1st Quarter Results - Part 2

RNS Number : 7147L

British Land Co PLC

04 August 2011

 



Consolidated Income Statement for the three month period ended 30 June 2011
Year ended 31 March 2011					Three months ended 30 June 2011			Three months ended 30 June 2010
Audited					Unaudited			Unaudited
Underlying	Capital				Underlying	Capital		Underlying	Capital
pre tax*	and other	Total			pre tax*	and other	Total	pre tax*	and other	Total
£m	£m	£m		Note	£m	£m	£m	£m	£m	£m
298		298	Gross rental and related income	2	80		80	71		71
255		255	Net rental and related income	2	67		67	61		61
15		15	Fees and other income	2	4		4	3		3
	(10)	(10)	Amortisation of intangible assets						(4)	(4)
117	264	381	Joint ventures and funds (see also below)		27	51	78	31	54	85
(61)		(61)	Administrative expenses		(17)		(17)	(13)		(13)
	321	321	Net valuation movement (includes profits & losses on disposals)	2		83	83		57	57
			Net financing costs
29	3	32	- financing  income		7		7	11		11
(99)	(4)	(103)	- financing charges		(23)	(1)	(24)	(29)		(29)
(70)	(1)	(71)			(16)	(1)	(17)	(18)		(18)
256	574	830	Profit on ordinary activities before taxation		65	133	198	64	107	171
			Taxation
	(2)	(2)	- current tax expense	2		(1)	(1)		(1)	(1)
	12	12	- deferred tax  income	2		1	1		2	2
	10	10		2					1	1
		840	Profit for the period after taxation attributable to shareholders of the Company				198			172

		95.7p	Earnings per share: basic	1			22.3p			19.8p
		95.2p	diluted	1			22.2p			19.7p
			Share of results of joint ventures and funds
117		117	Underlying profit before taxation		27		27	31		31
	270	270	Net valuation movement (includes profits & losses on disposals)			52	52		56	56
	(3)	(3)	Current tax expense						(1)	(1)
	(3)	(3)	Deferred tax expense			(1)	(1)		(1)	(1)
117	264	381		4	27	51	78	31	54	85
*As defined in note 1

Consolidated Balance Sheet as at 30 June 2011
31 March			30 June	30 June
2011			2011	2010
Audited			Unaudited	Unaudited
£m			£m	£m
	Assets
	Non-current assets
4,752	Investment and development properties	3	4,965	4,226
38	Owner-occupied property	3	39	35
4,790			5,004	4,261
	Other non-current assets
2,066	Investments in joint ventures and funds	4	2,121	1,620
51	Other investments	5	51	261
	Intangible assets			6
6,907			7,176	6,148
	Current assets
90	Debtors		139	104
203	Liquid investments	6	206	200
60	Cash and short-term deposits	6	94	66
353			439	370
7,260	Total assets		7,615	6,518
	Liabilities
	Current liabilities
(319)	Short-term borrowings and overdrafts	6	(389)	(135)
(333)	Creditors		(364)	(353)
(652)			(753)	(488)
	Non-current liabilities
(1,620)	Debentures and loans	6	(1,752)	(1,634)
(23)	Other non-current liabilities		(20)	(28)
(35)	Deferred tax liabilities		(34)	(46)
(1,678)			(1,806)	(1,708)
(2,330)	Total liabilities		(2,559)	(2,196)
4,930	Net assets		5,056	4,322
	Equity
224	Share capital		224	221
1,237	Share premium		1,237	1,240
(68)	Other reserves		(92)	(117)
3,537	Retained earnings		3,687	2,978
	Total equity attributable to shareholders
4,930	of the Company		5,056	4,322
567p	EPRA NAV per share*	1	583p	515p
* As defined in note 1

