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SHB Shaftesbury Plc

421.60
0.00 (0.00%)
28 Mar 2024 - Closed
Delayed by 15 minutes
Share Name Share Symbol Market Type Share ISIN Share Description
Shaftesbury Plc LSE:SHB London Ordinary Share GB0007990962 ORD 25P
  Price Change % Change Share Price Bid Price Offer Price High Price Low Price Open Price Shares Traded Last Trade
  0.00 0.00% 421.60 419.00 420.20 0.00 00:00:00
Industry Sector Turnover Profit EPS - Basic PE Ratio Market Cap
0 0 N/A 0

Shaftesbury PLC Shaftesbury 2018 Half Year Results (7852O)

22/05/2018 11:43am

UK Regulatory


Shaftesbury (LSE:SHB)
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RNS Number : 7852O

Shaftesbury PLC

22 May 2018

SHAFTESBURY 2018 HALF YEAR RESULTS

Growth in income, earnings, dividend and NAV

Shaftesbury, the Real Estate Investment Trust and owner of a 14.9 acre property portfolio in the heart of London's West End, today announces its results for the six months ended 31 March 2018.

Highlights

 
 
               *    The West End remains largely insulated from the 
                    economic impact of national short- and longer-term 
                    uncertainties and challenges. 
 
 
               *    Trading and footfall remains good across our 
                    locations. 
 
 
               *    Further rental growth resulting from sustained 
                    occupier demand across all uses. Vacancy remains low. 
 
 
 
               *    Good letting progress with our three larger schemes 
                    with 62% now let or under offer. 
 
 
 
               *    Strong growth in contracted income drives further 
                    growth in earnings. 
 
 
 
               *    Profit after tax increased by 20.8% to GBP123.7m. 
                    EPRA earnings(2) : GBP25.0m, +9.6%. 
 
 
               *    Interim dividend increase: 5.1% to 8.3p per share. 
                    Fully covered by EPRA earnings per share(2) . 
 
 
               *    EPRA NAV(2) : GBP9.83. Growth of 3.3% over six months 
                    driven by portfolio valuation growth(2,5) of 3.0%. 
                    Growth over 12 months: EPRA NAV(2) +7.8%, portfolio 
                    valuation(2,5) +8.0%. 
 
 
               *    Portfolio investment: GBP132.3m including 
                    acquisitions in Carnaby and Seven Dials (GBP117.4m) 
                    and schemes across 153,000 sq. ft. (GBP14.9m) 
 
 
               *    Equity issue raised GBP260.4m providing resources to 
                    grow and invest in our portfolio whilst maintaining 
                    appropriate debt levels for our long-term, accretive 
                    investment strategy. 
 
 
               *    Revolving credit facilities extended and refinanced. 
                    Earliest maturity now 2022. 
------------------------------------------------------------------------- 
 

Brian Bickell, Chief Executive, commented:

"Our results for the half year ended 31 March 2018, which show continuing growth in rental income, EPRA earnings, and NAV, demonstrate the successful and innovative approach we bring to the management of our portfolio, and the breadth of appeal and resilience of London's West End.

The West End economy has been largely unaffected by business and consumer uncertainty following the 2016 EU referendum and the structural challenges facing national retail and restaurant chains. Interest in our space is good and occupancy remains high with occupiers recognising that the West End has a broad appeal to domestic and international businesses and visitors, as well as its large local working population, and a generally less price-sensitive customer base.

We are confident that our exceptional portfolio, located in the centre of one of the world's leading global cities, managed by an experienced and enthusiastic team and supported by robust finances, is well-placed to continue to deliver excellent long-term returns for shareholders."

Growth in income, earnings, dividend and NAV

 
                                                      Six months ended 
 Statement of Comprehensive Income                31.3.2018  31.3.2017   Change 
--------------------------------------  -------  ----------  ---------  ------- 
 Reported results 
 Net property income                      GBPm         46.2       43.8    +5.5% 
 Profit after tax                         GBPm        123.7      102.4   +20.8% 
 Basic earnings per share                Pence         41.7       36.7   +13.6% 
 Interim dividend per share              Pence          8.3        7.9    +5.1% 
 Total distribution for the financial 
  period                                  GBPm         25.5       22.0   +15.9% 
 EPRA results(1,2) 
 Earnings                                 GBPm         25.0       22.8    +9.6% 
 Earnings per share                      Pence          8.4        8.2    +2.4% 
--------------------------------------  -------  ----------  ---------  ------- 
 

-- Dividend fully covered by EPRA earnings per share(1,2) and adjusted earnings per share(2,3) .

 
 Balance Sheet                           31.3.2018  30.9.2017   Change 
------------------------------  ------  ----------  ---------  ------- 
 Reported 
 Net assets                      GBPm        3,006      2,647   +13.6% 
 Net asset value per share(2)     GBP         9.78       9.49    +3.1% 
 EPRA(1,2) 
 Net assets                      GBPm        3,024      2,665   +13.5% 
 Net asset value per share        GBP         9.83       9.52    +3.3% 
------------------------------  ------  ----------  ---------  ------- 
 

-- Net asset value return(2) for six months ended 31.3.2018: 4.1% (12 months to 31.3.2018: 9.0%).

Occupier demand remains healthy

-- Commercial lettings, lease renewals and rent reviews(4) (rental value: GBP10.9 million) concluded at an average of 4.2% above 30 September 2017 ERV and 7.6% above ERV at 31 March 2017.

-- Excluding larger schemes, EPRA vacancy(4) at 31 March 2018: 2.8% of ERV, of which 1.3% was under offer.

Good progress with larger schemes

-- 62% by ERV is now let or under offer at our three larger schemes.

- Thomas Neal's Warehouse: terms agreed and expect to conclude lease shortly.

- Central Cross: restaurant space all let or under offer; retail space with an ERV of GBP0.2m under offer.

- 57 Broadwick Street: retail and restaurant space fully let. Office and residential elements completed in April 2018. 57% of office space now let.

Growth in portfolio value(2,7) , contracted rents and ERV

-- Portfolio valuation(2,7) : GBP3.86 billion. Like-for-like growth(2) over the six months: +3.0% (12 months to 31.3.2018: +8.0%).

-- Current annualised income(7) : GBP121.5 million (30.9.2017: GBP114.1 million). Like-for-like growth over six months: +3.7% (12 months to 31.3.2018: +5.6%). 10-year CAGR(5) : 5.3%.

-- ERV(7) increased by GBP6.2 million to GBP150.7 million. Like-for-like growth over six months: +1.4% (12 months to 31.3.2018: +3.0%). CAGR(5) over 10 years: 4.0%.

-- Portfolio reversionary potential(7) : GBP29.2 million, 24.0% above current annualised income.

-- Equivalent yields:

- Wholly-owned portfolio: 3.41% (30.9.2017: 3.46%);

- Longmartin joint venture: 3.80% (30.9.2017: 3.80%).

Further investment in our portfolio

-- Acquisitions during the first half: GBP117.4 million, including the freehold of 72 Broadwick Street, Carnaby and six buildings in Neal Street, Seven Dials.

-- Acquisition of 35 and 36 Great Marlborough Street, Carnaby, for GBP22.7 million (incl. costs) secured since 31 March 2018.

-- Forward-purchase of 90-104 Berwick Street, for GBP41 million (incl. costs) now expected to complete in spring 2019, as a result of delayed completion of the vendor's redevelopment scheme.

-- Redevelopment and refurbishment schemes(4) during the period across 153,000 sq. ft. (8.4% of floor space). Capital expenditure(4) : GBP14.9 million. Our share of capital expenditure in the Longmartin joint venture: GBP1.2 million.

- Projects with an ERV of GBP5.0 million completed in the period. New schemes (ERV: GBP2.7 million) commenced.

- Space extending to 93,300 sq. ft. (representing 4.8% of ERV) being held for, or under, refurbishment at 31 March 2018.

- Continuing to identify further asset management initiatives across the portfolio to increase rental potential and unlock value.

-- Selective disposals of non-core assets: GBP12.9 million, 48.3% above book value at 30 September 2017.

Financing arrangements to support growth and development of the business over the long term

-- Share placing in December 2017 at GBP9.52 per share raised GBP260.4 million (net of expenses).

-- Revolving credit facilities extended and refinanced. Earliest maturity now 2022.

-- Loan-to-value ratio(2,6,7) : 21.7% (30.9.2017: 26.7%).

-- Weighted average maturity of debt(2,7) : 10.7 years (30.9.2017: 10.3 years).

-- Blended cost of debt(2,6,7) : 3.2% (30.9.2017: 3.3%). Marginal cost on unutilised facilities: 1.5%.

21 May 2018

For further information:

 
 Shaftesbury PLC 020 7333 8118     RMS Partners 020 3735 6551 
  Brian Bickell, Chief Executive    Simon Courtenay 
  Chris Ward, Finance Director 
                                   MHP Communications 020 3128 8100 
                                    Oliver Hughes/Reg Hoare 
 

Shaftesbury PLC LEI: 213800N7LHKFNTDKAT98

   1.      Calculated in accordance with EPRA Best Practice Recommendations. 

2. An alternative performance measure ("APM"). The Group uses a number of measures to assess and explain its performance, some of which are considered to be APMs as they are not defined under IFRS. See below.

   3.      After adding back the non-cash accounting charge for share options. 
   4.      Wholly-owned portfolio. 
   5.      Like-for-like. 
   6.      Based on net debt. 
   7.      Includes 50% of the Longmartin joint venture. 

See Glossary of terms below.

This announcement includes inside information.

There will be a presentation to equity analysts at 9.30am on Tuesday 22 May 2018, at The London Stock Exchange, 10 Paternoster Square, London EC4M 7LS.

There is a live audio webcast of the analyst presentation which you can access via the following link: https://bit.ly/2I6Oe5X or from our website. A playback facility of this presentation will be available on the Group's website www.shaftesbury.co.uk by the end of the day. The presentation document is available on the Group's website www.shaftesbury.co.uk

About Shaftesbury

Shaftesbury is a Real Estate Investment Trust, which invests exclusively in the liveliest parts of London's West End. Our objective is to deliver long-term growth in rental income, capital values and shareholder returns.

Focussed on restaurants, leisure and retail, our exceptional portfolio now extends to 14.9 acres, clustered mainly in Carnaby, Seven Dials and Chinatown, with substantial ownerships in east and west Covent Garden, Soho and Fitzrovia. In addition, we have a 50% interest in the Longmartin joint venture with The Mercers' Company, which has a long leasehold interest, extending to 1.9 acres, in St Martin's Courtyard in Covent Garden.

Our proven management strategy is to create and foster distinctive, attractive and prosperous locations. It is implemented by an experienced management team with an innovative approach to long-term, sustainable income and value creation, and a focus on shareholder returns. We have a strong balance sheet and conservative leverage.

Forward-looking statements

This document may contain certain 'forward-looking' statements. By their nature, forward-looking statements involve risk and uncertainty because they relate to future events and circumstances. Actual outcomes and results may differ materially from any outcomes or results expressed or implied by such forward-looking statements.

Any forward-looking statements made by, or on behalf of, Shaftesbury PLC speak only as of the date they are made and no representation or warranty is given in relation to them, including as to their completeness or accuracy or the basis on which they were prepared. Shaftesbury PLC does not undertake to update forward-looking statements to reflect any changes in its expectations with regard thereto or any changes in events, conditions or circumstances on which any such statement is based.

Information contained in this document relating to Shaftesbury PLC or its share price, or the yield on its shares, should not be relied upon as an indicator of future performance.

Ends.

Half year results

Introduction

Our results for the half year ended 31 March 2018, which show continuing growth in rental income, EPRA earnings, and NAV, demonstrate the successful and innovative approach we bring to the management of our exceptional portfolio, and the breadth of appeal and resilience of London's West End as a destination for domestic and international visitors and business.

Our income and earnings have continued to rise, reflected in an increased interim dividend of 8.3 pence per share, up 5.1% on last year. With a greater number of shares in issue, the total distribution will be GBP25.5 million, 15.9% higher than last year.

During the period, we have made considerable progress in securing occupiers for our larger schemes in Chinatown, Carnaby and Seven Dials, as well as concluding over GBP15 million of leasing transactions across our portfolio. We have completed important additions to our ownerships, totalling GBP117.4 million.

Our recent equity issue, which raised GBP260.4 million, was well-supported by shareholders and has provided us with the financial resources to continue to grow and invest in our portfolio, whilst ensuring debt is maintained at a level the Board considers appropriate for our long-term, accretive investment strategy, and avoiding the risks associated with excessive leverage. Also, we have refinanced and extended the maturities of our revolving bank facilities, further improving the robustness of our balance sheet.

Our focus

We focus on restaurants, leisure and retail. In the West End, there is a long history of sustained demand for this space but a number of structural factors limit its availability, which has resulted in low vacancy and non-cyclical, long-term rental growth.

Extending to 1.1 million sq. ft., our 283 restaurants, cafés and pubs and 304 shops are mainly of medium or small size and provide 36% and 32% of our current annualised income, respectively. Generally, we choose mid-market, innovative and accessible concepts, rather than luxury or value-led shops and restaurants. This variety of interesting dining, leisure and retail brands gives our destinations a distinctive identity and provides visitors with an experience unmatched by other areas.

Typically, the upper floors in our buildings comprise small offices and rental apartments, which provide 18% and 14% of our current annualised income, respectively. These bring working and residential communities, providing regular customers for our restaurants, cafés, pubs and shops.

Current trading environment

The combination of the unique features of London, the West End and our portfolio have, in our long experience, provided a considerable degree of insulation from the economic impact of national short- and longer-term uncertainties and challenges.

Currently, unsettled sentiment since the EU referendum in June 2016 is continuing to adversely affect business and consumer confidence. In addition, national retail and restaurant chains are also having to address the structural implications of changing spending patterns and developments in technology. Inevitably they are cautious in their investment plans, with some permanently scaling back their operations.

In contrast, the West End economy has been largely unaffected by these current, widely-reported concerns. Whilst we have seen an increase in the time taken to complete lettings, interest in our space is good and occupancy remains high with occupiers recognising that the West End has a broad appeal to domestic and international businesses and visitors, as well as its large local working population, and a generally less price-sensitive customer base. Forecasts indicate continuing growth in inbound visitor numbers, and the expected inauguration of the Elizabeth Line in December will, in the years ahead, greatly improve accessibility to the West End. Together, they are expected to bring a sustained increase in the estimated 200 million visits the West End already receives annually.

Our proven and ever-evolving strategy curates and fosters lively and distinctive destinations, which draw visitors and spending in huge and growing numbers. We create prosperous trading environments for our 587 shops, restaurants, cafés and pubs, which, in turn, supports our ability to deliver long-term rental growth. In our locations, our restaurants, cafés, bars and shops are reporting year-on-year sales growth and we continue to see healthy interest for space from businesses keen to locate with us.

Leasing activity

Leasing activity levels have remained high during the six months ended 31 March 2018. Across the wholly-owned portfolio, we have concluded lettings, renewals and rent reviews with a rental value of GBP15.3 million (31.3.2017: GBP13.9 million), equating to 11.4% of ERV at 30 September 2017.

Commercial leasing transactions totalled GBP10.9 million (31.3.2017: GBP9.3 million) and residential lettings and renewals amounted to GBP4.4 million (31.3.2017: GBP4.6 million). Rents for commercial uses were, on average, 4.2% above ERV at 30 September 2017 and 7.6% ahead of ERV twelve months ago.

At 31 March 2018, space with a rental value of GBP3.5 million was under offer.

 
                                                                        Six months 
                               Six months ended 31.3.2018          ended 31.3.2017 
                        ---------------------------------------- 
                         GBPm                                                 GBPm 
----------------------  -----  ---------------------------------  ---------------- 
Commercial 
Lettings and renewals     7.1    +2.5% vs 30.9.2017 ERV                        3.9 
                                 +24.5% vs previous rent (5-year 
Rent reviews              3.8     CAGR: +4.5%)                                 5.4 
                        -----                                     ---------------- 
                         10.9    +4.2% vs 30.9.2017 ERV                        9.3 
Residential 
Lettings and renewals     4.4    -0.5% vs previous rent                        4.6 
                        -----                                     ---------------- 
Total                    15.3                                                 13.9 
----------------------  -----  ---------------------------------  ---------------- 
 

Our share of leasing transactions in the Longmartin joint venture was GBP0.4 million (31.3.2017: GBP3.0 million).

Portfolio review

Lower floors - 68% of current income(1)

 
                          Restaurants, cafés   Retail 
                                      and leisure 
-----------------------  ------------------------  ------- 
% of current income(1)                        36%      32% 
Number                                        283      304 
Area (sq. ft.)                            602,000  477,000 
-----------------------  ------------------------  ------- 
 
   1.   Wholly-owned portfolio 
   --      Restaurants, cafés and leisure 

The exceptional variety of restaurants, cafés and leisure choices in the West End are important to its economy, bringing footfall and spending. With 283 restaurants, cafés and pubs, we are the largest single provider of dining and leisure space in the West End. Our ownerships include high-profile and busy destinations such as Chinatown, Kingly Court, Neal's Yard and the Opera Quarter. The majority of our restaurants offer casual all-day dining, with a focus on experience and quality.

