Final Results - Part 3
British Land Co PLC
29 May 2002
PART 3
15. Net debt
2002 2001
£m £m
Secured on the assets of the Group
+ 6.5055% Secured Notes 2038 97.7 97.6
+ 5.920% Secured Notes 2035 59.2
8.875% First Mortgage Debenture Bonds 2035 246.6 246.5
9.375% First Mortgage Debenture Stock 2028 197.2 197.1
+ 7.743% Secured Notes 2025 19.6
10.5% First Mortgage Debenture Stock 2019/24 12.6 12.6
11.375% First Mortgage Debenture Stock 2019/24 20.4 20.4
+ 5.66% 135 Bishopsgate Securitisation 2018 1.9 1.8
+ 8.49% 135 Bishopsgate Securitisation 2018 7.1 7.1
662.3 583.1
Unsecured
+ Class A1 5.260% Unsecured Notes 2035 542.8
+ Class B 5.793% Unsecured Notes 2035 88.9
+ Class C Fixed Rate Unsecured Notes 2035 74.0
+ Class C2 6.4515% Unsecured Notes 2032 73.3 73.2
+ Class B 6.0875% Unsecured Notes 2031 219.8 219.6
+ Class A3 5.7125% Unsecured Notes 2031 146.5 146.4
+ Class A2 5.67% Unsecured Notes 2029 291.9 295.7
+ Class A2 (C) 6.457% Unsecured Notes 2025 157.0
+ Class B2 6.998% Unsecured Notes 2025 205.5
+ Class B3 7.243% Unsecured Notes 2025 20.6
+ Class A1 Fixed Rate Unsecured Notes 2024 317.5 317.2
** 8.875% Bonds 2023 147.6
+ 5.66% 135 Bishopsgate Securitisation 2018 24.3 25.2
+ 8.49% 135 Bishopsgate Securitisation 2018 94.5 97.2
+ Class A1 6.389% Unsecured Notes 2016 63.3
** 12.5% Bonds 2016 150.0
+ Class B1 7.017% Unsecured Notes 2016 97.0
+ Class C1 6.7446% Unsecured Notes 2014 171.0 170.8
+ Class D Fixed / Floating Rate Unsecured Notes 2014 98.2 127.4
+ Class A2 5.555% Unsecured Notes 2013 49.3
10.25% Bonds 2012 1.7 1.7
* 7.35% Senior US Dollar Notes 2007 97.8 97.8
Bank loans and overdrafts 240.4 894.2
3,075.3 2,764.0
Convertible Bonds
6% Subordinated Irredeemable Convertible Bonds 146.7 146.6
*** 6.5% Convertible Bonds 2007 323.0 317.3
469.7 463.9
Gross debt 4,207.3 3,811.0
Cash and deposits (366.9) (94.2)
Net debt 3,840.4 3,716.8
+ These borrowings are obligations of ringfenced, default remote, special
purpose companies, with no recourse to other companies or assets in the Group.
* These borrowings have been hedged into Sterling since the date of issue.
** These bonds were repurchased on 1 May 2001 (Note 4).
*** Notice has been given to redeem and cancel these bonds on 24 June 2002.
15. Net debt (continued)
Interest rate profile - including effect of derivatives 2002 2001
£m £m
Fixed rate 3,541.2 3,095.1
Capped rate 100.0 200.0
Variable rate (net of cash) 199.2 421.7
Net debt 3,840.4 3,716.8
All the above debt is effectively Sterling except for £101.0m (2001 - £160.2m)
of Euro debt of which £72.7m (2001 - £108.4m) is fixed and the balance floating.
At 31 March 2002 the weighted average interest rate of the Sterling fixed rate
debt is 6.84% (2001 - 7.13%). The weighted average period for which the rate is
fixed is 21.6 years. The Irredeemable Convertible Bond is treated as having a
life of 100 years for this calculation. The weighted average interest rate for
the Euro fixed rate debt is 3.85% and the weighted average period for which the
rate is fixed is 2.3 years. The floating rate debt is set for periods of the
Company's choosing at the relevant LIBOR (or similar) rate.
Total borrowings where any instalments are due after 31 March 2007 is £2,915.0m
(2006 - £1,614.9m).
