Final Results - Part 2

RNS Number : 6242S

British Land Co PLC

21 May 2009

 



Consolidated Income Statement for the year ended 31 March 2009
			2009			2008
			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	554		554	645		645
Net rental and related income		3	453		453	561		561
Fees and other income		4	18		18	40	30	70
Amortisation of intangible asset				(14)	(14)		(15)	(15)
Funds and joint ventures (see also below)		9	55	(822)	(767)	40	(346)	(306)
Administrative expenses			(51)		(51)	(67)		(67)
Net valuation movement (includes profits and losses on disposals)		5		(3,241)	(3,241)		(1,562)	(1,562)
Net financing costs
	financing income		52		52	26		26
	financing charges		(259)	(119)	(378)	(316)		(316)
		6	(207)	(119)	(326)	(290)		(290)
(Loss) profit on ordinary activities before taxation			268	(4,196)	(3,928)	284	(1,893)	(1,609)
Taxation
	current tax			(2)	(2)
	deferred tax income			49	49		46	46
		7		47	47		46	46
Loss for the year after taxation attributable to shareholders of the Company					(3,881)			(1,563)
Loss per share:	basic	2			(616)p			(253)p*
	diluted	2			(614)p			(251)p*
Share of results of funds and joint ventures (see above)
Underlying profit pre-tax			55		55	40		40
Net valuation movement (includes profits and losses on disposals)				(833)	(833)		(354)	(354)
Goodwill impairment							(3)	(3)
Non-recurring items							9	9
Current tax				2	2		1	1
Deferred tax				9	9		1	1
		9	55	(822)	(767)	40	(346)	(306)
+ As defined in note 2
* As restated - see note 2.

Consolidated Balance Sheet as at 31 March 2009
		2009		2008
	Note	£m		£m
Assets
Non-current assets
Investment properties	8	5,436		9,389
Development properties	8	358		1,062
Owner-occupied property	8	30		53
		5,824		10,504
Other non-current assets
Investments in funds and joint ventures	9	952		1,532
Other investments	10	38		196
Intangible assets	10	25		39
		6,839		12,271
Current assets
Debtors	11	123		133
Cash and short-term deposits	14	616		244
		739		377
Total assets		7,578		12,648
Liabilities
Current liabilities
Short-term borrowings and overdrafts	14	(49)		(111)
Creditors	12	(524)		(450)
		(573)		(561)
Non-current liabilities
Debentures and loans	14	(3,716)		(5,151)
Other non-current liabilities	13	(45)		(38)
Deferred tax liabilities	7	(35)		(108)
		(3,796)		(5,297)
Total liabilities		(4,369)		(5,858)
Net assets		3,209		6,790
Equity
Share capital	17	217		131
Share premium	17	1,244		1,269
Other reserves	17	(139)		335
Retained earnings	17	1,887		5,055
Total equity attributable to shareholders of the Company		3,209		6,790
EPRA NAV per share+	2	398	p	1114	p*
The financial information in this preliminary announcement was approved by the Board on 20 May 2009.
+ As defined in note 2
* As restated - see note 2.

Consolidated Statement of Recognised Income and Expense
for the year ended 31 March 2009
					2009		2008
				Note	£m		£m
	Loss for the year after taxation				(3,881)		(1,563)
	Valuation movements
	- on development properties			5	(44)		57
	- on owner occupied property			5	(3)		3
	- on other investments			5	(88)		(70)
					(135)		(10)
	Losses on cash flow hedges
	- Group				(182)		(53)
	- Funds and joint ventures				(46)		(20)
	Exchange differences on translation of foreign operations				5
	Actuarial loss on pension scheme				(2)		(10)
	Tax on items taken directly to equity				24		25
	Net loss recognised directly in equity				(336)		(68)
	Transferred to the income statement (cash flow hedges)
	- foreign currency derivatives				(30)		1
	- interest rate derivatives				109		(28)
					79		(27)
	Total recognised income and expense for the year				(4,138)		(1,658)
	Reconciliation of Movements in Shareholders' Funds
					2009		2008
					£m		£m
	Capital items
	- Shares issued				743		7
	- Purchase of own shares						(151)
	- Adjustment for share and share option awards				(1)		11
	- Dividends paid in the year				(185)		(166)
					557		(299)
	Total recognised income and expense for the year				(4,138)		(1,658)
	Movement in shareholders' funds for the year				(3,581)		(1,957)
	Opening equity shareholders' funds				6,790		8,747
	Closing equity shareholders' funds				3,209		6,790
Consolidated Cash Flow Statement
for the year ended 31 March 2009
						2009		2008
			Note			£m		£m
Rental income received from tenants						455		536
Fees and other income received						30		32
Operating expenses paid to suppliers and employees						(79)		(91)
Cash generated from operations						406		477
Interest paid						(270)		(373)
Interest received						20		19
UK corporation tax received (paid)						16		(3)
Foreign tax paid								(1)
Distributions received:		funds and joint ventures				33		47
		Songbird Estates plc						16
Net cash inflow from operating activities						205		182
Cash flows from investing activities
Purchase of investment properties						(107)		(119)
Development and other capital expenditure						(436)		(523)
Sale of investment properties						904		1,460
REIT conversion charge paid						(6)		(291)
Sale of investments								2
Indirect taxes in respect of investing activities						3		32
Establishment of Meadowhall Joint Venture						115
Establishment of BL Sainsbury Superstores Joint Venture								272
Investment in and loans to funds and joint ventures						(57)		(90)
Capital distributions received:		funds and joint ventures				2		88
		Songbird Estates plc						30
Purchase of subsidiary companies (net of cash acquired)								(4)
Net cash inflow from investing activities						418		857
Cash flows from financing activities
Issue of ordinary shares						743		7
Purchase of own shares								(151)
Dividends paid						(188)		(161)
Repayment of debt acquired with subsidiary undertaking						(11)
Movement in other financial liabilities						(76)
Decrease in bank and other borrowings						(714)		(686)
Net cash outflow from financing activities						(246)		(991)
Net increase in cash and cash equivalents						377		48
Cash and cash equivalents at 1 April 2008						239		191
Cash and cash equivalents at 31 March 2009						616		239
Cash and cash equivalents consists of:
Cash and short-term deposits                                          14						616		244
Overdrafts								(5)
						616		239

