Final Results - Part 2

RNS Number : 0553H

British Land Co PLC

23 May 2011

 



Consolidated Income Statement for the year ended 31 March 2011
		2011			2010
		Underlying pre tax*	Capital and other		Underlying pre tax*	Capital and other
				Total			Total
	Note	£m	£m	£m	£m	£m	£m
Gross rental and related income	3	298		298	394		394
Net rental and related income	3	255		255	337		337
Fees and other income	4	15		15	13		13
Amortisation of intangible assets			(10)	(10)		(15)	(15)
Joint ventures and funds (see also below)		117	264	381	81	398	479
Administrative expenses		(61)		(61)	(55)		(55)
Net valuation movement (includes result on disposals)	5		321	321		496	496
Net financing costs
- financing income	6	29	3	32	30		30
- financing charges	6	(99)	(4)	(103)	(157)		(157)
		(70)	(1)	(71)	(127)		(127)
Profit on ordinary activities before taxation		256	574	830	249	879	1,128
Taxation
- current tax (expense) income	7		(2)	(2)		24	24
- deferred tax income (expense)	7		12	12		(12)	(12)
			10	10		12	12
Profit for the year after taxation attributable to shareholders of the Company				840			1,140
Earnings per share: basic	2			95.7p			133p
diluted	2			95.2p			132.6p
Share of results of joint ventures and funds
Underlying profit before taxation		117		117	81		81
Net valuation movement (includes result on disposals)			270	270		412	412
Non-recurring items						(9)	(9)
Current tax expense			(3)	(3)		(5)	(5)
Deferred tax expense			(3)	(3)
	9	117	264	381	81	398	479
*As defined in note 2

Consolidated Balance Sheet
as at 31 March 2011
		2011			2010
	Note	£m			£m
Assets
Non-current assets
Investment properties	8	4,752			4,126
Owner-occupied property	8	38			33
		4,790			4,159
Other non-current assets
Investments in joint ventures and funds	9	2,066			1,594
Other investments	10	51			261
Intangible assets	10				10
		6,907			6,024
Current assets
Debtors	11	90			105
Liquid investments	14	203			195
Cash and short-term deposits	14	60			74
		353			374
Total assets		7,260			6,398
Liabilities
Current liabilities
Short-term borrowings and overdrafts	14	(319)			(139)
Creditors	12	(333)			(332)
		(652)			(471)
Non-current liabilities
Debentures and loans	14	(1,620)			(1,642)
Other non-current liabilities	13	(23)			(30)
Deferred tax liabilities	7	(35)			(47)
		(1,678)			(1,719)
Total liabilities		(2,330)			(2,190)
Net assets		4,930			4,208
Equity
Share capital		224			220
Share premium		1,237			1,241
Other reserves		(68)			(90)
Retained earnings		3,537			2,837
Total equity attributable to shareholders
of the Company		4,930			4,208
EPRA NAV per share*	2	567p			504p
* As defined in note 2
Consolidated Statement of Comprehensive Income
for the year ended 31 March 2011
				2011		2010
				£m		£m
Profit for the year after taxation				840		1,140
Other comprehensive income:
Gains (losses) on cash flow hedges
- Group				(13)		(6)
- Joint ventures and funds revaluations				18		(10)
				5		(16)
Transferred to the income statement (cash flow hedges)
- foreign currency derivatives				6		6
- interest rate derivatives				14		23
				20		29
Exchange differences on translation of foreign operations						(1)
Net actuarial loss on pension scheme				(2)		(2)
Other comprehensive income for the year				23		10
Total comprehensive income for the year				863		1,150

Consolidated Statement of Cash Flows
for the year ended 31 March 2011
		2011	2010
	Note	£m	£m
Rental income received from tenants		227	317
Fees and other income received		21	15
Operating expenses paid to suppliers and employees		(66)	(84)
Cash generated from operations		182	248
Interest paid		(96)	(179)
Interest received		19	9
UK corporation tax paid			(3)
Distributions and other receivables from joint ventures and funds		105	61
Net cash inflow from operating activities		210	136
Cash flows from investing activities
Development and other capital expenditure		(62)	(173)
Purchase of investment properties		(379)	(75)
Sale of investment properties		68	279
Purchase of investments			(43)
Sale of investments			13
Deferred consideration received		22
Loans repaid by Broadgate joint venture		220
Establishment of Broadgate joint venture			31
Investment in Shopping Centres joint venture with Tesco plc			(26)
Investment in and loans to joint ventures and funds		(123)	(56)
Capital distributions received from joint ventures and funds		12	7
Indirect taxes received (paid) in respect of investing activities		2	(4)
REIT conversion charge recovered			6
Net cash outflow from investing activities		(240)	(41)
Cash flows from financing activities
Dividends paid		(139)	(154)
Movement in other financial liabilities		(14)	(20)
Establishment of Broadgate joint venture - cash collateral			(266)
Increase in liquid investments			(200)
Increase in bank and other borrowings		171	1
Net cash inflow (outflow) from financing activities		18	(639)
Net decrease in cash and cash equivalents		(12)	(544)
Cash and cash equivalents at 1 April		72	616
Cash and cash equivalents at 31 March		60	72
Cash and cash equivalents consists of:
Cash and short-term deposits	14	60	74
Overdrafts			(2)
		60	72

