
|
|
(3)
|
|
Profit/(loss) before tax attributable to
shareholders of the parent
|
|
|
|
|
|
244
|
|
|
|
|
(181)
|
|
423
|
|
Non-controlling interests
|
|
|
|
|
|
(1)
|
|
|
|
|
(12)
|
|
13
|
|
Profit/(loss) before tax
|
|
|
|
|
|
243
|
|
|
|
|
(193)
|
|
436
|
1. Including our proportionate share of
subsidiaries and joint ventures, as explained in the Presentation
of financial information above.
2. Includes finance lease interest, after rents
payable.
Net rental income
Our gross rental income for the
half year was down £21m to £302m driven by non-core asset sales and
the aforementioned £13m reduction in surrender premiums. Surrender
premiums in the first half were £4m, as a result of lower levels of
customer rightsizing or repurposing activity. The release of bad
and doubtful debt provisions was up £4m, which is a result of
recovering outstanding debts on a number of assets that were
previously managed externally and we now manage in-house. On a full
year basis, we expect the benefit of this to broadly offset the
fact that surrenders will likely be slightly lower than our
original guidance.
Taking into account the above,
overall net rental income reduced by £13m to £269m, yet on a
like-for-like basis, net rental income was up £7m. Direct property
expenditure was stable and net service charge expenses were down
£4m. Developments and the repurposing of conventional office space
to Myo increased net rental income by £9m. Our investment activity,
with our significant non-core asset sales, reduced income by £20m,
ahead of recycling this capital into assets with stronger return
prospects.
Our gross to net margin improved by
1.7ppt to 89.1% due to a reduction in operating expenses and the
improved credit control position. During the period, Cineworld
announced a restructuring plan which affected five of their 13
cinemas in our portfolio, although all of these continue to trade
and the loss of rental income was limited to 0.2% of our overall
rent. All this meant that on a like-for-like basis, our net rental
income was up 3.4%, which is ahead of our expectation in May that
growth would be in line with last year's 2.8%. As such, we now
expect like-for-like income growth for the full year to be closer
to 4%.
Table 7: Net rental income(1)
|
|
|
£m
|
|
Net rental income for the six months ended 30
September 2023
|
|
282
|
|
Gross rental income like-for-like movement in
the period(2):
|
|
|
|
Increase in variable and turnover-based
rents
|
|
-
|
|
Operational performance
|
|
8
|
|
Total like-for-like gross rental
income
|
|
8
|
|
Like-for-like net service charge
expense
|
|
1
|
|
Like-for-like net direct property
expenditure
|
|
(2)
|
|
Decrease in surrender premiums
received
|
|
(13)
|
|
Developments(2)
|
|
9
|
|
Acquisitions since 1 April 2023(2)
|
|
1
|
|
Disposals since 1 April 2023(2)
|
|
(21)
|
|
Movement in bad/doubtful
debts
|
|
4
|
|
Net rental income for the six months ended 30
September 2024
|
|
269
|
1. Including our proportionate share of
subsidiaries and joint ventures, as explained in the Presentation
of financial information above.
2. Gross rental income on a like-for-like basis
and the impact of developments, acquisitions and disposals exclude
surrender premiums received.
Net administrative expenses
Net administrative expenses were
down £4m to £34m as a result of our continued focus on managing our
cost base. We now expect our net administrative expenses for the
full year to be lower than the prior year with further efficiencies
beyond this period, partly from our investments in data and
technology. Combined with our improved gross to net margin, this
meant our EPRA cost ratio reduced from 23.0% to 20.8%. We expect
this to increase slightly in the second half, but for the full year
to be well below last year's 25.0%. Our growth in like-for-like
income shows our focus on high-quality assets is paying off, even
though the margin on managing our more operational assets is lower
than on long-let, single occupier assets.
Net finance expenses
Net interest costs increased by £3m
to £49m, primarily due to higher average net debt compared with the
prior period and a small increase in average borrowing costs, as
capitalised interest was broadly flat. The increase in borrowing
costs is in line with our guidance and reflects our bond issue in
March to refinance some nearer term maturities. Our debt position
was fully fixed or hedged at the end of September.
Non-cash finance income, which
includes the fair value movements on derivatives, caps and hedging
and which is not included in EPRA earnings, decreased from a net
income of £1m during the prior period to a net expense of £16m.
This is predominantly due to the fair value movements of our
interest-rate swaps.
Valuation of investment properties
The independent external valuation
of our Combined Portfolio showed an increase in value of £91m. Our
continued strong leasing activity resulted in 2.1% ERV growth, and
overall valuation yields were stable. As rents continue to grow, we
expect this will remain supportive to the outlook for capital
values.
IFRS profit/loss after tax
Substantially all our activity
during the year was covered by UK REIT legislation, which means our
tax charge for the period remained minimal. The IFRS profit after
tax of £243m reflects our attractive income profile and the
positive fair value adjustment of our investment portfolio. This
compares with an IFRS loss after tax of £193m for the first half of
2023, which was primarily driven by a softening in valuation
yields.
Net assets and return on equity
Our total return on equity for the
six months improved to 3.9%, compared with -2.4% and -4.0% in the
first and second halves of last year. Our income return was 2.9%,
whilst ERV growth and development drove a capital return of
1.7%. As property yields
were stable, the impact of yields movements was minimal. As the
outlook for rental value growth remains positive and our annual
income return at NTA is an attractive 5.8%, we are well placed to
deliver the 8-10% return on equity per annum we target over
time.
After the £159m of dividends we
paid, our EPRA Net Tangible Assets, which reflects the value of our
Combined Portfolio less adjusted net debt, increased to £6,495m, or
871 pence per share, up 1.4% since March. Whilst the accounting of
this business combination is still in progress, the acquisition of
the remaining 25% interest in MediaCity since the period-end is
likely to give rise to c. £20m of goodwill for the studios business
we acquired as part of this. We intend to write this off in the
second half of the year, in line with our policy of not carrying
goodwill on our balance sheet.
Table 8: Balance sheet(1)
|
|
30 September 2024
|
31 March 2024
|
|
|
£m
|
£m
|
|
Combined Portfolio
|
9,957
|
9,963
|
|
Adjusted net debt
|
(3,510)
|
(3,517)
|
|
Other net assets/(liabilities)
|
48
|
(48)
|
|
EPRA Net Tangible Assets
|
6,495
|
6,398
|
|
Shortfall of fair value over net investment in
finance leases book value
|
7
|
5
|
|
Other intangible asset
|
2
|
2
|
|
Excess of fair value over trading properties
book value
|
(25)
|
(25)
|
|
Fair value of interest-rate swaps
|
11
|
22
|
|
Net assets, excluding amounts due to
non-controlling interests
|
6,490
|
6,402
|
|
|
|
|
|
Net assets per share
|
873p
|
863p
|
|
EPRA Net Tangible Assets per share
(diluted)
|
871p
|
859p
|
1. Including our proportionate share of
subsidiaries and joint ventures, as explained in the Presentation
of financial information above.
Table 9: Movement in EPRA Net Tangible
Assets(1)
|
|
|
Diluted per share
|
|
|
£m
|
pence
|
|
EPRA Net Tangible Assets at 31 March
2024
|
6,398
|
859
|
|
EPRA earnings
|
186
|
25
|
|
Like-for-like valuation movement
|
34
|
5
|
|
Development valuation movement
|
30
|
4
|
|
Impact of acquisitions/disposals
|
27
|
3
|
|
Total valuation surplus
|
91
|
12
|
|
Dividends
|
(159)
|
(21)
|
|
Loss on disposals
|
(10)
|
(2)
|
|
Other
|
(11)
|
(2)
|
|
EPRA Net Tangible Assets at 30 September
2024
|
6,495
|
871
|
|
|
|
|
| |
1. Including our proportionate share of
subsidiaries and joint ventures, as explained in the Presentation
of financial information above.
Net debt and leverage
Adjusted net debt, which includes
our share of JV borrowings, was effectively unchanged over the six
months, down £7m to £3,510m. Acquisitions totalled £141m,
principally reflecting the £120m acquisition of an additional 17.5%
stake in Bluewater, and we invested £200m in capex, including on
our two on-site London office developments. Disposals were £464m,
including the sale of our hotel portfolio for £400m. £50m of the
consideration for this is deferred for a maximum of two years with
an annual coupon of 6%.
Since the half year, we acquired
Peel's remaining 25% stake in MediaCity in Greater Manchester for a
cash consideration of £23m plus the assumption of £61m in
borrowings. This now gives us full control of the estate and allows
us to accelerate our asset management plans. The remaining
committed capex on our two London office developments, which are
due to complete late 2025 / early 2026, is £345m. We do not plan to
commit to any new developments for the remainder of this year, so
we expect commitments to reduce to c. £236m by the end of
March.
The other key elements behind the
decrease in net debt are set out in our statement of cash flows and
note 9 to the financial statements, with the main movements in
adjusted net debt shown below. A reconciliation between net debt
and adjusted net debt is shown in note 13 of the financial
statements.
Table 10: Movement in adjusted net
debt(1)
|
|
£m
|
|
Adjusted net debt at 31 March 2024
|
3,517
|
|
Adjusted net cash inflow from operating
activities
|
(107)
|
|
Dividends paid
|
157
|
|
Capital expenditure
|
200
|
|
Acquisitions
|
141
|
|
Disposals
|
(417)
|
|
Other
|
19
|
|
Adjusted net debt at 30 September
2024
|
3,510
|
1. Including our proportionate share of
subsidiaries and joint ventures, as explained in the Presentation
of financial information above.
With borrowings effectively stable,
net debt/EBITDA remained low at 7.4x at the end of September, or
7.4x based on our weighted-average net debt for the period. We
target net debt/EBITDA to remain below 8x over time. Group LTV
which includes our share of JVs, has reduced marginally to 34.9%,
and adjusted for the aforementioned £50m deferred consideration,
this would be 34.4%. Given where we are in the cycle, we expect our
LTV may temporarily increase slightly from this level as we aim to
capitalise on attractive acquisition opportunities, yet to remain
firmly within our 25% to 40% target range.
Table 11: Net debt and leverage
|
|
30 September 2024
|
31 March 2024
|
|
Net debt
|
£3,573m
|
£3,594m
|
|
Adjusted net debt(1)
|
£3,510m
|
£3,517m
|
|
|
|
|
|
Interest cover ratio
|
3.8x
|
3.9x
|
|
Net debt/EBITDA (period-end)
|
7.4x
|
7.4x
|
|
Net debt/EBITDA (weighted average)
|
7.4x
|
7.3x
|
|
|
|
|
|
Group LTV(1)
|
34.9%
|
35.0%
|
|
Security Group LTV
|
37.5%
|
37.0%
|
1. Including our proportionate share of
subsidiaries and joint ventures, as explained in the Presentation
of financial information above.
Financing
We have gross borrowings of
£3,624m, including £2,954m of Medium Term Notes (MTNs), £196m of
syndicated bank loans and £474m of commercial paper. Our MTNs and
the majority of our bank facilities form part of our Security
Group, which provides security on a floating pool of assets valued
at £9.2bn. This structure provides flexibility to include or
exclude assets, and an attractive cost of funding, with our MTNs
currently rated AA and AA- with a stable outlook respectively by
S&P and Fitch.
Our Security Group has a number of
tiered covenants, yet below 65% LTV and above 1.45x ICR, these
involve very limited operational restrictions. A default only
occurs when LTV is more than 100% or the ICR falls below 1.0x. With
a Security Group LTV of 37.5%, our portfolio could withstand a c.
42% fall in value before we reach the 65% LTV threshold and c. 63%
before reaching 100% LTV, whilst our EBITDA could fall by c. 61%
before we reach the 1.45x ICR threshold and c. 73% before reaching
1.0x ICR.
We had £2.2bn of cash and undrawn
facilities at the end of September, providing substantial
flexibility. In September, we issued a £350m Green Bond with a
maturity of 10 years at 4.625%, representing a spread of 97bps over
the reference gilt yield. This spread shows the continued strength
of our credit profile, and ensured our overall debt maturity
remains long, at 10.0 years, providing clear visibility and
underpinning the resilience of our attractive earnings profile. Our
average cost of debt rose from 3.3% to 3.5%, yet given our strong
financial position, we expect this to remain stable during the
second half.
In October, we put in place £2,250m
of revolving credit facilities to replace existing facilities that
were due to expire across 2025-27. The new facilities have two
tranches, with terms of 3+1+1 and 5+1+1 years to spread refinancing
dates. The margin on the new facilities is the same level as the
facilities they replace, reflecting the strength of our credit
profile. We now have no material debt maturities until
2027.
Table 12: Available facilities(1)
|
|
30 September 2024
£m
|
31 March 2024
£m
|
|
|
|
|
|
Medium Term Notes
|
2,954
|
2,607
|
|
|
|
|
|
Drawn bank debt
|
196
|
415
|
|
Outstanding commercial paper
|
474
|
681
|
|
Cash and available undrawn
facilities
|
2,176
|
1,889
|
|
Total committed credit facilities
|
2,810
|
2,907
|
|
|
|
|
|
Weighted average maturity of debt
|
10.0 years
|
9.5 years
|
|
Percentage of borrowings fixed or
hedged(1)
|
102%
|
94%
|
|
Weighted average cost of
debt(2)
|
3.5%
|
3.3%
|
1. Calculated as fixed rate debt and hedges
over gross debt based on the nominal values of debt and
hedges.
2. Including amortisation and
commitment fees; excluding this the weighted average cost of debt
is 3.2% at 30 September 2024.
Principal risks and uncertainties
The principal risks and uncertainties of the
business were set out on pages 41 - 45 of the 2024 Annual Report
that was published in May. The Executive Leadership Team and the
Board review these risks regularly, as well as monitor for changes
and any emerging risks. Though the risk landscape continues to
evolve and change over time, they remain most relevant and the
principal risks at half year are unchanged from those disclosed in
the Annual Report.
The macro-economic outlook remains our
highest-rated risk and has some impact on aspects of our other
strategic risks related to the workplace and retail occupier
markets, development strategy and capital allocation. However,
long-term interest rates have been relatively stable for some time
now, which means investor confidence is increasing and activity has
started to pick up. Reflecting this, property yields have
stabilised, with continued rental value growth driving modest
capital growth for the best assets.
Our ten principal risks and their current
outlook are summarised as follows:
Macro-economic
outlook - This risk incorporates the impacts
resulting from changes in the economic climate, including
inflationary pressures, challenging interest rates and business
confidence. Whilst there is a general reduction in the trend of
this risk when considering the stabilisation in key factors,
primarily: inflation, interest rates, UK political environment and
consumer confidence, these factors are not considered significant
enough to reduce the score of this risk. For Landsec this
risk impacts asset yields, income and therefore valuations, and our
cost base. This includes the cost of completing development
projects and our ability to recycle assets. It may also enable
opportunities to acquire assets.
Development
risk - The market risk is considered to have
marginally increased since the year end due to the persistence
of build cost inflation, continued challenges in
supply chains and an increase in exit yields in recent years which
are putting pressure on development returns. However, as the
majority of the development costs of our committed schemes is
already fixed, this risk is primarily a consideration for our
future development projects where we have the flexibility to manage
the scale and timing of our activity.
Office, Retail
and hospitality occupier markets - The risks
associated with these two markets are considered to have remained
stable over the period. In both markets, demand continues to focus
on the best quality assets in the strongest locations: both
characteristics of our portfolio. As a result, despite continued
pressure on some areas of the wider market, our operational
performance remains strong and our portfolio well-positioned for
further growth.
Capital
allocation - This risk is considered to have
remained stable since the year end, in line with the macroeconomic
environment and our strong asset position. We continue to
invest in major retail, which we think will deliver the most
attractive risk-adjusted returns, and retain the flexibility to
manage our exposure to development activity in line with our
risk-management metrics.
Change
projects - Landsec has various technology and
operational change projects underway - for example the upgrade and
improvement of the ERP system which encompasses both areas - which
carry inherent risk that they do not succeed in delivering the
operational benefits set out in their business cases. This risk has
remained stable over the period, with specific programme management
resource allocated and assurance obtained where
appropriate.
The four remaining operational principal risks
(Health and safety,
People and skills,
Information security and cyber
threat and Climate change
transition) have remained stable in the six months since
last year end.
Statement of Directors'
Responsibilities
The Directors confirm to the best of their
knowledge that these condensed consolidated interim financial
statements have been prepared in accordance with IAS 34, 'Interim
Financial Reporting', as contained in UK adopted international
accounting standards and that the interim management report herein
includes a fair review of the information required by the
Disclosure Guidance and Transparency Rules (DTR),
namely:
¾
DTR 4.2.7 (R): an indication of important events that have
occurred during the six month period ended 30 September 2024 and
their impact on the condensed interim financial statements and a
description of the principal risks and uncertainties for the
remaining six months of the financial year; and
¾
DTR 4.2.8 (R): any related party transactions in the six
month period ended 30 September 2024 that have materially affected,
and any changes in the related party transactions described in the
2024 Annual Report that could materially affect, the financial
position or performance of the enterprise during that
period.