Notes to the accounts for the year ended 31 March 2009
1. Basis of preparation
The financial information set out above does not constitute the company's statutory accounts for the years ended 31 March 2009 or 2008, but is derived from those accounts. Statutory accounts for 2008 have been delivered to the Registrar of Companies and those for 2009 will be delivered following the company's annual general meeting. The auditors have reported on those accounts; their reports were unqualified, did not draw attention to any matters by way of emphasis and did not contain statements under s237(2) or (3) of the Companies Act 1985.
The financial statements for the year ended 31 March 2009 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 2009.
The accounting policies used are consistent with those contained in the Group's last annual report and accounts for the year ended 31 March 2008.
The financial statements have been prepared on the going concern basis as stated in the directors' responsibility statement.

2. Performance measures
Rights Issue - Restatement of performance measures
The Rights Issue concluded in March 2009 involved the issue of two new shares for every three held.
To reflect the increased number of shares in issue at the year end, prior year comparatives for Earnings per share and Net Asset Value per share are restated with reference to the adjustment factor below:
Theoretical Ex Rights Price ('TERP')						326.25	p
Closing middle market quotation of share on last day shares traded 'cum rights'						393.75	p
	2009			2008
	(Loss)			(Loss)
(Loss) earnings per share (diluted)	earnings	Pence		earnings		Pence
	£m	per share		£m		per share
Underlying pre tax profit - income statement	268			284
Tax charge relating to underlying profit	(9)			(8)
Underlying earnings per share	259	41	p	276		44	p*
Realisation of cash flow hedges	(119)
Tax and other items				13
EPRA earnings per share	140	22	p	289		46	p*
Loss for the year after taxation	(3,881)	(614)	p	(1,563)		(251)	p*
The European Public Real Estate Association (EPRA) issued Best Practices Policy Recommendations in November 2006, which gives guidelines for performance measures. The EPRA earnings measure excludes investment property revaluations and gains or losses on disposals, intangible asset movements and their related taxation.
Underlying earnings consists of the EPRA earnings measure, with additional company adjustments. Adjustments include realisation of cash flow hedges, see note 6.
The weighted average number of shares in issue for the year was: basic: 630m (2008 restated: 618m); diluted for the effect of share options: 632m (2008 restated : 623m). Basic undiluted loss per share for the year was 616p (2008 restated: 253p).
Net asset value (NAV)				2009		2008
				£m		£m
Balance sheet net assets				3,209		6,790
Deferred tax arising on revaluation movements				25		102
Mark to market on effective cash flow hedges and related debt adjustments				153		(3)
Dilution effect of share options						47
EPRA NAV				3,387		6,936
EPRA NAV per share				398	p	1114	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 2009, the number of shares in issue was: basic: 850m (2008 restated: 614m); diluted for the effect of share options: 851m (2008 restated: 623m).
Total return per share of minus 61.6% represents a reduction in EPRA NAV per share of 716p net of dividends paid of 30p (see note 15). Total return per share for the year ended 31 March 2008 was minus 18.1%.
* As restated for the rights issue

