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| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| British Land Company Plc | LSE:BLND | London | Ordinary Share | GB0001367019 | ORD 25P |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| 4.40 | 1.13% | 392.80 | 392.20 | 393.00 | 395.80 | 388.80 | 391.00 | 1,952,690 | 16:29:57 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| Real Estate Investment Trust | 418M | -1.04B | -1.1194 | -3.51 | 3.64B |
From Apr 2019 to Apr 2024
TIDMBLND TIDM17KS
RNS Number : 3501F
British Land Co PLC
17 May 2017
THE BRITISH LAND COMPANY PLC
Consolidated income statement
For the year ended 31 march 2017
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Premium
2017 2016
================================ ==== =========================== ============================
Capital Capital
and and
Underlying1 other Total Underlying1 other Total
Note GBPm GBPm GBPm GBPm GBPm GBPm
================================ ==== =========== ======= ===== =========== ======= ======
Revenue 3 556 33 589 569 21 590
-------------------------------- ---- ----------- ------- ----- ----------- ------- ------
Costs 3 (122) (26) (148) (128) (11) (139)
================================ ==== =========== ======= ===== =========== ======= ======
3 434 7 441 441 10 451
-------------------------------- ---- ----------- ------- ----- ----------- ------- ------
Joint ventures and funds
(see also below) 8 132 (80) 52 135 262 397
-------------------------------- ---- ----------- ------- ----- ----------- ------- ------
Administrative expenses (84) - (84) (93) - (93)
-------------------------------- ---- ----------- ------- ----- ----------- ------- ------
Valuation movement 4 - (144) (144) - 616 616
-------------------------------- ---- ----------- ------- ----- ----------- ------- ------
(Loss) profit on disposal
of investment properties
and investments - (5) (5) - 35 35
-------------------------------- ---- ----------- ------- ----- ----------- ------- ------
Net financing costs
-------------------------------- ---- ----------- ------- ----- ----------- ------- ------
- financing income 5 2 42 44 5 65 70
-------------------------------- ---- ----------- ------- ----- ----------- ------- ------
- financing charges 5 (80) (29) (109) (111) (34) (145)
-------------------------------- ---- =========== ======= ===== =========== ======= ======
(78) 13 (65) (106) 31 (75)
================================ ==== =========== ======= ===== =========== ======= ======
Profit on ordinary activities
before taxation 404 (209) 195 377 954 1,331
-------------------------------- ---- ----------- ------- ----- ----------- ------- ------
Taxation 6 1 1 33 33
================================ ==== =========== ======= ===== =========== ======= ======
Profit for the year after
taxation 196 1,364
================================ ==== =========== ======= ===== =========== ======= ======
Attributable to non-controlling
interests 14 (11) 3 14 5 19
-------------------------------- ---- ----------- ------- ----- ----------- ------- ------
Attributable to shareholders
of the Company 390 (197) 193 363 982 1,345
================================ ==== =========== ======= ===== =========== ======= ======
Earnings per share:
-------------------------------- ---- ----------- ------- ----- ----------- ------- ------
- basic 2 18.8p 131.2p
-------------------------------- ---- ----------- ------- ===== ----------- ------- ======
- diluted2 2 14.7p 119.7p
-------------------------------- ---- ----------- ------- ===== ----------- ------- ======
All results derive from continuing operations.
2017 2016
========================== ==== =========================== ===========================
Capital Capital
and and
Underlying1 other Total Underlying1 other Total
Note GBPm GBPm GBPm GBPm GBPm GBPm
========================== ==== =========== ======= ===== =========== ======= =====
Results of joint ventures
and funds accounted for
using the equity method
-------------------------- ---- ----------- ------- ----- ----------- ------- -----
Underlying Profit 132 - 132 135 - 135
-------------------------- ---- ----------- ------- ----- ----------- ------- -----
Valuation movement 4 - (93) (93) - 245 245
-------------------------- ---- ----------- ------- ----- ----------- ------- -----
Capital financing costs - (6) (6) - - -
-------------------------- ---- ----------- ------- ----- ----------- ------- -----
Profit on disposal of
investment properties,
trading properties and
investments - 18 18 - 18 18
-------------------------- ---- ----------- ------- ----- ----------- ------- -----
Taxation - 1 1 - (1) (1)
========================== ==== =========== ======= ===== =========== ======= =====
8 132 (80) 52 135 262 397
========================== ==== =========== ======= ===== =========== ======= =====
