3rd Quarter Results - Part 2

RNS Number : 0880X

British Land Co PLC

09 February 2012

 



Consolidated Income Statement for the nine month period ended 31 December 2011
Year ended 31 March 2011					Nine months ended 31 December 2011			Nine months ended 31 December 2010
Audited					Unaudited			Unaudited
Underlying	Capital				Underlying	Capital		Underlying	Capital
pre tax*	and other	Total			pre tax*	and other	Total	pre tax*	and other	Total
£m	£m	£m		Note	£m	£m	£m	£m	£m	£m
298		298	Gross rental and related income	2	247		247	221		221
255		255	Net rental and related income	2	212		212	187		187
15		15	Fees and other income	2	11		11	10		10
	(10)	(10)	Amortisation of intangible assets						(10)	(10)
117	264	381	Joint ventures and funds (see also below)		84	87	171	90	220	310
(61)		(61)	Administrative expenses		(52)		(52)	(43)		(43)
	321	321	Net valuation movement (includes profits & losses on disposals)	2		115	115		194	194
			Net financing costs
29	3	32	- financing income		19		19	20		20
(99)	(4)	(103)	- financing charges		(74)	(4)	(78)	(73)	(4)	(77)
(70)	(1)	(71)			(55)	(4)	(59)	(53)	(4)	(57)
256	574	830	Profit on ordinary activities before taxation		200	198	398	191	400	591
			Taxation
	(2)	(2)	- current tax expense	2		(1)	(1)		(2)	(2)
	12	12	- deferred tax income	2		3	3		11	11
	10	10		2		2	2		9	9
		840	Profit for the period after taxation attributable to shareholders of the Company				400			600
		95.7p	Earnings per share: basic	1			45.1p			68.6p
		95.2p	diluted	1			44.8p			68.3p
			Share of results of joint ventures and funds
117		117	Underlying profit before taxation		84		84	90		90
	270	270	Net valuation movement (includes profits & losses on disposals)			91	91		224	224
			Non-recurring items			(2)	(2)
	(3)	(3)	Current tax expense			(3)	(3)		(3)	(3)
	(3)	(3)	Deferred tax income (expense)			1	1		(1)	(1)
117	264	381		4	84	87	171	90	220	310
*As defined in note 1

Consolidated Income Statement for the three month period ended 31 December 2011
Year ended 31 March 2011					Three months ended 31 December 2011			Three months ended 31 December 2010
Audited					Unaudited			Unaudited
Underlying	Capital				Underlying	Capital		Underlying	Capital
pre tax*	and other	Total			pre tax*	and other	Total	pre tax*	and other	Total
£m	£m	£m		Note	£m	£m	£m	£m	£m	£m
298		298	Gross rental and related income	2	85		85	79		79
255		255	Net rental and related income	2	73		73	65		65
15		15	Fees and other income	2	3		3	3		3
	(10)	(10)	Amortisation of intangible assets						(2)	(2)
117	264	381	Joint ventures and funds (see also below)		30		30	30	110	140
(61)		(61)	Administrative expenses		(17)		(17)	(15)		(15)
	321	321	Net valuation movement (includes profits & losses on disposals)	2		3	3		92	92
			Net financing costs
29	3	32	- financing income		5		5	11		11
(99)	(4)	(103)	- financing charges		(26)	(4)	(30)	(30)	(1)	(31)
(70)	(1)	(71)			(21)	(4)	(25)	(19)	(1)	(20)
256	574	830	Profit on ordinary activities before taxation		68	(1)	67	64	199	263
			Taxation
	(2)	(2)	- current tax expense	2					(1)	(1)
	12	12	- deferred tax (expense) income	2		1	1		(1)	(1)
	10	10		2		1	1		(2)	(2)
		840	Profit for the period after taxation attributable to shareholders of the Company				68			261
		95.7p	Earnings per share: basic	1			7.7p			29.6p
		95.2p	diluted	1			7.6p			29.5p
			Share of results of joint ventures and funds
117		117	Underlying profit before taxation		30		30	30		30
	270	270	Net valuation movement (includes profits & losses on disposals)			1	1		110	110
			Non-recurring items						1	1
	(3)	(3)	Current tax expense			(2)	(2)		(1)	(1)
	(3)	(3)	Deferred tax (expense) income			1	1
117	264	381		4	30		30	30	110	140
*As defined in note 1

