Final Results - Part Two
British Land Co PLC
28 May 2003
PRELIMINARY ANNOUNCEMENT OF FINANCIAL RESULTS
For the year ended 31 March 2003
Consolidated Profit & Loss Account
for the year ended 31 March 2003
Note 2003 2002
£m £m
Gross rental income 551.6 513.8
Less share of joint ventures 9 (102.2) (98.5)
Gross rental income - Group 449.4 415.3
Operating profit 2 380.4 363.6
Share of operating profits of joint ventures 9 92.3 88.6
Disposal of fixed assets - including amounts from joint ventures (note 9) 3 26.1 37.0
Profit on ordinary activities before interest 498.8 489.2
Net interest payable 4 (326.4) (317.9)
Profit on ordinary activities before taxation 172.4 171.3
Taxation 5 (33.1) (11.9)
Profit on ordinary activities after taxation 139.3 159.4
Ordinary dividends 6 (65.9) (64.3)
Retained profit for the year 73.4 95.1
Basic earnings per share 7 27.2 p 30.8 p
Diluted earnings per share 7 26.9 p 30.2 p
Adjusted basic earnings per share * 7 27.4 p 32.1 p
Adjusted diluted earnings per share * 7 27.1 p 31.5 p
Dividend per share 6 13.4 p 12.4 p
The results stated above relate to the continuing activities of the Group.
* Adjusted to exclude the capital allowance effects of FRS 19.
Group Balance Sheet
as at 31 March 2003
Note 2003 2002
£m £m
Fixed assets
Investment properties 8 8,085.2 7,528.3
Investments in joint ventures
Share of gross assets 9 1,470.3 1,689.6
Share of gross liabilities 9 (770.1) (962.4)
700.2 727.2
Other investments 10 26.6 12.4
Negative goodwill 16 (9.2)
8,802.8 8,267.9
Current assets
Trading properties 8 46.2 47.0
Debtors 11 55.6 45.6
Cash and deposits 15 139.7 366.9
Total current assets 241.5 459.5
Creditors due within one year
Convertible bonds 15 (323.0)
Other creditors 12 (555.9) (446.5)
(555.9) (769.5)
Net current liabilities (314.4) (310.0)
Total assets less current liabilities 8,488.4 7,957.9
Creditors due after one year 13 (4,119.6) (3,613.7)
Convertible bonds 15 (146.8) (146.7)
Provisions for liabilities and charges 14 (92.7) (89.6)
Net Assets 4,129.3 4,107.9
Capital and reserves
Called up share capital 19 122.1 129.6
Share premium 19 1,107.7 1,106.2
Capital redemption reserve 19 7.9 0.3
Other reserves 19 (8.0) (5.7)
Revaluation reserve 19 2,225.9 2,165.0
Profit and loss account 19 673.7 712.5
Shareholders' funds 4,129.3 4,107.9
Adjusted Net Asset Value (NAV) per share Basic 18 884 p 833 p
Fully diluted 18 860 p 803 p
(The NAV per share includes the external valuation surplus on development and trading properties but excludes the
capital allowance effects of FRS 19.)
Approved by the Board on 27 May 2003
Other Consolidated Primary Statements
for the year ended 31 March 2003
2003 2002
£m £m
Statement of total recognised gains and losses
Profit on ordinary activities after taxation 139.3 159.4
Unrealised surplus on revaluation:
- investment properties 12.6 58.9
- joint ventures 63.4 48.8
- other investments (0.1) (0.1)
75.9 107.6
Exchange movements on net investments 0.6 (0.5)
Taxation on realisation of prior year revaluations (9.7)
Total recognised gains and losses relating to
the financial year 215.8 256.8
2003 2002
£m £m
Note of historical cost profits and losses
Profit on ordinary activities before taxation 172.4 171.3
Realisation of prior year revaluations 17.7 33.6
Taxation on realisation of prior year revaluations (9.7)
Historical cost profit on ordinary activities before taxation 190.1 195.2
Historical cost profit for the year retained after
taxation and dividends 91.1 119.0
Other Consolidated Primary Statements (continued)
for the year ended 31 March 2003
2003 2002
£m £m
Reconciliation of movements in
shareholders' funds
Profit on ordinary activities after taxation 139.3 159.4
Ordinary dividends (65.9) (64.3)
Retained profit for the year 73.4 95.1
Revaluation of investment properties and investments 75.9 107.6
Exchange movements on net investments 0.6 (0.5)
Taxation on realisation of prior year revaluations (9.7)