3. Gross and net rental income
		2009	2008
		£m	£m
Rent receivable		462	547
Spreading of tenant incentives and guaranteed rent increases		34	46
Surrender premiums		1	3
Gross rental income		497	596
Service charge income		57	49
Gross rental and related income		554	645
Service charge expenses		(57)	(49)
Property operating expenses		(44)	(35)
Net rental and related income		453	561
The cash element of net rental income recognised during the year ended 31 March 2009 from properties which were not subject to a security interest was £103m. Property operating expenses relating to investment properties that did not generate any rental income were £1m (2008: £1m).
4. Fees and other income
		2009	2008
		£m	£m
Performance fees (from funds)		3	9
Management fees (from funds and joint ventures)		11	12
Dividend received from Songbird Estates plc			16
Other fees and commission		4	3
Underlying		18	40
Capital dividend received from Songbird Estates plc			30
		18	70
There were no performance fees receivable from HUT or HIF for the years ended 31 December 2008 or 31 December 2007. Some 50% of undistributed performance fees are payable each year provided there is no clawback. In relation to HUT, fees of £3m (2008: £7m) have been recognised in the current year and £3m (2008: £6m) deferred to later years, relating to calendar years 2005 and 2006.
Following a capital restructuring of Songbird Estates plc in 2008, a capital dividend of £30m was received in that year.
5. Net revaluation (losses) gains on property and investments
		2009	2008
		£m	£m
Consolidated Income statement
Revaluation of properties		(2,994)	(1,588)
(Loss) profit on property disposals		(177)	26
Revaluation of investments		(69)
Other revaluations and losses		(1)
		(3,241)	(1,562)
Share of losses of funds and joint ventures (note 9)		(833)	(354)
		(4,074)	(1,916)
Consolidated statement of recognised income and expense
Revaluation of development properties		(44)	57
Revaluation of owner-occupied property		(3)	3
Revaluation of investments		(88)	(70)
		(4,209)	(1,926)

6. Net financing costs
	2009	2008
	£m	£m
Interest payable on:
Bank loans and overdrafts	31	71
Other loans	230	280
Loans from joint ventures		1
Obligations under finance leases	1	2
	262	354
Development interest capitalised	(38)	(43)
	224	311
Interest receivable on:
Deposits and securities	(17)	(20)
Other finance (income) costs:
Expected return on pension scheme assets	(5)	(5)
Interest on pension scheme liabilities	5	4
Valuation movements on translation of foreign currency debt	30	(1)
Hedging reserve recycling	(30)	1
Net financing expenses - pre exceptional	207	290
Exceptional item *
Realisation of cash flow hedges	119
	119
Net financing costs	326	290
Total financing income	(52)	(26)
Total financing expenses	378	316
Net financing costs	326	290
Interest on development expenditure is capitalised at a rate of 5.5% (2008: 6%), with current year tax relief of £nil (2008: £nil).
* Due to lower projected Group borrowings as a result of the deleveraging that took place during the year, certain interest rate swap arrangements were no longer required. On close out of these swaps, amounts previously charged to reserves have been recycled through the income statement.

7. Taxation
				2009	2008
				£m	£m
Tax expense (income)
Current tax
	UK corporation tax: 28% (2008: 30%)			6	3
	Foreign tax			1	1
				7	4
Adjustments in respect of prior years				(5)	(4)
Total current tax expense				2
Deferred tax on income and revaluations				(49)	(46)
Group total taxation (net)				(47)	(46)
Tax reconciliation
Loss on ordinary activities before taxation				(3,928)	(1,609)
Less: loss attributable to funds and joint ventures				767	306
Group loss on ordinary activities before taxation				(3,161)	(1,303)
Tax on loss on ordinary activities at UK corporation
	tax rate of 28% (2008: 30%)			(885)	(391)
Effects of:
	REIT exempt income and gains			881	390
	Goodwill impairment and amortisation of intangibles				4
	Tax losses and other timing differences			(38)	(45)
	Adjustments in respect of prior years			(5)	(4)
Group total taxation				(47)	(46)
Tax attributable to underlying profits for the year ended 31 March 2009 is £9m (2008: £8m).
Corporation tax payable at 31 March 2009 was £40m (2008: £25m) as shown in note 12. Deferred tax is calculated on temporary differences under the liability method using a tax rate of 28% (2008: 28%). The movement on deferred tax is as shown below:
Deferred taxation
		1 April	Credited		31 March
		2008	to income	to reserves	2009
		£m	£m	£m	£m
Property and investment revaluations		93	(46)	(24)	23
Other timing differences		4			4
Intangible assets		11	(3)		8
		108	(49)	(24)	35
Under the REIT regime development properties which are sold within three years of completion do not benefit from tax exemption. At 31 March 2009 the value of such properties is £1,066m (2008: £1,806m) and if these properties were to be sold and tax exemption was not available the tax arising would be £nil (2008: £75m). No provision is made for this amount as the Group has no current plans to sell these properties.

