Derwent London Regulatory News (DLN)

25 February 2016

Derwent London plc ("Derwent London"/ "the Group")

Excellent lettings, strong finances and well positioned for 2016

Financial highlights

· EPRA net asset value per share increased by 21.6% to 3,535p from 2,908p at 31 December 2014, and by 9.6% from 3,226p at 30 June 2015.

· Net rental income increased 7.8% to £138.7m from £128.7m in 2014.

· EPRA profit before tax rose 31.0% to £81.6m from £62.3m last year.

· EPRA earnings per share increased 25.0% to 71.34p per share.

· Proposed final dividend per share increased by 10.0% to 30.80p, making 43.40p for the full year.

Operational performance in 2015

· New lettings of £27.1m, on average 10.8% above December 2014 ERVs.

· The full year underlying portfolio valuation uplift was 16.5%, and was 7.1% in H2.

· The underlying valuation uplift on our developments was 31.5% in the year.

· Total property return was 19.9%, and ahead of the IPD Central London Offices Index of 19.7%.

· EPRA true equivalent yield was 4.52%; a 21bp reduction in 2015 of which 4bp was in H2.

· Estimated rental values on an EPRA basis increased by 11.8% in 2015 (by 6.6% in H2).

· Completed 226,000 sq ft of development - 72% profit on cost.

· Total acquisitions were £246m, total disposals £277m, and capital expenditure £116m.

Portfolio well positioned for future earnings growth with a good start to 2016

· Achieved £10.1m of new lettings (£9.2m net) in 2016 to date.

· Includes pre-letting all the offices at The Copyright Building W1 to Capita (announced today).

· Estimated portfolio reversion £141m pa at year end:

o 25% contractual.

o 54% from space to be let, principally developments and refurbishments of which half to be delivered in 2016-17, and half in 2019.

o 21% from lease reviews and renewals.

· Estimated future capital expenditure including capitalised interest of £569m over four years.

· Estimated 5-8% ERV growth on our portfolio in 2016.

Strong finances

· Healthy 2015 financial ratios: interest cover 3.6x; dividend cover 1.6x; and LTV 17.8%.

· Net debt fell 10% to £911.7m in 2015.

· Debt maturity rose to 7.3 years at December 2015 before US Private Placement (USPP) in 2016.

· £105m USPP in February 2016 at attractive rates (announced today).

· Proforma cash and undrawn facilities of £374m including USPP.

Robbie Rayne, Chairman, commented:

"The Group made excellent progress in 2015, with results which highlight the underlying strength of our business. The Board has proposed a 10% increase in the final dividend reflecting our recent earnings growth and confirming our confidence in their longer term momentum."

John Burns, Chief Executive Officer, commented:

"We are seeing good occupier demand for our properties and our portfolio has significant reversionary potential. We recognise that London property cannot be immune from the economic and political issues causing global stock market volatility. However, we have a strong financial position and the current year has started well for our business as evidenced by today's announcements."

Webcast and conference call

There will be a live webcast together with a conference call for investors and analysts at 09:30 GMT today. The audio webcast can be accessed via www.derwentlondon.com.

To participate in the call, please dial the following number: +44 (0)20 3059 8125

Please say "Derwent London" when asked for the participant code.

A recording of the conference call will also be made available following the conclusion of the call on www.derwentlondon.com.

For further information, please contact:

CHAIRMAN'S STATEMENT

Overview

Derwent London made excellent progress in 2015. A highlight of the Group's performance was the 21.6% increase in our EPRA diluted NAV to 3,535p per share driven by the combination of rental value growth, development surpluses, asset management activity and yield tightening. There was also a particularly strong rise in EPRA recurring earnings which increased by 25.0% to 71.34p per share, the product of our substantial letting progress in recent years and lower interest costs.

As a result of this growing income stream, the Board has recommended raising the final dividend by 10.0% to 30.80p per share to make the full year's dividend 43.40p, an increase of 9.5% for the year. At this level the total dividend for 2015 is 1.6 times covered by recurring earnings. Our average dividend growth in the eight years since we converted to a REIT has been 8.6% pa.

During the year the London office market saw strong demand both from occupiers and investors. In what proved a record year for the Group, we let 523,800 sq ft in 79 transactions capturing £27.1m pa of rental income. On average these lettings were 10.8% above December 2014 Estimated Rental Values (ERV) and, by income, 44% were pre-lets. Buoyant investment demand enabled us to make £247.8m of investment property disposals at an average surplus of 18.4% to our December 2014 book values. Despite the competitive market conditions the Group was also able to acquire two major properties in the Tech Belt for £232.0m, and we invested £116.4m of capital expenditure in our projects. After a year of significant refinancing activity, including the early conversion to equity of the first of our two convertible bonds, we have strengthened our financial position with enhanced interest cover of 3.62x and the LTV ratio being reduced to 17.8%.

As long term investors in central London, it is important that our activities benefit the neighbourhoods and local environments in which we invest. Last year we extended our commitment to the Group's Community Investment Fund, which will now cover the Tech Belt as well as Fitzrovia. Our Sustainability Report, published simultaneously with the Annual Report, gives more detail of the Group's activities. Brief highlights include improved resource efficiency with reductions in carbon generation and energy use. We continue to record high ratings from GRESB, CDP and EPRA, and are a member of FTSE4good. Looking forward, to enhance the transparency of our sustainability and corporate responsibility, we will be following Global Reporting Initiative guidelines from 2016 onwards.

This year's results provide further testimony to the success of our strategy and culture. The Group has again been recognised in the Management Today awards for 'Britain's Most Admired Companies'. In this annual survey we were ranked third across all UK companies, and first in the property sector for the sixth successive year. It is also gratifying to know that in a recent non-attributable staff survey, of the 96% who responded, all stated that they were proud to work for the Group. Once again I would like to thank them as well as our other stakeholders and advisers.

The Board

Last year we continued to refresh the Board's composition. June de Moller and Robert Farnes retired and we would like to thank them for their insight and sound judgement over a long period. In their place we are delighted to welcome Claudia Arney and Cilla Snowball, who bring with them extensive business, advertising, marketing, media and technology experience.

Outlook

The current year has started with major falls in global stock markets mainly based on concerns regarding global economic growth. In addition, the UK is facing an EU referendum in June, the result of which will either confirm the existing situation or extend the period of uncertainty as the ramifications of leaving the EU are worked out. It is too early to tell what impact this may have on the London property market, but a protracted period of uncertainty is likely to reduce business confidence.