Consolidated Statement of Comprehensive Income
for the three month period ended 30 June 2011
Year ended		Three months ended	Three months ended
31 March		30 June	30 June
2011		2011	2010
Audited		Unaudited	Unaudited
£m		£m	£m
840	Profit for the period after taxation	198	172
	Other comprehensive income:
	(Losses) gains on cash flow hedges
(13)	- Group	(11)	(13)
18	- Joint ventures and funds revaluations	(17)	(18)
5		(28)	(31)
	Transferred (from) to the income statement (cash flow hedges)
6	- foreign currency derivatives		(1)
14	- interest rate derivatives	4	2
20		4	1
	Exchange differences on translation of foreign operations		3
(2)	Actuarial loss on pension scheme
23	Other comprehensive (loss) income for the period	(24)	(27)
863	Total comprehensive income for the period	174	145

Consolidated Statement of Cash Flows
for the three month period ended 30 June 2011
Year			Three months	Three months
ended			ended	ended
31 March			30 June	30 June
2011			2011	2010
Audited			Unaudited	Unaudited
£m		Note	£m	£m
227	Rental income received from tenants		67	56
21	Fees and other income received		4	2
(66)	Operating expenses paid to suppliers and employees		(25)	(20)
182	Cash generated from operations		46	38
(96)	Interest paid		(12)	(10)
19	Interest received		2	1
105	Distributions received from joint ventures and funds	4	18	30
210	Net cash inflow from operating activities		54	59
	Cash flows from investing activities
(62)	Development and other capital expenditure		(18)	(17)
(379)	Purchase of investment properties		(125)	(29)
68	Sale of investment properties			2
22	Deferred consideration received			13
220	Loans repaid by Broadgate joint venture
(123)	Investment in and loans to joint ventures and funds		(19)	(2)
12	Capital distributions received from joint ventures and funds
2	Indirect taxes in respect of investing activities			2
(240)	Net cash outflow from investing activities		(162)	(31)
	Cash flows from financing activities
(139)	Dividends paid		(49)	(32)
(14)	Movement in other financial liabilities		(6)	(2)
171	Increase (decrease) in bank and other borrowings		197	(1)
18	Net cash inflow (outflow) from financing activities		142	(35)
(12)	Net increase (decrease) in cash and cash equivalents		34	(7)
72	Cash and cash equivalents at 1 April		60	72
60	Cash and cash equivalents at 30 June		94	65
	Cash and cash equivalents consists of:
60	Cash and short-term deposits		94	66
	Overdrafts			(1)
60			94	65

Consolidated Statement of Changes in Equity
for the three month period ended 30 June 2011
			Hedging &
	Share	Share	translation	Revaluation	Retained
	capital*	premium	reserve	reserve	earnings	Total
	£m	£m	£m	£m	£m	£m
Three month movements in Equity
Balance at 1 April 2011	224	1,237	(34)	(34)	3,537	4,930
Total comprehensive income for the period			(7)	(17)	198	174
Adjustment for share and share option awards					2	2
Dividends payable in the three month period					(58)	(58)
Adjustment for scrip dividend element					8	8
Balance at 30 June 2011	224	1,237	(41)	(51)	3,687	5,056
Balance at 1 April 2010	220	1,241	(38)	(52)	2,837	4,208
Total comprehensive income for the period			(12)	(15)	172	145
Adjustment for share and share option awards					1	1
Dividends payable in the three month period					(56)	(56)
Adjustment for scrip dividend element	1	(1)			24	24
Balance at 30 June 2010	221	1,240	(50)	(67)	2,978	4,322
Prior year movements in Equity
Balance at 1 April 2010	220	1,241	(38)	(52)	2,837	4,208
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 the year					(228)	(228)
Adjustment for scrip dividend element					81	81
Balance at 31 March 2011	224	1,237	(34)	(34)	3,537	4,930
* See note 11 for a summary of the number of shares in issue

