Final Results - Part 2

RNS Number : 8273U

British Land Co PLC

20 May 2008

 



THE BRITISH LAND COMPANY PLC
PRELIMINARY ANNOUNCEMENT OF FINANCIAL RESULTS
For the year ended 31 March 2008

Consolidated Income Statement for the year ended 31 March 2008
			2008			2007
			Underlying	Capital		Underlying	Capital
			pre tax *	and other	Total	pre tax *	and other	Total
		Note	£m	£m	£m	£m	£m	£m
	Gross rental and related income	3	645		645	649		649
	Net rental and related income	3	561		561	561		561
	Fees and other income	4	40	30	70	50	33	83
	Amortisation of intangible asset			(15)	(15)		(15)	(15)
	Funds and joint ventures (see also below)	9	40	(346)	(306)	37	422	459
	Administrative expenses		(67)		(67)	(78)	(13)	(91)
	Net valuation movement (includes profits and losses on disposals)	5		(1,562)	(1,562)		1,167	1,167
	Goodwill impairment						(106)	(106)
	Net financing costs
	financing income		26		26	41		41
	financing charges		(316)		(316)	(354)		(354)
	refinancing charges						(305)	(305)
		6	(290)		(290)	(313)	(305)	(618)
	(Loss) profit on ordinary activities before taxation		284	(1,893)	(1,609)	257	1,183	1,440
	Taxation
	REIT conversion charge							(277)
	current tax income							1
	deferred tax income				46			1,289
		7			46			1,013
	(Loss) profit for the year after taxation attributable to shareholders of the Company				(1,563)			2,453
	(Loss) earnings per share: basic	2			(305)			472	p
	diluted	2			(303)			470	p
	Share of results of funds and joint ventures
	Underlying profit pre-tax		40		40	37		37
	Net valuation movement (includes profits and losses on disposals)			(354)	(354)		257	257
	Goodwill impairment			(3)	(3)		(5)	(5)
	REIT conversion charge and non-recurring items			9	9		(48)	(48)
	Current tax			1	1		(19)	(19)
	Deferred tax			1	1		237	237
		9	40	(346)	(306)	37	422	459

*	As defined in note 2.

Consolidated Balance Sheet as at 31 March 2008
			2008		2007
	Note		£m		£m
Assets
Non-current assets
Investment properties	8		9,389		12,891
Development properties	8		1,062		1,106
Owner-occupied property	8		53		50
			10,504		14,047
Other non-current assets
Investments in funds and joint ventures	9		1,532		1,610
Other investments	10		196		267
Intangible assets	10		39		50
			12,271		15,974
Current assets
Debtors	11		133		208
Cash and short-term deposits	14		244		198
			377		406
Total assets			12,648		16,380
Liabilities
Current liabilities
Short-term borrowings and overdrafts	14		(111)		(54)
Creditors	12		(450)		(746)
			(561)		(800)
Non-current liabilities
Debentures and loans	14		(5,151)		(6,617)
Other non-current liabilities	13		(38)		(37)
Deferred tax liabilities	7		(108)		(179)
			(5,297)		(6,833)
Total liabilities			(5,858)		(7,633)
Net assets			6,790		8,747
Equity
Share capital	17		131		130
Share premium	17		1,269		1,263
Other reserves	17		335		532
Retained earnings	17		5,055		6,822
Total equity attributable to shareholders of the Company			6,790		8,747
EPRA NAV per share*	2		1344	p	1682	p
The financial information in this preliminary announcement was approved by the Board on 19 May 2008.
* As defined in note 2.