UK economic growth appears to be moderating and, as a global city, London is not insulated from external risks, but the central London office market starts the year in a strong position with good demand and low vacancy rates. If current market conditions persist we estimate rental value growth across our portfolio of 5-8% and yields to remain firm in 2016. We expect the strongest rental growth will be at the lower end of our £45-80 per sq ft mid-market range and, with an average ERV on our central London office portfolio of only £51 per sq ft, the Group is well placed to benefit.

Operationally 2016 has started well for us. In particular we have achieved £9.2m net of new lettings thereby considerably de-risking our immediate development pipeline, and raised additional long-term finance. Together with the strong occupier interest being shown in our schemes, this enables the Group to continue its development programme confident in its resilience to potential market turbulence and well positioned to take advantage of opportunities that may arise.

CHIEF EXECUTIVE'S STATEMENT

Last year's achievements reinforced the Group's strong position as we consistently look to improve our long term income prospects. This approach has seen us assemble a portfolio that has significant opportunities to benefit from improving locations, hands-on asset management and regeneration. We start 2016 with £141.0m of estimated reversion. Just over half of this potential growth derives from developments and refurbishments with a total cost to complete of £569m (equivalent to 11% of the December 2015 property portfolio) which will be phased over the next four years. The completion of this programme will add net lettable area and will signify a major upgrade to our portfolio ensuring it meets the latest occupational demands and environmental standards. In the medium term our strategy is to deliver these growth prospects while ensuring the business does not incur undue risks.

Portfolio positioned for future earnings growth

Our strategy ensures that whilst our portfolio contains a wealth of future value enhancing opportunities the vast majority remains income producing (at the year end this was 77% by area). Approximately 53% consisted of property which we have already regenerated, but which have opportunities for growth through asset management, and another 24% was occupied buildings that form our stock of future redevelopment and refurbishment schemes, where we retain control over a project's timing. The remaining 23% of the portfolio is subject to development or refurbishment projects which we continue to de-risk as they progress. During the year the EPRA vacancy rate, which is based on the space available to let, was reduced from 4.1% to 1.3%. Dependent on future pre-letting activity, this could rise in the second half of 2016 as projects are completed.

Although we achieved new rental levels at a number of properties in 2015, we believe our buildings continue to offer occupiers good value with the average ERV of our central London office portfolio still only £51 per sq ft, and with 56% of our portfolio by area let below £50 per sq ft on a 'topped-up basis'. These lie comfortably at the lower end of our middle-market range of £45-£80 per sq ft.

The current development and refurbishment programme will benefit from the opening of Crossrail. The additional estimated £569m capital expenditure to complete these projects, which includes £48m of capitalised interest, will be spread over the next four years. Construction cost inflation remains high, and capacity constraints on many contractors have seen delays across the industry including at some of our schemes. The cumulative ERV of these projects (including pre-lets) is £78.9m of which half will not be completed until 2019.

We phase the timing of the capital expenditure on our developments to ensure that it is appropriate to the Group's risk appetite. During last year we completed 226,000 sq ft of projects which are now 97% let or sold. In the next two years we expect to deliver 728,000 sq ft, which is currently 32% let by area. This includes pre-lets in the current year of all the office space (87,150 sq ft) at The Copyright Building W1 to Capita, and 28,600 sq ft at White Collar Factory EC1 to Adobe. The remaining part of our development programme totalling 620,000 sq ft relates to two West End developments: 80 Charlotte Street W1 and Brunel Building W2. Neither building completes until 2019, but we are already having preliminary discussions with potential occupiers for part of this space.

We have taken steps to unlock potential major schemes that we could start from 2018 onwards. We are particularly pleased to have agreed terms with Crossrail, which enable us to gain access to redevelop above the Crossrail site at 1 Oxford Street W1, one of London's most prominent locations.

Disciplined approach to acquisitions and disposals

We have an opportunistic approach to acquisitions within our strategic plan and were pleased to acquire two substantial Tech Belt properties last year at attractive prices of around £545 per sq ft. Both present short term refurbishment opportunities and together will contribute 40% of our 2016-17 projects. In the longer term, both buildings offer the opportunity for regeneration and the creation of additional space in the next decade.

Overall the proceeds from property sales of £277m exceeded the cost of new acquisitions. Typically we sell investment assets when we have identified better relative growth elsewhere. In 2015, our disposals included a number of properties as part of a property swap, and a sale to an owner-occupier after we had obtained planning consent for a major hotel development. In addition we have completed and sold most of our available residential units. Following our decision to refurbish 25 Savile Row W1 as offices, our residential exposure remains modest and primarily consists of ancillary space connected with our larger commercial projects. In accordance with our usual approach, we expect to continue to recycle capital with over £100m of investment property sales planned in the current year.

Finance

Underpinning our business is a flexible financial structure and last year we took steps to strengthen this further. In January 2015 our £175m convertible bonds 2016 were converted early thereby raising new equity and reducing debt. Later in the year, we increased the level of our unsecured revolving debt by refinancing a secured loan and extended the maturity of our principal bank facility. The Group's year end financial ratios are strong with interest cover of 3.62 times and an LTV ratio of 17.8%. Since the year end we have also arranged £105m of new long-term debt which will increase the level of undrawn facilities.

The year ahead

Occupier and investment demand remains strong in Derwent London's markets and we have started the year well increasing contracted income with a significant number of new lettings at good levels. We have also enhanced our financial structure. The general economic environment has shown signs of nervousness and volatility in 2016 and, if conditions were to deteriorate, our balance sheet strength would give us considerable resilience. However, providing occupier demand remains solid, we expect to see further good letting activity as the year unfolds thereby locking in significant income growth.

OUR MARKET

See Appendix 1 for supporting graphs

http://www.rns-pdf.londonstockexchange.com/rns/0840Q_-2016-2-24.pdf

Last year the Group continued to enjoy very favourable market conditions with strong occupier demand underpinned by a growing UK economy. The recent falls in public equity prices and the value of oil and other commodities demonstrate that, despite some recovery in the USA and European economies, overall economic growth remains fragile and faces a number of risks. The latest estimates see the UK economy growing at about 2% pa over the next two years, one of the faster growth rates amongst the G8 economies, and London's growth rate is expected to remain in excess of the UK average.