8. Property
					Owner-
			Investment	Development	occupied	Total
			£m	£m	£m	£m
Carrying value at 1 April 2008			9,389	1,062	53	10,504
Additions:		property purchases	126			126
		other capital expenditure	168	271		439
			294	271		565
Disposals			(2,068)	(107)		(2,175)
Reclassifications			579	(579)
Revaluations:
	included in income statement		(2,729)	(245)	(20)	(2,994)
	included in statement of recognised
	income and expense			(44)	(3)	(47)
Movement in tenant incentives and
	contracted rent uplift balances		(29)			(29)
Carrying value at 31 March 2009			5,436	358	30	5,824
Head lease liabilities (note 13)						(14)
Total Group property portfolio valuation at 31 March 2009						5,810
The book value of owner-occupied property is £30m (2008: £53m) after charging £1m (2008: £nil) depreciation to the income statement for the year.
The Group book value of properties of £5,810m (2008: £10,469m) comprises freeholds of £5,189m (2008: £9,357m); virtual freeholds of £182m (2008: £303m); long leaseholds of £436m (2008: £802m) and short leaseholds of £3m (2008: £7m). The historical cost of properties was £6,000m (2008: £7,315m).
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 £5,793m (2008: £10,466m); other valuers £17m (2008: £3m). Valuers of Fund and Joint Venture properties are detailed in note 9.
Properties valued at £3,665m (2008: £7,162m) were subject to a security interest and other properties of non-recourse companies amounted to £1m (2008: £2m).
Included within the property valuation is £67m (2008: £58m) in respect of contracted rent uplift debtors, against which the Group holds a provision of £25m (2008: £8m). 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 and development properties amounts to £51m and £51m (2008: £33m and £84m) respectively.

9. Funds and joint ventures
British Land's summary share of the results of funds and joint ventures
			2009	2008
			£m	£m
Gross rental income			153	113
Service charge income			6	4
Gross rental and related income			159	117
Net rental and related income			145	106
Other income and expenditure			(5)	(6)
Net financing costs			(85)	(60)
Underlying profit before taxation			55	40
Net valuation movement (includes profits and losses on disposals)			(833)	(354)
Non-recurring items				9
Goodwill impairment				(3)
Loss on ordinary activities before taxation			(778)	(308)
Current tax			2	1
Deferred tax			9	1
Loss on ordinary activities after taxation			(767)	(306)
Summary movement for the year of the investments in funds and joint ventures
		Equity	Loans	Total
		£m	£m	£m
At 1 April 2008		1,492	40	1,532
Additions		214	18	232
Disposals			(1)	(1)
Reallocation of tax balances to Group		21		21
Share of loss after taxation		(767)		(767)
Distributions and dividends:	capital	(2)	(1)	(3)
	revenue	(43)	(4)	(47)
Hedging movements		(16)	1	(15)
At 31 March 2009		899	53	952
At 31 March 2009 the investment in Joint Ventures included within the total investment in Funds and Joint Ventures was £585m (2008: £833m).
Distributions in the year include the receipt of £25m from HUT, £4m from PREF, £4m (£2m capital) from CLOUT and £10m from Tesco Joint Ventures.
At 31 March 2009 the Group's share of funds and joint ventures properties is £2,815m (2008: £3,002m); external net debt is £1,863m (2008: £1,378m) and the mark to market adjustment for external debt is £236m asset (2008: £74m 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 £1,721m (2008: £1,935m), Knight Frank LLP an aggregate value of £787m (2008: £1,067m), and £307m (2008: £nil) held at Directors' valuation.

9. Funds and joint ventures continued: Joint Ventures' summary financial statements
A detailed breakdown of the 100% results of specific funds and joint ventures is set out on the two following pages. The total column represents the Group's share of all funds and joint ventures. All disclosures have been restated to British Land accounting policies under IFRS eliminating performance and management fees due to the Group.	MSC Property Intermediate Holdings Ltd	BL Sainsbury Superstores Ltd	BLT Properties Ltd	The Tesco British Land Property Partnership	Tesco BL Holdings Ltd	The Tesco Aqua Limited Partnership+	The Scottish Retail Property Limited Partnership
Partners	LSP Green Park Property Trust	J Sainsbury plc	Tesco plc	Tesco plc	Tesco plc	Tesco plc	Land Securities Group PLC
Group share	50%	50%	50%	50%	50%	50%	50%
Date established	February 2009	March 2008	November 1996	February 1998	November 1999	March 2007	March 2004
Accounting period	7 weeks ended 31 March 2009	Year ended 31 March 2009	Year ended 31 March 2009	Year ended 31 March 2009	Year ended 31 March 2009	Year ended 31 March 2009	Year ended 31 March 2009
Summarised income statements	£m	£m	£m	£m	£m	£m	£m
Gross rental and related income	10	62	17	7	29	30	21
Net rental and related income	10	62	17	7	29	30	12
Other income and expenditure	(1)	(1)					1
Net interest - External	(6)	(36)	(9)	(2)	(18)	(29)	(6)
- Shareholders
Net interest payable	(6)	(36)	(9)	(2)	(18)	(29)	(6)
Underlying profit before taxation	3	25	8	5	11	1	7
Deficit on revaluation	(14)	(226)	(69)	(18)	(113)	(65)	(108)
Disposal of fixed assets
Goodwill impairment
Non-recurring items
Loss on ordinary activities before taxation	(11)	(201)	(61)	(13)	(102)	(64)	(101)
Current tax			(5)		(8)
Deferred tax
Loss on ordinary activities after taxation	(11)	(201)	(66)	(13)	(110)	(64)	(101)
Summarised balance sheets	£m	£m	£m	£m	£m	£m	£m
Investment properties	1,165	964	255	94	492	532	179
Development properties
Total properties	1,165	964	255	94	492	532	179
Current assets	12	3	3			3	2
Upstream loans to joint venture shareholders			21
Cash and deposits	23	18	6	3	9	14	5
Gross assets	1,200	985	285	97	501	549	186
Current liabilities	(46)	(34)	(12)	(4)	(23)	(86)	(21)
Bank debt falling due within one year					(315)
Bank debt falling due after one year			(185)	(45)		(485)
Securitised debt	(831)	(697)					(119)
Obligations under finance leases	(6)						(11)
Deferred tax
Gross liabilities	(883)	(731)	(197)	(49)	(338)	(571)	(151)
Net external assets (liabilities)	317	254	88	48	163	(22)	35
Represented by:
Shareholder loans		2		2		57	14
Ordinary shareholders' funds / Partners' capital	317	252	88	46	163	(79)	21
Total investment	317	254	88	48	163	(22)	35
Capital commitments							13
+ 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.