Consolidated Statement of Recognised
Income and Expense for the year ended 31 March 2008
				2008			2007
		Note		£m			£m
(Loss) profit for the year after taxation				(1,563)			2,453
Valuation movements
- on development properties		5		57			184
- on owner occupied property		5		3
- on other investments		5		(70)			22
				(10)			206
(Losses) gains on cash flow hedges
- Group				(53)			93
- Funds and joint ventures				(20)			21
Actuarial (loss) gain on pension scheme				(10)			8
Fair value adjustment on consolidation
of former joint venture							(7)
Tax on items taken directly to equity				25			16
Net (loss) gain recognised directly in equity				(68)			337
Transferred to the income statement (cash flow hedges)
- foreign currency derivatives				1			21
- interest rate derivatives				(28)			(1)
				(27)			20
Total recognised income and expense for the year				(1,658)			2,810
Reconciliation of Movements in Shareholders' Funds
				2008			2007
				£m			£m
Capital items
- Shares issued				7			10
- Purchase of own shares				(151)			(16)
- Adjustment for share and share option awards				11			18
- Dividends paid in the year				(166)			(91)
				(299)			(79)
Total recognised income and expense for the year				(1,658)			2,810
Movement in shareholders' funds for the year				(1,957)			2,731
Opening equity shareholders' funds				8,747			6,016
Closing equity shareholders' funds				6,790			8,747
Consolidated Cash Flow Statement
for the year ended 31 March 2008
									2008				2007	+
						Note			£m				£m
Rental income received from tenants									536				568
Fees and other income received									32				36
Operating expenses paid to suppliers and employees									(91)				(110)
Cash generated from operations									477				494
Interest paid									(373)				(334)
Interest received									19				11
UK corporation tax paid									(3)
Foreign tax paid									(1)				(2)
Distributions received:		funds and joint ventures							47				32
		Songbird Estates							16				18
Net cash inflow from operating activities									182				219
Cash flows from investing activities
Purchase of investment properties									(119)				(309)
Development and other capital expenditure									(523)				(346)
Sale of investment properties									1,460				711
REIT conversion charge paid									(291)
Purchase of investments													(8)
Sale of investments									2				10
Indirect taxes in respect of investing activities									32				(15)
Establishment of BL Sainsbury Superstores Joint Venture									272
Investment in and loans to funds and joint ventures									(90)				(203)
Capital distributions received:		funds and joint ventures							88				80
		Songbird Estates							30				33
Sale of shares and loans repaid by funds and joint ventures													6
Purchase of subsidiary companies (net of cash acquired)									(4)				(13)
Net cash inflow (outflow) from investing activities									857				(54)
Cash flows from financing activities
Issue of ordinary shares									7				10
Purchase of own shares									(151)				(16)
Dividends paid									(161)				(91)
Issue of Meadowhall Finance PLC securitised debt													840
Redemption of MSC (Funding) PLC securitised debt													(897)
Issue of British Land debentures													263
Amounts paid on exchange of British Land debentures													(240)
Redemption of British Land debentures													(20)
Repayment of debt acquired with subsidiary companies													(305)
(Decrease) increase in bank and other borrowings									(686)				354
Net cash outflow from financing activities									(991)				(102)
Net increase in cash and cash equivalents									48				63
Opening cash and cash equivalents									191				128
Closing cash and cash equivalents									239				191
Cash and cash equivalents consists of:
Cash and short-term deposits									244				198
Overdrafts									(5)				(7)
									239				191
+ Re-presented under the direct method (see Note 1)

Notes to the accounts for the year ended 31 March 2008
1. Basis of preparation
The financial information set out above does not constitute the company's statutory accounts for the years ended 31 March 2008 or 2007, but is derived from those accounts. Statutory accounts for 2007 have been delivered to the Registrar of Companies and those for 2008 will be delivered following the company's annual general meeting. The auditors have reported on those accounts; their reports were unqualified, did not draw attention to any matters by way of emphasis and did not contain statements under s237(2) or (3) of the Companies Act 1985.
The financial statements for the year ended 31 March 2008 have been prepared on the historical cost basis, except for the revaluation of properties, investments and derivatives. The financial statements have also been prepared in accordance with International Financial Reporting Standards (IFRSs) as adopted by the European Union and therefore comply with Article 4 of the EU IAS Regulation.
The accounting policies used are consistent with those contained in the Group's last annual report and accounts for the year ended 31 March 2007, with the exception of the adoption of IFRS 7: Financial Instruments: Disclosures; the early adoption of IFRS 8: Operating Segments and the presentation of the cash flow under the direct method. These changes have no impact on the Group's net assets or profits before tax and the comparative results have been restated on a consistent basis.

2. Performance measures
	2008			2007
(Loss) earnings per share (diluted)	(Loss) earnings	Pence per share		(Loss) earnings		Pence per share
	£m			£m
Underlying pre tax profit - income statement	284			257
Tax charge relating to underlying profit	(8)			(31)
Underlying earnings per share	276	53	p	226		43	p
Refinancing charges				(305)
Tax and other items	13			58
EPRA earnings (loss) per share	289	56	p	(21)		(4)	p
(Loss) profit for the period after taxation	(1,563)	(303)	p	2,453		470	p
The European Public Real Estate Association (EPRA) issued Best Practices Policy Recommendations in November 2006, which gives guidelines for performance measures. The EPRA earnings measure excludes investment property revaluations and gains or losses on disposals, intangible asset movements and their related taxation and the REIT conversion charge.
Underlying earnings consists of the EPRA earnings measure, with additional company adjustments. Adjustments include reversal of refinancing charges, realisation of cash flow hedges and REIT-related transactions, none of which occurred in the current year.
The weighted average number of shares in issue for the year was: basic: 512m (2007: 520m); diluted for the effect of share options: 516m (2007: 522m). Basic undiluted (loss) earnings per share for the year was (305)p (2007: 472p).
Net asset value (NAV)				2008		2007
				£m		£m
Balance sheet net assets				6,790		8,747
Deferred tax arising on revaluation movements, capital allowances and derivatives				102		168
Mark to market on effective cash flow hedges and related debt adjustments				(3)		(99)
Dilution effect of share options				47		46
EPRA NAV				6,936		8,862
EPRA NAV per share				1344	p	1682	p
The EPRA NAV per share excludes the mark to market on effective cash flow hedges and related debt adjustments, deferred taxation on revaluations and is calculated on a fully diluted basis.
At 31 March 2008, the number of shares in issue was: basic: 509m (2007: 521m); diluted for the effect of share options: 516m (2007: 527m).
Total return per share of minus 18.1% represents a reduction in EPRA NAV per share of 338p net of dividends paid of 32.25p (see note 15). Total return per share (before charges for REIT conversion and refinancings) for the year ended 31 March 2007 was 21.3%.