Consolidated Statement of Changes in Equity for the year ended 31 March 2011
			Hedging and translation reserve*
	Share capital*	Share premium		Revaluation reserve*	Retained earnings
						Total
	£m	£m	£m	£m	£m	£m
Balance at 1 April 2010	220	1,241	(38)	(52)	2,837	4,208
Profit for the year after taxation					840	840
Joint ventures and funds revaluations				18		18
De-designation of cash flow hedges			(3)		3
Losses on cash flow hedges			(13)			(13)
Reclassification of losses on cash flow hedges to profit for the year after taxation
- foreign currency derivatives			6			6
- interest rate derivatives			14			14
Net actuarial loss on pension schemes					(2)	(2)
Other comprehensive income			4	18	1	23
Total comprehensive income for the year			4	18	841	863
Share issues	4	(4)
Adjustment for share and share option awards					6	6
Dividends payable in year (26.0p per share)					(228)	(228)
Adjustment for scrip dividend element					81	81
Balance at 31 March 2011	224	1,237	(34)	(34)	3,537	4,930
Balance at 1 April 2009	217	1,244	(98)	(41)	1,887	3,209
Profit for the year after taxation					1,140	1,140
Reallocation of hedging reserve on disposal			37		(37)
Joint ventures and funds revaluations				(10)		(10)
Losses on cash flow hedges			(6)			(6)
Reclassification of losses on cash flow hedges to profit for the year after taxation
- foreign currency derivatives			6			6
- interest rate derivatives			23			23
Exchange differences on translation of foreign operations				(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
* refer to note 17

Notes to the accounts for the year ended 31 March 2011
1.     Basis of preparation
The financial information set out above does not constitute the Company's statutory accounts for the years ended 31 March 2011 or 2010, but is derived from those accounts.  Statutory accounts for 2010 have been delivered to the Registrar of Companies and those for 2011 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 2011 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 Company expects to publish full financial statements that comply with IFRSs in June 2011.
The accounting policies used are consistent with those contained in the Company's last annual report and accounts for the year ended 31 March 2010, with the exception of the following: IFRS 3 (revised) Business Combinations - this standard includes comprehensive revisions on applying the acquisition method; IAS 27 (revised) Consolidated and Separate Financial Statements - consequential amendment arising from amendments to IFRS 3; IAS 28 (revised) Investments In Associates - consequential amendment arising from amendments to IFRS 3.  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
	2011		2010
Earnings per share (diluted)	Earnings	Pence per share	Earnings	Pence per share
	£m		£m
Underlying pre tax profit - income statement	256		249
Tax charge relating to underlying profit	(5)		(5)
Underlying earnings per share	251	28.5p	244	28.4p
Mark to market on liquid investments (held for trading assets)	8		(5)
Non-recurring items*	(4)		(9)
EPRA earnings per share	255	28.9p	230	26.7p
Profit for the year after taxation	840	95.2p	1,140	132.6p
* Non-recurring items in the year ended 31 March 2011 of £4m relate to fair value adjustments on the buy back of Group debentures (2010: debt break costs of £9m were incurred in HUT).
The European Public Real Estate Association (EPRA) issued Best Practices Recommendations most recently in October 2010, which gives guidelines for performance measures.  The 31 March 2010 comparatives have been presented to be in line with these recommendations.  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 held for trading assets, fair value adjustments on the buy back of debentures and debt break costs.
The weighted average number of shares in issue for the year was: basic: 878m (2010: 857m); diluted for the effect of share options: 882m (2010: 860m).  Basic undiluted earnings per share for the year was 95.7p (2010: 133.0p). Earnings per share shown in the table above are diluted.
			31 March	31 March
Net asset value (NAV) (diluted)			2011	2010
			£m	£m
Balance sheet net assets			4,930	4,208
Deferred tax arising on revaluation movements			37	43
Mark to market on effective cash flow hedges and related debt adjustments			89	126
Dilution effect of share options			45	30
EPRA NAV			5,101	4,407
EPRA NAV per share			567p	504p
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 2011, the number of shares in issue was: basic: 885m (2010: 866m); diluted for the effect of share options: 899m (2010: 875m).
REIT total return per share for the year ended 31 March 2011 of 17.7% includes dividends paid of 26.0p (see note 15) in addition to the increase in EPRA NAV of 63p. REIT total return per share for the year ended 31 March 2010 was 33.5%.

3.     Gross and net rental income
		2011	2010
		£m	£m
Rent receivable		227	319
Spreading of tenant incentives and guaranteed rent increases		32	23
Surrender premia		3
Gross rental income		262	342
Service charge income		36	52
Gross rental and related income		298	394
Service charge expense		(36)	(52)
Property operating expenses		(7)	(5)
Net rental and related income		255	337
The cash element of net rental income recognised during the year ended 31 March 2011 from properties which were not subject to a security interest was £81m (2010: £81m).  Property operating expenses relating to investment properties that did not generate any rental income were £1m (2010: £1m).  Property operating expenses in the year to 31 March 2010 included a £16m credit provision release.  Contingent rents of £1m (2010: £1m) were recognised in the year.
4.     Fees and other income
		2011	2010
		£m	£m
Management fees (from joint ventures and funds)		11	7
Other fees and commission		4	6
		15	13
5.     Net revaluation gains on property and investments
		2011	2010
		£m	£m
Consolidated income statement
Revaluation of properties		297	530
Result on property disposals		20	(18)
Revaluation of investments		8	(12)
Other revaluations and losses		(4)	(4)
		321	496
Share of valuation movement of joint ventures and funds		270	412
Net revaluation gains on property and investments		591	908