9. Funds and joint ventures continued: Joint ventures' and Funds' summary financial statements
A detailed breakdown of the 100% results of specific funds and joint ventures is set out on the current and previous page. The total column represents the Group's share of all funds and joint ventures. All disclosures have been restated to British Land accounting policies under IFRS eliminating performance and management fees due to the Group.	Hercules Unit Trust	Hercules Income Fund	Pillar Retail Europark Fund		Other Joint Ventures and Funds	*	JV & Fund TOTAL Group Share 2009	JV & Fund TOTAL Group share 2008
Group share	36.27%	26.12%	35.23%	+	At Group Share
Date established	Sep 2000	Sep 2004	Mar 2004
Accounting period	Year ended   31   March 2009	Year ended 31 March 2009	Year ended 31 December 2008
Summarised income statements	£m	£m	£m		£m		£m	£m
Gross rental and related income	118	7	36		14		159	117
Net rental and related income	107	7	27		11		145	106
Other income and expenditure	(3)		(6)		(1)		(5)	(6)
Net interest - External	(59)	(1)	(14)		(6)		(86)	(61)
- Shareholders					1		1	1
Net interest payable	(59)	(1)	(14)		(5)		(85)	(60)
Underlying profit before taxation	45	6	7		5		55	40
Deficit on revaluation	(683)	(48)	(205)		(123)		(762)	(367)
Disposal of fixed assets	(165)		(4)		(10)		(71)	13
Goodwill impairment								(3)
Non-recurring items								9
Loss on ordinary activities before taxation	(803)	(42)	(202)		(128)		(778)	(308)
Current tax			(1)		9		2	1
Deferred tax			24		1		9	1
Loss on ordinary activities after taxation	(803)	(42)	(179)		(118)		(767)	(306)
Summarised balance sheets	£m	£m	£m		£m		£m	£m
Investment properties	1,535	81	479		188		2,775	2,889
Development properties					49		49	119
Total properties	1,535	81	479		237		2,824	3,008
Current assets	138	2	28		20		92	57
Upstream loans to joint venture shareholders					20		31	23
Cash and deposits	63	3	15		24		92	102
Gross assets	1,736	86	522		301		3,039	3,190
Current liabilities	(55)	(4)	(49)		(41)		(192)	(166)
Bank debt falling due within one year		(14)			(46)		(207)	(2)
Bank debt falling due after one year			(272)		(71)		(525)	(712)
Securitised debt	(907)						(1,152)	(763)
Obligations under finance leases							(9)	(6)
Deferred tax			(6)				(2)	(9)
Gross liabilities	(962)	(18)	(327)		(158)		(2,087)	(1,658)
Net external assets	774	68	195		143		952	1,532
Represented by:
Shareholder loans					16		54	60
Ordinary shareholders' funds / Partners' capital	774	68	195		127		898	1,472
Total investment	774	68	195		143		952	1,532
Capital commitments	13		1				12	79
* Comprises smaller joint ventures and funds including Eurofund Investments Zaragoza SL - a development joint venture - and Group adjustments.
+ When the fund is fully invested, this will reach approximately 40%. The Group share at 31 March 2008 was 30.26%.

10. Other non-current assets
	Other	Intangible
	investments	assets
	£m	£m
At 1 April 2008	196	39
Revaluation of investments	(157)
Depreciation	(1)
Amortisation		(14)
At 31 March 2009	38	25
Other investments include £28m (2008: £185m) relating to the Group's 17.8% interest in Songbird Estates plc, which owns 60.8% of Canary Wharf Group plc. In view of the control rights of other shareholders, the investment is not equity accounted. £69m of the valuation write down is reflected in the income statement, and £88m in the statement of recognised income and expense.
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 2009 being £54m (2008: £40m).
11. Debtors
	2009	2008
	£m	£m
Trade and other debtors+	103	101
Prepayments and accrued income	4	15
Interest rate derivatives*	16	17
	123	133
* Includes contracted cash flow with a maturity greater than one year at fair value.
+ Included within this balance is deferred consideration of £43m (2008: £9m) arising on the sale of investment properties. The timing of the receipt is uncertain and may fall due after one year.
Trade and other debtors are shown after deducting a provision for bad and doubtful debts of £6m (2008: £9m). The charge to the income statement was £3m (2008: £4m).
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
	2009	2008
	£m	£m
Trade creditors	129	90
Amounts owed to joint ventures	33	29
Corporation tax	40	25
Other taxation and social security	11	13
Accruals and deferred income	202	262
Interest rate derivatives*	109	31
	524	450
* 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
	2009	2008
	£m	£m
Trade and other creditors	27
Obligations under finance leases	14	35
Minority interest	4	3
	45	38