The Directors of Land Securities Group PLC are
listed on pages 51-54 of the 2024 Annual Report and maintained on
the Land Securities Group PLC website at landsec.com.
The Directors are responsible for the
maintenance and integrity of the corporate and financial
information included on the Company's website. Legislation in the
United Kingdom governing the preparation and dissemination of
financial information differs from legislation in other
jurisdictions.
By order of the Board
Mark
Allan
Vanessa Simms
Chief
Executive
Chief Financial Officer
Independent review report to Land
Securities Group PLC
Conclusion
We have been engaged by the
Company to review the condensed set of financial statements in the
half-yearly financial report for the six months ended 30 September
2024 which comprises the consolidated income statement, the
consolidated statement of comprehensive income, the consolidated
balance sheet, the consolidated statement of changes in equity, the
consolidated statement of cash flows and the related notes to the
financial statements. We have read the other information contained
in the half yearly financial report and considered whether it
contains any apparent misstatements or material inconsistencies
with the information in the condensed set of financial
statements.
Based on our review, nothing has
come to our attention that causes us to believe that the condensed
set of financial statements in the half-yearly financial report for
the six months ended 30 September 2024 is not prepared, in all
material respects, in accordance with UK adopted International
Accounting Standard 34 and the Disclosure Guidance and Transparency
Rules of the United Kingdom's Financial Conduct
Authority.
Basis for Conclusion
We conducted our review in
accordance with International Standard on Review Engagements 2410
(UK) "Review of Interim Financial Information Performed by the
Independent Auditor of the Entity" (ISRE) issued by the Financial
Reporting Council. 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.
As disclosed in note 1, the annual
financial statements of the Group are prepared in accordance with
UK adopted international accounting standards. The condensed set of
financial statements included in this half-yearly financial report
has been prepared in accordance with UK adopted International
Accounting Standard 34, "Interim Financial Reporting".
Conclusions Relating to Going
Concern
Based on our review procedures,
which are less extensive than those performed in an audit as
described in the Basis for Conclusion section of this report,
nothing has come to our attention to suggest that management have
inappropriately adopted the going concern basis of accounting or
that management have identified material uncertainties relating to
going concern that are not appropriately disclosed.
This conclusion is based on the
review procedures performed in accordance with this ISRE, however
future events or conditions may cause the entity to cease to
continue as a going concern.
Responsibilities of the directors
The directors are responsible for
preparing the half-yearly financial report in accordance with the
Disclosure Guidance and Transparency Rules of the United Kingdom's
Financial Conduct Authority.
In preparing the half-yearly
financial report, the directors are responsible for assessing the
company's ability to continue as a going concern, disclosing, as
applicable, matters related to going concern and using the going
concern basis of accounting unless the directors either intend to
liquidate the company or to cease operations, or have no realistic
alternative but to do so.
Auditor's Responsibilities for the review of
the financial information
In reviewing the half-yearly
report, we are responsible for expressing to the Company a
conclusion on the condensed set of financial statements in the
half-yearly financial report. Our conclusion, including our
Conclusions Relating to Going Concern, are based on procedures that
are less extensive than audit procedures, as described in the Basis
for Conclusion paragraph of this report.
Use of our report
This report is made solely to the
company in accordance with guidance contained in International
Standard on Review Engagements 2410 (UK) "Review of Interim
Financial Information Performed by the Independent Auditor of the
Entity" issued by the Financial Reporting Council. To the fullest
extent permitted by law, we do not accept or assume responsibility
to anyone other than the company, for our work, for this report, or
for the conclusions we have formed.
Ernst & Young LLP
London
14 November 2024
Financial statements
|
Unaudited income statement
|
Six months ended
30 September 2024
|
Six months ended
30 September 2023
|
|
|
|
EPRA earnings
|
Capital and other items
|
Total
|
EPRA earnings
|
Capital and other items
|
Total
|
|
|
Notes
|
£m
|
£m
|
£m
|
£m
|
£m
|
£m
|
|
Revenue
|
5
|
372
|
11
|
383
|
385
|
27
|
412
|
|
Costs
|
6
|
(153)
|
(21)
|
(174)
|
(157)
|
(27)
|
(184)
|
|
|
|
219
|
(10)
|
209
|
228
|
-
|
228
|
|
Share of post-tax profit/(loss) from joint
ventures
|
12
|
11
|
5
|
16
|
10
|
(17)
|
(7)
|
|
Loss on disposal of investment
properties
|
|
-
|
(5)
|
(5)
|
-
|
(3)
|
(3)
|
|
Net surplus/(deficit) on revaluation of
investment properties
|
10
|
-
|
84
|
84
|
-
|
(371)
|
(371)
|
|
Operating
profit/(loss)
|
|
230
|
74
|
304
|
238
|
(391)
|
(153)
|
|
Finance income
|
7
|
7
|
-
|
7
|
6
|
1
|
7
|
|
Finance expense
|
7
|
(51)
|
(17)
|
(68)
|
(46)
|
(1)
|
(47)
|
|
Profit/(loss)
before tax
|
|
186
|
57
|
243
|
198
|
(391)
|
(193)
|
|
Taxation
|
|
-
|
-
|
-
|
-
|
-
|
-
|
|
Profit/(loss)
for the period
|
|
186
|
57
|
243
|
198
|
(391)
|
(193)
|
|
|
|
|
|
|
|
|
|
|
Attributable
to:
|
|
|
|
|
|
|
|
|
Shareholders of the
parent
|
|
|
|
244
|
|
|
(181)
|
|
Non-controlling interests
|
|
|
|
(1)
|
|
|
(12)
|
|
|
|
|
|
243
|
|
|
(193)
|
|
|
|
|
|
|
|
|
|
|
Profit/(loss)
per share attributable to shareholders of the
parent:
|
|
|
|
|
|
|
|
|
Basic earnings/(loss) per
share
|
4
|
|
|
32.8p
|
|
|
(24.4)p
|
|
Diluted earnings/(loss) per share
|
4
|
|
|
32.7p
|
|
|
(24.4)p
|
|
|
|
|
|
|
|
|
|
|
Unaudited statement of comprehensive
income
|
|
Six months ended
30 September 2024
|
Six months ended
30 September 2023
|
|
|
|
|
Total
|
|
|
Total
|
|
|
|
|
£m
|
|
|
£m
|
|
Profit/(loss) for the period
|
|
|
243
|
|
|
(193)
|
|
|
|
|
|
|
|
|
|
Items that will not be subsequently
reclassified to the income statement:
|
|
|
|
|
|
|
|
Net re-measurement loss on defined benefit
pension scheme
|
|
|
-
|
|
|
(1)
|
|
Other comprehensive profit/(loss) for the
period
|
|
|
-
|
|
|
(1)
|
|
|
|
|
|
|
|
|
|
Total comprehensive profit/(loss) for the
period
|
|
|
243
|
|
|
(194)
|
|
|
|
|
|
|
|
|
|
Attributable to:
|
|
|
|
|
|
|
|
Shareholders of the parent
|
|
|
244
|
|
|
(182)
|
|
Non-controlling interests
|
|
|
(1)
|
|
|
(12)
|
|
|
|
|
243
|
|
|
(194)
|
|
Unaudited balance sheet
|
|
|
|
|
|
|
|
|
|
|
|
30 September 2024
|
31 March
2024
|
|
|
|
Notes
|
£m
|
£m
|
|
|
Non-current assets
|
|
|
|
|
|
Investment properties
|
10
|
9,296
|
9,330
|
|
|
Intangible assets
|
|
3
|
3
|
|
|
Net investment in finance leases
|
|
20
|
21
|
|
|
Investments in joint ventures
|
12
|
537
|
529
|
|
|
Trade and other receivables
|
|
204
|
159
|
|
|
Other non-current assets
|
|
26
|
48
|
|
|
Total non-current assets
|
|
10,086
|
10,090
|
|
|
|
|
|
|
|
|
Current assets
|
|
|
|
|
|
Trading properties
|
11
|
97
|
100
|
|
|
Trade and other receivables
|
|
416
|
379
|
|
|
Monies held in restricted accounts and
deposits
|
|
10
|
6
|
|
|
Cash and cash equivalents
|
|
37
|
78
|
|
|
Other current assets
|
|
12
|
11
|
|
|
Total current assets
|
|
572
|
574
|
|
|
|
|
|
|
|
|
Total assets
|
|
10,658
|
10,664
|
|
|
|
|
|
|
|
|
Current liabilities
|
|
|
|
|
|
Borrowings
|
14
|
(477)
|
(975)
|
|
|
Trade and other payables
|
|
(328)
|
(348)
|
|
|
Provisions
|
15
|
(48)
|
(30)
|
|
|
Other current liabilities
|
|
(8)
|
-
|
|
|
Total current liabilities
|
|
(861)
|
(1,353)
|
|
|
|
|
|
|
|
|
Non-current liabilities
|
|
|
|
|
|
Borrowings
|
14
|
(3,219)
|
(2,805)
|
|
|
Trade and other payables
|
|
(4)
|
(4)
|
|
|
Provisions
|
15
|
(20)
|
(42)
|
|
|
Other non-current liabilities
|
|
(9)
|
(13)
|
|
|
Total non-current liabilities
|
|
(3,252)
|
(2,864)
|
|
|
|
|
|
|
|
|
Total liabilities
|
|
(4,113)
|
(4,217)
|
|
|
|
|
|
|
|
|
Net assets
|
|
6,545
|
6,447
|
|
|
|
|
|
|
|
|
Equity
|
|
|
|
|
|
Capital and reserves attributable to
shareholders
|
|
|
|
|
|
Ordinary shares
|
|
80
|
80
|
|
|
Share premium
|
|
319
|
319
|
|
|
Other reserves
|
|
26
|
23
|
|
|
Retained earnings
|
|
6,065
|
5,980
|
|
|
Equity attributable to shareholders of the
parent
|
|
6,490
|
6,402
|
|
|
Equity attributable to non-controlling
interests
|
|
55
|
45
|
|
|
Total equity
|
|
6,545
|
6,447
|
|
|
|
|
|
|
|
| |
The financial statements on pages 24 to 42 were
approved by the Board of Directors on 14 November 2024 and were
signed on its behalf by:
|
Mark Allan
|
Vanessa Simms
|
|
Directors
|
|
|
Unaudited statements of changes in
equity
|
|
Attributable to shareholders of the
parent
|
|
|
|
|
|
Ordinary shares
|
Share premium
|
Other reserves
|
Retained earnings
|
Total
|
Non-controlling interests
|
Total
equity
|
|
|
|
£m
|
£m
|
£m
|
£m
|
£m
|
£m
|
£m
|
|
At 1 April 2023
|
|
80
|
318
|
13
|
6,594
|
7,005
|
67
|
7,072
|
|
|
|
|
|
|
|
|
|
|
|
Total comprehensive loss for the financial
period
|
|
-
|
-
|
-
|
(182)
|
(182)
|
(12)
|
(194)
|
|
Transactions with shareholders of the
parent:
|
|
|
|
|
|
|
|
|
|
Share-based payments
|
|
-
|
1
|
5
|
-
|
6
|
-
|
6
|
|
Dividends paid to shareholders of the
parent
|
8
|
-
|
-
|
-
|
(156)
|
(156)
|
-
|
(156)
|
|
Total transactions with shareholders of the
parent
|
|
-
|
1
|
5
|
(156)
|
(150)
|
-
|
(150)
|
|
|
|
|
|
|
|
|
|
|
|
Total
transactions with shareholders
|
|
-
|
1
|
5
|
(156)
|
(150)
|
-
|
(150)
|
|
|
|
|
|
|
|
|
|
|
|
At 30 September 2023
|
|
80
|
319
|
18
|
6,256
|
6,673
|
55
|
6,728
|
|
|
|
|
|
|
|
|
|
|
|
Total comprehensive loss for the financial
period
|
|
-
|
-
|
-
|
(139)
|
(139)
|
(10)
|
(149)
|
|
Transactions with shareholders of the
parent:
|
|
|
|
|
|
|
|
|
|
Share-based payments
|
|
-
|
-
|
5
|
(2)
|
3
|
-
|
3
|
|
Dividends paid to shareholders of the
parent
|
8
|
-
|
-
|
-
|
(135)
|
(135)
|
-
|
(135)
|
|
Total transactions with shareholders of the
parent
|
|
-
|
-
|
5
|
(137)
|
(132)
|
-
|
(132)
|
|
|
|
|
|
|
|
|
|
|
|
Total transactions with shareholders
|
|
-
|
-
|
5
|
(137)
|
(132)
|
-
|
(132)
|
|
|
|
|
|
|
|
|
|
|
|
At 31 March 2024
|
|
80
|
319
|
23
|
5,980
|
6,402
|
45
|
6,447
|
|
|
|
|
|
|
|
|
|
|
| |
|
Total comprehensive profit for the financial
period
|
|
-
|
-
|
-
|
244
|
244
|
(1)
|
243
|
|
|
Transactions with shareholders of the
parent:
|
|
|
|
|
|
|
|
|
|
|
Share-based payments
|
|
-
|
-
|
3
|
-
|
3
|
-
|
3
|
|
|
Dividends paid to shareholders of the
parent
|
8
|
-
|
-
|
-
|
(159)
|
(159)
|
-
|
(159)
|
|
|
Total transactions with shareholders of the
parent
|
|
-
|
-
|
3
|
(159)
|
(156)
|
-
|
(156)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dividends paid to non-controlling
interests
Issued share capital
|
|
-
-
|
-
-
|
-
-
|
-
-
|
-
-
|
(1)
12
|
(1)
12
|
|
|
Total
transactions with shareholders
|
|
-
|
-
|
3
|
(159)
|
(156)
|
11
|
(145)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At 30
September 2024
|
|
80
|
319
|
26
|
6,065
|
6,490
|
55
|
6,545
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
Unaudited statements of cash flows
|
|
Six months ended
30 September
|
|
|
|
2024
|
2023
|
|
|
Notes
|
£m
|
£m
|
|
Cash flows from operating activities
|
|
|
|
|
Net cash generated from operations
|
9
|
148
|
210
|
|
Interest received
|
|
10
|
15
|
|
Interest paid
|
|
(42)
|
(50)
|
|
Rents paid
|
|
(7)
|
(7)
|
|
Capital expenditure on trading
properties
|
|
(7)
|
(8)
|
|
Disposal of trading properties
|
|
5
|
7
|
|
Other operating cash flows
|
|
-
|
(1)
|
|
Net cash inflow from operating
activities
|
|
107
|
166
|
|
|
|
|
|
|
Cash flows from investing activities
|
|
|
|
|
Investment property development
expenditure
|
|
(124)
|
(92)
|
|
Other investment property related
expenditure
|
|
(68)
|
(65)
|
|
Acquisition of investment properties, net of
cash acquired
|
|
(137)
|
(91)
|
|
Disposal of investment properties
|
|
393
|
1
|
|
Cash distributions from joint
ventures
|
12
|
7
|
7
|
|
Net cash inflow/(outflow) from investing
activities
|
|
71
|
(240)
|
|
|
|
|
|
|
Cash flows from financing activities
|
|
|
|
|
Net proceeds from new borrowings (net of
finance fees)
|
14
|
541
|
284
|
|
Net repayment of borrowings
|
14
|
(601)
|
(9)
|
|
Net cash outflow from derivative financial
instruments
|
14
|
(10)
|
(12)
|
|
Proceeds from non-controlling interest share
capital issuance
|
|
12
|
-
|
|
Dividends paid to shareholders of the
parent
|
8
|
(157)
|
(153)
|
|
(Increase)/decrease in monies held in
restricted accounts and deposits
|
|
(4)
|
2
|
|
Other financing cash flows
|
|
-
|
1
|
|
Net cash (outflow)/inflow from financing
activities
|
|
(219)
|
113
|
|
|
|
|
|
|
(Decrease)/increase in cash and cash
equivalents for the period
|
|
(41)
|
39
|
|
Cash and cash equivalents at the beginning of
the period
|
|
78
|
41
|
|
Cash and cash equivalents at the end of the
period
|
|
37
|
80
|
Notes to the financial statements
|
1. Basis of preparation and
consolidation
|
|
Basis of preparation
This condensed consolidated interim financial
information (financial statements) for the six months ended 30
September 2024 has been prepared on a going concern basis and in
accordance with the Disclosure and Transparency Rules of the
Financial Conduct Authority and IAS 34 'Interim Financial
Reporting' as contained in UK adopted international accounting
standards (IFRS). As applied by the Group, there are no material
differences between UK adopted international accounting standards
and EU IFRS.
The condensed consolidated interim financial
information does not comprise statutory accounts within the meaning
of section 434 of the Companies Act 2006. Statutory accounts for
the year ended 31 March 2024, prepared in accordance with UK
adopted international accounting standards (IFRSs and IFRICs) and
in conformity with the Companies Act 2006, were approved by the
Board of Directors on 16 May 2024 and delivered to the Registrar of
Companies. The report of the auditor on those accounts was
unqualified, did not contain an emphasis of matter paragraph and
did not contain any statement under section 498(2) or (3) of the
Companies Act 2006. The condensed consolidated interim financial
information has been reviewed, not audited, and should be read in
conjunction with the Group's annual financial statements for the
year ended 31 March 2024.