3. Gross and net rental income
		2008		2007
		£m		£m
Rent receivable		547		551
Spreading of tenant incentives and guaranteed rent increases		46		37
Surrender premiums		3		9
Gross rental income		596		597
Service charge income		49		52
Gross rental and related income		645		649
Service charge expenses		(49)		(52)
Property operating expenses		(35)		(36)
Net rental and related income		561		561
Net rental income for the year ended 31 March 2008 from properties which were subject to a security interest or held by non recourse companies was £409m (2007: £409m). Property operating expenses relating to investment properties that did not generate any rental income were £1m (2007: £3m).
4. Fees and other income
		2008		2007
		£m		£m
Performance and management fees (from funds and joint ventures)		21		30
Dividend received from Songbird Estates		16		18
Other fees and commission		3		2
Underlying		40		50
Capital dividend received from Songbird Estates		30		33
		70		83
The £21m (2007: £30m) performance and management fees comprise £9m (2007: £17m) performance fees and £12m (2007: £13m) management fees from funds and joint ventures.
The performance fee receivable from HUT for the year ended 31 December 2007 is £nil. In the year ended 31 December 2006 the fee was £27m, of which the third party element available to the Group was £17m. 50% of the undistributed performance fee is payable each year provided there is no clawback. In the current year fees of £7m (2007: £16m) have been recognised and £6m (2007: £13m) is deferred to later years. The net performance fee receivable from HIF for the year ended 31 December 2007 is £nil (2006: £1m).
Following the capital restructuring of Songbird Estates plc a capital dividend of £30m (2007: £33m) was received in the year.
5. Net revaluation (losses) gains on property and investments
		2008		2007
		£m		£m
Income statement
Revaluation of properties		(1,588)		1,053
Gains on property disposals		26		115
Other revaluations and gains				(1)
		(1,562)		1,167
Share of (losses) gains of funds and joint ventures (note 9)		(354)		257
		(1,916)		1,424
Consolidated statement of recognised income and expense
Revaluation of development properties		57		184
Revaluation of owner-occupied property		3
Revaluation of investments		(70)		22
		(1,926)		1,630

6. Net financing costs
	2008		2007
	£m		£m
Interest payable on:
Bank loans and overdrafts	71		75
Other loans	280		284
Loans from joint ventures	1
Obligations under finance leases	2		2
	354		361
Development interest capitalised	(43)		(37)
	311		324
Interest receivable on:
Deposits and securities	(20)		(11)
Other finance (income) costs:
Expected return on pension scheme assets	(5)		(4)
Interest on pension scheme liabilities	4		4
Valuation movements on fair value debt			(5)
Valuation movements on fair value hedges			5
Valuation movements on translation of foreign currency debt	(1)		(21)
Hedging reserve recycling	1		21
Net financing expenses	290		313
Refinancing charges
Debenture refinancings			266
Meadowhall Shopping Centre securitisation			39
			305
Net financing costs	290		618
Total financing income	(26)		(41)
Total financing expenses	316		659
Net financing costs	290		618
Interest on development expenditure is capitalised at a rate of 6% (2007: 5.5%), with current year tax relief of £nil (2007: £8m).

7. Taxation
			2008	2007
			£m	£m
Tax expense (income)
Current tax
UK corporation tax (30%)			3	(8)
Foreign tax			1	3
			4	(5)
Adjustments in respect of prior years			(4)	4
Total current tax (income)				(1)
REIT conversion charge				277
Deferred tax on income and revaluations			(46)	(1,289)
Group total taxation (net)			(46)	(1,013)
Tax reconciliation
(Loss) profit on ordinary activities before taxation			(1,609)	1,440
Less: loss (profit) attributable to funds and joint ventures			306	(459)
Group (loss) profit on ordinary activities before taxation			(1,303)	981
Tax on (loss) profit on ordinary activities at UK corporation tax rate of 30% (2007: 30%)
tax rate of 30% (2007: 30%)			(391)	294
Effects of:
REIT conversion charge				277
REIT conversion on investment gains				(1,458)
REIT conversion on capital allowance provisions				(134)
REIT exempt income and gains			390	(10)
Goodwill impairment and amortisation of intangibles			4	31
Tax losses and other timing differences			(45)	19
Expenses not deductible for tax purposes				(36)
Adjustments in respect of prior years			(4)	4
Group total taxation			(46)	(1,013)
Corporation tax payable at 31 March 2008 was £25m (2007: £283m) as shown in note 12. Deferred tax is calculated on temporary differences under the liability method using a tax rate of 28% (2007: 30%). The movement on deferred tax is as shown below:
Deferred taxation
	1 April	Charged (credited)			31 March
	2007	to income	to reserves		2008
	£m	£m	£m		£m
Property and investment revaluations	160	(42)	(25)		93
Other timing differences	4				4
Intangible assets	15	(4)			11
	179	(46)	(25)		108
Under the REIT regime development properties which are sold within three years of completion do not benefit from tax exemption. At 31 March 2008 the value of properties under development is £1,806m (2007: £1,220m) and if these properties were to be sold and tax exemption was not available the tax arising would be £73m (2007: £100m). No provision is made for this amount as the Group has no current plans to sell these properties.

