Final Results - Part 2

RNS Number : 6166E
British Land Co PLC
14 May 2013
 



Consolidated Income Statement










for the year ended 31 March 2013















2013


2012






















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

329


             -

329


332


             -

332

















Net rental and related income

3

281


             -

281


286


             -

286

















Fees and other income

4

15


             -

15


16


             -

16

















Joint ventures and funds (see also below)

130


(63)

67


113


69

182

















Administrative expenses

(72)


             -

(72)


(69)


             -

(69)

















Net valuation movement (includes result on disposals)

5

             -


88

88


             -


143

143

















Financing costs




























- financing income

6

21


2

23


24


2

26



- financing charges

6

(101)


(41)

(142)


(101)


(4)

(105)






















(80)


(39)

(119)


(77)


(2)

(79)
































Profit (loss) on ordinary activities before taxation

274


(14)

260


269


210

479

















Taxation






























- current tax income (expense)

7



8

8




(2)

(2)



- deferred tax income

7



16

16




3

3
























24

24




1

1

















Profit for the year after taxation attributable to shareholders of the Company

284





480
































Earnings per share:

-

basic

2




31.7

p



54.1

p



-

diluted

2




31.5

p



53.8

p












































































Share of results of joint ventures and funds








Underlying profit before taxation

130


             -

130


113


             -

113


Net valuation movement (includes result on disposals)

             -


(62)

(62)


             -


72

72


Non-recurring items


             -


(4)

(4)


             -


(3)

(3)


Current tax income (expense)

             -


2

2


             -


(1)

(1)


Deferred tax income

             -


1

1


             -


1

1


Share of results of joint ventures and funds

9

130


(63)

67


113


69

182
































All results derive from continuing operations.



























*As defined in note 2


























 

 

Consolidated Statement of Comprehensive Income

for the year ended 31 March 2013
















2013

2012



£m

£m









Profit for the year after taxation

284

480





Other comprehensive income:


Items that will not be reclassified subsequently to profit or loss:

Net actuarial loss on pension scheme

(2)

(3)



(2)

(3)





Items that may be reclassified subsequently to profit or loss:

Losses on cash flow hedges


- Group


(16)

(65)

- Joint ventures and funds

(6)

(50)



(22)

(115)





Transferred to the income statement (cash flow hedges)

- foreign currency derivatives

(5)

                              -

- interest rate derivatives

26

18



21

18





Exchange differences on translation of foreign operations


- hedging and translation

(4)

9

- other


6

(8)



2

1









Other comprehensive loss for the year

(1)

(99)









Total comprehensive income for the year attributable to shareholders of the Company

283

381

















 

 

 




 

 

Consolidated Balance Sheet




as at 31 March 2013



















2013


2012*



Note

£m


£m


ASSETS






Non-current assets





Investment and development properties

8

5,488


5,346


Owner-occupied property

8

42


41




5,530


5,387








Other non-current assets





Investments in joint ventures and funds

9

2,336


2,191


Other investments

10

76


28


Interest rate derivative assets

15

92


73




8,034


7,679








Current assets






Trading properties

8

40


47


Debtors

11

60


95


Liquid investments

15

                                       -


200


Cash and short-term deposits

15

135


137




235


479








Total assets


8,269


8,158








LIABILITIES






Current liabilities





Short-term borrowings and overdrafts

15

(44)


(49)


Creditors

12

(259)


(261)


Corporation tax


(17)


(23)




(320)


(333)








Non-current liabilities





Debentures and loans

15

(2,134)


(2,572)


Other non-current liabilities

13

(26)


(25)


Deferred tax liabilities

14

(16)


(32)


Interest rate derivative liabilities

15

(86)


(92)




(2,262)


(2,721)








Total liabilities


(2,582)


(3,054)








Net assets


5,687


5,104








Equity






Share capital

18

249


225


Share premium


1,242


1,237


Merger reserve


213


                                    -


Other reserves


(163)


(164)


Retained earnings

4,146


3,806








Total equity attributable to shareholders of the Company

5,687


5,104














EPRA NAV per share**

2

596

p

595

p













* Comparatives have been re-presented, see note 1.


** As defined in note 2.











 

 

 

 

 

Consolidated Statement of Cash Flows


for the year ended 31 March 2013










2013

2012


Note

£m

£m









Rental income received from tenants

266

271

Fees and other income received

19

21

Operating expenses paid to suppliers and employees

(88)

(81)

Cash generated from operations

197

211









Interest paid

(113)

(89)

Interest received

31

17

UK corporation tax received

1

3

Distributions and other receivables from joint ventures and funds

74

64

Net cash inflow from operating activities

190

206









Cash flows from investing activities


Development and other capital expenditure

(230)

(106)

Purchase of investment properties

(442)

(382)

Sale of investment properties

699

59

Purchase of investments

                                    -

(22)

Sale of investments

2

                                    -

Deferred consideration received

18

12

Investment in and loans to joint ventures and funds

(318)

(110)

Capital distributions received from joint ventures and funds

72

                                    -

Indirect taxes (paid) received in respect of investing activities

(3)

2

Net cash outflow from investing activities

(202)

(547)









Cash flows from financing activities


Issue of ordinary shares

493

                                    -

Dividends paid

16

(203)

(212)

Closeout of interest rate derivatives

4

                                    -

Movement in other financial liabilities

2

(4)

Disposal of liquid investments

15

210

                                    -

Decrease in bank and other borrowings

(889)

(406)

Drawdowns on bank and other borrowings

                                    -

1,040

Proceeds on convertible bond issue

393

                                    -

Net cash inflow from financing activities

10

418









Net (decrease) increase in cash and cash equivalents

(2)

77

Cash and cash equivalents at 1 April

137

60

Cash and cash equivalents at 31 March

135

137









Cash and cash equivalents consists of:


Cash and short-term deposits

15

135

137





 

Consolidated Statement of Changes in Equity






 for the year ended 31 March 2013






































Hedging and















Share


Share


translation


Revaluation


Merger


Retained









capital

*

premium


reserve

*

reserve

*

reserve

*

earnings


Total







£m


£m


£m

**

£m




£m


£m

Balance at 1 April 2012


225


1,237


(72)


(92)


       -


3,806


5,104

Profit for the year after taxation

       -


       -


       -


       -


       -


284


284

Losses on cash flow hedges

       -


       -


(16)


       -


       -


       -


(16)

Joint ventures and funds revaluations

       -


       -


       -


(6)


       -


       -


(6)

Reclassification of losses on cash flow hedges














- foreign currency derivatives

       -


       -


(5)


       -


       -


       -


(5)

- interest rate derivatives

       -


       -


26


       -


       -


       -


26

Exchange differences on translation of foreign operations

       -


       -


(4)


6


       -


       -


2

Net actuarial loss on pension schemes

       -


       -


       -


       -


       -


(2)


(2)

Other comprehensive income (loss)

       -


       -


1


       -


       -


(2)


(1)