149.9 192.5
Shares issued 1.6 0.9
Purchase and cancellation of own shares (130.1)
Increase in shareholders' funds 21.4 193.4
Opening shareholders' funds 4,107.9 3,914.5
Closing shareholders' funds 4,129.3 4,107.9
Group Cash Flow Statement
for the year ended 31 March 2003
Note 2003 2002
£m £m
Net cash inflow from operating activities 17 373.6 382.4
Dividends received from joint ventures 22.6 25.2
Returns on investments and servicing of finance
Interest received 20.9 59.9
Interest paid (303.6) (366.1)
Dividends received 0.3 5.1
(282.4) (301.1)
Taxation
UK corporation tax paid (6.1) (7.6)
Foreign tax paid (12.7) (0.1)
(18.8) (7.7)
Net cash inflow from operating activities and
investments after finance charges and taxation 95.0 98.8
Capital expenditure and financial investment
Purchase of investment properties and development expenditure (371.0) (426.1)
Purchase of investments (15.4) (8.5)
Sale of investment properties 76.6 148.9
Sale of investments 158.4
(309.8) (127.3)
Acquisitions and disposals
Purchase of interest in subsidiary companies 16 (42.7)
Cash at bank acquired with interest in subsidiary companies 5.8
Investment in and loans to joint ventures (14.9) (176.0)
Sale of shares in and loans repaid by joint ventures 91.0 150.5
39.2 (25.5)
Equity dividends paid (65.1) (60.6)
Net cash outflow before management
of liquid resources and financing (240.7) (114.6)
Management of liquid resources
Decrease (increase) in term deposits 254.8 (281.5)
Financing
Issue of ordinary shares 1.3 0.9
Purchase and cancellation of own shares (130.1)
Repurchase of 6.5% Convertible Bonds 2007 (322.7)
Repurchase of bonds (300.0)
Issue of Sainsbury supermarkets securitised debt 575.0
Issue of Meadowhall Shopping Centre securitised debt 825.0
Increase (decrease) in bank and other borrowings 463.2 (711.9)
11.7 389.0
Increase (decrease) in cash 17 25.8 (7.1)
Notes to the financial information
for the year ended 31 March 2003
1. Basis of preparation
The financial information is prepared on the basis of the accounting policies set out in the Group's financial
statements for the year ended 31 March 2002, consistently applied in all material respects.
The financial information set out in the announcement does not constitute the company's statutory accounts for the
years ended 31 March 2003 or 2002, but is derived from those accounts. Statutory accounts for 2002 have been
delivered to the Registrar of Companies and those for 2003 will be delivered following the company's annual general
meeting. The auditors have reported on those accounts; their reports were unqualified and did not contain
statements under s237(2) or (3) Companies Act 1985.
2. Operating profit 2003 2002
£m £m
Gross rental income 449.4 415.3
Rents payable (2.1) (3.6)
Other property outgoings (29.1) (25.1)
Net rental income 418.2 386.6
Profit on property trading (see below) 0.6 6.8
Other income 4.2 9.5
Administrative expenses (42.6) (39.3)
Operating profit 380.4 363.6
Profit on property trading
Sale proceeds 2.1 16.2
Cost of sales (1.5) (9.4)
Profit on property trading 0.6 6.8
3. Profit on the disposal of fixed assets
2003 2002
£m £m
British Land Group 5.7 39.5
Share of joint ventures 20.4 (2.5)
26.1 37.0
The profit for the year ended 31 March 2002 includes £25.6m arising on the disposal of shares held in Haslemere
N.V.
4. Net interest payable
2003 2002
£m £m
British Land Group
Payable on: bank loans and overdrafts 35.2 41.4
other loans 254.1 240.8
289.3 282.2
Deduct: development cost element (8.1) (5.9)
281.2 276.3
Receivable on: deposits and securities (11.2) (8.4)
loans to joint ventures (8.9) (16.1)
Total British Land Group 261.1 251.8
Share of joint ventures
Interest payable on shareholder loans 8.9 16.1
Other interest payable (net) 56.4 50.0
Total share of joint ventures (note 9) 65.3 66.1
Net interest payable 326.4 317.9
The £323m 6.5% Convertible Bonds 2007 were redeemed and cancelled on 24 June 2002.