Notes to the accounts (unaudited)
1.     Performance measures
Year ended					Three months ended		Three months ended
31 March 2011					30 June 2011		30 June 2010
Earnings	Pence per share	Earnings per share (diluted)			Earnings	Pence per share	Earnings	Pence per share
£m					£m		£m
256		Underlying pre tax profit - income statement			65		64
(5)		Tax charge relating to underlying profit			(1)		(2)
251	28.5p	Underlying earnings per share			64	7.2p	62	7.1p
8		Mark to market on liquid investments (held			3		5
		for trading assets)
(4)		Non-recurring items*
255	28.9p	EPRA earnings (diluted) per share			67	7.5p	67	7.7p
840	95.2p	Profit for the period after taxation			198	22.2p	172	19.7p
*Non-recurring items in the year ended 31 March 2011 of £4m relate to fair value adjustments on the buy back of Group debentures                 The European Public Real Estate Association (EPRA) issued Best Practices Recommendations most recently in October 2010, which gives guidelines for performance measures.  The 30 June 2010 comparatives have been presented to be in line with these recommendations.  The EPRA earnings (diluted) 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 three month period was: basic: 887m (year ended 31 March 2011: 878m; three months ended 30 June 2010: 869m); diluted for the effect of share options: 893m (year ended 31 March 2011: 882m; three months ended 30 June 2010: 873m).  Basic undiluted earnings per share for the three month period was 22.3p (year ended 31 March 2011: 95.7p; three months ended 30 June 2010: 19.8p). Earnings per share shown in the table above are diluted.
31 March							30 June	30 June
2011		Net asset value (NAV)					2011	2010
£m							£m	£m
4,930		Balance sheet net assets					5,056	4,322
37		Deferred tax arising on revaluation movements					37	42
89		Mark to market on effective cash flow hedges and related debt adjustments					116	152
45		Dilution effect of share options					53	45
5,101		EPRA NAV					5,262	4,561
567p		EPRA NAV per share					583p	515p
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 30 June 2011, the number of shares in issue was: basic: 886m (31 March 2011: 885m; 30 June 2010: 872m); diluted for the effect of share options: 902m (31 March 2011: 899m; 30 June 2010: 886m).
REIT total return per share for the three months ended 30 June 2011 of 4.0% includes dividends paid of 6.5p (see note 7) in addition to the increase in EPRA NAV of 16p. Total return per share for the year ended 31 March 2011 was 17.7%.

2.     Income statement notes
			Three months	Three months
Year ended			ended	ended
31 March			30 June	30 June
2011			2011	2010
£m			£m	£m
	Gross and net rental income
227	Rent receivable		60	57
32	Spreading of tenant incentives and guaranteed rent increases		10	7
3	Surrender premia
262	Gross rental income		70	64
36	Service charge income		10	7
298	Gross rental and related income		80	71
(36)	Service charge expenses		(10)	(7)
(7)	Property operating expenses		(3)	(3)
255	Net rental and related income		67	61
	Fees and other income
11	Performance & management fees (from funds and joint ventures)		4	3
4	Other fees and commissions
15			4	3
	Net revaluation movements on property and investments
	Income statement
297	Revaluation of properties		80	53
20	Result on property disposals			(1)
8	Revaluation of investments		3
(4)	Other revaluation movements			5
321			83	57
270	Share of valuation movements of joint ventures and funds (note 4)		52	56
591			135	113
	Tax (expense) income
(1)	Current tax:	UK corporation tax (30 June 2011: 28%; 30 June 2010: 26%)	(1)	(1)
(1)		Foreign tax
(2)			(1)	(1)
(2)	Total current tax expense		(1)	(1)
12	Deferred tax on revaluations		1	2
10	Group total taxation (net)			1
(6)	Attributable to joint ventures and funds		(1)	(2)
4	Total taxation		(1)	(1)
Tax expense attributable to underlying profits for the three months ended 30 June 2011 was £1m (year ended 31 March 2011: £5m; three months ended 30 June 2010: £2m).