In preparing the condensed consolidated interim
financial information, the Group has considered the impact of
climate change. Related capital expenditure and the expected impact
on ERVs associated with this commitment have been factored within
property valuations. On this basis, the Group has concluded that
climate change did not have a material impact on the financial
reporting judgements and estimates, consistent with the assessment
that this is not expected to have a significant impact on the
Group's going concern assessment.
This condensed consolidated interim financial
information was approved for issue by the Directors on 14 November
2024.
Going concern
Following a prolonged period of high inflation,
rising interest rates and minimal GDP growth, the UK is now
experiencing modest GDP growth, falling inflation and interest rate
cuts since 1 April 2024. Nevertheless, the Directors have continued
to place keen focus on the appropriateness of adopting the going
concern assumption in preparing the financial statements for the
half year ended 30 September 2024.
The Group's going concern assessment considers
changes in the Group's principal risks (see page 20) and is
dependent on a number of factors, including our financial
performance and continued access to borrowing facilities. The Group
has successfully refinanced its revolving credit facilities on 30
October 2024 of £2.3bn significantly ahead of its maturity under
the same financial covenant terms as the existing facilities. The
new facilities have two equally split tranches with initial
maturities falling in 2027 and 2029 respectively. This refinancing
is a testament to the Group's strong financial position and
performance and further enhances the Group's financial capacity,
flexibility and maturity profile across the going concern
assessment period. Moreover, access to our borrowing facilities is
also dependent on our ability to continue to operate the Group's
secured debt structure within its financial covenants, which are
described in note 14.
In order to satisfy themselves that the Group
has adequate resources to continue as a going concern for the
foreseeable future, the Directors have reviewed base case, downside
and reverse stress test models, as well as a cash flow model which
considers the impact of pessimistic assumptions on the Group's
operating environment (the 'mitigated downside scenario'). This
mitigated downside scenario reflects unfavourable macro-economic
conditions, a deterioration in our ability to collect rent and
service charge from our customers and removes uncommitted capital
expenditure, acquisitions, disposals and developments.
The Group's key metrics from the mitigated
downside scenario incorporating the impact of the refinanced
revolving credit facilities as at the end of the going concern
assessment period, which covers the 16 months from the date of
authorisation of these financial statements to 31 March 2026, are
shown below alongside the actual position at 30 September
2024.
|
Key metrics
|
|
|
30 September
2024
mitigated downside scenario
|
31 March 2024
mitigated downside scenario
|
|
|
|
30 September 2024
|
31 March
2026
|
30 September 2025
|
|
Security Group LTV
|
|
37.5%
|
44.7%
|
42.8%
|
|
Adjusted net debt
|
|
£3,510m
|
£4,230m
|
£3,885m
|
|
EPRA net tangible assets
|
|
£6,495m
|
£5,392m
|
£5,559m
|
|
Available financial headroom
|
|
£2.2bn
|
£0.8bn
|
£0.9bn
|
In our mitigated downside scenario, the Group
has sufficient cash reserves, with our Security Group LTV ratio
remaining less than 65% and interest cover above 1.45x, for a
period of 16 months from the date of authorisation of these
financial statements. Under this scenario, the Security Group's
asset values would need to fall by a further 31% from the
sensitised values forecasted at 31 March 2026 to be
non‑compliant with the LTV
covenant. This equates to a 42% fall in the value of the Security
Group's assets as at 30 September 2024 for the LTV to reach 65%.
The Directors consider the likelihood of this occurring over the
going concern assessment period to be remote.
The Security Group also requires earnings
before interest of at least £186m in the full year ending 31 March
2025 and at least £237m in the full year ending 31 March 2026 for
interest cover to remain above 1.45x in the mitigated downside
scenario, which would ensure compliance with the Group's covenant
through to the end of the going concern assessment period. Security
Group earnings post year end 31 March 2024 are above the level
required to meet the interest cover covenant for the year ended 31
March 2025. The Directors do not anticipate a reduction in Security
Group earnings over the period ending 31 March 2026 to a level that
would result in a breach of the interest cover covenant.
The Directors have also considered a reverse
stress-test scenario which assumes no further rent will be
received, to determine when our available cash resources would be
exhausted. Even under this extreme scenario, although breaching the
interest cover covenant, the Group continues to have sufficient
cash reserves to continue in operation throughout the going concern
assessment period.
Based on these considerations, together with
available market information and the Directors' knowledge and
experience of the Group's property portfolio and markets, the
Directors have adopted the going concern basis in preparing the
financial statements of the Group and parent for the half year
ended 30 September 2024.
Presentation of results
The Group income statement is presented in a
columnar format, split into those items that relate to EPRA
earnings and Capital and other items. The Total column represents
the Group's results presented in accordance with IFRS; the other
columns provide additional information. This is intended to reflect
the way in which the Group's Senior Management review the results
of the business and to aid reconciliation to the segmental
information.
A number of the financial measures used
internally by the Group to measure performance include the results
of partly-owned subsidiaries and joint ventures on a proportionate
basis. Measures that are described as being on a proportionate
basis include the Group's share of joint ventures on a line-by-line
basis and are adjusted to exclude the non-owned elements of our
subsidiaries. These measures are non-GAAP measures and therefore
not presented in accordance with IFRS. This is in contrast to the
condensed consolidated interim financial information presented in
these half year results, where the Group applies equity accounting
to its interest in joint ventures and associates, presenting its
interest collectively in the income statement and balance sheet,
and consolidating all subsidiaries at 100% with any non-owned
element being adjusted as a non-controlling interest or redemption
liability, as appropriate. Our joint operations are presented on a
proportionate basis in all financial measures used internally by
the Group.
|
2. Significant accounting judgements and
estimates
|
|
The condensed consolidated interim financial
information has been prepared on the basis of the accounting
policies, significant judgements and estimates as set out in the
notes to the Group's annual financial statements for the year ended
31 March 2024, as amended where relevant to reflect the new
standards, amendments and interpretations which became effective in
the period. There has been no material impact on the financial
statements of adopting these new standards, amendments and
interpretations.
The Group's operations are all in the UK and
are managed across four operating segments, being Central London,
Major retail destinations (Major retail), Mixed-use urban
neighbourhoods (Mixed-use urban) and Subscale sectors.
The Central London segment includes all assets
geographically located within central London. Major retail
destinations includes all regional shopping centres and shops
outside London and our outlets. The Mixed-use urban segment
includes those assets where we see the most potential for capital
investment. Subscale sectors mainly includes assets that will not
be a focus for capital investment and consists of leisure and hotel
assets and retail parks.
Management has determined the Group's operating
segments based on the information reviewed by Senior Management to
make strategic decisions. The chief operating decision maker is the
Executive Leadership Team (ELT), comprising the Executive Directors
and the Managing Directors. The information presented to ELT
includes reports from all functions of the business as well as
strategy, financial planning, succession planning, organisational
development and Group-wide policies.
The Group's primary measure of underlying
profit before tax is EPRA earnings. However, Segment net rental
income is the lowest level to which the profit arising from the
ongoing operations of the Group is analysed between the four
segments. The administrative costs, which are predominantly staff
costs for centralised functions, are all treated as administrative
expenses and are not allocated to individual segments.
The Group manages its financing structure, with
the exception of joint ventures and non-wholly owned subsidiaries,
on a pooled basis. Individual joint ventures and non-wholly owned
subsidiaries may have specific financing arrangements in place.
Debt facilities and finance expenses, including those of joint
ventures, are managed centrally and are therefore not attributed to
a particular segment. Unallocated income and expenses are items
incurred centrally which are not directly attributable to one of
the segments.
All items in the segmental information note are
presented on a proportionate basis.
|
Segmental results
|
|
|
|
|
Six months ended 30 September 2024
|
Six months ended 30 September 2023(2)
|
|
EPRA earnings
|
Central London
|
Major retail
|
Mixed-use urban
|
Subscale sectors
|
Total
|
Central London
|
Major
retail
|
Mixed-use urban
|
Subscale sectors
|
Total
|
|
£m
|
£m
|
£m
|
£m
|
£m
|
£m
|
£m
|
£m
|
£m
|
£m
|
|
Rental income
|
147
|
95
|
24
|
41
|
307
|
148
|
95
|
29
|
56
|
328
|
|
Finance lease interest
|
-
|
-
|
-
|
1
|
1
|
-
|
-
|
-
|
-
|
-
|
|
Gross rental income (before rents
payable)
|
147
|
95
|
24
|
42
|
308
|
148
|
95
|
29
|
56
|
328
|
|
Rents payable(1)
|
(1)
|
(5)
|
-
|
-
|
(6)
|
(2)
|
(3)
|
-
|
-
|
(5)
|
|
Gross rental income (after rents
payable)
|
146
|
90
|
24
|
42
|
302
|
146
|
92
|
29
|
56
|
323
|
|
Service charge income
|
33
|
28
|
7
|
5
|
73
|
28
|
28
|
6
|
-
|
62
|
|
Service charge expense
|
(35)
|
(31)
|
(8)
|
(5)
|
(79)
|
(31)
|
(32)
|
(7)
|
(2)
|
(72)
|
|
Net service charge expense
|
(2)
|
(3)
|
(1)
|
-
|
(6)
|
(3)
|
(4)
|
(1)
|
(2)
|
(10)
|
|
Other property related income
|
10
|
4
|
2
|
1
|
17
|
9
|
5
|
2
|
1
|
17
|
|
Direct property expenditure
|
(20)
|
(20)
|
(6)
|
(7)
|
(53)
|
(20)
|
(17)
|
(7)
|
(9)
|
(53)
|
|
Movement in bad and doubtful debts
provision
|
-
|
4
|
3
|
2
|
9
|
-
|
4
|
-
|
1
|
5
|
|
Segment net rental income
|
134
|
75
|
22
|
38
|
269
|
132
|
80
|
23
|
47
|
282
|
|
Other income
|
|
|
|
|
1
|
|
|
|
|
2
|
|
Administrative expense
|
|
|
|
|
(33)
|
|
|
|
|
(38)
|
|
Depreciation
|
|
|
|
|
(2)
|
|
|
|
|
(2)
|
|
EPRA earnings before interest
|
|
|
|
|
235
|
|
|
|
|
244
|
|
Finance income
|
|
|
|
|
7
|
|
|
|
|
6
|
|
Finance expense
|
|
|
|
|
(51)
|
|
|
|
|
(46)
|
|
Joint venture net finance expense
|
|
|
|
|
(5)
|
|
|
|
|
(6)
|
|
EPRA earnings attributable to shareholders of
the parent
|
|
|
|
|
186
|
|
|
|
|
198
|
1. Included within rents payable is lease
interest payable of £2m across the four
segments (2023: £2m).
2. A reconciliation from the Group income
statement to the information presented in the segmental results
table for the six months ended 30 September 2023 is included in
table 24.
The following table reconciles the Group's
income statement to the segmental results.
Reconciliation of segmental information note to
statutory reporting
|
|
|
|
Six months ended 30 September 2024
|
|
|
Group income statement
£m
|
Joint
ventures(1)
£m
|
Adjustment for non-wholly owned
subsidiaries(2)
£m
|
Total
£m
|
EPRA earnings
£m
|
|
Capital and other items
£m
|
|
Rental income
|
290
|
21
|
(4)
|
307
|
307
|
|
-
|
|
Finance lease interest
|
1
|
-
|
-
|
1
|
1
|
|
-
|
|
Gross rental income (before rents
payable)
|
291
|
21
|
(4)
|
308
|
308
|
|
-
|
|
Rents payable
|
(6)
|
-
|
-
|
(6)
|
(6)
|
|
-
|
|
Gross rental income (after rents
payable)
|
285
|
21
|
(4)
|
302
|
302
|
|
-
|
|
Service charge income
|
69
|
5
|
(1)
|
73
|
73
|
|
-
|
|
Service charge expense
|
(74)
|
(6)
|
1
|
(79)
|
(79)
|
|
-
|
|
Net service charge expense
|
(5)
|
(1)
|
-
|
(6)
|
(6)
|
|
-
|
|
Other property related income
|
16
|
1
|
-
|
17
|
17
|
|
-
|
|
Direct property expenditure
|
(50)
|
(4)
|
1
|
(53)
|
(53)
|
|
-
|
|
Movement in bad and doubtful debts
provision
|
9
|
-
|
-
|
9
|
9
|
|
-
|
|
Segment net rental income
|
255
|
17
|
(3)
|
269
|
269
|
|
-
|
|
Other income
|
1
|
-
|
-
|
1
|
1
|
|
-
|
|
Administrative expenses
|
(32)
|
(1)
|
-
|
(33)
|
(33)
|
|
-
|
|
Depreciation, including amortisation of
software
|
(2)
|
-
|
-
|
(2)
|
(2)
|
|
-
|
|
EPRA earnings before interest
|
222
|
16
|
(3)
|
235
|
235
|
|
-
|
|
Share of post-tax profit from joint
ventures
|
16
|
(16)
|
-
|
-
|
-
|
|
-
|
|
Loss on disposal of trading
properties
|
(5)
|
-
|
-
|
(5)
|
-
|
|
(5)
|
|
Loss on disposal of investment
properties
|
(5)
|
-
|
-
|
(5)
|
-
|
|
(5)
|
|
Net surplus on revaluation of investment
properties
|
84
|
5
|
2
|
91
|
-
|
|
91
|
|
Net long term development contract
expenditure
|
(1)
|
-
|
-
|
(1)
|
-
|
|
(1)
|
|
Impairment of trading properties
|
(4)
|
-
|
-
|
(4)
|
-
|
|
(4)
|
|
Depreciation
|
(1)
|
-
|
-
|
(1)
|
-
|
|
(1)
|
|
Impairment of amounts due from joint
ventures
|
(2)
|
-
|
-
|
(2)
|
-
|
|
(2)
|
|
Operating profit/(loss)
|
304
|
5
|
(1)
|
308
|
235
|
|
73
|
|
Finance income
|
7
|
-
|
-
|
7
|
7
|
|
-
|
|
Finance expense
|
(68)
|
(5)
|
2
|
(71)
|
(56)
|
|
(15)
|
|
Profit/(loss) before tax
|
243
|
-
|
1
|
244
|
186
|
|
58
|
|
Taxation
|
-
|
-
|
-
|
-
|
|
|
|
|
Profit/(loss) for the period
|
243
|
-
|
1
|
244
|
|
|
|
1. Reallocation of the share of post-tax profit
from joint ventures reported in the Group income statement to the
individual line items reported in the segmental results
table.
2. Removal of the non-wholly owned share of
results of the Group's subsidiaries. The non-wholly owned
subsidiaries are consolidated at 100% in the Group's income
statement, but only the Group's share is included in EPRA earnings
reported in the segmental results table.
In the tables below, we present earnings per
share attributable to shareholders of the parent, calculated in
accordance with IFRS, and net assets per share attributable to
shareholders of the parent together with certain measures defined
by the European Public Real Estate Association (EPRA), which have
been included to assist comparison between European property
companies. Three of the Group's key financial performance measures
are EPRA earnings per share, EPRA Net Tangible Assets per share and
Total return on equity. Refer to table 13 in the Business Analysis
section for further details on these alternative performance
measures.