6.     Net financing costs
	2011	2010
	£m	£m
Interest payable on:
Bank loans and overdrafts	8	12
Other loans	86	146
Obligations under finance leases		1
	94	159
Development interest capitalised	(5)	(13)
	89	146
Interest receivable on:
Deposits, securities and liquid investments	(15)	(15)
Loans to joint ventures	(2)	(3)
	(17)	(18)
Other finance (income) costs:
Expected return on pension scheme assets	(7)	(5)
Interest on pension scheme liabilities	5	4
Valuation movements on translation of foreign currency debt	(5)	(6)
Hedging reserve recycling	5	6
Net financing expenses - underlying	70	127
Capital and other
Valuation movements on fair value debt	(3)	1
Valuation movements on fair value derivatives	3	(1)
Fair value adjustment on buy back of group debentures	4
Fair value movement on non-hedge accounted derivatives	(3)
Net financing costs - capital	1
Net financing costs	71	127
Total financing income	(32)	(30)
Total financing charges	103	157
Net financing costs	71	127
Interest on development expenditure is capitalised at a rate of 5.20% (2010: 5.27%).

7.     Taxation
		2011	2010
		£m	£m
Tax expense (income)
Current tax: UK corporation tax: 28% (2010: 28%)		1	2
Foreign tax		1
		2	2
Adjustments in respect of prior periods			(26)
Total current tax expense (income)		2	(24)
Deferred tax on revaluations		(12)	12
Group total taxation (net)		(10)	(12)
Attributable to joint ventures and funds		6	5
Total taxation		(4)	(7)
Tax reconciliation
Profit on ordinary activities before taxation		830	1,128
Less: profit attributable to joint ventures and funds		(381)	(479)
Group profit on ordinary activities before taxation		449	649
Tax on profit on ordinary activities at UK corporation tax rate of 28% (2010: 28%)		126	182
Effects of:
REIT exempt income and gains		(121)	(170)
Tax losses and other timing differences		(15)	2
Adjustments in respect of prior years			(26)
Group total taxation		(10)	(12)
Tax expense attributable to underlying profits for the year ended 31 March 2011 was £5m (2010: £5m).
Corporation tax payable at 31 March 2011 was £30m (2010: £23m) as shown in note 12.  Deferred tax is calculated on temporary differences under the liability method using a tax rate of 26% (2010: 28%).  The movement on deferred tax is as shown below:
Deferred taxation
	1 April	Credited	31 March
	2010	to income	2011
	£m	£m	£m
Property and investment revaluations	39	(8)	31
Other timing differences	4		4
Intangible assets	4	(4)
	47	(12)	35
Under the REIT regime development properties which are sold within three years of completion do not benefit from tax exemption.  At 31 March 2011 the value of such properties is £1,391m (2010: £1,108m) and if these properties were to be sold and tax exemption was not available the tax arising would be £nil (2010: £nil).
The deferred tax charge for the year ended 31 March 2011 includes a credit of £2m to reflect reduced deferred tax liabilities arising from the forthcoming reduction in the UK corporation tax rate to 26% (effective from 1 April 2011).

8.     Property
			Owner-
		Investment	occupied	Total
		£m	£m	£m
Carrying value at 1 April 2010		4,126	33	4,159
Additions:	property purchases	383		383
	development expenditure	43		43
	capitalised interest	3		3
	capital expenditure on asset management initiatives	6		6
		435		435
Depreciation			(1)	(1)
Disposals		(137)		(137)
Revaluations included in income statement		291	6	297
Movement in tenant incentives and contracted rent uplift balances		37		37
Carrying value at 31 March 2011		4,752	38	4,790
Head lease liabilities (note 13)				(7)
Total Group property portfolio valuation at 31 March 2011				4,783
The Group valuation of properties of £4,783m (2010: £4,152m) comprises freeholds of £3,724m (2010: £3,053m); virtual freeholds of £162m (2010: £187m); long leaseholds of £897m (2010: £911m) and short leaseholds of nil (2010: £1m).  The historical cost of properties was £3,816m (2010: £3,401m).
The property valuation does not include any investment properties held under operating leases (2010: nil).
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 £4,729m (2010: £4,136m); other valuers £54m (2010: £16m). Valuers of joint venture and fund properties are detailed in note 9.
Properties valued at £2,850m (2010: £2,659m) were subject to a security interest and other properties of non-recourse companies amounted to £nil (2010: £nil).
Included within the property valuation is £76m (2010: £66m) in respect of accrued contracted rental uplift income, against which the Group holds a provision of £5m (2010: £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 £73m (2010: £74m).
Included in investment properties are £149m of properties which are in the course of development (2010: £120m).

9.     Joint ventures and funds
British Land's summary share of the results of joint ventures and funds
			2011	2010
			£m	£m
Gross rental income			279	219
Service charge income			28	19
Gross rental and related income			307	238
Net rental and related income			263	208
Other income and expenditure			(4)	(8)
Net financing costs			(142)	(119)
Underlying profit before taxation			117	81
Net valuation movement (includes profits and losses on disposals)			270	412
Non-recurring items - debt break costs				(9)
Profit on ordinary activities before taxation			387	484
Current tax			(3)	(5)
Deferred tax			(3)
Profit on ordinary activities after taxation			381	479
Summary movement for the year of the investments in joint ventures and funds
		Equity	Loans	Total
		£m	£m	£m
At 1 April 2010		1,508	86	1,594
Additions		107	99	206
Disposals		(9)	(26)	(35)
Share of profit after taxation		381		381
Distributions and dividends:	capital	(12)		(12)
	revenue	(86)		(86)
Hedging and exchange movements		18		18
At 31 March 2011		1,907	159	2,066
At 31 March 2011 the investment in joint ventures included within the total investment in joint ventures and funds was £1,573m (2010: £1,149m).
Distributions in the year include the receipt of £11m from HUT, £8m from PREF, £9m from HIF (£8m capital), £9m from BL Fraser, £34m from Tesco joint ventures, £7m from Sainsbury joint ventures and £14m from Meadowhall.
At 31 March 2011 the valuation of the Group's share of joint ventures and funds properties is £4,789m (2010: £4,387m); external net debt is £2,697m (2010: £2,660m) and the mark to market adjustment for external debt is £104m asset (2010: £177m 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 £2,357m (2010: £2,177m), Knight Frank LLP an aggregate value of £2,432m (2010: £2,210m).