3.     Property
Total property interests are £9,857m at 30 June 2011 comprising properties held by the Group of £4,997m, share of properties held by funds of £935m and share of properties held by joint ventures of £3,925m. Properties were valued on the basis of market value, supported by market evidence, in accordance with the Appraisal and Valuation Standards published by The Royal Institution of Chartered Surveyors.
31 March					30 June	30 June
2011					2011	2010
£m					£m	£m
4,752	Investment properties				4,965	4,226
38	Owner-occupied property				39	35
4,790	Carrying value of properties on balance sheet				5,004	4,261
(7)	Head lease liabilities				(7)	(7)
4,783	Total British Land Group property portfolio valuation				4,997	4,254
At 30 June 2011 Group properties valued at £2,383m were subject to a security interest (31 March 2011: £2,850m; 30 June 2010: £2,688m).
Interest capitalised on development expenditure for the three months ended 30 June 2011 was £1m (year ended 31 March 2011 £3m; three months ended 30 June 2010: £1m).
4.     Joint ventures and funds
Summary of British Land's share of investments in joint ventures and funds at 30 June 2011
		Underlying
		profit
		(three	Net	Property	Other	Gross
		months)	Investment	assets	assets	liabilities
		£m	£m	£m	£m	£m
Share of funds		6	495	935	109	(549)
Share of joint ventures		21	1,626	3,925	206	(2,505)
Total		27	2,121	4,860	315	(3,054)
PREF, a fund owning a portfolio of retail property in Europe (in which British Land has a net investment of £110 million), has a €173 million syndicated bank loan which matures on 17 August 2011.  Discussions are ongoing with a number of banks, including the existing lenders, in relation to its refinancing or extension and other alternatives are being explored.  The PREF borrowings are non-recourse to the Group. At 30 June 2011 the investment in joint ventures included within the total net investment in joint ventures and funds was £1,626m (31 March 2011: £1,573m; 30 June 2010: £1,169m).
Amounts owed to joint ventures at 30 June 2011 were £53m (31 March 2011: £55m; 30 June 2010: £36m).
British Land's share of the results of joint ventures and funds
Year					Three months	Three months
ended					ended	ended
31 March					30 June	30 June
2011					2011	2010
£m					£m	£m
279	Gross rental income				68	71
263	Net rental and related income				65	67
(4)	Other income and expenditure				(2)	(1)
(142)	Net financing costs				(36)	(35)
117	Underlying profit before taxation				27	31
270	Net valuation and disposal movements				52	56
387	Profit on ordinary activities before taxation				79	87
(3)	Current tax expense					(1)
(3)	Deferred tax expense				(1)	(1)
381	Profit on ordinary activities after taxation				78	85
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 results.

4.     Joint ventures and funds (continued)
Operating cash flows of joint ventures and funds
Year		Three months	Three months
ended		ended	ended
31 March		30 June	30 June
2011		2011	2010
£m		£m	£m
280	Rental income received from tenants	71	66
3	Fees and other income received		1
(30)	Operating expenses paid to suppliers and employees	(12)	(8)
253	Cash generated from operations	59	59
(147)	Interest paid	(36)	(37)
(5)	UK corporation tax paid	(2)	(1)
101	Cash inflow from operating activities	21	21
	Cash inflow from operating activities deployed as:
(4)	Surplus cash (distributed by) retained within joint ventures and funds	3	(9)
105	Total distributed to British Land	18	30
101		21	21
5.     Other investments
Other investments include the investment in the HUT convertible bond of £43m (31 March 2011: £43m).  At 30 June 2010 there was a £209m secured commercial loan to the Bluebutton joint venture; this was repaid during the year ended 31 March 2011.