Consolidated Balance Sheet as at 31 December 2011
31 March					31 December	31 December	30 September
2011					2011	2010	2011
Audited					Unaudited	Unaudited	Unaudited
£m				Note	£m	£m	£m
		Assets
		Non-current assets
4,752		Investment and development properties		3	5,379	4,529	5,323
38		Owner-occupied property		3	39	37	39
4,790					5,418	4,566	5,362
		Other non-current assets
2,066		Investments in joint ventures and funds		4	2,180	1,934	2,131
51		Other investments			16	51	59
6,907					7,614	6,551	7,552
		Current assets
90		Debtors			165	92	142
203		Liquid investments		5	200	201	200
60		Cash and short-term deposits		5	55	54	111
353					420	347	453
7,260		Total assets			8,034	6,898	8,005
		Liabilities
		Current liabilities
(319)		Short-term borrowings and overdrafts		5	(81)	(381)	(104)
(333)		Creditors			(382)	(345)	(376)
(652)					(463)	(726)	(480)
		Non-current liabilities
(1,620)		Debentures and loans		5	(2,456)	(1,403)	(2,402)
(23)		Other non-current liabilities			(24)	(23)	(26)
(35)		Deferred tax liabilities			(33)	(36)	(33)
(1,678)					(2,513)	(1,462)	(2,461)
(2,330)		Total liabilities			(2,976)	(2,188)	(2,941)
4,930		Net assets			5,058	4,710	5,064
		Equity
224		Share capital			225	224	224
1,237		Share premium			1,237	1,237	1,237
(68)		Other reserves			(189)	(98)	(171)
3,537		Retained earnings			3,785	3,347	3,774
		Total equity attributable to shareholders
4,930		of the Company			5,058	4,710	5,064
567p		EPRA NAV per share*		1	593p	548p	591p
* As defined in note 1

Consolidated Statement of Comprehensive Income
for the period ended 31 December 2011
Year ended				Three months ended				Nine months ended
31 March				31 December				31 December
2011				2011		2010		2011		2010
Audited				Unaudited		Unaudited		Unaudited		Unaudited
£m				£m		£m		£m		£m
840		Profit for the period after taxation		68		261		400		600
		Other comprehensive income:
		(Losses) gains on cash flow hedges
(13)		- Group		(19)		16		(73)		(17)
18		- Joint ventures and funds		(6)		28		(61)		(2)
5				(25)		44		(134)		(19)
		Transferred to (from) the income statement
		(cash flow hedges)
6		- foreign currency derivatives		1		(2)		(1)		2
14		- interest rate derivatives		5		3		13		9
20				6		1		12		11
		Exchange differences on translation of foreign operations
		-hedging & translation		5				9
		-other		(4)				(8)		1
(2)		Actuarial loss on pension scheme
23		Other comprehensive (loss) income for the period		(18)		45		(121)		(7)
863		Total comprehensive income for the period		50		306		279		593
Consolidated Statement of Cash Flows
for the period ended 31 December 2011
Year					Three months		Nine months
ended					ended		ended
31 March					31 December		31 December
2011					2011	2010	2011		2010
Audited					Unaudited		Unaudited
£m			Note		£m	£m	£m		£m
227	Rental income received from tenants				65	62	203		172
21	Fees and other income received				4	8	14		15
(66)	Operating expenses paid to suppliers and employees				(18)	(15)	(62)		(51)
182	Cash generated from operations				51	55	155		136
(96)	Interest paid				(12)	(10)	(63)		(60)
19	Interest received				2	1	10		13
105	Distributions received from joint ventures and funds		4		17	23	52		76
210	Net cash inflow from operating activities				58	69	154		165
	Cash flows from investing activities
(62)	Development and other capital expenditure				(25)	(17)	(74)		(49)
(379)	Purchase of investment properties				(20)	(262)	(382)		(291)
68	Sale of investment properties				(1)	37	6		39
22	Deferred consideration received						9		22
220	Loans repaid by Broadgate joint venture								220
(123)	Investment in and loans to joint ventures and funds				(31)	(17)	(83)		(47)
12	Capital distributions received from joint ventures and funds					12			12
2	Indirect taxes in respect of investing activities				4		(3)		2
(240)	Net cash outflow from investing activities				(73)	(247)	(527)		(92)
	Cash flows from financing activities
(139)	Dividends paid				(57)	(31)	(154)		(95)
(14)	Movement in other financial liabilities				2	(2)	1		(13)
171	Increase in bank and other borrowings				14	44	521		14
18	Net cash (outflow) inflow from financing activities				(41)	11	368		(94)
(12)	Net decrease in cash and cash equivalents				(56)	(167)	(5)		(21)
72	Opening cash and cash equivalents				111	218	60		72
60	Closing cash and cash equivalents				55	51	55		51
	Cash and cash equivalents consists of:
60	Cash and short-term deposits				55	54	55		54
	Overdrafts					(3)			(3)
60					55	51	55		51