This level of economic activity remains conducive to employment growth and continuing low interest and inflation rates in the UK. CBRE forecasts Inner London office employment growth at 1.7% pa in the next five years. Last year 14.5m sq ft of central London office space was taken up, of which 4.4m sq ft was in the West End. Total take-up was 3% below the previous year's level, but remains well above trend. In 2015 demand from the financial sector recovered so take up was more evenly spread across sectors with business and professional services at 35.8%, banking and finance at 24.4% and TMT at 20.2%. The overall vacancy rate reduced to 2.5% in central London (one of the lowest levels recorded), and to 2.2% in the West End. Prime rental levels are now estimated at £120 per sq ft in Mayfair and St. James's, £82.50 per sq ft in Fitzrovia and £68.50 per sq ft in the City.

The decline in the vacancy rate has led to a supply response with estimated above average central London completions in each of the next five years. In total this adds up to a potential 35 million sq ft of space, or 16% of the current market. The net impact is likely to be lower than this as only 33%, or 11.6m sq ft is under construction and, of this amount, 40% is pre-let or under offer. The outcome is 6.9m sq ft of speculative space currently available which represents less than half of last year's take-up. The full impact of the 23.4m sq ft yet to start may be deferred due to planning delays and the availability of finance.

Another feature of the potential supply is that only 24%, or 8.2m sq ft, is in the West End and the amount of new supply to be delivered in the West End is expected to fall between 2016 and 2019. Of this potential supply 2.5m sq ft is under construction of which 30% is pre-let. This leaves 1.7m sq ft under speculative construction representing 40% of last year's take-up. After the completion of White Collar Factory and the refurbishment of The White Chapel Building E1 later this year, our subsequent committed major projects are all located in the West End.

Last year saw £16.2bn of central London investment transactions (£8.2bn in H1), which was £2.3bn below 2014 levels with a smaller volume of deals above £100m. Overseas investors continued to dominate, but the UK buyers' share of the total increased to 42% from 31%. CBRE reports that demand weakened in Q3 before picking up again in Q4, and there was £4.5bn of office stock under offer at year end. However, it expects to see more stock on the market as some investors seek to take profits. CBRE expects yields to be unchanged in 2016 given the background of continuing low interest rates and central London's growth prospects. It estimates rental growth in the City and West End markets for 2016 to be over 6%. Our own portfolio has a more significant West End and Tech Belt weighting than the central London average, but CBRE's views support our own estimates of 5-8% average ERV growth across our portfolio and investment yields to remain firm in 2016.

In the near term the London property market continues to face a number of specific opportunities and challenges. Crossrail is on track to open in 2018. This will improve London's east-west connectivity and, in central London, the new service is expected to particularly benefit Tottenham Court Road and Farringdon. Approximately half our portfolio is located near these two stations. With London's population growth expected to continue, attention has begun to focus on central London's next major rail project, Crossrail 2, but this is still uncommitted and the project is unlikely to complete before 2030 at the earliest. If it goes ahead it will improve north-south connectivity, again running through Tottenham Court Road and with new stations in our Islington and Victoria villages.

It is expected that business rates (local taxes) will increase in 2017, and this is likely to raise occupation costs in London. The new rates will be set on April 2015 rental levels, whereas the current rates are set on April 2008 levels. As most London commercial property has experienced good rental growth in that period, business rates are likely to rise, although a transitional period, if adopted, could defer the full impact. Although these costs are borne by our tenants, the rise in overall occupation costs may affect future rental growth while these additional expenses are absorbed. CBRE has recently estimated the impact across 19 central London locations. On an unweighted basis the average increase in rates on prime offices is 40%, which translates into an average increase of occupational costs (rates and rents) of 11%. Given that we have seen strong rental growth on our properties we would expect to be affected and CBRE estimates that occupational costs in our largest village, Fitzrovia will increase by 4%. Based on their numbers, the successful Shoreditch and Farringdon locations could experience some of the higher increases of our villages, with increases of 13% and 9% respectively. These numbers remain a matter of conjecture at this stage, but they suggest Tech Belt total occupancy costs will still remain substantially below most of the traditional core office locations.

As well as these two specific catalysts there are two uncertainties based on upcoming votes. On 5 May Londoners will choose a new Mayor, and, whatever the outcome, there are likely to be some policy changes. In addition, a national referendum on whether the UK should remain in the European Union is to be held on 23 June. We have previously discussed the additional property market uncertainty that we would expect to see if the result was for the UK to leave the EU. CBRE warns that the central London office market would be the most affected given the sensitivity of the financial services industry. Our own portfolio would not be immune to any potential fall out, but it has no exposure to the City core market and financial tenants accounted for just 2% of our rental income in December 2015.

VALUATION

See Appendix 2 for supporting graphs and table

http://www.rns-pdf.londonstockexchange.com/rns/0840Q_1-2016-2-24.pdf

The Group's investment portfolio was valued at £5.0bn as at 31 December 2015, having benefited from buoyant occupational demand, development surpluses and a further tightening of valuation yields. The valuation surplus for the year was £672.2m, before accounting adjustments of £20.8m (see note 11) giving a total reported movement of £651.4m. The underlying valuation increase was 16.5% which followed 20.4% in 2014, another strong year. We have outperformed our benchmarks again in 2015. The IPD Central London Offices Index increased by 15.7% and the wider IPD All UK Property Index rose by 7.8%.

By location, our central London properties, which constitute 98% of the portfolio, saw an underlying valuation increase of 16.8%. The West End was up 14.6% and the City Borders rose 22.5%. The Scottish properties represent the balance of the portfolio and increased by 1.3%. The portfolio's total property return was 19.9% in 2015 compared to 25.1% in 2014. The IPD total return index was 19.7% for Central London Offices and 13.1% for All UK Property.

Within the investment portfolio, we were on site at five developments during the year. Four of these, Turnmill EC1, 40 Chancery Lane WC2, White Collar Factory EC1 and The Copyright Building W1 were commercial developments whilst the fifth was a small residential scheme at 73 Charlotte Street W1. In total these projects were valued at £457.5m and delivered a 31.5% uplift in the year. Turnmill and 40 Chancery Lane were completed in the year and handed over to Publicis Groupe, and at 73 Charlotte Street the majority of the apartments have been sold. At year end we were still on-site at White Collar Factory and The Copyright Building. These two projects were valued at £259.3m and are progressing well.