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 and upstream transactions due to the Group.
	Bluebutton Properties Ltd	MSC Property Intermediate Holdings Ltd	BL Sainsbury Superstores Ltd	Tesco Joint Ventures*	The Scottish Retail Property Limited Partnership	Leadenhall JV
	Blackstone Group LP funds	LSP Green Park Property Trust			Land Securities Group PLC	Oxford Properties
Partners			J Sainsbury plc	Tesco plc
Property sector	City Offices (Broadgate)	Shopping Centres (Meadowhall)	Superstores	Superstores/ Retail W'hses Shopping Centres	Shopping Centres (Bon Accord)	City Offices Leadenhall
Group share	50%	50%	50%	50%	50%	50%
Date established	November 2009	February 2009	March 2008	November 1996	March 2004	Dec 2010
Accounting period	Year ended 31 March	Year ended 31 March	Year ended 31 March	Year ended 31 March	Year ended 31 March	14 weeks ended 31 March
	2011	2011	2011	2011	2011	2011
Summarised income statements	£m	£m	£m	£m	£m	£m
Gross rental and related income	215	81	65	102	20
Net rental and related income	168	76	65	101	13
Other income and expenditure	(1)	(8)	(1)	(1)	(1)
Net interest payable	(99)	(43)	(34)	(55)	(7)
Underlying profit before taxation	68	25	30	45	5
Surplus on revaluation	197	145	58	79	1
Disposal of fixed assets			1
Non-recurring items
Profit on ordinary activities before taxation	265	170	89	124	6
Current tax				(2)
Deferred tax
Profit on ordinary activities after taxation	265	170	89	122	6
Summarised balance sheets	£m	£m	£m	£m	£m	£m
Investment properties	2,717	1,428	1,262	1,834	213	101
Current assets	11	4	1	9	5	74
Upstream loans to joint venture shareholders	29			15
Cash and deposits	75	23	21	34	2	7
Gross assets	2,832	1,455	1,284	1,892	220	182
Current liabilities	(127)	(34)	(27)	(117)	(18)	(3)
Commercial loan from joint venture shareholder
Bank debt falling due within one year
Bank debt falling due after one year				(1,041)
Securitised debt	(1,898)	(808)	(655)		(119)
Convertible loan notes
Other non-current liabilities		(32)
Obligations under finance leases		(5)			(11)
Deferred tax				(4)
Gross liabilities	(2,025)	(879)	(682)	(1,162)	(148)	(3)
Net external assets	807	576	602	730	72	179
Represented by:
Shareholder loans	15		18	190	14	174
Ordinary shareholders' funds / Partners' capital	792	576	584	540	58	5
Total investment	807	576	602	730	72	179
Capital commitments	12					7
*Tesco joint ventures include BLT Holdings (2010) Limited (parent of BLT Properties Ltd), the Tesco British Land Property Partnership, Tesco BL Holdings Limited, Shopping Centres Limited 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 and upstream transactions due to the Group.
					JV & Fund TOTAL Group share 2011	JV & Fund TOTAL Group share 2010
	Hercules Unit Trust	Hercules Income Fund	Pillar Retail Europark Fund+	Other Joint Ventures and Funds+*
Partners
Property sector	Retail	Retail	Retail
	Warehouses	Warehouses	Warehouses
Group share	38.56%	26.12%	65.30%
Date established	Sep 2000	Sep 2004	Mar 2004
Accounting period	Year ended	Year ended	Year ended
	31 March	31 March	31 March
	2011	2011	2011
Summarised income statements	£m	£m	£m	£m	£m	£m
Gross rental and related income	85	5	37	7	307	238
Net rental and related income	78	5	22	6	263	208
Other income and expenditure	(3)	(1)	(3)	5	(4)	(8)
Net interest payable	(41)		(7)	(3)	(142)	(119)
Underlying profit before taxation	34	4	12	8	117	81
Surplus (deficit) on revaluation	68	(1)		2	268	420
Disposal of fixed assets			1	1	2	(8)
Non-recurring items						(9)
Profit on ordinary activities before taxation	102	3	13	11	387	484
Current tax			(3)		(3)	(5)
Deferred tax				(3)	(3)
Profit (loss) on ordinary activities after taxation	102	3	10	8	381	479
Summarised balance sheets
Investment properties	1,588	80	321	177	4,797	4,395
Current assets	40		10	40	114	94
Upstream loans to joint venture shareholders				8	30	31
Cash and deposits	168	3	13	14	169	327
Gross assets	1,796	83	344	239	5,110	4,847
Current liabilities	(44)	(4)	(24)	(25)	(222)	(247)
Commercial loan from joint venture shareholder						(105)
Bank debt falling due within one year		(15)	(153)	(121)	(224)	(179)
Bank debt falling due after one year					(520)	(637)
Securitised debt	(603)				(1,973)	(2,002)
Convertible loan notes	(194)				(75)	(70)
Other non-current liabilities					(16)	(1)
Obligations under finance leases					(8)	(8)
Deferred tax			(6)		(6)	(4)
Gross liabilities	(841)	(19)	(183)	(146)	(3,044)	(3,253)
Net external assets	955	64	161	93	2,066	1,594
Represented by:
Shareholder loans				20	226	73
Ordinary shareholders' funds / Partners' capital	955	64	161	73	1,840	1,521
Total investment	955	64	161	93	2,066	1,594
Capital commitments	31			2	24	11
+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:  Fareham Property Partnership, the BL Goodman Limited Partnership, the Public House Company Limited, BL Gazeley Limited, BL Canada Quays Limited, Eurofund Investments Zaragoza S.L., the City of London Office Unit Trust (CLOUT), Auchinlea Partnership, Centro Commercial Nueva Condomina Siglo XXI S.L. and Group 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.  Where a joint venture or fund has net liabilities, as required under IFRS, the Group does not account for its share of the defecit in its total share of joint venture and fund profits.  All joint ventures are incorporated in the United Kingdom, with the exception of Bluebutton Properties Limited, 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)
	2011	2010
	£m	£m
Rental income received from tenants	280	215
Fees and other income received	3
Operating expenses paid to suppliers and employees	(30)	(22)
Cash generated from operations	253	193
Interest paid	(147)	(111)
UK corporation tax paid	(5)	(4)
Cash inflow from operating activities	101	78
Cash inflow from operating activities deployed as:
Surplus cash (distributed by) retained within joint ventures and funds	(4)	17
Total distributed to British Land	105	61
	101	78
10.     Other non-current assets
	Other	Intangible
	investments	assets
	£m	£m
At 1 April 2010	261	10
Disposals	(209)
Depreciation	(1)
Amortisation		(10)
At 31 March 2011	51
Other investments include the investment in the HUT convertible bond of £43m (31 March 2010: £43m).  At 31 March 2010 there was a £209m secured commercial loan to the Bluebutton joint venture; this was repaid during the year ended 31 March 2011.
11.     Debtors
	2011	2010
	£m	£m
Trade and other debtors+	77	85
Prepayments and accrued income	2	9
Interest rate derivatives*	11	11
	90	105
+ Included within this balance is deferred consideration of £10m (2010: £42m) 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 (2010: £7m).  The charge to the income statement was £nil (2010: £2m).
The directors consider that the carrying amount of trade and other debtors approximates their fair value.  There is no concentration of credit risk with respect to trade debtors as the Group has a large number of customers, who are paying their rent in advance.