1 See definition in glossary.
2 Prior year diluted EPS has been restated. See note 1.
Consolidated statement OF COMPREHENSIVE INCOME
For the year ended 31 march 2017
2017 2016
GBPm GBPm
================================================= ===== =====
Profit for the year after taxation 196 1,364
------------------------------------------------- ----- -----
Other comprehensive (loss) income:
------------------------------------------------- ----- -----
Items that will not be reclassified subsequently
to profit or loss:
------------------------------------------------- ----- -----
Net actuarial loss on pension schemes (12) (1)
------------------------------------------------- ----- -----
Valuation movements on owner-occupied properties - 19
------------------------------------------------- ===== =====
(12) 18
------------------------------------------------- ===== =====
Items that may be reclassified subsequently
to profit or loss:
------------------------------------------------- ----- -----
(Losses) gains on cash flow hedges
------------------------------------------------- ----- -----
- Group (21) (24)
------------------------------------------------- ----- -----
- Joint ventures and funds 1 (3)
------------------------------------------------- ===== =====
(20) (27)
------------------------------------------------- ===== =====
Transferred to the income statement (cash
flow hedges)
------------------------------------------------- ----- -----
- Foreign currency derivatives - 2
------------------------------------------------- ----- -----
- Interest rate derivatives 16 10
------------------------------------------------- ===== =====
16 12
------------------------------------------------- ===== =====
Exchange differences on translation of foreign
operations
------------------------------------------------- ----- -----
- Hedging and translation - (3)
------------------------------------------------- ----- -----
- Other - 3
------------------------------------------------- ===== =====
- -
------------------------------------------------- ===== =====
Deferred tax on items of other comprehensive
income - (15)
------------------------------------------------- ----- -----
Other comprehensive loss for the year (16) (12)
================================================= ===== =====
Total comprehensive income for the year 180 1,352
================================================= ===== =====
Attributable to non-controlling interests 3 19
------------------------------------------------- ----- -----
Attributable to shareholders of the Company 177 1,333
================================================= ===== =====
Consolidated BALANCE SHEET
AS AT 31 march 2017
2017 2016
Note GBPm GBPm
================================================== ==== ======= =======
ASSETS
-------------------------------------------------- ---- ------- -------
Non-current assets
-------------------------------------------------- ---- ------- -------
Investment and development properties 7 9,073 9,643
-------------------------------------------------- ---- ------- -------
Owner-occupied properties 7 94 95
-------------------------------------------------- ---- ======= =======
9,167 9,738
-------------------------------------------------- ---- ------- -------
Other non-current assets
-------------------------------------------------- ---- ------- -------
Investments in joint ventures and funds 8 2,766 3,353
-------------------------------------------------- ---- ------- -------
Other investments 9 154 142
-------------------------------------------------- ---- ------- -------
Deferred tax assets 13 4 3
-------------------------------------------------- ---- ------- -------
Interest rate and currency derivative assets 14 217 167
-------------------------------------------------- ---- ======= =======
12,308 13,403
-------------------------------------------------- ---- ======= =======
Current assets
-------------------------------------------------- ---- ------- -------
Joint venture held for sale 8 540 -
-------------------------------------------------- ---- ------- -------
Trading properties 7 334 325
-------------------------------------------------- ---- ------- -------
Debtors 10 171 33
-------------------------------------------------- ---- ------- -------
Cash and short term deposits 14 114 114
-------------------------------------------------- ---- ======= =======
1,159 472
================================================== ==== ======= =======
Total assets 13,467 13,875
================================================== ==== ======= =======
LIABILITIES
-------------------------------------------------- ---- ------- -------
Current liabilities
-------------------------------------------------- ---- ------- -------
Short term borrowings and overdrafts 14 (464) (74)
-------------------------------------------------- ---- ------- -------
Creditors 11 (458) (218)
-------------------------------------------------- ---- ------- -------
Corporation tax (30) (18)
-------------------------------------------------- ---- ======= =======
(952) (310)
-------------------------------------------------- ---- ======= =======
Non-current liabilities
-------------------------------------------------- ---- ------- -------
Debentures and loans 14 (2,817) (3,687)
-------------------------------------------------- ---- ------- -------
Other non-current liabilities 12 (78) (122)
-------------------------------------------------- ---- ------- -------
Interest rate and currency derivative liabilities 14 (144) (137)
-------------------------------------------------- ---- ======= =======
(3,039) (3,946)
================================================== ==== ======= =======
Total liabilities (3,991) (4,256)
================================================== ==== ======= =======
Net assets 9,476 9,619
================================================== ==== ======= =======
EQUITY
-------------------------------------------------- ---- ------- -------
Share capital 260 260
-------------------------------------------------- ---- ------- -------
Share premium 1,298 1,295
-------------------------------------------------- ---- ------- -------
Merger reserve 213 213
-------------------------------------------------- ---- ------- -------
Other reserves (97) (93)
-------------------------------------------------- ---- ------- -------
Retained earnings 7,547 7,667
================================================== ==== ======= =======
Equity attributable to shareholders of
the Company 9,221 9,342
================================================== ==== ======= =======
Non-controlling interests 255 277
-------------------------------------------------- ---- ------- -------
Total equity 9,476 9,619
================================================== ==== ======= =======
EPRA NAV per share* 2 915p 919p
================================================== ==== ======= =======
* As defined in glossary.