8. Property
			Owner-
	Investment	Development	occupied	Total
	£m	£m	£m	£m
Carrying value at 1 April 2007	12,891	1,106	50	14,047
Additions: property purchases	115			115
other capital expenditure	253	292		545
	368	292		660
Disposals	(2,694)	(24)		(2,718)
Reclassifications	360	(360)
Revaluations:
included in income statement	(1,569)	(19)		(1,588)
included in statement of recognised
income and expense		57	3	60
Increase in tenant incentives and
guaranteed rent uplift balances	33	10		43
Carrying value at 31 March 2008	9,389	1,062	53	10,504
Head lease liabilities (note 13)				(35)
Total Group property portfolio valuation				10,469
At 31 March 2008, the book value of owner-occupied property is £53m (2007: £50m) after charging £nil (2007: £nil) depreciation to the income statement for the year.
At 31 March 2008, the Group book value of properties of £10,469m (2007: £14,047m) comprises freeholds of £9,357m (2007: £13,118m); virtual freeholds of £303m (2007: £106m); long leaseholds of £802m (2007: £820m) and short leaseholds of £7m (2007: £3m). The historical cost of properties was £7,315m (2007: £8,879m).
The Group's total property portfolio was valued by external valuers on the basis of Market Value in accordance with the Appraisal and Valuation Standards published by The Royal Institution of Chartered Surveyors. Knight Frank LLP valued properties to an aggregate value of £10,466m (2007: £14,015m); other valuers £3m (2007: £2m).
Properties valued at £7,162m (2007: £9,194m) were subject to a security interest and other properties of non-recourse companies amounted to £2m (2007: £128m).
Cumulative interest capitalised in investment and development properties amounts to £33m and £84m (2007: £28m and £46m) respectively.

9. Funds and joint ventures
British Land's summary share of the results of funds and joint ventures
		2008	2007
		£m	£m
Gross rental income		113	109
Service charge income		4	6
Gross rental and related income		117	115
Net rental and related income		106	100
Other income and expenditure		(6)	(6)
Net financing costs		(60)	(57)
Underlying profit before taxation		40	37
Net valuation and disposal movements		(354)	257
Non-recurring items		9
Goodwill impairment		(3)	(5)
(Loss) profit on ordinary activities before taxation		(308)	289
REIT conversion charge			(48)
Current tax		1	(19)
Deferred tax		1	237
(Loss) profit on ordinary activities after taxation		(306)	459
Summary movement for the year of the investments in funds and joint ventures
	Equity	Loans	Total
	£m	£m	£m
At 1 April 2007	1,560	50	1,610
Additions	360	11	371
Disposals	(8)	(21)	(29)
Share of loss after taxation	(306)		(306)
Distributions and dividends:     capital	(67)		(67)
revenue	(55)		(55)
Hedging movements	8		8
At 31 March 2008	1,492	40	1,532
At 31 March 2008 the investment in Joint Ventures included within the total investment in Funds and Joint Ventures was £833m (2007: £780m).
Distributions in the year include the receipt of £43m (£38m capital) from The Scottish Retail Property Limited Partnership; £34m (£17m capital) from Tesco Joint Ventures; £28m from HUT and £12m (capital) from CLOUT.
At 31 March 2008 the Group's share of funds and joint ventures properties is £3,002m (2007: £2,886m) of which £nil (2007: £153m) is carried at directors' valuation; external net debt is £1,378m (2007: £1,238m) and the mark to market adjustment for external debt is £74m asset (2007: £8m asset).