6.     Net Debt
31 March					30 June			30 June
2011					2011			2010
£m					£m			£m
1,012	Debentures				1,017			1,165
472	Bank loans and overdrafts				669			143
455	Other bonds and loan notes				455			461
1,939	Gross debt				2,141			1,769
49	Interest rate and currency derivative liabilities				69			64
(11)	Interest rate and currency derivative assets				(30)			(16)
1,977					2,180			1,817
(203)	Liquid investments				(206)			(200)
(60)	Cash and short-term deposits				(94)			(66)
1,714	Net debt				1,880			1,551
Gross debt includes £389m due within one year at 30 June 2011 (31 March 2011: £319m; 30 June 2010: £135m).
Undrawn committed bank facilities at 30 June 2011 amounted to £1,845m.
The two financial covenants applicable to the Group unsecured debt are:
Net Borrowings not to exceed 175% of Adjusted Capital and Reserves.
At 30 June 2011 the ratio is 38%:
i. Net Borrowings are £2,127m, being the principal amount of gross debt of £2,138m plus amounts owed to joint ventures of £53m and TPP Investments Ltd of £30m (see note 9), less the cash and short-term deposits of £94m; and
ii. Adjusted Capital and Reserves are £5,557m, being share capital and reserves of £5,056m (see Consolidated Statement of Changes in Equity), adjusted for £37m of deferred tax (see note 1), £348m exceptional refinancing charges (see below) and £116m mark to market on interest rate swaps (see note 1); and
Net Unsecured Borrowings not to exceed 70% of Unencumbered Assets.
At 30 June 2011 the ratio is 25%:
i. Net Unsecured Borrowings are £832m, being the principal amount of gross debt of £2,138m plus amounts owed to joint ventures of £53m less cash and deposits not subject to a security interest of £90m less the principal amount of secured and non-recourse borrowings of £1,269m; and
ii. Unencumbered Assets are £3,366m being properties of £4,997m (see note 3) plus investments in joint ventures and funds of £2,121m (see note 4), other investments of £257m (see balance sheet: liquid investments of £206m and other investments of £51m) less investments in joint ventures of £1,626m (see note 4) and encumbered assets of £2,383m (see note 3).
In calculating Adjusted Capital and Reserves for the purpose of the unsecured debt financial covenants, there is an adjustment of £348m to reflect the cumulative net amortised exceptional items relating to the refinancing in the years ending 31 March 2005, 2006 and 2007.
The Group Loan to Value ratio at 30 June 2011 is 26%, being gross debt of £2,141m less cash, short-term deposits and liquid investments of £300m, divided by total Group property of £4,997m (see note 3) plus investments in joint ventures and funds of £2,121m (balance sheet) and other investments of £51m (balance sheet).
7.     Dividends
The first quarter dividend of 6.5 pence per share, totalling £58m, is payable on 11 November 2011 to shareholders on the register at close of business on 7 October 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 5 October 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 elect to receive dividends gross.  Please refer to our website (www.britishland.com) for details.
The 2011 fourth quarter PID dividend of 6.5 pence per share, totalling £58m, is payable on 12 August 2011.
In respect of the 2011 third quarter PID dividend of 6.5 pence per share, totalling £58m which was paid on 13 May 2011, 16% of shareholders opted for the Scrip Dividend Alternative.  The total cash paid by the Group was £50m, being £41m paid to shareholders and £9m of withholding tax.  A cash saving of £8m resulted from settling the balance by issuing of shares.
The Consolidated Statement of Changes in Equity shows total dividends paid in the period of £58m being the third quarter 2011 dividend disclosed above.
8.     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
Three months ended 30 June
Revenue		26	24	51		44	7		6	84	74
Net rental income		19	17	44		39	4		5	67	61
Segment assets		2,886	1,892	3,998		3,773	731		853	7,615	6,518
Capital expenditure		34	36	14		3	76			124	39
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 funds and joint ventures. No customer exceeds 10% of the Group's revenues.
Segment assets include the Group's investment in joint ventures and funds of £2,121m (31 March 2011: £2,066m; 30 June 2010: £1,620m), property assets of £5,004m (31 March 2011: £4,790m; 30 June 2010: £4,261m), intangible assets of £nil (31 March 2011: £nil; 30 June 2010: £6m), other investments of £51m (31 March 2011: £51m; 30 June 2010: £261m), debtors of £345m (31 March 2011: £293m; 30 June 2010: £304m) and cash of £94m (31 March 2011: £60m; 30 June 2010: £66m).
9.     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 (31 March 2011: £30m, 30 June 2010: £23m) and recourse is only to the partnership assets.
10.     Related party transactions
Details of transactions with joint ventures and funds are given in notes 2 and 9. Amounts owed to joint ventures are detailed in note 4.
There have been no material changes in the related party transactions described in the last annual report.
11.     Note to the Consolidated Statement of Changes in Equity
At 30 June 2011, of the issued 25p ordinary shares, 1m were held in the ESOP Trust (31 March 2011: 1m; 30 June 2010: 2m), 11m were held as Treasury shares (31 March 2011: 11m; 30 June 2010: 11m) and 886m shares were in free issue (31 March 2011: 885m; 30 June 2010: 872m). All shares are fully paid.
12.     Basis of preparation
The financial information for the year ended 31 March 2011 does not constitute statutory accounts as defined in section 434 of the Companies Act 2006. A copy of the statutory accounts for that year has been delivered to the Registrar of Companies. The auditor report on those accounts was not qualified, did not include a reference to any matters to which the auditors drew attention by way of emphasis without qualifying the report, and did not contain statements under section 498(2) or (3) of the Companies Act 2006.
The financial information included in this announcement has been prepared on a going concern basis using accounting policies consistent with International Financial Reporting Standards (IFRS) and in accordance with IAS 34 'Interim Financial Reporting'. The same accounting policies, estimates, presentation and methods of computation are followed in the quarterly report as applied in the Group's latest annual audited financial statements. The current period financial information presented in this document is unaudited.
The Group's business activities, financial position, cash flows, liquidity position and financing structure are discussed on pages 4 to 12. The Directors have a reasonable expectation that the company has adequate resources to continue in operational existence for the foreseeable future. Thus they continue to adopt the going concern basis of accounting in preparing the financial statements.
The interim financial information was approved by the Board on 3 August 2011.