Consolidated statement OF CASH FLOWS
For the year ended 31 march 2017
2017 2016
Note GBPm GBPm
============================================ ==== ===== =====
Rental income received from tenants 464 435
-------------------------------------------- ---- ----- -----
Fees and other income received 64 58
-------------------------------------------- ---- ----- -----
Operating expenses paid to suppliers and
employees (149) (152)
-------------------------------------------- ---- ===== =====
Cash generated from operations 379 341
-------------------------------------------- ---- ===== =====
Interest paid (92) (124)
-------------------------------------------- ---- ----- -----
Interest received 8 11
-------------------------------------------- ---- ----- -----
Corporation taxation repayments received 9 8
-------------------------------------------- ---- ----- -----
Distributions and other receivables from
joint ventures and funds 8 59 58
-------------------------------------------- ---- ===== =====
Net cash inflow from operating activities 363 294
-------------------------------------------- ---- ===== =====
Cash flows from investing activities
-------------------------------------------- ---- ----- -----
Development and other capital expenditure (225) (256)
-------------------------------------------- ---- ----- -----
Purchase of investment properties (87) (243)
-------------------------------------------- ---- ----- -----
Sale of investment and trading properties 761 564
-------------------------------------------- ---- ----- -----
Payments received in respect of future
trading property sales 8 40
-------------------------------------------- ---- ----- -----
Purchase of investments (19) -
-------------------------------------------- ---- ----- -----
Indirect taxes paid in respect of investing
activities (1) -
-------------------------------------------- ---- ----- -----
Investment in and loans to joint ventures
and funds (50) (241)
-------------------------------------------- ---- ----- -----
Capital distributions and loan repayments
from joint ventures and funds 83 366
-------------------------------------------- ---- ===== =====
Net cash inflow from investing activities 470 230
-------------------------------------------- ---- ===== =====
Cash flows from financing activities
-------------------------------------------- ---- ----- -----
Issue of ordinary shares 3 5
-------------------------------------------- ---- ----- -----
Purchase of own shares (8) -
-------------------------------------------- ---- ----- -----
Dividends paid 15 (295) (235)
-------------------------------------------- ---- ----- -----
Dividends paid to non-controlling interests (14) (16)
-------------------------------------------- ---- ----- -----
Acquisition of units in Hercules Unit Trust (11) (61)
-------------------------------------------- ---- ----- -----
Closeout of interest rate derivatives (13) 15
-------------------------------------------- ---- ----- -----
Cash collateral transactions - (24)
-------------------------------------------- ---- ----- -----
Decrease in bank and other borrowings (526) (919)
-------------------------------------------- ---- ----- ----- Drawdowns on bank and other borrowings 31 373 -------------------------------------------- ---- ----- ----- Drawdown of zero coupon 2015 convertible bond - 344 -------------------------------------------- ---- ===== ===== Net cash outflow from financing activities (833) (518) -------------------------------------------- ---- ===== ===== Net increase in cash and cash equivalents - 6 -------------------------------------------- ---- ----- ----- Cash and cash equivalents at 1 April 114 108 ============================================ ==== ===== ===== Cash and cash equivalents at 31 March 114 114 ============================================ ==== ===== ===== Cash and cash equivalents consists of: -------------------------------------------- ---- ----- ----- Cash and short term deposits 14 114 114 ============================================ ==== ===== =====
Consolidated statement OF CHANGES IN EQUITY
For the year ended 31 march 2017
Hedging
and Re-
Share Share translation valuation Merger Retained Non-controlling Total
capital premium reserve1 reserve reserve earnings Total interests equity
GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
================== ======== ======== ============ ========== ======== ========= ===== =============== =======
Balance at 1 April
2016 260 1,295 (107) 14 213 7,667 9,342 277 9,619
================== ======== ======== ============ ========== ======== ========= ===== =============== =======
Profit for the
year
after taxation - - - - - 193 193 3 196
------------------ -------- -------- ------------ ---------- -------- --------- ----- --------------- -------
Losses on cash
flow
hedges - - (21) - - - (21) - (21)
------------------ -------- -------- ------------ ---------- -------- --------- ----- --------------- -------
Exchange and
hedging
movements in
joint
ventures
and funds - - - 1 - - 1 - 1
------------------ -------- -------- ------------ ---------- -------- --------- ----- --------------- -------
Reclassification
of
gains on cash flow
hedges
------------------ -------- -------- ------------ ---------- -------- --------- ----- --------------- -------
Foreign currency
derivatives - - - - - - - - -
------------------ -------- -------- ------------ ---------- -------- --------- ----- --------------- -------
Interest rate
derivatives - - 16 - - - 16 - 16
------------------ -------- -------- ------------ ---------- -------- --------- ----- --------------- -------
Net actuarial loss