9. Funds and joint ventures: Joint Ventures' summary financial statements
All disclosures have been restated to British Land accounting policies under IFRS.
	BL Sainsbury	BLT	The Tesco	Tesco	The Tesco		The Scottish
	Superstores	Properties	British Land	BL	Aqua Limited	BL Fraser	Retail Property
	Ltd	Ltd	Property Partnership	Holdings Ltd	Partnership	Ltd	Limited Partnership
Partners	J Sainsbury plc	Tesco plc	Tesco plc	Tesco plc	Tesco plc	House of Fraser plc	Land Securities  Group plc
Group share 2008	50:50 JV	50:50 JV	50:50 JV	50:50 JV	50:50 JV	50:50 JV	50:50 JV
Group share 2007	50:50 JV	50:50 JV	50:50 JV	50:50 JV	50:50 JV	50:50 JV	50:50 JV
Date established	March 2008	November 1996	February 1998	November 1999	March 2007	July 1999	March 2004
Accounting period	5 days ended	Year ended	Year ended	Year ended	Year ended	Year ended	Year  ended
	31 Mar 2008	31 Mar 2008	31 Mar  2008	31 Mar 2008	31 Mar 2008	31 Mar 2008	31 Mar 2008
Summarised income statements	£m	£m	£m	£m	£m	£m	£m
Gross rental and related income	1	16	5	30	29	14	30
Net rental and related income	1	16	5	30	29	14	19
Other income and expenditure						(1)	(2)
Net interest -External	(1)	(11)	(3)	(15)	(27)	(8)	(11)
-Shareholders		1
Net interest payable	(1)	(10)	(3)	(15)	(27)	(8)	(11)
Underlying profit before taxation		6	2	15	2	5	6
(Deficit) surplus on revaluation		(49)	(12)	(104)	(58)	(35)	(57)
Disposal of fixed assets							(15)
Goodwill impairment
Non-recurring items							15
(Loss) profit on ordinary activities before taxation		(43)	(10)	(89)	(56)	(30)	(51)
REIT conversion charge
Current tax		7		(1)		(1)
Deferred tax
Profit on ordinary activities after taxation		(36)	(10)	(90)	(56)	(31)	(51)
Summarised balance sheets
Investment properties	1,190	316	112	601	594	263	263
Development properties
Total properties	1,190	316	112	601	594	263	263
Current assets	5	7	10	11			5
Upstream loans to joint venture shareholders		17
Cash and deposits	47	7	2	13	13	5	16
Gross assets	1,242	347	124	625	607	268	284
Current liabilities	(58)	(5)	(34)	(21)	(26)	(8)	(14)
Bank debt falling due within one year						(4)
Bank debt falling due after one year		(185)	(45)	(315)	(485)	(122)
Securitised debt	(719)						(119)
Obligations under finance leases							(11)
Deferred tax
Gross liabilities	(777)	(190)	(79)	(336)	(511)	(134)	(144)
Net external assets	465	157	45	289	96	134	140
Represented by:
Shareholder loans	24		2		52	1	14
Ordinary shareholders' funds / Partners' capital	441	157	43	289	44	133	126
Total investment	465	157	45	289	96	134	140
Capital commitments		10		5

9. Funds and joint ventures: Joint ventures' and Funds' summary financial statements
							JV & Fund	JV & Fund
All disclosures have been restated to British Land accounting policies under IFRS.	Hercules	Hercules	Pillar Retail		Other		TOTAL	TOTAL
	Unit	Income	Europark		Joint Ventures		Group share	Group share
	Trust	Fund	Fund		and Funds	*	2008	2007
Group share 2008	36.27%	26.12%	30.26%	+	At Group
Group share 2007	36.27%	26.12%	22.35%		Share
Date established	22 Sep 2000	16 Sep 2004	17 Mar 2004
Accounting period	Year ended	Year ended	Year ended
	31 Mar 2008	31 Mar 2008	31 Dec 2007
Summarised income statements	£m	£m	£m		£m		£m	£m
Gross rental and related income	107	7	34		4		117	115
Net rental and related income	99	6	29		3		106	100
Other income and expenditure	(4)		(11)				(6)	(6)
Net interest - External	(47)	(1)	(12)		(2)		(61)	(59)
- Shareholders							1	2
Net interest payable	(47)	(1)	(12)		(2)		(60)	(57)
Underlying profit before taxation	48	5	6		1		40	37
(Deficit) Surplus on revaluation	(514)	(31)	17		(20)		(367)	224
Disposal of fixed assets	4				19		13	33
Goodwill impairment					(3)		(3)	(5)
Non-recurring items					2		9
(Loss) profit on ordinary activities before taxation	(462)	(26)	23		(1)		(308)	289
REIT conversion charge								(48)
Current tax					(1)		1	(19)
Deferred tax	7		(6)				1	237
(Loss) profit on ordinary activities after taxation	(455)	(26)	17		(2)		(306)	459
Summarised balance sheets
Investment properties	2,601	125	456		105		2,889	2,815
Development properties					119		119	77
Total properties	2,601	125	456		224		3,008	2,892
Current assets	18	3	26		23		57	113
Upstream loans to joint venture shareholders					15		23	28
Cash and deposits	28	1	50		25		102	80
Gross assets	2,647	129	532		287		3,190	3,113
Current liabilities	(49)	(4)	(40)		(52)		(166)	(158)
Bank debt falling due within one year							(2)	(29)
Bank debt falling due after one year	(21)	(10)	(207)		(63)		(712)	(721)
Securitised debt	(948)						(763)	(581)
Obligations under finance leases					(1)		(6)	(6)
Deferred tax			(29)				(9)	(8)
Gross liabilities	(1,018)	(14)	(276)		(116)		(1,658)	(1,503)
Net external assets	1,629	115	256		171		1,532	1,610
Represented by:
Shareholder loans					14		60	50
Ordinary shareholders' funds / Partners' capital	1,629	115	256		157		1,472	1,560
Total investment	1,629	115	256		171		1,532	1,610
Capital commitments	40		156		10		79	132
* Comprises smaller joint ventures and funds including Eurofund Investments Zaragoza SL - a development joint venture - and Group adjustments.
+ When the fund is fully invested, this will reach approximately 40%