At the end of the year we added two new developments, both properties where we had achieved planning permissions for substantial floor area increases. These were 80 Charlotte Street W1 and Brunel Building W2 which were valued at £251.4m. Both will be completed in 2019.

At 1-2 Stephen Street W1, our major refurbishment project during the year, we completed the latest phase of works. This focused on improving and extending the retail units on Tottenham Court Road and followed a phased upgrade of nearly half the office space. The letting of the majority of the retail units and the office refurbishment at above anticipated rental values contributed to a strong valuation rise of 19.0% on the property to £340.6m.

Looking at our rental growth, it was another strong year. Rental values, on an EPRA basis, rose by 11.8% following 9.0% in 2014. During 2015 the City Borders saw rental growth of 15.2% and the West End 10.8%.

On an EPRA basis the portfolio's initial yield was 3.1% which increases to 3.8% on a 'topped-up' basis, following expiry of rent free periods and contractual rental uplifts. For the previous year, these figures were 3.4% and 4.0% respectively. The true equivalent yield at year end was 4.52%, a 21bp reduction over the year and follows 55bp of yield tightening in 2014. This tempering of yield compression was further illustrated with the second half of 2015's movement being 4bp compared to 17bp in the first half. As valuation yields appear to have levelled out so future property valuation growth is most likely to come from rental returns, development surpluses and asset management.

The December 2015 valuation recorded a good increase in our portfolio's contracted income and a very significant increase in our potential income. Overall, our contracted income has risen 4.1% to £137.1m pa and our ERV has risen 29.0% to £278.1m pa.

The portfolio's reversion stands at £141.0m. Of this growth £35.5m is contractual and due to come from fixed uplifts or the expiry of rent free periods within the leases. Adding this to our contracted income takes 'topped-up' rent to £172.6m, 5.4% higher than last year.

The bulk of the reversion comes from the potential income from letting either vacant space under construction, under refurbishment or currently available. It primarily reflects the recent start of the two new developments at 80 Charlotte Street W1 and Brunel Building W2, and the acquisition of The White Chapel Building E1 (previously known as Aldgate Union), which is currently undergoing refurbishment. The total ERV of vacant space at the year end was £76.4m pa. Whilst this has more than doubled since June 2015, much of this space will not be delivered for four years. These projects require £569m of further expenditure, and offer a degree of flexibility on the timing of delivery. Of this vacant space 75% derives from developments, 22% from refurbishments and only 3% represents existing vacancy. We have let or pre-let 12% of this space since the year end for £9.2m pa net, at levels in excess of December 2015 ERV.

The final component of our growth could come from lease reviews and renewals and this is estimated to add £29.1m to our income, which is 24% higher than last year.

PORTFOLIO MANAGEMENT

See Appendix 3 for supporting graphs and tables

http://www.rns-pdf.londonstockexchange.com/rns/0840Q_2-2016-2-24.pdf

2015 was a record year for Group letting activity. In total we secured £27.1m of rental income on 523,800 sq ft at an average level 10.8% above December 2014 ERVs . Of this, 44% by income were pre-lets as we let development space during its course of construction. Open market lettings were 14.3% above December 2014 ERVs. Second half lettings totalled £10.7m pa on 201,200 sq ft, and were on average 22.3% above December 2014 ERVs or 12.9% above June 2015 ERVs. Notable new rental levels were achieved at 1 Stephen Street W1, Davidson Building WC2 (since sold) and Charlotte Building W1 all at £80 per sq ft or above for the upper floors, and at White Collar Factory EC1, Tea Building E1 and Angel Square EC1 where rents of £62.50 per sq ft, £57.50 per sq ft and £55.00 per sq ft respectively, were obtained.

Significant transactions included the letting of the majority of the commercial space on our recently completed projects including the office space at 1-2 Stephen Street W1 and eight of the nine retail units at Tottenham Court Walk W1. Together these added £5.8m to rents. We also made our first pre-lets at White Collar Factory securing £4.9m pa.

The purchases of Angel Square EC1 in November 2014 and 20 Farringdon Road EC1 in February 2015 brought almost immediate letting opportunities. The former 126,900 sq ft property was acquired with an income of £2.4m pa, equivalent to an average rent of £19 per sq ft. The majority of the leases expired in March 2015, but we swiftly re-let 98,300 sq ft to Expedia and The Office Group, and the property is now virtually fully let at a rent of £4.8m pa. The second purchase was a 170,600 sq ft building producing £3.2m pa net. In the second half we re-let the 25,700 sq ft ground floor, and embarked on the refurbishment of 88,000 sq ft, of which 38% has been pre-let. Assuming we let the remaining available space at ERV we will have increased the income on the property to £6.5m pa net.

For some time we have been monitoring the expansion of the new breed of flexible office space providers. We could see they were responding to significant demand for small amounts of space, lease flexibility and co-working facilities that would be too management intensive for our business. One operator which caught our attention was The Office Group ("TOG"), who share with us an interest in workspace design. Last year we made three lettings to them totalling 116,150 sq ft, or £6.0m pa of rent (3.5% of contractual rent). All these transactions are at properties with multi-let strategies, and were agreed at market rents with two incorporating an additional profit share once TOG has achieved a threshold return. The most significant of these is at 2 Stephen Street W1 where, based on current profitability, we are expecting overage income of about £7 per sq ft in 2016 on 34,150 sq ft. We expect the TOG space to complement our offer and extend our buildings' appeal to a wider range of potential occupiers to whom we are unable to offer the same level of services and lease flexibility. TOG's services are available both to occupiers within the buildings and to other businesses in the vicinity, which we believe adds to each properties' utility and vibrancy.

Our letting progress saw the EPRA vacancy rate on our portfolio fall from 4.1% to 1.3% in the year. The major components of this residual have either since been let or are currently under offer. However in addition to the immediately available space we have a number of refurbishments under way which will provide letting opportunities during the course of the year. The most significant is at The White Chapel Building E1, which we acquired vacant in December 2015 and is now undergoing a light refurbishment at a cost of around £18m. We expect 200,000 sq ft of refurbished offices to be available here in the latter part of 2016 with an ERV of c.£9.0m. Other notable projects include rejuvenating space at 20 Farringdon Road EC1, Network Building W1 and the eighth floor of 1 Stephen Street W1. Assuming we are unable to secure any further lettings at White Collar Factory or these other projects, our proforma vacancy would rise to c.12%.

