Final Results - Part 2

RNS Number : 0967M

British Land Co PLC

18 May 2010

 



Consolidated Income Statement for the year ended 31 March 2010
			2010			2009
		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	394		394	554		554
Net rental and related income	3	337		337	453		453
Fees and other income	4	13		13	18		18
Amortisation of intangible assets			(15)	(15)		(14)	(14)
Joint ventures and funds (see also below)		81	398	479	55	(822)	(767)
Administrative expenses		(55)		(55)	(51)		(51)
Net valuation movement (includes profits & losses on disposals)	5		496	496		(3,241)	(3,241)
Net financing costs
- financing income		30		30	52		52
- financing charges		(157)		(157)	(259)	(119)	(378)
		(127)		(127)	(207)	(119)	(326)
Profit (loss) on ordinary activities before taxation		249	879	1,128	268	(4,196)	(3,928)
Taxation
- current tax income (expense)	7		24	24		(2)	(2)
- deferred tax (expense) income	7		(12)	(12)		49	49
			12	12		47	47
Profit (loss) for the year after taxation attributable to shareholders of the Company				1,140			(3,881)
Earnings (loss) per share:   basic	2			133p			(616)p
diluted	2			133p			(614)p
Share of results of joint ventures and funds
Underlying profit before taxation		81		81	55		55
Net valuation movement (includes profits & losses on disposals)			412	412		(833)	(833)
Non-recurring items			(9)	(9)
Current tax (expense) income			(5)	(5)		2	2
Deferred tax income						9	9
	9	81	398	479	55	(822)	(767)
*As defined in note 2

Consolidated Balance Sheet
as at 31 March 2010
		2010		2009
	Note	£m		£m
Assets
Non-current assets
Investment properties	8	4,126		5,436
Development properties	8			358
Owner-occupied property	8	33		30
		4,159		5,824
Other non-current assets
Investments in joint ventures and funds	9	1,594		952
Other investments	10	261		38
Intangible assets	10	10		25
		6,024		6,839
Current assets
Debtors	11	105		123
Liquid investments	14	195
Cash and short-term deposits	14	74		616
		374		739
Total assets		6,398		7,578
Liabilities
Current liabilities
Short-term borrowings and overdrafts	14	(139)		(49)
Creditors	12	(332)		(524)
		(471)		(573)
Non-current liabilities
Debentures and loans	14	(1,642)		(3,716)
Other non-current liabilities	13	(30)		(45)
Deferred tax liabilities	7	(47)		(35)
		(1,719)		(3,796)
Total liabilities		(2,190)		(4,369)
Net assets		4,208		3,209
Equity
Share capital		220		217
Share premium		1,241		1,244
Other reserves		(90)		(139)
Retained earnings		2,837		1,887
Total equity attributable to shareholders
of the Company		4,208		3,209
EPRA NAV per share*	2	504	p	398	p
* As defined in note 2

Consolidated Statement of Comprehensive Income
for the year ended 31 March 2010
		2010	2009
	Note	£m	£m
Profit (loss) for the year after taxation		1,140	(3,881)
Other comprehensive income:
Valuation movements
- on development properties	5		(44)
- on owner-occupied property	5		(3)
- on other investments	5		(88)
			(135)
Losses on cash flow hedges
- Group		(6)	(182)
- Joint ventures and funds		(10)	(46)
Transferred to the income statement (cash flow hedges)
- foreign currency derivatives		6	(30)
- interest rate derivatives		23	109
		29	79
Exchange differences on translation of foreign operations		(1)	5
Net actuarial loss on pension scheme		(2)	(2)
Tax on items taken directly to equity			24
Other comprehensive income for the period		10	(257)
Total comprehensive income for the period		1,150	(4,138)

Consolidated Statement of Cash Flows
for the year ended 31 March 2010
		2010	2009
	Note	£m	£m
Rental income received from tenants		317	455
Fees and other income received		15	30
Operating expenses paid to suppliers and employees		(84)	(79)
Cash generated from operations		248	406
Interest paid		(179)	(270)
Interest received		9	20
UK corporation tax (paid) received		(3)	16
Distributions and other receivables from joint ventures and funds		61	33
Net cash inflow from operating activities		136	205
Cash flows from investing activities
Purchase of investment properties		(75)	(107)
Development and other capital expenditure		(173)	(436)
Sale of investment properties		279	904
REIT conversion charge recovered (paid)		6	(6)
Purchase of investments		(43)
Sale of investments		13
Indirect taxes in respect of investing activities		(4)	3
Establishment of Meadowhall Joint Venture			115
Establishment of Broadgate Joint Venture		31
Investment in Shopping Centres Joint Venture with Tesco		(26)
Investment in and loans to joint ventures and funds		(56)	(57)
Capital distributions received from joint ventures and funds		7	2
Net cash (outflow) inflow from investing activities		(41)	418
Cash flows from financing activities
Issue of ordinary shares			743
Dividends paid		(154)	(188)
Repayment of debt acquired with subsidiary undertaking			(11)
Movement in other financial liabilities		(20)	(76)
Establishment of Broadgate Joint Venture - cash collateral		(266)
Increase in liquid investments		(200)
Increase (decrease) in bank and other borrowings		1	(714)
Net cash outflow from financing activities		(639)	(246)
Net (decrease) increase in cash and cash equivalents		(544)	377
Cash and cash equivalents at 1 April		616	239
Cash and cash equivalents at 31 March		72	616
Cash and cash equivalents consists of:
Cash and short-term deposits	14	74	616
Overdrafts		(2)
		72	616