10. Other non-current assets
	Other	Intangible
	investments	assets
	£m	£m
At 1 April 2007	267	50
Additions		4
Disposals	(1)
Revaluation	(70)
Amortisation		(15)
At 31 March 2008	196	39
Other investments include the Group's investment in Songbird Estates plc which was acquired for £98m in June 2004 and is valued by a major independent firm of Chartered Accountants on the basis of market value at £185m as at 31 March 2008 (2007: £255m). The investment represents 17.8% of the share capital of Songbird Estates plc which in turn owns 60.8% of Canary Wharf Group plc. In view of the control rights of other shareholders, the investment is not equity accounted.
Intangible assets relate to fund management contracts which are amortised over the expected remaining life of each contract, which ranged from 6 to 10 years at acquisition. The original fair value was £79m (2007: £75m) with accumulated amortisation at 31 March 2008 being £40m (2007: £25m).
11. Debtors
	2008	2007
	£m	£m
Trade and other debtors	101	95
Prepayments and accrued income	15	16
Defined benefit pension scheme asset (non-current)		9
Interest rate derivatives*	17	88
	133	208
* Includes contracted cash flow with a maturity greater than one year at fair value.
Trade and other debtors are shown after deducting a provision for bad and doubtful debts of £9m (2007: £5m). The charge to the income statement was £4m (2007: £2m).
The directors consider that the carrying amount of trade and other debtors approximates their fair value. There is no concentration of credit risk with respect to trade debtors as the Group has a large number of customers, who are paying their rental in advance.

12. Creditors
	2008	2007
	£m	£m
Trade creditors	90	85
Amounts owed to joint ventures	29	32
Corporation tax	25	283
Other taxation and social security	13	15
Accruals and deferred income	262	312
Interest rate derivatives*	31	19
	450	746
* Includes contracted cash flow with a maturity greater than one year at fair value.
Trade payables are interest free and have settlement dates within one year. The directors consider that the carrying amount of trade and other payables approximates their fair value.
13. Other non-current liabilities
	2008	2007
	£m	£m
Obligations under finance leases	35	30
Minority interest	3	7
	38	37

14. Net debt
				2008	2007
			Footnote	£m	£m
Secured on the assets of the Group
Class A1 4.986% Bonds 2037			1.1	602	602
Class A2 Floating Rate Bonds 2037			1.1	60	60
Class B 4.988% Bonds 2037			1.1	171	174
Class A4 4.821% Bonds 2036			1.2	396	396
Class C2 5.098% Bonds 2035			1.2	217	217
Class B 4.999% Bonds 2033			1.2	365	365
Class A3 4.851% Bonds 2033			1.2	174	174
Class A1 Floating Rate Bonds 2032			1.2	224	224
Class A2 4.949% Bonds 2031			1.2	295	302
Class A2 4.482% Bonds 2030			1.3, 2		257
Class M1 Floating Rate Bonds 2030			1.3, 2		82
Class B2 5.270% Bonds 2030			1.3, 2		239
Class B3 5.578% Bonds 2030			1.3, 2		49
Class C1 Floating Rate Bonds 2030			1.3, 2		70
Class D1 Floating Rate Bonds 2030			1.3, 2		43
Class D Floating Rate Bonds 2025			1.2	130	144
Class C1 Floating Rate Bonds 2022			1.2	235	234
5.264% First Mortgage Debenture Bonds 2035				327	327
5.0055% First Mortgage Amortising Debentures 2035				105	106
5.357% First Mortgage Debenture Bonds 2028				307	307
9.125% First Mortgage Debenture Stock 2020			1.4	40	40
6.75% First Mortgage Debenture Bonds 2020				204	205
6.125% First Mortgage Debenture Stock 2014			1.4	45	45
10.3125% First Mortgage Debenture Stock 2011			1.4	44	45
6.75% First Mortgage Debenture Bonds 2011				100	100
Floating Rate Secured Loan Notes 2035				256	256
Loan notes				5	5
				4,302	5,068
Unsecured
5.50% Senior Notes 2027				98	98
6.30% Senior US Dollar Notes 2015			3	77	78
10.25% Bonds 2012					2
Bank loans and overdrafts				785	1,425
				960	1,603
Gross debt			4	5,262	6,671
Interest rate derivatives: liabilities				31	19
Interest rate derivatives: assets				(17)	(88)
				5,276	6,602
Cash and short-term deposits			5	(244)	(198)
Net debt				5,032	6,404
				2008	2007
				£m	£m
1	These borrowings are obligations of ring-fenced, special purpose companies, with no recourse to other companies or assets in the Group:
	1.1	Meadowhall Finance PLC		833	836
	1.2	Broadgate Financing PLC		2,036	2,056
	1.3	BL Superstores Finance PLC			740
	1.4	BLD Property Holdings Ltd		129	130
2	On 26 March 2008 the BL Superstores Finance PLC securitisation group was transferred to BL Sainsbury Superstores Limited, a joint venture with J Sainsbury PLC.
3	Principal and interest on this borrowing was fully hedged into Sterling at the time of issue.
4	The principal amount of gross debt at 31 March 2008 was £5,275m (2007: £6,684m). Included in this, the principal amount of secured borrowings and other borrowings of non-recourse companies was £4,294m (2007: £5,061m).
5	Cash and deposits not subject to a security interest amount to £78m (2007: £27m).