Total comprehensive income for the year

       -


       -


1


       -


       -


282


283

Share issues

24


5


       -


       -


464


       -


493

Adjustment for share and share option awards

       -


       -


       -


       -


       -


9


9

Dividends payable in year (26.3p per share)

       -


       -


       -


       -


       -


(234)


(234)

Transfer






       -


       -


       -


       -


(251)


251


       -

Adjustment for scrip dividend element

       -


       -


       -


       -


       -


32


32

Balance at 31 March 2013


249


1,242


(71)


(92)


213


4,146


5,687







































Balance at 1 April 2011


224


1,237


(34)


(34)


       -


3,537


4,930

Profit for the year after taxation

       -


       -


       -


       -


       -


480


480

Losses on cash flow hedges

       -


       -


(65)


       -


       -


       -


(65)

Joint ventures and funds revaluations

       -


       -


       -


(50)


       -


       -


(50)

Reclassification of losses on cash flow hedges














- interest rate derivatives

       -


       -


18


       -


       -


       -


18

Exchange differences on translation of foreign operations

       -


       -


9


(8)


       -


       -


1

Net actuarial loss on pension schemes

       -


       -


       -


       -


       -


(3)


(3)

Other comprehensive loss

       -


       -


(38)


(58)


       -


(3)


(99)

Total comprehensive (loss) income for the year

       -


       -


(38)


(58)


       -


477


381

Share issues

1


       -


       -


       -


       -


       -


1

Adjustment for share and share option awards

       -


       -


       -


       -


       -


5


5

Dividends payable in year (26.0p per share)

       -


       -


       -


       -


       -


(231)


(231)

Adjustment for scrip dividend element

       -


       -


       -


       -


       -


18


18

Balance at 31 March 2012


225


1,237


(72)


(92)


       -


3,806


5,104

* refer to note 18.















** The balance at 1 April 2012 includes £11m relating to foreign exchange and (£83m) relating to hedging.

 

Notes to the accounts

 for the year ended 31 March 2013


1.     Basis of preparation


The financial information set out above does not constitute the Company's statutory accounts for the years ended 31 March 2013 or 2012, but is derived from those accounts.  Statutory accounts for 2012 have been delivered to the Registrar of Companies and those for 2013 will be delivered following the Company's annual general meeting. The auditor has 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 s498(2) or (3) of Companies Act 2006 or equivalent preceding legislation.


The financial statements for the year ended 31 March 2013 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.


While the financial information included in this preliminary announcement has been prepared in accordance with the recognition and measurement criteria of IFRSs, this announcement does not itself contain sufficient information to comply with IFRSs. The Company expects to publish full financial statements that comply with IFRSs in June 2013.


The accounting policies used are consistent with those contained in the Group's last annual report and accounts for the year ended 31 March 2012.  Standards and interpretations issued but not effective for the current accounting period were: IFRS 9 - Financial Instruments; IFRS 10 -  Consolidated Financial Statements; IFRS 11 - Joint Arrangements; IFRS 12 - Disclosure of Interests in Other Entities; IFRS 13 - Fair Value Measurement; IAS 1 (amended) - Presentation of Items of Other Comprehensive Income; IAS 12 (amended) - Deferred Tax: recovery of assets; IAS 19 (revised) - Employee Benefits; IAS 27 (revised) - Separate Financial Statements; IAS 28 (revised) - Investments in Associates and Joint Ventures and IAS 32 (amended) - Financial Instruments: Presentation.


The balance sheet has been re-presented to show interest rate derivative assets, interest rate derivative liabilities and corporation tax creditor on the face of the balance sheet, in accordance with IAS 1.  Comparatives on the balance sheet and in the notes to the accounts have been re-presented accordingly.  The tax withheld on dividends, previously disclosed within corporation tax creditors, has been re-presented in other taxation and social security.


The Directors do not expect that the adoption of the standards listed above will have a material impact on the financial statements of the Group in future periods except as follows: IFRS 9 will impact both the measurement and disclosures of financial instruments; IFRS 12 will impact the disclosure of interests the Group has in other entities; IFRS 13 will impact the disclosure of fair value measurements and IAS 19 (revised) will impact the measurement of the various components representing movements in the defined benefit pension obligation.


The financial statements have been prepared on the going concern basis as stated in the directors' responsibility statement.


2.     Performance measures






























2013


2012


Earnings per share (diluted)

Earnings


Pence
per share


Earnings


Pence
per share





£m



£m














Underlying pre-tax profit - income statement

274




269




Tax charge relating to underlying profit

(1)




(4)















Underlying earnings

273


30.3

p

265


29.7

p












Mark-to-market on / profit on disposal of liquid investments (held for trading assets)

9




(3)




Mark-to-market on convertible bond

(7)




            -




Non-recurring items*


(7)




            -















EPRA earnings

268


29.7

p

262


29.4

p












Profit for the year after taxation

284


31.5

p

480


53.8

p












*Non-recurring items for the year ended 31 March 2013 relate to £7m of issue costs for the convertible bond.












The European Public Real Estate Association (EPRA) issued Best Practices Recommendations most recently in September 2011 and additional guidance in January 2013, which gives guidelines for performance measures.    Comparatives have been re-presented in line with the additional guidance.  The EPRA earnings 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 measure, with additional company adjustments.  Adjustments include mark-to-market adjustments on, or profits on disposal of, held for trading assets, mark-to-market adjustments on the convertible bond and issue costs of the convertible bond.












The weighted average number of shares in issue for the year was: basic: 895m (2012: 887m); diluted for the effect of share options: 901m (2012: 892m).  Basic undiluted earnings per share for the year, calculated using profit for the year after taxation of £284m (2012: £480m), was 31.7p (2012: 54.1p). Earnings per share shown in the table above are diluted.






























31 March


31 March


Net asset value (NAV) (diluted)





2013


2012









£m


£m













Balance sheet net assets





5,687


5,104













Deferred tax arising on revaluation movements



14


31


Mark-to-market on effective cash flow hedges and related debt adjustments




198


189


Surplus on trading properties





10


            -


Dilution effect of share options





58


57













EPRA NAV






5,967


5,381













EPRA NAV per share





596

p

595

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 2013, the number of shares in issue was: basic: 986m (2012: 888m); diluted for the effect of share options: 1,001m (2012: 904m).












Total accounting return per share for the year ended 31 March 2013 of 4.6% includes dividends paid of 26.4p (see note 16) in addition to the increase in EPRA NAV of 1p. Total accounting return per share for the year ended 31 March 2012 was 9.5%.

3.     Gross and net rental and related income



 



2013

2012


 



£m

£m


 






 

Rent receivable


269

259


 

Spreading of tenant incentives and guaranteed rent increases

24

41


 

Surrender premia


1

                             -


 






 

Gross rental income


294

300


 






 

Service charge income


35

32


 






 

Gross rental and related income


329

332


 






 

Service charge expenses


(35)

(32)


 

Property operating expenses


(13)

(14)


 






 

Net rental and related income


281

286


 






 

The cash element of net rental income recognised during the year ended 31 March 2013 from properties which were not subject to a security interest was £159m (2012: £126m).  Property operating expenses relating to investment properties that did not generate any rental income were £1m (2012: £1m).  Contingent rents of £1m (2012: £1m) were recognised in the year.