5. Taxation
2003 2002
£m £m
Current tax
UK corporation tax (30%) 10.8 5.6
Foreign tax 1.6 1.8
12.4 7.4
Adjustments in respect of prior years 7.0 (13.5)
Total current tax charge (credit) 19.4 (6.1)
Deferred tax
Origination and reversal of timing differences 3.1 22.0
Prior year items (10.3)
Total deferred tax charge 3.1 11.7
Group total taxation 22.5 5.6
Attributable to joint ventures 10.6 6.3
Total taxation - effective tax rate - 19.2% (2002 - 6.9%) 33.1 11.9
Tax reconciliation
Profit on ordinary activities before taxation 172.4 171.3
Less - Share of profit of joint ventures (47.4) (20.0)
Group profit on ordinary activities before taxation 125.0 151.3
Tax on group profit on ordinary activities at
UK corporation tax rate of 30% (2002 - 30%) 37.5 45.4
Effects of:
Capital allowances (6.0) (6.3)
Tax losses and other timing differences (22.4) (31.9)
Expenses not deductible for tax purposes 3.3 0.2
Adjustments in respect of prior years 7.0 (13.5)
Group current tax charge (credit) 19.4 (6.1)
Factors affecting future tax rate
The level of capital allowances and losses reduce the current tax charge below 30%. Capital allowances are claimed
on eligible investment assets and calculated on the reducing balance. The availability of further capital
allowances will depend, inter alia, on the timing of the Group's development programme. In addition where assets
are sold out of the British Land Group the gain arising will initially be set off against capital losses and so
such sales may reduce the tax rate.
Contingent tax
The tax which would arise on the disposal of properties at valuation, including trading and development surpluses,
and investments at the amount at which they are carried in the balance sheet, is estimated at £470m (2002 - £510m)
after taking account of available losses and provisions. Tax losses, which have not been recognised in the Balance
Sheet, have reduced the contingent tax by approximately £100m (2002 - £100m). This unprovided taxation is stated
after taking account of the FRS 19 capital allowance deferred tax provision of £86m (2002 - £83m) recorded in the
Balance Sheet, which, as described in note 14, would be expected to be released on sale.
6. Ordinary dividends
2003 2002 2003 2002
pence pence £m £m
Interim 4.1 3.8 20.5 19.7
Proposed final 9.3 8.6 45.4 44.6
Total for year 13.4 12.4 65.9 64.3
The final dividend of 9.3 pence will be paid on 22 August 2003 to shareholders on the register at the close of
business on 25 July 2003. The ex-dividend date is 23 July 2003. The interim dividend was paid on 21 February 2003.
7. Basic and diluted earnings per share
Basic and diluted earnings per share are calculated on the profit on ordinary activities after taxation and on the
weighted average number of shares in issue during the year as shown below:
2003 2002
Weighted Weighted
average Profit average Profit
number after number after
of shares taxation of shares taxation
m £m m £m
Earnings per share
Basic 512.5 139.3 518.3 159.4
Diluted 554.0 149.0 596.4 180.4
Weighted Weighted
average Profit average Profit
number after number after
of shares taxation of shares taxation
m £m m £m
Adjusted earnings per share
Basic 512.5 140.4 518.3 166.6
Diluted 554.0 150.1 596.4 187.6
The weighted average number of shares has changed as a result of the redemption on 24 June 2002 of the 6.5%
Convertible Bonds 2007 and from the impact of shares purchased and cancelled during the year. The weighted average
number of shares used for calculating diluted earnings per share includes the dilutive effect of convertible bonds
and share options, and totals 41.5m (2002 - 78.1m). Diluted earnings per share reflects the £9.7m (2002 - £21.0m)
post tax profit adjustment arising from assuming the conversion of convertible bonds.
Adjusted earnings per share are calculated by excluding the post tax profit adjustment of £1.1m (2002 - £7.2m)
which is the capital allowance effect of FRS 19 which is not expected to arise, as described in note 14.
8. Investment, development and trading properties
Leasehold
Freehold Long Short Total
£m £m £m £m
Investment and development properties
Valuation and cost 1 April 2002 7,239.5 288.8 7,528.3
Additions 568.7 38.0 606.7
Disposals (70.6) (70.6)
Reallocation 14.2 (14.2)
Exchange fluctuations 8.2 8.2
Revaluations (22.6) 35.2 12.6
Valuation and cost 31 March 2003 7,737.4 347.8 8,085.2
Trading properties
At lower of cost and net realisable value
31 March 2003 36.8 8.4 1.0 46.2
External valuation surplus on development and trading properties 87.9
Total investment, development and trading properties 8,219.3
Investment, development and trading properties were valued by external valuers on the basis of open market value in
accordance with the Appraisal and Valuation Manual published by The Royal Institution of Chartered Surveyors.