14. Net debt
Interest rate profile - including effect of derivatives
	2008	2007
	£m	£m
Fixed rate	5,248	6,061
Capped rate		100
Variable rate (net of cash)	(216)	243
Net debt	5,032	6,404
Maturity analysis of net debt
	2008	2007
	£m	£m
Repayable:
within one year and on demand	111	54
between:
one and two years	51	122
two and five years	712	1,422
five and ten years	1,117	1,212
ten and fifteen years	613	797
fifteen and twenty years	943	906
twenty and twenty five years	912	1,244
twenty five and thirty years	803	914
	5,151	6,617
Gross debt	5,262	6,671
Interest rate derivatives	14	(69)
Cash and short term deposits	(244)	(198)
Net debt	5,032	6,404
Total borrowings where any instalments are due after five years is £3,084m (2007: £3,260m).

14. Net debt
Maturity of committed undrawn borrowing facilities
		2008	2007
		£m	£m
Expiring:
within one year		77	50
between:
one and two years		80	40
two and three years		221	130
three and four years		709	707
four and five years		80	322
over five years		1,266	408
Total		2,433	1,657
The above facilities are those freely available to be drawn for Group purposes. There are additional undrawn 364 day revolving liquidity facilities of £185m and £75m which are only available for requirements of the Broadgate and Meadowhall securitisations, respectively.
Comparison of market values and book values at 31 March 2008
	Market	Book
	Value	Value	Difference
	£m	£m	£m
Securitisations	2,495	2,869	(374)
Debentures and unsecured bonds	1,213	1,347	(134)
Bank debt and other floating rate debt	1,046	1,046
Cash and short-term deposits	(244)	(244)
	4,510	5,018	(508)
Other financial (assets) liabilities:
interest rate derivative assets	(17)	(17)
interest rate derivative liabilities	31	31
	14	14
Total	4,524	5,032	(508)
Short-term debtors and creditors have been excluded from the disclosures.
The fair values of securitised debt and debentures have been established by obtaining quoted market prices from brokers. The bank debt and loan notes have been valued assuming they could be renegotiated at contracted margins. The derivatives have been valued by calculating the present value of future cash flows, using appropriate market discount rates, by an independent treasury advisor.

15. Dividend
The proposed final dividend of 8.75 pence per share, totalling £45m (2007: 8.25 pence per share, totalling £43m) was approved by the Board on 19 May 2008 and is payable on 15 August 2008 to shareholders on the register at the close of business on 18 July 2008. The final dividend is 100% property income distribution (PID).
The PID element of the dividend may vary over time and is paid, as required by REIT legislation, after deduction of withholding tax at the basic rate (22% for 2007/2008 and 20% for 2008/2009). However, certain classes of shareholder may be able to claim exemption from deduction of withholding tax. Please refer to our website (www.britishland.com) for details. The non-PID element will be treated as a normal dividend.
Payment	Dividend	Pence per share			2008	2007
Date		PID	Non-PID	Total	£m	£m
Current year dividends
15.08.2008	2008 Final	8.75		8.75
15.05.2008	2008 3rd interim	4.25	4.50	8.75
15.02.2008	2008 2nd interim	4.25	4.50	8.75	44
16.11.2007	2008 1st interim	4.25	4.50	8.75	45
		21.50	13.50	35.00
Prior year dividends
17.08.2007	2007 Final		8.25	8.25	43
18.05.2007	2007 2nd interim		6.50	6.50	34
16.02.2007	2007 1st interim		5.60	5.60		30
			20.35	20.35
18.08.2006	2006 Final		11.80	11.80		61
Dividends in Reconciliation of Movement in Shareholders' Funds					166	91
Withholding tax paid after 31 March 2008					(5)
Dividends in Cash Flow Statement					161	91
16. 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 £23m (2007: £23m) and recourse is only to the partnership assets.