on pension
schemes - - - - - (12) (12) - (12)
------------------ ======== ======== ============ ========== ======== ========= ===== =============== =======
Other
comprehensive
(loss) income - - (5) 1 - (12) (16) - (16)
================== ======== ======== ============ ========== ======== ========= ===== =============== =======
Total
comprehensive
income for the
year - - (5) 1 - 181 177 3 180
================== ======== ======== ============ ========== ======== ========= ===== =============== =======
Share issues - 3 - - - - 3 - 3
------------------ -------- -------- ------------ ---------- -------- --------- ----- --------------- -------
Fair value of
share
and share option
awards - - - - - 2 2 - 2
------------------ -------- -------- ------------ ---------- -------- --------- ----- --------------- -------
Purchase of own
shares - - - - - (8) (8) - (8)
------------------ -------- -------- ------------ ---------- -------- --------- ----- --------------- -------
Purchase of units
from
non-controlling
interests - - - - - - - (11) (11)
------------------ -------- -------- ------------ ---------- -------- --------- ----- --------------- -------
Gain on purchase
of
units from
non-controlling
interests - - - - - 1 1 - 1
------------------ -------- -------- ------------ ---------- -------- --------- ----- --------------- -------
Dividends payable
in
year (28.8p per
share) - - - - - (296) (296) - (296)
------------------ -------- -------- ------------ ---------- -------- --------- ----- --------------- -------
Dividends payable
by
subsidiaries - - - - - - - (14) (14)
================== ======== ======== ============ ========== ======== ========= ===== =============== =======
Balance at 31
March
2017 260 1,298 (112) 15 213 7,547 9,221 255 9,476
================== ======== ======== ============ ========== ======== ========= ===== =============== =======
Balance at 1 April
2015 258 1,280 (76) (6) 213 6,563 8,232 333 8,565
================== ======== ======== ============ ========== ======== ========= ===== =============== =======
Profit for the
year
after taxation - - - - - 1,345 1,345 19 1,364
------------------ -------- -------- ------------ ---------- -------- --------- ----- --------------- -------
Losses on cash
flow
hedges - - (24) - - - (24) - (24)
------------------ -------- -------- ------------ ---------- -------- --------- ----- --------------- -------
Revaluation of
owner-occupied
property - - - 19 - - 19 - 19
------------------ -------- -------- ------------ ---------- -------- --------- ----- --------------- -------
Exchange and
hedging
movements in
joint
ventures
and funds - - - (3) - - (3) - (3)
------------------ -------- -------- ------------ ---------- -------- --------- ----- --------------- -------
Reclassification
of
(losses) gains on
cash
flow hedges
------------------ -------- -------- ------------ ---------- -------- --------- ----- --------------- -------
Foreign currency
derivatives - - 2 - - - 2 - 2
------------------ -------- -------- ------------ ---------- -------- --------- ----- --------------- -------
Interest rate
derivatives - - 10 - - - 10 - 10
------------------ -------- -------- ------------ ---------- -------- --------- ----- --------------- -------
Exchange
differences
on translation of
foreign
operations - - (3) 3 - - - - -
------------------ -------- -------- ------------ ---------- -------- --------- ----- --------------- -------
Net actuarial loss
on pension
schemes - - - - - (1) (1) - (1)
------------------ -------- -------- ------------ ---------- -------- --------- ----- --------------- -------
Deferred tax on
items
of other
comprehensive
income - - (16) 1 - - (15) - (15)
------------------ ======== ======== ============ ========== ======== ========= ===== =============== =======
Other
comprehensive
(loss) income - - (31) 20 - (1) (12) - (12)
================== ======== ======== ============ ========== ======== ========= ===== =============== =======
Total
comprehensive
income for the
year - - (31) 20 - 1,344 1,333 19 1,352
================== ======== ======== ============ ========== ======== ========= ===== =============== =======
Share issues 2 15 - - - (12) 5 - 5
------------------ -------- -------- ------------ ---------- -------- --------- ----- --------------- -------
Fair value of
share
and share option
awards - - - - - 8 8 - 8
------------------ -------- -------- ------------ ---------- -------- --------- ----- --------------- -------
Purchase of units
from
non-controlling
interests - - - - - - - (59) (59)
------------------ -------- -------- ------------ ---------- -------- --------- ----- --------------- -------
- - - - - (1) (1) - (1)
------------------ -------- -------- ------------ ---------- -------- --------- ----- --------------- -------
Dividends payable
in
year (28.0p per
share) - - - - - (287) (287) - (287)
------------------ -------- -------- ------------ ---------- -------- --------- ----- --------------- -------
Dividends payable
by
subsidiaries - - - - - - - (16) (16)
------------------ -------- -------- ------------ ---------- -------- --------- ----- --------------- -------
Adjustment for
scrip
dividend element - - - - - 52 52 - 52
================== ======== ======== ============ ========== ======== ========= ===== =============== =======
Balance at 31
March
2016 260 1,295 (107) 14 213 7,667 9,342 277 9,619
================== ======== ======== ============ ========== ======== ========= ===== =============== =======
1 The balance at the beginning of the current year includes GBP9m in relation to translation and (GBP116m) in relation to hedging (2015/16: GBP10m and (GBP86m)).