£m
On an open market basis - External valuations:
United Kingdom: ATIS REAL Weatheralls 8,005.4
United Kingdom: FPD Savills 154.5
Republic of Ireland: Jones Lang LaSalle 74.6
Netherlands: CB Richard Ellis B.V. 1.1
8,235.6
Adjustment for UITF 28 - lease incentives debtors (16.3)
Total investment, development and trading properties 8,219.3
Total external valuation surplus on development and trading properties
£m
British Land Group 87.9
Share of joint 1.4
ventures
89.3
8. Investment, development and trading properties (continued)
Total property valuations including share of joint ventures
2003 2002
£m £m
British Land Group
Investment and development properties 8,085.2 7,528.3
Trading properties 46.2 47.0
External valuation surplus on development and
trading properties 87.9 108.6
Adjustment for UITF 28 - lease incentive debtors 16.3 7.7
8,235.6 7,691.6
Share of joint ventures
Properties 1,404.8 1,601.3
External valuation surplus on development and
trading properties 1.4 5.5
Adjustment for UITF 28 - lease incentive debtors 3.8 1.9
1,410.0 1,608.7
Total property portfolio valuation 9,645.6 9,300.3
9. Joint ventures' summary financial
statements
The Public BL BL BLT Tesco BL
House Universal Fraser Properties BL West
Company Ltd PLC Ltd Ltd Holdings Ltd companies
All joint ventures are held equally on a
50:50 basis
Partners Scottish & GUS plc House of Tesco plc Tesco plc West LB,
Newcastle plc Fraser plc WestImmo,
and Provinzial
Date established April 1995 Feb. 1997 July 1999 Nov. 1996 Nov. 1999 Sept. 2000
Accounting year end 31 March 31 March 25 Jan. 31 Dec. 31 Dec. 31 Dec.
Summarised profit and £m £m £m £m £m £m
loss accounts
Gross rental income 11.1 58.6 14.4 16.2 22.9 24.6
Net rental income 11.0 51.9 14.2 16.2 22.4 23.6
Other expenditure (0.9) (1.2) (0.3) (0.4) (0.4) (0.4)
Operating profit 10.1 50.7 13.9 15.8 22.0 23.2
Disposal of fixed 13.2 1.2 2.8 0.2
assets
Net interest - external (8.3) (23.2) (9.1) (8.2) (14.7) (18.8)
- shareholders (13.7) (2.9) (1.2)
Net interest (payable) (8.3) (36.9) (12.0) (9.4) (14.7) (18.8)
receivable
Profit (loss) before 15.0 15.0 4.7 6.6 7.3 4.4
tax
Tax 4.7 (5.3) (1.0) (1.9) (2.2) (1.3)
Profit (loss) after tax 19.7 9.7 3.7 4.7 5.1 3.1
Summarised statements of total recognised gains and
losses
Profit (loss) retained 19.7 9.7 3.7 4.7 5.1 3.1
for the year
Unrealised surplus 2.8 29.6 31.5 31.4 23.2 (31.9)
(deficit) on
revaluation
Total recognised gains
and losses/
relating to the
financial year 22.5 39.3 35.2 36.1 28.3 (28.8)
Summarised balance
sheets
Investment properties 53.2 794.9 230.2 238.9 368.7 333.3
at valuation
Development and trading
properties at cost
Total properties 53.2 794.9 230.2 238.9 368.7 333.3
Current assets 0.3 5.0 0.9 1.0 1.9 2.6
Cash and deposits 6.0 0.6 17.1 14.9 6.1 8.9
Gross assets 59.5 800.5 248.2 254.8 376.7 344.8
Current liabilities (0.6) (30.5) (4.6) (6.9) (10.9) (12.3)
Bank debt falling due (111.0)
within one year
Bank debt falling due (45.0) (139.1) (209.6) (256.2)
after one year
Debentures (295.9)
Deferred tax (1.3) (4.8) (5.4) (0.5) (0.5) (1.4)
Gross liabilities (1.9) (376.2) (149.1) (118.4) (221.0) (269.9)
Net external assets 57.6 424.3 99.1 136.4 155.7 74.9
Represented by:
Shareholder loans 164.9 53.1 18.2 83.5
Ordinary shareholders'
funds /
Partners' capital 57.6 259.4 46.0 118.2 72.2 74.9
Total investment 57.6 424.3 99.1 136.4 155.7 74.9
Capital commitments 2.6 2.7
Contingent tax 2.4 43.6 9.3 24.5 11.7 1.6
9. Joint ventures' summary financial statements
(continued)
Cherrywood BL Other British
Properties Ltd Davidson * BVP Joint Land 2002