Consolidated Statement of Changes in Equity
for the period ended 31 December 2011
			Hedging &
	Share	Share	translation	Revaluation	Retained
	capital*	premium	reserve	reserve	earnings	Total
	£m	£m	£m	£m	£m	£m
Nine month movements in Equity
Balance at 1 April 2011	224	1,237	(34)	(34)	3,537	4,930
Total comprehensive (loss) income for the period			(52)	(69)	400	279
Adjustment for share and share option awards	1				3	4
Dividends payable in the nine month period					(173)	(173)
Adjustment for scrip dividend element					18	18
Balance at 31 December 2011	225	1,237	(86)	(103)	3,785	5,058
Balance at 1 April 2010	220	1,241	(38)	(52)	2,837	4,208
Total comprehensive (loss) income for the period			(6)	(1)	600	593
Adjustment for share and share option awards					4	4
De-designation of cash flow hedges			(1)		1
Dividends payable in the nine month period					(170)	(170)
Adjustment for scrip dividend element	4	(4)			75	75
Balance at 31 December 2010	224	1,237	(45)	(53)	3,347	4,710
Three month movements in Equity
Balance at 1 October 2011	224	1,237	(78)	(93)	3,774	5,064
Total comprehensive (loss) income for the period			(8)	(10)	68	50
Adjustment for share and share option awards	1				1	2
Dividends payable in the three month period					(58)	(58)
Balance at 31 December 2011	225	1,237	(86)	(103)	3,785	5,058
Balance at 1 October 2010	223	1,238	(62)	(81)	3,115	4,433
Total comprehensive income (loss) for the period			17	28	261	306
Adjustment for share and share option awards					2	2
Dividends payable in the three month period	1	(1)			(57)	(57)
Adjustment for scrip dividend element					26	26
Balance at 31 December 2010	224	1,237	(45)	(53)	3,347	4,710
Prior year movements in Equity
Balance at 1 April 2010	220	1,241	(38)	(52)	2,837	4,208
Total comprehensive income (loss) for the period			4	18	841	863
Share issues	4	(4)
Adjustment for share and share option awards					6	6
Dividends payable in the year					(228)	(228)
Adjustment for scrip dividend element					81	81
Balance at 31 March 2011	224	1,237	(34)	(34)	3,537	4,930
* See note 10 for a summary of the number of shares in issue