Notes to the accounts
1 Basis of preparation, significant accounting policies and accounting judgements
The financial information set out above does not constitute the Company's statutory accounts for the years ended 31 March 2017 or 2016, but is derived from those accounts. Statutory accounts for 2016 have been delivered to the Registrar of Companies and those for 2017 will be delivered following the Company's Annual General Meeting. The auditor has reported on those accounts; their report was 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 2017 have been prepared on a historical cost basis, except for the revaluation of properties, investments held for trading 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 2017.
A number of new standards and amendments to standards and interpretations have been issued but are not yet effective for the current accounting period. None of these are expected to have a material impact on the consolidated financial statements of the Group.
Certain standards which could be expected to have an impact on the consolidated financial statements are discussed in further detail below.
IFRS 9 - Financial Instruments (effective year ending 31 March 2019). The new standard addresses the classification, measurement and recognition of financial assets and financial liabilities. It simplifies the existing categories of financial instruments, introduces an expected credit loss model and redefines the criteria required for hedge effectiveness. On adoption of the new standard, these changes are not expected to have a material impact on the consolidated financial statements of the Group. There will however be limited changes to presentation and disclosure.
IFRS 15 - Revenue from contracts with customers (effective year ending 31 March 2019). The new standard combines a number of previous standards, setting out a five step model for the recognition of revenue and establishing principles for reporting useful information to users of financial statements about the nature, amount, timing and uncertainty of revenue and cash flows arising from an entity's contracts with customers. The new standard does not apply to gross rental income, but does apply to service charge income, management and performance fees and trading property disposals. The impact of the new standard on these items of revenue is not expected to have a material impact on the consolidated financial statements of the Group.
IFRS 16 - Leases (effective year ending 31 March 2020). For lessees, it will result in almost all leases being recognised on the balance sheet, as the distinction between operating and finance leases will be removed. The accounting for lessors will however not significantly change. As a result on adoption of the new standard, these changes are not expected to have a material impact on the consolidated financial statements of the Group.
The Group conducted an impact assessment of the above new standards in the year, and concluded that whilst adoption of these new standards based on the Group's current activities would lead to some limited changes to presentation and disclosure, they are not expected to have a material impact on the consolidated financial statements.
Restatement
The IFRS diluted earnings per share for the year ended 31 March 2016 has been restated to reflect the full dilutive impact of the 1.5% 2012 convertible bond. This restatement reduces the diluted earnings per share measure from 124.1 pence to 119.7 pence shown on the Consolidated Income Statement and within the associated notes. This is the only financial measure within these financial statements impacted by this restatement.
Accounting judgements and estimates
In applying the Group's accounting policies, the Directors are requiredto make judgements and estimates that affect the financial statements.
Significant areas of estimation are:
Valuation of properties and investments held for trading: The Groupuses external professional valuers to determine the relevant amounts. The primary source of evidence for property valuations should be recent, comparable market transactions on an arms-length basis. However, the valuation of the Group's property portfolio and investments held for trading are inherently subjective, as they are made on the basis of assumptions made by the valuers which may not prove to be accurate.
Other less significant areas of estimation include the valuation of fixed rate debt and interest rate derivatives, the determination of share-based payment expense, and the actuarial assumptions used in calculating the Group's retirement benefit obligations.
The key areas of accounting judgement are:
REIT status: British Land is a Real Estate Investment Trust (REIT)
and does not pay tax on its property income or gains on property sales, provided that at least 90% of the Group's property income is distributed as a dividend to shareholders, which becomes taxable in their hands. In addition, the Group has to meet certain conditions such as ensuring the property rental business represents more than 75% of total profits and assets. Any potential or proposed changes to the REIT legislation are monitored and discussed with HMRC. It is Management's intention that the Group will continue as a REIT for the foreseeable future.
Accounting for joint ventures and funds: In accordance with IFRS 10 'Consolidated financial statements', IFRS 11 'Joint arrangements', and IFRS 12 'Disclosures of interests in other entities' an assessment is required to determine the degree of control or influence the Group exercises and the form of any control to ensure that the financial statement treatment is appropriate.