Despite a national slowdown in dining and leisure spending, we continue to see healthy trading across our areas. Availability of restaurant space in the West End is constrained by a restrictive planning environment, and the reluctance of existing occupiers to give up their valuable space other than for significant premiums. Against this backdrop of limited supply, occupier demand is good, with operators attracted by exceptional footfall, seven days a week, and a relatively affluent customer base. Competition for available space continues to be strong, and occupancy levels remain high. At 31 March 2018, all our available-to-let restaurant, café and leisure space (ERV: GBP1.3 million) was under offer.

The 79 restaurants, cafés and bars we own in Chinatown, close to the West End's major entertainment venues, represent approximately one-third, by floor space, of our total ownership of these valuable uses. In this exceptionally busy location, notable for its long hours of trading, our strategy is to improve the variety of the dining offer, whilst maintaining its authentic Chinese and East Asian character and affordability. We are taking opportunities, as they arise, to secure vacant possession of buildings and improve the layout of space on lower floors whilst introducing new uses on upper floors. Demand for this refurbished space is strong and is enabling us to introduce exciting, new concepts. The new restaurants and cafés, and associated public realm works, at our Central Cross scheme (see below) are important additions to Chinatown's offer and appeal.

During the period, we completed leasing transactions in the wholly-owned portfolio with a rental value of GBP5.2 million (31.3.2017: GBP4.5 million).

 
                                                                       Six months 
                               Six months ended 31.3.2018         ended 31.3.2017 
                         ------------------------------------- 
                                   Rental value 
                          Number           GBPm   % of use ERV       % of use ERV 
                         -------  -------------  -------------  ----------------- 
 Lettings and renewals        15            2.8           5.9%               2.4% 
 Rent reviews                 15            2.4           5.0%               7.6% 
                         -------  -------------  -------------  ----------------- 
                              30            5.2          10.9%              10.0% 
-----------------------  -------  -------------  -------------  ----------------- 
 

There were no restaurant or café leasing transactions in the Longmartin joint venture during the six months ended 31 March 2018 (31.3.2017: GBP0.9 million).

   --      Retail 

Our 304 shops, the majority of which are in Carnaby and Seven Dials, make an important contribution to the West End as a leading shopping destination.

With the wide range of shop sizes and rental levels across our buildings and streets, we can provide space for a diverse range of retail formats including start-ups, new brands and international flagships, focussing on interesting, innovative and experiential concepts. Also, we can offer retailers flexibility to expand, relocate, or introduce new ideas and collaborations. Importantly, in our high-footfall and spending locations, rental levels remain affordable compared with nearby streets.

Despite continued headwinds and challenges across the retail sector, our tenants continue to trade well. We remain innovative and flexible in the terms we offer and are continuing to see good interest for the smaller space we typically have to offer, both from domestic and overseas retailers. During the period, we completed leasing transactions with an ERV of GBP2.9 million (31.3.2017: GBP2.9 million).

 
                                                                       Six months 
                               Six months ended 31.3.2018         ended 31.3.2017 
                         ------------------------------------- 
                                   Rental value 
                          Number           GBPm   % of use ERV       % of use ERV 
                         -------  -------------  -------------  ----------------- 
 Lettings and renewals        18            2.4           5.1%               2.2% 
 Rent reviews                  5            0.5           1.1%               4.1% 
                         -------  -------------  -------------  ----------------- 
                              23            2.9           6.2%               6.3% 
-----------------------  -------  -------------  -------------  ----------------- 
 

Our share of lettings and rent reviews in the Longmartin joint venture was GBP50,000 (31.3.2017: GBP0.5 million).

Upper floors - 32% of current income(1)

 
                          Offices   Residential 
-----------------------  --------  ------------ 
% of current income(1)        18%           14% 
Number                                      578 
Area (sq. ft.)            452,000       356,000 
-----------------------  --------  ------------ 
 
   1.   Wholly-owned portfolio 
   --      Offices 

We are an important provider of small, flexible office space in the core West End. At 31 March 2018, we owned 452,000 sq. ft. of office space, a net increase of 49,000 sq. ft. since 30 September 2017, due to the purchase of 72 Broadwick Street, Carnaby (see below), partly offset by further conversion of space to other uses. With 238 tenants, the average letting across our portfolio is 1,650 sq. ft. at GBP56 per sq. ft. (30.9.2017: GBP55 per sq. ft.). Average ERVs are GBP64 per sq. ft. (30.9.2017: GBP61 per sq. ft.).

Occupier demand for our space remains good, particularly from SME media, fashion, creative and tech businesses. Availability of this type of space remains low across our locations and, whilst we have seen a small increase in incentive levels, rental tones for our modestly-priced space have increased marginally and occupancy levels have been high.

During the period, wholly-owned office lettings, renewals and rent reviews with a rental value of GBP2.8 million were completed (31.3.2017: GBP1.9 million).

 
                                                                         Six months 
                               Six months ended 31.3.2018           ended 31.3.2017 
                         ------------------------------------- 
                                   Rental value 
                          Number           GBPm   % of use ERV       % of use ERV 
                         -------  -------------  -------------  ----------------- 
 Lettings and renewals        20            1.9           6.6%               7.2% 
 Rent reviews                  3            0.9           3.1%               0.4% 
                         -------  -------------  -------------  ----------------- 
                              23            2.8           9.7%               7.6% 
-----------------------  -------  -------------  -------------  ----------------- 
 

Our share of office lettings and rent reviews in the Longmartin joint venture was GBP0.2 million (31.3.2017: GBP1.4 million).

   --      Residential 

Demand to rent our 578 mid-market apartments - mainly studios and one or two bedroom flats - remains good.

Lettings and renewals with a rental value of GBP4.4 million were completed in the period (31.3.2017: GBP4.6 million). Whilst rents achieved were 0.5% below previous levels, reflecting a greater availability of flats to rent in Central London, occupancy levels have been as high as ever, delivering an important cash flow for the business. Our rolling programme to upgrade apartments continues.

 
                                                                         Six months 
                               Six months ended 31.3.2018           ended 31.3.2017 
                         ------------------------------------- 
                                   Rental value 
                          Number           GBPm   % of use ERV       % of use ERV 
                         -------  -------------  -------------  ----------------- 
 Lettings and renewals       154            4.4          25.7%              28.2% 
-----------------------  -------  -------------  -------------  ----------------- 
 

Our share of residential letting activity in the Longmartin joint venture was GBP0.2 million (31.3.2017: GBP0.2 million).

Vacancy

EPRA vacancy decreased by 0.4% to 5.6% of total ERV over the first half of the year, following letting progress at our larger schemes. Excluding these larger schemes, EPRA vacancy was 2.8%, of which 1.3% was under offer.

EPRA vacancy(1) at 31 March 2018

 
                                                                        % of total ERV 
                     Restaurants, 
                       cafés 
                      and leisure  Shops  Offices  Residential  Total  31.3.18  30.9.17 
                             GBPm   GBPm     GBPm         GBPm   GBPm        %        % 
-------------------  ------------  -----  -------  -----------  -----  -------  ------- 
 
 Larger schemes(2) 
Under offer                   0.8    0.9        -            -    1.7     1.2%     0.2% 
Available-to-let                -    2.2        -            -    2.2     1.6%     3.3% 
                     ------------  -----  -------  -----------  -----  -------  ------- 
                              0.8    3.1        -            -    3.9     2.8%     3.5% 
                     ------------  -----  -------  -----------  -----  -------  ------- 
Other vacancy 
Under offer                   0.5    1.0      0.2          0.1    1.8     1.3%     0.8% 
Available-to-let                -    1.1      1.0          0.1    2.2     1.5%     1.7% 
                     ------------  -----  -------  -----------  -----  -------  ------- 
                              0.5    2.1      1.2          0.2    4.0     2.8%     2.5% 
                     ------------  -----  -------  -----------  -----  -------  ------- 
Total 
Under offer                   1.3    1.9      0.2          0.1    3.5     2.5%     1.0% 
Available-to-let                -    3.3      1.0          0.1    4.4     3.1%     5.0% 
                     ------------  -----  -------  -----------  -----  -------  ------- 
                              1.3    5.2      1.2          0.2    7.9     5.6%     6.0% 
                     ------------  -----  -------  -----------  -----  -------  ------- 
Area ('000 sq. 
 ft.)                          13     83       18            5    119 
-------------------  ------------  -----  -------  -----------  -----  -------  ------- 
 
   1.   Wholly-owned portfolio 
   2.   Thomas Neal's Warehouse, Seven Dials and Central Cross, Chinatown - see also below. 

Other vacancy

Excluding larger schemes, available-to-let vacancy comprised six shops (ERV: GBP1.1 million), 16,100 sq. ft. of office space (ERV: GBP1.0 million) and five apartments (ERV: GBP0.1 million). Space under offer included three restaurants and cafés, six shops, 2,300 sq. ft. of offices and three apartments.

In the Longmartin joint venture, three shops and three apartments were available to let. The ERV of our 50% share of this space was GBP0.5 million.

Progress with our larger schemes

We have made further progress in letting our three larger schemes. At 21 May 2018, the combined ERV of these schemes was GBP7.1 million, of which 62% was let or under offer.

Larger schemes - letting status

 
                                  Completed at    Completed since 
                                    31.3.2018        31.3.2018         Total 
                                    GBPm      %       GBPm       %   GBPm     % 
-------------------------------  -------  -----  ---------  ------  -----  ---- 
 
Completed space - ERV 
Thomas Neal's Warehouse              0.9                 -            0.9 
Central Cross                        3.7                 -            3.7 
57 Broadwick St                      1.0               1.5            2.5 
                                 -------         ---------          ----- 
                                     5.6               1.5            7.1 
                                 -------         ---------          ----- 
ERV let or under offer 
At 31 March 2018                     3.4    61%          -      -%    3.4   48% 
Since 31 March 2018                  0.2     4%        0.8     53%    1.0   14% 
                                 -------  -----  ---------  ------  -----  ---- 
Total let or under offer at 21 
 May 2018                            3.6    65%        0.8     53%    4.4   62% 
-------------------------------  -------  -----  ---------  ------  -----  ---- 
 
   --    Thomas Neal's Warehouse, Seven Dials 

We have agreed terms with an international retailer over the entire space and expect to conclude the lease shortly.

   --    Central Cross, Chinatown 

At 31 March 2018, all of the scheme's restaurant space (ERV: GBP1.5 million) was let or under offer. The ERV of space under offer was GBP0.8 million, of which lettings in respect of GBP0.4 million have subsequently completed.

We are marketing the retail units fronting Charing Cross Road, which extend to 34,500 sq. ft.. At 31 March 2018, all of the space was available to let. Subsequently, we have placed one unit, with an ERV of GBP0.2 million, under offer and discussions continue in respect of the remaining units.

   --      57 Broadwick Street, Carnaby 

Construction of the retail and restaurant accommodation completed in autumn 2017 and the space has been let.

The remainder of the scheme, comprising 15,500 sq. ft. of grade A office accommodation and two new apartments (1,900 sq. ft.), was completed in late April 2018. We have already let 9,000 sq. ft. of the office space (GBP0.8m) and are seeing good interest in the remaining space.

Portfolio investment

 
  Space under refurbishment    Capital expenditure              Acquisitions 
   during the period 
  153,000 sq. ft.              GBP14.9m               GBP117.4m         GBP22.7m 
                                                      6 months ended    Since 31.3.2018 
                                                       31.3.2018 
---------------------------  ---------------------  ----------------  ----------------- 
 

Asset management activity

Capital expenditure in the wholly-owned portfolio during the period totalled GBP14.9 million and included schemes extending to 153,000 sq. ft. (8.4% of wholly-owned floor space).

At 31 March 2018, vacant space held for, or under, refurbishment extended to 93,300 sq. ft. and represented 4.8% of ERV, a decrease of 1.8% over six months. During the period, schemes with an ERV of GBP5.0 million completed, including the restaurant and retail elements of our 57 Broadwick Street project. New schemes with an ERV of GBP2.7 million commenced.

We have a number of other potential projects at various stages from initial ideas, seeking planning consent, or awaiting vacant possession, and continue to identify further opportunities to add to this pipeline.

Vacant space(1) held for, or under, refurbishment at 31 March 2018

 
                                                                              % of total 
                                                                                  ERV 
                    Restaurants, 
                      cafés 
                     and leisure   Shops   Offices   Residential   Total   31.3.18   30.9.17 
                            GBPm    GBPm      GBPm          GBPm    GBPm         %         % 
-----------------  -------------  ------  --------  ------------  ------  --------  -------- 
 
 57 Broadwick 
  St (see above)               -       -       1.4           0.1     1.5      1.1%      1.7% 
 Other schemes               1.5     1.2       1.6           0.9     5.2      3.7%      4.9% 
                   -------------  ------  --------  ------------  ------  --------  -------- 
 Total                       1.5     1.2       3.0           1.0     6.7      4.8%      6.6% 
                   -------------  ------  --------  ------------  ------  --------  -------- 
 
 Area ('000 sq. 
  ft.)                        14      20        39            20      93 
-----------------  -------------  ------  --------  ------------  ------  --------  -------- 
 
 
   1.   Wholly-owned portfolio 

Other schemes

We had 39 other schemes underway at 31 March 2018, extending to 75,900 sq. ft. and representing 3.7% of ERV. These included 14,400 sq. ft. of restaurants and cafés (ERV: GBP1.5 million), 20,400 sq. ft. of shops (ERV: GBP1.2 million), 23,600 sq. ft. of office space (ERV: GBP1.6 million), and 30 apartments either being created or up-graded (ERV: GBP0.9 million).

Longmartin

In the Longmartin joint venture, our share of capital expenditure in the period was GBP1.2 million. At 31 March 2018, the ERV of our 50% share of space held for refurbishment was GBP1.0 million. This included a mixed-use commercial scheme on the corner of Long Acre and Upper St Martin's Lane, as well as space where we have recently secured vacant possession ahead of a project to increase the restaurant space in St Martin's Courtyard.

Public realm improvements

In our experience, investing in the public realm is an important catalyst for long-term growth in footfall.

During the period, the scheme to improve the pedestrian environment on the west section of Earlham Street completed. Together with the recently-completed improvements to Cambridge Circus, we are seeing increased footfall already, and expect this to grow further once the Elizabeth Line opens.

Westminster City Council's public realm scheme in Chinatown, which we are funding, will complete in the summer. The new part-pedestrianised public square in Newport Place will provide a focal point for visitors, and, subject to planning and licensing, will provide the opportunity for al fresco dining for the first time in Chinatown.

Acquisitions

The availability of assets to buy which meet our strict criteria remains limited. However, we continue to identify acquisitions which offer the potential for future rental growth, either individually or through combination with our existing ownerships.

During the six months ended 31 March 2018, we secured acquisitions totalling GBP117.4 million and since then, we have contracted a further purchase for GBP22.7 million (including purchase costs).

72 Broadwick Street, Carnaby

In early December 2017, we acquired the freehold of 72 Broadwick Street, situated at the eastern gateway to Carnaby, for GBP92.2 million.

The Group already owned an ungeared long leasehold interest over 13,900 sq. ft. of retail and a café space in the lower floors of the building. Acquiring the freehold gives the Group control over this important 0.5-acre site, which, in its current configuration, also provides 54,100 sq. ft. of office accommodation, eleven apartments extending to 11,200 sq. ft. and a large basement car park.

Subject to planning and licensing consents, we are looking to create valuable new retail and restaurant space in the lower floors of the building, once the office tenant's lease expires in September 2018. In addition, we will reconfigure and refurbish the remaining office space, and up-grade the residential accommodation. We estimate the scheme will take around two years at a cost of around GBP20 million.

Neal Street, Seven Dials

In late December 2017, we acquired six shops on Neal Street, Seven Dials, for GBP24.4 million. Adjacent to existing holdings, these buildings increase our ownership of frontages on the northern section of Neal Street to around 70%.

Situated close to the Tottenham Court Road Crossrail hub, we expect the northern end of Neal Street to see material footfall growth once the Elizabeth Line service starts in December 2018. Current rental tones on this part of the street are significantly lower than at the southern end. However, with the benefit of growing footfall and our careful curation, we expect this differential in rents will narrow significantly over the medium term.

Great Marlborough Street, Carnaby

Since 31 March 2018, we have exchanged contracts to acquire the freehold of 35 and 36 Great Marlborough Street, for GBP22.7 million (including costs). Located at the busy northern gateway to Carnaby, the buildings comprise two shops (3,000 sq. ft.) and 4,250 sq. ft. of office accommodation on the upper floors.

We are discussing plans with Westminster City Council to improve the streetscape in the vicinity materially. Together with our wider estate management strategy, this will bring sustained growth in medium term rental prospects.

90-104 Berwick Street, Soho (forward purchase)

The forward-purchase of this long leasehold interest in 90-104 Berwick Street, for GBP41 million (including acquisition costs), is now expected to complete in spring 2019, as a result of delayed completion of the vendor's redevelopment scheme.