Notes to the accounts (unaudited)
1.     Performance measures
Year ended																		Nine months ended									Nine months ended
31 March 2011																		31 December 2011									31 December 2010
Earnings		Pence per share					Earnings per share (diluted)											Earnings				Pence per share					Earnings				Pence per share
£m																		£m									£m
256							Underlying pre tax profit - income statement											200									191
(5)							Tax charge relating to underlying profit											(3)									(5)
251		28.5p					Underlying earnings per share											197				22.1p					186				21.2p
8							Mark to market on liquid investments (held for trading assets)											(3)									6
(4)							Non-recurring items *											(2)									(4)
255		28.9p					EPRA earnings per share (diluted)											192				21.5p					188				21.4p
840		95.2p					Profit for the period after taxation											400				44.8p					600				68.3p
Year ended																		Three months ended									Three months ended
31 March 2011																		31 December 2011									31 December 2010
Earnings		Pence per share					Earnings per share (diluted)											Earnings				Pence per share					Earnings				Pence per share
£m																		£m									£m
256							Underlying pre tax profit - income statement											68									64
(5)							Tax charge relating to underlying profit											(1)									(2)
251		28.5p					Underlying earnings per share											67				7.5p					62				7p
8							Mark to market on liquid investments (held																				(5)
							for trading assets)
(4)							Non-recurring items*
255		28.9p					EPRA earnings per share (diluted)											67				7.5p					57				6.4p
840		95.2p					Profit for the period after taxation											68				7.6p					261				29.5p
*Non-recurring items for the nine months ended 31 December 2011 of £2m relate to the debt break costs in HUT and for the year ended 31 March 2011 £4m relate to fair value adjustments on the buy back of Group debentures.
The European Public Real Estate Association (EPRA) issued Best Practices Recommendations most recently in October 2010, which gives guidelines for performance measures.  The EPRA earnings (diluted) measure excludes investment property revaluations and gains or losses on disposals, intangible asset movements and their related taxation.  A summary of the EPRA Performance Measures is provided in table B within the Supplementary Disclosures.
Underlying earnings consists of the EPRA earnings (diluted) measure, with additional company adjustments.  Adjustments include mark to market adjustments on held for trading assets, fair value adjustments on the buy back of debentures and debt break costs.
The weighted average number of shares in issue for the three month period was: basic: 888m (nine months ended 31 December 2011: 887m; year ended 31 March 2011: 878m; three months ended 31 December 2010: 881m; nine months ended 31 December 2010: 875m); diluted for the effect of share options: 893m (nine months ended 31 December 2011: 893m; year ended 31 March 2011: 882m; three months ended 31 December 2010: 886m; nine months ended 31 December 2010: 879m).  Basic undiluted earnings per share for the three month period was 7.7p (nine months ended 31 December 2011: 45.1p; year ended 31 March 2011: 95.7p; three months ended 31 December 2010: 29.6p; nine months ended 31 December 2010: 68.6p). Earnings per share shown in the table above are diluted.
31 March																						31 December					31 December				30 September
2011							Net asset value (NAV)															2011					2010				2011
£m																						£m					£m				£m
4,930							Balance sheet net assets															5,058					4,710				5,064
37							Deferred tax arising on revaluation movements															34					36				33
89							Mark to market on effective cash flow hedges and related debt adjustments															216					122				193
45							Dilution effect of share options															57					44				53
5,101							EPRA NAV															5,365					4,912				5,343
567p							EPRA NAV per share															593p					548p				591p
The EPRA NAV per share excludes the mark to market on effective cash flow hedges and related debt adjustments, deferred taxation on revaluations, surplus on trading properties and is calculated on a fully diluted basis.
At 31 December 2011, the number of shares in issue was: basic: 888m (31 March 2011: 885m; 31 December 2010: 884m); diluted for the effect of share options: 904m (31 March 2011: 899m; 31 December 2010: 897m).
Total return per share for the nine months ended 31 December 2011 of 8.0% includes dividends paid of 19.5p (see note 6) in addition to the increase in EPRA NAV of 26p. Total return per share for the three months ended 31 December 2011 was 1.4% and the year ended 31 March 2011 was 17.7%.
2.     Income statement notes
Year ended																	Three months ended							Nine months ended
31 March																	31 December							31 December
2011																	2011			2010				2011				2010
£m																	£m			£m				£m				£m
				Gross and net rental income
227				Rent receivable													66			56				192				169
32				Spreading of tenant incentives and guaranteed rent increases													11			8				31				22
3				Surrender premia																2								2
262				Gross rental income													77			66				223				193
36				Service charge income													8			13				24				28
298				Gross rental and related income													85			79				247				221
(36)				Service charge expenses													(8)			(13)				(24)				(28)
(7)				Property operating expenses													(4)			(1)				(11)				(6)
255				Net rental and related income													73			65				212				187
				Fees and other income
11				Performance & management fees (from joint ventures & funds)													3			3				9				8
4				Other fees and commission																				2				2
15																	3			3				11				10
				Net revaluation movements on property and investments
297				Revaluation of properties													(1)			82				117				172
20				Result on property disposals													4			13				1				19
8				Revaluation of investments																(3)				(3)				3
(4)				Other revaluation movements
321																	3			92				115				194
270				Share of valuation movements of joint ventures and funds (note 4)													1			110				91				224
591																	4			202				206				418
				Tax (expense) income
(1)				Current tax:								UK corporation tax (31 December 2011: 26%; 31 December 2010: 28%)								(1)				(1)				(2)
(1)												Foreign tax
(2)																				(1)				(1)				(2)
(2)				Total current tax expense																(1)				(1)				(2)
12				Deferred tax on revaluations													1			(1)				3				11
10				Group total taxation (net)													1			(2)				2				9
(6)				Attributable to joint ventures and funds													1			(1)								(4)
4				Total taxation													2			(3)				2				5
Tax expense attributable to underlying profits for the three months ended 31 December 2011 was £1m (nine months ended 31 December 2011: £3m; year ended 31 March 2011: £5m; three months ended 31 December 2010: £2m; nine months ended 31 December 2010: £5m). The underlying tax rate for the three months ended 31 December 2011 was 1.5% (nine months ended 31 December 2011: 1.5%; year ended 31 March 2011: 2%; three months ended 31 December 2010: 3.1%; nine months ended 31 December 2010: 2.6%).
3.     Property
Total property interests are £10,280m at 31 December 2011 comprising properties held by the Group of £5,398m, share of properties held by funds of £864m and share of properties held by joint ventures of £4,018m. Properties were valued on the basis of market value, supported by market evidence, in accordance with the Appraisal and Valuation Standards published by The Royal Institution of Chartered Surveyors.
31 March																							31 December							31 December				30 September
2011																							2011							2010				2011
£m																							£m							£m				£m
4,752					Investment properties																		5,379							4,529				5,323
38					Owner-occupied property																		39							37				39
4,790					Carrying value of properties on balance sheet																		5,418							4,566				5,362
(7)					Head lease liabilities																		(20)							(7)				(20)
4,783					Total British Land Group property portfolio valuation																		5,398							4,559				5,342
At 31 December 2011 Group properties valued at £1,814m were subject to a security interest (31 March 2011: £2,850m; 31 December 2010: £2,757m) and other properties of non-recourse companies amounted to £114m.
Interest capitalised on development expenditure for the three months ended 31 December 2011 was £2m (nine months ended 31 December 2011: £5m; year ended 31 March 2011: £3m; three months ended 31 December 2010: £1m; nine months ended 31 December 2010: £3m).
4.     Joint ventures and funds
Summary of British Land's share of investments in joint ventures and funds at 31 December 2011
						Underlying		Underlying
						profit		profit
						(nine		(three						Net									Property							Other				Gross
						months)		months)						Investment									assets							assets				liabilities
						£m		£m						£m									£m							£m				£m
Share of funds						18		7						520									864							106				(450)
Share of joint ventures						66		23						1,660									4,018							153				(2,511)
Total						84		30						2,180									4,882							259				(2,961)
PREF, a fund owning a portfolio of retail property in Europe (in which British Land has a net investment of £98m), had a €173m syndicated bank loan of which €61m was refinanced in December 2011 with a new term loan in respect of assets in Spain. The remaining balance of €110m matures on 2nd April 2012, subject to conditions.  Discussions are ongoing in relation to the refinancing of this loan. The PREF borrowings are non-recourse to the Group. A market uncertainty clause is included in the valuation report of the Portuguese properties within PREF, due to a lack of transactional evidence and uncertainty over the economic situation in that market.
At 31 December 2011 the investment in Joint Ventures included within the total net investment in joint ventures and funds was £1,663m (31 March 2011: £1,573m; 31 December 2010: £1,449m).
Amounts owed to joint ventures at 31 December 2011 were £22m (31 March 2011: £55m; 31 December 2010: £52m).
British Land's share of the results of joint ventures and funds
Year														Three months									Three months							Nine months				Nine months
ended														ended									ended							ended				ended
31 March														31 December									31 December							31 December				31 December