(Rep of Ireland) Group Group Ventures Share Comparative
All joint ventures are held equally on a
50:50 basis
Partners Manny
Dunloe Davidson, ProLogis
Ewart his family Developments
plc & trusts Ltd
Date established April 1999 Sept. 2001 June 1999
Accounting year end 31 Dec. 31 Dec. 31 March
Summarised profit £m £m £m £m £m £m
and loss accounts
Gross rental income 1.2 29.6 4.9 20.9 102.2 98.5
Net rental income 1.2 27.4 4.6 17.7 95.1 90.3
Other expenditure (1.7) 2.3 (0.1) (2.5) (2.8) (1.7)
Operating profit (0.5) 29.7 4.5 15.2 92.3 88.6
Disposal of fixed 4.0 19.4 20.4 (2.5)
assets
Net interest - 0.1 (16.3) (3.1) (11.2) (56.4) (50.0)
external
- shareholders (0.6) 0.6 (8.9) (16.1)
Net interest 0.1 (16.9) (3.1) (10.6) (65.3) (66.1)
(payable) receivable
Profit (loss) before (0.4) 16.8 1.4 24.0 47.4 20.0
tax
Tax (0.4) (5.9) (0.7) (7.2) (10.6) (6.3)
Profit (loss) after (0.8) 10.9 0.7 16.8 36.8 13.7
tax
Summarised statements of total recognised gains and
losses
Profit (loss) (0.8) 10.9 0.7 16.8 36.8 13.7
retained for the
year
Unrealised surplus 23.4 1.5 15.3 63.4 41.7
(deficit) on
revaluation
Total recognised
gains and losses/
relating to the (0.8) 34.3 2.2 32.1 100.2 55.4
financial year
Summarised balance
sheets
Investment 437.2 83.5 132.5 1,336.2 1,510.2
properties at
valuation
Development and 89.9 17.4 19.7 10.2 68.6 91.1
trading properties
at cost
Total properties 89.9 454.6 103.2 142.7 1,404.8 1,601.3
Current assets 3.1 10.5 3.8 3.3 16.2 34.0
Cash and deposits 0.1 33.9 2.1 8.9 49.3 54.3
Gross assets 93.1 499.0 109.1 154.9 1,470.3 1,689.6
Current liabilities (14.9) (58.8) (12.7) (11.0) (81.6) (104.1)
Bank debt falling (14.2) (1.4) (63.3) (4.9)
due within one year
Bank debt falling (113.5) (47.0) (405.2) (627.3)
due after one year
Debentures (124.5) (210.2) (213.7)
Deferred tax (4.6) (1.1) (9.8) (12.4)
Gross liabilities (14.9) (315.6) (62.2) (11.0) (770.1) (962.4)
Net external assets 78.2 183.4 46.9 143.9 700.2 727.2
Represented by:
Shareholder loans 46.0 10.0 12.4 29.9 209.0 293.9
Ordinary
shareholders' funds/
Partners' capital 32.2 173.4 34.5 114.0 177.1 433.3
Total investment 78.2 183.4 46.9 143.9 700.2 727.2
Capital commitments 22.5 5.8 1.4 17.5 56.2
Contingent tax 47.9 11.1 1.7 76.9 73.8
* British Land's share of negative
goodwill is included in Current
Liabilities, and amounts in total to
£19.6m (2002 - £23.3m).
9. Joint ventures (continued)
The movement for the year
Equity Loans Total
£m £m £m
At 1 April 2002 433.3 293.9 727.2
Additions 5.4 19.8 25.2
Purchase of remaining interest in London & Henley (24.1) (11.2) (35.3)
Repayment of loans (93.5) (93.5)
Share of profit attributable to joint ventures 36.8 36.8
Dividends received from joint ventures (22.6) (22.6)
Disposals (1.0) (1.0)
Revaluation 63.4 63.4
At 31 March 2003 491.2 209.0 700.2
The Group's share of the market value of the debt and derivatives as at 31 March 2003 was £40.6m more than the
Group's share of the book value (2002 - £16.8m).
The Group's share of joint venture external net debt as at 31 March 2003 was £632.0m (2002 - £791.6m). The amount
guaranteed by British Land is £12.0m (2002 - £33.0m).
The Group's share of joint venture properties as at 31 March 2003 was £1,404.8m (2002 - £1,601.3m).
All companies are property investment companies registered in England and Wales unless otherwise stated.
10. Other investments
£m
At 1 April 2002 12.4
Additions 15.3
Disposals (1.0)
Revaluations (0.1)
At 31 March 2003 26.6
For the year ended 31 March 2003 dividends and interest from other investments amounted to £0.3m (2002 - £5.1m).