12.     Creditors
	2011	2010
	£m	£m
Trade creditors	78	104
Amounts owed to joint ventures	55	40
Corporation tax	30	23
Other taxation and social security	16	11
Accruals and deferred income	105	105
Interest rate derivatives*	49	49
	333	332
* 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
	2011	2010
	£m	£m
Trade and other creditors	11	19
Obligations under finance leases	7	7
Non-controlling interest	5	4
	23	30

14.     Net debt
				2011	2010
			Footnote	£m	£m
Secured on the assets of the Group
9.125% First Mortgage Debenture Stock 2020			1	38	39
6.125% First Mortgage Debenture Stock 2014			1	45	45
10.3125% First Mortgage Debenture Stock 2011			1	32	41
5.264% First Mortgage Debenture Bonds 2035				328	327
5.0055% First Mortgage Amortising Debentures 2035				103	103
5.357% First Mortgage Debenture Bonds 2028				296	307
6.75% First Mortgage Debenture Bonds 2020				170	204
6.75% First Mortgage Debenture Bonds 2011					99
Floating Rate Secured Loan Notes 2035				256	256
Loan notes				5	5
				1,273	1,426
Unsecured
5.50% Senior Notes 2027				98	98
6.30% Senior US Dollar Notes 2015			2	96	101
Bank loans and overdrafts				472	156
				666	355
Gross debt			3	1,939	1,781
Interest rate derivatives: liabilities (see note 12)				49	49
Interest rate derivatives: assets (see note 11)				(11)	(11)
				1,977	1,819
Liquid investments
4.405% Medium Term Note 2015				(100)	(98)
4.395% Medium Term Note 2015				(103)	(97)
				(203)	(195)
Cash and short-term deposits			4	(60)	(74)
Net debt				1,714	1,550
				2011	2010
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			115	125
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 2011 was £1,937m (2010: £1,767m). Included in this, the principal amount of secured borrowings and other borrowings of non-recourse companies was £1,269m (2010: £1,415m).
4	Cash and deposits not subject to a security interest amount to £55m (2010: £66m).
Maturity analysis of net debt				2011	2010
				£m	£m
Repayable:		within one year and on demand		319	139
between:		one and two years		46	297
		two and five years		543	170
		five and ten years		216	313
		ten and fifteen years		6	42
		fifteen and twenty years		431	441
		twenty and twenty five years		378	6
		twenty five and thirty years			373
				1,620	1,642
Gross debt				1,939	1,781
Interest rate derivatives				38	38
Liquid Investments				(203)	(195)
Cash and short-term deposits				(60)	(74)
Net debt				1,714	1,550