Located at the southern end of Berwick Street, the development will provide 12,500 sq. ft. of retail, a 5,500 sq. ft. supermarket, a 2,000 sq. ft. restaurant and a 110 bedroom hotel. Both the hotel and supermarket have been pre-let, representing two thirds of the expected income from the property. Following this acquisition, we will own c. 50% of Berwick Street's frontages.

Portfolio valuation

 
 Portfolio valuation(1)            Valuation growth(1,2)                ERV growth(1,2) 
        GBP3.86bn               3.0%             8.0%            1.4%           3.0% 
                              6 months        12 months        6 months       12 months 
------------------------  ---------------  ---------------  -------------  -------------- 
 

1. Including our 50% share of the Longmartin joint venture. See presentation of financial information below.

   2.   Like-for-like. See Glossary for definition. 

Like-for-like valuation increase: 3.0%

At 31 March 2018, the valuation of our portfolio, including our 50% share of the Longmartin joint venture, was GBP3.86 billion. Like-for-like valuation growth over the period was 3.0%, bringing cumulative growth over the year to 31 March 2018 to 8.0%.

The increase over the first half was driven by:

-- strong investor demand for quality, well-located assets with the prospect of high occupancy, growth in rents and cash flows, yet limited exposure to obsolescence;

-- continued improvements we make to accommodation and rental potential in the portfolio through asset management activity. These incremental benefits often have a compound effect across nearby holdings; and

-- sustained occupier demand in our carefully-curated locations exceeding the supply of available space, helping to deliver further growth in contracted rents and rental values.

 
                                                        Annualised 
                                                           current 
                                                                                        Topped-up 
                                                                             Valuation    initial  Equivalent 
                              Fair value         % of       income     ERV   Growth(1)      yield       yield 
                                    GBPm    portfolio         GBPm    GBPm           %          %           % 
---------------------------  -----------  -----------  -----------  ------  ----------  ---------  ---------- 
 Carnaby                           1,396          36%         45.3    56.2       +3.2%      3.02%       3.56% 
 Covent Garden                       997          26%         29.7    36.9       +3.5%      2.73%       3.25% 
 Chinatown                           818          21%         24.6    30.9       +2.7%      2.72%       3.35% 
 Soho                                281           7%          8.9    10.8       +4.5%      2.81%       3.41% 
 Fitzrovia                           146           4%          4.7     5.6       +3.8%      2.88%       3.26% 
                             -----------  -----------  -----------  ------  ----------  ---------  ---------- 
 Wholly-owned portfolio(4)         3,638          94%        113.2   140.4       +3.3%      2.87%       3.41% 
 Longmartin joint 
  venture(2)                         225           6%          8.3    10.3       -1.9%      3.13%       3.80% 
                             -----------  -----------  -----------  ------  ---------- 
 Total portfolio(3,4)              3,863         100%        121.5   150.7       +3.0% 
---------------------------  -----------  -----------  -----------  ------  ----------  ---------  ---------- 
 
   1.   Like-for-like. See Glossary for definition. 
   2.   Our 50% share. 

3. Including our 50% share of the Longmartin joint venture. See presentation of financial information below.

   4.   Portfolio excluding non-core asset acquired as part of a portfolio. 

Continued strong investment demand and limited supply

With economic and political uncertainty, institutional and private investor demand for the best quality assets in the best locations remains strong. The equivalent yield attributed by our valuers to our wholly-owned portfolio was 3.41% (30.9.2017: 3.46%).

Our portfolio, in the heart of the West End, has a history of delivering sustainable rental growth and sector outperformance over the long term. It is therefore unsurprising that existing owners of the types of buildings we seek to acquire remain reluctant to sell in this exceptionally prosperous and resilient area, severely limiting the supply of assets to buy. Together with the strength of investor demand, this means that when assets become available, competition is intense. Having patiently assembled our ownerships over nearly 32 years, it would be virtually impossible, now, to replicate a portfolio such as ours.

The valuation of the geared long leasehold interest held by the Longmartin joint venture showed a reduction of 1.9% over the six months to 31 March 2018. The equivalent yield was unchanged at 3.80%. However, we saw a small reduction in retail ERVs on Long Acre, reflecting a lack of recent letting evidence and a potential increase in availability of large shops in this "high street" location, where rental tones have increased significantly over recent years. Additionally, the valuation takes into account the short-term impact of securing vacant possession of space ahead of a planned restaurant scheme in St Martin's Courtyard.

Potential for greater value

Cushman & Wakefield, independent valuer of our wholly-owned portfolio, has continued to note that:

-- our portfolio is unusual in its substantial number of predominantly restaurant, leisure and retail properties in adjacent, or adjoining, locations in London's West End; and

-- there is a long record of strong occupier demand for these uses in this location and, as a result, high occupancy levels, which underpins the long-term prospects for rental growth.

Consequently, they have reiterated to the Board that some prospective purchasers may recognise the rare and compelling opportunity to acquire, in a single transaction, substantial parts of the portfolio, or the portfolio in its entirety. Such parties may consider a combination of some, or all, parts of the portfolio to have a greater value than currently reflected in the valuation included in these interim results, which has been prepared in accordance with RICS guidelines.

Continuing capture of the reversionary potential

With the benefits of our leasing activity and active asset management strategy, we have continued our long record of converting our portfolio's potential reversion into contracted income and cash flow, whilst further increasing rental values. Annualised current income has increased, on a like-for-like basis, by 3.7% and 5.6% over 6 months and 12 months, respectively.

 
 Rental growth(1,2)                   Annualised                Reversionary 
                             current income(1,2)     ERV(1,2)      potential 
                                            GBPm         GBPm           GBPm 
-------------------------  ---------------------  -----------  ------------- 
 At 30 September 2017                      114.1        144.5           30.4 
 Acquisitions                                3.5          4.6            1.1 
 Disposals                                 (0.3)        (0.4)          (0.1) 
 Like-for-like growth(3)                     4.2          2.0          (2.2) 
                           ---------------------  -----------  ------------- 
 At 31 March 2018                          121.5        150.7           29.2 
                           ---------------------  -----------  ------------- 
 Like-for-like growth(3) 
 - 6 months                                 3.7%         1.4% 
 - 12 months                                5.6%         3.0% 
-------------------------  ---------------------  -----------  ------------- 
 

1. Including our 50% share of the Longmartin joint venture. See presentation of financial information below.

   2.     Portfolio excluding a non-core asset acquired as part of a portfolio. 
   3.     See Glossary for definition. 

Total ERV, which is based on current established rental tones, was assessed by our valuers at GBP150.7 million, 24.0% higher than annualised current income. Like-for-like ERV growth over 6 months was 1.4%, bringing the total for the past 12 months to 3.0%.

Components of the reversionary potential(1)

 
                             Wholly-owned   Longmartin   Total 
                                     GBPm         GBPm    GBPm   How it will be realised 
--------------------------  -------------  -----------  ------  --------------------------------- 
 Contracted income                    2.5            -     2.5   Expiry of rent-free periods 
 EPRA vacancy                         7.9          0.5     8.4   Letting of space 
 Space held for,                                                 Completion and letting of 
  or under, refurbishment             6.7          1.0     7.7    schemes 
                                                                 Through the normal cycle 
                                                                  of rent reviews, lease renewals 
                                                                  and lettings. This is typically 
                                                                  converted to income over 
 Under-rented leases                 10.1          0.5    10.6    a 3 - 5 year period. 
--------------------------  -------------  -----------  ------  --------------------------------- 
                                     27.2          2.0    29.2 
--------------------------  -------------  -----------  ------  --------------------------------- 
 

1. Including our 50% share of the Longmartin joint venture. See presentation of financial information below.

Financial results

 
 Reported results 
  +3.1%(1)          +5.5%(2)         +20.8%(2)        +13.6%(2)    +5.1%(2) 
  GBP9.78           GBP46.2m         GBP123.7m        41.7p        8.3p 
  NAV(3)            Net property     Profit after     Basic EPS    Interim dividend 
                     income           tax 
----------------  ---------------  ---------------  -----------  -------------------- 
 EPRA(3) results 
  +3.3%(1)                           +9.6%(2)         +2.4%(2) 
  GBP9.83           +4.1%            GBP25.0m         8.4p 
  EPRA NAV          NAV return(4)    EPRA earnings    EPRA EPS 
----------------  ---------------  ---------------  -----------  -------------------- 
 
 
   1.   vs. 30.9.2017 
   2.   vs. 6 months ended 31.3.2017 
   3.   An alternative performance measure ("APM"). See below. 
   4.   6 month period ended 31.3.2018 

Presentation of financial information

Our property portfolio is a combination of properties which are wholly owned by the Group and a 50% share of property held in joint venture.

The financial statements, prepared under IFRS, includes the Group's interest in its joint venture as one-line items in the Income Statement and Balance Sheet. The analysis below is based on the IFRS financial statements.

Internally, management consider the valuation of properties and our debt position on a proportionally consolidated basis, including our 50% share of the joint venture. Consequently, the analysis of the valuation above and the finance review below are presented on this proportionally consolidated basis.

We consider that this presentation better explains to stakeholders the Group's activities and financial position. Measures presented on a proportional consolidation basis are alternative performance measures as they are not defined under IFRS. Further details are set out below.

Income statement

 
                                                Six months ended  Year ended 
                                            31.3.2018  31.3.2017   30.9.2017 
                                                 GBPm       GBPm        GBPm 
Net property income                              46.2       43.8        88.3 
Administrative expenses                         (6.8)      (6.8)      (14.1) 
Valuation gains and profits on disposal         101.8       61.9       231.7 
                                           ----------  ---------  ---------- 
Operating profit                                141.2       98.9       305.9 
Net finance costs                              (15.9)     (16.1)      (32.7) 
Interest rate swaps fair value movements            -       16.1        22.0 
Share of Longmartin post-tax results            (1.6)        3.5         6.4 
                                           ----------  ---------  ---------- 
Profit before tax                               123.7      102.4       301.6 
Tax                                                 -          -           - 
                                           ----------  ---------  ---------- 
Reported earnings for the period                123.7      102.4       301.6 
                                           ----------  ---------  ---------- 
Basic earnings per share                        41.7p      36.7p      108.1p 
-----------------------------------------  ----------  ---------  ---------- 
 

Reported earnings

Profit after tax for the six months was GBP123.7 million (31.3.2017: GBP102.4 million) and basic earnings per share was 41.7p (31.3.2017: 36.7p). The increase in profit after tax was largely due to:

-- the revaluation surplus and disposal profits in the wholly-owned portfolio, which contributed GBP101.8 million (31.3.2017: GBP61.9 million); and

-- increased net property income, which contributed GBP46.2 million (31.3.2017: GBP43.8 million).

This was partly offset by a post-tax loss in the joint venture, our share of which reduced earnings by GBP1.6 million in the current period, compared with a profit during the comparable period last year of GBP3.5 million.

Additionally, earnings were boosted in the comparative period last year by a gain on the fair value of interest rate swaps of GBP16.1 million. These swaps were cancelled in September 2017.

EPRA earnings(1)

As is usual practice in our sector, we produce alternative measures for certain indicators, including earnings, making adjustments set out by EPRA in its Best Practice Recommendations. EPRA earnings are a measure of the level of underlying operating results and an indication of the extent to which current dividend payments are supported by recurring earnings. In our case, EPRA earnings exclude valuation movements in respect of our properties, profits on disposal of investment properties, and deferred tax arising in our Longmartin joint venture. In 2017, it also excluded valuation movements in respect of interest rate swaps, which were terminated in September 2017. EPRA earnings are reconciled below.

 
                                                   Six months ended    Year ended 
EPRA earnings(1)                                 31.3.2018  31.3.2017   30.9.2017 
                                                      GBPm       GBPm        GBPm 
----------------------------------------------  ----------  ---------  ---------- 
IFRS profit after tax                                123.7      102.4       301.6 
Adjusted for: 
- Change in value of investment properties          (97.6)     (61.6)     (230.6) 
- Profit on disposal of investment properties        (4.2)      (0.3)       (1.1) 
- Change in fair value of financial 
 instruments                                             -     (16.1)      (22.0) 
Adjustments in respect of the Longmartin 
 joint venture: 
- Change in value of investment properties             4.1      (1.5)       (2.6) 
- Deferred tax                                       (1.0)      (0.1)       (0.1) 
                                                ----------  ---------  ---------- 
EPRA earnings                                         25.0       22.8        45.2 
                                                ----------  ---------  ---------- 
EPRA EPS(1)                                           8.4p       8.2p       16.2p 
----------------------------------------------  ----------  ---------  ---------- 
 
   1.   An alternative performance measure ("APM"). See below. 

EPRA earnings increased by 9.6% to GBP25.0 million (31.3.2017: GBP22.8 million) and EPRA EPS amounted to 8.4p, 2.4% above the first half last year (31.3.2017: 8.2p). The smaller relative increase in EPRA EPS, compared with that for EPRA earnings, reflects the additional shares in issue following the equity placing in December. We expect to deliver further earnings as the placing proceeds are fully deployed.

The increase in EPRA earnings was principally driven by growth in net property income and lower net finance costs, partly offset by lower net property income in the Longmartin joint venture due to reconfiguration scheme vacancy.

 
EPRA earnings(1)              GBPm 
---------------------------  ----- 
Six months ended 31.3.2017    22.8 
Net property income            2.4 
Net finance costs              0.2 
Longmartin                   (0.4) 
                             ----- 
Six months ended 31.3.2018    25.0 
---------------------------  ----- 
 
   1.   An alternative performance measure ("APM"). See below. 

Net property income

Rents receivable have increased by 9.2% to GBP55.6 million (31.3.2017: GBP50.9 million). Like-for-like growth, excluding the impact of acquisitions and disposals, was 6.8%, which reflects the continued conversion of our portfolio's reversionary potential into contracted income. Turnover-related rental top-ups made a useful contribution, totalling GBP0.6 million in the period (31.3.2017: GBP0.5 million). Acquisitions accounted for GBP1.4 million of the increase, whilst disposals reduced rents receivable compared with the same period last year by GBP0.2 million.

Irrecoverable property charges were GBP9.4 million (31.3.2017: GBP7.1 million). The increase in property operating costs reflects:

-- Higher levels of management and refurbishment activity across the portfolio, and associated costs which we expense rather than capitalise, in accordance with our accounting policies.

-- Additional expenditure to enhance general security arrangements across our high-profile locations.

-- Growing our promotional and social media activities, which are an essential aspect of our strategy to drive footfall to our areas.

Net property income was GBP46.2 million, up 5.5% on the same period last year (31.3.2017: GBP43.8 million).

Administrative expenses

Administrative expenses totalled GBP6.8 million (31.3.2017: GBP6.8 million) and included a non-cash accounting charge for equity-settled remuneration of GBP0.4 million (31.3.2017: GBP0.7 million).

Valuation surplus and disposal profits

Our wholly-owned portfolio's revaluation surplus was GBP97.6 million (31.3.2017: GBP61.6 million), following like-for-like valuation growth of 3.3%, principally driven by a like-for-like increase in ERV of 1.5%, and yield compression of 5 basis points. See also above.

During the six months ended 31 March 2018, we sold two non-core properties which comprised two shops, 1,875 sq. ft. of office space and three apartments. Sold at 48.3% over book value at 30 September 2017, the disposals generated net proceeds, after sale costs, of GBP12.9 million and a surplus of GBP4.2 million.

Net finance costs

Net finance costs decreased by GBP0.2 million to GBP15.9 million (31.3.2017: GBP16.1 million). This reflects the benefits of reduced borrowing costs following the refinancing reported last year, and interest income following the equity placing. This was partly offset by an accelerated write-off of previously unamortised loan issue costs, totalling GBP0.3 million, following refinancing activity in February 2018 (see below).

Share of Longmartin post-tax results

Following a small reduction in the valuation of Longmartin's investment property (see above), the joint venture delivered a loss after tax for the period, our 50% share of which was GBP1.6 million (31.3.2017: profit of GBP3.5 million).

Our share of the revaluation deficit was GBP4.1 million, compared with a surplus in the same period last year of GBP1.5 million. Excluding this revaluation loss and our share of the related deferred tax credit totalling GBP1.0 million (31.3.2017: GBP0.1 million), our share of EPRA earnings from the Longmartin joint venture decreased by GBP0.4 million to GBP1.5 million (31.3.2017: GBP1.9 million), largely due to scheme-related vacancy during the period.

Tax

As a REIT, the Group's activities are largely exempt from corporation tax and, as a result, there is no tax charge in the period (31.3.2017: GBPNil).

Interim dividend

The Board has declared an interim dividend of 8.3p per share, an increase of 5.1% on last year's interim dividend of 7.9p. The total distribution will be GBP25.5 million, 15.9% higher than last year (31.3.2017: GBP22.0 million), reflecting the increased number of shares now in issue. The interim dividend, to be paid on 6 July 2018, will be paid as a PID.

As a REIT, we are required to distribute a minimum of 90% of net rental income, calculated by reference to tax rather than accounting rules, as a PID. Notwithstanding this, our dividend policy is to maintain steady growth in dividends, reflecting the long-term trend in our income and EPRA earnings, adjusted to add back the non-cash accounting charge for equity-settled remuneration. To the extent that dividends for a year exceed the amount available to distribute as a PID, we pay the balance as ordinary dividends.