11. Debtors
2003 2002
£m £m
Trade debtors 36.1 25.5
Amounts owed by joint ventures 0.9 8.6
Prepayments and accrued income 18.6 11.5
55.6 45.6
12. Other creditors due within one year
2003 2002
£m £m
Debentures and loans * 57.8 45.4
Overdrafts * 8.4 4.3
Bank loans * 168.5 74.2
Trade creditors 58.6 45.7
Corporation tax 33.7 33.4
Other taxation and social security 13.9 12.0
Accruals and deferred income 169.6 186.9
Proposed final dividend 45.4 44.6
555.9 446.5
* See Maturity Analysis of Net Debt - note 15.
13. Creditors due after one year
2003 2002
£m £m
Debentures and loans * 3,397.5 3,451.8
Bank loans * 722.1 161.9
4,119.6 3,613.7
* See Maturity Analysis of Net Debt - note 15.
14. Provisions for liabilities and charges
2003 2002
£m £m
At 1 April 2002 89.6 77.9
Charged to profit and loss account 3.1 11.7
At 31 March 2003 92.7 89.6
Deferred tax is provided as follows:
Capital allowances 90.1 86.4
Other timing differences 2.6 3.2
92.7 89.6
The deferred tax liability relates primarily to capital allowances claimed on plant and machinery within investment
properties. When a property is sold and the agreed disposal value for this plant and machinery is less than
original cost, there is a release of the surplus part of the provision. The entire amount of the capital allowance
provision would be expected to be released on sale.
15. Net debt
2003 2002
£m £m
Secured on the assets of the Group
+ 6.5055% Secured Notes 2038 97.7 97.7
+ 5.920% Secured Notes 2035 59.2 59.2
8.875% First Mortgage Debenture Bonds 2035 246.6 246.6
9.375% First Mortgage Debenture Stock 2028 197.2 197.2
+ 7.743% Secured Notes 2025 19.7 19.6
10.5% First Mortgage Debenture Stock 12.6 12.6
2019/24
11.375% First Mortgage Debenture Stock 20.4 20.4
2019/24
+ 5.66% 135 Bishopsgate Securitisation 2018 1.9 1.9
+ 8.49% 135 Bishopsgate Securitisation 2018 7.1 7.1
662.4 662.3
Unsecured
+ Class A1 5.260% Unsecured Notes 2035 543.0 542.8
+ Class B 5.793% Unsecured Notes 2035 88.9 88.9
+ Class C Fixed Rate Unsecured Notes 2035 74.0 74.0
+ Class C2 6.4515% Unsecured Notes 2032 73.4 73.3
+ Class B 6.0875% Unsecured Notes 2031 220.0 219.8
+ Class A3 5.7125% Unsecured Notes 2031 146.6 146.5
+ Class A2 5.67% Unsecured Notes 2029 287.8 291.9
+ Class A2 (C) 6.457% Unsecured Notes 2025 157.0 157.0
+ Class B2 6.998% Unsecured Notes 2025 205.6 205.5
+ Class B3 7.243% Unsecured Notes 2025 20.5 20.6
+ Class A1 Fixed Rate Unsecured Notes 2024 318.6 317.5
+ 5.66% 135 Bishopsgate Securitisation 2018 23.3 24.3
+ 8.49% 135 Bishopsgate Securitisation 2018 91.6 94.5
+ Class A1 6.389% Unsecured Notes 2016 60.9 63.3
+ Class B1 7.017% Unsecured Notes 2016 91.6 97.0
+ Class C1 6.7446% Unsecured Notes 2014 161.6 171.0
+ Class D Fixed / Floating Rate Unsecured 78.7 98.2
Notes 2014
+ Class A2 5.555% Unsecured Notes 2013 49.5 49.3
10.25% Bonds 2012 1.7 1.7
* 7.35% Senior US Dollar Notes 2007 97.8 97.8
Guaranteed Floating Rate Unsecured Loan 0.8
Notes 2005
Bank loans and overdrafts 899.0 240.4
3,691.9 3,075.3
Convertible Bonds
6% Subordinated Irredeemable Convertible 146.8 146.7
Bonds
** 6.5% Convertible Bonds 2007 323.0
146.8 469.7
Gross debt 4,501.1 4,207.3
Cash and deposits (139.7) (366.9)
Net debt 4,361.4 3,840.4
+ 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 redeemed and cancelled on 24 June 2002.
15. Net debt (continued)
Interest rate profile - including effect of derivatives 2003 2002
£m £m
Fixed rate 3,543.8 3,541.2
Capped rate 100.0 100.0
Variable rate (net of cash) 717.6 199.2
Net debt 4,361.4 3,840.4
All the above debt is effectively Sterling except for £120.7m (2002 - £101.0m) of Euro debt of which £57.4m (2002 -
£72.7m) is fixed and the balance floating. At 31 March 2003 the weighted average interest rate of the Sterling
fixed rate debt is 6.78% (2002 - 6.84%). The weighted average period for which the rate is fixed is 19.3 years
(2002 - 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 4.00% (2002 - 3.85%) and the
weighted average period for which the rate is fixed is 1.9 years (2002 - 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 five years is £2,866.3m (2002 - £2,915.0m).