EPRA earnings, which is a tax adjusted measure
of underlying earnings, is the basis for the calculation of EPRA
earnings per share. We believe EPRA earnings and EPRA earnings per
share provide further insight into the results of the Group's
operational performance to stakeholders as they focus on the rental
income performance of the business and exclude Capital and other
items which can vary significantly from period to
period.
|
Earnings per share
|
Six months ended
30 September 2024
|
Six months ended
30 September 2023
|
|
|
Profit for the period
|
EPRA earnings
|
Loss for the period
|
EPRA earnings
|
|
|
£m
|
£m
|
£m
|
£m
|
|
Profit/(loss) attributable to shareholders of
the parent
|
244
|
244
|
(181)
|
(181)
|
|
Valuation and (loss)/profit on
disposals
|
-
|
(77)
|
-
|
383
|
|
Net finance expense/(income) (excluded from
EPRA earnings)
|
-
|
15
|
-
|
(2)
|
|
Impairment of amounts due from joint
ventures
|
-
|
2
|
-
|
-
|
|
Other
|
-
|
2
|
-
|
(2)
|
|
Profit/(loss) used in per share
calculation
|
244
|
186
|
(181)
|
198
|
|
|
|
|
|
|
|
|
IFRS
|
EPRA
|
IFRS
|
EPRA
|
|
Basic earnings/(loss) per share
|
32.8p
|
25.0p
|
(24.4)p
|
26.7p
|
|
Diluted earnings/(loss) per share(1)
|
32.7p
|
24.9p
|
(24.4)p
|
26.7p
|
1. In the six months ended 30 September 2023,
share options are excluded from the weighted average diluted number
of shares when calculating IFRS and EPRA diluted earnings/(loss)
per share because they are not dilutive.
|
Net assets per share
|
30 September 2024
|
31 March 2024
|
|
|
Net assets
|
EPRA NDV
|
EPRA NTA
|
Net assets
|
EPRA NDV
|
EPRA NTA
|
|
|
£m
|
£m
|
£m
|
£m
|
£m
|
£m
|
|
Net assets attributable to shareholders of the
parent
|
6,490
|
6,490
|
6,490
|
6,402
|
6,402
|
6,402
|
|
Shortfall of fair value over net investment in
finance leases book value
|
-
|
(7)
|
(7)
|
-
|
(5)
|
(5)
|
|
Other intangible asset
|
-
|
-
|
(2)
|
-
|
-
|
(2)
|
|
Fair value of interest-rate swaps
|
-
|
-
|
(11)
|
-
|
-
|
(22)
|
|
Excess of fair value of trading properties over
book value
|
-
|
25
|
25
|
-
|
25
|
25
|
|
Shortfall of fair value of debt over book value
(note 14)
|
-
|
319
|
-
|
-
|
313
|
-
|
|
Net assets used in per share
calculation
|
6,490
|
6,827
|
6,495
|
6,402
|
6,735
|
6,398
|
|
|
|
|
|
|
|
|
|
|
IFRS
|
EPRA NDV
|
EPRA NTA
|
IFRS
|
EPRA NDV
|
EPRA NTA
|
|
Net assets per share
|
873p
|
n/a
|
n/a
|
863p
|
n/a
|
n/a
|
|
Diluted net assets per share
|
870p
|
915p
|
871p
|
859p
|
904p
|
859p
|
|
Number of shares
|
|
|
|
|
|
|
Six months ended
30 September 2024
Weighted average
|
30 September 2024
|
Six months ended
30 September 2023
Weighted average
|
31 March 2024
|
|
|
million
|
million
|
million
|
Million
|
|
Ordinary shares
|
752
|
752
|
751
|
752
|
|
Treasury shares
|
(7)
|
(7)
|
(7)
|
(7)
|
|
Own shares
|
(2)
|
(2)
|
(3)
|
(3)
|
|
Number of shares - basic
|
743
|
743
|
741
|
742
|
|
Dilutive effect of share options
|
3
|
3
|
3
|
3
|
|
Number of shares - diluted
|
746
|
746
|
744
|
745
|
Total return on equity is calculated as the
cash dividends per share paid in the period plus the change in EPRA
NTA per share, divided by the opening EPRA NTA per share. We
consider this to be a useful measure for shareholders as it gives
an indication of the total return on equity over the
period.
|
Total return on equity based on EPRA
NTA
|
Six months ended
30 September 2024
|
Six months ended
30 September 2023
|
|
|
pence
|
pence
|
|
Increase/(decrease) in EPRA NTA per
share
|
12.0
|
(43.0)
|
|
Dividend paid per share in the period (note
8)
|
21.3
|
21.0
|
|
Total return (a)
|
33.3
|
(22)
|
|
EPRA NTA per share at the beginning of the
period (b)
|
859
|
936
|
|
Total return on equity (a/b)
|
3.9%
|
(2.4)%
|
All revenue is classified within the 'EPRA
earnings' column of the income statement, with the exception of
proceeds from the sale of trading properties, income from long-term
development contracts and the non-owned element of the Group's
subsidiaries which are presented in the 'Capital and other items'
column.
|
|
Six months ended
30 September 2024
|
Six months ended
30 September 2023
|
|
|
EPRA earnings
|
Capital and other items
|
Total
|
EPRA earnings
|
Capital and other items
|
Total
|
|
|
£m
|
£m
|
£m
|
£m
|
£m
|
£m
|
|
Rental income (excluding adjustment for lease
incentives)
|
272
|
4
|
276
|
305
|
4
|
309
|
|
Adjustment for lease incentives
|
14
|
-
|
14
|
3
|
-
|
3
|
|
Rental income
|
286
|
4
|
290
|
308
|
4
|
312
|
|
Service charge income
|
68
|
1
|
69
|
58
|
1
|
59
|
|
Trading property sales proceeds
|
-
|
6
|
6
|
-
|
7
|
7
|
|
Other property related income
|
16
|
-
|
16
|
17
|
-
|
17
|
|
Development contract and transaction
income
|
-
|
-
|
-
|
-
|
15
|
15
|
|
Finance lease interest
|
1
|
-
|
1
|
-
|
-
|
-
|
|
Other income
|
1
|
-
|
1
|
2
|
-
|
2
|
|
Revenue per the income statement
|
372
|
11
|
383
|
385
|
27
|
412
|
The following table reconciles revenue per the
income statement to the individual components of revenue presented
in the segmental results table in note 3.
|
|
Six months ended
30 September 2024
|
Six months ended
30 September 2023
|
|
|
Group
|
Joint ventures
|
Adjustment for non-wholly owned
subsidiaries
|
Total
|
Group
|
Joint
ventures
|
Adjustment
for non- wholly owned
subsidiaries
|
Total
|
|
|
£m
|
£m
|
£m
|
£m
|
£m
|
£m
|
£m
|
£m
|
|
Rental income
|
290
|
21
|
(4)
|
307
|
312
|
20
|
(4)
|
328
|
|
Service charge income
|
69
|
5
|
(1)
|
73
|
59
|
4
|
(1)
|
62
|
|
Other property related income
|
16
|
1
|
-
|
17
|
17
|
-
|
-
|
17
|
|
Finance lease interest
|
1
|
-
|
-
|
1
|
-
|
-
|
-
|
-
|
|
Other income
|
1
|
-
|
-
|
1
|
2
|
-
|
-
|
2
|
|
Revenue in the segmental information
note
|
377
|
27
|
(5)
|
399
|
390
|
24
|
(5)
|
409
|
|
Development contract and transaction
income(1)
|
-
|
-
|
-
|
-
|
15
|
-
|
-
|
15
|
|
Trading property sales proceeds
|
6
|
-
|
-
|
6
|
7
|
-
|
-
|
7
|
|
Revenue including Capital and other
items
|
383
|
27
|
(5)
|
405
|
412
|
24
|
(5)
|
431
|
1. Development contract and transaction income
for the six months to 30 September 2023 includes income released
from the contract liability recorded on the disposal of 21
Moorfields, recognised in line with costs incurred on the
development in note 6.
All costs are classified within the 'EPRA
earnings' column of the income statement, with the exception of the
cost of sale and impairment of trading properties, costs arising on
long-term development contracts, amortisation and impairments of
intangible assets, other attributable costs arising on business
combinations and the non-owned element of the Group's subsidiaries
which are presented in the 'Capital and other items'
column.
|
|
Six months ended
30 September 2024
|
Six months ended
30 September 2023
|
|
|
EPRA earnings
|
Capital and other items
|
Total
|
EPRA earnings
|
Capital and other items
|
Total
|
|
|
£m
|
£m
|
£m
|
£m
|
£m
|
£m
|
|
Rents payable
|
6
|
-
|
6
|
5
|
-
|
5
|
|
Service charge expense
|
73
|
1
|
74
|
67
|
1
|
68
|
|
Direct property expenditure
|
49
|
1
|
50
|
51
|
1
|
52
|
|
Movement in bad and doubtful debts
provisions
|
(9)
|
-
|
(9)
|
(5)
|
-
|
(5)
|
|
Administrative expenses
|
32
|
-
|
32
|
37
|
-
|
37
|
|
Depreciation, including amortisation of
software
|
2
|
1
|
3
|
2
|
1
|
3
|
|
Cost of trading property disposals
|
-
|
11
|
11
|
-
|
8
|
8
|
|
Development contract expenditure(1)
|
-
|
1
|
1
|
-
|
12
|
12
|
|
Impairment of amounts due from joint
ventures
|
-
|
2
|
2
|
-
|
-
|
-
|
|
Impairment of trading properties
|
-
|
4
|
4
|
-
|
4
|
4
|
|
Total costs per the income statement
|
153
|
21
|
174
|
157
|
27
|
184
|
The following table reconciles costs per the
income statement to the individual components of costs presented in
the segmental results table in note 3.
|
|
Six months ended
30 September 2024
|
Six months ended
30 September 2023
|
|
|
Group
|
Joint ventures
|
Adjustment for non-wholly owned
subsidiaries
|
Total
|
Group
|
Joint
ventures
|
Adjustment
for non-wholly owned subsidiaries
|
Total
|
|
|
£m
|
£m
|
£m
|
£m
|
£m
|
£m
|
£m
|
£m
|
|
Rents payable
|
6
|
-
|
-
|
6
|
5
|
-
|
-
|
5
|
|
Service charge expense
|
74
|
6
|
(1)
|
79
|
68
|
5
|
(1)
|
72
|
|
Direct property expenditure
|
50
|
4
|
(1)
|
53
|
52
|
2
|
(1)
|
53
|
|
Administrative expenses
|
32
|
1
|
-
|
33
|
37
|
1
|
-
|
38
|
|
Depreciation, including amortisation of
software
|
2
|
-
|
-
|
2
|
2
|
-
|
-
|
2
|
|
Movement in bad and doubtful debts
provision
|
(9)
|
-
|
-
|
(9)
|
(5)
|
-
|
-
|
(5)
|
|
Costs in the segmental information
note
|
155
|
11
|
(2)
|
164
|
159
|
8
|
(2)
|
165
|
|
Impairment of trading properties
|
4
|
-
|
-
|
4
|
4
|
-
|
-
|
4
|
|
Cost of trading property disposals
|
11
|
-
|
-
|
11
|
8
|
-
|
-
|
8
|
|
Development contract and transaction
expenditure(1)
|
1
|
-
|
-
|
1
|
12
|
-
|
-
|
12
|
|
Depreciation
|
1
|
-
|
-
|
1
|
1
|
-
|
-
|
1
|
|
Impairment of amounts due from joint
ventures
|
2
|
-
|
-
|
2
|
-
|
-
|
-
|
-
|
|
Costs including Capital and other
items
|
174
|
11
|
(2)
|
183
|
184
|
8
|
(2)
|
190
|
1. Development contract and transaction
expenditure for the six months to 30 September 2024 mainly related
to St Marks Commercial, Bromley (2023: related to 21 Moorfields
following the sale of the property).
The Group's costs include employee costs for
the period of £42m (2023:
£40m), of which £5m (2023:
£3m) is within service charge expense, £7m (2023: £7m) is within direct
property expenditure and £30m (2023: £30m) is within
administrative expenses.
|
7. Net finance expense
|
|
|
|
|
Six months ended
30 September 2024
|
Six months ended
30 September 2023
|
|
|
EPRA earnings
|
Capital and other items
|
Total
|
EPRA earnings
|
Capital and other items
|
Total
|
|
|
£m
|
£m
|
£m
|
£m
|
£m
|
£m
|
|
Finance income
|
|
|
|
|
|
|
|
Interest receivable from joint
ventures
|
5
|
-
|
5
|
6
|
-
|
6
|
|
Fair value movement on interest-rate
swaps
|
-
|
-
|
-
|
-
|
1
|
1
|
|
Other interest receivable
|
2
|
-
|
2
|
-
|
-
|
-
|
|
|
7
|
-
|
7
|
6
|
1
|
7
|
|
|
|
|
|
|
|
|
|
Finance expense
|
|
|
|
|
|
|
|
Bond
|
(47)
|
-
|
(47)
|
(44)
|
-
|
(44)
|
|
Bank and other short-term borrowings
|
(17)
|
(1)
|
(18)
|
(14)
|
(1)
|
(15)
|
|
value movement on interest-rate
swaps
|
-
|
(16)
|
(16)
|
-
|
-
|
-
|
|
|
(64)
|
(17)
|
(81)
|
(58)
|
(1)
|
(59)
|
|
Interest capitalised in relation to properties
under development
|
13
|
-
|
13
|
12
|
-
|
12
|
|
|
(51)
|
(17)
|
(68)
|
(46)
|
(1)
|
(47)
|
|
|
|
|
|
|
|
|
|
Net finance expense
|
(44)
|
(17)
|
(61)
|
(40)
|
-
|
(40)
|
|
Joint venture net finance expense
|
(5)
|
|
|
(6)
|
|
|
|
Net finance expense included in EPRA
earnings
|
(49)
|
|
|
(46)
|
|
|
Finance lease interest payable of
£2m (2023: £2m) is included within
rents payable as detailed in note 3.
|
8. Dividends
|
|
|
|
|
|
|
Dividends paid
|
|
Six months ended
30 September
|
|
|
|
Pence per share
|
2024
|
2023
|
|
|
Payment date
|
PID
|
Non-PID
|
Total
|
£m
|
£m
|
|
For the year ended 31 March 2023:
|
|
|
|
|
|
|
|
Third interim
|
6 April 2023
|
9.00
|
-
|
9.00
|
|
67
|
|
Final
|
21 July 2023
|
12.00
|
-
|
12.00
|
|
89
|
|
For the year ended 31 March 2024:
|
|
|
|
|
|
|
|
Third interim
|
12 April 2024
|
9.30
|
-
|
9.30
|
69
|
|
|
Final
|
26 July 2024
|
12.10
|
-
|
12.10
|
90
|
|
|
Gross dividends
|
|
|
|
|
159
|
156
|
|
|
|
|
|
|
|
|
|
Dividends in the statement of changes in
equity
|
|
|
|
|
159
|
156
|
|
Timing difference on payment of withholding
tax
|
|
|
|
|
(2)
|
(3)
|
|
Dividends in the statement of cash
flows
|
|
|
|
|
157
|
153
|
|
|
|
|
|
|
|
| |
On 4 October 2024, the Company paid a first
interim dividend in respect of the current financial year of
9.2p per ordinary share
(2023: 9.0p), wholly as a Property Income Distribution (PID),
representing £68m
in total (2023: £67m).
The Board has declared a second interim
dividend of 9.4p per
ordinary share to be payable wholly as an ordinary dividend (2023:
9.2p) on 8 January 2025 to shareholders registered at the close of
business on 29 November 2024.
A Dividend Reinvestment Plan (DRIP) has been
available in respect of all dividends paid during the period. The
last day for DRIP elections for the second interim dividend is
close of business on 13 December 2024.
|
9. Net cash generated from
operations
|
|
|
|
Reconciliation of operating profit/(loss) to
net cash generated from operations
|
Six months
ended
30 September
2024
|
Six months ended
30 September 2023
|
|
|
£m
|
£m
|
|
|
|
|
|
Operating profit/(loss)
|
304
|
(153)
|
|
|
|
|
|
Adjustments for:
|
|
|
|
Net (surplus)/deficit on revaluation of
investment properties
|
(84)
|
371
|
|
Loss on disposal of trading
properties
|
5
|
1
|
|
Loss on disposal of investment
properties
|
5
|
3
|
|
Share of (profit)/loss from joint
ventures
|
(16)
|
7
|
|
Share-based payment charge
|
4
|
6
|
|
Impairment of amounts due from joint
ventures
|
2
|
-
|
|
Non-cash development contract and transaction
expenditure
|
2
|
-
|
|
Rents payable
|
4
|
5
|
|
Depreciation and amortisation
|
2
|
3
|
|
Impairment of trading properties
|
4
|
4
|
|
|
232
|
247
|
|
Changes in working capital:
|
|
|
|
Increase in receivables
|
(30)
|
(23)
|
|
Decrease in payables and provisions
|
(54)
|
(14)
|
|
Net cash generated from operations
|
148
|
210
|
|
Reconciliation to adjusted net cash inflow from
operating activities
|
Six months
ended
30 September 2024
|
Six
months ended
30 September 2023
|
|
|
£m
|
£m
|
|
Net cash inflow from operating
activities
|
107
|
166
|
|
Joint ventures net cash outflow from operating
activities
|
-
|
-
|
|
Adjusted net cash inflow from operating
activities(1)
|
107
|
166
|
1. Includes cash flows relating to the interest
in MediaCity which is not owned by the Group as at 30 September
2024 or as at 30 September 2023, but is consolidated in the Group
numbers.
|
10. Investment properties
|
|
|
|
|
|
|
Six months ended
30 September 2024
|
Six months ended
31 March 2024
|
Six months ended
30 September 2023
|
|
|
£m
|
£m
|
£m
|
|
Net book value at the beginning of the
period
|
9,330
|
9,562
|
9,658
|
|
Acquisitions of investment
properties
|
133
|
53
|
91
|
|
Net movement in head leases
capitalised(1)
|
(1)
|
(30)
|
-
|
|
Capital expenditure
|
199
|
201
|
173
|
|
Capitalised interest
|
12
|
7
|
12
|
|
Disposals(2)
|
(461)
|
(206)
|
(1)
|
|
Net surplus/(deficit) on revaluation of
investment properties
|
84
|
(257)
|
(371)
|
|
Net book value at the end of the
period
|
9,296
|
9,330
|
9,562
|
|
|
|
|
|
|
|
| |
1. See note 14 for details of the amounts
payable under head leases and note 6 for details of the rents
payable in the income statement.
2. Includes impact of disposals of finance
leases.
The fair value of investment
properties at 30 September 2024 was determined by the Group's
external valuers, CBRE and JLL. The valuations are in accordance
with RICS standards and were arrived at by reference to market
evidence of transactions for similar properties. The valuations
performed by the valuers are reviewed internally by Senior
Management and other relevant people within the business. This
process includes discussions of the assumptions used by the
valuers, as well as a review of the resulting valuations.