 


 


 


 






 






 

4.     Fees and other income





 



2013

2012


 



£m

£m


 






 

Performance and management fees (from joint ventures and funds)

10

12


 

Other fees and commissions


5

4


 






 

Fees and other income


15

16


 






 






 

5.     Net revaluation gains on property and investments



 



2013

2012


 



£m

£m


 

Consolidated income statement





 

Revaluation of properties


71

143


 

Result on property and investment disposals

8

3


 

Revaluation of investments


9

(3)


 






 



88

143


 

Share of valuation movements of joint ventures and funds

(62)

72


 






 

Net revaluation gains on property and investments

26

215


 






 






 

 

 

6.     Net financing costs




2013

2012


£m

£m

Interest payable on:



Bank loans and overdrafts

37

27

Other loans

75

76

Obligations under finance leases

1

1





113

104

Development interest capitalised

(17)

(8)





96

96

Interest receivable on:



Deposits, securities and liquid investments

(11)

(17)

Loans to joint ventures

(3)

               -





(14)

(17)




Other finance (income) costs:






Expected return on pension scheme assets

(7)

(7)

Interest on pension scheme liabilities

5

5

Valuation movements on translation of foreign currency debt

5

               -

Hedging reserve recycling

(5)

               -




Net financing expenses - underlying

80

77




Capital and other:



Valuation movements on fair value debt

18

66

Valuation movements on fair value derivatives

(14)

(68)

Net capital movement on convertible bond

14

               -

Recycling of fair value movement on close-out of derivatives

20

               -

Valuation movement on translation of foreign currency net assets

(2)

               -

Fair value movement on non-hedge accounted derivatives

3

4




Net financing costs - capital

39

2




Net financing costs

119

79




Total financing income

(23)

(26)

Total financing charges

142

105




Net financing costs

119

79







Interest on development expenditure is capitalised at a rate of 4.00% (2012: 4.48%).




 

7.     Taxation









2013

2012





£m

£m


Tax (income) expense











Current tax:


UK corporation tax: 24% (2012: 26%)

1

2











1

2


Adjustments in respect of prior periods


(9)

              -














Total current tax expense (income)


(8)

2


Deferred tax on revaluations


(16)

(3)








Group total taxation (net)


(24)

(1)








Attributable to joint ventures and funds


(3)

              -








Total taxation income



(27)

(1)








Tax reconciliation






Profit on ordinary activities before taxation


257

479


Less: profit attributable to joint ventures and funds*

(64)

(182)








Group profit on ordinary activities before taxation

193

297








Tax on profit on ordinary activities at UK corporation
 tax rate of 24% (2012: 26%)



46

77














Effects of:







REIT exempt income and gains

(41)

(70)



Tax losses


(6)

(8)



Adjustments in respect
 of prior years


(23)

              -








Group total taxation income


(24)

(1)








*A current tax credit of £2m (2012: charge of £1m) and a deferred tax credit of £1m (2012: credit of £1m) arose on profits attributable to joint ventures and funds.  The low charges reflect the Group's REIT status.








Tax expense attributable to underlying profits for the year ended 31 March 2013 was £1m (2012: £4m). The underlying tax rate for the year ended 31 March 2013 was 0.5% (2012: 1.5%).














Corporation tax payable at 31 March 2013 was £17m (2012: £23m) as shown on the balance sheet.














 

8.     Property


















Property reconciliation 12 months to 31 March 2013

Investment &

Trading

Owner-







Development

Properties

occupied

Total






£m

£m

£m

£m










Carrying value at 1 April 2012


5,346

47

41

5,434



















Additions:

- property purchases

453

                   -

                   -

453



- development expenditure

201

5

                   -

206



- capitalised interest

15

1

                   -

16



- capital expenditure on asset management initiatives


28

                   -

                   -


28















697

6

                   -

703










Depreciation




                   -

                   -

(1)

(1)

Disposals




(651)

(13)

                   -

(664)

Revaluations included in income statement

72

                   -

2

74

Movement in tenant incentives and contracted rent uplift balances


24

                   -

                   -


24










Carrying value at 31 March 2013


5,488

40

42

5,570










Head lease liabilities (note 13)





(26)

Surplus on trading properties





10










Total Group property portfolio valuation at 31 March 2013



5,554



















At 31 March 2013, the Group book value of properties of £5,554m (2012: £5,414m) comprises freeholds of £3,502m (2012: £4,034m); virtual freeholds of £709m (2012: £107m); and long leaseholds of £1,343m (2012: £1,273m). The historical cost of properties was £4,229m (2012: £4,264m).










The property valuation does not include any investment properties held under operating leases (2012: £nil).










Properties valued at £1,724m (2012: £1,827m) were subject to a security interest and other properties of non-recourse companies amounted to £40m (2012: £49m).










Included within the property valuation is £91m (2012: £86m) in respect of accrued contracted rental uplift income, against which the Group holds a provision of £5m (2012: £5m). The balance arises through the IFRS treatment of leases containing such arrangements which requires the recognition of rental income on a straight line basis over the lease term, with the difference between this and the cash receipt changing the carrying value of the property against which revaluations are measured.










Cumulative interest capitalised against investment properties amounts to £56m (2012: £78m).










Included in investment properties are £904m of properties which are in the course of development (2012: £444m).










The Group's total property portfolio was valued by external valuers on the basis of fair value, in accordance with the RICS Valuation - Professional Standards 2012, eighth edition, published by The Royal Institution of Chartered Surveyors. 

Copies of the valuation certificates of Knight Frank LLP and CBRE can be found on the website at: www.britishland.com/investors/operational-performance.aspx










A breakdown of valuations split between the Group and its share of joint ventures and funds is shown below:













2013

2012




Group

Joint Ventures
and Funds

Total

Group

Joint
Ventures
and Funds

Total




£m

£m

£m

£m

£m

£m










Knight Frank LLP


          5,084

          2,680

            7,764

            5,133

            2,577

            7,710

CBRE


             470

          2,265

            2,735

               281

            2,346

            2,627




          5,554

          4,945

          10,499

            5,414

            4,923

          10,337










 

9.     Joint ventures and funds






















Summary movement for the year of the investments in joint ventures and funds













Joint Ventures

Funds

Total

Equity

Loans

Total



£m

£m

£m

£m

£m

£m









At 1 April 2012

1,687

504

2,191

1,992

199

2,191

Additions

315

70

385

139

246

385

Disposals

(65)

(35)

(100)

(65)

(35)

(100)

Share of profit after taxation

128

(61)

67

67

                 -

67

Distributions and dividends:

Capital

(72)

                 -

(72)

(72)

                 -

(72)


Revenue

(110)

(24)

(134)

(134)

                 -

(134)

Hedging and exchange movements

3

(4)

(1)

(1)

                 -

(1)









At 31 March 2013

1,886

450

2,336

1,926

410

2,336









PREF, a fund owning a portfolio of retail property in Europe (in which British Land has a net investment of £82m) is externally valued by CBRE.  CBRE have included market uncertainty clauses in the valuation reports of the Spanish, Italian and Portuguese properties due to the lack of transactional evidence and uncertainty over the economic situation in these markets.  In the 2014 calendar year PREF has €89m of bank loans that are due to mature, discussions are on-going with the existing lenders in relation to loan extensions and other alternatives are being explored.