Consolidated Statement of Changes in Equity for the year ended 31 March 2010
				Hedging and
	Share	Share	Merger	translation	Revaluation	Retained
	capital *	premium	reserve *	reserve *	reserve *	earnings	Total
	£m	£m	£m	£m	£m	£m	£m
Balance at 1 April 2009	217	1,244		(98)	(41)	1,887	3,209
Profit for the period after taxation						1,140	1,140
Reallocation of hedging reserve on disposal				37		(37)
Joint venture and fund revaluations					(10)		(10)
Losses on cash flow hedges				(6)			(6)
Reclassification of losses (gains) on cash flow hedges to loss for the period after taxation
- foreign currency derivatives				6			6
- interest rate derivatives				23			23
Foreign exchange movements					(1)		(1)
Net actuarial loss on pension schemes						(2)	(2)
Other comprehensive income				60	(11)	(39)	10
Total comprehensive income for the year				60	(11)	1,101	1,150
Share issues	3	(3)
Adjustment for share and share option awards						1	1
Dividends payable in year (27.3p per share)						(215)	(215)
Adjustment for scrip dividend element						63	63
Balance at 31 March 2010	220	1,241		(38)	(52)	2,837	4,208
Balance at 1 April 2008	131	1,269		3	332	5,055	6,790
Loss for the period after taxation						(3,881)	(3,881)
Development property revaluations					(44)		(44)
Transfer on practical completion of developments					(219)	219
Revaluation of owner occupied property					(3)		(3)
Revaluation of investments					(88)		(88)
Joint venture and fund revaluations					(46)		(46)
Losses on cash flow hedges				(182)			(182)
Reclassification of losses (gains) on cash flow hedges to loss for the period after taxation
- foreign currency derivatives				(30)			(30)
- interest rate derivatives				109			109
Foreign exchange movements				2	3		5
Net actuarial loss on pension schemes						(2)	(2)
Deferred tax taken to equity					24		24
Other comprehensive income				(101)	(373)	217	(257)
Total comprehensive income for the year				(101)	(373)	(3,664)	(4,138)
Share issues	86	(25)	682				743
Transfer			(682)			682
Adjustment for share and share option awards						(1)	(1)
Dividends payable in year (30p per share)						(185)	(185)
Balance at 31 March 2009	217	1,244		(98)	(41)	1,887	3,209
* refer to note 17

Notes to the accounts for the year ended 31 March 2010
1.     Basis of preparation
The financial information set out above does not constitute the company's statutory accounts for the years ended  31 March 2010 or 2009, but is derived from those accounts.  Statutory accounts for 2009 have been delivered to the Registrar of Companies and those for 2010 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 s498(2) or (3) of Companies Act 2006 or equivalent preceding legislation.
The financial statements for the year ended 31 March 2010 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 International Financial Reporting Standards (IFRSs), this announcement does not itself contain sufficient information to comply with IFRSs. The Group expects to publish full financial statements that comply with IFRSs in June 2010.
The accounting policies used are consistent with those contained in the Group's last annual report and accounts for the year ended 31 March 2009, with the exception of the adoption of the amendments to IAS 1 (revised) which now requires the presentation of a statement of changes in equity as a primary statement; prospective adoption of revisions to IAS 16 Property, Plant & Equipment and IAS 40 Investment Property, which have had the effect to bring property under construction or development for future use as an investment property within the scope of IAS 40; and the amendments to IFRS 7 Financial Instruments. None of these adoptions have affected profits before tax, net assets or underlying profits before tax and comparative results have not needed to be restated.
The financial statements have been prepared on the going concern basis as stated in the directors' responsibility statement.