2011														2011									2010							2011				2010
£m														£m									£m							£m				£m
279					Gross rental income									68									70							205				210
263					Net rental and related income									66									67							196				200
(4)					Other income and expenditure									(2)									(1)							(5)				(3)
(142)					Net financing costs									(34)									(36)							(107)				(107)
117					Underlying profit before taxation									30									30							84				90
270					Net valuation and disposal movements									1									110							91				224
					Non-recurring items																		1							(2)
387					Profit on ordinary activities before taxation									31									141							173				314
(3)					Current tax expense									(2)									(1)							(3)				(3)
(3)					Deferred tax income (expense)									1																1				(1)
381					Profit on ordinary activities after taxation									30									140							171				310
4.     Joint ventures and funds (continued)
Operating cash flows of joint ventures and funds
Year									Three months										Three months							Nine months						Nine months
ended									ended										ended							ended						ended
31 March									31 December										31 December							31 December						31 December
2011									2011										2010							2011						2010
£m									£m										£m							£m						£m
280	Rental income received from tenants								65										70							207						206
3	Fees and other income received																		1													2
(30)	Operating expenses paid to suppliers and employees								(3)										(7)							(21)						(21)
253	Cash generated from operations								62										64							186						187
(147)	Interest paid								(35)										(38)							(109)						(110)
(5)	UK corporation tax paid								(1)										(2)							(6)						(4)
101	Cash inflow from operating activities								26										24							71						73
	Cash inflow from operating activities deployed as:
(4)	Surplus cash (distributed by) retained								9										1							19						(3)
	within joint ventures and funds
105	Total distributed to British Land								17										23							52						76
101									26										24							71						73
5.     Net Debt
31 March											31 December					31 December							30 September
2011											2011					2010							2011
£m											£m					£m							£m
1,012			Debentures								1,033					1,102							1,051
472			Bank loans and overdrafts								966					224							926
455			Other bonds and loan notes								538					458							529
1,939			Gross debt								2,537					1,784							2,506
49			Interest rate and currency derivative liabilities								107					60							93
(11)			Interest rate and currency derivative assets								(98)					(12)							(81)
1,977											2,546					1,832							2,518
(203)			Liquid investments								(200)					(201)							(200)
(60)			Cash and short-term deposits								(55)					(54)							(111)
1,714			Net debt								2,291					1,577							2,207
Gross debt includes £81m due within one year at 31 December 2011 (31 March 2011: £319m; 31 December 2010: £381m).
Undrawn committed bank facilities at 31 December 2011 amounted to £1,491m.
The two financial covenants applicable to the Group unsecured debt are:
Net Borrowings not to exceed 175% of Adjusted Capital and Reserves.
At 31 December 2011 the ratio is 43%
i. Net Borrowings are £2,446m, being the principal amount of gross debt of £2,449m plus amounts owed to joint ventures of £22m (see note 4) plus TPP Investments Ltd of £30m (see note 8), less the cash and short-term deposits of £55m; and
ii. Adjusted Capital and Reserves are £5,650m, being share capital and reserves of £5,058m (see Consolidated Statement of Changes in Equity), adjusted for £34m of deferred tax (see note 1), £342m exceptional refinancing charges (see below) and £216m mark to market on interest rate swaps (see note 1).
Net Unsecured Borrowings not to exceed 70% of Unencumbered Assets.
At 31 December 2011 the ratio is 34%
i. Net Unsecured Borrowings are £1,439m, being the principal amount of gross debt of £2,449m plus amounts owed to joint ventures of £22m less cash and deposits not subject to a security interest of £50m less the principal amount of secured and non-recourse borrowings of £982m; and
ii. Unencumbered Assets are £4,203m being properties of £5,398m (see note 3) plus investments in joint ventures and funds of £2,180m (see note 4) and other investments of £216m (see balance sheet: liquid investments of £200m and other investments of £16m) less investments in joint ventures of £1,663m (see note 4) and encumbered assets of £1,928m (see note 3).
In calculating Adjusted Capital and Reserves for the purpose of the unsecured debt financial covenants, there is an adjustment of £342m to reflect the cumulative net amortised exceptional items relating to the refinancing in the years ended 31 March 2005, 2006 and 2007.
The Group Loan to Value (LTV) ratio at 31 December 2011 is 28.9%, being principal value of gross debt of £2,449m less cash, short-term deposits and liquid investments of £255m, divided by total Group property of £5,398m (see note 3) plus investments in joint ventures and funds of £2,180m (balance sheet) and other investments of £16m (balance sheet).
6.     Dividends
The 2012 third quarter dividend of 6.5 pence per share, totalling £58m, is payable on 9 May 2012 to shareholders on the register at close of business on 30 March 2012.
The Board will announce the availability of the Scrip Dividend Alternative via the Regulatory News Service and on its website (www.britishland.com), no later than 48 hours before the ex-dividend date of 28 March 2012.  The Board expects to announce the split between PID and non-PID income at that time. A Scrip Dividend Alternative will not be enhanced.  PID dividends are paid, as required by REIT legislation, after deduction of withholding tax at the basic rate (currently 20%), where appropriate.  Certain classes of shareholders may be able to elect to receive dividends gross.  Please refer to our website (www.britishland.com) for details.
The 2012 second quarter PID dividend of 6.5 pence per share, totalling £58m, will be paid on 17 February 2012.
7.     Segment information
The Group allocates resources to investment and asset management according to the sectors it expects to perform over the medium term. Its two principal sectors are currently offices and retail. The relevant revenue, net rental income, assets and capital expenditure, being the measure of profit or loss and total assets used by the management of the business, are set out below:
										Offices					Retail										Other						Total
										2011			2010		2011						2010				2011				2010		2011			2010
										£m			£m		£m						£m				£m				£m		£m			£m
Nine months ended 31 December
Revenue										74			72		157						142				27				17		258			231
Net rental income										58			58		131						117				23				12		212			187
Segment assets										2,560			2,072		4,543						4,192				931				634		8,034			6,898
Capital expenditure										111			55		25						250				344				12		480			317
Three months ended 31 December
Revenue										25			24		52						51				11				7		88			82
Net rental income										21			21		44						39				8				5		73			65
Capital expenditure										26			4		2						244				18				11		46			259
Revenue is derived from the rental of buildings, fund management and performance fees and investments. Corporate costs, including administrative and interest expenses, are not allocated to the segments shown, therefore a sectoral profit or loss is not disclosed. Segment assets include the Group's investment in joint ventures and funds. No customer exceeds 10% of the Group's revenues.
Segment assets include the Group's investment in joint ventures and funds of £2,180m (31 March 2011: £2,066m; 31 December 2010: £1,934m), property assets of £5,418m (31 March 2011: £4,790m; 31 December 2010: £4,566m),  other investments of £16m (31 March 2011: £51m; 31 December 2010: £51m), debtors of £165m (31 March 2011: £90m; 31 December 2010: £92m), liquid investments of £200m (31 March 2011: £203m; 31 December 2010: £201m) and cash of £55m (31 March 2011: £60m; 31 December 2010: £54m).
8.     Contingent liabilities
TPP Investments Limited, a wholly owned ring-fenced special purpose subsidiary, is a partner in The Tesco British Land Property Partnership and, in that capacity, has entered into a secured bank loan under which its liability is limited to £30m (31 March 2011: £30m, 31 December 2010: £23m) and recourse is only to the partnership assets.
9.     Related party transactions
Details of transactions with joint ventures and funds are given in notes 2 and 8. Amounts owed to joint ventures are detailed in note 4.
There have been no material changes in the related party transactions described in the last annual report.
10.     Note to the Consolidated Statement of Changes in Equity
At 31 December 2011, of the issued 25p ordinary shares, 1m were held in the ESOP Trust (31 March 2011: 1m; 31 December 2010: 1m), 11m were held as Treasury shares (31 March 2011: 11m; 31 December 2010: 11m) and 888m shares were in free issue (31 March 2011: 885m; 31 December 2010: 884m). All shares are fully paid.
11.     Basis of preparation
The financial information for the year ended 31 March 2011 does not constitute statutory accounts as defined in section 434 of the Companies Act 2006. A copy of the statutory accounts for that year has been delivered to the Registrar of Companies. The auditor report on those accounts was not qualified, did not include a reference to any matters to which the auditors drew attention by way of emphasis without qualifying the report, and did not contain statements under section 498(2) or (3) of the Companies Act 2006.
The financial information included in this announcement has been prepared on a going concern basis using accounting policies consistent with International Financial Reporting Standards (IFRS) and in accordance with IAS 34 'Interim Financial Reporting'. The same accounting policies, estimates, presentation and methods of computation are followed in the quarterly report as applied in the Group's latest annual audited financial statements. The current period financial information presented in this document is unaudited.
The Group's business activities, financial position, cash flows, liquidity position and financing structure are discussed on pages 4 to 10. The Directors have a reasonable expectation that the company has adequate resources to continue in operational existence for the foreseeable future. Thus they continue to adopt the going concern basis of accounting in preparing the financial statements.
The interim financial information was approved by the Board on 8 February 2012.