During 2015 the Group carried out 35 rent reviews on 357,300 sq ft and 29 lease renewals on 72,300 sq ft. In total this increased the income from these properties by 27.7% to £18.2m pa. 98% of all rents were collected within 14 days of the due date.

In the current year to date we have let 132,300 sq ft for £10.1m pa gross (£9.2m net). The most significant letting was of the 87,150 sq ft office element at The Copyright Building W1 which was announced today. Capita is taking a 20-year lease for a gross rent of £7.4m pa. After ground rents we will receive £6.5m pa. The average office rent is £86 per sq ft, which was above December ERV, but after allowing for rental incentives equivalent to a 34 months rent-free period and a payment to Capita's current landlord to extend their lease to allow a back-to-back move into The Copyright Building, the terms are in line with December levels. The other major letting in the period was a further two floors at White Collar Factory where Adobe has pre-let 28,600 sq ft for £1.8m pa.

Principal lettings in 2015

1 The Group will receive a share of The Office Group's profits on this space above a minimum level

2 Landlord's break in year five

PROJECTS

See Appendix 4 for supporting graphs and tables

http://www.rns-pdf.londonstockexchange.com/rns/0840Q_3-2016-2-24.pdf

During 2015 we completed four major projects totalling 226,000 sq ft, the commercial elements of which are now virtually fully let. Our residential scheme at 73 Charlotte Street W1 was completed in September, and we have sold nine apartments leaving one under offer and one available. These projects have proved very profitable providing the Group with £10.3m of net rental income and the four major projects recorded a 72% profit on cost.

Major projects pipeline

1 Refurbishment

2 Excludes reception area

We are now on-site at four major projects. White Collar Factory is our signature Tech Belt development overlooking Silicon Roundabout. Following five years' research by our own design team, together with AHMM (architects) and Arup (engineers), it incorporates a number of design principles which enhance its flexibility, utility and sustainability to occupiers. The ERV has risen 12% to £16.5m pa in 2015 and we have budgeted to spend a further £62m of capital expenditure to complete the project in Q4 2016 with 38% already pre-let.

At The Copyright Building W1 we have today announced the letting to Capita of the entire office element leaving 20,000 sq ft of retail still to let. The ERV of this retail space is £1.1m pa gross (£1.0m net). We estimate future capital expenditure at £49m to complete the scheme in H2 2017.

At 80 Charlotte Street in the heart of Fitzrovia, we have commenced stripping out with full demolition of the existing property to start later this year. The major island site will comprise a 309,000 sq ft office building capable of being multi-let as well as ancillary retail and residential space. This ancillary space will include the development of 67 Whitfield Street with 14,000 sq ft residential, and the redevelopment of the neighbouring Asta House which will comprise 12,000 sq ft offices and 31,000 sq ft residential including 32% affordable. The project's estimated ERV is £23.9m pa and capital expenditure to complete is estimated at £207m. Following delays in finishing other projects, completion is now expected in H1 2019.

We are also on site at the Brunel Building W2, where our scheme will provide modern flexible office space and enhance the immediate location by opening up the canal side beside Paddington station (another beneficiary of Crossrail). In November we fixed the price of the construction contract and the overall capital expenditure to complete is estimated at £122m. The ERV is £14.8m pa net with completion expected in H1 2019.

At the half year we highlighted the impact of escalating building costs. We challenged the consensus indices that were reporting 4 to 6% annual inflation arguing that in central London it was actually running closer to 10% pa. We expect it to continue at this level through 2016. Our sensitivity to construction costs principally resides with The Copyright Building and 80 Charlotte Street as our other two major projects' costs are fixed. This leaves approximately half of our four year capital expenditure with variable costs but we have assumed inflation in our estimates.

We have made advances on our future projects that could start from 2018 onwards. In July we agreed terms at 1 Oxford Street W1 with Crossrail whereby we will be granted a new 150-year lease in return for a payment to them of £55m. Of this sum £2m has been paid, a further £5m will be payable on release of the site, with the residual £48m payable on practical completion of our buildings. In addition, Crossrail will receive 16% of any development profit and a ground rent equivalent to 5% of the rent on the commercial space. The site, which is currently being developed as the Tottenham Court Road Crossrail station, has planning for 204,000 sq ft offices, 37,000 sq ft retail and a 34,000 sq ft theatre. Work is due to start in early 2018 and this exciting project represents the west side of a major new central London piazza.

Earlier in the year we signed a Memorandum of Understanding with our joint venture partners, The Portman Estate, enabling us to progress preliminary planning studies on another major potential project at 19-35 Baker Street W1. The existing buildings, which are fully let off low rents, comprise 146,000 sq ft, but our plans indicate the site is capable of supporting up to 250,000 sq ft. Our ownership is 55% and the earliest possession date is 2018.

In June we received planning consent for a 110,000 sq ft hotel and offices at Wedge House, 40 Blackfriars Road SE1. The existing property is a 38,700 sq ft building and we had previously engaged with Ennismore, the owners of The Hoxton, to draw up new plans. Following the success of our application and the resolution of a number of outstanding matters we sold the building to Ennismore for £33.0m after costs in December releasing value early and securing a substantial capital uplift. We are being retained as development manager for which we will receive a fee of £1.5m. Completion of the new 192-room Hoxton is expected in 2018.

Since the year end we have received planning permission for two projects: Monmouth House EC1 and Balmoral Grove N7. The former would involve the redevelopment of two existing office buildings of 69,000 sq ft into a new property providing 125,000 sq ft of offices, workspaces and retail. It is located adjacent to White Collar Factory and therefore will benefit from the latter's progress in transforming the south western corner of Silicon Roundabout. Our earliest possession date for this site is 2017. Balmoral Grove is 67,000 sq ft of industrial and office space in Islington. Consent has been obtained to redevelop this site with 280,000 sq ft of residential and commercial space, of which 44% of the residential will be affordable. We have agreed terms to sell this property to a residential developer subject to the resolution of a few outstanding matters.

INVESTMENT ACTIVITY

Despite very competitive market conditions during 2015 we were able to acquire two substantial buildings in the Tech Belt at a low average cost of £545 per sq ft. We also acquired a number of smaller retail and office properties. These are strategically placed close to our current holdings at the eastern end of Oxford Street, and will benefit from the significant changes to this area.