2.     Performance measures
	2010		2009
Earnings (loss) per share (diluted)	Earnings	Pence per share	Earnings	Pence per share
	£m		£m
Underlying pre tax profit - income statement	249		268
Tax charge relating to underlying profit	(5)		(9)
Underlying earnings per share	244	28.4p	259	41.0p
Realisation of cash flow hedges/non-recurring items*	(9)		(119)
EPRA earnings per share	235	27.3p	140	22.2p
Profit (loss) for the period after taxation	1,140	133p	(3,881)	(614)p
* In the year ended 31 March 2010 debt break costs of £9m were incurred in HUT - see note 9 (2009: Realisation of cash flow hedges £119m - see note 6).
The European Public Real Estate Association (EPRA) issued Best Practices Recommendations in July 2009, 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.
Underlying earnings consists of the EPRA earnings measure, with additional company adjustments.  Adjustments include realisation of cash flow hedges and non-recurring items.
The weighted average number of shares in issue for the year was: basic: 857m (2009: 630m); diluted for the effect of share options: 860m (2009: 632m).  Basic undiluted earnings per share for the year was 133p (2009: 616p loss). Earnings per share shown in the table above are diluted.
			31 March	31 March
Net asset value (NAV)			2010	2009
			£m	£m
Balance sheet net assets			4,208	3,209
Deferred tax arising on revaluation movements			43	25
Mark to market on effective cash flow hedges and related debt adjustments			126	153
Dilution effect of share options			30
EPRA NAV			4,407	3,387
EPRA NAV per share			504p	398p
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 2010, the number of shares in issue was: basic: 866m (2009: 850m); diluted for the effect of share options: 875m (2009: 851m).
Total return per share for the year ended 31 March 2010 of 33.5% includes dividends paid of 27.3p (see note 15) in addition to the increase in EPRA NAV of 106p. Total return per share for the year ended 31 March 2009 was minus 61.6%.

3.     Gross and net rental income
		2010	2009
		£m	£m
Rent receivable		319	462
Spreading of tenant incentives and guaranteed rent increases		23	34
Surrender premiums			1
Gross rental income		342	497
Service charge income		52	57
Gross rental and related income		394	554
Service charge expenses		(52)	(57)
Property operating expenses		(5)	(44)
Net rental and related income		337	453
The cash element of net rental income recognised during the year ended 31 March 2010 from properties which were not subject to a security interest was £81m (2009: £103m).  Property operating expenses relating to investment properties that did not generate any rental income were £1m (2009: £1m).
4.     Fees and other income
		2010	2009
		£m	£m
Performance fees (from funds)			3
Management fees (from joint ventures and funds)		7	11
Other fees and commission		6	4
		13	18
There were no performance fees receivable from HUT or HIF for the years ended 31 December 2009 or 31 December 2008. Some 50% of undistributed performance fees are payable each year provided there is no clawback. In relation to HUT, all unpaid deferred fees relating to calendar years 2005 and 2006 have been clawed back in the current year. The basis on which HUT performance fees are calculated has been amended with effect from 1 January 2010 to a rolling three year period with no clawbacks.
5.     Net revaluation movements on property and investments
		2010	2009
		£m	£m
Consolidated income statement
Revaluation of properties		530	(2,994)
Result on property disposals		(18)	(177)
Revaluation of investments		(12)	(69)
Other revaluations and losses		(4)	(1)
		496	(3,241)
Share of profits (losses) of joint ventures and funds		412	(833)
		908	(4,074)
Consolidated statement of comprehensive income
Revaluation of development properties			(44)
Revaluation of owner-occupied property			(3)
Revaluation of investments			(88)
		908	(4,209)

6.     Net financing costs
	2010	2009
	£m	£m
Interest payable on:
Bank loans and overdrafts	12	31
Other loans	146	230
Obligations under finance leases	1	1
	159	262
Development interest capitalised	(13)	(38)
	146	224
Interest receivable on:
Deposits, securities and liquid investments	(15)	(17)
Loans to joint ventures	(3)
	(18)	(17)
Other finance (income) costs:
Expected return on pension scheme assets	(5)	(5)
Interest on pension scheme liabilities	4	5
Valuation movements on translation of foreign currency debt	(6)	30
Hedging reserve recycling	6	(30)
Valuation movements on fair value debt	1
Valuation movements on fair value derivatives	(1)
Net financing expenses - pre exceptional	127	207
Exceptional item
Realisation of cash flow hedges		119
		119
Net financing costs	127	326
Total financing income	(30)	(52)
Total financing expenses	157	378
Net financing costs	127	326
Interest on development expenditure is capitalised at a rate of 5.27% (2009: 5.5%).

7.     Taxation
		2010	2009
		£m	£m
Tax expense (income)
Current tax: UK corporation tax: 28% (2009: 28%)		2	6
Foreign tax			1
		2	7
Adjustments in respect of prior periods		(26)	(5)
Total current tax (income) expense		(24)	2
Deferred tax on revaluations		12	(49)
Group total taxation (net)		(12)	(47)
Attributable to joint ventures and funds		5	(11)
Total taxation		(7)	(58)
Tax reconciliation
Profit (loss) on ordinary activities before taxation		1,128	(3,928)
Less: (profit) loss attributable to joint ventures and funds		(479)	767
Group profit (loss) on ordinary activities before taxation		649	(3,161)
Tax on profit (loss) on ordinary activities at UK corporation
tax rate of 28% (2009: 28%)		182	(885)
Effects of:
REIT exempt income and gains		(170)	881
Tax losses and other timing differences		2	(38)
Adjustments in respect of prior years		(26)	(5)
Group total taxation		(12)	(47)
Tax expense attributable to underlying profits for the year ended 31 March 2010 was £5m (2009: £9m).
Corporation tax payable at 31 March 2010 was £23m (2009: £40m) as shown in note 12.  Deferred tax is calculated on temporary differences under the liability method using a tax rate of 28% (2009: 28%).  The movement on deferred tax is as shown below:
Deferred taxation
	1 April	Charged (credited)	31 March
	2009	to income	2010
	£m	£m	£m
Property and investment revaluations	23	16	39
Other timing differences	4		4
Intangible assets	8	(4)	4
	35	12	47
Under the REIT regime development properties which are sold within three years of completion do not benefit from tax exemption.  At 31 March 2010 the value of such properties is £1,108m (2009: £1,066m) and if these properties were to be sold the tax arising would be £nil (2009: £nil).