Supplementary Disclosures
Table A: REIT Income and Capital Return
Summary income statement based on proportional consolidation for the period ended 30 June 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				Three months ended 30 June 2011			Three months ended 30 June 2010
Group	JVs &	Prop		Group	JVs &	Prop	Group	JVs &	Prop
	funds	Consol			funds	Consol		funds	Consol
£m	£m	£m		£m	£m	£m	£m	£m	£m
262	279	541	Gross rental income	70	68	138	64	71	135
(7)	(16)	(23)	Property operating expenses	(3)	(3)	(6)	(3)	(4)	(7)
255	263	518	Net rental income	67	65	132	61	67	128
(61)	(7)	(68)	Administrative expenses	(17)	(2)	(19)	(13)	(2)	(15)
15	3	18	Fees & other income	4		4	3	1	4
209	259	468	Profit before interest and tax	54	63	117	51	66	117
(70)	(142)	(212)	Net  interest	(16)	(36)	(52)	(18)	(35)	(53)
139	117	256	Underlying profit before tax	38	27	65	33	31	64
		28.5p	Underlying earnings per share - diluted basis			7.2p			7.1p
The underlying earnings per share is calculated on underlying profit before taxation of £65m, tax attributable to underlying profits of £1m and 893m shares on a diluted basis, for the three months ended 30 June 2011.
Quarterly summary
Year ended					Three months ended			Three months ended
31 March							30 June		30 June
2011							2011		2010
£m							£m		£m
	REIT Income Return
541	Gross rental income						138		135
(23)	Property operating expenses						(6)		(7)
518	Net rental income						132		128
(68)	Administrative expenses						(19)		(15)
18	Fees and other income						4		4
468	Ungeared income return						117		117
(212)	Net interest						(52)		(53)
256	Underlying profit before taxation						65		64
(5)	Underlying tax						(1)		(2)
251	REIT income return						64		62
	REIT Capital Return
591	Valuation movement						135		113
(1)	Other capital & tax (net)*						12		11
590	REIT capital return						147		124
841	REIT total return						211		186
*includes other comprehensive income, movement in dilution of share options and the movement in items excluded for EPRA NAV.