Principal acquisitions 2015

1 Excludes 26,200 sq ft ground floor offices let at a peppercorn rent

2 Includes 36-38 and 42-44 Hanway Street W1

3 Excludes 30,500 sq ft lower ground floor that completed in Q1 2016

The first Tech Belt acquisition was in Clerkenwell, an area we had previously identified as a major beneficiary of Crossrail. Our recent acquisition and development activity has seen our exposure to this village rise from 5% to 11% in the last five years. The 175-year lease of 20 Farringdon Road, with a ground rent of 10% pa was acquired in February 2015 through a property swap. This substantial property is located opposite the new Farringdon Crossrail station which will be an important interchange with the London underground and the Thameslink overground line. In the second half of 2015 we renewed the lease on the 25,700 sq ft ground floor raising the rent from £2 pa to £1.1m pa (£42.50 per sq ft). We are currently refurbishing 88,000 sq ft principally on the upper floors at a total cost of £11m and have pre-let 38% at £45 per sq ft. All the leases expire or have a landlord break in 2021/2022 giving us the scope to consider a more significant redevelopment following the opening of Crossrail which is expected to complete the transformation of an area that is already improving.

The second Tech Belt acquisition was in Whitechapel, at the eastern end of the Tech Belt arc. We see this village as offering attractive value given the good levels of occupier demand here and the rent increases seen elsewhere. We made our first acquisition in the Whitechapel market in 2012 when we acquired 9 and 16 Prescot Street E1. This is now held in a 50/50 joint venture as a consequence of our property swap for 20 Farringdon Road. Our progress on this property and elsewhere in the Tech Belt gave us the confidence to acquire The White Chapel Building with vacant possession. This represents a departure from our normal practice of acquiring income producing buildings. In this exceptional case we believe that, due to the good condition and flexibility of the existing property, it requires only a modest level of refurbishment. Since the year end we have acquired the long lease on the lower ground floor for £12m after costs, which extended our ownership to 285,000 sq ft.

To maintain the balance of our investment portfolio, with its attractive growth profile, it is important that we dispose of assets where either we can secure substantial uplifts or where we now expect only a limited impact on our overall growth. These decisions are made in the context of the Group's income base as a whole.

The volume of our sales activity in the last few years has been at fairly consistent levels. It has also seen us sell most of our isolated smaller buildings in less central locations at substantial premiums to book value. The latest of these were our holdings at Portobello Dock W10. In addition last year we sold a number of more central properties. At the Davidson Building WC2 we completed the refurbishment of a number of floors in Q4 2014. These were let at new rental levels ranging between £72.50 per sq ft and £80 per sq ft during 2015. This fresh rental evidence enabled us to achieve an attractive price for the building. Following the receipt of planning permission for a hotel and office development, we sold Wedge House SE1 to a hotel operator. The three Q1 disposals which formed part of the property swap to acquire 20 Farringdon Road were discussed in last year's report and are included in the Table below.

Principal disposals 2015

Residential development forms a very small part of Group activities. In the last two years our disposals have included a number of residential trading sales relating to our small developments at Queens, Bayswater W2 and The Corner House, Fitzrovia W1. During 2015 these activities raised £23.7m, comprising 13 apartments. Since the year end we have sold the last unit at Queens and have only two apartments remaining at The Corner House. In addition we have the potential to receive an overage payment at Riverwalk House SW1, which is dependent on the scheme's final profitability.

FINANCE REVIEW

See Appendix 5 for supporting graphs and tables

http://www.rns-pdf.londonstockexchange.com/rns/0840Q_4-2016-2-24.pdf

Financial overview

Derwent London has reported another very strong combination of NAV and earnings growth for the year ended 31 December 2015 and, as explained below, has also taken a number of steps during the year to further strengthen its financial position and de-risk its pipeline.

Helped by the issue of shares in January 2015 in connection with our call for early redemption of the 2016 convertible bonds, the Group's net asset value (NAV) rose by £919.7m to £4.0bn through 2015, an increase substantially higher than the £705.2m recorded in 2014. After allowing for the new shares issued, diluted EPRA NAV per share was 21.6% higher than the year before, giving a total return for 2015 of 23.0% (2014: 30.1%).

The benefits of consistently good lettings and asset management over the last year or so, as well as the refinancing activity in 2015 which substantially reduced our interest charge, have been reflected in a 31.0% increase in EPRA profit before tax and a 25.0% increase in EPRA recurring earnings per share to 71.34p compared to the previous year. Backed up by a 5.2 % increase in like-for-like net rents in 2015 and positive lettings continuing into 2016, this has encouraged us to raise the final dividend by 10.0% to 30.8p per share. The total dividend for the year remains well covered at 1.6 times recurring earnings.

Our financing ratios have all improved again, with the loan-to-value ratio reduced from 24.0% at December 2014 to 17.8% in December 2015 and net interest cover up from 286% in 2014 to 362% for 2015. We have also been able to reduce the average IFRS interest rate on debt from 4.22% to 3.93% at December 2015, or down from 3.78% to 3.68% on a cash basis, while paying down net debt by £101.6m during the year and usefully increasing the weighted average unexpired length of our debt facilities.

Keeping to our long-established business model, the short term project pipeline is now substantially de-risked following lettings at the White Collar Factory and The Copyright Building and, as reported elsewhere, we are seeing good enquiries for the White Chapel Building and the space which we are creating for delivery in 2019. With a further £105m of long term financing arranged in February 2016, we have the financial confidence to comfortably build out the committed pipeline, which continues to produce a significant level of development profit, while retaining our financial ratios at attractive levels.

See Appendix 5 for chart of portfolio value, net assets and gearing

http://www.rns-pdf.londonstockexchange.com/rns/0840Q_4-2016-2-24.pdf

Net asset value growth

The overall 627p increase in EPRA NAV per share can be summarised as follows:

See Appendix 5 for NAV 'bridge' chart

http://www.rns-pdf.londonstockexchange.com/rns/0840Q_4-2016-2-24.pdf

A detailed reconciliation showing adjustments from the IFRS NAV to the EPRA NAV is shown in note 22 to the financial statements.