Supplementary Disclosures
Table A:
Summary income statement based on proportional consolidation for the period ended 31 December 2011
The following pro forma information is unaudited and does not form part of the consolidated primary statements or the notes thereto.  It presents the results of the Group, with its share of the results of joint ventures and funds included on a line by line, i.e. proportional basis.  The underlying profit before taxation and total profit after taxation are the same as presented in the consolidated income statement.
Year ended 31 March 2011				Nine months ended 31 December 2011			Nine months ended 31 December 2010
Group	JVs &	Prop		Group	JVs &	Prop	Group	JVs &	Prop
	funds	Consol			funds	Consol		funds	Consol
£m	£m	£m		£m	£m	£m	£m	£m	£m
262	279	541	Gross rental income	223	205	428	193	210	403
(7)	(16)	(23)	Property operating expenses	(11)	(9)	(20)	(6)	(10)	(16)
255	263	518	Net rental income	212	196	408	187	200	387
(61)	(7)	(68)	Administrative expenses	(52)	(5)	(57)	(43)	(5)	(48)
15	3	18	Fees & other income	11		11	10	2	12
209	259	468	Underlying profit before interest and tax	171	191	362	154	197	351
(70)	(142)	(212)	Net  interest	(55)	(107)	(162)	(53)	(107)	(160)
139	117	256	Underlying profit before tax	116	84	200	101	90	191
		28.5p	Underlying earnings per share - diluted basis			22.1p			21.2p
The underlying earnings per share is calculated on underlying profit before taxation of £200m, tax attributable to underlying profits of £3m and 893m shares on a diluted basis, for the nine months ended 31 December 2011.
Year					Three months	Three months	Nine months	Nine months
ended					ended	ended	ended	ended
31 March					31 December	31 December	31 December	31 December
2011					2011	2010	2011	2010
£m					£m	£m	£m	£m
541	Gross rental income				145	136	428	403
(23)	Property operating expenses				(6)	(4)	(20)	(16)
518	Net rental income				139	132	408	387
(68)	Administrative expenses				(19)	(16)	(57)	(48)
18	Fees and other income				3	3	11	12
468	Underlying profit before interest and tax				123	119	362	351
(212)	Net interest				(55)	(55)	(162)	(160)
256	Underlying profit before tax				68	64	200	191
(5)	Underlying tax				(1)	(2)	(3)	(5)
251	Underlying profit after tax				67	62	197	186
591	Valuation movement				4	202	206	418
(1)	Other capital & tax (net)*				9	(4)	16	(4)
590	Capital & other				13	198	222	414
841	Total return				80	260	419	600
*includes other comprehensive income, movement in dilution of share options and the movement in items excluded for EPRA NAV.