Discussions of the valuation process and results are held between
Senior Management, the Audit Committee and the valuers on a
half-yearly basis. The Group considers all of its investment
properties to fall within 'Level 3', as defined by IFRS 13. There
have been no transfers of properties within the fair value
hierarchy in the financial period.
The market value of the Group's investment
properties, as determined by the Group's external valuers, differs
from the net book value presented in the balance sheet due to the
Group presenting tenant finance leases, head leases and lease
incentives separately. The following table reconciles the net book
value of the investment properties to the market value.
|
|
30 September 2024
|
31 March 2024
|
|
|
Group
|
Joint ventures
|
Adjustment for
non-wholly owned subsidiaries
|
Combined Portfolio
|
Group
|
Joint
ventures
|
Adjustment
for non-
wholly owned subsidiaries
|
Combined Portfolio
|
|
|
£m
|
£m
|
£m
|
£m
|
£m
|
£m
|
£m
|
£m
|
|
Market value
|
9,451
|
622
|
(116)
|
9,957
|
9,465
|
616
|
(118)
|
9,963
|
|
Less: properties treated as finance
leases
|
(13)
|
-
|
-
|
(13)
|
(18)
|
-
|
-
|
(18)
|
|
Plus: head leases capitalised
|
72
|
1
|
-
|
73
|
77
|
1
|
-
|
78
|
|
Less: tenant lease incentives
|
(214)
|
(30)
|
-
|
(244)
|
(194)
|
(32)
|
-
|
(226)
|
|
Net book value
|
9,296
|
593
|
(116)
|
9,773
|
9,330
|
585
|
(118)
|
9,797
|
|
|
|
|
|
|
|
|
|
|
|
Net surplus/(deficit) on revaluation of
investment properties
|
84
|
5
|
2
|
91
|
(628)
|
(19)
|
22
|
(625)
|
As at 30 September 2024, the Group had
contractually committed development capital expenditure obligations
of £355m (31 March 2024:
£367m)
|
11. Trading properties
|
|
|
|
|
|
Development land and infrastructure
|
Residential
|
Total
|
|
|
£m
|
£m
|
£m
|
|
At 1 April 2023
|
98
|
20
|
118
|
|
Capital expenditure
|
3
|
1
|
4
|
|
Disposals
|
(7)
|
-
|
(7)
|
|
Impairment provision
|
(4)
|
-
|
(4)
|
|
At 30 September 2023
|
90
|
21
|
111
|
|
Capital expenditure
|
3
|
6
|
9
|
|
Capitalised interest
|
-
|
1
|
1
|
|
Disposals
|
(14)
|
-
|
(14)
|
|
Impairment provision
|
(7)
|
-
|
(7)
|
|
At 31 March 2024
|
72
|
28
|
100
|
|
Acquisitions
Capital expenditure
|
3
3
|
-
3
|
3
6
|
|
Capitalised interest
|
-
|
1
|
1
|
|
Disposals
|
(9)
|
-
|
(9)
|
|
Impairment provision
|
(4)
|
-
|
(4)
|
|
At 30 September 2024
|
65
|
32
|
97
|
The cumulative impairment provision at 30
September 2024 in respect of Development land and infrastructure
was £30m (31 March 2024:
£36m); and in respect of Residential was £nil (31 March 2024: £nil).
The Group's principal joint arrangements are
described below:
|
Joint ventures
|
Percentage owned & voting
rights(1)
|
Business
segment
|
Year end date(2)
|
Joint venture partner
|
|
Held at 30 September 2024
|
|
|
|
|
|
|
Nova, Victoria(3)
|
50%
|
Central London
|
31 March
|
Suntec Real Estate Investment Trust
|
|
|
Southside Limited Partnership
|
50%
|
Major retail
|
31 March
|
Invesco Real Estate European Fund
|
|
|
Westgate Oxford Alliance Limited
Partnership
|
50%
|
Major retail, Subscale sectors
|
31 March
|
The Crown Estate Commissioners
|
|
|
Harvest(4)
|
50%
|
Subscale sectors
|
31 March
|
J Sainsbury plc
|
|
|
The Ebbsfleet Limited Partnership
|
50%
|
Subscale sectors
|
31 March
|
Ebbsfleet Property Limited
|
|
|
West India Quay Unit Trust
|
50%
|
Subscale sectors
|
31 March
|
Schroder UK Real Estate Fund
|
|
|
Mayfield(5)
|
50%
|
Mixed-use urban
|
31 March
|
LCR Limited, Manchester City Council, Transport
for Greater Manchester
|
|
Curzon Park Limited
|
50%
|
Subscale sectors
|
31 March
|
Derwent Developments (Curzon)
Limited
|
|
Plus X Holdings Limited
|
50%
|
Subscale sectors
|
31 March
|
Paul David Rostas, Matthew Edmund
Hunter
|
|
Landmark Court Partnership Limited
|
51%
|
Central London
|
31 March
|
TTL Landmark Court Properties
Limited
|
|
Opportunities for Sittingbourne
Limited
|
50%
|
Mixed-use urban
|
31 March
|
Swale Borough Council
|
|
Cathedral (Movement, Greenwich) LLP
|
52%
|
Mixed-use urban
|
31 March
|
Mr Richard Upton
|
|
Circus Street Developments Limited
|
50%
|
Mixed-use urban
|
31 March
|
High Wire Brighton Limited
|
|
|
|
|
|
|
|
Joint operation
|
Ownership interest
|
Business
segment
|
Year end date(2)
|
Joint operation partners
|
|
|
Held at 30 September 2024
|
|
|
|
|
|
|
Bluewater, Kent(6)
|
66.25%
|
Major retail
|
31 March
|
M&G Real Estate,
Royal London Asset Management,
Aberdeen Standard Investments
|
|
1. Investments under joint arrangements are not
always represented by an equal percentage holding by each partner.
In a number of joint ventures, the Group holds a majority
shareholding but has joint control and therefore the arrangement is
accounted for as a joint venture.
2. The year end date shown is the accounting
reference date of the joint arrangement. In all cases, the Group's
accounting is performed using financial information for the Group's
own reporting year and reporting date.
3. Nova, Victoria includes the Nova Limited
Partnership, Nova Residential Limited Partnership, Nova GP Limited,
Nova Business Manager Limited, Nova Residential (GP) Limited, Nova
Residential Intermediate Limited, Nova Estate Management Company
Limited, Nova Nominee 1 Limited and Nova Nominee 2
Limited.
4. Harvest includes Harvest 2 Limited
Partnership, Harvest Development Management Limited, Harvest 2
Selly Oak Limited, Harvest 2 GP Limited and Harvest GP
Limited.
5. Mayfield includes Mayfield Development
Partnership LP and Mayfield Development (General Partner)
Limited.
6. On 24 June 2024, the Group acquired an
additional 17.5% interest in Bluewater from GIC.
All of the Group's joint arrangements listed
above have their principal place of business in the United Kingdom.
All of the Group's principal joint arrangements own and operate
investment property, with the exception of:
- The Ebbsfleet Limited
Partnership and Plus X Holdings Limited, which are holding
companies;
- Harvest, which is engaged
in long-term development contracts; and
- Curzon Park Limited,
Landmark Court Partnership Limited, Opportunities for Sittingbourne
Limited and Circus Street Developments Limited, which are companies
continuing their business of property development.
The activities of all the Group's principal
joint arrangements are therefore strategically important to the
business activities of the Group.
All joint ventures listed above are registered
in England and Wales with the exception of Southside Limited
Partnership and West India Quay Unit Trust which are registered in
Jersey.
|
Joint ventures
|
|
|
|
Total
|
|
Net investment
|
Group share
|
|
£m
|
|
At 1 April 2023
|
528
|
|
Total comprehensive loss
|
(7)
|
|
Cash distributions
|
(7)
|
|
Other non-cash movements
|
(1)
|
|
At 30 September 2023
|
513
|
|
Total comprehensive
income
|
10
|
|
Cash distributions
|
(10)
|
|
Other non-cash movements
|
8
|
|
At 31 March 2024
|
521
|
|
Total comprehensive
income
|
16
|
|
Cash and other
distributions
|
(7)
|
|
At 30 September 2024
|
530
|
|
Comprised of:
|
|
|
At 31 March 2024
|
|
|
Non-current assets
|
529
|
|
Non-current liabilities(1)
|
(8)
|
|
At 30 September 2024
|
|
|
Non-current assets
|
537
|
|
Non-current liabilities(1)
|
(7)
|
1. The Group's share of accumulated losses of a
joint venture interest are recognised as net liabilities where
there is an obligation to provide for these losses.
|
13. Capital structure
|
|
|
|
|
|
30 September 2024
|
|
31 March 2024
|
|
|
Group
|
Joint ventures
|
Adjustment for non-wholly owned
subsidiaries
|
Combined
|
Group
|
Joint ventures
|
Adjustment for non-wholly owned
subsidiaries
|
Combined
|
|
|
£m
|
£m
|
£m
|
£m
|
£m
|
£m
|
£m
|
£m
|
|
Property portfolio
|
|
|
|
|
|
|
|
|
|
Market value of investment
properties
|
9,451
|
622
|
(116)
|
9,957
|
9,465
|
616
|
(118)
|
9,963
|
|
Trading properties and long-term
contracts
|
97
|
-
|
-
|
97
|
100
|
-
|
-
|
100
|
|
Total property portfolio (a)
|
9,548
|
622
|
(116)
|
10,054
|
9,565
|
616
|
(118)
|
10,063
|
|
|
|
|
|
|
|
|
|
|
|
Net debt
|
|
|
|
|
|
|
|
|
|
Borrowings
|
3,624
|
-
|
(49)
|
3,575
|
3,703
|
-
|
(73)
|
3,630
|
|
Monies held in restricted accounts and
deposits
|
(10)
|
-
|
1
|
(9)
|
(6)
|
-
|
-
|
(6)
|
|
Cash and cash equivalents
|
(37)
|
(30)
|
3
|
(64)
|
(78)
|
(31)
|
4
|
(105)
|
|
Fair value of interest-rate swaps
|
(12)
|
-
|
-
|
(12)
|
(23)
|
-
|
2
|
(21)
|
|
Fair value of foreign exchange swaps and
forwards
|
8
|
-
|
-
|
8
|
(2)
|
-
|
-
|
(2)
|
|
Net debt (b)
|
3,573
|
(30)
|
(45)
|
3,498
|
3,594
|
(31)
|
(67)
|
3,496
|
|
Add/(less): Fair value of interest-rate
swaps
|
12
|
-
|
-
|
12
|
23
|
-
|
(2)
|
21
|
|
Adjusted net debt (c)
|
3,585
|
(30)
|
(45)
|
3,510
|
3,617
|
(31)
|
(69)
|
3,517
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted total equity
|
|
|
|
|
|
|
|
|
|
Total equity (d)
|
6,545
|
-
|
(55)
|
6,490
|
6,447
|
-
|
(45)
|
6,402
|
|
Fair value of interest-rate swaps
|
(12)
|
-
|
-
|
(12)
|
(23)
|
-
|
2
|
(21)
|
|
Adjusted total equity (e)
|
6,533
|
-
|
(55)
|
6,478
|
6,424
|
-
|
(43)
|
6,381
|
|
|
|
|
|
|
|
|
|
|
|
Gearing (b/d)
|
54.6%
|
|
|
53.9%
|
55.7%
|
|
|
54.6%
|
|
Adjusted gearing (c/e)
|
54.8%
|
|
|
54.2%
|
56.3%
|
|
|
55.1%
|
|
Group LTV (c/a)
|
37.5%
|
|
|
34.9%
|
37.8%
|
|
|
35.0%
|
|
EPRA LTV(1)
|
|
|
|
36.1%
|
|
|
|
36.3%
|
|
Security Group LTV
|
37.5%
|
|
|
|
37.0%
|
|
|
|
|
Weighted average cost of debt
|
3.5%
|
|
|
3.5%
|
3.3%
|
|
|
3.3%
|
|
|
|
|
|
|
|
|
|
|
|
| |
1. EPRA LTV differs from Group LTV as it
includes net payables and receivables and includes trading
properties at fair value and debt instruments at nominal value
rather than book value. Group LTV remains our core performance
measure used by external investors and lenders.
|
14. Borrowings
|
|
|
|
|
|
|
30 September 2024
|
31 March 2024
|
|
|
Secured/
unsecured
|
Fixed/
floating
|
Effective
interest rate
%
|
Nominal/ notional value
£m
|
Fair
value
£m
|
Book value
£m
|
Nominal/ notional value
£m
|
Fair
value
£m
|
Book value
£m
|
|
Current borrowings
|
|
|
|
|
|
|
|
|
|
|
Commercial paper
|
|
|
|
|
|
|
|
|
|
|
Sterling
|
Unsecured
|
Floating
|
Various(1)
|
30
|
30
|
30
|
15
|
15
|
15
|
|
Euro
|
Unsecured
|
Floating
|
Various(1)
|
287
|
287
|
287
|
518
|
518
|
518
|
|
US Dollar
|
Unsecured
|
Floating
|
Various(1)
|
157
|
157
|
157
|
148
|
148
|
148
|
|
|
|
|
|
474
|
474
|
474
|
681
|
681
|
681
|
|
Syndicated and bilateral bank debt
|
Secured
|
Floating
|
SONIA + margin
|
1
|
1
|
1
|
292
|
292
|
292
|
|
Total current borrowings
|
|
|
|
475
|
475
|
475
|
973
|
973
|
973
|
|
Amounts payable under head leases
|
|
|
|
2
|
2
|
2
|
2
|
2
|
2
|
|
Total current borrowings including amounts
payable under head leases
|
|
|
|
477
|
477
|
477
|
975
|
975
|
975
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-current borrowings
|
|
|
|
|
|
|
|
|
|
|
Medium term notes (MTN)
|
|
|
|
|
|
|
|
|
|
|
A5 5.391% MTN due
2027
|
Secured
|
Fixed
|
5.4
|
87
|
86
|
87
|
87
|
86
|
87
|
|
A16 2.375% MTN due 2029
|
Secured
|
Fixed
|
2.5
|
350
|
330
|
349
|
350
|
325
|
349
|
|
A6 5.376% MTN due
2029
|
Secured
|
Fixed
|
5.4
|
65
|
65
|
65
|
65
|
66
|
65
|
|
A13 2.399% MTN due 2031
|
Secured
|
Fixed
|
2.4
|
300
|
274
|
299
|
300
|
270
|
299
|
|
A7 5.396% MTN due
2032
|
Secured
|
Fixed
|
5.4
|
77
|
79
|
77
|
77
|
78
|
77
|
|
A18 4.750% MTN due 2033
|
Secured
|
Fixed
|
4.9
|
300
|
301
|
297
|
300
|
299
|
297
|
|
A17 4.875% MTN due 2034
|
Secured
|
Fixed
|
5.0
|
400
|
405
|
393
|
400
|
403
|
393
|
|
A19 4.625% MTN due 2036
|
Secured
|
Fixed
|
4.5
|
350
|
342
|
347
|
-
|
-
|
-
|
|
A11 5.125% MTN due 2036
|
Secured
|
Fixed
|
5.1
|
50
|
49
|
50
|
50
|
48
|
50
|
|
A14 2.625% MTN due 2039
|
Secured
|
Fixed
|
2.6
|
500
|
389
|
495
|
500
|
387
|
495
|
|
A15 2.750% MTN due 2059
|
Secured
|
Fixed
|
2.7
|
500
|
299
|
495
|
500
|
309
|
495
|
|
|
|
|
|
2,979
|
2,619
|
2,954
|
2,629
|
2,271
|
2,607
|
|
|
|
|
|
|
|
|
|
|
|
|
Syndicated and bilateral bank debt
|
Secured
|
Floating
|
SONIA + margin
|
195
|
195
|
195
|
123
|
123
|
123
|
|
Total non-current borrowings
|
|
|
|
3,174
|
2,814
|
3,149
|
2,752
|
2,394
|
2,730
|
|
Amounts payable under head leases
|
Unsecured
|
Fixed
|
4.0
|
70
|
86
|
70
|
75
|
98
|
75
|
|
Total non-current borrowings including amounts
payable under head leases
|
|
|
|
3,244
|
2,900
|
3,219
|
2,827
|
2,492
|
2,805
|
|
|
|
|
|
|
|
|
|
|
|
|
Total borrowing including amounts payable under
head leases
|
|
|
|
3,721
|
3,377
|
3,696
|
3,802
|
3,467
|
3,780
|
|
Total borrowings excluding amounts payable
under head leases
|
|
|
|
3,649
|
3,289
|
3,624
|
3,725
|
3,367
|
3,703
|
1. Non-Sterling commercial paper is immediately
swapped into Sterling. The interest rate is fixed at the time of
the issuance for the duration (1 to 3 months) and tracks SONIA swap
rates.