14. Net debt
					2009	2008
				Footnote	£m	£m
Secured on the assets of the Group
Class A1 4.986% Bonds 2037				1.1, 2		602
Class A2 Floating Rate Bonds 2037				1.1, 2		60
Class B 4.988% Bonds 2037				1.1, 2		171
Class A4 4.821% Bonds 2036				1.2	396	396
Class C2 5.098% Bonds 2035				1.2	217	217
Class B 4.999% Bonds 2033				1.2	365	365
Class A3 4.851% Bonds 2033				1.2	174	174
Class A1 Floating Rate Bonds 2032				1.2	224	224
Class A2 4.949% Bonds 2031				1.2	288	295
Class D Floating Rate Bonds 2025				1.2	112	130
Class C1 Floating Rate Bonds 2022				1.2	215	235
9.125% First Mortgage Debenture Stock 2020				1.3	40	40
6.125% First Mortgage Debenture Stock 2014				1.3	45	45
10.3125% First Mortgage Debenture Stock 2011				1.3	42	44
5.264% First Mortgage Debenture Bonds 2035					327	327
5.0055% First Mortgage Amortising Debentures 2035					104	105
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	100
Floating Rate Secured Loan Notes 2035					256	256
Loan notes					5	5
					3,420	4,302
Unsecured
5.50% Senior Notes 2027					98	98
6.30% Senior US Dollar Notes 2015				3	108	77
Bank loans and overdrafts					139	785
					345	960
Gross debt				4	3,765	5,262
Interest rate derivatives: liabilities					109	31
Interest rate derivatives: assets					(16)	(17)
					3,858	5,276
Cash and short-term deposits				5	(616)	(244)
Net debt					3,242	5,032
Maturity analysis of net debt					2009	2008
					£m	£m
Repayable:			within one year and on demand		49	111
between:			one and two years		148	51
			two and five years		439	712
			five and ten years		553	1,117
			ten and fifteen years		436	613
			fifteen and twenty years		835	943
			twenty and twenty five years		930	912
			twenty five and thirty years		375	803
					3,716	5,151
Gross debt					3,765	5,262
Interest rate derivatives					93	14
Cash and short term deposits					(616)	(244)
Net debt					3,242	5,032
Total borrowings where any instalments are due after five years are £1,702m (2008: £3,084m).
					2009	2008
					£m	£m
1	These borrowings are obligations of ring-fenced, special purpose companies, with no recourse to other companies or assets in the Group:
	1.1	Meadowhall Finance PLC				833
	1.2	Broadgate Financing PLC			1,991	2,036
	1.3	BLD Property Holdings Ltd			127	129
2	The Meadowhall Finance PLC securitisation group is owned indirectly by MSC Property Intermediate Holdings Limited which on 11 February 2009 became a joint venture with LSP Green Park Property Trust.
3	Principal and interest on this borrowing was fully hedged into Sterling at the time of issue.
4	The principal amount of gross debt at 31 March 2009 was £3,746m (2008: £5,275m). Included in this, the principal amount of secured borrowings and other borrowings of non-recourse companies was £3,412m (2008: £4,294m).
5	Cash and deposits not subject to a security interest amount to £215m (2008: £78m).

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 2009 the ratio is 83%:
i. Net Borrowings are £3,186m, being the principal amount of gross debt of £3,746m plus amounts owed to joint ventures of £33m and TPP Investments Ltd of £23m (see note 16), less the cash and short-term deposits of £616m; and
ii. Adjusted Capital and Reserves are £3,831m, being share capital and reserves of £3,209m (see note 17), adjusted for £25m of deferred tax (see note 2), £444m exceptional refinancing charges (see note 17) and £153m mark to market on interest rate swaps (see note 2); and
Net Unsecured Borrowings not to exceed 70% of Unencumbered Assets.
At 31 March 2009 the ratio is 6%:
i. Net Unsecured Borrowings are £152m, being the principal amount of gross debt of £3,746m plus amounts owed to joint ventures of £33m less cash and deposits not subject to a security interest of £215m less the principal amount of secured and non-recourse borrowings of £3,412m; and
ii. Unencumbered Assets are £2,549m being properties of £5,810m (see note 8) plus investments in funds and joint ventures of £952m (see note 9) and other investments of £38m (see note 10) less investments in joint ventures of £585m (see note 9) and encumbered assets of £3,666m (see note 8).
The Group Loan to Value ratio at 31 March 2009 is 46%, being gross debt of £3,765m less cash and short-term deposits of £616m, divided by total Group property of £5,810m (see note 8) plus investments in Funds and Joint Ventures of £952m (see note 9) and other investments of £38m (see note 10).
Interest rate profile - including effect of derivatives
				2009	2008
				£m	£m
Fixed rate				3,879	5,248
Variable rate (net of cash)				(637)	(216)
Net debt				3,242	5,032
Reconciliation of movement in Group Net Debt to Cash Flow Statement
	2008	Disposals*	Cash flow	Non cash	2009
	£m	£m	£m	£m	£m
Per Cash Flow Statement:
Cash and short-term deposits	(244)		(372)		(616)
Overdrafts	5		(5)
Cash and cash equivalents	(239)		(377)		(616)
Term debt (excluding overdrafts)	5,257	(835)	(714)	57	3,765
Fair value of interest rate derivatives	14			79	93
Net debt	5,032	(835)	(1,091)	136	3,242