Supplementary Disclosures
Table A: EPRA Net Assets
Summary balance sheet based on proportional consolidation as at 31 December 2011
The following pro forma information is unaudited and does not form part of the consolidated primary statements or the notes thereto.  It presents the composition of the EPRA net assets of the Group, with its share of the net assets of the joint venture and fund assets and liabilities included on a line by line, i.e. proportional basis and assuming full dilution.
EPRA Net assets 31 March 2011				Group	Share of joint ventures & funds			Share options		Deferred tax			Mark to Market of interest rate swaps	Head Leases	EPRA Net assets 31 December 2011	EPRA Net assets 31 December 2010
£m				£m	£m			£m		£m			£m	£m	£m	£m
6,295	Retail properties			2,959	3,365									(11)	6,313	6,079
3,077	Office properties			1,977	1,519									(6)	3,490	2,979
200	Other properties			482	6									(11)	477	216
9,572	Total properties			5,418	4,890									(28)	10,280	9,274
	Investments in joint			2,180	(2,180)
	ventures and funds
51	Other investments			16	(4)										12	51
(205)	Other net (liabilities)			(265)	(90)			57		34				28	(236)	(190)
	assets
(4,317)	Net debt			(2,291)	(2,616)								216		(4,691)	(4,223)
5,101	Net assets			5,058				57		34			216		5,365	4,912
567p	EPRA NAV per share (note 1)														593p	548p
EPRA Net Assets Movement
Year ended												Nine months ended			Nine months ended
31 March 2011												31 December 2011			31 December 2010
£m	Pence per share												£m	Pence per share	£m	Pence per share
4,407	504p			Opening EPRA NAV									5,101	567p	4,407	504p
251	29p			Underlying profit after tax									197	22p	186	21p
590	60p			Capital & other									222	23p	414	43p
(147)	-26p			Dividend paid									(155)	(19)p	(95)	(20)p
														`
5,101	567p			Closing EPRA NAV									5,365	593p	4,912	548p
Supplementary Disclosures
Table B: EPRA Performance Measures
EPRA Performance measures summary table
						Nine months					Nine months
Year ended						ended					ended
31 March 2011						31 December 2011					31 December 2010
£m		Pence per share					£m		Pence per share		£m			Pence per share
255		28.9p	EPRA Earnings (diluted)				192		21.5p		188			21.4p
5,101		567p	EPRA NAV				5,365		593p		4,912			548p
5,117		569p	EPRA NNNAV				5,094		563p		4,882			544p
		5.2%	EPRA Net Initial Yield						5.2%
		5.8%	EPRA 'topped-up' Net Initial Yield						5.8%
		2.7%	EPRA Vacancy Rate						2.3%
Calculation of EPRA earnings (diluted) per share
						Nine months					Nine months
Year ended						ended					ended
31 March 2011						31 December 2011					31 December 2010
£m		Pence per share					£m		Pence per share		£m			Pence per share
840		95.2p	Profit for the period after taxation				400		44.8p		600			68.3p
			Exclude
			Group - non-underlying current tax
(12)		(1.4)p	Group - deferred tax				(3)		(0.3)p		(11)			(1.3)p
			JVs & Funds - non-underlying current tax				1		0.1p
3		0.3p	JVs & Funds - deferred tax				(1)		(0.1)p		1			0.1p
(313)		(35.4)p	Group - net valuation movement (including result on disposals)				(115)		(12.9)p		(194)			(22.1)p
(270)		(30.6)p	Joint ventures and funds - net valuation movement (including result on disposals)				(91)		(10.2)p		(224)			(25.4)p
10		1.1p	Amortisation of intangible assets								10			1.1p
(3)		(0.3)p	Fair value movement on non-hedge accounted derivatives				1		0.1p		6			0.7p
255		28.9p	EPRA Earnings (diluted) per Share (EPS)				192		21.5p		188			21.4p
Calculation of EPRA NNNAV per share
Year											Nine months			Nine months
ended											ended			ended
31 March											31 December			31 December
2011											2011			2010
£m											£m			£m
5,101			EPRA NAV								5,365			4,912
(37)			Deferred tax arising on revaluation movements								(34)			(36)
(89)			Mark to market on effective cash flow hedges and related debt adjustments								(216)			(122)
142			Mark to market on debt								(21)			128
5,117			EPRA NNNAV								5,094			4,882
569p			EPRA NNNAV per share								563p			544p
EPRA NNNAV is the EPRA NAV adjusted to reflect the fair value of the debt and derivatives and to include the deferred taxation on revaluations.