2003 2002
£m £m
Maturity analysis of net debt
Repayable:
within one year and on demand 234.7 446.9
between: one and two years 459.6 151.1
two and five years 543.6 324.9
five and ten years 431.1 365.0
ten and fifteen years 430.8 418.3
fifteen and twenty years 469.9 459.9
twenty and twenty five years 789.0 630.7
twenty five and thirty years 666.8 845.8
thirty and thirty five years 328.8 418.0
Irredeemable 146.8 146.7
Gross debt 4,501.1 4,207.3
Cash (50.3) (20.4)
Term deposits (89.4) (346.5)
Total cash and deposits (139.7) (366.9)
Net debt 4,361.4 3,840.4
Maturity of committed undrawn borrowing facilities
Expiring:
within one year 133.1 437.1
between: one and two years 30.0 161.8
two and three years 255.0 402.5
three and four years 170.0 425.0
four and five years 215.0
over five years 8.6 37.7
Total 596.7 1,679.1
15. Net debt (continued)
Comparison of market values and book values
2003 2002
Market Book Market Book
Value Value Difference Value Value Difference
£m £m £m £m £m £m
Fixed rate debt
Securitisations 3,153.6 2,878.2 275.4 3,009.2 2,920.9 88.3
Debentures and
unsecured bonds 756.9 576.3 180.6 729.1 576.3 152.8
Convertible bonds 154.0 146.8 7.2 492.8 469.7 23.1
Bank debt 899.8 899.8 240.4 240.4
Cash and deposits (139.7) (139.7) (366.9) (366.9)
4,824.6 4,361.4 463.2 4,104.6 3,840.4 264.2
Derivatives
- unrecognised gains (17.5) (17.5) (4.4) (4.4)
- unrecognised losses 41.0 41.0 44.1 44.1
23.5 23.5 39.7 39.7
Total 4,848.1 4,361.4 486.7 4,144.3 3,840.4 303.9
The Market Value and Difference are shown before any tax relief. The difference between book value and market value
on the convertible bonds 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 losses of £6.5m (2002 gains - £4.8m) were recognised in the current year, comprising gains of £7.0m (2002 -
£17.7m) and losses of £13.5m (2002 - £12.9m).
Of the unrecognised amount at 31 March 2003, £nil gains and £nil of losses are expected to be realised in the next
financial year (2002 - £nil gains; £1.2m losses) 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 (2002 - 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.
Debt issue costs
Total unamortised issue costs reducing the principal amount of debt in arriving at the Balance Sheet values amount
to £57.5m (2002 - £63.7m), of which £3.4m (2002 - £3.5m) relates to the secured tranches of Securitisations, £44.7m
(2002 - £50.7m) to the unsecured tranches of Securitisations, £6.2m (2002 - £6.2m) to Debentures and £3.2m (2002 -
£3.3m) to Convertible bonds.
16. Acquisition of subsidiary undertakings
On 19 July 2002 the Group acquired the remaining 50% interest in Broadgate Phase 12 Ltd, owner of 201 Bishopsgate,
London EC2. On 11 October 2002 the Group acquired 100% of the issued share capital of FRP Group Plc. On 19 December
2002 the Group acquired the remaining 50% interest in London & Henley Holdings Limited. The net assets acquired and
their fair value to the Group are as follows:
Total book value Book value acquired
Broadgate London & Combined FRP Group Fair value Fair value
Phase 12 Ltd Henley remaining Plc adjustment to Group
Holdings Ltd 50% interest
£m £m £m £m £m £m
Properties 55.2 159.4 107.3 21.0 12.9 (i) 141.2
Other assets 0.2 0.2
Cash 0.6 5.4 3.0 0.1 3.1
Creditors (1.0) (3.2) (2.1) (0.7) (0.4) (ii) (3.2)
Shareholder loans (54.6) (22.4) (38.5) (38.5)
Bank loans (86.4) (43.2) (4.5) (2.4) (iii) (50.1)
0.2 52.8 26.5 16.1 10.1 52.7
Negative Goodwill (9.2)
43.5
Satisfied by:
Issue of Guaranteed Floating Rate
Unsecured Loan 0.8 0.8
Notes 2005
Cash paid 13.0 16.4 13.3 42.7
Total 13.0 16.4 14.1 43.5
consideration
Repayment of 27.3 11.2 38.5
shareholder loans
Total cash payable 40.3 27.6 14.1 82.0
The fair value adjustments arise because:
(i) As a development property, 201 Bishopsgate was carried in the accounts of Broadgate Phase 12 Ltd at historical
cost.