Supplementary Disclosures (continued) Table A (continued): EPRA Net Assets Summary balance sheet based on proportional consolidation as at 30 June 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. EPRA Net assets 31 March 2011 Group Share of joint ventures & funds Share options Deferred tax Mark to Market of interest rate swaps Head Lease EPRA Net assets 30 June 2011 EPRA Net assets 30 June 2010 £m £m £m £m £m £m £m £m £m 6,295 Retail properties 2,961 3,389 (9) 6,341 5,632 3,077 Office properties 1,833 1,473 (6) 3,300 2,846 200 Other properties 210 6 216 204 9,572 Total properties 5,004 4,868 (15) 9,857 8,682 Investments in joint ventures and funds 2,121 (2,121) 51 Other investments 51 51 156 Intangible assets 6 (205) Other net (liabilities) assets (240) (38) 53 37 (3) 15 (176) (231) (4,317) Net debt (1,880) (2,709) 119 (4,470) (4,052) 5,101 Net assets 5,056 53 37 116 5,262 4,561 567p EPRA NAV per share (note 1) 583 p 515 p EPRA Net Assets Movement Year ended Three months ended Three months ended 31 March 2011 30 June 2011 30 June 2010 £m Pence per share £m Pence per share £m Pence per share 4,407 504 p Opening EPRA NAV 5,101 567 p 4,407 504 p 251 29 p REIT income return 64 7 p 62 7 p 590 60 p REIT capital return 147 15 p 124 10 p (147) (26) p Dividend paid (50) (6) p (32) (6) p ` 5,101 567 p Closing EPRA NAV 5,262 583 p 4,561 515 p

Supplementary Disclosures (continued) Table B: EPRA Performance Measures EPRA Performance measures summary table Three months Three months Year ended ended ended 31 March 2011 30 June 2011 30 June 2010 £m Pence per share £m Pence per share £m Pence per share 255 28.9 p EPRA Earnings  (diluted) 67 7.5 p 67 7.7 p 5,101 567 p EPRA NAV 5,262 583 p 4,561 515 p 5,117 569 p EPRA NNNAV 5,232 580 p 4,539 512 p 5.2 % EPRA Net Initial Yield 5.2 % 5.8 % EPRA 'topped-up' Net Initial Yield 5.8 % 2.7 % EPRA Vacancy Rate 2.7 % Calculation of EPRA earnings (diluted) per share Three months Three months Year ended ended ended 31 March 2011 30 June 2011 30 June 2010 £m Pence per share £m Pence per share £m Pence per share 840 95.2 p Profit for the period after taxation 198 22.2 p 172 19.7 p Exclude Group - non-underlying current tax (12) (1.4) p Group - deferred tax (1) (0.1) p (2) (0.2) p JVs & Funds - non-underlying current tax 3 0.3 p JVs & Funds - deferred tax 1 0.1 p 1 0.1 p (313) (35.4) p Group - net valuation movement (including result on disposals) (80) (9.0) p (52) (5.9) p (270) (30.6) p Joint ventures and funds - net valuation movement (including result on disposals) (52) (5.8) p (56) (6.5) p 10 1.1 p Amortisation of intangible assets 4 0.5 p (3) (0.3) p Fair value movement on non-hedge accounted derivatives 1 0.1 p 255 28.9 p EPRA Earnings (diluted) per Share (EPS) 67 7.5 p 67 7.7 p Calculation of EPRA NNNAV per share Year Three months Three months ended ended ended 31 March 30 June 30 June 2011 2011 2010 £m £m £m 5,101 EPRA NAV 5,262 4,561 (37) Deferred tax arising on revaluation movements (37) (42) (89) Mark to market on effective cash flow hedges and related debt adjustments (116) (155) 142 Mark to market on debt 123 175 5,117 EPRA NNNAV     5,232 4,539 569p EPRA NNNAV per share 580p 512p 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 (continued)
Table B (continued): EPRA Performance Measures
EPRA Net Initial Yield and 'topped-up' Net Initial Yield
Year ended			Three months ended
31 March 2011			30 June 2011
£m			£m
4,783		Investment property - wholly owned	4,997
4,789		Investment property - share of joint  ventures and funds	4,860
(407)		Less developments	(500)
9,165		Completed property portfolio	9,357
499		Allowance for estimated purchasers' costs	509
9,664		Gross up completed property portfolio valuation	9,866
512		Annualised cash passing rental income	518
(8)		Property outgoings	(8)
504		Annualised net rents	510
60		Rent expiration of rent free periods and fixed uplifts*	58
564		'Topped-up' net annualised rent	568
5.2	%	EPRA Net Initial Yield	5.2	%
5.8	%	EPRA 'topped-up' Net Initial Yield	5.8	%
21		Including fixed/minimum uplifts received in lieu of rental growth	24
585		Total 'topped-up' net rents	592
6.1	%	Overall 'topped-up' Net Initial Yield	6.0	%
564		'Topped-up' net annualised rent	568
15		ERV vacant space	15
(21)		Reversions	(17)
558		Total ERV	566
5.8	%	Net Reversionary Yield	5.7	%
		*The periods over which rent free period expire is 2.5 years (March 2011: 3 years)
		EPRA Vacancy Rate
Year ended 31 March 2011			Three months ended June 2011
£m			£m
15		Annualised potential rental value of vacant premises	15
558		Annualised potential rental value for the completed property portfolio	566
2.7	%	EPRA Vacancy Rate	2.7	%
Table C: Calculation of gross rental income
Year ended 31 March			Three months ended 30 June		Three months ended 30 June
2011			2011		2010
£m			£m		£m
505		Rent receivable	128		123
32		Spreading of tenant incentives and guaranteed rent increases	10		12
4		Surrender premia
541		Gross rental income	138		135