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 2011 the ratio is 36%:
i. Net Borrowings are £1,962m, being the principal amount of gross debt of £1,937m plus amounts owed to joint ventures of £55m and TPP Investments Ltd of £30m (see note 16), less the cash and short-term deposits of £60m; and
ii. Adjusted Capital and Reserves are £5,407m, being share capital and reserves of £4,930m (see Consolidated Statement of Changes in Equity), adjusted for £37m of deferred tax (see note 2), £351m exceptional refinancing charges (see below) and £89m mark to market on interest rate swaps (see note 2); and
Net Unsecured Borrowings not to exceed 70% of Unencumbered Assets.
At 31 March 2011 the ratio is 25%:
i. Net Unsecured Borrowings are £668m, being the principal amount of gross debt of £1,937m plus amounts owed to joint ventures of £55m less cash and deposits not subject to a security interest of £55m less the principal amount of secured and non-recourse borrowings of £1,269m; and
ii. Unencumbered Assets are £2,680m being properties of £4,783m (see note 8) plus investments in funds and joint ventures of £2,066m (see note 9), other investments of £254m (see balance sheet: liquid investments of £203m and other investments of £51m) less investments in joint ventures of £1,573m (see note 9) and encumbered properties of £2,850m (see note 8).
In calculating Adjusted Capital and Reserves for the purpose of the unsecured debt financial covenants, there is an adjustment of £351m 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
			2011	2010
			£m	£m
Fixed rate			1,240	1,245
Variable rate (net of cash)			474	305
Net debt			1,714	1,550
Reconciliation of movement in Group Net Debt to Cash Flow Statement
	2010	Cash flow	Non cash	2011
	£m	£m	£m	£m
Per Cash Flow Statement:
Cash and short-term deposits	(74)	14		(60)
Overdrafts	2	(2)
Cash and cash equivalents	(72)	12		(60)
Term debt (excluding overdrafts)	1,779	171	(11)	1,939
Fair value of interest rate derivatives	38			38
Liquid investments	(195)		(8)	(203)
Net debt	1,550	183	(19)	1,714
The Group Loan to Value ratio at 31 March 2011 is 24%, being gross debt of £1,939m less cash, short-term deposits and liquid investments of £263m, divided by total Group property of £4,783m (see note 8) plus investments in Funds and Joint Ventures of £2,066m (see note 9) and other investments of £51m (see note 10).

14.    Net debt (continued)
Maturity of committed undrawn borrowing facilities
		2011	2010
		£m	£m
Maturity date:
over five years		75	75
four and five years			781
three and four years		586	905
Total facilities available for more than three years		661	1,761
two and three years		821	80
one and two years		35	775
within one year		820	245
Total		2,337	2,861
The above facilities are available to be drawn for Group purposes.
Following the year end, the Group agreed a new £560m 5 year unsecured revolving credit facility and as a result total undrawn borrowing facilities with a maturity of more than three years has increased to £1.2bn.
Comparison of market values and book values at 31 March 2011
	Market	Book
	Value	Value	Difference
	£m	£m	£m
Debentures and unsecured bonds	1,168	1,206	(38)
Bank debt and other floating rate debt	733	733
Liquid investments	(203)	(203)
Cash and short-term deposits	(60)	(60)
	1,638	1,676	(38)
Other financial (assets) liabilities:
interest rate derivative assets	(11)	(11)
interest rate derivative liabilities	49	49
	38	38
Total	1,676	1,714	(38)
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 fourth quarter dividend of 6.5 pence per share, totalling £58m (2010: 6.5 pence per share, totalling £57m) was approved by the Board on 16 May 2011 and is payable on 12 August 2011 to shareholders on the register at the close of business on 8 July 2011.
The Board will announce the availability of the Scrip Dividend Alternative via the Regulatory News Service and on its website (www.britishland.com), no later than 48 hours before the ex-dividend date of 6 July 2011.  The Board expects to announce the split between PID and non-PID income at that time. A Scrip Dividend Alternative will not be enhanced.  PID dividends are paid, as required by REIT legislation, after deduction of withholding tax at the basic rate (currently 20%), where appropriate.  Certain classes of shareholders may be able to claim to receive dividends gross.  Please refer to our website (www.britishland.com) for details.
Payment Date	Dividend	PID	Non PID	Pence per share	2011 £m	2010 £m
Current year dividends
12.08.2011	2011 4th interim			6.50
13.05.2011	2011 3rd interim	6.50		6.50
18.02.2011	2011 2nd interim	6.50		6.50	58
12.11.2010	2011 1st interim		6.50	6.50	57
				26.00
Prior year dividends
13.08.2010	2010 4th interim		6.50	6.50	57
14.05.2010	2010 3rd interim		6.50	6.50	56
12.02.2010	2010 2nd interim		6.50	6.50		56
13.11.2009	2010 1st interim		6.50	6.50		56
				26.00
14.08.2009	2009 4th interim			6.50		55
15.05.2009	2009 3rd interim*			7.77		48
Dividends in Consolidated Statement of Changes in Equity					228	215
Dividends settled in shares					(81)	(63)
Dividends settled in cash					147	152
Timing difference relating to payment of withholding tax					(8)	2
Dividends in Cash Flow Statement					139	154
* This dividend per share was restated in the year ended March 2009 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 £30m (2010: £23m) and recourse is only to the partnership assets.