(ii) An adjustment is required to recognise additional liabilities for London & Henley Holdings Ltd.
(iii) An adjustment is required to show London & Henley's bank loans and related derivatives at fair value.
17. Notes to the cash flow statement
Reconciliation of operating profit to net cash inflow from operating
activities
2003 2002
£m £m
Operating profit 380.4 363.6
Dividends (0.3) (5.1)
received
Depreciation 0.6 1.3
Decrease in 1.3 6.3
trading
properties
(Increase) (17.2) 4.9
decrease in
debtors
Increase in 8.8 11.4
creditors
Net cash inflow from operating activities 373.6 382.4
Analysis of Group
net debt
1 April Cash Non cash 31 March
2002 Acquisitions * flow movements 2003
£m £m £m £m £m
Cash at bank (20.4) (29.9) (50.3)
Overdraft 4.3 4.1 8.4
Net cash per cash flow statement (16.1) (25.8) (41.9)
Term debt 3,733.3 130.2 463.2 19.2 4,345.9
Convertible Bonds 469.7 (322.7) (0.2) 146.8
Term deposits (346.5) 254.8 2.3 (89.4)
Group net debt 3,840.4 130.2 369.5 21.3 4,361.4
Reconciliation of net cash flow to movement in Group net debt
2003 2002
£m £m
Brought forward 3,840.4 3,716.8
Movement in net debt in the year
(Increase) decrease in cash (25.8) 7.1
Cash inflow from movement in debt 463.2 388.1
Cash outflow to repurchase Convertible Bonds (322.7)
Cash inflow (outflow) from term deposits 254.8 (281.5)
Changes resulting from cash flows 369.5 113.7
Non cash movements including acquisitions 151.5 9.9
521.0 123.6
Carried forward 4,361.4 3,840.4
* Excluding cash and overdrafts
18. Net Asset Value per share
31 March 31 31 March 31
March March
2003 2003 2002 2002
Adjusted Adjusted
Net Net Net Net
Shares Assets Assets Shares Assets Assets
m £m £m m £m £m
Net Asset Value
(undiluted)
Shareholders' funds as shown on 488.6 4,129.3 4,129.3 518.4 4,107.9 4,107.9
balance sheet
FRS 19 capital - British Land 90.1 86.4
allowance effects Group
- Share of joint 9.8 12.4
ventures
99.9 98.8
Total external valuation surplus on
development
and trading 89.3 89.3 114.1 114.1
properties
(note 8)
Net assets attributable to ordinary 4,318.5 4,218.6 4,320.8 4,222.0
shares
Net Asset Value per share (undiluted) 884 p 863 p 833 p 814 p
Fully diluted Net
Asset Value
Net assets attributable to ordinary 488.6 4,318.5 4,218.6 518.4 4,320.8 4,222.0
shares
Adjust to fully diluted on conversion
of:
Dilutive effect of share options and 31.5 152.7 152.7 78.1 469.7 469.7
conversion of Convertible Bonds
Net assets attributable to fully
diluted
ordinary 520.1 4,471.2 4,371.3 596.5 4,790.5 4,691.7
shares
Fully diluted Net Asset Value per 860 p 840 p 803 p 787 p
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.
19. Share capital and
reserves
Capital
Share Share redemption Other Revaluation Profit Total
capital premium reserve reserves reserve and loss
account
£m £m £m £m £m £m £m
At 1 April 2002 129.6 1,106.2 0.3 (5.7) 2,165.0 712.5 4,107.9
Issues 0.1 1.5 1.6
Purchase and cancellation (7.6) 7.6 (130.1) (130.1)
of own shares
Retained profit for the 73.4 73.4
year
Realisation of prior year (17.7) 17.7
revaluations
Current year revaluation 75.9 75.9
Exchange movements on net investments (2.3) 2.7 0.2 0.6
At 31 March 2003 122.1 1,107.7 7.9 (8.0) 2,225.9 673.7 4,129.3
20. Contingent liabilities
In addition to contingent tax, as described in note 5, contingent liabilities of the Parent for guarantees to third
parties amounted to £12.0m (2002 - £33.0m).
21. Capital commitments
2003 2002
£m £m
British Land 279.2 419.7
Share of joint ventures (note 9) 17.5 56.2
296.7 475.9
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