At 31 March 2013 the investment in joint ventures included within the total investment in joint ventures and funds was £1,889m (2012: £1,690m).









Distributions in the year include the receipt of £24m from the Broadgate joint venture, £63m from the Meadowhall joint venture, £23m from the Sainsbury joint venture, £36m from Tesco joint ventures, £17m from HUT, £5m from PREF and £9m from Auchinlea.  Of the total distributions made in the year £146m were settled in cash and £60m were settled via the transfer of other assets.









At 31 March 2013, the valuation of the Group's share of joint ventures and funds properties was £4,945m (2012: £4,923m); external net debt was £2,427m (2012: £2,576m) and the mark-to-market adjustment for external debt was £193m liability (2012: £5m asset).









 

9.     Joint ventures and funds (continued): Joint ventures' summary financial statements













A detailed breakdown of the 100% results of specific joint ventures and funds is set out on the two following pages. The total column represents the Group's share of all joint ventures and funds. All disclosures have been restated to British Land accounting policies under IFRS eliminating all profits and losses resulting from upstream and downstream transactions with the Group.


















Bluebutton
Properties
Ltd

MSC Property
Intermediate
Holdings Ltd

BL Sainsbury
Superstores
Ltd

Tesco Joint
Ventures




*

USS
Joint
Ventures**

Leadenhall
Holding Co
(Jersey) Ltd









Partners

Blackstone
Group LP funds

Norges Bank Investment
Management

J Sainsbury plc

Tesco PLC


Universities Superannuation Scheme

Oxford
Properties









Property sector

City Offices

Shopping Centres

Superstores

Superstores


Shopping Centres

City Offices


Broadgate

Meadowhall





Leadenhall

Group share

50%

50%

50%

50%


50%

50%









Date established

November 2009

February 2009

March 2008

November 1996


May 2007

Dec 2010









Accounting period

31 March

31 March

31 March

31 March


31 March

31 March


2013

2013

2013

2013


2013

2013

Summarised income statements

£m

£m

£m

£m


£m

£m

















Gross rental and related income

198

93

65

106


4

                 -









Net rental and related income

160

77

65

100


3

                 -

Other income and expenditure

(1)

(8)

(1)

(2)


                 -

                 -

Net interest payable (receivable)

(95)

(51)

(31)

(58)


                 -

                 -









Underlying profit before taxation

64

18

33

40


3

                 -

Surplus  (deficit) on revaluation

53

24

(18)

(11)


18

5

Disposal of fixed assets

                 -

                 -

(1)

(1)


                 -

                 -

Non-recurring items

                 -

1

                 -

(2)


(2)

                 -









Profit (loss) on ordinary activities before taxation

117

43

14

26


19

5

Current tax

                 -

                 -

                 -

                 -


                 -

                 -

Deferred tax

                 -

                 -

                 -

                 -


                 -

                 -









Profit (loss) on ordinary activities after taxation

117

43

14

26


19

5

















Summarised balance sheets

£m

£m

£m

£m


£m

£m









Investment properties

3,042

1,530

1,203

1,700


164

318

Current assets

22

2

1

1


                 -

5

Upstream loans to joint venture shareholders

                 -

                 -

                 -

                 -


                 -

                 -

Cash and deposits

266

38

21

33


6

1

Gross assets

3,330

1,570

1,225

1,734


170

324









Current liabilities

(238)

(43)

(35)

(174)


(3)

(12)

Bank debt falling due within one year

(185)

                 -

                 -

                 -


                 -

                 -

Bank debt falling due after one year

(52)

                 -

                 -

(1,007)


                 -

                 -

Securitised debt

(1,809)

(766)

(609)

                 -


                 -

                 -

Other non-current liabilities

-

                 -

                 -

                 -


                 -

                 -

Obligations under finance leases

                 -

(5)

                 -

                 -


                 -

                 -

Deferred tax

                 -

                 -

                 -

                 -


                 -

                 -

Gross liabilities

(2,284)

(814)

(644)

(1,181)


(3)

(12)









Net external assets

1,046

756

581

553


167

312









Represented by:







Shareholder loans

15

204

15

95


12

259

Ordinary shareholders' funds/partners' capital

1,031

552

566

458


155

53

Total investment

1,046

756

581

553


167

312

















*Tesco joint ventures include BLT Holdings (2010) Limited, the Tesco British Land Property Partnership, Tesco BL Holdings Limited, Shopping Centres Limited and the Tesco Aqua Limited Partnership.

** USS joint ventures include the Eden Walk Shopping Centre Unit Trust and the Fareham Property Partnership.









 

9.     Joint ventures and funds (continued): joint ventures' and funds' summary financial statements























A detailed breakdown of the 100% results of specific joint ventures and funds is set out on the current and previous page. The total column represents the Group's share of all joint ventures and funds. All disclosures have been restated to British Land accounting policies under IFRS eliminating all profits and losses resulting from upstream and downstream transactions with the Group.










































Joint Ventures and Funds


Joint Ventures and Funds










Hercules



Pillar Retail


Other


TOTAL


TOTAL










Unit



Europark


joint ventures


Group share


Group share










Trust



Fund

+

and funds

+*

2013


2012




Partners

































Property sector





Retail



Retail
















Parks



Parks





























Group share






41.24%



65.30%





























Date established





September 2000



March 2004





























Accounting period





31 March



31 March
















2013



2013










Summarised income statements

£m



£m


£m


£m


£m





































Gross rental and related income


95



28


16


306


298























Net rental and related income



85



19


10


260


260




Other income and expenditure


(3)



(1)


4


(4)


(6)




Net interest payable (receivable)


(28)



(7)


8


(126)


(141)























Underlying profit before taxation


54



11


22


130


113




Surplus (deficit) on revaluation



(83)



(91)


(3)


(61)


71




Disposal of fixed assets




                   -



                   -


                   -


(1)


1




Non-recurring items




(4)



                   -


(1)


(4)


(3)























Profit (loss) on ordinary activities before taxation


(33)



(80)


18


64


182




Current tax






                   -



                   -


2


2


(1)




Deferred tax






                   -



3


(1)


1


1























Profit (loss) on ordinary activities after taxation


(33)



(77)


19


67


182










































Summarised balance sheets



































Investment properties




1,496



204


220


            4,949


4,931




Current assets





5



36


21


62


67




Upstream loans to joint venture shareholders


                   -



                   -


4


4


14




Cash and deposits





38



15


7


215


146




Gross assets






1,539



255


252


5,230


5,158























Current liabilities





(36)



(55)


(37)


(340)


(303)




Bank debt falling due within one year

                   -



(51)


(1)


(127)


(63)




Bank debt falling due after one year


(619)



(24)


(28)


(828)


(702)




Securitised debt





                   -



                   -


                   -


           (1,592)


(1,842)




Other non-current liabilities



                   -



                   -


                   -


                   -


(45)




Obligations under finance leases


                   -



                   -


(2)


(5)


(9)




Deferred tax






                   -



                   -


(2)


(2)


(3)




Gross liabilities





(655)



(130)


(70)


2,894


(2,967)























Net external assets




884



125


182


2,336


2,191























Represented by:


















Shareholder loans





                   -



                 62


135


477


266




Ordinary shareholders' funds/partners' capital


884



63


47


            1,859


1,925




Total investment





884



125


182


2,336


2,191










































+Although the Group's ownership share is 65.30%, it does not exercise control over significant decisions. The Group therefore equity accounts for its interest in Pillar Retail Europark Fund (PREF).


