INDEPENDENT REVIEW REPORT TO THE BRITISH LAND COMPANY PLC
We have been engaged by the company to review the condensed set of financial statements in the quarterly financial report for the three months ended 30 June 2011 which comprises the Consolidated Income Statement, the Consolidated Balance Sheet, the Consolidated Statement of Comprehensive Income, the Consolidated Statement of Cash flows, the Consolidated Statement of Changes in Equity and related notes 1 to 12. We have read the other information contained in the quarterly financial report and considered whether it contains any apparent misstatements or material inconsistencies with the information in the condensed set of financial statements.
This report is made solely to the company in accordance with International Standard on Review Engagements (UK and Ireland) 2410 "Review of Interim Financial Information Performed by the Independent Auditor of the Entity" issued by the Auditing Practices Board.  Our work has been undertaken so that we might state to the company those matters we are required to state to it in an independent review report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company, for our review work, for this report, or for the conclusions we have formed.
Directors' responsibilities
The quarterly financial report is the responsibility of, and has been approved by, the directors.  The directors are responsible for preparing the quarterly financial report in accordance with the Disclosure and Transparency Rules of the United Kingdom's Financial Services Authority.
As disclosed in note 12, the annual financial statements of the group are prepared in accordance with IFRSs as adopted by the European Union.  The condensed set of financial statements included in this quarterly financial report has been prepared in accordance with International Accounting Standard 34, "Interim Financial Reporting", as adopted by the European Union.
Our responsibility
Our responsibility is to express to the Company a conclusion on the condensed set of financial statements in the quarterly financial report based on our review.
Scope of Review
We conducted our review in accordance with International Standard on Review Engagements (UK and Ireland) 2410 "Review of Interim Financial Information Performed by the Independent Auditor of the Entity" issued by the Auditing Practices Board for use in the United Kingdom. A review of quarterly information consists of making inquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing (UK and Ireland) and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.
Conclusion
Based on our review, nothing has come to our attention that causes us to believe that the condensed set of financial statements in the quarterly financial report for the three months ended 30 June 2011 is not prepared, in all material respects, in accordance with International Accounting Standard 34 as adopted by the European Union and the Disclosure and Transparency Rules of the United Kingdom's Financial Services Authority.
Deloitte LLP
Chartered Accountants and Statutory Auditor
London, United Kingdom
3 August 2011

 

END

 

 

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