2002 2001
£m £m
Maturity analysis of net debt
Repayable:
within one year and on demand 446.9 289.8
between: one and two years 151.1 283.1
two and five years 324.9 509.4
five and ten years 365.0 637.3
ten and fifteen years 418.3 381.0
fifteen and twenty years 459.9 197.6
twenty and twenty five years 630.7 382.2
twenty five and thirty years 845.8 555.9
thirty and thirty five years 418.0 428.1
Irredeemable 146.7 146.6
Gross debt 4,207.3 3,811.0
Cash (20.4) (29.2)
Term deposits (346.5) (65.0)
Total cash and deposits (366.9) (94.2)
Net debt 3,840.4 3,716.8
Maturity of committed undrawn borrowing facilities
Expiring:
Within one year 437.1 239.5
between: one and two years 161.8 219.5
two and three years 402.5 81.8
three and four years 425.0 252.5
four and five years 215.0 360.0
over five years 37.7 75.4
Total 1,679.1 1,228.7
15. Net debt (continued)
Comparison of market values and book values
2002 2001
Market Book Market Book
Value Value Difference Value Value Difference
£m £m £m £m £m £m
Fixed rate debt
Securitised debt 3,009.2 2,920.9 88.3 1,658.0 1,579.2 78.8
Other fixed rate debt 729.1 576.3 152.8 1,105.5 977.6 127.9
Convertible debt 492.8 469.7 23.1 492.5 463.9 28.6
Bank debt (net) 240.4 240.4 894.2 894.2
Cash and deposits (366.9) (366.9) (94.2) (94.2)
4,104.6 3,840.4 264.2 4,056.0 3,820.7 235.3
Derivatives
- unrecognised gains (4.4) (4.4) (49.0) (20.3) (28.7)
- unrecognised losses 44.1 44.1 25.4 25.4
39.7 39.7 (23.6) (20.3) (3.3)
Total* 4,144.3 3,840.4 303.9 4,032.4 3,800.4 232.0
* At 31 March 2001, this included the accrual of £83.6m for the premium payable
(net of the profit on the close out of associated derivatives of £20.3m) on the
repurchase of the unsecured bonds (£150m 12.5% Bonds 2016 and the £150m 8.875%
Bonds 2023) which was included in the accounts for the year to 31 March 2001
(see Note 4).
The market value and difference are shown before any tax relief. The
difference between book value and market value on the convertibles arises
principally from the British Land share price.
In accordance with Accounting Standards the book value of debt is par value
net of amortised issue costs. Short term debtors and creditors have been
excluded from the disclosures (other than the currency disclosures). The
valuations of the Broadgate and Meadowhall Notes have been undertaken by Morgan
Stanley. The valuations of 135 Bishopsgate Securitisations 2018 have been
undertaken by The Royal Bank of Scotland. The valuations of other fixed rate
debt and convertible debt have been undertaken by UBS Warburg. The bank debt has
been valued assuming it could be renegotiated at contracted margins. The
derivatives have been valued by the independent treasury advisor Record
Currency Management.
The Group uses interest rate swaps to manage its interest rate profile.
Changes in the fair value of instruments used as hedges are not recognised
in the financial statements until the hedged position matures.
Net gains of £4.8m (2001 - £33.9m) were recognised in the current year,
comprising gains of £17.7m (2001 - £118.5m) and losses of £12.9m (2001 -
£84.6m).
Of the unrecognised amount at 31 March 2002 £nil gains and £1.2m of losses are
expected to be realised in the next financial year (2001 - £0.1m; £nil) and
the balance in subsequent years.
15. Net debt (continued)
6% Subordinated Irredeemable Convertible Bonds
The £150 million 6% Subordinated Irredeemable Convertible Bonds carry a
Bondholder conversion right exercisable at any time into Ordinary Shares of the
Company at 500p (2001 - 500p) per share. The Company has the right to redeem,
at its discretion, the Bonds at par if after 9 April 2001 the average ordinary
share price attains 130% of the conversion price for a 30 day period and
after 9th April 2008 without conditions. The Company has the right to
redeem the remaining Bonds where 75% of the Bonds have been converted or
purchased or cancelled. If the Company elects to redeem the Bonds,
Bondholders have the right to convert into the underlying Ordinary Shares. The
Company has an option to exchange the Bonds for 6% Convertible Preference
Shares with the same conversion terms. The Company has a further option
to exchange the preference shares back to convertible bonds after these
preference shares have been in issue for six months. On conversion of the
entire issue into Ordinary Shares of the Company 30.0 million Ordinary
Shares would be issued.
6.5% Convertible Bonds 2007
The £323 million 6.5% Convertible Bonds 2007 carry a Bondholder right of
conversion, exercisable at any time, into Ordinary Shares of the company at
672p (2001 - 672p) per share. The Company has the right to redeem, at its
discretion, all or part of the Bonds at par on or after 17 June 2002. The
Company has the right to redeem the remaining Bonds where 75% of the
Bonds have been converted or purchased or cancelled. If the Company elects to
redeem the Bonds, Bondholders have the right to elect for conversion into
the underlying Ordinary Shares. On conversion of the entire issue into
Ordinary Shares of the Company 48.1 million Ordinary Shares would be issued.