The dividend is covered 1.01 times by EPRA earnings and 1.03 times by adjusted earnings, after adding back the non-cash accounting charge in the period for equity-settled remuneration of GBP0.4 million.

The Board monitors the Group's ability to pay dividends out of available resources and distributable reserves.

Balance Sheet

 
                                        31.3.2018   31.3.2017   30.9.2017 
                                             GBPm        GBPm        GBPm 
-------------------------------------  ----------  ----------  ---------- 
 Investment properties                    3,628.5     3,216.4     3,407.3 
 Investment in joint venture                144.9       147.1       148.0 
 Net debt                                 (779.1)     (831.1)     (914.2) 
 Fair value of financial instruments            -      (63.9)           - 
 Other net assets                            12.0         0.4         5.8 
                                       ----------  ----------  ---------- 
 Net assets                               3,006.3     2,468.9     2,646.9 
                                       ----------  ----------  ---------- 
 Net asset value per share(1)             GBP9.78     GBP8.85     GBP9.49 
-------------------------------------  ----------  ----------  ---------- 
 
   1.   An alternative performance measure ("APM"). See below. 

Net assets

Net assets increased by GBP359.4 million, predominantly due to the equity placing in December, which added GBP260.4 million, and profit after tax of GBP123.7 million, partly offset by the final dividend for 2017 which totalled GBP25.1 million.

EPRA NAV(1)

EPRA NAV is a sector-recognised benchmark, which makes adjustments to reported NAV to provide a measure of the fair value of net assets on a long-term basis. Assets and liabilities which are not expected to crystallise in normal circumstances are excluded. In our case, the calculation excludes deferred tax related to property valuation surpluses in the Longmartin joint venture and, in the six months ended 31 March 2017, the fair value of interest rate swaps. Having terminated these interest rate swaps in September 2017, there is no adjustment to EPRA NAV in respect of these at 30 September 2017 nor 31 March 2018.

 
 EPRA NAV(1)                                   31.3.2018   31.3.2017   30.9.2017 
                                                    GBPm        GBPm        GBPm 
--------------------------------------------  ----------  ----------  ---------- 
 IFRS net assets                                 3,006.3     2,468.9     2,646.9 
 Effect of exercise of options                       0.5         0.5         0.5 
                                              ----------  ----------  ---------- 
 Diluted net assets                              3,006.8     2,469.4     2,647.4 
 Adjusted for: 
                                                       -        63.9           - 
   *    Fair value of financial instruments 
 Adjustments in respect of the Longmartin 
  joint venture: 
 
   *    Deferred tax                                16.9        17.9        17.9 
                                              ----------  ----------  ---------- 
 EPRA NAV                                        3,023.7     2,551.2     2,665.3 
                                              ----------  ----------  ---------- 
 EPRA NAV per share                              GBP9.83     GBP9.12     GBP9.52 
 EPRA NAV growth(2)                                 3.3%        2.7%        7.2% 
 Net asset value return(1,2)                        4.1%        3.6%        8.9% 
--------------------------------------------  ----------  ----------  ---------- 
 
   1.   An alternative performance measure ("APM"). See below. 

2. 31.3.2018 and 31.3.2017: growth/return over six months; 30.9.2017: growth/return over twelve months

EPRA NAV per share increased by 31p (3.3%) to GBP9.83 over the period (30.9.2017: GBP9.52), bringing growth over twelve months to 7.8%. During the six months ended 31 March 2018, the revaluation surplus in the wholly-owned portfolio added 32p. EPRA earnings of 8.4p per share were offset by the final dividend for 2017 (8.1p per share). Disposal profits contributed 1p and our share of the revaluation deficit in the Longmartin joint venture reduced NAV per share by 1p.

 
EPRA NAV(1)                                  Pence per share 
-------------------------------------------  --------------- 
September 2017                                           952 
EPRA earnings                                              8 
Dividends                                                (8) 
Portfolio revaluation and disposal profits                32 
Share placing/rounding                                   (1) 
                                             --------------- 
March 2018                                               983 
-------------------------------------------  --------------- 
 
   1.   An alternative performance measure ("APM"). See below. 

Cash flows and net debt

Net debt decreased by GBP135.1 million to GBP779.1 million over the period (30.9.2017: GBP914.2 million). The major cash flows were:

   --      net proceeds from the equity raise of GBP260.4 million. 
   --      net capital investment in our portfolio of GBP121.1 million. 
   --      operating cash inflow totalling GBP23.0 million. 
   --      dividends paid amounting to GBP25.1 million. 

Finance review

 
  21.7%                   2.5x                   3.2%               10.7 years 
  Loan-to-value(1,3,4)    Interest cover(1,4)    Blended cost of    Weighted average debt 
                                                  debt(1,2,4)        maturity(1) 
----------------------  ---------------------  -----------------  ----------------------- 
 
   1.   Including our 50% share of Longmartin debt. See presentation of financial information above. 
   2.   Including non-utilisation fees on undrawn bank facilities. 
   3.   Based on net debt. 
   4.   An alternative performance measure ("APM"). See below. 

Share issue

On 6 December 2017, we strengthened our equity base, issuing 27,855,508 million new ordinary shares, representing approximately 9.98% of our issued share capital at the time. The shares were issued at GBP9.52 per share, equivalent to EPRA NAV at 30 September 2017. Net proceeds, after issue costs, of GBP260.4 million funded the acquisition of 72 Broadwick Street, Carnaby, with the balance available for:

-- the acquisition of a long-leasehold interest in 90-104 Berwick Street, Soho for GBP41 million;

-- anticipated capital expenditure at 72 Broadwick Street, Carnaby, currently estimated at GBP20 million; and

   --      further acquisitions and value-enhancing schemes. 

By 31 March 2018, approximately 79% of the net proceeds had been spent or earmarked for acquisitions and schemes.

The equity issue has increased the resources available for further investment in our portfolio. Once fully deployed, we shall raise additional new debt facilities to support our long-term investment strategy, whilst maintaining a balance between equity and debt which the Board considers appropriate for this business.

Related party disclosures relevant to the share issue are set out in note 15 to the attached condensed financial statements.

Refinancing bank facilities

In February 2018, we completed the refinancing of our revolving bank facilities with arrangements as follows:

   --      GBP125m facility extended from 2020 to 2022. 

-- new GBP100m facility maturing in 2023 replacing a GBP150m facility which was due to mature later this year.

Following this, our weighted average debt maturity has increased to 10.7 years, with no contractual maturities until 2022.

Debt maturity profile

 
 Year of maturity    Facility type                  Total facility 
                                                              GBPm 
------------------  -----------------------------  --------------- 
 2022                Bank                                      125 
 2023                Bank                                      100 
                     Term loan (Longmartin joint 
 2026                 venture)                               60(1) 
 2027                Bonds                                     290 
 2029                Term loan                                 135 
 2030                Term loan                                 130 
 2031                Bonds                                     285 
 2035                Term loan                                 120 
------------------  -----------------------------  --------------- 
 
   1.   Shaftesbury Group's 50% share. This loan is without recourse to Shaftesbury. 

At 31 March 2018, our cash and committed undrawn facilities totalled GBP405.7 million (30.9.2017: GBP320.6 million). The blended cost of debt was 3.2%, 10 basis points lower than at 30 September 2017.

Net debt summary

 
                                                        31.3.2018   31.3.2017   30.9.2017 
                                                             GBPm        GBPm        GBPm 
-----------------------------------------------------  ----------  ----------  ---------- 
 Debt excluding Longmartin JV 
 
   *    Fixed/hedged debt                                   959.8       794.8       959.8 
                                                                -        46.6           - 
   *    Drawn unhedged bank debt 
                                                       ----------  ----------  ---------- 
 Wholly-owned                                               959.8       841.4       959.8 
 Longmartin non-recourse debt (50% share)                    60.0        60.0        60.0 
                                                       ----------  ----------  ---------- 
 Total debt(1,5)                                          1,019.8       901.4     1,019.8 
 Cash and cash equivalents 
 
   *    Wholly-owned                                      (180.7)      (10.3)      (45.6) 
 
   *    Longmartin (50% share)                              (1.7)       (2.2)       (0.6) 
                                                       ----------  ----------  ---------- 
 Net debt (including our 50% share of Longmartin)(5)        837.4       888.9       973.6 
 Less: our share of Longmartin net debt                    (58.3)      (57.8)      (59.4) 
                                                       ----------  ----------  ---------- 
 Reported net debt                                          779.1       831.1       914.2 
-----------------------------------------------------  ----------  ----------  ---------- 
 
   Debt metrics(1) 
 Undrawn floating rate facilities (GBPm)                    225.0       178.4       275.0 
 Loan-to-value(4,5)                                         21.7%       25.7%       26.7% 
 Gearing(3,4,5)                                             27.7%       34.8%       36.5% 
 Interest cover(5)                                           2.5x        2.3x        2.3x 
 % debt fixed                                                100%         95%        100% 
 Blended cost of debt(2,5)                                   3.2%        3.7%        3.3% 
 Marginal cost of undrawn floating rate 
  facilities                                                 1.5%        1.3%        1.2% 
 Weighted average maturity (years)                           10.7        10.3        10.3 
-----------------------------------------------------  ----------  ----------  ---------- 
 
   1.   Including our 50% share of Longmartin debt. See presentation of financial information above. 
   2.   Including non-utilisation fees on undrawn bank facilities. 
   3.   Based on EPRA net assets. 
   4.   Based on net debt. 
   5.   An alternative performance measure ("APM"). See below. 
 
 Brian Bickell      Chris Ward 
  Chief Executive    Finance Director 
 21 May 2018 
 

Alternative Performance Measures (APMs)

The Group has applied the European Securities and Markets Authority (ESMA) guidelines on alternative performance measures in these interim results. An 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.

Set out below is a summary of APMs used in these interim results. EPRA performance measures are a set of standard disclosures for the property industry, as defined by EPRA in its Best Practices Recommendations.

 
APM                        Nearest IFRS measure            Explanation and reconciliation 
------------------------  ------------------------------  ------------------------------- 
EPRA earnings and         Profit and total comprehensive  Note 18 and Financial results 
 earnings per share        income for the year             (above) 
                           Basic earnings per share 
------------------------  ------------------------------  ------------------------------- 
Adjusted earnings         Basic earnings per share        Financial results (above) 
 per share 
------------------------  ------------------------------  ------------------------------- 
Net asset value per       Net assets attributable         Note 18 
 share                     to shareholders 
------------------------  ------------------------------  ------------------------------- 
Diluted net asset         Net assets attributable         Note 18 
 value per share           to shareholders 
------------------------  ------------------------------  ------------------------------- 
EPRA net assets and       Net assets                      Note 18 and Financial results 
 NAV                                                       (above) 
------------------------  ------------------------------  ------------------------------- 
Net asset value return    N/A                             Note 18 and Financial results 
                                                           (above) 
------------------------  ------------------------------  ------------------------------- 
Total portfolio           Investment properties           Portfolio valuation (above) 
------------------------  ------------------------------  ------------------------------- 
Valuation growth          Net surplus on revaluation      Portfolio valuation (above) 
                           of investment properties        and Financial results (above) 
------------------------  ------------------------------  ------------------------------- 
Portfolio net investment  N/A                             Glossary 
------------------------  ------------------------------  ------------------------------- 
Total debt                Borrowings                      Note 18 and Financial results 
                                                           (above) 
------------------------  ------------------------------  ------------------------------- 
Net debt                  Borrowings less cash            Note 18 and Financial results 
                           and cash equivalents            (above) 
------------------------  ------------------------------  ------------------------------- 
Loan-to-value             N/A                             Note 18 and Financial results 
                                                           (above) 
------------------------  ------------------------------  ------------------------------- 
Gearing                   N/A                             Note 18 and Financial results 
                                                           (above) 
------------------------  ------------------------------  ------------------------------- 
Blended cost of debt      N/A                             Note 18 and Financial results 
                                                           (above) 
------------------------  ------------------------------  ------------------------------- 
Interest cover            N/A                             Note 18 and Financial results 
                                                           (above) 
------------------------  ------------------------------  ------------------------------- 
 

Where this report uses like-for-like comparisons, these are defined within the Glossary.

Portfolio analysis

 
                                                                                            Wholly- 
                                                Covent                                        owned                       Total 
 At 31 March 2018             Note   Carnaby    Garden   Chinatown     Soho   Fitzrovia   portfolio   Longmartin(1)   portfolio 
                             -----  --------  --------  ----------  -------  ----------  ----------  --------------  ---------- 
                 Fair value 
 Portfolio        (GBPm)      1,14   1,396.1     997.3       817.5    281.1       146.3     3,638.3           224.7     3,863.0 
--------------  -----------  -----  --------  --------  ----------  -------  ----------  ----------  --------------  ---------- 
  % of total 
   fair value                            36%       26%         21%       7%          4%         94%              6%        100% 
 --------------------------  -----  --------  --------  ----------  -------  ----------  ----------  --------------  ---------- 
  Current income 
   (GBPm)                     2,14      45.3      29.7        24.6      8.9         4.7       113.2             8.3       121.5 
 --------------------------  -----  --------  --------  ----------  -------  ----------  ----------  --------------  ---------- 
  ERV (GBPm)                  3,14      56.2      36.9        30.9     10.8         5.6       140.4            10.3       150.7 
 --------------------------  -----  --------  --------  ----------  -------  ----------  ----------  --------------  ---------- 
 Restaurants, 
  cafés 
  and leisure    Number                   59        90          79       31          24         283               9 
--------------  -----------  -----  --------  --------  ----------  -------  ----------  ----------  -------------- 
  Area - sq. 
   ft.                               111,000   176,000     206,000   59,000      50,000     602,000          39,000 
 --------------------------  -----  --------  --------  ----------  -------  ----------  ----------  -------------- 
  % of current 
   income                      4         18%       38%         62%      40%         53%         36%             14% 
 --------------------------  -----  --------  --------  ----------  -------  ----------  ----------  -------------- 
  % of ERV                     4         16%       34%         60%      38%         53%         34%             13% 
 --------------------------  -----  --------  --------  ----------  -------  ----------  ----------  -------------- 
  Average unexpired 
   lease length 
   - years                     5          10         8          11        9           7           9              14 
 --------------------------  -----  --------  --------  ----------  -------  ----------  ----------  -------------- 
 Shops           Number                   97       101          61       36           9         304              22 
--------------  -----------  -----  --------  --------  ----------  -------  ----------  ----------  -------------- 
  Area - sq. 
   ft.                               180,000   147,000      92,000   44,000      14,000     477,000          73,000 
 --------------------------  -----  --------  --------  ----------  -------  ----------  ----------  -------------- 
  % of current 
   income                      4         44%       29%         21%      25%         13%         32%             35% 
 --------------------------  -----  --------  --------  ----------  -------  ----------  ----------  -------------- 
  % of ERV                     4         43%       33%         24%      29%         13%         34%             40% 
 --------------------------  -----  --------  --------  ----------  -------  ----------  ----------  -------------- 
  Average unexpired 
   lease length 
   - years                     5           4         3           4        4           5           4               3 
 --------------------------  -----  --------  --------  ----------  -------  ----------  ----------  -------------- 
                 Area - sq. 
 Offices          ft.                299,000    84,000      25,000   34,000      10,000     452,000         102,000 
--------------  -----------  -----  --------  --------  ----------  -------  ----------  ----------  -------------- 
  % of current 
   income                      4         31%       12%          4%      15%          8%         18%             36% 
 --------------------------  -----  --------  --------  ----------  -------  ----------  ----------  -------------- 
  % of ERV                     4         35%       15%          4%      17%          7%         20%             34% 
 --------------------------  -----  --------  --------  ----------  -------  ----------  ----------  -------------- 
  Average unexpired 
   lease length 
   - years                     5           3         3           3        2           2           3               5 
 --------------------------  -----  --------  --------  ----------  -------  ----------  ----------  -------------- 
 Residential     Number                  109       214         136       68          51         578              75 
--------------  -----------  -----  --------  --------  ----------  -------  ----------  ----------  -------------- 
  Area - sq. 
   ft.                                67,000   133,000      94,000   37,000      25,000     356,000          55,000 
 --------------------------  -----  --------  --------  ----------  -------  ----------  ----------  -------------- 
  % of current 
   passing rent                4          7%       21%         13%      20%         26%         14%             15% 
 --------------------------  -----  --------  --------  ----------  -------  ----------  ----------  -------------- 
  % of ERV                     4          6%       18%         12%      16%         27%         12%             13% 
 --------------------------  -----  --------  --------  ----------  -------  ----------  ----------  -------------- 
 