Interest in the Group's joint ventures is commonly driven by the terms of the partnership agreements which ensure that control is shared between the partners. These are accounted for under the equity method, whereby the consolidated balance sheet incorporates the Group's share of the net assets of its joint ventures and associates. The consolidated income statement incorporates the Group's share of joint venture and associate profits after tax.
Accounting for transactions: Property transactions are complex in nature and can be material to the financial statements. Assessment is required to determine the most appropriate accounting treatment of assets acquired and of potential contractual arrangements in the legal documents for both acquisitions and disposals. Management consider each transaction separately and, when considered appropriate, seek independent accounting advice.
Held for sale asset: On 1 March 2017 the Group exchanged conditional contracts on an agreement to sell its interest in Leadenhall Holding Co (Jersey) Limited, a joint venture with Oxford Properties. The net investment in the joint venture has been reclassified as a held for sale asset within current assets on the Group balance sheet, and the carrying amount is disclosed separately from the investment in joint ventures and funds within note 8.
Prior to exchange, held for sale criteria were not deemed to be met since the transaction relates to an illiquid asset and is subject to significant uncertainty prior to agreement of terms. However, upon exchange the sale is deemed highly probable as detailed terms have been agreed upon by relevant parties. At this point management expect the carrying amount of the Group's investment in the venture to be recovered principally through a sale transaction rather than continuing operations.
2 Performance measures
Earnings per share
The Group measures financial performance with reference to underlying earnings per share, the European Public Real Estate Association (EPRA) earnings per share and IFRS earnings per share. The relevant earnings and weighted average number of shares (including dilution adjustments) for each performance measure are shown below, and a reconciliation between these is shown within the supplementary disclosures (Table B).
EPRA earnings per share is calculated using EPRA earnings, which is the IFRS profit after taxation attributable to shareholders of the Company excluding investment and development property revaluations, gains/losses on investing and trading property disposals, changes in the fair value of financial instruments and associated close-out costs and their related taxation. In the current year, diluted EPRA earnings per share did not include the dilutive impact of the 2012 convertible bond, as the Group's share price was below the exchange price of 693 pence. IFRS diluted earnings per share includes the dilutive impact as IAS 33 ignores this hurdle to conversion. In the prior year, both measures included the dilutive impact of the 2012 convertible bond, as the Group's share price was above the exchange price.
Underlying earnings per share is calculated using Underlying Profit adjusted for underlying taxation (see note 6). Underlying Profit is the pre-tax EPRA earnings measure, with additional Company adjustments. No Company adjustments were made in either the current or prior year.
2017 2016
=================== ============================= =============================
Relevant Relevant
number Earnings number Earnings
Relevant of per Relevant of per
earnings shares share earnings shares share
Earnings per share GBPm million pence GBPm million pence
=================== ========= ======== ======== ========= ======== ========
Underlying
------------------- --------- -------- -------- --------- -------- --------
Underlying basic 390 1,029 37.9 365 1,025 35.6
------------------- --------- -------- -------- --------- -------- --------
Underlying diluted 390 1,033 37.8 371 1,089 34.1
=================== ========= ======== ======== ========= ======== ========
EPRA
------------------- --------- -------- -------- --------- -------- --------
EPRA basic 390 1,029 37.9 365 1,025 35.6
------------------- --------- -------- -------- --------- -------- --------
EPRA diluted 390 1,033 37.8 371 1,089 34.1
=================== ========= ======== ======== ========= ======== ========
IFRS
------------------- --------- -------- -------- --------- -------- --------
Basic 193 1,029 18.8 1,345 1,025 131.2
------------------- --------- -------- -------- --------- -------- --------
Diluted1 160 1,091 14.7 1,303 1,089 119.7
=================== ========= ======== ======== ========= ======== ========
1 Prior year diluted EPS has been restated. See note 1.
Net asset value
The Group measures financial position with reference to EPRA net asset value (NAV) per share and EPRA triple net asset value (NNNAV) per share. The net asset value and number of shares for each performance measure is shown below. A reconciliation between IFRS net assets and EPRA net assets, and the relevant number of shares for each performance measure, is shown within the supplementary disclosures (Table B). EPRA net assets is a proportionally consolidated measure that is based on IFRS net assets excluding the mark-to-market on effective cash flow hedges and related debt adjustments, the mark-to-market on the convertible bonds as well as deferred taxation on property and derivative valuations. They include the valuation surplus on trading properties and are adjusted for the dilutive impact of share options.
As at 31 March 2017, EPRA NAV and EPRA NNNAV did not include the dilutive impact of the 2012 convertible bond, as the Group's share price was below the exchange price of 693 pence. IFRS net assets includes the dilutive impact following the treatment of IFRS earnings per share. In the prior year period, both measures included the dilutive impact of the 2012 convertible bond, as the Group's share price was above the exchange price.