* Excluding cash and overdrafts. Represents the principal of securitised debt in MSC Property

Intermediate Holdings Ltd on formation of the joint venture.   

14. Net debt (continued)
Maturity of committed undrawn borrowing facilities
		2009	2008
		£m	£m
Expiring:
within one year		89	77
between:
one and two years		265	80
two and three years		775	221
three and four years		80	709
four and five years		905	80
over five years		836	1,266
Total		2,950	2,433
The above facilities are those freely available to be drawn for Group purposes. There is an additional undrawn 364 day revolving liquidity facility of £185m which is only available for the requirements of the Broadgate securitisation.
Comparison of market values and book values at 31 March 2009
	Market	Book
	Value	Value	Difference
	£m	£m	£m
Securitisations	1,383	1,991	(608)
Debentures and unsecured bonds	1,091	1,374	(283)
Bank debt and other floating rate debt	400	400
Cash and short-term deposits	(616)	(616)
	2,258	3,149	(891)
Other financial (assets) liabilities:
interest rate derivative assets	(16)	(16)
interest rate derivative liabilities	109	109
	93	93
Total	2,351	3,242	(891)
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 £55m (2008: 8.75 pence per share, totalling £45m) was approved by the Board on 20 May 2009 and is payable on 14 August 2009 to shareholders on the register at the close of business on 10 July 2009. An enhanced scrip alternative is to be offered to shareholders with the 4th interim dividend. Further details will be avaliable with the Annual General Meeting notice circular.
The cash dividend (but not the share alternative) will be all PID. 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	Pence per share				2009	2008
Date		PID	Non-PID	Total	Restated Total*	£m	£m
Current year dividends
14.08.2009	2009 4th interim	6.50+		6.50	6.50
15.05.2009	2009 3rd interim	9.38		9.38	7.77
13.02.2009	2009 2nd interim	2.00	7.37	9.37	7.76	47
14.11.2008	2009 1st interim	6.70	2.68	9.38	7.77	48
		24.58	10.05	34.63	29.80
Prior year dividends
15.08.2008	2008 Final	8.75		8.75	7.25	45
19.05.2008	2008 3rd interim	4.25	4.50	8.75	7.25	45
15.02.2008	2008 2nd interim	4.25	4.50	8.75	7.25		44
16.11.2007	2008 1st interim	4.25	4.50	8.75	7.25		45
		21.50	13.50	35.00	29.00
17.08.2007	2007 Final		8.25	8.25	6.84		43
18.05.2007	2007 2nd interim		6.50	6.50	5.39		34
Dividends in Reconciliation of Movement in Shareholders' Funds						185	166
Timing difference relating to payment of withholding tax						3	(5)
Dividends in Cash Flow Statement						188	161
+ Any shareholder elections to recieve shares instead of the cash dividend will not be PID. * Shares issued on 19 March 2009 pursuant to the Rights Issue were only entitled to dividends commencing with the 4th interim dividend payable on 14 August 2009. For comparability the table above is restated for all past dividends to reflect the increase in the number of shares in issue. See note 2.
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 (2008: £23m) and recourse is only to the partnership assets.