+*Included in the column headed 'Other joint ventures and funds' are contributions from the following:  the BL Goodman Limited Partnership, the Scottish Retail Property Limited Partnership, BL Gazeley Limited, BL Canada Quays Limited, Eurofund Investments Zaragoza S.L., Hercules Income Fund (HIF), the City of London Office Unit Trust (CLOUT), Auchinlea Partnership and Group consolidation adjustments. Amounts are included in this column at the relevant percentage for the Group's interest.

















The borrowings of joint ventures and funds and their subsidiaries are non-recourse to the Group.  All joint ventures are incorporated in the United Kingdom, with the exception of Bluebutton Properties Limited,  the Eden Walk Shopping Centre Unit Trust, Leadenhall Holding Co (Jersey) Limited and the Scottish Retail Property Limited Partnership which are domiciled in Jersey and Eurofund Investments Zaragoza S.L. which is domiciled in Spain.  Of the funds, Hercules Unit Trust (HUT) and Hercules Income Fund (HIF) are domiciled in Jersey and PREF in Luxembourg.













 

 

 

9.     Joint ventures and funds (continued)

 




 

Operating cash flows of joint ventures and funds (Group share)

 


2013

2012

 


£m

£m

 




 

Rental income received from tenants

264

277

 

Operating expenses paid to suppliers and employees

(22)

(28)

 




 

Cash generated from operations

242

249

 




 

Interest paid

(133)

(144)

 

UK corporation tax paid

(7)

(8)

 




 

Cash inflow from operating activities

102

97

 




 

Cash inflow from operating activities deployed as:

 




 

Surplus cash retained within joint ventures and funds

28

33

 




 

Revenue distributions to British Land

74

64

 




 


102

97

 




 




 

10.     Other investments


 



£m

 




 

At 1 April 2012


28

 

Additions


53

 

Disposals


(4)

 

Depreciation


(1)

 




 

At 31 March 2013


76

 




 

Included within additions is £53m in relation to a loan to Bluebutton Properties Limited, a joint venture company.

 

 




 




 

11.     Debtors



 


2013

2012

 


£m

£m

 




 

Trade and other debtors+

15

29

 

Amounts owed by joint ventures

40

57

 

Prepayments and accrued income

5

9

 




 

Debtors

60

95

 




 

+ Included within this balance is deferred consideration of £4m (2012: £4m) arising on the sale of investment properties for which the timing of the receipt is contingent and therefore may fall due after one year.

 

 




 

Comparatives have been re-presented, see note 1.

 




 

Trade and other debtors are shown after deducting a provision for bad and doubtful debts of £11m (2012: £10m).  The charge to the income statement was £1m (2012: £1m).

 

 




 

The Directors consider that the carrying amount of trade and other debtors approximates to 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 rent in advance.

 

 

 




 

12.     Creditors




 



2013

2012

 



£m

£m

 





 

Trade creditors


94

88

 

Amounts owed to joint ventures

4

15

 

Other taxation and social security

24

27

 

Accruals and deferred income

137

131

 





 

Creditors


259

261

 





 

Comparatives have been re-presented, see note 1.


 





 

Trade creditors are interest-free and have settlement dates within one year.  The Directors consider that the carrying amount of trade and other creditors approximates to their fair value.

 

 





 





 





 

13.     Other non-current liabilities



 



2013

2012

 



£m

£m

 





 

Trade and other creditors

                      -

5

 

Head leases


26

20

 





 

Other non-current liabilities

26

25

 





 





 





 

14.     Deferred Taxation



 





 

Deferred tax is calculated on temporary differences under the liability method using a tax rate of 23% (2012: 24%).

 

The movement in deferred tax is shown below:

 





 


1 April

Credited

31 March

 


2012

to income

2013

 


£m

£m

£m

 





 

Property and investment revaluations

28

(16)

12

 

Other timing differences

4

                      -

4

 





 

Deferred taxation

32

(16)

16

 





 





 

Under the REIT regime development properties which are sold within three years of completion do not benefit from tax exemption.  At 31 March 2013 the value of such properties is £nil (2012: £763m) and if these properties were to be sold and tax exemption was not available the tax arising would be £nil (2012: £30m)

 

 

 

 

The deferred tax charge for the year ended 31 March 2013 includes a credit of £1m to reflect reduced deferred tax liabilities arising from the forthcoming reduction in the UK corporation tax rate to 23% (effective from 1 April 2013).

 

 





 

Deferred tax assets of £40m (2012: £41m) arising on losses from previous years have not been recognised in the financial year.

 

 





 





 





 





 

15.     Net debt










2013

2012





Footnote

£m

£m

Secured on the assets of the Group



9.125% First Mortgage Debenture Stock 2020

1

37

37

6.125% First Mortgage Debenture Stock 2014

1

45

46

5.264% First Mortgage Debenture Bonds 2035

345

341

5.0055% First Mortgage Amortising Debentures 2035

101

102

5.357% First Mortgage Debenture Bonds 2028

334

322

6.75% First Mortgage Debenture Bonds 2020

181

179

Loan notes




5

5













1,048

1,032

Unsecured






5.50% Senior Notes 2027


98

98

6.30% Senior US Dollar Notes 2015

2

101

96

3.895% Senior US Dollar Notes 2018

3

28

26

4.635% Senior US Dollar Notes 2021

3

158

145

4.766% Senior US Dollar Notes 2023

3

97

89

5.003% Senior US Dollar Notes 2026

3

62

57

1.5% Convertible Bond 2017


407

                          -

Bank loans and overdrafts


179

1,078













1,130

1,589

Gross debt



4

2,178

2,621








Interest rate derivatives: liabilities


86

92

Interest rate derivatives: assets


(92)

(73)













2,172

2,640

Liquid investments




4.405% Medium Term Note 2015


                          -

(100)

4.395% Medium Term Note 2015


                          -

(100)






                          -

(200)








Cash and short-term deposits

5

(135)

(137)








Net debt




2,037

2,303








Total borrowings where any instalments are due after five years are £103m (2012: £104m).