   1.   Shaftesbury Group's 50% share 

Basis of valuation

 
                                                                                                         Wholly- 
 At 31 March                                  Covent                                                       owned 
 2018           Note         Carnaby          Garden       Chinatown            Soho       Fitzrovia   portfolio     Longmartin 
 Overall 
  initial 
  yield          7             2.89%           2.64%           2.66%           2.77%           2.70%       2.75%          3.10% 
               -----  --------------  --------------  --------------  --------------  --------------  ----------  ------------- 
 Topped-up 
  initial 
  yield          8             3.02%           2.73%           2.72%           2.81%           2.88%       2.87%          3.13% 
               -----  --------------  --------------  --------------  --------------  --------------  ----------  ------------- 
 Overall 
  equivalent 
  yield          9             3.56%           3.25%           3.35%           3.41%           3.26%       3.41%          3.80% 
               -----  --------------  --------------  --------------  --------------  --------------  ----------  ------------- 
 Tone of 
 restaurant 
 equivalent 
 yields          10      3.40%-3.80%     3.35%-3.90%     3.40%-3.75%     3.40%-3.75%     3.25%-3.75%                3.75%-4.00% 
               -----  --------------  --------------  --------------  --------------  --------------  ----------  ------------- 
 Tone of 
 restaurant 
 ERVs - GBP 
 per sq.                                               GBP270-GBP415 
 ft.             10    GBP120-GBP153    GBP55-GBP178          (ITZA)   GBP110-GBP135    GBP93-GBP120               GBP90-GBP138 
               -----  --------------  --------------  --------------  --------------  --------------  ----------  ------------- 
 Tone of 
 retail 
 equivalent 
 yields          10      3.30%-3.85%     3.00%-3.90%     3.40%-4.25%     3.40%-4.25%     3.30%-4.35%                3.40%-4.15% 
               -----  --------------  --------------  --------------  --------------  --------------  ----------  ------------- 
 Tone of 
 retail ERVs 
 - ITZA GBP 
 per sq. 
 ft.             10    GBP125-GBP535   GBP110-GBP710   GBP150-GBP355   GBP170-GBP305   GBP100-GBP215               GBP94-GBP675 
               -----  --------------  --------------  --------------  --------------  --------------  ----------  ------------- 
 Tone of 
  office 
  equivalent 
  yields         10      3.75%-4.50%     4.00%-4.25%           4.25%     4.25%-4.50%     4.00%-4.35%                4.00%-4.50% 
               -----  --------------  --------------  --------------  --------------  --------------  ----------  ------------- 
 Tone of 
  office ERVs 
  - GBP per 
  sq. ft.        10      GBP58-GBP88     GBP53-GBP75     GBP43-GBP65    GBP53-GBP73      GBP48-GBP60                GBP63-GBP78 
               -----  --------------  --------------  --------------  --------------  --------------  ----------  ------------- 
 Average 
  residential 
  ERVs - GBP 
  per sq. 
  ft. per 
  annum          10            GBP50           GBP49           GBP42           GBP48           GBP57                      GBP48 
               -----  --------------  --------------  --------------  --------------  --------------  ----------  ------------- 
 

Notes

1. The fair values at 31 March 2018 (the "valuation date") shown in respect of the individual villages are, in each case, the aggregate of the fair values of several different property interests located within close proximity which, for the purpose of this analysis, are combined to create each village. The different interests within each village were not valued as a single lot.

2. Current income includes total annualised actual and 'estimated income' reserved by leases. No rent is attributed to leases which were subject to rent-free periods at the valuation date. Current income does not reflect any ground rents, head rents nor rent charges and estimated irrecoverable outgoings at the valuation date. 'Estimated income' refers to gross estimated rental values in respect of rent reviews outstanding at the valuation date and, where appropriate, ERV in respect of lease renewals outstanding at the valuation date where the fair value reflects terms for a renewed lease.

3. ERV is the respective valuers' opinion of the rental value of the properties, or parts thereof, reflecting the terms of the relevant leases or, if appropriate, the fact that certain of the properties, or parts thereof, have been valued on the basis of vacant possession and the assumed grant of a new lease. Where appropriate, ERV assumes completion of developments which are reflected in the valuations. ERV does not reflect any ground rents, head rents nor rent charges and estimated irrecoverable outgoings.

4. The percentage of current income and the percentage of ERV in each of the use sectors are expressed as a percentage of total income and total ERV for each village.

5. Average unexpired lease length has been calculated by weighting the leases in terms of current rent reserved under the relevant leases and, where relevant, by reference to tenants' options to determine leases in advance of expiry through effluxion of time.

6. Where mixed uses occur within single leases, for the purpose of this analysis, the majority use by rental value has been adopted.

7. The initial yield is the net initial income at the valuation date expressed as a percentage of the gross valuation. Yields reflect net income after deduction of any ground rents, head rents and rent charges and estimated irrecoverable outgoings at the valuation date.

8. The topped-up initial yield, ignoring contractual rent free periods, has been calculated as if the contracted rent is payable from the valuation date and as if any future stepped rental uplifts under leases had occurred.

9. Equivalent yield is the internal rate of return, being the discount rate which needs to be applied to the expected flow of income so that the total amount of income so discounted at this rate equals the capital outlay at values current as of the valuation date. The equivalent yield shown for each village has been calculated by merging together the cash flows and fair values of each of the different interests within each village and represents the average equivalent yield attributable to each village from this approach.

10. The tone of rental values and yields is the range of rental values or yields attributed to the majority of the properties.

11. All commercial floor areas are net lettable. All residential floor areas are gross internal.

   12.     For presentation purposes some percentages have been rounded to the nearest integer. 

13. The analysis includes accommodation which is awaiting, or undergoing, refurbishment or development and is not available for occupation at the date of valuation.

   14.     The analysis excludes a non-core asset, acquired as part of a portfolio. 

Principal Risks and Uncertainties

The principal strategic risks and uncertainties are those which might prevent the Group from achieving its goal of long-term sustainable growth in rental income. The risks and uncertainties facing the Group for the remaining six months of the financial year are summarised below. These risks and uncertainties are consistent with those set out on pages 61 to 63 in the Annual Report for the year ended 30 September 2017. Details of how we manage risk are set out on pages 59 to 60 of the Annual Report.

Geographic concentration risk

Risk of a sustained fall in visitor numbers and/or spending

 
 Risk                                 Potential impact                                    Mitigation 
-----------------------------------  --------------------------------------------------  ------------------------------------------------------------ 
 Events which discourage 
 visitors to the West                  *    Reduced visitor numbers, spending and occup     *    Inherent risk given the geographic concentration of 
 End e.g.                             ier demand                                                 our investments in a high profile location 
  *    Acts or threats of terrorism 
 
                                       *    Reduced rental income and/or capital values     *    Insurance cover maintained for terrorism and 
  *    Health concerns (e.g. pandem                                                              associated loss-of-rent 
 ics) 
                                       *    Potential increased vacancy and declining 
                                            profitability                                   *    Close liaison with statutory authorities to maximise 
                                                                                                 safety of visitors 
 
                                       *    Damage to property 
                                                                                            *    Detailed emergency response plans 
-----------------------------------  --------------------------------------------------  ------------------------------------------------------------ 
 Competing destinations 
  lead to long-term decline            *    Reduced visitor numbers and occupier demand    *    Ensure our villages maintain a distinct identity 
  in footfall in our villages 
 
                                       *    Reduced rental income and/or capital values    *    Management strategies to create prosperous 
                                                                                                destinations within which tenants can operate 
 
                                       *    Potential increased vacancy and declining 
                                            profitability                                  *    Seek out new concepts, brands and ideas to keep our 
                                                                                                villages vibrant and appealing 
 
 
                                                                                           *    Consistent strategy on tenant mix which evolves over 
                                                                                                time 
 
 
                                                                                           *    Marketing and promotion of our villages 
 
 
                                                                                           *    KPI to deliver sustainable rental growth 
 
 
                                                                                           *    Regular Board monitoring of performance and prospects 
-----------------------------------  --------------------------------------------------  ------------------------------------------------------------ 
 

Regulatory risk

 
 Risk            Potential impact                               Mitigation 
--------------  ---------------------------------------------  ------------------------------------------------------------ 
  All our 
  properties      *    Limit our ability to optimise revenues    *    Ensure our properties are operated in compliance with 
  are                                                                 local regulations 
  in the 
  boroughs of     *    Reduced profitability 
  Westminster                                                    *    Make representations on proposed policy changes, to 
  and Camden.                                                         ensure our views and experience are considered 
  Changes to      *    Reduced capital values 
  national 
  or local                                                       *    Mix of uses in our portfolio means we are not reliant 
  policies,                                                           on income from one particular use 
  particularly 
  planning and 
  licensing, 
  could have a 
  significant 
  impact on 
  our ability 
  to maximise 
  the 
  long-term 
  potential of 
  our assets 
--------------  ---------------------------------------------  ------------------------------------------------------------ 
 

Economic risk

 
 Risk                    Potential impact                Mitigation 
----------------------  ------------------------------  -------------------------------------------------------------- 
 Economic uncertainty 
 and lower confidence     *    Pressure on rents           *    Focus on assets, locations and uses which have 
 could reduce consumer                                          historically proved to be economically resilient 
 spending. Together 
 with                     *    Declining profitability 
 upward cost                                               *    Tourism and retail/leisure spending in the West End 
 pressures,                                                     are less reliant on the wider-UK economy 
 this could reduce        *    Reduced capital values 
 tenant 
 profitability and                                         *    Promoting our areas 
 occupier 
 demand 
                                                           *    Diverse tenant base with limited exposure to any one 
                                                                tenant 
 
 
                                                           *    Tenant deposits held against unpaid rent obligations 
                                                                at 31 March 2018: GBP19.2m 
----------------------  ------------------------------  -------------------------------------------------------------- 
 Decline in the UK 
 real                      *    Reduced capital values      *    Focus on assets, locations and uses: 
 estate market due to 
 macro-economic 
 factors                   *    Decrease in NAV, ampli      *    where there is a structural imbalance between 
 e.g. global political    fied by gearing                        availability of space and demand; and 
 landscape, currency 
 expectations, bond 
 yields,                   *    Loan covenant defaults      *    which have historically proved to be economically 
 interest rate                                                   resilient and have demonstrated much lower valuation 
 expectations,                                                   volatility than the wider market 
 availability and cost 
 of finance, relative 
 attractiveness of                                          *    Regular review of investment market conditions 
 property                                                        including bi-annual external valuations 
 compared with other 
 asset classes 
                                                            *    Conservative levels of leverage, with the majority at 
                                                                 fixed rates 
 
 
                                                            *    Spread of sources of finance and debt maturities 
 
 
                                                            *    Quarterly forecasts including covenant headroom 
                                                                 review 
 
 
                                                            *    Pool of uncharged assets available to top up security 
                                                                 held by lenders 
----------------------  ------------------------------  -------------------------------------------------------------- 
 

Unaudited Group Statement of Comprehensive Income

For the six months ended 31 March 2018

 
                                                    Six months  Six months        Year 
                                                         ended       ended       ended 
                                                     31.3.2018   31.3.2017   30.9.2017 
                                             Notes        GBPm        GBPm        GBPm 
-----------------------------------------  -------  ----------  ----------  ---------- 
Revenue                                          2        60.9        54.9       111.5 
Property charges                                 3      (14.7)      (11.1)      (23.2) 
                                                    ----------  ----------  ---------- 
Net property income                                       46.2        43.8        88.3 
Administrative expenses                                  (6.8)       (6.8)      (14.1) 
                                                    ----------  ----------  ---------- 
Operating profit before investment 
 property disposals and valuation 
 movements                                                39.4        37.0        74.2 
Profit on disposal of investment 
 properties                                      4         4.2         0.3         1.1 
Net surplus on revaluation of investment 
 properties                                      7        97.6        61.6       230.6 
                                                    ----------  ----------  ---------- 
Operating profit                                         141.2        98.9       305.9 
Finance income                                             0.3           -         0.1 
Finance costs                                    5      (16.2)      (16.1)      (32.8) 
Change in fair value of derivative 
 financial instruments                          14           -        16.1        22.0 
Share of post-tax (loss)/profit from 
 joint venture                                   9       (1.6)         3.5         6.4 
                                                    ----------  ----------  ---------- 
Profit before tax                                        123.7       102.4       301.6 
Tax charge for the period                        6           -           -           - 
                                                    ----------  ----------  ---------- 
Profit and total comprehensive income 
 for the period                                          123.7       102.4       301.6 
                                                    ----------  ----------  ---------- 
 
Earnings per share:                             18 
Basic                                                    41.7p       36.7p      108.1p 
Diluted                                                  41.6p       36.6p      107.9p 
EPRA                                                      8.4p        8.2p       16.2p 
-----------------------------------------  -------  ----------  ----------  ---------- 
 

Please see above for an explanation of the EPRA measures used in these financial statements.

Unaudited Group Balance Sheet

As at 31 March 2018

 
                                          31.3.2018  31.3.2017  30.9.2017 
                                   Notes       GBPm       GBPm       GBPm 
---------------------------------  -----  ---------  ---------  --------- 
Non-current assets 
Investment properties                  7    3,628.5    3,216.4    3,407.3 
Accrued income                         8        9.9        9.5        9.5 
Investment in joint venture            9      144.9      147.1      148.0 
Property, plant and equipment                   1.3        1.3        1.2 
Other receivables                     11        3.7        3.7        3.7 
                                            3,788.3    3,378.0    3,569.7 
Current assets 
Trade and other receivables           10       24.1       16.8       22.0 
Cash and cash equivalents             11      180.7       10.3       45.6 
                                          ---------  ---------  --------- 
Total assets                                3,993.1    3,405.1    3,637.3 
                                          ---------  ---------  --------- 
 
Current liabilities 
Trade and other payables              12       38.8       40.3       41.6 
Non-current liabilities 
Borrowings                            13      948.0      832.0      948.8 
Derivative financial instruments      14          -       63.9          - 
                                          ---------  ---------  --------- 
Total liabilities                             986.8      936.2      990.4 
                                          ---------  ---------  --------- 
 
Net assets                                  3,006.3    2,468.9    2,646.9 
                                          ---------  ---------  --------- 
 
Equity 
Share capital                         15       76.8       69.8       69.8 
Share premium                                 378.4      124.8      124.9 
Share-based payments reserve                    0.8        2.3        3.0 
Retained earnings                           2,550.3    2,272.0    2,449.2 
                                          ---------  ---------  --------- 
Total equity                                3,006.3    2,468.9    2,646.9 
                                          ---------  ---------  --------- 
 
Net asset value per share:            18 
Basic                                       GBP9.78    GBP8.85    GBP9.49 
Diluted                                     GBP9.77    GBP8.83    GBP9.46 
EPRA                                        GBP9.83    GBP9.12    GBP9.52 
---------------------------------  -----  ---------  ---------  --------- 
 

Unaudited Group Cash Flow Statement

For the six months ended 31 March 2018

 
                                                   Six months  Six months        Year 
                                                        ended       ended       ended 
                                                    31.3.2018   31.3.2017   30.9.2017 
                                            Notes        GBPm        GBPm        GBPm 
------------------------------------------  -----  ----------  ----------  ---------- 
Cash flows from operating activities 
Cash generated from operating activities       17        38.6        37.6        76.7 
Interest received                                         0.3           -         0.1 
Interest paid                                          (15.9)      (16.0)      (32.8) 
                                                   ----------  ----------  ---------- 
Net cash generated from operating 
 activities                                              23.0        21.6        44.0 
                                                   ----------  ----------  ---------- 
 
Cash flows from investing activities 
Investment property acquisitions                      (117.4)      (28.3)      (40.1) 
Investment property disposals                            12.9         5.2        13.4 
Capital expenditure on investment 
 properties                                            (16.6)      (21.2)      (41.5) 
Purchase of property, plant and equipment               (0.3)       (0.1)       (0.1) 
Dividends received from joint venture                     1.5         2.8         4.8 
Increase in loans to joint venture                      (1.5)           -           - 
Net cash used in investing activities                 (121.4)      (41.6)      (63.5) 
                                                   ----------  ----------  ---------- 
 
Cash flows from financing activities 
Proceeds from exercise of share options                     -           -         0.1 
Proceeds from share placing                    15       265.2           -           - 
Share placing costs                            15       (4.8)           -           - 
Proceeds from borrowings                                 72.0        88.9       146.5 
Repayment of borrowings                                (72.0)     (208.0)     (437.2) 
Proceeds from issue of mortgage bonds                       -       203.2       493.2 
Repayment of debenture stock                                -      (10.4)      (10.4) 
Loan issue costs                                        (1.8)       (3.6)       (6.1) 
Termination of derivative financial 
 instruments                                                -      (34.1)      (92.1) 
Equity dividends paid                          16      (25.1)      (21.3)      (44.5) 
                                                   ----------  ----------  ---------- 
Net cash from financing activities                      233.5        14.7        49.5 
                                                   ----------  ----------  ---------- 
 
Net change in cash and cash equivalents                 135.1       (5.3)        30.0 
Cash and cash equivalents at the 
 beginning of the period                       11        45.6        15.6        15.6 
                                                   ----------  ----------  ---------- 
Cash and cash equivalents at the 
 end of the period                             11       180.7        10.3        45.6 
------------------------------------------  -----  ----------  ----------  ---------- 
 