17. Share capital and reserves
			Number of	Share	Share	Merger	Other	Retained
			shares	capital	premium	reserve	reserves	earnings	Total
			m	£m	£m	£m	£m	£m	£m
At 1 April 2008			522	131	1,269		335	5,055	6,790
Total recognised income and expense							(474)	(3,664)	(4,138)
Share issues			341	86	(25)	682			743
Adjustment for share and share
	option awards							(1)	(1)
Transfer						(682)		682
Dividends paid in the year								(185)	(185)
At 31 March 2009			863	217	1,244		(139)	1,887	3,209
The authorised share capital is 887,000,000 25p ordinary shares (2008: 800,000,000).
The number of shares held in Treasury is 11,266,245 (2008: 11,266,245).
The number of shares held in the ESOP trust is 2,040,620 (2008: 2,307,730).
In calculating Adjusted Capital and Reserves for the purpose of the unsecured debt financial covenants, there is an adjustment of £444m to reflect the cumulative net amortised exceptional items relating to the refinancings in the years ending 31 March 2005, 2006 and 2007, see also note 14.
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.
Other reserves
Other reserves comprise the following reserve accounts:
(i)	Hedging reserve - The hedging reserve comprises the effective portion of the cumulative net change in the fair value of cash flow and foreign currency hedging instruments.
(ii)	Translation reserve - The translation reserve comprises all foreign exchange differences arising from the translation of the financial statements of foreign operations as well as the translation of the liabilities that hedge the Company's net investment in a foreign subsidiary.
(iii)	Revaluation reserve - The revaluation reserve relates to development properties and other investments.
(iv)	Equity reserve - The equity reserve represents the equity component of the irredeemable convertible bonds, which were converted during the year ended 31 March 2005, net of the related deferred tax asset.
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 regularly provided to the Chief Operating Decision Maker, are set out below:
		Offices		Retail		Other		Total
		2009	2008	2009	2008	2009	2008	2009	2008
		£m	£m	£m	£m	£m	£m	£m	£m
Revenue		278	317	268	366	26	32	572	715
Net rental income		230	230	206	314	17	17	453	561
Segment assets		3,572	5,506	3,012	6,235	976	907	7,560	12,648
Capital expenditure		383	537	170	105	12	17	565	659
Segment assets include the Group's investment in funds and joint ventures.

Table A
Summary income statement based on proportional consolidation
The following pro forma information is unaudited and does not form part of the consolidated primary statements or the notes thereto. It presents the results of the Group, with funds and joint ventures consolidated on a line by line, i.e. proportional basis. The underlying profit before tax and total loss after tax are the same as presented in the consolidated income statement.
	Q4		Q3		Q2		Q1
	3 months ended								Year ended
	31 Mar		31 Dec		30 Sep		30 Jun		31 Mar		31 Mar
	2009		2008		2008		2008		2009		2008
	£m		£m		£m		£m		£m		£m
Gross rental income	160		159		162		169		650		709
Net rental income	130		151		155		162		598		667
Fees and other income	6		4		5		5		20		40
Administrative expenses	(9)		(16)		(16)		(17)		(58)		(73)
Net interest costs	(66)		(76)		(74)		(76)		(292)		(350)
Underlying profit before taxation	61		63		70		74		268		284
Non-recurring items											9
Net valuation movement (includes profits and losses on disposal)	(967)		(1,635)		(821)		(651)		(4,074)		(1,916)
Realisation of cash flow hedges	(78)		(41)						(119)
Amortisation of intangible asset	(3)		(4)		(3)		(4)		(14)		(15)
Songbird Estates plc dividend (capital)											30
Goodwill impairment											(3)
Loss on ordinary activities before taxation	(987)		(1,617)		(754)		(581)		(3,939)		(1,611)
Tax charge relating to underlying profit	(3)		(2)		(3)		(1)		(9)		(8)
Deferred tax	8		27		12		11		58		47
Other taxation			5		(2)		6		9		9
Loss for the period after taxation	(982)		(1,587)		(747)		(565)		(3,881)		(1,563)
Underlying earnings per share - diluted basis	9	p	10	p*	11	p*	12	p*	41	p+	44	p*
The underlying earnings per share is calculated on underlying pre tax profit of £268m (2008: £284m), tax attributable to underlying profits of £9m (2008: £8m) and fully diluted shares numbering 632m (2008: 623m*). Gross rental income excludes service charge receivable.
+ The difference between the aggregate of the four quarters' EPS and the annual EPS arises due to the impact of the Rights Issue on the weighted average number of shares.
* As restated - see note  2.

Table A (continued)
Summary balance sheets based on proportional consolidation
The following pro forma information is unaudited and does not form part of the consolidated primary statements or the notes thereto. It presents the composition of the EPRA net assets of the Group, with share of funds and joint venture assets and liabilities included on a line by line, i.e. proportional basis and assuming full dilution.
	2009		2008
	£m		£m
Retail properties	4,867		7,661
Office properties	3,570		5,505
Other properties	188		305
Total properties	8,625		13,471
Other investments	38		197
Intangible assets	25		39
Other net liabilities	(360)		(358)
Net debt	(4,941)		(6,413)
EPRA NAV	3,387		6,936
EPRA NAV per share (note 2)	398	p	1114	p*
Calculation of EPRA NNNAV per share	2009		2008
	£m		£m
EPRA NAV	3,387		6,936
Deferred tax arising on revaluation movements	(25)		(102)
Mark to market on effective cash flow hedges and related debt adjustments	(153)		3
Mark to market on debt	1,116		582
EPRA NNNAV	4,325		7,419
EPRA NNNAV per share	508	p	1191	p*
EPRA NNNAV is the EPRA NAV adjusted to reflect the fair value of debt and derivatives and to include the deferred taxation on revaluations.
Total property valuations including share of funds and joint ventures
	2009		2008
	£m		£m
British Land Group	5,810		10,469
Share of funds and joint ventures
Investment properties	2,775		2,889
Development properties	49		119
Head lease liabilities	(9)		(6)
	2,815		3,002
Total property portfolio valuation	8,625		13,471
* As restated - see note 2.

 

END

 

 

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