8.     Property
				Owner-
		Investment	Development	occupied	Total
		£m	£m	£m	£m
Carrying value at 1 April 2009		5,436	358	30	5,824
Additions:	property purchases	76			76
	other capital expenditure	155			155
		231			231
Depreciation				(1)	(1)
Disposals		(2,401)			(2,401)
Reclassifications		358	(358)
Revaluations included in income statement		526		4	530
Movement in tenant incentives and contracted rent uplift balances		(24)			(24)
Carrying value at 31 March 2010		4,126		33	4,159
Head lease liabilities (note 13)					(7)
Total Group property portfolio valuation at 31 March 2010					4,152
The Group valuation of properties of £4,152m (2009: £5,810m) comprises freeholds of £3,053m (2009: £5,189m); virtual freeholds of £187m (2009: £182m); long leaseholds of £911m (2009: £436m) and short leaseholds of £1m (2009: £3m).  The historical cost of properties was £3,401m (2009: £6,000m).
The Group's property portfolio was valued by external valuers on the basis of Market Value, by reference to recent market evidence of transactions for similar properties, in accordance with the Appraisal and Valuation Standards, sixth edition, published by The Royal Institution of Chartered Surveyors.  Knight Frank LLP valued properties to an aggregate value of £4,136m (2009: £5,793m); other valuers £16m (2009: £17m). Valuers of Fund and Joint Venture properties are detailed in note 9.
Properties valued at £2,659m (2009: £3,665m) were subject to a security interest and other properties of non-recourse companies amounted to £nil (2009: £1m).
Included within the property valuation is £66m (2009: £67m) in respect of accrued contracted rental uplift income, against which the Group holds a provision of £5m (2009: £25m). 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 £74m (2009: £102m).

9.     Joint ventures and funds
British Land's summary share of the results of joint ventures and funds
			2010	2009
			£m	£m
Gross rental income			219	153
Service charge income			19	6
Gross rental and related income			238	159
Net rental and related income			208	145
Other income and expenditure			(8)	(5)
Net financing costs			(119)	(85)
Underlying profit before taxation			81	55
Net valuation movement (includes profits and losses on disposals)			412	(833)
Non-recurring items - debt break costs			(9)
Profit (loss) on ordinary activities before taxation			484	(778)
Current tax			(5)	2
Deferred tax				9
Profit (loss) on ordinary activities after taxation			479	(767)
Summary movement for the year of the investments in joint ventures and funds
		Equity	Loans	Total
		£m	£m	£m
At 1 April 2009		899	53	952
Additions		202	36	238
Disposals		(11)	(3)	(14)
Share of profit after taxation		479		479
Distributions and dividends:	capital	(7)		(7)
	revenue	(53)		(53)
Hedging movements		(1)		(1)
At 31 March 2010		1,508	86	1,594
At 31 March 2010 the investment in joint ventures included within the total investment in joint ventures and funds was £1,149m (2009: £585m).
Distributions in the year include the receipt of £13m from HUT, £6m from PREF, £15m (£7m capital) from BL Fraser, £6m from Tesco joint ventures and £9m from Meadowhall.
At 31 March 2010 the valuation of the Group's share of joint ventures and funds properties is £4,387m (2009: £2,815m); external net debt is £2,660m (2009: £1,863m) and the mark to market adjustment for external debt is £177m asset (2009: £236m asset).
The Joint Venture and Funds portfolios were 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. CB Richard Ellis Ltd valued properties to an aggregate value of £2,177m (2009: £1,721m), Knight Frank LLP an aggregate value of £2,210m (2009: £787m), and £nil (2009: £307m) held at Directors' valuation.

