Cash flow, net debt and gearing

During the period, our cash expenditure exceeded cash receipts by £776.5m, and as a result net debt increased to £5,864.4m (31 March 2007: £5,087.9m). During the six months we paid the REIT conversion charge of £316.2m, and in total we invested £1,126.7m in our properties and PPP assets including £552.7m on investment property acquisitions and £246.2m on development. The development expenditure, which includes land acquisitions but excludes our share of joint ventures and capitalised interest, was spent principally on New Street Square, EC4, Queen Anne’s Gate, SW1, in London and shopping centre developments in Exeter and Livingston. In Trillium, we spent £153.0m on property acquisitions (primarily Accor hotels), £35.8m on Norwich Union and DVLA buildings and contributed £61.0m to the disposal group for further PPP acquisitions.

Cash receipts during the six months totalled £799.4m from investment portfolio property disposals, which included Whitefriars, Canterbury, Greater London House, NW1 and New London House, EC3. This excludes the £193.4m received on the disposal of East Kilbride Shopping Centre, where the majority of the proceeds were used to repay debt in the Scottish Retail Property joint venture. A further £30.6m was received from the sale of operating properties.

We advanced a net £29.8m to our joint ventures, including £71.7m invested in shopping centre developments in Bristol and Cardiff, which was largely offset by £43.1m received on disposals, the largest of which was East Kilbride Shopping Centre.