2017 2016
========================== ========================== ==========================
Net Net
Relevant asset Relevant asset
Relevant number value Relevant number value
net of per net of per
assets shares share assets shares share
Net asset value per share GBPm million pence GBPm million pence
========================== ======== ======== ====== ======== ======== ======
EPRA
-------------------------- -------- -------- ------ -------- -------- ------
EPRA NAV 9,498 1,038 915 10,074 1,096 919
-------------------------- -------- -------- ------ -------- -------- ------
EPRA NNNAV 8,938 1,038 861 9,640 1,096 880
========================== ======== ======== ====== ======== ======== ======
IFRS
-------------------------- -------- -------- ------ -------- -------- ------
Basic 9,476 1,029 921 9,619 1,029 935
-------------------------- -------- -------- ------ -------- -------- ------
Diluted 9,876 1,096 901 10,019 1,096 914
========================== ======== ======== ====== ======== ======== ======
Total accounting return
The Group also measures financial performance with reference to total accounting return. This is calculated as the increase in EPRA net asset value per share and dividend paid in the year as a percentage of the EPRA net asset value per share at the start of the year.
2017 2016
======================== =============================== ===============================
Decrease Dividend Increase Dividend
in NAV per in NAV per
per share Total per share Total
share paid accounting share paid accounting
pence pence return pence pence return
======================== ======== ======== =========== ======== ======== ===========
Total accounting return (4) 28.78 2.7% 90 28.02 14.2%
======================== ======== ======== =========== ======== ======== ===========
3 Revenue and costs
2017 2016
================================ ========================== ==========================
Capital Capital
and and
Underlying other Total Underlying other Total
GBPm GBPm GBPm GBPm GBPm GBPm
================================ ========== ======= ===== ========== ======= =====
Rent receivable 449 - 449 437 - 437
-------------------------------- ---------- ------- ----- ---------- ------- -----
Spreading of tenant incentives
and guaranteed rent increases (9) - (9) 12 - 12
-------------------------------- ---------- ------- ----- ---------- ------- -----
Surrender premia 2 - 2 2 - 2
================================ ========== ======= ===== ========== ======= =====
Gross rental income 442 - 442 451 - 451
================================ ========== ======= ===== ========== ======= =====
Trading property sales proceeds - 33 33 - 21 21
-------------------------------- ---------- ------- ----- ---------- ------- -----
Service charge income 62 - 62 72 - 72
-------------------------------- ---------- ------- ----- ---------- ------- -----
Management and performance
fees (from joint ventures
and funds) 9 - 9 8 - 8
-------------------------------- ---------- ------- ----- ---------- ------- -----
Other fees and commissions 43 - 43 38 - 38
================================ ========== ======= ===== ========== ======= =====
Revenue 556 33 589 569 21 590
================================ ========== ======= ===== ========== ======= =====
Trading property cost of
sales - (26) (26) - (11) (11)
-------------------------------- ---------- ------- ----- ---------- ------- -----
Service charge expenses (62) - (62) (72) - (72)
-------------------------------- ---------- ------- ----- ---------- ------- -----
Property operating expenses (25) - (25) (26) - (26)
-------------------------------- ---------- ------- ----- ---------- ------- -----
Other fees and commissions
expenses (35) - (35) (30) - (30)
================================ ========== ======= ===== ========== ======= =====
Costs (122) (26) (148) (128) (11) (139)
================================ ========== ======= ===== ========== ======= =====
434 7 441 441 10 451
================================ ========== ======= ===== ========== ======= =====
The cash element of net rental income recognised during the year ended 31 March 2017 from properties which were not subject to a security interest was GBP276m (2015/16: GBP229m). Property operating expenses relating to investment properties that did not generate any rental income were GBP2m (2015/16: GBP1m). Contingent rents of GBP2m (2015/16: GBP3m) were recognised in the year.