2013

2012

1

These borrowings are obligations of ring-fenced, special purpose companies, with no recourse to other companies or assets in the Group:




£m


£m


BLD Property Holdings Ltd

82

83

2

Principal and interest on this borrowing was fully hedged into Sterling at the time of issue.

3

Principal and interest on this borrowing was fully hedged into Sterling at a floating rate at the time of issue.



4

The principal amount of gross debt at 31 March 2013 was £2,063m (2012: £2,562m). Included in this, the principal amount of secured borrowings and other borrowings of non-recourse companies was £981m (2012: £982m).


5

Cash and deposits not subject to a security interest amount to £106m (2012: £132m).















Maturity analysis of net debt


2013

2012






£m

£m








Repayable:

within one year and on demand

44

49

between:

one and two years


188

405



two and five years


522

776



five and ten years


441

422



ten and fifteen years

602

260



fifteen and twenty years

5

332



twenty and twenty five years

376

377






2,134

2,572

Gross debt




2,178

2,621

Interest rate and currency derivatives

(6)

19

Liquid Investments


                          -

(200)

Cash and short-term deposits


(135)

(137)








Net debt




2,037

2,303















 

 

 

 

 

15.     Net debt (continued)








The two financial covenants applicable to the Group unsecured debt including convertible bonds are:






Net Borrowings not to exceed 175% of Adjusted Capital and Reserves

At 31 March 2013, the ratio is 31%:


i. Net Borrowings are £1,962m, being the principal amount of gross debt of £2,063m plus amounts owed to joint ventures of £4m plus TPP Investments Ltd of £30m (see note 17), less the cash and short-term deposits of £135m; and

ii. Adjusted Capital and Reserves are £6,242m, being share capital and reserves of £5,687m (see consolidated statement of changes in equity), adjusted for £14m of deferred tax (see note 2), £10m trading property surplus, £326m exceptional refinancing charges (see below) and £205m fair value adjustments on financial assets and liabilities (£198m mark-to-market on interest rate swaps and £7m fair value adjustment on the convertible bond).






Net Unsecured Borrowings not to exceed 70% of Unencumbered Assets

At 31 March 2013 the ratio is 23%:


i. Net Unsecured Borrowings are £980m, being the principal amount of gross debt of £2,063m plus amounts owed to joint ventures of £4m less cash and deposits not subject to a security interest of £106m less the principal amount of secured and non-recourse borrowings of £981m; and

ii. Unencumbered Assets are £4,313m being properties of £5,554m (see note 8) plus investments in joint ventures and funds of £2,336m (see note 9) and other investments of £76m (see balance sheet) less investments in joint ventures of £1,889m (see note 9) and encumbered assets of £1,764m (see note 8).






In calculating Adjusted Capital and Reserves for the purpose of the unsecured debt financial covenants, there is an adjustment of £326m to reflect the cumulative net amortised exceptional items relating to the refinancings in the years ended 31 March 2005, 2006 and 2007.






Interest rate profile - including effect of derivatives





2013

2012




£m

£m






Fixed rate


1,848

1,976

Variable rate (net of cash)


189

327






Net debt


2,037

2,303






Reconciliation of movement in Group net debt to cash flow statement







2012

Cash flow

Non cash

2013


£m

£m

£m

£m






Per cash flow statement:




Cash and short-term deposits

(137)

2

                         -

(135)

Cash and cash equivalents

(137)

2

                         -

(135)






Term debt (excluding overdrafts)

2,621

(496)

53

2,178

Fair value of interest rate derivatives

19

                          -

(25)

(6)

Liquid investments

(200)

210

(10)

                         -






Net debt

2,303

(284)

18

2,037






The Group Loan to Value (LTV) ratio at 31 March 2013 is 24%, being principal value of gross debt of £2,063m less cash and short-term deposits of £135m, divided by total Group property of £5,554m (see note 8) plus investments in joint ventures and funds of £2,336m (balance sheet) and other investments of £76m (see balance sheet).

 

15.    Net debt (continued)











Maturity of committed undrawn borrowing facilities








2013

2012



£m

£m

Maturity date:








between four and five years

108

825

between three and four years

870

                         -

Total facilities available for more than three years

978

825





between two and three years

                         -

280

between one and two years

757

100

within one year


369

35





Total


2,104

1,240





The above facilities are available to be drawn for Group purposes.









Comparison of market values and book values at 31 March 2013






Market

Book



Value

Value

Difference


£m

£m

£m





Debentures and unsecured bonds

1,622

1,587

35

Convertible bond

407

407

                         -

Bank debt and other floating rate debt

189

184

5

Cash and short-term deposits

(135)

(135)

                         -






2,083

2,043

40





Other financial (assets) liabilities:



- interest rate derivative assets

(92)

(92)

                         -

- interest rate derivative liabilities

86

86

                         -






(6)

(6)

                         -





Total

2,077

2,037

40





Short-term debtors and creditors have been excluded from the disclosures.





The fair values of 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 expected future cash flows, using appropriate market discount rates, by an independent treasury advisor.





Convertible Bond

On 10 September 2012 British Land (Jersey) Limited (the Issuer) issued £400 million 1.5 per cent guaranteed convertible bonds due 2017 (the bonds) at par. The Company has unconditionally and irrevocably guaranteed the due and punctual performance by the Issuer of all of its obligations (including payments) in respect of the bonds and the obligations of the Company, as guarantor, constitute direct, unsubordinated unconditional and unsecured obligations of the Company.

Subject to their terms, the bonds are convertible into preference shares of the Issuer which are automatically transferred to the Company in exchange for ordinary shares in the Company or, at the Company's election, any combination of ordinary shares and cash. The bonds can be converted from 22 October 2012 up to and including 24 September 2015 if the share price has traded at a level exceeding 130 per cent of the exchange price for a specified period and from 25 September 2015 to (but excluding) the 20th dealing day before 10 September 2017 (the maturity date) at any time.

The initial exchange price was 693.07 pence per ordinary share. Under the terms of the bonds, the exchange price is adjusted on the happening of certain events including the payment of dividends by the Company above 26.4 pence in any year.

On or after 25 September 2015, the bonds may be redeemed at par at the Company's option subject to the Company's ordinary shares having traded at a price exceeding 130 per cent of the exchange price for a specified period, or at any time once 85 per cent by nominal value of the bonds originally issued have been converted, redeemed, or purchased and cancelled. If not previously converted, redeemed or purchased and cancelled, the bonds will be redeemed at par on the maturity date.





 

 

16.     Dividend
















The fourth quarter dividend of 6.6 pence per share, totalling £65m (2012: 6.6 pence per share, totalling £58m) was approved by the Board on 13 May 2013 and is payable on 9 August 2013 to shareholders on the register at the close of business on 5 July 2013.









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 four business days before the ex-dividend date of 3 July 2013.  The Board expects to announce the split between PID (Property Income Distribution) and non-PID income at that time. Any 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.


