17.     Share capital and reserves
						2011		2010
Number of ordinary shares in issue at 1 April					879,427,102		863,450,216
Share issues					17,615,196		15,976,886
Number of ordinary shares in issue at 31 March					897,042,298		879,427,102
At 31 March 2011, the authorised share capital is 1,440,000,000 25p ordinary shares (2010: 1,440,000,000).
At 31 March 2011, of the issued 25p ordinary shares, 1,551,420 shares were held in the ESOP Trust (2010: 1,830,208), 11,266,245 shares were held as treasury shares (2010: 11,266,245) and  884,224,633 shares were in free issue (2010: 866,330,649).  No treasury shares were acquired by the ESOP during the year.  All issued shares are fully paid.
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 derivatives on 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
	2011	2010	2011	2010	2011	2010	2011	2010
	£m	£m	£m	£m	£m	£m	£m	£m
Revenue	98	194	193	187	22	26	313	407
Net rental income	76	143	161	175	18	19	255	337
Segment assets	2,175	1,791	4,460	3,753	625	854	7,260	6,398
Capital expenditure	72	165	342	56	21	10	435	231
Revenue is derived from the rental of buildings, fund management and performance fees and investments.  Corporate costs, including administrative and interest expenses, are not allocated to the segments shown, therefore a sectoral profit or loss is not disclosed.  Segment assets include the Group's investment in joint ventures and funds.  No customer exceeds 10% of the Group's revenues.
Segment assets include the Group's investment in joint ventures and funds of £2,066m (2010: £1,594m), property assets of £4,790m (2010: £4,159m), intangible assets of £nil (2010: £10m), other investments of £51m (2010: £261m), debtors of £293m (2010: £300m) and cash of £60m (2010: £74m).

Supplementary Disclosures
Table A: REIT Income and Capital Return
Summary income statement based on proportional consolidation for the year ended 31 March 2011
The following pro forma information is unaudited and does not form part of the consolidated primary statements or the notes thereto.  It presents the results of the Group, with its share of the results of joint ventures and funds included on a line by line, i.e. proportional basis.  The underlying profit before taxation and total profit after taxation are the same as presented in the consolidated income statement.
	Year ended 31 March 2011			Year ended 31 March 2010
	Group	JVs &	Prop	Group	JVs &	Prop
		funds	Consol		funds	Consol
	£m	£m	£m	£m	£m	£m
Gross rental income	262	279	541	342	219	561
Property operating expenses	(7)	(16)	(23)	(5)	(11)	(16)
Net rental income	255	263	518	337	208	545
Administrative expenses	(61)	(7)	(68)	(55)	(10)	(65)
Fees & other income	15	3	18	13	2	15
Profit before interest and tax	209	259	468	295	200	495
Net  interest	(70)	(142)	(212)	(127)	(119)	(246)
Underlying profit before tax	139	117	256	168	81	249
Underlying earnings per share - diluted basis			28.5p			28.4p
The underlying earnings per share is calculated on underlying profit before taxation of £256m, tax attributable to underlying profits of £5m and 882m shares on a diluted basis, for the year ended 31 March 2011.
Quarterly summary
	Q4	Q3	Q2	Q1
	3 months ended				Year ended
	31 Mar	31 Dec	30 Sep	30 Jun	31 Mar	31 Mar
	2011	2010	2010	2010	2011	2010
	£m	£m	£m	£m	£m	£m
REIT Income Return
Gross rental income	138	136	132	135	541	561
Property operating expenses	(7)	(4)	(5)	(7)	(23)	(16)
Net rental income	131	132	127	128	518	545
Administrative expenses	(20)	(16)	(17)	(15)	(68)	(65)
Fees and other income	6	3	5	4	18	15
Ungeared income return	117	119	115	117	468	495
Net interest	(52)	(55)	(52)	(53)	(212)	(246)
Underlying profit before taxation	65	64	63	64	256	249
Underlying tax		(2)	(1)	(2)	(5)	(5)
REIT income return	65	62	62	62	251	244
REIT Capital Return
Valuation movement	173	202	103	113	591	908
Other capital & tax (net)*	3	(4)	(11)	11	(1)	20
REIT capital return	176	198	92	124	590	928
REIT total return	241	260	154	186	841	1,172
*includes other comprehensive income, movement in dilution of share options and the movement in items excluded for EPRA NAV.

Supplementary Disclosures
Table A continued: EPRA Net Assets
Summary balance sheet based on proportional consolidation as at 31 March 2011
The following pro forma information is unaudited and does not form part of the consolidated primary statements or the notes thereto.  It presents the composition of the EPRA net assets of the Group, with its share of the net assets of the joint venture and fund assets and liabilities included on a line by line, i.e. proportional basis and assuming full dilution.
	Group	Share of joint ventures & funds	Share options	Deferred tax	Mark to Market of interest rate swaps	Head Lease	EPRA Net assets 2011	EPRA Net assets 2010
	£m	£m	£m	£m	£m	£m	£m	£m
Retail properties	2,936	3,368				(9)	6,295	5,602
Office properties	1,666	1,417				(6)	3,077	2,736
Other properties	188	12					200	201
Total properties	4,790	4,797				(15)	9,572	8,539
Investments in joint ventures and funds	2,066	(2,066)
Other investments	51						51	156
Intangible assets								10
Other net (liabilities) assets	(263)	(34)	45	37	(5)	15	(205)	(217)
Net debt	(1,714)	(2,697)			94		(4,317)	(4,081)
Net assets	4,930		45	37	89		5,101	4,407
EPRA NAV per share (note 2)							567p	504p
EPRA Net Assets Movement
					Year ended		Year ended
					31 March 2011		31 March 2010
					£m	Pence per share	£m	Pence per share
Opening EPRA NAV					4,407	504p	3,387	398p
REIT income return					251	29p	244	28p
REIT capital return					590	60p	928	105p
Dividend paid					(147)	(26)p	(152)	(27)p
Closing EPRA NAV					5,101	567p	4,407	504p