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 performance and management fees due to the Group.
	Bluebutton	MSC Property	BL Sainsbury	Tesco Joint	The Scottish
	Properties	Intermediate	Superstores	Ventures*	Retail Property
	Ltd	Holdings Ltd	Ltd		Limited Partnership
	Blackstone	LSP Green Park			Land Securities
Partners	Group LP funds	Property Trust	J Sainsbury plc	Tesco plc	Group PLC
Property sector	City Offices	Shopping Centres	Superstores	Superstores/	Shopping Centres
	(Broadgate)	(Meadowhall)		Retail W'hses	(Bon Accord)
				Shopping Centres
Group share	50%	50%	50%	50%	50%
Date established	November 2009	February 2009	March 2008	November 1996	March 2004
Accounting period	21 weeks ended	Year ended	Year ended	Year ended	Year ended
	31 March	31 March	31 March	31 March	31 March
	2010	2010	2010	2010	2010
Summarised income statements	£m	£m	£m	£m	£m
Gross rental and related income	88	87	64	92	18
Net rental and related income	68	73	63	91	10
Other income and expenditure	(1)	(6)	(1)	(1)	(1)
Net interest - External	(42)	(42)	(34)	(56)	(7)
- Shareholders
Net interest payable	(42)	(42)	(34)	(56)	(7)
Underlying profit before taxation	25	25	28	34	2
Surplus on revaluation	282	99	224	201	20
Disposal of fixed assets
Non-recurring items
Profit on ordinary activities before taxation	307	124	252	235	22
Current tax				(2)
Deferred tax
Profit on ordinary activities after taxation	307	124	252	233	22
Summarised balance sheets	£m	£m	£m	£m	£m
Investment properties	2,483	1,277	1,188	1,754	206
Development properties
Total properties	2,483	1,277	1,188	1,754	206
Current assets	17	5	2	12	4
Upstream loans to joint venture shareholders			2	15
Cash and deposits	349	23	20	51	3
Gross assets	2,849	1,305	1,212	1,832	213
Current liabilities	(131)	(34)	(30)	(130)	(23)
Commercial loan from British Land	(209)
Bank debt falling due within one year				(349)
Bank debt falling due after one year				(798)
Securitised debt	(1,947)	(829)	(676)		(119)
Convertible loan notes
Other non-current liabilities		(3)
Obligations under finance leases		(6)			(11)
Deferred tax
Gross liabilities	(2,287)	(872)	(706)	(1,277)	(153)
Net external assets	562	433	506	555	60
Represented by:
Shareholder loans	30		2	59	14
Ordinary shareholders' funds / Partners' capital	532	433	504	496	46
Total investment	562	433	506	555	60
Capital commitments	7
All joint ventures are non-recourse to the Group. Where a joint venture has net liabilities, as required under IFRS, the Group does not account for its share of the deficit in its total share of joint venture profits.
* Tesco Joint Ventures include BLT Properties Ltd, the first joint venture established in November 1996, The Tesco British Land Property Partnership, Tesco BL Holdings Ltd, Shopping Centres Ltd and The Tesco Aqua Limited 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 performance and management fees due to the Group.
					JV & Fund	JV & Fund
	Hercules	Hercules	Pillar Retail	Other	TOTAL	TOTAL
	Unit	Income	Europark	Joint Ventures	Group share	Group share
	Trust	Fund	Fund	and Funds*	2010	2009
Property sector	Retail	Retail	Retail
	Warehouses	Warehouses	Warehouses
Group share	36.003%	26.12%	65.30%	At Group Share
Date established	Sep 2000	Sep 2004	Mar 2004
Accounting period	Year ended	Year ended	Year ended
	31 March	31 March	31 December
	2010	2010	2009
Summarised income statements	£m	£m	£m	£m	£m	£m
Gross rental and related income	92	8	32	8	238	159
Net rental and related income	83	8	25	7	208	145
Other income and expenditure	(7)		(4)	2	(8)	(5)
Net interest - External	(50)		(11)	(3)	(119)	(86)
- Shareholders						1
Net interest payable	(50)		(11)	(3)	(119)	(85)
Underlying profit before taxation	26	8	10	6	81	55
Surplus (deficit) on revaluation	172	19	(20)	(47)	420	(762)
Disposal of fixed assets	(31)	8	(2)	3	(8)	(71)
Non-recurring items	(25)				(9)
Profit (loss) on ordinary activities before taxation	142	35	(12)	(38)	484	(778)
Current tax	(1)			(4)	(5)	2
Deferred tax						9
Profit (loss) on ordinary activities after taxation	141	35	(12)	(42)	479	(767)
Summarised balance sheets	£m	£m	£m	£m	£m	£m
Investment properties	1,528	80	385	119	4,395	2,775
Development properties						49
Total properties	1,528	80	385	119	4,395	2,824
Current assets	25	1	32	44	94	92
Upstream loans to joint venture shareholders				22	31	31
Cash and deposits	156	34	32	18	327	92
Gross assets	1,709	115	449	203	4,847	3,039
Current liabilities	(25)	(4)	(29)	(44)	(247)	(192)
Commercial loan from British Land					(105)
Bank debt falling due within one year		(15)			(179)	(207)
Bank debt falling due after one year			(259)	(69)	(637)	(525)
Securitised debt	(603)				(2,002)	(1,152)
Convertible loan notes	(194)				(70)
Other non-current liabilities					(1)
Obligations under finance leases					(8)	(9)
Deferred tax			(6)		(4)	(2)
Gross liabilities	(822)	(19)	(294)	(113)	(3,253)	(2,087)
Net external assets	887	96	155	90	1,594	952
Represented by:
Shareholder loans				20	73	54
Ordinary shareholders' funds / Partners' capital	887	96	155	70	1,521	898
Total investment	887	96	155	90	1,594	952
Capital commitments	7		2	3	11	12
* Comprises smaller joint ventures and funds including Eurofund Investments Zaragoza SL - a development joint venture - and Group adjustments.