Payment
Date

Dividend

PID


Non PID

Pence per share

2013
£m

2012
£m









Current year dividends








09.08.2013

2013 4th interim



6.60

                 -

                 -

10.05.2013

2013 3rd interim

6.60

*


6.60

                 -

                 -

15.02.2013

2013 2nd interim

6.60

*


6.60

59

                 -

09.11.2012

2013 1st interim

6.60

*


6.60

59

                 -






26.40



Prior year dividends








10.08.2012

2012 4th interim

3.30


3.30

6.60

58

                 -

9.05.2012

2012 3rd interim

6.50



6.50

58

                 -

17.02.2012

2012 2nd interim

6.50



6.50

                 -

58

11.11.2011

2012 1st interim

6.50



6.50

                 -

58






26.10











12.08.2011

2011 4th interim

6.50



6.50

                 -

58

13.05.2011

2011 3rd interim

6.50



6.50

                 -

57









Dividends in consolidated statement of changes in equity


234

231

Dividends settled in shares





(32)

(18)

Dividends settled in cash






202

213

Timing difference relating to payment of withholding tax



1

(1)

Dividends in cash flow statement





203

212









* Scrip alternative treated as non-PID for this dividend.





























17.     Contingent liabilities















The Group has contingent liabilities in respect of legal claims, guarantees and warranties arising in the ordinary course of business.  It is not anticipated that any material liabilities will arise from 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 (2012: £30m) and recourse is only to the partnership assets.

















 

18.     Share capital and reserves










2013


2012

Number of ordinary shares in issue at 1 April

900,199,638

897,042,298






Share issues

97,491,850

3,157,340






At 31 March

997,691,488

900,199,638






Of the issued 25p ordinary shares, 275,497 shares were held in the ESOP trust (2012: 1,370,161), 11,266,245 shares were held as treasury shares (2012: 11,266,245) and 986,149,746 shares were in free issue (2012: 887,563,232).  No treasury shares were acquired by the ESOP trust during the year.  All issued shares are fully paid.






On 12 March 2013, the Company announced the placing of 89,674,604 new ordinary shares at a price of 550 pence per share.  The new shares are fully paid and rank pari passu in all respects with those ordinary shares of the Company in issue prior to the placing.






Hedging and translation reserve







The hedging and translation reserve comprises the effective portion of the cumulative net change in the fair value of cash flow and foreign currency hedging instruments, as well as all foreign exchange differences arising from the translation of the financial statements of foreign operations. The foreign exchange differences also include the translation of the liabilities that hedge the Company's net investment in a foreign subsidiary.


Revaluation reserve








The revaluation reserve relates to owner-occupied properties and investments in joint ventures and funds.






Merger reserve








This comprises the premium on the share placing in March 2013.  No share premium is recorded in the Company's financial statements, through the operation of the Merger Relief provisions of the Companies Act 2006.

 

 

19. Segment Information

































Operating segments

















The segmental note has been updated to reflect changes to internal management reporting. 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. Prior year comparatives have been updated to reflect this change.

The relevant revenue, net rental income, operating result, assets and capital expenditure, being the measure of segment revenue, segment result and segment assets used by the management of the business, are set out below. Revenue is derived from the rental of buildings. Operating result is the net of net rental income, fee income and administration expenses. No customer exceeds 10% of the Group's revenues in either year.


















Segment Result


Offices


Retail


Other /
unallocated


Total



2013


2012


2013


2012


2013


2012


2013


2012



£m


£m


£m


£m


£m


£m


£m


£m



































Revenue

















British Land Group


85


87


176


184


33


29


294


300

Share of joint ventures
 and funds


83


82


190


189


           -


1


273


272

Total


168


169


366


373


33


30


567


572


















Net rental income

















British Land Group


82


77


167


175


32


34


281


286

Share of joint ventures
 and funds


80


80


180


180


           -


           -


260


260

Total


162


157


347


355


32


34


541


546


















Operating Result

















British Land Group


72


77


159


174


(7)


(18)


224


233

Share of joint ventures
 and funds


80


80


175


172


1


           2


256


254

Total


152


157


334


346


(6)


(16)


480


487


















Reconciliation to underlying
 profit before taxation































2013


2012

British Land Group














£m


£m

Total operating result














480


487

British Land Group net
 financing costs














(80)


(77)

Share of joint ventures and
 funds net financing costs














(126)


(141)

Capital and other














(14)


210

Total profit on ordinary
activities before tax














260


479


















Of the total revenues above, £19m (2012: £17m) was derived from outside the UK.
























Segment Assets


Offices


Retail


Other /
unallocated


Total



2013


2012


2013


2012


2013


2012


2013


2012



£m


£m


£m


£m


£m


£m


£m


£m



































Property assets (includes head leases liabilities)

















British Land Group


2,033


2,017


3,071


2,946


450


451


5,554


5,414

Share of joint ventures
 and funds


1,684


1,545


3,256


3,372


5


6


4,945


4,923

Total


3,717


3,562


6,327


6,318


455


457


10,499


10,337


















Segment assets

















British Land Group


2,039


2,023


3,080


2,949


814


995


5,933


5,967

Share of joint ventures
 and funds


1,839


1,628


3,367


3,517


12


14


5,218


5,159

Total


3,878


3,651


6,447


6,466


826


1,009


11,151


11,126


















Other assets

















British Land Group


           -


           -


           -


           -


363


533


363


533

Share of joint ventures
 and funds


155


83


107


137


7


8


269


228

Total


155


83


107


137


370


541


632


761


















Capital expenditure

















British Land Group


391


148


315


27


47


347


753


522

Share of joint ventures
 and funds


109


113


26


83


           -


           -


135


196

Total


500


261


341


110


47


347


888


718


















Other assets include other investments of £76m (2012: £28m), debtors of £60m (2012: £95m), liquid investments of £nil (2012: £200m), cash of £135m (2012: £137m) and derivatives of £92m (2012: £73m).

 

Supplementary Disclosures
































Table A: SUMMARY INCOME STATEMENT AND BALANCE SHEET

















Summary income statement based on proportional consolidation for the year ended 31 March 2013














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 underlying profit after taxation are the same as presented in the consolidated income statement.

















31 March 2013


31 March 2012



Group


Joint ventures


Proportionally


Group

Joint ventures

Proportionally





and funds


Consolidated



and funds

Consolidated



£m


£m


£m


£m

£m

£m













Gross rental income

294


273


567


300

272

572













Property operating expenses

(13)


(13)


(26)


(14)

(12)

(26)













Net rental income

281


260


541


286

260

546













Administrative expenses

(72)


(4)


(76)


(69)

(7)

(76)













Fees and other income

15


              -


15


16

1

17













Ungeared income return

224


256


480


233

254

487













Net  interest

(80)


(126)


(206)


(77)

(141)

(218)













Underlying profit before taxation

144


130


274


156

113

269













Underlying tax

(1)


              -


(1)


(2)

(2)

(4)













Underlying profit after taxation

143


130


273


154

111

265













Underlying earnings per
 share - diluted basis





30.3


p



29.7

p












Valuation movement





26




215













Other capital and tax (net)*





(4)




13













Capital and other





22




228













Total return





295




493













*includes other comprehensive income, movement in dilution of share options and the movement in items excluded for EPRA NAV.