Supplementary Disclosures
Table B (continued): EPRA Performance Measures
EPRA Net Initial Yield and 'topped-up' Net Initial Yield
As at			As at	As at
31 March 2011			31 December 2011	30 September 2011
£m			£m	£m
4,783		Investment property - wholly owned	5,398	5,342
4,789		Investment property - share of joint ventures and funds	4,882	4,821
(407)		Less developments	(780)	(695)
9,165		Completed property portfolio	9,500	9,468
499		Allowance for estimated purchasers' costs	520	519
9,664		Gross up completed property portfolio valuation	10,020	9,987
512		Annualised cash passing rental income	525	528
(8)		Property outgoings	(6)	(11)
504		Annualised net rents	519	517
60		Rent expiration of rent free periods and fixed uplifts*	60	58
564		'Topped-up' net annualised rent	579	575
5.2	%	EPRA Net Initial Yield	5.2%	5.2		%
5.8	%	EPRA 'topped-up' Net Initial Yield	5.8%	5.8		%
21		Including fixed/minimum uplifts received in lieu of rental growth	31	31
585		Total 'topped-up' net rents	610	606
6.1	%	Overall 'topped-up' Net Initial Yield	6.1%	6.1		%
564		'Topped-up' net annualised rent	579	575
15		ERV vacant space	13	15
(21)		Reversions	(19)	(19)
558		Total ERV	573	571
5.8	%	Net Reversionary Yield	5.7%	5.7		%
* The period over which rent free periods expire is 2 years (30 September 2011: 2.3 years; 31 March 2011: 3 years)
EPRA Vacancy Rate
As at			As at	As at
31 March 2011			31 December 2011	30 September 2011
£m			£m	£m
15		Annualised potential rental value of vacant premises	13	15
558		Annualised potential rental value for the completed property portfolio	573	571
2.7	%	EPRA Vacancy Rate	2.3%	2.5		%
Table C: Calculation of gross rental income
Year ended			Nine months ended	Nine months ended
31 March			31 December	31 December
2011			2011	2010
£m			£m	£m
505		Rent receivable	398	373
32		Spreading of tenant incentives and guaranteed rent increases	29	27
4		Surrender premia	1	3
541		Gross rental income	428	403
INDEPENDENT REVIEW REPORT TO THE BRITISH LAND COMPANY PLC
We have been engaged by the company to review the condensed set of financial statements in the interim financial report for the nine months ended 31 December 2011 which comprises the Consolidated Income Statement, Consolidated Balance Sheet, the Consolidated Statement of Comprehensive Income, the Consolidated Statement of Cash Flows, the Consolidated Statement of Changes in Equity, and related notes 1 to 11. We have read the other information contained in the interim 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 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.  Our work has been undertaken so that we might state to the company those matters we are required to state to it in an independent review report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company, for our review work, for this report, or for the conclusions we have formed.
Directors' responsibilities
The interim financial report is the responsibility of, and has been approved by, the directors.  The directors are responsible for preparing the interim financial report in accordance with the Disclosure and Transparency Rules of the United Kingdom's Financial Services Authority.
As disclosed in note 11, 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 quarterly 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 interim 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 inquiries, 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 interim financial report for the nine months ended 31 December 2011 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 Services Authority.
Deloitte LLP
Chartered Accountants and Statutory Auditor
London, United Kingdom
8 February 2012

 

END

 

 

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