Statement of Changes in Equity

For the six months ended 31 March 2018

 
                                                            Share-based 
                                           Share     Share     payments   Retained    Total 
                                         capital   premium      reserve   earnings   equity 
                                 Notes      GBPm      GBPm         GBPm       GBPm     GBPm 
-------------------------------  -----  --------  --------  -----------  ---------  ------- 
At 1 October 2017                           69.8     124.9          3.0    2,449.2  2,646.9 
Profit and total comprehensive 
 income for the period                         -         -            -      123.7    123.7 
Transactions with owners: 
Dividends paid                      16         -         -            -     (25.1)   (25.1) 
Share placing                       15       6.9     253.5            -          -    260.4 
Exercise of share options                    0.1         -            -      (0.1)        - 
Fair value of share-based 
 payments                                      -         -          0.4          -      0.4 
Release on exercise of share 
 options                                       -         -        (2.6)        2.6        - 
                                        --------  --------  -----------  ---------  ------- 
At 31 March 2018                            76.8     378.4          0.8    2,550.3  3,006.3 
                                        --------  --------  -----------  ---------  ------- 
 
At 1 October 2016                           69.7     124.8          3.6    2,189.0  2,387.1 
Profit and total comprehensive 
 income for the period                         -         -            -      102.4    102.4 
Transactions with owners: 
Dividends paid                      16         -         -            -     (21.3)   (21.3) 
Exercise of share options                    0.1         -            -      (0.1)        - 
Fair value of share-based 
 payments                                      -         -          0.7          -      0.7 
Release on exercise of share 
 options                                       -         -        (2.0)        2.0        - 
                                        --------  --------  -----------  ---------  ------- 
At 31 March 2017                            69.8     124.8          2.3    2,272.0  2,468.9 
                                        --------  --------  -----------  ---------  ------- 
 
At 1 October 2016                           69.7     124.8          3.6    2,189.0  2,387.1 
Profit and total comprehensive 
 income for the year                           -         -            -      301.6    301.6 
Transactions with owners: 
Dividends paid                      16         -         -            -     (43.3)   (43.3) 
Exercise of share options                    0.1       0.1            -      (0.1)      0.1 
Fair value of share-based 
 payments                                      -         -          1.4          -      1.4 
Release on exercise of share 
 options                                       -         -        (2.0)        2.0        - 
                                        --------  --------  -----------  ---------  ------- 
At 30 September 2017                        69.8     124.9          3.0    2,449.2  2,646.9 
-------------------------------  -----  --------  --------  -----------  ---------  ------- 
 

Notes to the half year results

For the six months ended 31 March 2018

1. Accounting policies

Basis of preparation

The Group's condensed consolidated half year financial statements have been prepared in accordance with the Disclosure and Transparency Rules of the Financial Conduct Authority and with IAS 34, Interim Financial Reporting, as adopted by the European Union. They should be read in conjunction with the annual financial statements for the year ended 30 September 2017, which have been prepared in accordance with International Financial Reporting Standards as adopted by the European Union (IFRS), IFRS Interpretations Committee interpretations and those parts of the Companies Act 2006 applicable to companies reporting under IFRS.

The financial information in these condensed consolidated half year financial statements do not comprise statutory accounts within the meaning of section 434 of the Companies Act 2006. The financial information presented for the year ended 30 September 2017 is derived from the statutory accounts for that year. Statutory accounts for the year ended 30 September 2017 were approved by the Board on 27 November 2017 and delivered to the Registrar of Companies. The report of the auditor on those accounts was unqualified, did not contain an emphasis of matter paragraph and did not contain any statement under section 498 (2) or (3) of the Companies Act 2006.

The condensed consolidated half year financial statements have been reviewed, not audited.

Going concern

The directors have a reasonable expectation that the Group has adequate resources to continue in operational existence for at least 12 months from the date these financial statements were approved. Therefore, they continue to adopt the going concern basis in preparing the condensed consolidated half year financial statements.

Critical judgements, assumptions and estimates

The preparation of these financial statements requires the Board to make judgements, assumptions and estimates that affect amounts reported in the Statement of Comprehensive Income and Balance Sheet. The directors consider the valuation of investment property to be a critical judgement because of the level of complexity, judgement or estimation involved and its impact on the financial statements. This is consistent with the financial statements for the previous year end. Full disclosure of the critical judgements, assumptions and estimates is included in the 2017 financial statements.

Changes in accounting policies

The accounting policies adopted and methods of computation used are consistent with those of the previous financial year.

New accounting standards and interpretations

a) The following amendment to an existing Standard was relevant to the Group and mandatory for the first time for the financial year beginning 1 October 2017:

 
Standard or Interpretation                                Effective from 
--------------------------------------------------------  -------------- 
Amendments to IAS 7 Statement of cash flows - disclosure  1 January 2017 
 initiative 
--------------------------------------------------------  -------------- 
 

No material changes to accounting policies arose as a result of this amendment.

b) The following new Standards and amendments to existing Standards are relevant to the Group, are not yet effective in the year ending 30 September 2018 and are not expected to have a significant impact on the Group's financial statements:

 
Standard or Interpretation                          Effective from 
--------------------------------------------------  -------------- 
Annual Improvements 2014-2016                       1 January 2018 
Amendments to IFRS 2 Classification of share-based  1 January 2018 
 payment transactions 
IFRS 15 Revenue from contracts with customers       1 January 2018 
IFRS 9 Financial instruments                        1 January 2018 
IFRS 16 Leases                                      1 January 2019 
--------------------------------------------------  -------------- 
 

IFRS 9 - Financial Instruments

This standard deals with, amongst other things, the classification and measurement of financial instruments. Having carried out an assessment of the standard, the Group believes the main impact will be the measurement and presentation of trade receivables in the Group financial statements, and balances due from subsidiaries in the Company financial statements. Having considered expected credit losses and sources of forward-looking data, we do not currently expect any impact will be material.

IFRS 15 - Revenue from contracts with customers

This standard is based on the principle that revenue is recognised when control passes to a customer. In our case, the standard is most applicable to the recognition point for service charge income and disposals of investment properties. As the standard excludes rental income, which falls within the scope of IFRS 16 - Leases, it is not expected that IFRS 15 will have a significant impact on the Group's financial statements. There may be changes to presentation and disclosure.

IFRS 16 - Leases

For operating leases in excess of one year, this standard requires lessees to recognise a right-of-use asset and a related lease liability representing the obligation to make lease payments. The right-of-use asset is assessed for impairment annually and is amortised on a straight-line basis. The lease liability is amortised using the effective interest method. Lessor accounting is substantially unchanged from current accounting. Therefore, since the Group is primarily a lessor, this standard does not significantly impact the Group's financial statements. However, for the Company, it will result in the recognition of a right-to-use asset and corresponding lease liability, which we estimate at approximately GBP3 million, in the year when the standard becomes effective.

c) There are no other Standards or Interpretations that are not yet effective that would be expected to have a material impact on the Group.

Segmental information

IFRS 8 requires operating segments to be reported in a manner consistent with the internal financial reporting reviewed by the chief operating decision maker. The chief operating decision maker of the Group is the Board. The Board is responsible for reviewing the Group's internal reporting in order to assess performance.

The information reviewed by the Board is prepared on a basis consistent with these financial statements. That is, the information is provided at a Group level and includes both the IFRS reported results and EPRA measures (see above for an explanation on the EPRA measures used in these financial statements).

The Group's properties are all located in London's West End, and are all of a similar type. The properties are typically mixed-use buildings with restaurants, leisure and retail on the lower floors and small offices and apartments on the upper floors. As the properties share similar economic characteristics we consider them to be one operating segment. As such, no further financial information is presented.

2. Revenue

 
                                Six months  Six months        Year 
                                     ended       ended       ended 
                                 31.3.2018   31.3.2017   30.9.2017 
                                      GBPm        GBPm        GBPm 
------------------------------  ----------  ----------  ---------- 
Rents receivable                      55.6        50.9       103.4 
Recoverable property expenses          5.3         4.0         8.1 
                                ----------  ----------  ---------- 
                                      60.9        54.9       111.5 
------------------------------  ----------  ----------  ---------- 
 

Rents receivable includes a credit of GBP0.6 million from accrued income in respect of lease incentives (31.3.2017: charge of GBP0.3 million; 30.9.2017: charge of GBP0.5 million).

3. Property charges

 
                                          Six months  Six months        Year 
                                               ended       ended       ended 
                                           31.3.2018   31.3.2017   30.9.2017 
                                                GBPm        GBPm        GBPm 
----------------------------------------  ----------  ----------  ---------- 
Property operating costs                         4.5         3.1         7.1 
Fees payable to managing agents                  1.4         1.2         2.4 
Letting, rent review, and lease renewal 
 costs                                           1.7         1.8         3.4 
Village promotion costs                          1.8         1.0         2.2 
                                          ----------  ----------  ---------- 
Property outgoings                               9.4         7.1        15.1 
Recoverable property expenses                    5.3         4.0         8.1 
                                          ----------  ----------  ---------- 
                                                14.7        11.1        23.2 
----------------------------------------  ----------  ----------  ---------- 
 

4. Profit on disposal of investment properties

 
                             Six months  Six months        Year 
                                  ended       ended       ended 
                              31.3.2018   31.3.2017   30.9.2017 
                                   GBPm        GBPm        GBPm 
---------------------------  ----------  ----------  ---------- 
Net sale proceeds                  12.9         5.2        13.4 
Book value at date of sale        (8.7)       (4.9)      (12.3) 
                             ----------  ----------  ---------- 
                                    4.2         0.3         1.1 
---------------------------  ----------  ----------  ---------- 
 

5. Finance costs

 
                                            Six months  Six months        Year 
                                                 ended       ended       ended 
                                             31.3.2018   31.3.2017   30.9.2017 
                                                  GBPm        GBPm        GBPm 
------------------------------------------  ----------  ----------  ---------- 
Debenture stock interest and amortisation            -         0.1         0.1 
Mortgage bond interest                             6.9         3.4         7.4 
Bank and other interest                            8.3        12.0        23.8 
Loan issue cost amortisation                       1.0         0.6         1.5 
                                            ----------  ----------  ---------- 
                                                  16.2        16.1        32.8 
------------------------------------------  ----------  ----------  ---------- 
 

6. Tax charge for the period

The Group's wholly-owned business is subject to taxation as a REIT. Under the REIT regime, income from its rental business (calculated by reference to tax rather than accounting rules) and chargeable gains from the sale of its investment properties are exempt from corporation tax.

7. Investment properties

 
                                              31.3.2018  31.3.2017  30.9.2017 
                                                   GBPm       GBPm       GBPm 
--------------------------------------------  ---------  ---------  --------- 
At beginning of period                          3,407.3    3,111.6    3,111.6 
Acquisitions                                      117.4       28.1       37.1 
Disposals                                         (8.7)      (4.9)     (12.3) 
Refurbishment and other capital expenditure        14.9       20.0       40.3 
Net surplus on revaluation of investment 
 properties                                        97.6       61.6      230.6 
                                              ---------  ---------  --------- 
Book value at end of period                     3,628.5    3,216.4    3,407.3 
--------------------------------------------  ---------  ---------  --------- 
 
 
  Fair value at end of period: 
Core properties valued by Cushman 
 & Wakefield                                    3,638.3    3,225.7    3,416.5 
Non-core properties valued by Cushman 
 & Wakefield                                        2.4        2.4        2.4 
Less: unamortised lease incentives 
 (note 8)                                        (12.2)     (11.7)     (11.6) 
                                              ---------  ---------  --------- 
Book value at end of period                     3,628.5    3,216.4    3,407.3 
--------------------------------------------  ---------  ---------  --------- 
 

The investment properties valuation comprises:

 
                       31.3.2018  31.3.2017  30.9.2017 
                            GBPm       GBPm       GBPm 
---------------------  ---------  ---------  --------- 
Freehold properties      3,415.6    2,956.6    3,133.0 
Leasehold properties       225.1      271.5      285.9 
                       ---------  ---------  --------- 
                         3,640.7    3,228.1    3,418.9 
---------------------  ---------  ---------  --------- 
 

Investment properties were valued at 31 March 2018 by qualified professional valuers, being members of the Royal Institution of Chartered Surveyors (RICS), working for Cushman & Wakefield, Chartered Surveyors, acting in the capacity of external valuers.

All properties were valued on the basis of fair value and highest and best use, in accordance with the RICS Valuation - Global Standards, which incorporate, the International Valuation Standards, and the RICS UK Valuation Standards edition current at the valuation date and IFRS 13. When considering a property's highest and best use, the valuer considers its actual and potential uses which are physically, legally and financially viable. Where the highest and best use differs from the existing use, the valuer considers the use a market participant would have in mind when formulating the price it would bid and reflects the cost and likelihood of achieving that use.

The fair value of the Group's investment properties has primarily been determined using a market approach, which provides an indication of value by comparing the subject asset with similar assets for which price information is available. The external valuer uses information provided by the Group, such as tenancy information and capital expenditure expectations. In deriving fair value, the valuer also makes a series of assumptions, using professional judgement and market observations. These assumptions include equivalent yields and rental values (ERVs) applicable to the properties. Equivalent yields are based on current market prices, depending on, inter alia, the location and use of the properties. ERVs are calculated using a number of factors which include current rental income, market comparatives and occupancy levels. Whilst there is market evidence for these inputs, and recent transaction prices for similar properties, there is still a significant element of estimation and judgement. As a result of adjustments made to market observable data, these

significant inputs are deemed unobservable.

Since the key inputs to the valuation are unobservable, the Group considers all its investment properties fall within Level 3 of the fair value hierarchy in IFRS 13. The Group's policy is to recognise transfers between hierarchy levels as at the date of the event or change in circumstances that caused the transfer. There have been no transfers during the period (31.3.2017: none; 30.9.2017: none).

The key assumptions made by the valuers are set out in the Basis of Valuation above.

The major inputs to the external valuation are reviewed by the senior management team. In addition, the valuer meets with external auditors and the Audit Committee.

At 31 March 2018, the Group had capital commitments of GBP52.9 million (31.3.2017: GBP25.0 million; 30.9.2017: GBP13.6 million), relating to the forward purchase of an investment property and future capital expenditure for the enhancement of the Group's investment properties. Since 31 March 2018, the Group exchanged contracts to acquire a property for GBP22.7 million. See note 20 for further details.

The Group's portfolio activity is discussed above.

Sensitivity analysis

As noted in the critical judgements, assumptions and estimates section on page 118 in the 2017 Annual Report, the valuation of the Group's property portfolio is inherently subjective. As a result, the valuations the Group places on its property portfolio are subject to a degree of uncertainty and are made on the basis of assumptions which may not prove to be accurate, particularly in periods of volatility or low transaction flow in the commercial property market.

The key unobservable inputs are inter-dependent. All other factors being equal, a higher equivalent yield would lead to a decrease in the valuation of a property, and an increase in the ERV would increase the capital value, and vice versa.

   8.   Accrued income 
 
                                     31.3.2018  31.3.2017  30.9.2017 
                                          GBPm       GBPm       GBPm 
-----------------------------------  ---------  ---------  --------- 
Accrued income in respect of lease 
 incentives                               12.2       11.7       11.6 
Less: included in trade and other 
 receivables (note 10)                   (2.3)      (2.2)      (2.1) 
                                     ---------  ---------  --------- 
                                           9.9        9.5        9.5 
-----------------------------------  ---------  ---------  --------- 
 

Accrued income in respect of lease incentives is allocated between amounts to be charged against rental income within one year of the Balance Sheet date and amounts which will be charged against rental income in subsequent years.