|
Reconciliation of the movement in
borrowings
|
Six months ended
30 September 2024
|
Year ended
31 March 2024
|
|
|
£m
|
£m
|
|
At the beginning of the period
|
3,780
|
3,538
|
|
Net (repayments)/proceeds from ECP
issuance
|
(185)
|
378
|
|
Net (repayments)/proceeds from bank
debt
|
(221)
|
33
|
|
Repayment of MTNs
|
-
|
(427)
|
|
Issue of MTNs (net of finance fees)
|
346
|
297
|
|
Foreign exchange movement on non-Sterling
borrowings
|
(19)
|
(9)
|
|
Other
|
(5)
|
(30)
|
|
At the end of the period
|
3,696
|
3,780
|
|
|
|
|
Reconciliation of movements in liabilities
arising from financing activities
|
|
Six months ended 30 September 2024
|
|
|
|
|
Non-cash changes
|
|
|
|
At the beginning of the period
|
Cash flows
|
Foreign exchange movements
|
Other changes in fair values
|
Other changes
|
At the end
of the period
|
|
|
£m
|
£m
|
£m
|
£m
|
£m
|
£m
|
|
Borrowings
|
3,780
|
(60)
|
(19)
|
-
|
(5)
|
3,696
|
|
Derivative financial instruments
|
(25)
|
(10)
|
19
|
12
|
-
|
(4)
|
|
|
3,755
|
(70)
|
-
|
12
|
(5)
|
3,692
|
|
|
|
|
|
|
|
|
|
|
|
|
Year ended 31 March 2024
|
|
Borrowings
|
3,538
|
281
|
(9)
|
-
|
(30)
|
3,780
|
|
Derivative financial instruments
|
(38)
|
(18)
|
10
|
21
|
-
|
(25)
|
|
|
3,500
|
263
|
1
|
21
|
(30)
|
3,755
|
|
|
|
|
|
|
|
| |
Medium Term Notes (MTNs)
The MTNs are secured on the fixed and floating
pool of assets of the Security Group. The Security Group includes
wholly owned investment properties, development properties and a
number of the Group's investment in other assets, in total
valued at £9.2bn at 30 September
2024 (31 March 2024: £9.2bn). The secured debt
structure has a tiered operating covenant regime which gives the
Group substantial flexibility when the loan-to-value and interest
cover in the Security Group are less than 65% and more than 1.45x
respectively. If these limits are exceeded, the operating
environment becomes more restrictive with provisions to encourage a
reduction in gearing. The interest rate of each MTN is fixed until
the expected maturity, being two years before the legal maturity
date of the MTN. The interest rate for the last two years may
either become floating on a SONIA basis plus an increased margin
(relative to that at the time of issue), or subject to a fixed
coupon uplift, depending on the terms and conditions of the
specific notes.
The effective interest rate is based on the
coupon paid and includes the amortisation of issue costs and
discount to redemption value. The MTNs are listed on the Irish
Stock Exchange and their fair values are based on their respective
market prices.
|
Committed syndicated and bilateral bank
debt
|
|
|
|
Authorised
|
Drawn
|
Undrawn
|
|
|
Maturity as at
30 September 2024
|
30 Sept 2024
|
31 March 2024
|
30 Sept 2024
|
31 March 2024
|
30 Sept 2024
|
31 March 2024
|
|
|
|
£m
|
£m
|
£m
|
£m
|
£m
|
£m
|
|
Syndicated debt
|
2024-27
|
2,585
|
2,682
|
195
|
415
|
2,390
|
2,267
|
|
Bilateral debt
|
2026
|
225
|
225
|
-
|
-
|
225
|
225
|
|
|
|
2,810
|
2,907
|
195
|
415
|
2,615
|
2,492
|
At 30 September 2024, the Group's committed
facilities totalled £2,810m (31
March 2024: £2,907m). All the committed syndicated and
bilateral facilities are secured on the assets of the
Security Group, with the exception of facilities secured on the
assets at MediaCity. During the period ended 30 September 2024, the
amounts drawn under the Group's facilities decreased by
£220m.
The MediaCity bank facility was successfully
refinanced on 13 June 2024 with £195m of this facility drawn at 30
September 2024 (31 March 2024: £292m drawn). The difference in the
facility outstanding between both periods was financed via
proportional equity contributions by the MediaCity shareholders of
£49m in aggregate and a
shareholder loan extended by Landsec only of £49m.
The terms of the Security Group funding
arrangements require undrawn facilities to be reserved where
syndicated and bilateral facilities mature within one year, or when
commercial paper is issued. The total amount of cash and available
undrawn facilities, net of commercial paper, at 30 September 2024
was £2,176m (31 March 2024:
£1,889m).
Fair values
The fair value of the Group's net investment in
tenant finance leases is calculated by the Group's external valuer
by applying a weighted average equivalent yield of 9.3% (31 March 2024: 7.8%).
The fair values of any floating rate financial
liabilities are assumed to be equal to their nominal and book
value. The fair values of the MTNs fall within Level 1 of the fair
value hierarchy, the syndicated and bilateral facilities,
commercial paper, interest-rate swaps and foreign exchange swaps
fall within Level 2, and the amounts payable and receivable under
leases fall within Level 3.
The fair values of the financial instruments
have been determined by reference to relevant market prices, where
available. The fair values of the Group's outstanding interest-rate
swaps have been estimated by calculating the present value of
future cash flows, using appropriate market discount rates. These
valuation techniques fall within Level 2.
|
|
Building and fire safety remediation
|
Transaction and contract related
|
Total
|
|
|
£m
|
£m
|
£m
|
|
At 1 April 2023
|
-
|
-
|
-
|
|
At 30 September 2023
|
-
|
-
|
-
|
|
Transfer from other current
liabilities
|
14
|
4
|
18
|
|
Charge for the period
|
12
|
45
|
57
|
|
Reversed during the period
|
(3)
|
-
|
(3)
|
|
At 31 March 2024
|
23
|
49
|
72
|
|
Charge for the period
|
3
|
1
|
4
|
|
Utilised during the period
|
(3)
|
(3)
|
(6)
|
|
Reversed during the period
|
(1)
|
(1)
|
(2)
|
|
At 30
September 2024
|
22
|
46
|
68
|
|
Current
|
22
|
26
|
48
|
|
Non-current
|
-
|
20
|
20
|
|
At 30
September 2024
|
22
|
46
|
68
|
The Group has contingent liabilities in respect
of legal claims, contractor claims, remediation for building
defects, developer contractual arrangements, defined benefit
pension scheme member liabilities(1), guarantees and
warranties arising in the ordinary course of business. A provision
for such matters is only recognised to the extent that the Group
has a legal or constructive obligation as a result of a past event
and it is probable that an outflow of economic benefit will be
required to settle the obligation.
1. Refer to note 35 of the Group's annual
financial statements for the year ended 31 March 2024.
|
17. Related party transactions
|
|
There have been no related party transactions
during the period that require disclosure under Section 4.2.8 (R)
of the Disclosure and Transparency Rules or under IAS 34 Interim
Financial Reporting.
|
18. Events after the reporting
period
|
|
On 30 October 2024, the Group refinanced its
existing revolving credit facilities of £2.3bn that was due to
expire in 2025 on substantially the same terms as the existing
facilities. The new facilities have two equally split tranches with
initial maturities falling in 2027 and 2029
respectively.
On 30 October 2024, the Group acquired the
residual 25% interest in the MediaCity assets as well as a 100%
interest in entities which operate a 218-bed hotel and studio
operations that were previously wholly owned by The Peel Group. The
cash consideration is £23m and the Group will assume £61m of debt,
providing an overall consideration of £84m for this acquisition. As
part of the acquisition, the existing bank facility relating to the
MediaCity assets of £195m was terminated on 5 November 2024. Given
the proximity of the acquisition to the results release date, the
accounting of this business combination will be performed by the
year end.
Alternative performance measures
Table 13: Alternative performance
measures
The Group has applied the European Securities
and Markets Authority (ESMA) 'Guidelines on Alternative Performance
Measures' in these results. In the context of these results, an
alternative performance measure (APM) is a financial measure of
historical or future financial performance, position or cash flows
of the Group which is not a measure defined or specified in
IFRS.
The table below summarises the APMs included in
these results and where the reconciliations of these measures can
be found. The definitions of APMs are included in the
Glossary.
|
Alternative performance measure
|
Nearest IFRS measure
|
Reconciliation
|
|
EPRA earnings
|
Profit/loss before tax
|
Note 3
|
|
EPRA earnings per share
|
Basic earnings/loss per share
|
Note 4
|
|
EPRA diluted earnings per share
|
Diluted earnings/loss per share
|
Note 4
|
|
EPRA Net Tangible Assets
|
Net assets attributable to
shareholders
|
Note 4
|
|
EPRA Net Tangible Assets per share
|
Net assets attributable to
shareholders
|
Note 4
|
|
Total return on equity
|
n/a
|
Note 4
|
|
Adjusted net cash inflow from operating
activities
|
Net cash inflow from operating
activities
|
Note 9
|
|
Combined Portfolio
|
Investment properties
|
Note 10
|
|
Adjusted net debt
|
Borrowings
|
Note 13
|
|
Group LTV
|
n/a
|
Note 13
|
|
EPRA LTV
|
n/a
|
Note 13
|
EPRA disclosures
Table 14: EPRA net asset measures
|
EPRA net asset measures
|
30 September 2024
|
|
|
|
EPRA NRV
|
EPRA NTA
|
EPRA NDV
|
|
|
|
£m
|
£m
|
£m
|
|
|
Net assets attributable to
shareholders
|
6,490
|
6,490
|
6,490
|
|
|
Shortfall of fair value over net investment in
finance lease book value
|
(7)
|
(7)
|
(7)
|
|
|
Other intangible asset
|
-
|
(2)
|
-
|
|
|
Fair value of interest-rate swaps
|
(11)
|
(11)
|
-
|
|
|
Shortfall of fair value of debt over book
value
|
-
|
-
|
319
|
|
|
Excess of fair value of trading properties over
book value
|
25
|
25
|
25
|
|
|
Purchasers' costs(1)
|
605
|
-
|
-
|
|
|
Net assets used in per share
calculation
|
7,102
|
6,495
|
6,827
|
|
|
|
|
|
|
|
|
|
EPRA NRV
|
EPRA NTA
|
EPRA NDV
|
|
|
Diluted net assets per share
|
952p
|
871p
|
915p
|
|
|
31 March 2024
|
|
|
EPRA NRV
|
EPRA NTA
|
EPRA NDV
|
|
|
£m
|
£m
|
£m
|
|
Net assets attributable to
shareholders
|
6,402
|
6,402
|
6,402
|
|
Shortfall of fair value over net investment in
finance lease book value
|
(5)
|
(5)
|
(5)
|
|
Other intangible asset
|
-
|
(2)
|
-
|
|
Fair value of interest-rate swaps
|
(22)
|
(22)
|
-
|
|
Shortfall of fair value of debt over book
value
|
-
|
-
|
313
|
|
Excess of fair value of trading properties over
book value
|
25
|
25
|
25
|
|
Purchasers' costs(1)
|
605
|
-
|
-
|
|
Net assets used in per share
calculation
|
7,005
|
6,398
|
6,735
|
|
|
|
|
|
|
|
EPRA NRV
|
EPRA NTA
|
EPRA NDV
|
|
Diluted net assets per share
|
940p
|
859p
|
904p
|
1. EPRA NTA and EPRA NDV reflect IFRS values
which are net of purchasers' costs. Purchasers' costs are added
back when calculating EPRA NRV.
Table 15: EPRA performance measures
|
|
|
|
30 September 2024
|
|
Measure
|
Definition for EPRA measure
|
|
Notes
|
EPRA
measure
|
|
|
|
|
|
|
|
EPRA earnings
|
Earnings from core operational
activity
|
|
4
|
£186m
|
|
EPRA earnings per share
|
EPRA earnings per weighted number of ordinary
shares
|
|
4
|
25.0p
|
|
EPRA diluted earnings per share
|
EPRA diluted earnings per weighted number of
ordinary shares
|
|
4
|
24.9p
|
|
EPRA Net Tangible Assets (NTA)
|
Net assets adjusted to exclude the fair value
of interest-rate swaps, intangible assets and excess of fair value
over net investment in finance lease book value
|
|
4
|
£6,495m
|
|
EPRA Net Tangible Assets per share
|
Diluted Net Tangible Assets per
share
|
|
4
|
871p
|
|
EPRA net disposal value (NDV)
|
Net assets adjusted to exclude the fair value
of debt and goodwill on deferred tax and to include excess of fair
value over net investment in finance lease book value
|
|
4
|
£6,787m
|
|
EPRA net disposal value per share
|
Diluted net disposal value per share
|
|
4
|
915p
|
|
EPRA loan-to-value (LTV) (1)
|
Ratio of adjusted net debt, including net
payables, to the sum of the net assets, including net receivables,
of the Group, its subsidiaries and joint ventures, all on a
proportionate basis, expressed as a percentage
|
|
13
|
36.1%
|
|
|
|
|
Table
|
|
|
Voids/vacancy rate
|
ERV of vacant space as a % of ERV of Combined
Portfolio excluding the development programme(2)
|
|
16
|
3.4%
|
|
Net initial yield (NIY)
|
Annualised rental income less non-recoverable
costs as a % of market value plus assumed purchasers'
costs(3)
|
|
|
5.2%
|
|
Topped-up NIY
|
NIY adjusted for rent free periods(4)
|
|
|
6.2%
|
|
Cost ratio(4)
|
Total costs as a percentage of gross rental
income (including direct vacancy costs)
|
|
|
20.8%
|
|
|
Total costs as a percentage of gross rental
income (excluding direct vacancy costs)
|
|
|
16.6%
|
1. EPRA LTV differs from the Group LTV
presented in note 13 as it includes net payables and receivables
and includes trading properties at fair value and debt instruments
at nominal value rather than book value. Group LTV remains our core
performance measure used by external investors and
lenders.
2. This measure reflects voids in the Combined
Portfolio excluding only properties under development.
3. This measure relates to the Combined
Portfolio, excluding properties currently under development, and
are calculated by our external valuer. Topped-up NIY reflects
adjustments of £86m for
rent free periods and other incentives.
4. This measure is calculated based on gross
rental income after rents payable and excluding costs recovered
through rents but not separately invoiced of £6m.
Table 16: EPRA vacancy rate
The EPRA vacancy rate is based on the ratio of
the estimated market rent for vacant properties versus total
estimated market rent, for the Combined Portfolio excluding
properties under development. There are no significant distorting
factors influencing the EPRA vacancy rate.
|
|
30 September 2024
|
|
|
£m
|
|
ERV of vacant properties
|
21
|
|
ERV of Combined Portfolio excluding properties
under development
|
622
|
|
EPRA vacancy rate (%)
|
3.4
|
Table 17: Change in net rental income from the
like-for-like portfolio(1)
|
|
30 September 2024
|
30 September 2023
|
Change
|
|
|
£m
|
£m
|
£m
|
%(2)
|
|
Central London
|
118
|
112
|
6
|
5.5%
|
|
Major retail
|
70
|
68
|
2
|
3.1%
|
|
Subscale sectors
Mixed-use
|
30
17
|
28
20
|
2
(3)
|
6.6%
(12.1%)
|
|
|
235
|
228
|
7
|
3.4%
|
1. Excludes surrender premiums received during
the period.
2. Percentage change is disclosed on unrounded
figures.
Table 18: Acquisitions, disposals and capital
expenditure
|
|
|
|
|
Six months ended
30 September 2024
|
Six months ended
30 September
2023
|
|
Investment properties
|
Group
(excl. joint ventures)
£m
|
Joint
ventures
£m
|
Adjustment for
non-wholly owned subsidiaries(1)
£m
|
Combined
Portfolio
£m
|
Combined
Portfolio
£m
|
|
Net book value at the beginning of the
period
|
9,330
|
585
|
(118)
|
9,797
|
10,120
|
|
Acquisitions
|
133
|
-
|
-
|
133
|
91
|
|
Capital expenditure
|
199
|
3
|
-
|
202
|
173
|
|
Capitalised interest
|
12
|
-
|
-
|
12
|
12
|
|
Net movement in head leases
capitalised
|
(1)
|
-
|
-
|
(1)
|
-
|
|
Disposals
|
(461)
|
-
|
-
|
(461)
|
(1)
|
|
Net surplus/(deficit) on revaluation of
investment properties
|
84
|
5
|
2
|
91
|
(375)
|
|
Net book value at the end of the
period
|
9,296
|
593
|
(116)
|
9,773
|
10,020
|
|
|
|
|
|
|
|
|
Loss on disposal of investment
properties
|
(5)
|
-
|
-
|
(5)
|
(3)
|
|
|
|
|
|
|
|
|
Trading properties
|
£m
|
£m
|
£m
|
£m
|
£m
|
|
Net book value at the beginning of the
period
|
100
|
-
|
-
|
100
|
118
|
|
Acquisitions
|
3
|
-
|
-
|
3
|
-
|
|
Capital expenditure
|
6
|
-
|
-
|
6
|
4
|
|
Capitalised interest
|
1
|
-
|
-
|
1
|
-
|
|
Disposals
|
(9)
|
-
|
-
|
(9)
|
(7)
|
|
Movement in impairment
|
(4)
|
-
|
-
|
(4)
|
(4)
|
|
Net book value at the end of the
period
|
97
|
-
|
-
|
97
|
111
|
|
|
|
|
|
|
|
|
Loss on disposal of trading
properties
|
(5)
|
-
|
-
|
(5)
|
(1)
|
|
Acquisitions, development and other capital
expenditure
|
Investment
properties(2)
£m
|
Trading
properties
£m
|
Combined
Portfolio
£m
|
Combined
Portfolio
£m
|
|
Acquisitions(3)
|
133
|
3
|
136
|
91
|
|
Development capital expenditure(4)
|
128
|
3
|
131
|
110
|
|
Other capital expenditure
|
74
|
3
|
77
|
67
|
|
Capitalised interest
|
12
|
1
|
13
|
12
|
|
Acquisitions, development and other capital
expenditure
|
347
|
10
|
357
|
280
|
|
|
|
|
|
|
|
Disposals
|
|
|
£m
|
£m
|
|
Net book value - investment property
disposals
|
|
|
461
|
1
|
|
Net book value - trading property
disposals
|
|
|
9
|
7
|
|
Net book value - other net assets of investment
property disposals
|
|
|
1
|
-
|
|
Loss on disposal - investment
properties
|
|
|
(5)
|
(3)
|
|
Loss on disposal - trading
properties
|
|
|
(5)
|
(1)
|
|
Other
|
|
|
1
|
4
|
|
Total disposal proceeds
|
|
|
462
|
8
|
1. This represents the interest in MediaCity
which we did not own during the six months ended 30 September 2024
or the six months ended 30 September 2023 but consolidate in the
Group numbers.