10.     Other non-current assets
	Other	Intangible
	investments	assets
	£m	£m
At 1 April 2009	38	25
Additions	252
Revaluation of investments	(12)
Depreciation	(1)
Disposals	(16)
Amortisation		(15)
At  31 March 2010	261	10
Other investments include the £209m secured commercial loan to Bluebutton Properties Ltd (the parent company of the Broadgate joint venture). In the prior year other investments included £28m relating to the Group's 17.8% interest in Songbird Estates plc which was disposed of in the current year.
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 with accumulated amortisation at 31 March 2010 being £69m (2009: £54m).
11.     Debtors
	2010	2009
	£m	£m
Trade and other debtors+	85	103
Prepayments and accrued income	9	4
Interest rate derivatives*	11	16
	105	123
+ Included within this balance is deferred consideration of £42m (2009: £43m) arising on the sale of investment properties for which the timing of the receipt is contingent and therefore may fall due after one year.
* 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 £7m (2009: £6m).  The charge to the income statement was £2m (2009: £3m).
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
	2010	2009
	£m	£m
Trade creditors	104	129
Amounts owed to joint ventures	40	33
Corporation tax	23	40
Other taxation and social security	11	11
Accruals and deferred income	105	202
Interest rate derivatives*	49	109
	332	524
* 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
	2010	2009
	£m	£m
Trade and other creditors	19	27
Obligations under finance leases	7	14
Minority interest	4	4
	30	45

14.     Net debt
					2010	2009
				Footnote	£m	£m
Secured on the assets of the Group
Class A4 4.821% Bonds 2036				1.1		396
Class C2 5.098% Bonds 2035				1.1		217
Class B 4.999% Bonds 2033				1.1		365
Class A3 4.851% Bonds 2033				1.1		174
Class A1 Floating Rate Bonds 2032				1.1		224
Class A2 4.949% Bonds 2031				1.1		288
Class D Floating Rate Bonds 2025				1.1		112
Class C1 Floating Rate Bonds 2022				1.1		215
9.125% First Mortgage Debenture Stock 2020				1.2	39	40
6.125% First Mortgage Debenture Stock 2014				1.2	45	45
10.3125% First Mortgage Debenture Stock 2011				1.2	41	42
5.264% First Mortgage Debenture Bonds 2035					327	327
5.0055% First Mortgage Amortising Debentures 2035					103	104
5.357% First Mortgage Debenture Bonds 2028					307	307
6.75% First Mortgage Debenture Bonds 2020					204	204
6.75% First Mortgage Debenture Bonds 2011					99	99
Floating Rate Secured Loan Notes 2035					256	256
Loan notes					5	5
					1,426	3,420
Unsecured
5.50% Senior Notes 2027					98	98
6.30% Senior US Dollar Notes 2015				2	101	108
Bank loans and overdrafts					156	139
					355	345
Gross debt				3	1,781	3,765
Interest rate derivatives: liabilities					49	109
Interest rate derivatives: assets					(11)	(16)
					1,819	3,858
Liquid investments
4.405% Medium Term Note 2015					(98)
4.395% Medium Term Note 2015					(97)
					(195)
Cash and short-term deposits				4	(74)	(616)
Net debt					1,550	3,242
					2010	2009
					£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	Broadgate Financing PLC (sold into a joint venture with Blackstone Group LP funds on 3 November 2009)				1,991
	1.2	BLD Property Holdings Ltd			125	127
2	Principal and interest on this borrowing was fully hedged into Sterling at the time of issue.
3	The principal amount of gross debt at 31 March 2010 was £1,767m (2009: £3,746m). Included in this, the principal amount of secured borrowings and other borrowings of non-recourse companies was £1,415m (2009: £3,412m).
4	Cash and deposits not subject to a security interest amount to £66m (2009: £215m).
Maturity analysis of net debt					2010	2009
					£m	£m
Repayable:			within one year and on demand		139	49
between:			one and two years		297	148
			two and five years		170	439
			five and ten years		313	553
			ten and fifteen years		42	436
			fifteen and twenty years		441	835
			twenty and twenty five years		6	930
			twenty five and thirty years		373	375
					1,642	3,716
Gross debt					1,781	3,765
Interest rate derivatives					38	93
Liquid Investments					(195)
Cash and short term deposits					(74)	(616)
Net debt					1,550	3,242
Total borrowings where any instalments are due after five years are £106m (2009: £1,702m).