9. Investment in joint venture

 
                              31.3.2018  31.3.2017  30.9.2017 
                                   GBPm       GBPm       GBPm 
----------------------------  ---------  ---------  --------- 
At 1 October                      148.0      146.4      146.4 
Share of (losses)/profits         (1.6)        3.5        6.4 
Dividends received                (1.5)      (2.8)      (4.8) 
                              ---------  ---------  --------- 
Book value at end of period       144.9      147.1      148.0 
----------------------------  ---------  ---------  --------- 
 

The summarised Statement of Comprehensive Income and Balance Sheet used for consolidation purposes are presented below:

 
                                        Six months  Six months        Year 
                                             ended       ended       ended 
                                         31.3.2018   31.3.2017   30.9.2017 
                                              GBPm        GBPm        GBPm 
--------------------------------------  ----------  ----------  ---------- 
Statement of Comprehensive Income 
--------------------------------------  ----------  ----------  ---------- 
Rents receivable                               8.3         9.2        17.7 
Recoverable property expenses                  0.8         0.8         1.5 
--------------------------------------  ----------  ----------  ---------- 
Revenue from properties                        9.1        10.0        19.2 
--------------------------------------  ----------  ----------  ---------- 
Property outgoings                           (1.0)       (1.0)       (1.7) 
Recoverable property expenses                (0.8)       (0.8)       (1.5) 
--------------------------------------  ----------  ----------  ---------- 
Property charges                             (1.8)       (1.8)       (3.2) 
                                        ----------  ----------  ---------- 
Net property income                            7.3         8.2        16.0 
Administrative expenses                      (0.2)       (0.1)       (0.2) 
                                        ----------  ----------  ---------- 
Operating profit before investment 
 property valuation movements                  7.1         8.1        15.8 
Net (deficit)/surplus on revaluation 
 of investment properties                    (8.1)         3.0         5.3 
                                        ----------  ----------  ---------- 
Operating (loss)/profit                      (1.0)        11.1        21.1 
Finance costs                                (3.4)       (3.4)       (6.8) 
                                        ----------  ----------  ---------- 
(Loss)/profit before tax                     (4.4)         7.7        14.3 
--------------------------------------  ----------  ----------  ---------- 
Current tax                                  (0.8)       (0.9)       (1.7) 
Deferred tax                                   2.0         0.2         0.2 
--------------------------------------  ----------  ----------  ---------- 
Tax credit/(charge) for the period             1.2       (0.7)       (1.5) 
                                        ----------  ----------  ---------- 
(Loss)/profit and total comprehensive 
 income for the period                       (3.2)         7.0        12.8 
                                        ----------  ----------  ---------- 
 
(Loss)/profit attributable to the 
 Group                                       (1.6)         3.5         6.4 
--------------------------------------  ----------  ----------  ---------- 
 
 
                                       31.3.2018  31.3.2017  30.9.2017 
                                            GBPm       GBPm       GBPm 
-------------------------------------  ---------  ---------  --------- 
Balance Sheet 
Non-current assets 
Investment properties at book value        456.9      458.2      462.6 
Accrued income                               2.7        3.7        3.1 
Other receivables                            1.3        1.3        1.3 
                                       ---------  ---------  --------- 
                                           460.9      463.2      467.0 
 
Cash and cash equivalents                    3.3        4.4        1.2 
Current assets                               2.8        2.6        3.9 
                                       ---------  ---------  --------- 
Total assets                               467.0      470.2      472.1 
                                       ---------  ---------  --------- 
 
Current liabilities                         13.1        9.9       10.1 
Non-current liabilities 
Secured term loan                          120.0      120.0      120.0 
Other non-current liabilities               44.2       46.1       46.1 
                                       ---------  ---------  --------- 
Total liabilities                          177.3      176.0      176.2 
                                       ---------  ---------  --------- 
Net assets                                 289.7      294.2      295.9 
                                       ---------  ---------  --------- 
 
Net assets attributable to the Group       144.9      147.1      148.0 
-------------------------------------  ---------  ---------  --------- 
 

Knight Frank LLP, acting in the capacity of external valuers, value the investment properties owned by the joint venture.

10. Trade and other receivables

 
                                     31.3.2018  31.3.2017  30.9.2017 
                                          GBPm       GBPm       GBPm 
-----------------------------------  ---------  ---------  --------- 
Amounts due from tenants                  11.9        9.6       12.0 
Provision for doubtful debts             (0.7)      (0.4)      (0.5) 
                                     ---------  ---------  --------- 
                                          11.2        9.2       11.5 
Accrued income in respect of lease 
 incentives (note 8)                       2.3        2.2        2.1 
Amount due from joint venture              2.4        0.9        0.9 
Prepayments                                8.1        4.2        7.1 
Other receivables                          0.1        0.3        0.4 
                                     ---------  ---------  --------- 
                                          24.1       16.8       22.0 
-----------------------------------  ---------  ---------  --------- 
 

At 31 March 2018, cash deposits totalling GBP19.2 million (31.3.2017: GBP18.1 million; 30.9.2017: GBP18.5 million) were held against tenants' rent payment obligations. The deposits are held in bank accounts administered by the Group's managing agents and are not included within the Group Balance Sheet.

11. Cash and cash equivalents

Cash and cash equivalents at 31 March 2018 were GBP180.7 million (31.3.2017: GBP10.3 million; 30.9.2017: GBP45.6 million).

Non-current other receivables include GBP3.7 million at 31 March 2018 (31.3.2017: GBP3.7 million; 30.9.2017: GBP3.7 million) which relate to cash held on deposit as security for certain secured term loans, and where there are certain conditions restricting their use.

12. Trade and other payables

 
                                         31.3.2018  31.3.2017  30.9.2017 
                                              GBPm       GBPm       GBPm 
---------------------------------------  ---------  ---------  --------- 
Rents and service charges invoiced 
 in advance                                   24.3       22.1       22.8 
Amounts due in respect of property 
 acquisitions                                    -        0.5          - 
Trade payables and accruals in respect 
 of capital expenditure                        2.3        4.0        4.0 
Other taxation and social security             5.3        4.3        5.2 
Other payables and accruals                    6.9        9.4        9.6 
                                         ---------  ---------  --------- 
                                              38.8       40.3       41.6 
---------------------------------------  ---------  ---------  --------- 
 

13. Borrowings

 
                          Nominal   Unamortised 
                            value   issue costs  31.3.2018  31.3.2017  30.9.2017 
                             GBPm          GBPm       GBPm       GBPm       GBPm 
------------------------  -------  ------------  ---------  ---------  --------- 
Mortgage bonds              575.0         (5.6)      569.4      281.5      569.2 
Secured bank facilities         -         (2.0)      (2.0)      170.2      (0.8) 
Secured term loans          384.8         (4.2)      380.6      380.3      380.4 
                          -------  ------------  ---------  ---------  --------- 
Total borrowings            959.8        (11.8)      948.0      832.0      948.8 
------------------------  -------  ------------  ---------  ---------  --------- 
 

At 31 March 2018, there were no drawings against the Group's secured bank facilities (31.3.2017: GBP171.6 million; 30.9.2017: none). The Group is still able to benefit from these committed revolving credit facilities, and as such, unamortised issue costs of GBP2.0 million continue to be carried in the Balance Sheet.

Net debt reconciliation

 
                                    Cash flows 
                           ---------------------------- 
                           1.10.2017  Inflows  Outflows  Non-cash  31.3.2018 
                                GBPm     GBPm      GBPm     items       GBPm 
-------------------------  ---------  -------  --------  --------  --------- 
Non-current borrowings 
Mortgage bonds                 575.0        -         -         -      575.0 
Secured bank facilities            -     72.0    (72.0)         -          - 
Secured term loans             384.8        -         -         -      384.8 
Loan issue costs              (11.0)        -     (1.8)       1.0     (11.8) 
                           ---------  -------  --------  --------  --------- 
                               948.8     72.0    (73.8)       1.0      948.0 
 
Loan issue costs(1)             11.0        -       1.8     (1.0)       11.8 
Cash & cash equivalents 
 (note 11)                    (45.6)  (390.5)     255.4         -    (180.7) 
Net debt at 31 March 
 2018                          914.2  (318.5)     183.4         -      779.1 
                           ---------  -------  --------  --------  --------- 
Net debt at 31 March 
 2017                          752.1   (45.6)     124.6         -      831.1 
Net debt at 30 September 
 2017                          752.1   (95.1)     257.2         -      914.2 
-------------------------  ---------  -------  --------  --------  --------- 
 
 
   1.   Loan issue costs are eliminated in the calculation of net debt. 

The cash flows relating to secured bank facilities were drawings under revolving credit facilities and their subsequent repayments. The Group's borrowings are secured by fixed charges over certain investment properties held by subsidiaries, with a carrying value of GBP3,119.8 million (31.3.2017: GBP2,700.9 million; 30.9.2017: GBP3,015.4 million), and by floating charges over the assets of the Company and/or certain subsidiaries.

Availability and maturity of borrowings

 
                                          Facilities 
---------------------------------  ------------------------- 
                                   Committed  Drawn  Undrawn 
                                        GBPm   GBPm     GBPm 
---------------------------------  ---------  -----  ------- 
Repayable within 5 years               225.0      -    225.0 
Repayable between 5 and 10 years       290.0  290.0        - 
Repayable after 10 years               669.8  669.8        - 
                                   ---------  -----  ------- 
At 31 March 2018                     1,184.8  959.8    225.0 
                                   ---------  -----  ------- 
At 31 March 2017                     1,019.8  841.4    178.4 
                                   ---------  -----  ------- 
At 30 September 2017                 1,234.8  959.8    275.0 
---------------------------------  ---------  -----  ------- 
 

Interest rate profile of interest bearing borrowings

 
                                        31.3.2018        31.3.2017        30.9.2017 
-----------------------------------  ---------------  ---------------  --------------- 
                                      Debt  Interest   Debt  Interest   Debt  Interest 
                                      GBPm      rate   GBPm      rate   GBPm      rate 
-----------------------------------  -----  --------  -----  --------  -----  -------- 
Floating rate borrowings 
LIBOR-linked facilities (including 
 margin)                                 -         -   46.6     1.49%      -         - 
Hedged borrowings 
Interest rate swaps (including 
 margin)                                 -         -  125.0     6.02%      -         - 
                                     -----  --------  -----  --------  -----  -------- 
Total bank borrowings                    -         -  171.6     4.79%      -         - 
                                     -----            -----            ----- 
Fixed rate borrowings 
Secured term loans                   384.8     3.85%  384.8     3.85%  384.8     3.85% 
Mortgage bonds 2027                  290.0     2.35%      -         -  290.0     2.35% 
Mortgage bonds 2031                  285.0     2.49%  285.0     2.49%  285.0     2.49% 
Weighted average cost of 
 drawn borrowings                              2.99%            3.58%            2.99% 
-----------------------------------  -----  --------  -----  --------  -----  -------- 
 

The Group also incurs non-utilisation fees on undrawn facilities. At 31 March 2018, the weighted average charge on the undrawn facilities of GBP225.0 million (31.3.2017: GBP178.4 million; 30.9.2017: GBP275.0 million) was 0.66% (31.3.2017: 0.70%; 30.9.2017: 0.69%).

Details of the Group's current financial position and refinancing activity during the period are discussed above.

14. Financial instruments

Fair value of derivative financial instruments

 
                                      31.3.2018  31.3.2017  30.9.2017 
                                           GBPm       GBPm       GBPm 
------------------------------------  ---------  ---------  --------- 
Interest rate swaps 
At beginning of period                        -    (114.1)    (114.1) 
Swap contracts terminated                     -       34.1       92.1 
Fair value movement credited to the 
 Statement of Comprehensive Income            -       16.1       22.0 
                                      ---------  ---------  --------- 
At end of period                              -     (63.9)          - 
------------------------------------  ---------  ---------  --------- 
 

Other financial instruments

The Group's mortgage bonds and secured term loans are held at amortised cost in the Balance Sheet. The fair value of these financial instruments is in excess of book value. This excess, which is not recognised in the reported results for the period, is GBP14.2 million (31.3.2017: GBP37.4 million; 30.9.2017: GBP16.2 million). The fair values have been calculated based on a discounted cash flow model using the relevant reference gilt and appropriate market spread. The valuation technique falls within Level 2 of the fair value hierarchy in IFRS 13.

The Group has no obligation to repay its mortgage bonds or secured term loans in advance of their maturities between 2027 and 2035.

The fair values of the Group's cash and cash equivalents, and those financial instruments included within trade and other receivables, interest bearing borrowings, (excluding the mortgage bonds and the secured term loans), and trade and other payables are not materially different from the values at which they are carried in the financial statements.

15. Share capital

During the period, 27,855,508 ordinary 25p shares were issued at GBP9.52 per share, raising GBP265.2 million. Transaction costs in connection with the issue, which amounted to GBP4.8 million, have been charged against share premium in accordance with the Companies Act 2006.

In respect of the equity issue, Invesco Asset Management Limited and Orosi (UK) Limited were related parties of Shaftesbury PLC for the purposes of the Listing Rules and participated in the equity placing in respect of 1,050,000 and 6,864,368 placing shares respectively, for a total consideration of approximately GBP9.996 million and GBP65.349 million respectively. These transactions were disclosed via the Regulatory News Service on 6 December 2017, in accordance with LR11.1.10R, and Shaftesbury PLC received written confirmation from its sponsor that the terms of the transactions were fair and reasonable as far as Shaftesbury PLC's shareholders were concerned.

Also during the period, 402,426 ordinary 25p shares were issued in connection with the exercise of nil cost options granted under the 2006 LTIP.

16. Dividends paid

 
                                              Six months  Six months        Year 
                                                   ended       ended       ended 
                                               31.3.2018   31.3.2017   30.9.2017 
                                                    GBPm        GBPm        GBPm 
--------------------------------------------  ----------  ----------  ---------- 
Final dividend for: 
Year ended 30 September 2017 at 8.1p 
 per share                                          25.1           -           - 
Year ended 30 September 2016 at 7.55p 
 per share                                             -        21.3        21.3 
Interim dividend for: 
Year ended 30 September 2017 at 7.9p 
 per share                                             -           -        22.0 
Dividends for the period                            25.1        21.3        43.3 
Timing difference on payment of withholding 
 tax                                                   -           -         1.2 
                                              ----------  ----------  ---------- 
Dividends cash paid                                 25.1        21.3        44.5 
--------------------------------------------  ----------  ----------  ---------- 
 

An interim dividend of 8.3p per share in respect of the six months ended 31 March 2018 was declared by the Board on 21 May 2018. The interim dividend will be paid as a PID on 6 July 2018 to shareholders on the register at 15 June 2018. The dividend will be accounted for as an appropriation of revenue reserves in the year ending 30 September 2018.

17. Cash flows from operating activities

 
                                              Six months  Six months        Year 
                                                   ended       ended       ended 
                                               31.3.2018   31.3.2017   30.9.2017 
Operating activities                                GBPm        GBPm        GBPm 
--------------------------------------------  ----------  ----------  ---------- 
Profit before tax                                  123.7       102.4       301.6 
Adjusted for: 
Lease incentives recognised (note 
 2)                                                (0.6)         0.3         0.5 
Charge for share-based remuneration                  0.4         0.7         1.4 
Depreciation                                         0.2         0.2         0.3 
Investment property valuation movements 
 (note 7)                                         (97.6)      (61.6)     (230.6) 
Profit on disposal of investment properties 
 (note 4)                                          (4.2)       (0.3)       (1.1) 
Net finance costs                                   15.9           -        10.7 
Share of loss/(profit) from joint 
 venture (note 9)                                    1.6       (3.5)       (6.4) 
                                              ----------  ----------  ---------- 
Cash flows from operations before 
 changes in working capital                         39.4        38.2        76.4 
Changes in working capital: 
Change in trade and other receivables              (0.4)         2.5       (0.5) 
Change in trade and other payables                 (0.4)       (3.1)         0.8 
                                              ----------  ----------  ---------- 
Cash generated from operating activities            38.6        37.6        76.7 
--------------------------------------------  ----------  ----------  ---------- 
 

18. Performance measures

Basic and diluted earnings per share

 
                               31.3.2018               31.3.2017               30.9.2017 
-----------------------  ----------------------  ----------------------  ---------------------- 
                             Profit    Earnings      Profit    Earnings      Profit    Earnings 
                          after tax   per share   after tax   per share   after tax   per share 
                               GBPm       pence        GBPm       pence        GBPm       pence 
-----------------------  ----------  ----------  ----------  ----------  ----------  ---------- 
Basic                         123.7        41.7       102.4        36.7       301.6       108.1 
Dilutive effect of 
 share options                    -       (0.1)           -       (0.1)           -       (0.2) 
                         ----------  ----------  ----------  ----------  ----------  ---------- 
Diluted                       123.7        41.6       102.4        36.6       301.6       107.9 
                         ----------  ----------  ----------  ----------  ----------  ---------- 
 
Number of shares for 
 Basic and EPRA EPS 
 (million)                                296.9                   278.8                   278.9 
Number of shares for 
 Diluted EPS (million)                    297.2                   279.5                   279.6 
-----------------------  ----------  ----------  ----------  ----------  ----------  ---------- 
 

EPRA earnings per share

The calculations below are in accordance with the EPRA Best Practice Recommendations.

 
                                      31.3.2018             31.3.2017              30.9.2017 
-------------------------------  --------------------  --------------------  --------------------- 
                                   Profit                Profit                 Profit 
                                    after    Earnings     after    Earnings      after    Earnings 
                                      tax   per share       tax   per share        tax   per share 
                                     GBPm       pence      GBPm       pence       GBPm       pence 
-------------------------------  --------  ----------  --------  ----------  ---------  ---------- 
Basic                               123.7        41.7     102.4        36.7      301.6       108.1 
EPRA adjustments: 
  Investment property 
   valuation surplus (note 
   7)                              (97.6)      (32.9)    (61.6)      (22.1)    (230.6)      (82.7) 
  Profit on disposal 
   of investment properties 
   (note 4)                         (4.2)       (1.4)     (0.3)       (0.1)      (1.1)       (0.4) 
  Movement in fair value 
   of derivatives                       -           -    (16.1)       (5.8)     (22.0)       (7.9) 
Adjustments in respect 
 of the joint venture: 
  Investment property 
   valuation deficit/(surplus)        4.1         1.4     (1.5)       (0.5)      (2.6)       (0.9) 
  Deferred tax                      (1.0)       (0.4)     (0.1)           -      (0.1)           - 
                                 --------  ----------  --------  ----------  ---------  ---------- 
EPRA earnings                        25.0         8.4      22.8         8.2       45.2        16.2 
-------------------------------  --------  ----------  --------  ----------  ---------  ---------- 
 

Net asset value per share

The calculations below are in accordance with the EPRA Best Practice Recommendations.