The contribution to NAV growth per share from property revaluations has fallen slightly from 2014, due partly to the larger number of shares in issue, but, at 581p per share (584p including our share of joint ventures) remained at a very high level. Of this increase, 55% came from an increase in estimated rental values adopted by our valuers, 24% from development profits and a relatively lower 21% from yield shift. We also made substantial property disposals during the year achieving 39p per share over book values and demonstrating that our valuations are underpinned by market demand. One of the properties, 9 and 16 Prescot Street, was sold into a joint venture in which the Group has a residual 50% interest. This is the main reason why the carrying value of our investments increased from £7.4m to £30.7m during the year.

As the £175m convertible bonds due in 2016 were redeemed early and converted into new shares in January 2015, there was no further dilution relating to those bonds in 2015. However, with the Group's NAV per share now over £33.35, which is the conversion price of the 2019 convertible bonds, the fully diluted EPRA NAV per share has taken into account 17p per share of dilution in 2015 in relation to the 2019 bonds. Note that the earliest date that the 2019 bonds can be converted into new shares is July 2016.

Medium and long term interest rates continued to move up and down with market sentiment through 2015 and into 2016. The twenty year swap, for example, varied between 1.7% and 2.5% through the course of 2015 and, since the year end, has fallen back to well under 2.0%. These are substantial relative movements but interest rates generally remain at very low levels by historical standards, helping to underpin property yields. We have continued to monitor these rates and to buy down swaps from time to time thereby managing our interest rate exposure. The mark-to-market cost of all our interest rate swaps fell from £25.2m to £17.6m through 2015, the latter figure representing less than 2% of year end net debt. Fair value exposures for our fixed rate debt and bonds also closed substantially through the year helping the EPRA triple net asset value to increase by 23.7% during the year to 3,463p per share.

Income statement

As we progress through the current long London office property cycle, there is naturally a greater focus on income generation. Lettings from recent developments and asset management initiatives have had a tangible impact upon the Group's property income, a trend expected to continue over the next few years. Gross rental income was up by 8.5% to £148.3m and net rental income by 7.8% to £138.7m. Allowing for the profits from sales of residential apartments and other property income, net property and other income increased by £12.5m or 9.2% to £148.6m for the year.

In 2015, the increase in gross rental income came mainly from lettings and rent reviews which added £21.5m of income including £18.3 from lettings commencing in the year. Property acquisitions added another £4.0m of rental income while the disposals brought it down by £7.0m. Rent lost from lease breaks, expiries and voids was £2.6m and from schemes starting was £4.5m. An additional £2.3m came from various small premiums received and 'rights of light' settlements. The other property income of £3.7m related to compensation received from contractors for schemes at 40 Chancery Lane, Turnmill and 1-2 Stephen Street which were delivered late. The contracts were at fixed prices and the sums recognised partly offset the rent lost in 2015 due to the late completion of the projects.

See Appendix 5 for gross property income chart

http://www.rns-pdf.londonstockexchange.com/rns/0840Q_4-2016-2-24.pdf

Administrative expenses increased by 7.0% to just under £30.0m in 2015, due mainly to higher staff salaries and bonuses. However, finance costs were reduced considerably, by 17.0% to £35.2m, as the total amount of debt fell following the conversion of the 2016 bonds and the average interest rate on that debt was also reduced during the year. This came mainly from lower margins on our bank facilities but was also achieved by breaking or re-setting swap rates during the year at a cost of £4.0m. The positive impact of this will be felt for several years. In addition the start date on a £70m forward start swap was deferred at a cost of £2.4m. The interest capitalised in 2015 was £5.0m, a small reduction on the £5.3m in 2014 and, as before, no overheads or property costs were capitalised. Our EPRA cost ratios were almost identical to the previous year.

The combination of rental growth and lower finance costs drove the recurring EPRA profit before tax to £81.6m, up by 31.0% over the year. After taking account of property valuation uplifts, profits on disposals of properties and fair value movements, the overall IFRS profit for the year increased from £749.8m in 2014 to £777.2m for the year ended 31 December 2015.

A table providing a reconciliation of the IFRS to EPRA profit before tax and earnings per share is included in note 22.

See Appendix 5 for EPRA profit before tax chart

http://www.rns-pdf.londonstockexchange.com/rns/0840Q_4-2016-2-24.pdf

EPRA like-for-like gross rental income, which removes the impact of development activity, acquisitions and disposals, increased by 5.0% during the year with net rental income on a similar basis up by 5.2%. These figures demonstrate the gradual capture of our rental reversion as we move through the current property cycle. A full analysis is shown in the table below.

See Appendix 5 for EPRA like-for-like rental income table

http://www.rns-pdf.londonstockexchange.com/rns/0840Q_4-2016-2-24.pdf 

Taxation

The corporation tax charge for the year increased to £1.9m in 2015 from £0.8m in the previous year, most of this increase being due to the profits arising on the sales of residential apartments which were held as trading stock and therefore outside the REIT tax environment. The deferred tax charge for the year was lower than in 2014 at £0.4m as this took account of certain historic tax losses which were previously not recognised.

In addition, and in accordance with our status as a REIT, £4.8m of tax was withheld from shareholders on property income distributions and paid to HMRC during the year.

Refinancing to fund the pipeline

Derwent London has had another significant year of financing activity.

As is noted above, the first element was the early conversion of the 2016 convertible bonds into new equity and the resultant issue of 7.88m new ordinary shares. This brought down our net debt by £170.5m and significantly reduced financial gearing while also boosting interest cover. Together with the general improvement in our financial risk profile over recent years, it also enabled Standard and Poor's to upgrade our corporate credit rating, which now stands at BBB+ with a stable outlook.

With effect from March 2015, we extended the maturity of a £40m interest rate swap from June 2017 to June 2022 thereby reducing the rate payable from 3.0% to 2.35%. This had no associated cost and extended the weighted average maturity of our swaps while also saving interest charges of £260k per annum until June 2017. In July 2015, we paid £2m to reduce the coupon on a £75m interest rate swap from 2.975% to 2.49% through to April 2020.

Then, in July 2015 we completed a new unsecured and fully revolving £75m facility with Wells Fargo. The facility has a five year term but can be extended by up to two years upon request and can also be increased in amount by up to £25m during its term. The previous £90m secured facility from the same lender, of which £70m was drawn, was repaid and cancelled at the same time. The margin under the new facility is substantially lower than previously and, at a cost of £2m, we also reduced the amount hedged under this facility from £70m to £40m and extended the swap period out to July 2022 at a new lower rate of 2.446% (previously 3.18%). This refinancing extended the weighted average maturity of our debt, lowered our annual finance costs and provided greater flexibility: the new facility is fully revolving (ie we can draw and repay between zero and £75m) whereas the previous facility only had a £20m revolving element and it also increased our unencumbered property assets by £390m. The financial covenants for the new facility are identical to those of our existing £550m unsecured bank facility.