Supplementary Disclosures
Table B: EPRA Performance Measures
EPRA Performance measures summary table
		2011		2010
	£m	Pence per share	£m	Pence per share
EPRA Earnings	255	28.9p	230	26.7p
EPRA NAV	5,101	567p	4,407	504p
EPRA NNNAV	5,117	569p	4,520	517p
EPRA Net Initial Yield		5.2%		5.5%
EPRA 'topped-up' Net Initial Yield		5.8%		6.1%
EPRA Vacancy Rate		2.7%		4.9%
Calculation of EPRA earnings per share
		2011		2010
	£m	Pence per share	£m	Pence per share
Profit for the year after taxation	840	95.2p	1,140	132.6p
Exclude
Group - non-underlying current tax			(26)	(3.0)p
Group - deferred tax	(12)	(1.4)p	12	1.4p
JVs & Funds - non-underlying current tax			2	0.2p
JVs & Funds - deferred tax	3	0.3p
Group - net valuation movement (including result on disposals)	(313)	(35.4)p	(501)	(58.3)p
Joint ventures and funds - net valuation movement (including result on disposals)	(270)	(30.6)p	(412)	(47.9)p
Amortisation of intangible assets	10	1.1p	15	1.7p
Fair value movement on non-hedge accounted derivatives	(3)	(0.3)p
EPRA Earnings per Share (EPS)	255	28.9p	230	26.7p
Calculation of EPRA NNNAV per share
			2011	2010
			£m	£m
EPRA NAV			5,101	4,407
Deferred tax arising on revaluation movements			(37)	(43)
Mark to market on effective cash flow hedges and related debt adjustments			(89)	(129)
Mark to market on debt			142	285
EPRA NNNAV			5,117	4,520
EPRA NNNAV per share			569p	517p
EPRA NNNAV is the EPRA NAV adjusted to reflect the fair value of the debt and derivatives and to include the deferred taxation on revaluations.

Supplementary Disclosures
Table B continued: EPRA Performance Measures
EPRA Net Initial Yield and 'topped-up' Net Initial Yield
	2011	2010
	£m	£m
Investment property - wholly owned	4,783	4,152
Investment property - share of joint ventures and funds	4,789	4,387
Less developments	(407)	(201)
Completed property portfolio	9,165	8,338
Allowance for estimated purchasers' costs	499	451
Gross up completed property portfolio valuation	9,664	8,789
Annualised cash passing rental income	512	486
Property outgoings	(8)	(6)
Annualised net rents	504	480
Rent expiration of rent free periods and fixed uplifts*	60	60
'Topped-up' net annualised rent	564	540
EPRA Net Initial Yield	5.2%	5.5%
EPRA 'topped-up' Net Initial Yield	5.8%	6.1%
Including fixed/minimum uplifts received in lieu of rental growth	21	22
Total 'topped-up' net rents	585	562
Overall 'topped-up' Net Initial Yield	6.1%	6.4%
'Topped-up' net annualised rent	564	540
ERV vacant space	15	26
Reversions	(21)	(33)
Total ERV	558	533
Net Reversionary Yield	5.8%	6.1%
* The period over which rent free periods expire is 3 years (2010: 3.5 years).
EPRA Vacancy Rate
	2011	2010
	£m	£m
Annualised potential rental value of vacant premises	15	26
Annualised potential rental value for the completed property portfolio	558	533
EPRA Vacancy Rate	2.7%	4.9%

Supplementary Disclosures
Table C: Segment information
Segment information
Operating segments
The Group allocates resources to investment and asset management according to the sectors it expects to perform over the medium term. Its two principal sectors are currently offices and retail. The relevant revenue, net rental income, assets and capital expenditure, being the measure of profit or loss and total assets used by the management of the business, are set out below:
		Offices		Retail		Other		Total
	2011	2010	2011	2010	2011	2010	2011	2010
	£m	£m	£m	£m	£m	£m	£m	£m
Revenue
British Land Group	98	194	193	187	22	26	313	407
Share of joint ventures and funds	107	44	199	193	3	3	309	240
Total	205	238	392	380	25	29	622	647
Net rental income
British Land Group	76	143	161	175	18	19	255	337
Share of joint ventures and funds	84	34	179	174			263	208
Total	160	177	340	349	18	19	518	545
Property assets (includes head lease liabilities)
British Land Group	1,660	1,487	2,935	2,477	188	188	4,783	4,152
Share of joint ventures and funds	1,417	1,249	3,360	3,125	12	13	4,789	4,387
Total	3,077	2,736	6,295	5,602	200	201	9,572	8,539
Other assets
British Land Group				10	404	635	404	645
Share of joint ventures and funds	98	91	187	236	28	20	313	347
Total	98	91	187	246	432	655	717	992
Capital expenditure
British Land Group	72	165	342	56	21	10	435	231
Share of joint ventures and funds	62	2	56	139			118	141
Total	134	167	398	195	21	10	553	372
Calculation of gross rental income
			Q4	Q3	Q2	Q1
			3 months ended				Year ended
			31 Mar	31 Dec	30 Sep	30 Jun	31 Mar	31 Mar
			2011	2010	2010	2010	2011	2010
			£m	£m	£m	£m	£m	£m
Rent receivable			132	127	123	123	505	538
Spreading of tenant incentives and guaranteed rent increases			5	6	9	12	32	23
Surrender premia			1	3			4
Gross rental income			138	136	132	135	541	561

 

END

 

 

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