The underlying earnings per share is calculated on underlying profit before taxation of £274m, tax attributable to underlying profits of £1m and 901m shares on a diluted basis for the year ended 31 March 2013.



















































































































 

Supplementary Disclosures (continued)























Table A (continued):






































Summary balance sheet based on proportional consolidation as at 31 March 2013



















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.


















Group

Share of joint ventures & funds

Share options

Deferred tax

Mark-to-Market of interest rate swaps

Head Leases

Valuation surplus on trading properties


EPRA Net assets 2013


EPRA Net assets 2012



£m

£m

£m

£m

£m

£m

£m


£m


£m















Retail properties

3,080

3,260

           -

           -

           -

(13)

           -


6,327


6,318















Office properties

2,039

1,684

           -

           -

           -

(6)

           -


3,717


3,562















Other properties

451

5

           -

           -

           -

(11)

10


455


457




























Total properties

5,570

4,949

           -

           -

           -

(30)

10


10,499


10,337















Investments in joint

2,336

(2,336)

           -

           -

           -

           -

           -


           -


           -


ventures and

funds

























Other investments

76

(23)

           -

           -

           -

           -

           -


53


28















Other net
(liabilities) assets

(258)

(163)

58

14

           -

30

           -


(319)


(294)















Net debt

(2,037)

(2,427)

           -

           -

198

           -

           -


(4,266)


(4,690)















Net assets

5,687

           -

58

14

198

           -

10


5,967


5,381















EPRA NAV per share
 (note 2)









596

p

595

p


































































EPRA Net Assets
 Movement





























31 March 2013


31 March 2012








£m

Pence per share


£m


Pence per share















Opening EPRA NAV





5,381

595

p

5,101


567

p














Income return






273

30

p

265


29

p














Capital return






22

2

p

228


25

p














Dividend paid






(202)

(27)

p

(213)


(26)

p














Dilution due to issues
 of shares






493

(4)

p

           -


           -















Closing EPRA NAV





5,967

596

p

5,381


595

p














 

 

Supplementary Disclosures (continued)














Table B:  EPRA PERFORMANCE MEASURES




















EPRA Performance measures summary table








2013



2012



£m

Pence per share


£m

Pence per share









EPRA earnings

268

29.7

p

262

29.4

p








EPRA NAV

5,967

596

p

5,381

595

p








EPRA NNNAV

5,522

552

p

5,148

569

p








EPRA net initial yield


5.5

%


5.2

%








EPRA 'topped-up' net initial yield   


5.7

%


5.8

%








EPRA vacancy rate     


3.3

%


2.4

%






















Calculation of EPRA earnings and EPRA earnings per share


2013

2012






£m

£m









Profit for the year after taxation




284

480


Exclude







Group - non-underlying current tax




(9)

                  -


Group - deferred tax




(16)

(3)


Joint ventures and funds - non-underlying current tax



(2)

(1)


Joint ventures and funds - deferred tax




(1)

(1)


Group - net valuation movement (including result on disposals)


(79)

(146)


Joint ventures and funds - net valuation movement (including result on disposals)   

62

(72)


Amortisation of intangible assets




1

                  -


Changes in fair value of financial instruments and associated close-out costs

28

5









EPRA earnings*




268

262









Mark-to-market on / profit on disposal of liquid investments (held for trading assets)   


(9)

3


Mark-to-market on convertible bond




7

                  -


Non-recurring items**




7

                  -








Underlying earnings




273

265









* Comparatives have been re-presented in line with updated EPRA guidance.

**Non-recurring items for the year ended 31 March 2013 relate to £7m of issue costs for the convertible bond.













2013

2012






Number

Number






million

million









Weighted average number of shares




907

899









Adjustment for treasury shares




(11)

(11)









Adjustment for ESOP shares




(1)

(1)








Weighted average number of shares (basic)



895

887








Dilutive effect of share options




2

2









Dilutive effect of ESOP shares




4

3









Weighted average number of shares (diluted)



901

892




















2013

2012






Pence

Pence









Earnings per share (basic)




31.7

54.1









Earnings per share (diluted)




31.5

53.8















Underlying earnings per share (diluted)




30.3

29.7








EPRA earnings per share




29.7

29.4









.




 

 

 

 

Supplementary Disclosures (continued)













Table B (continued):



































Net assets per share


2013



2012



   £m

Pence per share


£m

Pence per share









Balance sheet net assets

5,687



5,104










Deferred tax arising on revaluation movements

     14



31



Mark-to-market on effective cash flow hedges and related debt adjustments

   198



189



Dilution effect of share options

     58



57



Surplus on trading properties

     10



    -



EPRA NAV

 5,967

596

p

5,381

595

p








Deferred tax arising on revaluation movements

   (14)



(31)



Mark-to-market on effective cash flow hedges and related debt adjustments

  (198)



(189)



Mark-to-market on debt

  (233)



(13)










EPRA NNNAV

 5,522

552

p

5,148

569

p








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.






















EPRA Net Initial Yield and 'topped-up' Net Initial Yield







2013



2012




£m



£m


Investment property - wholly-owned

5,554



5,414


Investment property - share of joint ventures and funds

4,945



4,923


Less developments, residential and land

(1,340)



(835)









Completed property portfolio


9,159



9,502


Allowance for estimated purchasers' costs

552



521









Gross up completed property portfolio valuation

9,711



10,023









Annualised cash passing rental income

541



531


Property outgoings


(11)



(8)









Annualised net rents


530



523









Rent expiration of rent-free periods and fixed uplifts*

27



57









'Topped-up' net annualised rent


557



580


EPRA Net Initial Yield


5.5

%


5.2

%

EPRA 'topped-up' Net Initial Yield


5.7

%


5.8

%








Including fixed/minimum uplifts received in lieu of rental growth

26



27









Total 'topped-up' net rents


583



607


Overall 'topped-up' Net Initial Yield


6.0

%


6.1

%








'Topped-up' net annualised rent


557



580


ERV vacant space


19



14


Reversions


                   -



(18)


Total ERV


576



576


Net Reversionary Yield


5.9

%


5.7

%

* The period over which rent-free periods expire is 2 years (2012: 3 years).










EPRA Vacancy Rate









2013



2012




£m



£m


Annualised potential rental value of vacant premises

19



14


Annualised potential rental value for the completed property portfolio

576



576


EPRA vacancy rate


3.3

%


2.4

%








 

 

Supplementary Disclosures (continued)













Table C:  GROSS RENTAL INCOME AND ACCOUNTING RETURN











Calculation of gross rental income


















31 March

31 March






2013

2012






£m

£m
















Rent receivable




538

533


Spreading of tenant incentives and guaranteed rent increases


28

38


Surrender premia




1

1









Gross rental income




567

572































31 March 2013


31 March 2012
















Total accounting return


4.6

%


9.5

%















 

 

 


This information is provided by RNS
The company news service from the London Stock Exchange
 
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