2. See EPRA analysis of capital expenditure
table 19 for further details.
3. Properties acquired in the
period.
4. Development capital expenditure for
investment properties comprises expenditure on the future
development pipeline and completed developments.
Table 19: EPRA analysis of capital
expenditure
|
|
|
Six months ended 30 September 2024
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other capital expenditure
|
|
|
|
|
|
|
|
|
|
Acquisitions(1)
£m
|
Development capital expenditure(2)
£m
|
Incremental lettable space(3)
£m
|
No incremental
lettable space
£m
|
Tenant
improvements
£m
|
Total
£m
|
Capitalised interest
£m
|
Total capital expenditure - Combined
Portfolio
£m
|
|
Total capital expenditure - joint
ventures
(Group share)
£m
|
Total capital expenditure - non-wholly
owned subsidiaries
£m
|
Total capital expenditure -
Group
£m
|
|
|
Central London
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
West End offices
|
|
-
|
6
|
-
|
7
|
-
|
7
|
-
|
13
|
|
-
|
-
|
13
|
|
|
City offices
|
|
-
|
-
|
-
|
31
|
-
|
31
|
1
|
32
|
|
-
|
-
|
32
|
|
|
Retail and other
|
|
-
|
-
|
-
|
8
|
-
|
8
|
-
|
8
|
|
-
|
-
|
8
|
|
|
Developments
|
|
-
|
112
|
-
|
-
|
-
|
-
|
11
|
123
|
|
-
|
-
|
123
|
|
|
Total Central London
|
|
-
|
118
|
-
|
46
|
-
|
46
|
12
|
176
|
|
-
|
-
|
176
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Major retail
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shopping centres
|
|
116
|
-
|
2
|
7
|
2
|
11
|
-
|
127
|
|
2
|
-
|
125
|
|
|
Outlets
|
|
-
|
-
|
-
|
6
|
1
|
7
|
-
|
7
|
|
-
|
-
|
7
|
|
|
Total Major retail
|
|
116
|
-
|
2
|
13
|
3
|
18
|
-
|
134
|
|
2
|
-
|
132
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mixed-use urban
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
London
|
|
2
|
9
|
-
|
-
|
-
|
-
|
-
|
11
|
|
-
|
-
|
11
|
|
|
Major regional cities
|
|
15
|
1
|
-
|
5
|
-
|
5
|
-
|
21
|
|
1
|
-
|
20
|
|
|
Total Mixed-use urban
|
|
17
|
10
|
-
|
5
|
-
|
5
|
-
|
32
|
|
1
|
-
|
31
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Subscale sectors
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Leisure
|
|
-
|
-
|
-
|
-
|
3
|
3
|
-
|
3
|
|
-
|
-
|
3
|
|
|
Hotels
|
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
|
-
|
-
|
-
|
|
|
Retail parks
|
|
-
|
-
|
-
|
-
|
2
|
2
|
-
|
2
|
|
-
|
-
|
2
|
|
|
Total Subscale sectors
|
|
-
|
-
|
-
|
-
|
5
|
5
|
-
|
5
|
|
-
|
-
|
5
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total capital expenditure
|
|
133
|
128
|
2
|
64
|
8
|
74
|
12
|
347
|
|
3
|
-
|
344
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Timing difference from accrual to cash
basis
|
|
|
|
|
|
|
|
(20)
|
|
(1)
|
-
|
(19)
|
|
|
Total capital expenditure on a cash
basis
|
|
|
|
|
|
|
|
|
327
|
|
2
|
-
|
325
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
1. Investment properties acquired in the
period.
2. Expenditure on the future development
pipeline and completed developments.
3. Capital expenditure where the lettable area
increases by at least 10%.
Table 20: Top 12 occupiers at 30 September
2024
|
|
% of Group rent(1)
|
|
Central Government
|
5.9%
|
|
Deloitte
|
2.3%
|
|
Cineworld
|
1.8%
|
|
Taylor Wessing
|
1.6%
|
|
Boots
|
1.4%
|
|
Peel
|
1.4%
|
|
Qube RT
|
1.3%
|
|
BBC
|
1.3%
|
|
Inditex UK
|
1.2%
|
|
H&M
|
1.0%
|
|
Sainsbury's
|
1.0%
|
|
Primark
|
1.0%
|
|
|
21.2%
|
1. On a proportionate basis.
Table 21: Committed development pipeline and
trading property development schemes at 30 September
2024
|
Central London
|
|
|
|
|
|
|
|
|
|
|
Property
|
Description
of use
|
Ownership
interest
%
|
Size
sq ft
|
Letting
status
%
|
Market value
£m
|
Net income/ ERV
£m
|
Estimated completion
date
|
Total development costs to date
£m
|
Forecast total development cost
£m
|
|
|
|
|
|
|
|
|
|
|
|
|
Committed development pipeline
|
|
|
|
|
|
|
|
|
|
|
Thirty High, SW1
|
Office
|
100
|
299,000
|
-
|
300
|
30
|
Oct-2025
|
265
|
416
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Timber Square, SE1
|
Office
|
100
|
383,000
|
-
|
205
|
31
|
Dec-2025
|
218
|
442
|
|
Property
|
Description
of use
|
Ownership
interest
%
|
Size
sq ft
|
Number
of units
|
Sales exchanged by unit
%
|
Estimated completion
date
|
Total development costs to date
£m
|
Forecast total development cost
£m
|
|
|
|
|
|
|
|
|
|
|
|
Trading property development schemes
|
|
|
|
|
|
|
|
|
|
Castle Lane, SW1
|
Residential
|
100
|
52,000
|
89
|
99
|
Jan-2025
|
43
|
49
|
Where the property is not 100% owned, floor
areas and letting status shown above represent the full scheme
whereas all other figures represent our proportionate share.
Letting % is measured by ERV and shows letting status at 30
September 2024.
Total development cost
Refer to the Glossary for
definition.
Net income/ERV
Net income/ERV represents headline annual rent
on let units plus ERV at 30 September 2024 on unlet units, both
after rents payable.
Table 22: Combined Portfolio analysis
Total portfolio analysis
|
|
Market value(1)
|
Valuation
movement(1)
|
Rental income(1)
|
Annualised rental income(2)
|
Net estimated rental value(3)
|
|
|
30 September 2024
|
31 March 2024
|
Surplus/ (deficit)
|
Surplus/ (deficit)
|
30 September 2024
|
30 September 2023
|
30 September 2024
|
31 March 2024
|
30 September 2024
|
31 March 2024
|
|
|
£m
|
£m
|
£m
|
%
|
£m
|
£m
|
£m
|
£m
|
£m
|
£m
|
|
Central London
|
|
|
|
|
|
|
|
|
|
|
|
West End offices
|
3,083
|
3,109
|
1
|
0.0
|
80
|
68
|
158
|
160
|
188
|
186
|
|
City offices
|
1,251
|
1,192
|
22
|
1.9
|
35
|
35
|
71
|
70
|
98
|
93
|
|
Retail and other
|
1,028
|
991
|
(4)
|
(0.4)
|
28
|
27
|
41
|
43
|
55
|
55
|
|
Developments(4)
|
1,080
|
926
|
30
|
2.9
|
4
|
18
|
9
|
8
|
100
|
93
|
|
Total Central London
|
6,442
|
6,218
|
49
|
0.8
|
147
|
148
|
279
|
281
|
441
|
427
|
|
Major retail
|
|
|
|
|
|
|
|
|
|
|
|
Shopping centres
|
1,413
|
1,226
|
57
|
4.2
|
71
|
64
|
139
|
121
|
139
|
122
|
|
Outlets
|
611
|
605
|
(2)
|
(0.3)
|
24
|
31
|
47
|
48
|
50
|
49
|
|
Total Major retail
|
2,024
|
1,831
|
55
|
2.8
|
95
|
95
|
186
|
169
|
189
|
171
|
|
Mixed-use urban
|
|
|
|
|
|
|
|
|
|
|
|
London
|
189
|
191
|
(11)
|
(5.6)
|
6
|
9
|
11
|
11
|
16
|
16
|
|
Major regional cities
|
516
|
510
|
(16)
|
(3.0)
|
18
|
20
|
37
|
37
|
41
|
38
|
|
Total Mixed-use urban
|
705
|
701
|
(27)
|
(3.7)
|
24
|
29
|
48
|
48
|
57
|
54
|
|
Subscale sectors
|
|
|
|
|
|
|
|
|
|
|
|
Leisure
|
420
|
423
|
(5)
|
(1.1)
|
25
|
23
|
44
|
46
|
42
|
42
|
|
Hotels
|
-
|
400
|
-
|
-
|
2
|
18
|
-
|
35
|
-
|
29
|
|
Retail parks
|
366
|
390
|
19
|
5.6
|
15
|
15
|
25
|
27
|
27
|
29
|
|
Total Subscale sectors
|
786
|
1,213
|
14
|
2.0
|
42
|
56
|
69
|
108
|
69
|
100
|
|
Combined Portfolio
|
9,957
|
9,963
|
91
|
0.9
|
308
|
328
|
582
|
606
|
756
|
752
|
|
Properties treated as finance leases
|
-
|
-
|
-
|
-
|
(1)
|
-
|
|
|
|
|
|
Combined Portfolio
|
9,957
|
9,963
|
91
|
0.9
|
307
|
328
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Represented by:
|
|
|
|
|
|
|
|
|
|
|
|
Investment portfolio
|
9,335
|
9,347
|
86
|
0.9
|
287
|
308
|
544
|
569
|
715
|
712
|
|
Share of joint ventures
|
622
|
616
|
5
|
0.9
|
20
|
20
|
38
|
37
|
41
|
40
|
|
Combined Portfolio
|
9,957
|
9,963
|
91
|
0.9
|
307
|
328
|
582
|
606
|
756
|
752
|
Total portfolio
analysis
Notes:
|
|
Net initial yield(5)
|
Equivalent yield(6)
|
|
|
30 September 2024
|
Movement in like-for-like(7)
|
30 September 2024
|
Movement in like-for-like(7)
|
|
|
%
|
bps
|
%
|
bps
|
|
Central London
|
|
|
|
|
|
West End offices
|
3.9
|
(30)
|
5.3
|
4
|
|
City offices
|
4.3
|
44
|
6.1
|
7
|
|
Retail and other
|
4.2
|
(15)
|
5.0
|
11
|
|
Developments(4)
|
(0.2)
|
n/a
|
5.4
|
n/a
|
|
Total Central London
|
4.1
|
(10)
|
5.4
|
7
|
|
Major retail
|
|
|
|
|
|
Shopping centres
|
7.7
|
(33)
|
7.9
|
(22)
|
|
Outlets
|
6.3
|
1
|
6.9
|
(10)
|
|
Total Major retail
|
7.3
|
(21)
|
7.6
|
(17)
|
|
Mixed-use urban
|
|
|
|
|
|
London
|
4.4
|
26
|
6.6
|
6
|
|
Major regional cities
|
6.6
|
2
|
8.1
|
33
|
|
Total Mixed-use urban
|
6.1
|
8
|
7.5
|
25
|
|
Subscale sectors
|
|
|
|
|
|
Leisure
|
8.4
|
(28)
|
8.7
|
(8)
|
|
Retail parks
|
5.8
|
(23)
|
6.6
|
(27)
|
|
Total Subscale sectors
|
7.2
|
(30)
|
7.7
|
(20)
|
|
Combined Portfolio
|
5.2
|
(12)
|
6.2
|
1
|
|
|
|
|
|
|
|
Represented by:
|
|
|
|
|
|
Investment portfolio
|
5.2
|
n/a
|
6.2
|
n/a
|
|
Share of joint ventures
|
5.7
|
n/a
|
6.1
|
n/a
|
|
Combined Portfolio
|
5.2
|
n/a
|
6.2
|
n/a
|
|
|
|
|
|
|
|
1. Refer to
Glossary for definition.
2. Annualised
rental income is annual 'rental income' (as defined in the
Glossary) at the balance sheet date, except that car park and
commercialisation income are included on a net basis (after
deduction for operational outgoings). Annualised rental income
includes temporary lettings.
3. Net estimated
rental value is gross estimated rental value, as defined in the
Glossary, after deducting expected rent payable.
4. Comprises the
development pipeline - refer to Glossary for definition.
5. Net initial
yield - refer to Glossary for definition. This calculation includes
all properties including those sites with no income.
6. Equivalent
yield - refer to Glossary for definition. Future developments are
excluded from the calculation of equivalent yield on the Combined
Portfolio.
7. The
like-for-like portfolio - refer to Glossary for
definition.
|
Table 23: Floor Areas
|
|
30 September 2024
Million sq ft
|
|
Central London
|
|
|
|
West End offices
|
|
2.7
|
|
City offices
|
|
1.6
|
|
Retail and other
|
|
1.1
|
|
Total Central London
|
|
5.4
|
|
Major retail
|
|
|
|
Shopping centres
|
|
6.7
|
|
Outlets
|
|
1.0
|
|
Total Major retail
|
|
7.7
|
|
Mixed-use urban
|
|
|
|
London
|
|
0.8
|
|
Other
cities
|
|
2.0
|
|
Total Mixed-use urban
|
|
2.8
|
|
Subscale sectors
|
|
|
|
Leisure
|
|
3.3
|
|
Retail parks
|
|
1.5
|
|
Total Subscale sectors
|
|
4.8
|
|
Total
|
|
20.7
|
Table 24: Reconciliation of segmental
information note to interim reporting for the six months ended 30
September 2023
|
|
|
|
|
|
|
|
Group income statement
£m
|
Joint
ventures(1)
£m
|
Adjustment for non-wholly owned
subsidiaries(2)
£m
|
Total
£m
|
EPRA
earnings
£m
|
Capital and other items
£m
|
|
Rental income
|
312
|
20
|
(4)
|
328
|
328
|
-
|
|
Finance lease interest
|
-
|
-
|
-
|
-
|
-
|
-
|
|
Gross rental income (before rents
payable)
|
312
|
20
|
(4)
|
328
|
328
|
-
|
|
Rents payable
|
(5)
|
-
|
-
|
(5)
|
(5)
|
-
|
|
Gross rental income (after rents
payable)
|
307
|
20
|
(4)
|
323
|
323
|
-
|
|
Service charge income
|
59
|
4
|
(1)
|
62
|
62
|
-
|
|
Service charge expense
|
(68)
|
(5)
|
1
|
(72)
|
(72)
|
-
|
|
Net service charge expense
|
(9)
|
(1)
|
-
|
(10)
|
(10)
|
-
|
|
Other property related income
|
17
|
-
|
-
|
17
|
17
|
-
|
|
Direct property expenditure
|
(52)
|
(2)
|
1
|
(53)
|
(53)
|
-
|
|
Movement in bad and doubtful debt
provision
|
5
|
-
|
-
|
5
|
5
|
-
|
|
Segment net rental income
|
268
|
17
|
(3)
|
282
|
282
|
-
|
|
Other income
|
2
|
-
|
-
|
2
|
2
|
-
|
|
Administrative expenses
|
(37)
|
(1)
|
-
|
(38)
|
(38)
|
-
|
|
Depreciation
|
(2)
|
-
|
-
|
(2)
|
(2)
|
-
|
|
EPRA earnings before interest
|
231
|
16
|
(3)
|
244
|
244
|
-
|
|
Share of post-tax loss from joint
ventures
|
(7)
|
7
|
-
|
-
|
-
|
-
|
|
Loss on disposal of trading
properties
|
(1)
|
-
|
-
|
(1)
|
-
|
(1)
|
|
Loss on disposal of investment
properties(3)
|
(3)
|
-
|
-
|
(3)
|
-
|
(3)
|
|
Net deficit on revaluation of investment
properties
|
(371)
|
(17)
|
13
|
(375)
|
-
|
(375)
|
|
Net development contract income
|
3
|
-
|
-
|
3
|
-
|
3
|
|
Impairment of trading properties
|
(4)
|
-
|
-
|
(4)
|
-
|
(4)
|
|
Depreciation
|
(1)
|
-
|
-
|
(1)
|
-
|
(1)
|
|
Operating (loss)/profit
|
(153)
|
6
|
10
|
(137)
|
244
|
(381)
|
|
Finance income
|
7
|
-
|
2
|
9
|
6
|
3
|
|
Finance expense
|
(47)
|
(6)
|
-
|
(53)
|
(52)
|
(1)
|
|
(Loss)/Profit before tax
|
(193)
|
-
|
12
|
(181)
|
198
|
(379)
|
|
Taxation
|
-
|
-
|
-
|
-
|
|
|
|
(Loss)/Profit for the period
|
(193)
|
-
|
12
|
(181)
|
|
|
1. Reallocation of the share of post-tax loss
from joint ventures reported in the Group income statement to the
individual line items reported in the segmental information
note.