17. Share capital and reserves
		Number	Share	Share	Other	Retained
		of shares	capital	premium	reserves	earnings	Total
		m	£m	£m	£m	£m	£m
At 1 April 2007		521	130	1,263	532	6,822	8,747
Total recognised income and expense					(197)	(1,461)	(1,658)
Share issues		1	1	6			7
Purchase of own shares						(151)	(151)
Adjustment for share and share
	option awards					11	11
Dividends paid in the year						(166)	(166)
At 31 March 2008		522	131	1,269	335	5,055	6,790
The authorised share capital is 800,000,000 25p ordinary shares (2007: 800,000,000).
The number of shares held in Treasury is 11,266,245 (2007: nil).
Other reserves
Other reserves comprise the following reserve accounts:
(i)	Hedging reserve - The hedging reserve comprises the effective portion of the cumulative net change in the fair value of cash flow and foreign currency hedging instruments.
(ii)	Translation reserve - The translation reserve comprises all foreign exchange differences arising from the translation of the financial statements of foreign operations as well as the translation of the liabilities that hedge the Company's net investment in a foreign subsidiary.
(iii)	Revaluation reserve - The revaluation reserve relates to development properties and other investments.
(iv)	Equity reserve - represented the equity component of the irredeemable convertible bonds, which were converted during the year ended 31 March 2005, net of the related deferred tax asset.

	Table A
	Summary income statement based on proportional consolidation
	for the year ended 31 March 2008
	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 funds and joint ventures consolidated on a line by line, i.e. proportional basis. The underlying profit before tax and total profit after tax are the same as presented in the consolidated income statement.
		Q4	Q3	Q2	Q1
		3 months ended				Year ended
		31 Mar	31 Dec	30 Sep	30 Jun	31 Mar	31 Mar
		2008	2007	2007	2007	2008	2007
		£m	£m	£m	£m	£m	£m
	Gross rental income	180	174	175	180	709	706
	Net rental income	166	167	167	167	667	661
	Fees and other income	4	7	7	22	40	51
	Administrative expenses	(15)	(17)	(19)	(22)	(73)	(85)
	Net interest costs	(86)	(85)	(88)	(91)	(350)	(370)
	Underlying profit before taxation	69	72	67	76	284	257
	Debt refinancing costs				9	9	(305)
	Net valuation movement (includes profits and losses on disposal)	(318)	(1,391)	(365)	158	(1,916)	1,424
	Amortisation of intangible asset	(7)	(3)	(1)	(4)	(15)	(15)
	Songbird dividend (capital)				30	30	33
	Goodwill impairment	(1)			(2)	(3)	(111)
	REIT conversion costs						(13)
	(Loss) profit on ordinary activities before taxation	(257)	(1,322)	(299)	267	(1,611)	1,270
	Tax charge relating to underlying profit		(2)	(3)	(3)	(8)	(31)
	REIT conversion charge						(325)
	Deferred tax benefit	8	5	24	10	47	1,673
	Other taxation	6	1	1	1	9	(134)
	(Loss) profit for the period after taxation	(243)	(1,318)	(277)	275	(1,563)	2,453
	Underlying earnings per share - diluted basis	13p	14p	12p	14p	53p	43p
	The underlying earnings per share is calculated on underlying pre tax profit of £284m (2007: £257m), tax attributable to underlying profits of £8m (2007: £31m) and fully diluted shares numbering 516m (2007: 522m). Gross rental income excludes service charge receivable.

Table A (continued)
Pro forma summary balance sheets based on proportional consolidation
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 share of funds and joint venture assets and liabilities included on a line by line, i.e. proportional basis and assuming full dilution.
	2008		2007
	£m		£m
Retail properties	7,661		10,173
Office properties	5,505		6,165
Other properties	305		565
Total properties	13,471		16,903
Other investments	197		267
Intangible assets	39		50
Other net liabilities	(358)		(617)
Net debt	(6,413)		(7,741)
EPRA NAV	6,936		8,862
EPRA NAV per share (note 2)	1344	p	1682	p
Calculation of EPRA NNNAV per share
EPRA NAV	6,936		8,862
Deferred tax arising on revaluation movements, capital allowances and derivatives	(102)		(168)
Mark to market on effective cash flow hedges and related debt adjustments	3		99
Mark to market on debt	582		75
EPRA NNNAV	7,419		8,868
EPRA NNNAV per share	1438	p	1683	p
EPRA NNNAV is the EPRA NAV adjusted to reflect the fair value of debt and derivatives and to include the deferred taxation on revaluations.
Total property valuations including share of funds and joint ventures
	2008		2007
	£m		£m
British Land Group	10,469		14,017
Share of funds and joint ventures
Investment properties	2,889		2,815
Development properties	119		77
Head lease liabilities	(6)		(6)
	3,002		2,886
Total property portfolio valuation	13,471		16,903

 

END

 

 

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