14.     Net debt (continued)
The two financial covenants applicable to the Group unsecured debt are:
Net Borrowings not to exceed 175% of Adjusted Capital and Reserves.
At 31 March 2010 the ratio is 37%:
i. Net Borrowings are £1,756m, being the principal amount of gross debt of £1,767m plus amounts owed to joint ventures of £40m and TPP Investments Ltd of £23m (see note 16), less the cash and short-term deposits of £74m; and
ii. Adjusted Capital and Reserves are £4,741m, being share capital and reserves of £4,208m (see Consolidated Statement of Changes in Equity), adjusted for £43m of deferred tax (see note 2), £364m exceptional refinancing charges (see below) and £126m mark to market on interest rate swaps (see note 2); and
Net Unsecured Borrowings not to exceed 70% of Unencumbered Assets.
At 31 March 2010 the ratio is 14%:
i. Net Unsecured Borrowings are £326m, being the principal amount of gross debt of £1,767m plus amounts owed to joint ventures of £40m less cash and deposits not subject to a security interest of £66m less the principal amount of secured and non-recourse borrowings of £1,415m; and
ii. Unencumbered Assets are £2,394m being properties of £4,152m (see note 8) plus investments in funds and joint ventures of £1,594m (see note 9), other investments of £456m (see balance sheet: liquid investments of £195m and other investments of £261m) less investments in joint ventures of £1,149m (see note 9) and encumbered assets of £2,659m (see note 8).
In calculating Adjusted Capital and Reserves for the purpose of the unsecured debt financial covenants, there is an adjustment of £364m to reflect the cumulative net amortised exceptional items relating to the refinancings in the years ending 31 March 2005, 2006 and 2007.
Interest rate profile - including effect of derivatives
				2010	2009
				£m	£m
Fixed rate				1,245	3,879
Variable rate (net of cash)				305	(637)
Net debt				1,550	3,242
Reconciliation of movement in Group Net Debt to Cash Flow Statement
	2009	Disposals*	Cash flow	Non cash	2010
	£m	£m	£m	£m	£m
Per Cash Flow Statement:
Cash and short-term deposits	(616)		542		(74)
Overdrafts			2		2
Cash and cash equivalents	(616)		544		(72)
Term debt (excluding overdrafts)	3,765	(1,970)	1	(17)	1,779
Fair value of interest rate derivatives	93	(47)		(8)	38
Liquid investments			(200)	5	(195)
Net debt	3,242	(2,017)	345	(20)	1,550
* Excluding cash and overdrafts.
The Group Loan to Value ratio at 31 March 2010 is 25%, being gross debt of £1,781m less cash, short-term deposits and liquid investments of £269m, divided by total Group property of £4,152m (see note 8) plus investments in Funds and Joint Ventures of £1,594m (see note 9) and other investments of £261m (see note 10).

14.    Net debt (continued)
Maturity of committed undrawn borrowing facilities
				2010	2009
				£m	£m
Expiring:
within one year				245	89
between:
one and two years				775	265
two and three years				80	775
three and four years				905	80
four and five years				781	905
over five years				75	836
Total				2,861	2,950
The above facilities are those freely available to be drawn for Group purposes.
Comparison of market values and book values at 31 March 2010
		Market		Book
		Value		Value	Difference
		£m		£m	£m
Debentures and unsecured bonds		1,256		1,364	(108)
Bank debt and other floating rate debt		417		417
Liquid investments		(195)		(195)
Cash and short-term deposits		(74)		(74)
		1,404		1,512	(108)
Other financial (assets) liabilities:
interest rate derivative assets		(11)		(11)
interest rate derivative liabilities		49		49
		38		38
Total		1,442		1,550	(108)
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 expected future cash flows, using appropriate market discount rates, by an independent treasury advisor.
15.     Dividend
The proposed 4th interim dividend of 6.5 pence per share, totalling £57m (2009: 6.5 pence per share, totalling £55m) was approved by the Board on 13 May 2010 and is payable on 13 August 2010 to shareholders on the register at the close of business on 9 July 2010. An enhanced scrip alternative is to be offered to shareholders with the 4th interim dividend.
This dividend will be entirely a 'normal' dividend i.e. not a PID (Property Income Distribution). PID dividends are paid, as required by REIT legislation, after deduction of withholding tax at the basic rate (currently 20%).  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.
Payment	Dividend				2010		2009
Date			Pence per share		£m		£m
Current year dividends
13.08.2010	2010 4th interim		6.50
14.05.2010	2010 3rd interim		6.50
12.02.2010	2010 2nd interim		6.50		56
13.11.2009	2010 1st interim		6.50		56
			26.00
Prior year dividends
14.08.2009	2009 4th interim		6.50		55
15.05.2009	2009 3rd interim*		7.77		48
13.02.2009	2009 2nd interim*		7.76				47
14.11.2008	2009 1st interim*		7.77				48
			29.80
15.08.2008	2008 Final*		7.25				45
19.05.2008	2008 3rd interim*		7.25				45
Dividends in Reconciliation of Movement in Shareholders' Funds					215		185
Dividends settled in shares					(63)
Dividends settled in cash					152		185
Timing difference relating to payment of withholding tax					2		3
Dividends in Cash Flow Statement					154		188
* Dividends per share was restated in the prior year to take account of the bonus element of the increased number of shares due to the March 2009 Rights Issue.
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 (2009: £23m) and recourse is only to the partnership assets.