2. Removal of the non-wholly owned share of
results of the Group's subsidiaries. The non-wholly owned
subsidiaries are consolidated at 100% in the Group's income
statement, but only the Group's share is included in EPRA earnings
reported in the segmental information note. The non-owned element
of the Group's subsidiaries are included in the 'Capital and other
items' column presented in the Group's income statement, together
with items not directly related to the underlying rental business
such as investment properties valuation changes, profits or losses
on the disposal of investment properties, the proceeds from, and
costs of, the sale of trading properties, income from and costs
associated with development contracts, amortisation and impairment
of intangibles, and other attributable costs, arising on business
combinations.
Table 25: Lease lengths
|
|
Weighted average unexpired lease term at 30
September 2024
|
|
|
Like-for-like portfolio
|
Like-for-like portfolio, completed developments
and acquisitions
|
|
|
Mean(1)
|
Mean(1)
|
|
|
Years
|
Years
|
|
Central London
|
|
|
|
West End Offices
|
6.4
|
6.4
|
|
City offices
|
7.8
|
7.4
|
|
Retail and other
|
5.8
|
5.4
|
|
Total Central London
|
6.7
|
6.5
|
|
Major retail
|
|
|
|
Shopping centres
|
4.3
|
4.3
|
|
Outlets
|
2.9
|
2.9
|
|
Total Major retail
|
3.9
|
3.9
|
|
Mixed-use urban
|
|
|
|
London
|
n/a
|
7.5
|
|
Major regional cities
|
7.9
|
6.9
|
|
Total Mixed-use urban
|
7.9
|
7.0
|
|
Subscale sectors
|
|
|
|
Leisure
|
10.6
|
10.5
|
|
Retail parks
|
5.6
|
5.6
|
|
Total Subscale sectors
|
8.6
|
8.6
|
|
|
|
|
|
Combined Portfolio
|
6.1
|
6.1
|
1. Mean is the rent weighted average of the
unexpired lease term across all leases (excluding short-term
leases). Term is defined as the earlier of tenant break or
expiry.
Investor information
1. Company website: landsec.com
The Group's half-yearly and annual reports to
shareholders, results announcements and presentations, are
available to view and download from the Company's website. The
website also provides details of the Company's current share price,
the latest news about the Group, its properties and operations, and
details of future events and how to obtain further
information.
2. Registrar: Equiniti Group PLC
Enquiries concerning shareholdings, dividends
and changes in personal details should be referred to the Company's
registrar, Equiniti Limited (Equiniti), in the first instance. They
can be contacted using the details below:
Telephone:
- 0371 384 2128 (from the
UK)
- +44 371 384 2128 (from
outside the UK)
- Lines are ordinarily open
from 08:30 to 17:30, Monday to Friday, excluding UK public
holidays.
Correspondence address:
Equiniti Limited
Aspect House
Spencer Road
Lancing
West Sussex
BN99 6DA
Information on how to manage your shareholding
can be found at https://help.shareview.co.uk.
If you are not able to find the answer to your question within the
general Help information page, a personal enquiry can be sent
directly through Equiniti's secure e-form on their website. Please
note that you will be asked to provide your name, address,
shareholder reference number and a valid e-mail address.
Alternatively, shareholders can view and manage their shareholding
through the Landsec share portal which is hosted by Equiniti -
simply visit https://portfolio.shareview.co.uk
and follow the registration instructions.
3. Shareholder enquiries
If you have an enquiry about the Company's
business or about something affecting you as a shareholder (other
than queries which are dealt with by the Registrar), please email
Investor Relations (see details in 8. below).
4. Share dealing services: https://shareview.co.uk
The Company's shares can be traded through most
banks, building societies and stockbrokers. They can also be traded
through Equiniti. To use their service, shareholders should contact
Equiniti: 0345 603 7037 from the UK. Lines are ordinarily open
Monday to Friday 08:00 to 16:30 for dealing and until 18:00 for
enquiries, excluding UK public holidays.
5. Dividends
The Board has declared a second quarterly
dividend for the year ending 31 March 2025 of 9.4p per ordinary
share which will be paid on 8 January 2025 to shareholders
registered at the close of business on 29 November 2024. This will
be paid wholly as an ordinary dividend. Together with the first
quarterly dividend of 9.2p already paid on 4 October 2024 wholly as
a Property Income Distribution (PID), the first half dividend will
be 18.6p per ordinary share (six months ended 30 September 2023:
18.2p).
6. Dividend related services
Dividend payments to UK shareholders - Dividend
mandates
Dividends are no longer paid by cheque.
Shareholders whose dividends have previously been paid by cheque
will need to have their dividends paid directly into their personal
bank or building society account or alternatively participate in
our Dividend Reinvestment Plan (see below) to receive dividends in
the form of additional shares. To facilitate this, please contact
Equiniti or complete a mandate instruction available on our
website: landsec.com/investors and return it to Equiniti.
Dividend payments to overseas shareholders -
Overseas Payment Service (OPS)
Dividends are no longer paid by cheque.
Shareholders need to request that their dividends be paid directly
to a personal bank account overseas. For more information, please
contact Equiniti or download an application form online at
https://shareview.co.uk.
Dividend Reinvestment Plan (DRIP)
A DRIP is available from Equiniti. This
facility provides an opportunity by which shareholders can
conveniently and easily increase their holding in the Company by
using their cash dividends to buy more shares. Participation in the
DRIP will mean that your dividend payments will be reinvested in
the Company's shares and these will be purchased on your behalf in
the market on, or as soon as practical after, the dividend payment
date.
You may only participate in the DRIP if you are
resident in the UK.
For further information (including terms and
conditions) and to register for any of these dividend-related
services, simply visit www.shareview.co.uk.
7. Investor relations enquiries
For investor relations enquiries, please
contact Edward Thacker, Head of Investor Relations at Landsec, by
telephone on +44 (0)20 7413 9000 or by email at
enquiries@landsec.com.
Glossary
Adjusted net cash inflow from operating
activities
Net cash inflow from operating activities
including the Group's share of our joint ventures' net cash inflow
from operating activities.
Adjusted net debt
Net debt excluding cumulative fair value
movements on interest-rate swaps and amounts payable under head
leases. It generally includes the net debt of subsidiaries and
joint ventures on a proportionate basis.
Book value
The amount at which assets and
liabilities are reported in the financial statements.
Combined Portfolio
The Combined Portfolio comprises the investment
properties of the Group's subsidiaries, on a proportionately
consolidated basis when not wholly owned, together with our share
of investment properties held in our joint ventures.
Developments/development pipeline
Development pipeline consists of future
developments, committed developments, projects under construction
and developments which have reached practical completion within the
last two years but are not yet 95% let.
Development gross yield on total development
cost
Gross ERV, before adjustment for lease
incentives, divided by total development cost. Gross ERV reflects
Landsec's or the valuer's view of expected ERV at completion of the
scheme.
EPRA earnings
Profit before tax, excluding profits on the
sale of non-current assets and trading properties, profits on
development contracts, valuation movements, fair value movements on
interest-rate swaps and similar instruments used for hedging
purposes, debt restructuring charges, and any other items of an
exceptional nature.
EPRA loan-to- value (LTV)
Ratio of adjusted net debt, including net
payables, to the sum of the net assets, including net receivables,
of the Group, its subsidiaries and joint ventures, all on a
proportionate basis, expressed as a percentage. The calculation
includes trading properties at fair value and debt at nominal
value.
EPRA net disposal value (NDV) per
share
Diluted net assets per share adjusted to remove
the impact of goodwill arising as a result of deferred tax, and to
include the difference between the fair value and the book value of
the net investment in tenant finance leases and fixed interest rate
debt.
EPRA net initial yield
EPRA net initial yield is defined within EPRA's
Best Practice Recommendations as the annualised rental income based
on the cash rents passing at the balance sheet date, less
non-recoverable property operating expenses, divided by the gross
market value of the property. It is consistent with the net initial
yield calculated by the Group's external valuer.
EPRA Net Reinstatement Value (NRV) per
share
Diluted net assets per share adjusted to remove
the cumulative fair value movements on interest-rate swaps and
similar instruments, the carrying value of deferred tax on
intangible assets and to include the difference between the fair
value and the book value of the net investment in tenant finance
leases and add back purchasers' costs.
EPRA Net Tangible Assets (NTA) per
share
Diluted net assets per share adjusted to remove
the cumulative fair value movements on interest-rate swaps and
similar instruments, the carrying value of goodwill arising as a
result of deferred tax and other intangible assets, deferred tax on
intangible assets and to include the difference between the fair
value and the book value of the net investment in tenant finance
leases.
Equivalent yield
Calculated by the Group's external valuer,
equivalent yield is the internal rate of return from an investment
property, based on the gross outlays for the purchase of a property
(including purchase costs), reflecting reversions to current market
rent and such items as voids and non-recoverable expenditure but
ignoring future changes in capital value. The calculation assumes
rent is received annually in arrears.
ERV - Gross estimated rental value
The estimated market rental value of lettable
space as determined biannually by the Group's external valuer. For
investment properties in the development programme, which have not
yet reached practical completion, the ERV represents management's
view of market rents.
Gearing
Total borrowings, including bank overdrafts,
less short-term deposits, corporate bonds and cash, at book value,
plus cumulative fair value movements on financial derivatives as a
percentage of total equity. For adjusted gearing, see note
13.
Gross market value
Market value plus assumed usual purchaser's
costs at the reporting date.
Interest Cover Ratio (ICR)
A calculation of a company's ability to meet
its interest payments on outstanding debt. It is calculated using
EPRA earnings before interest, divided by net interest (excluding
the mark-to-market movement on interest-rate swaps, foreign
exchange swaps, capitalised interest and interest on the pension
scheme assets and liabilities).
Investment portfolio
The investment portfolio comprises the
investment properties of the Group's subsidiaries on a
proportionately consolidated basis where not wholly
owned.
Lease incentives
Any incentive offered to occupiers to enter
into a lease. Typically, the incentive will be an initial rent-free
period, or a cash contribution to fit-out or similar costs. For
accounting purposes, the value of the incentive is spread over the
non-cancellable life of the lease.
Like-for-like portfolio
The like-for-like portfolio includes all
properties which have been in the portfolio since 1 April 2021 but
excluding those which are acquired or sold since that date.
Properties in the development pipeline and completed developments
are also excluded.
Loan-to-value (LTV)
Group LTV is the ratio of adjusted net debt,
including subsidiaries and joint ventures, to the sum of the market
value of investment properties and the book value of trading
properties of the Group, its subsidiaries and joint ventures, all
on a proportionate basis, expressed as a percentage. For the
Security Group, LTV is the ratio of net debt lent to the Security
Group divided by the value of secured assets.
Market value
Market value is determined by the Group's
external valuer, in accordance with the RICS Valuation Standards,
as an opinion of the estimated amount for which a property should
exchange on the date of valuation between a willing buyer and a
willing seller in an arm's-length transaction after proper
marketing.
Net initial yield
Net initial yield is a calculation by the
Group's external valuer of the yield that would be received by a
purchaser, based on the Estimated Net Rental Income expressed as a
percentage of the acquisition cost, being the market value plus
assumed usual purchasers' costs at the reporting date. The
calculation is in line with EPRA guidance. Estimated Net Rental
Income is determined by the valuer and is based on the passing cash
rent less rent payable at the balance sheet date, estimated
non-recoverable outgoings and void costs including service charges,
insurance costs and void rates.
Net rental income
Net rental income is the net operational income
arising from properties, on an accruals basis, including rental
income, finance lease interest, rents payable, service charge
income and expense, other property related income, direct property
expenditure and bad debts. Net rental income is presented on a
proportionate basis.
Net zero carbon building
A building for which an overall balance has
been achieved between carbon emissions produced and those taken out
of the atmosphere, including via offset arrangements. This relates
to operational emissions for all buildings while, for a new
building, it also includes supply-chain emissions associated with
its construction.
Passing rent
The estimated annual rent receivable as at the
reporting date which includes estimates of turnover rent and
estimates of rent to be agreed in respect of outstanding rent
review or lease renewal negotiations. Passing rent may be more or
less than the ERV (see over-rented, reversionary and ERV). Passing
rent excludes annual rent receivable from units in administration
save to the extent that rents are expected to be received. Void
units at the reporting date are deemed to have no passing rent.
Although temporary lets of less than 12 months are treated as void,
income from temporary lets is included in passing rents.
Property Income Distribution (PID)
A PID is a distribution by a REIT to its
shareholders paid out of qualifying profits. A REIT is required to
distribute at least 90% of its qualifying profits as a PID to its
shareholders.
Rental income
Rental income is as reported in the income
statement, on an accruals basis, and adjusted for the spreading of
lease incentives over the term certain of the lease in accordance
with IFRS 16 (previously, SIC-15). It is stated gross, prior to the
deduction of ground rents and without deduction for operational
outgoings on car park and commercialisation activities.
Reversionary or under-rented
Space where the passing rent is below the
ERV.
Reversionary yield
The anticipated yield to which the initial
yield will rise (or fall) once the rent reaches the ERV.
Security Group
Security Group is the principal funding vehicle
for the Group and properties held in the Security Group are
mortgaged for the benefit of lenders. It has the flexibility to
raise a variety of different forms of finance.
Topped-up net initial yield
Topped-up net initial yield is a calculation by
the Group's external valuer. It is calculated by making an
adjustment to net initial yield in respect of the annualised cash
rent foregone through unexpired rent-free periods and other lease
incentives. The calculation is consistent with EPRA
guidance.
Total return on equity
Dividend paid per share in the year plus the
change in EPRA Net Tangible Assets per share, divided by EPRA Net
Tangible Assets per share at the beginning of the year.
Total cost ratio
Total cost ratio represents all costs included
within EPRA earnings, other than rents payable, financing costs and
provisions for bad and doubtful debts, expressed as a percentage of
gross rental income before rents payable adjusted for costs
recovered through rents but not separately invoiced.
Total development cost (TDC)
Total development cost refers to the book value
of the site at the commencement of the project, the estimated
capital expenditure required to develop the scheme from the start
of the financial year in which the property is added to our
development programme, together with capitalised interest, being
the Group's borrowing costs associated with direct expenditure on
the property under development. Interest is also capitalised on the
purchase cost of land or property where it is acquired specifically
for redevelopment. The TDC for trading property development schemes
excludes any estimated tax on disposal.
Trading properties
Properties held for trading purposes and shown
as current assets in the balance sheet.
Vacancy rates
Vacancy rates are expressed as a percentage of
ERV and represent all unlet space, including vacant properties
where refurbishment work is being carried out and vacancy in
respect of pre-development properties, unless the scale of
refurbishment is such that the property is not deemed lettable. The
screen at Piccadilly Lights, W1 is excluded from the vacancy rate
calculation as it will always carry advertising although the number
and duration of our agreements with advertisers will
vary.
Valuation surplus/deficit
The valuation surplus/deficit represents the
increase or decrease in the market value of the Combined Portfolio,
adjusted for net investment and the effect of accounting for lease
incentives under IFRS 16 (previously SIC-15). The market value of
the Combined Portfolio is determined by the Group's external
valuer.
Voids
Voids are expressed as a percentage of ERV and
represent all unlet space, including voids where refurbishment work
is being carried out and voids in respect of pre-development
properties. Temporary lettings for a period of one year or less are
also treated as voids. The screen at Piccadilly Lights, W1 is
excluded from the void calculation as it will always carry
advertising although the number and duration of our agreements with
advertisers will vary. Commercialisation lettings are also excluded
from the void calculation.
Weighted average unexpired lease
term
The weighted average of the unexpired term of
all leases other than short-term lettings such as car parks and
advertising hoardings, temporary lettings of less than one year,
residential leases and long ground leases.