On 16 May 2002 the Company gave notice to redeem the Bonds. The Bonds will be
redeemed and cancelled on 24 June 2002 and have therefore been classified
as Creditors due within one year.
16. Notes to the cash flow statement
Reconciliation of operating profit to net cash inflow from operating activities
2000 2000
(restated)
£m £m
Operating profit 363.6 373.8
Dividends received (5.1) (6.8)
Depreciation 1.3 0.6
Decrease in trading properties 6.3 15.7
Decrease (increase) in debtors 4.9 (29.4)
Increase in creditors 11.4 26.4
Net cash inflow from operating activities 382.4 380.3
Analysis of Group net debt
1 31
April Cash Non cash March
2001 flow movements 2002
£m £m £m £m
Cash at bank (29.2) 8.8 (20.4)
Overdraft 6.0 (1.7) 4.3
Net cash per cash flow statement (23.2) 7.1 (16.1)
Term debt 3,341.1 388.1 4.1 3,733.3
Convertible Bonds 463.9 5.8 469.7
Term deposits (65.0) (281.5) (346.5)
Group net debt 3,716.8 113.7 9.9 3,840.4
Reconciliation of net cash flow to movement in Group net debt
2001 2000
£m £m
Brought forward 3,716.8 3,762.3
Movement in net debt in the year
Decrease in cash 7.1 25.1
Cash inflow (outflow) from movement in debt 388.1 (78.0)
Cash outflow from term deposits (281.5) (1.0)
Changes resulting from cash flows 113.7 (53.9)
Other non cash movements 9.9 8.4
123.6 (45.5)
Carried forward 3,840.4 3,716.8
17. Net Asset Value per share
31 March 31 March 31 March 31 March
2002 2002 2001 2001
Adjusted Net Adjusted Net
Net Assets Net Assets
Shares Assets Shares Assets (restated)
m £m £m m £m £m
Net Asset Value (undiluted)
Shareholders' funds as shown on 518.4 4,107.9 4,107.9 518.2 3,914.5 3,914.5
balance sheet
FRS 19 capital allowance British Land 86.4 80.2
effects Group
Share of joint 12.4 9.3
ventures
98.8 89.5
Total external valuation
surplus on
development and trading
properties (note 8) 114.1 114.1 149.4 149.4
Net assets attributable to 4,320.8 4,222.0 4,153.4 4,063.9
ordinary shares
Net Asset Value per share (undiluted) 833p 814p 802p 784p
Fully diluted Net Asset Value
Net assets attributable to ordinary 518.4 4,320.8 4,222.0 518.2 4,153.4 4,063.9
shares
Adjust to fully diluted on conversion
of:
6% Irredeemable 30.0 146.7 146.7 30.0 146.6 146.6
Convertible Bonds
6.5% Convertible Bonds 48.1 323.0 323.0 48.1 317.3 317.3
2007
Net assets attributable to
fully diluted
ordinary shares 596.5 4,790.5 4,691.7 596.3 4,617.3 4,527.8
Fully diluted Net Asset Value per 803p 787p 774p 759p
share
The adjusted NAV includes the surplus of the external valuation over the book
value of both development and trading properties after adding back the FRS 19
deferred tax capital allowance provision (as described in note 14) which is not
expected to arise.
18. Reserves
Share Other Revaluation Profit Total
premium reserves reserve and loss
account
£m £m £m £m £m
At 1 April 2001 1,105.3 (1.9) 2,092.1 679.9 3,875.4
Prior year adjustment (see note 1) (90.5) (90.5)
Restated at 1 April 2001 1,105.3 (1.9) 2,092.1 589.4 3,784.9
Issues 0.9 0.9
Retained profit for the year 95.1 95.1
Realisation of prior year
revaluations (33.6) 33.6
Current year revaluation 107.6 107.6
Taxation on realisation of
prior year revaluations (9.7) (9.7)
Exchange movements on net
investments (3.5) (1.1) 4.1 (0.5)
At 31 March 2002 1,106.2 (5.4) 2,165.0 712.5 3,978.3
19. Contingent liabilities
Contingent liabilities of the Parent for guarantees to third parties amounted
to £33.0m (2001 - £33.0m).
20 Capital commitments
2002 2001
£m £m
British Land 419.7 374.6
Share of joint ventures (note 9) 56.2 50.4
475.9 425.0
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