The final step in 2015 was to extend the maturity of the £550m unsecured revolving bank facility from January 2020 to January 2021. There is an additional one year extension option available, subject to the usual consents.

All of these actions have helped us extend the weighted average maturity of our debt from 6.6 years at December 2014 to 7.3 years at December 2015. The average interest rate on our debt has also been reduced from 4.22% at December 2014 to 3.93% at December 2015 on an IFRS basis and from 3.78% to 3.68% on a cash basis. In addition, unencumbered property assets have increased by 36% during the year to £3.7bn.

The proportion of our debt that is fixed or swapped into fixed rates was 85% as at 31 December 2015. This excludes a £70m forward start swap which would become effective in March 2016 unless we pay to defer it.

With long term interest rates remaining at very low levels, our most recent refinancing activity has been to increase the Group's long term fixed rate unsecured debt by accessing the US private placement market for the second time. In February 2016, we agreed to issue £30m of new 3.46% senior notes expiring in May 2028 and £75m of new 3.57% senior notes expiring in May 2031. The £105m funds will be drawn in May 2016 from three new institutional relationships and have identical financial covenants to both our existing unsecured bank facilities and the private placement notes issued in January 2014. Together with the planned property disposals in 2016, this will increase our financial firepower further from the £269.0m of undrawn facilities and cash at 31 December 2015 and will also further extend the weighted average maturity of our debt.

See Appendix 5 for table of debt facilities

http://www.rns-pdf.londonstockexchange.com/rns/0840Q_4-2016-2-24.pdf 

Net debt and cash flow

Net debt was reduced significantly during the year to £911.7m from £1,013.3m, taking the loan-to-value ratio down to 17.8% and NAV gearing to 22.8%. These are now at the lower end of our target range but are only expected to grow modestly through the next few years. Net proceeds from the sale of properties during the year totalled £277.2m; this sum exceeded properties acquired by £31.0m so we have been net sellers of property for the fifth year in a row before taking account of capital expenditure. Cash flows invested in our projects during the year increased to £116.4m but were more than covered by the deleveraging impact of the early redemption of the 2016 convertible bonds.

As planned, the net cash from operations has increased significantly again, to £76.0m for the year from £65.6m in 2014. Most of this increase comes directly from higher property income receipts. This has helped us to grow interest cover again, a particularly important metric that the Group uses in its business planning. From 286% in 2014, this rose to 362% for the year ended 31 December 2015, calculated on the net basis as set out in note 23.

See Appendix 5 for reconciliation of net debt, gearing and interest cover ratios, debt summary and maturity profiles of debt facilities and fixed rates and swaps

http://www.rns-pdf.londonstockexchange.com/rns/0840Q_4-2016-2-24.pdf 

Dividend

With the step up in recurring earnings in 2015, the Board has recommended a 10.0% increase in the proposed final dividend to 30.80p per share for payment to shareholders in June 2016. All 30.80p will be paid as a PID. The total dividend for the year will be 43.40p per share, an increase of 3.75p or 9.5% over last year. As before, we will be offering a scrip dividend alternative though this will be reviewed later in the year depending upon equity market conditions.

Our financial outlook

With low financial gearing, enhanced interest cover, substantial recent pre-lets to de-risk the pipeline and additional financial headroom, we are well placed to build out our current committed programme of projects and thereby crystallise anticipated development profits over the next few years. Recurring earnings growth has also accelerated in 2015 and, with substantial rental reversion in a portfolio with low average rents, should continue to increase as we move through this property cycle.

Our consistent and focused business model is based on the fundamental balancing of the portfolio between income and value growth while retaining a conservative level of financial risk. The portfolio remains full of opportunities for many years to come but, with low passing rents, also offers many defensive qualities should the current global economic uncertainty bring a more challenging occupational environment for London's office landlords. At the moment, conditions remain favourable for us and, with limited new space being built in our markets and low interest rates supporting tight property yields, we aim to continue delivering and de-risking our committed projects over the next year while also continuing to capture rental reversion and grow earnings.

Directors' responsibilities

The Directors are responsible for preparing the Annual Report, the Directors' Remuneration Report and the financial statements in accordance with applicable law and regulations.

Company law requires the Directors to prepare financial statements for each financial year. Under that law the Directors have prepared the Group and Company financial statements in accordance with International Financial Reporting Standards (IFRSs) as adopted by the European Union. Under company law the Directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the Group and the Company and of the profit or loss of the Group for that period. In preparing these financial statements, the Directors are required to:

· select suitable accounting policies and then apply them consistently;

· make judgements and accounting estimates that are reasonable and prudent;

· state whether applicable IFRSs as adopted by the European Union have been followed, subject to any material departures disclosed and explained in the financial statements;

· prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Company will continue in business.

The Directors are responsible for keeping adequate accounting records that are sufficient to show and explain the Company's transactions and disclose with reasonable accuracy at any time the financial position of the Company and the Group and enable them to ensure that the financial statements and the Directors' Remuneration Report comply with the Companies Act 2006 and, as regards the Group financial statements, Article 4 of the IAS Regulation. They are also responsible for safeguarding the assets of the Company and the Group and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

The Directors are responsible for the maintenance and integrity of the Company's website. Legislation in the United Kingdom governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.

The Directors consider that the annual report and accounts, taken as a whole, is fair, balanced and understandable and provides the information necessary for shareholders to assess a company's performance, business model and strategy.

The Directors confirm that to the best of their knowledge:

· the Group financial statements, which have been prepared in accordance with IFRSs as adopted by the EU, give a true and fair view of the assets, liabilities, financial position and profit of the Group; and

· the Strategic Report includes a fair review of the development and performance of the business and the position of the Group, together with a description of the principal risks and uncertainties that it faces.

On behalf of the board

John D. Burns Damian M.A. Wisniewski

Chief Executive Officer Finance Director

25 February 2016

GROUP INCOME STATEMENT

GROUP STATEMENT OF COMPREHENSIVE INCOME

GROUP BALANCE SHEET

GROUP STATEMENT OF CHANGES IN EQUITY

GROUP CASH FLOW STATEMENT