 
                                31.3.2018        31.3.2017        30.9.2017 
                                Net assets       Net assets       Net assets 
---------------------------  ---------------  ---------------  --------------- 
                                 Net     Per      Net     Per      Net     Per 
                              assets   share   assets   share   assets   share 
                                GBPm     GBP     GBPm     GBP     GBPm     GBP 
---------------------------  -------  ------  -------  ------  -------  ------ 
Basic                        3,006.3    9.78  2,468.9    8.85  2,646.9    9.49 
Dilutive effect of share 
 options                         0.5              0.5              0.5 
                             -------  ------  -------  ------  -------  ------ 
Diluted                      3,006.8    9.77  2,469.4    8.83  2,647.4    9.46 
Fair value of derivatives          -       -     63.9    0.23        -       - 
Deferred tax(1)                 16.9    0.06     17.9    0.06     17.9    0.06 
                             -------  ------  -------  ------  -------  ------ 
EPRA NAV                     3,023.7    9.83  2,551.2    9.12  2,665.3    9.52 
Fair value of derivatives          -       -   (63.9)  (0.23)        -       - 
Deferred tax(1)               (16.9)  (0.06)   (17.9)  (0.06)   (17.9)  (0.06) 
Excess of fair value over 
 carrying value of debt: 
  Secured term loans(2)       (41.3)  (0.13)   (49.0)  (0.18)   (40.0)  (0.14) 
  Mortgage bonds                19.3    0.06      2.3    0.01     15.5    0.05 
EPRA NNNAV                   2,984.8    9.70  2,422.7    8.66  2,622.9    9.37 
                             -------  ------  -------  ------  -------  ------ 
 
Number of shares (million)             307.3            279.0            279.0 
Number of diluted shares 
 (million)                             307.7            279.8            279.8 
---------------------------  -------  ------  -------  ------  -------  ------ 
 
   1.   Includes our 50% share of deferred tax in the Longmartin joint venture. 

2. Includes the wholly-owned Group's secured term loans and our 50% share of secured term loans in the Longmartin joint venture.

The calculations of diluted net asset value per share show the potentially dilutive effect of share options outstanding at the Balance Sheet date and include the increase in shareholders' equity which would arise on the exercise of those options.

Net asset value return

 
                                       31.3.2018  31.3.2017    30.9.2017 
                                           Pence      Pence        Pence 
 ------------------------------------  ---------  ---------  ----------- 
EPRA NAV at beginning of period (A)       952.00     888.00     888.00 
EPRA NAV at end of period                 983.00     912.00     952.00 
                                       ---------  ---------  --------- 
Increase during the period                 31.00      24.00      64.00 
Dividends paid during the period             8.1       7.55      15.45 
                                       ---------  ---------  --------- 
NAV return (B)                              39.1      31.55      79.45 
                                       ---------  ---------  --------- 
NAV return % (B/A)                          4.1%       3.6%       8.9% 
-------------------------------------  ---------  ---------  --------- 
 
 

Financing ratios

 
                                                31.3.2018                         31.3.2017 
-----------------------------------  --------------------------------  -------------------------------- 
                                                       Share                             Share 
                                     Wholly-owned   of joint           Wholly-owned   of joint 
                                         business    venture    Total      business    venture    Total 
                                             GBPm       GBPm     GBPm          GBPm       GBPm     GBPm 
-----------------------------------  ------------  ---------  -------  ------------  ---------  ------- 
Loan-to-value and gearing 
Nominal value of debt                       959.8       60.0  1,019.8         841.4       60.0    901.4 
Cash and cash equivalents                 (180.7)      (1.7)  (182.4)        (10.3)      (2.2)   (12.5) 
                                     ------------  ---------  -------  ------------  ---------  ------- 
Net debt (A)                                779.1       58.3    837.4         831.1       57.8    888.9 
                                     ------------  ---------  -------  ------------  ---------  ------- 
Fair value of investment 
 properties (B)                           3,640.7      224.7  3,865.4       3,228.1      225.9  3,454.0 
Loan-to-value (A/B)                         21.4%      25.9%    21.7%         25.7%      25.6%    25.7% 
 
EPRA net assets (C)                                           3,023.7                           2,551.2 
Gearing (A/C)                                                   27.7%                             34.8% 
 
Interest cover 
Operating profit before investment 
 property disposals & valuation 
 movements (A)                               39.4        3.6     43.0          37.0        4.1     41.1 
 
Finance costs                                16.2        1.4     17.6          16.1        1.4     17.5 
Finance income                              (0.3)          -    (0.3)             -          -        - 
                                     ------------  ---------  -------  ------------  ---------  ------- 
Net finance costs (B)                        15.9        1.4     17.3          16.1        1.4     17.5 
                                     ------------  ---------  -------  ------------  ---------  ------- 
Interest cover (A/B)                         2.5x       2.6x     2.5x          2.3x       2.9x     2.3x 
 
Cost of debt 
Blended cost of drawn borrowings             3.0%       4.4%     3.1%          3.6%       4.4%     3.6% 
Commitment fees on undrawn 
 bank facilities                             0.7%          -     0.7%          0.7%          -     0.7% 
Blended cost of debt (including 
 commitment fees on undrawn 
 facilities)                                 3.2%       4.4%     3.2%          3.7%       4.4%     3.7% 
-----------------------------------  ------------  ---------  -------  ------------  ---------  ------- 
 

Financing ratios

 
                                                             30.9.2017 
------------------------------------------------  -------------------------------- 
                                                                    Share 
                                                  Wholly-owned   of joint 
                                                      business    venture    Total 
                                                          GBPm       GBPm     GBPm 
------------------------------------------------  ------------  ---------  ------- 
Loan-to-value and gearing 
Nominal value of debt                                    959.8       60.0  1,019.8 
Cash and cash equivalents                               (45.6)      (0.6)   (46.2) 
                                                  ------------  ---------  ------- 
Net debt (A)                                             914.2       59.4    973.6 
                                                  ------------  ---------  ------- 
Fair value of investment properties (B)                3,418.9      227.8  3,646.7 
Loan-to-value (A/B)                                      26.7%      26.1%    26.7% 
 
EPRA net assets (C)                                                        2,665.3 
Gearing (A/C)                                                                36.5% 
 
Interest cover 
Operating profit before investment property 
 disposals & valuation movements (A)                      74.2        7.9     82.1 
 
Finance costs                                             32.8        2.7     35.5 
Finance income                                           (0.1)          -    (0.1) 
                                                  ------------  ---------  ------- 
Net finance costs (B)                                     32.7        2.7     35.4 
                                                  ------------  ---------  ------- 
Interest cover (A/B)                                      2.3x       2.9x     2.3x 
 
Cost of debt 
Blended cost of drawn borrowings                          3.0%       4.4%     3.1% 
Commitment fees on undrawn bank facilities                0.7%          -     0.7% 
Blended cost of debt (including commitment fees 
 on undrawn facilities)                                   3.2%       4.4%     3.3% 
------------------------------------------------  ------------  ---------  ------- 
 

See also above for explanations of why we use these performance measures.

19. Related party transactions

Transactions between the Company and its subsidiaries, which are related parties, have been eliminated on consolidation and are not disclosed in this note.

Transactions and balances between the Company and its joint venture, which have not been eliminated on consolidation are summarised below:

 
                                       31.3.2018  31.3.2017  30.9.2017 
                                            GBPm       GBPm       GBPm 
-------------------------------------  ---------  ---------  --------- 
Transactions with the joint venture: 
Administrative fees receivable               0.1        0.1        0.1 
Dividends receivable                         1.5        2.8        4.8 
 
Balance with the joint venture: 
Amount due from joint venture                2.4        0.9        0.9 
-------------------------------------  ---------  ---------  --------- 
 

20. Post balance sheet event

On 30 April 2018 the Group exchanged contracts to acquire a building in Carnaby for GBP22.7 million (including costs). Further details are set out above.

Responsibility Statement

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

-- important events that have occurred during the first six months and their impact on the condensed set of half year financial statements, and a description of the principal risks and uncertainties for the remaining six months of the financial year; and

-- material related party transactions in the first six months and a fair review of any material changes in the related party transactions described in the last Annual Report.

The maintenance and integrity of the Shaftesbury website is the responsibility of the directors. Legislation in the United Kingdom governing the preparation and dissemination of financial statements may differ from legislations in other jurisdictions.

The directors of Shaftesbury PLC are listed in its Annual Report for the year ended 30 September 2017.

A list of current directors is maintained on the Shaftesbury PLC website: www.shaftesbury.co.uk.

On behalf of the Board

Brian Bickell

Chief Executive

Chris Ward

Finance Director

21 May 2018

Independent Review Report to Shaftesbury PLC

Introduction

We have been engaged by the Company to review the condensed set of financial statements in the half-yearly financial report for the six months ended 31 March 2018 which comprises the Unaudited Group Statement of Comprehensive Income, the Unaudited Group Balance Sheet, the Unaudited Group Cash Flow Statement, the Unaudited Group Statement of Changes in Equity and the related notes to the financial statements 1 to 20. We have read the other information contained in the half yearly financial report and considered whether it contains any apparent misstatements or material inconsistencies with the information in the condensed set of financial statements.

This report is made solely to the Company in accordance with guidance contained in International Standard on Review Engagements (UK and Ireland) 2410 "Review of Interim Financial Information Performed by the Independent Auditor of the Entity" issued by the Auditing Practices Board. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Company, for our work, for this report, or for the conclusions we have formed.

Directors' Responsibilities

The half-yearly financial report is the responsibility of, and has been approved by, the directors. The directors are responsible for preparing the half-yearly financial report in accordance with the Disclosure and Transparency Rules of the United Kingdom's Financial Conduct Authority.

As disclosed in note 1, the annual financial statements of the Group are prepared in accordance with IFRSs as adopted by the European Union. The condensed set of financial statements included in this half-yearly financial report has been prepared in accordance with International Accounting Standard 34, "Interim Financial Reporting", as adopted by the European Union.

Our Responsibility

Our responsibility is to express to the Company a conclusion on the condensed set of financial statements in the half-yearly financial report based on our review.

Scope of Review

We conducted our review in accordance with International Standard on Review Engagements (UK and Ireland) 2410, "Review of Interim Financial Information Performed by the Independent Auditor of the Entity" issued by the Auditing Practices Board for use in the United Kingdom. A review of interim financial information consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing (UK and Ireland) and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

Conclusion

Based on our review, nothing has come to our attention that causes us to believe that the condensed set of financial statements in the half-yearly financial report for the six months ended 31 March 2018 is not prepared, in all material respects, in accordance with International Accounting Standard 34 as adopted by the European Union and the Disclosure and Transparency Rules of the United Kingdom's Financial Conduct Authority.

Ernst & Young LLP

London

21 May 2018

Shareholder Information

Registrar

Equiniti Limited

Aspect House

Spencer Road

Lancing

West Sussex, BN99 6DA

Telephone 0371 384 2294 (International +44 121 415 7047). Lines open 8.30am to 5.30pm, Monday to Friday.

Shareholder accounts may be accessed online through www.shareview.co.uk. This gives secure access to account information instructions. There is also a Shareview dealing service which is a simple and convenient way to buy or sell shares in the Group.

Effect of REIT status on payment of dividends

As a REIT, we do not pay UK corporation tax in respect of rental profits and chargeable gains relating to our property rental business. However, we are required to distribute at least 90% of the qualifying income (broadly calculated using the UK tax rules) as a PID.

Certain categories of shareholder may be able to receive the PID element of their dividends gross, without deduction of withholding tax. Categories which may claim this exemption include: UK companies, charities, local authorities, UK pension schemes and managers of PEPs, ISAs and Child Trust Funds.

Further information and the forms for completion to apply for PIDs to be paid gross are available on the Group's website or from the registrar.

Where the Group pays an ordinary dividend this will be treated in the same way as dividends from non-REIT companies.

The 2018 interim dividend is being paid entirely as a PID.

Corporate Timetable

Financial Calendar

 
 Annual Results           November 2018 
 Annual General Meeting   February 2019 
 

Dividends and Bond interest

Proposed 2018 interim dividend:

 
 Ex-dividend    14 June 2018 
 Record date    15 June 2018 
 Payment date   6 July 2018 
 
 
 Bond interest   30 September/31 March 
 

Glossary of terms

Annualised current income

Total annualised actual and 'estimated income' reserved by leases at a valuation date. No rent is attributed to leases which were subject to rent-free periods at that date. It does not reflect any ground rents, head rents nor rent charges and estimated irrecoverable outgoings at the valuation date. 'Estimated income' refers to gross ERVs in respect of rent reviews outstanding at the valuation date and, where appropriate, ERV in respect of lease renewals outstanding at the valuation date where the fair value reflects terms for a renewed lease. Like-for-like growth in annualised current income is the change during a period, adjusted to remove the impact of acquisitions and disposals, expressed as a percentage of annualised current income at the start of the period.

Alternative Performance Measure (APM)

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.

Best Practices Recommendations (BPR)

Standards set out by EPRA to provide comparable reporting between investment property companies.

Blended cost of debt

Weighted average cost of drawn borrowings, plus non-utilisation fees on undrawn borrowings.

Compound Annual Growth Rate (CAGR)

The year-on-year growth rate of an investment over a specified period of time.

Diluted net asset value per share

Net asset value per share taking into account the dilutive effect of potential vesting of share options.

EPRA

European Public Real Estate Association.

EPRA adjustments

Standard adjustments to calculate EPRA measures, in accordance with its BPR.

EPRA cost ratio

Total costs as a percentage of gross rental income.

EPRA earnings

The level of recurring income arising from core operational activities. It excludes all items which are not relevant to the underlying and recurring portfolio performance.

EPRA EPS

EPRA earnings divided by the weighted average number of shares in issue during a reporting period.

EPRA net assets

Net assets adjusted for items that are not expected to crystallise in normal circumstances, such as the fair value of derivative financial instruments and deferred tax on property valuation surpluses. It includes additional equity if all vested share options were exercised.

EPRA NAV

EPRA net assets per share, including the potentially dilutive effect of outstanding options granted over ordinary shares.

EPRA triple net assets

EPRA net assets amended to include the fair value of financial instruments and debt.

EPRA NNNAV

EPRA NAV amended to include the fair value of financial instruments and debt.

EPRA vacancy

The rental value of vacant property available expressed as a percentage of ERV of the total portfolio.

Equivalent yield

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 disregarding potential changes in market rents.

European Public Real Estate Association (EPRA)

EPRA develops policies for standards of reporting disclosure, ethics and industry practices.

Estimated rental value (ERV)

ERV is the market rental value of properties owned by the Group, estimated by the Group's valuers.

Like-for-like ERV growth is the change in ERV during a period, adjusted to remove the impact of acquisitions and disposals, expressed as a percentage of ERV at the start of the period.

Fair value

The amount at which an asset or liability could be exchanged between two knowledgeable, willing and unconnected parties in an arm's length transaction at the valuation date.

Gearing

Nominal value of Group borrowings expressed as a percentage of EPRA net assets.

Interest cover

Operating profit before investment property disposals and valuation movements, divided by finance costs net of finance income.

Like-for-like growth in rents receivable

The increase in rents receivable during an accounting period, adjusted to remove the impact of acquisitions, disposals and changes as a result of larger refurbishment schemes, expressed as a percentage of rents receivable in the corresponding previous accounting period.

Listing Rules

A set of regulations applicable to any company listed on a United Kingdom Stock Exchange.

Loan-to-value (LTV)

Nominal value of borrowings expressed as a percentage of the fair value of property assets.

Long Term Incentive Plan (LTIP)

An arrangement under which an employee is awarded options in the Company at nil cost, subject to a period of continued employment and the attainment of NAV and TSR targets over a three-year vesting period.

Net asset value (NAV)

Equity shareholders' funds divided by the number of ordinary shares at the balance sheet date.

Net asset value return

The change in EPRA NAV per ordinary share plus dividends paid per ordinary share during the period of calculation, expressed as a percentage of the EPRA NAV per share at the beginning of the period.

Net initial yield

Net initial income at the date of valuation expressed as a percentage of the gross valuation. Yields reflect net income after deduction of any ground rents, head rents, rent charges and estimated irrecoverable outgoings.

Net investment

Acquisitions and capital expenditure less disposals in a period.

Portfolio reversionary potential

The amount by which the ERV exceeds current income, measured at a valuation date.

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.

Real Estate Investment Trust (REIT)

A REIT is a tax designation for an entity or group investing in real estate that reduces or eliminates corporation tax on rental profits and chargeable gains relating to the rental business, providing certain criteria obligations set out in tax legislation are met.

Regulatory News Service (RNS)

RNS is both a regulatory and financial communications channel which allows companies to issue announcements to fulfil their regulatory disclosure obligations.

Topped-up net initial yield

Net initial yield adjusted to assume rent-free periods or other unexpired lease incentives, such as discounted rent periods and stepped rents, have expired.

Total Shareholder Return (TSR)

The change in the market price of an ordinary share plus dividends reinvested expressed as a percentage of the share price at the beginning of the period.

Valuation growth

The valuation movement and realised surpluses or deficits arising from the Group's investment property portfolio expressed as a percentage return on the valuation at the beginning of the period adjusted, on a time weighted basis, for acquisitions, disposals and capital expenditure. When measured on a like-for-like basis, the calculation excludes those properties acquired or sold during the period.

This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact rns@lseg.com or visit www.rns.com.

END

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