17.     Share capital and reserves
						2010		2009
Number of ordinary shares in issue at 1 April					863,450,216		522,190,080
Share issues					15,976,886		341,260,136
Number of ordinary shares in issue at 31 March					879,427,102		863,450,216
At 31 March 2010, the authorised share capital is 1,440,000,000 25p ordinary shares (2009: 887,000,000).
At 31 March 2010 of the issued 25p ordinary shares, 1,830,208 were held in the ESOP trust (2009: 2,040,620), 11,266,245 shares were held as treasury shares (2009: 11,266,245) and 866,330,649 shares were in free issue (2009: 850,143,351). No treasury shares were acquired by the ESOP during the year. All issued shares are fully paid.
Merger reserve
This comprises the premium on shares issued to acquire Springboard Capital (Jersey) Limited under the arrangement for the Rights Issue in March 2009. The subsequent redemption gave rise to distributable profits of £682m, which have been transferred to Retained Earnings.
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 difference 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.
18.     Segment information
The Group allocates resources to investment and asset management according to the sectors it expects to perform over the medium term. Its two principal sectors are currently offices and retail. The relevant revenue, net rental income, assets and capital expenditure, being the measure of profit or loss and total assets used by the management of the business, are set out below:
	Offices		Retail		Other		Total
	2010	2009	2010	2009	2010	2009	2010	2009
	£m	£m	£m	£m	£m	£m	£m	£m
Revenue	194	278	187	268	26	26	407	572
Net rental income	143	230	175	206	19	17	337	453
Segment assets	1,791	3,572	3,753	3,012	854	976	6,398	7,560
Capital expenditure	165	383	56	170	10	12	231	565
Segment assets include the Group's investment in joint ventures and funds.

Table A
Summary income statement based on proportional consolidation
for the period ended 31 March 2010
The following pro forma information is unaudited and does not form part of the consolidated primary statements or the notes thereto.  It presents the results of the Group, with its share of the results of joint ventures and funds included on a line by line, i.e. proportional basis.  The underlying profit before taxation and total profit after taxation are the same as presented in the consolidated income statement.
		Q4	Q3	Q2	Q1
		Three months ended				Year ended
		31 Mar	31 Dec	30 Sep	30 Jun	31 Mar	31 Mar
		2010	2009	2009	2009	2010	2009
		£m	£m	£m	£m	£m	£m
Rent receivable		129	128	140	141	538	616
Spreading of tenant incentives and guaranteed
	rent increases	3	6	7	7	23	33
Surrender premiums							1
Gross rental income		132	134	147	148	561	650
Property operating expenses		(6)	(6)	1	(5)	(16)	(52)
Net rental income		126	128	148	143	545	598
Fees and other income		8	1	2	4	15	20
Administrative expenses		(16)	(17)	(14)	(18)	(65)	(58)
Net interest costs		(56)	(54)	(70)	(66)	(246)	(292)
Underlying profit before taxation		62	58	66	63	249	268
Net valuation movement (includes profits and
	losses on disposal)	573	567	100	(332)	908	(4,074)
Realisation of cash flow hedges/non-recurring items			(9)			(9)	(119)
Amortisation of intangible assets		(4)	(4)	(3)	(4)	(15)	(14)
Profit (loss) on ordinary activities
before taxation		631	612	163	(273)	1,133	(3,939)
Tax charge relating to underlying profit		(1)	(1)	(1)	(2)	(5)	(9)
Deferred tax		(3)	(8)	(3)	2	(12)	58
Other taxation		2	20	2		24	9
Profit (loss) for the period after taxation		629	623	161	(273)	1,140	(3,881)
Underlying earnings per share - diluted basis		7.0p	6.6p	7.6p	7.2p	28.4p	41.0p
The underlying earnings per share is calculated on underlying profit before taxation of £249m, tax attributable to underlying profits of £5m and 860m shares on a diluted basis, for the year ended 31 March 2010 and underlying profit before taxation of £62m, tax attributable to underlying profits of £1m and 867m shares on a diluted basis, for the three months ended 31 March 2010.

Table A (continued)
Summary balance sheet based on proportional consolidation
as at 31 March 2010
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 joint ventures and funds included on a line by line, i.e. proportional basis and assuming full dilution.
	31 March		31 March
	2010		2009
	£m		£m
Retail properties	5,602		4,867
Office properties	2,736		3,570
Other properties	201		188
Total properties	8,539		8,625
Other investments	156		38
Intangible assets	10		25
Other net liabilities	(217)		(360)
Net debt	(4,081)		(4,941)
EPRA NAV (note 2)	4,407		3,387
EPRA NAV per share (note 2)	504	p	398	p
Total property valuations including share of joint ventures and funds
British Land Group	4,152		5,810
Share of joint ventures and funds
Investment properties	4,395		2,775
Development properties			49
Head lease liabilities	(8)		(9)
	4,387		2,815
Total property portfolio valuation	8,539		8,625
Calculation of EPRA NNNAV per share
EPRA NAV	4,407		3,387
Deferred tax arising on revaluation movements	(43)		(25)
Mark to market on effective cash flow hedges and related debt adjustments	(129)		(153)
Mark to market on debt	285		1,116
EPRA NNNAV	4,520		4,325
EPRA NNNAV per share	517	p	508	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.

 

END

 

 

FR UWOORRUAVARR