4 Valuation movements on property
2017 2016
GBPm GBPm
================================================= ===== =====
Consolidated income statement
------------------------------------------------- ----- -----
Revaluation of properties (144) 616
------------------------------------------------- ----- -----
Revaluation of properties held by joint ventures
and funds accounted for using the equity method (93) 245
================================================= ===== =====
(237) 861
================================================= ===== =====
Consolidated statement of comprehensive income
------------------------------------------------- ----- -----
Revaluation of owner-occupied properties - 19
================================================= ===== =====
(237) 880
================================================= ===== =====
5 Net financing costs
2017 2016
GBPm GBPm
============================================== ===== =====
Underlying
---------------------------------------------- ----- -----
Financing charges
---------------------------------------------- ----- -----
Bank loans, overdrafts and derivatives (3) (30)
---------------------------------------------- ----- -----
Other loans (83) (88)
---------------------------------------------- ----- -----
Obligations under head leases (2) (2)
---------------------------------------------- ===== =====
(88) (120)
---------------------------------------------- ----- -----
Development interest capitalised 8 9
---------------------------------------------- ===== =====
(80) (111)
---------------------------------------------- ----- -----
Financing income
---------------------------------------------- ----- -----
Deposits, securities and liquid investments 2 3
---------------------------------------------- ----- -----
Loans to joint ventures - 2
---------------------------------------------- ===== =====
2 5
============================================== ===== =====
Net financing charges - underlying (78) (106)
============================================== ===== =====
Capital and other
---------------------------------------------- ----- -----
Financing charges
---------------------------------------------- ----- -----
Valuation movements on translation of foreign
currency debt - 2
---------------------------------------------- ----- -----
Hedging reserve recycling - (2)
---------------------------------------------- ----- -----
Valuation movements on fair value derivatives 51 54
---------------------------------------------- ----- -----
Valuation movements on fair value debt (48) (53)
---------------------------------------------- ----- -----
Recycling of fair value movement on close-out
of derivatives (10) (6)
---------------------------------------------- ----- -----
Capital financing costs(1) (15) (29)
---------------------------------------------- ----- -----
Fair value movement on non-hedge accounted
derivatives (7) -
---------------------------------------------- ===== =====
(29) (34)
---------------------------------------------- ===== =====
Financing income
---------------------------------------------- ----- -----
Fair value movement on convertible bonds 42 64
---------------------------------------------- ----- -----
Fair value movement on non-hedge accounted
derivatives - 1
---------------------------------------------- ===== =====
42 65
============================================== ===== =====
Net financing income - capital 13 31
============================================== ===== =====
Net financing costs
---------------------------------------------- ----- -----
Total financing income 44 70
---------------------------------------------- ----- -----
Total financing charges (109) (145)
============================================== ===== =====
Net financing costs (65) (75)
============================================== ===== =====
1 Primarily debenture bonds redemption and tender offer and purchase costs.
Interest payable on unsecured bank loans and related interest rate derivatives was GBP13m (2015/16: GBP19m). Interest on development expenditure is capitalised at the Group's weighted average interest rate of 2.4% (2015/16: 2.6%). The weighted average interest rate on a proportionately consolidated basis at 31 March 2017 was 3.1% (2015/16: 3.3%).
6 Taxation
2017 2016
GBPm GBPm
==================================================== ===== =====
Taxation income (expense)
---------------------------------------------------- ----- -----
Current taxation:
---------------------------------------------------- ----- -----
UK corporation taxation: 20% (2015/16: 20%) (3) (15)
---------------------------------------------------- ----- -----
Adjustments in respect of prior years 4 17
---------------------------------------------------- ===== =====
Total current taxation income 1 2
---------------------------------------------------- ----- -----
Deferred taxation on revaluations and derivatives - 31
==================================================== ===== =====
Group total taxation 1 33
---------------------------------------------------- ----- -----
Attributable to joint ventures and funds 1 (1)
==================================================== ===== =====
Total taxation income 2 32
==================================================== ===== =====
Taxation reconciliation
---------------------------------------------------- ----- -----
Profit on ordinary activities before taxation 195 1,331
---------------------------------------------------- ----- -----
Less: profit attributable to joint ventures
and funds(1) (52) (397)
---------------------------------------------------- ===== =====
Group profit on ordinary activities before
taxation 143 934
---------------------------------------------------- ===== =====
Taxation on profit on ordinary activities
at UK corporation taxation rate of 20% (2015/16:
20%) (29) (187)
---------------------------------------------------- ----- -----
Effects of:
---------------------------------------------------- ----- -----
REIT exempt income and gains 28 161
---------------------------------------------------- ----- -----
Taxation losses (2) 11
---------------------------------------------------- ----- -----
Deferred taxation on revaluations and derivatives - 31
---------------------------------------------------- ----- -----
Adjustments in respect of prior years 4 17
==================================================== ===== ===== Group total taxation income 1 33 ==================================================== ===== =====
1 A current taxation expense of GBPnil (2015/16: charge of GBP1m) and a deferred taxation credit of GBP1m (2015/16: expense of GBPnil) arose on profits attributable to joint ventures and funds. The low tax charges reflects the Group's REIT status.
Taxation expense attributable to Underlying Profit for the year ended 31 March 2017 was a GBPnil (2015/16: GBP2m). Corporation taxation payable at
31 March 2017 was GBP30m (2015/16: GBP18m) as shown on the balance sheet.
7 Property
Property reconciliation for the year ended 31 March 2017
Investment
========================== ====================== ------------------------------------------------------------------
Investment
and
Offices Canada development Owner-
Retail & residential Water Developments properties occupied
Level Level Level Level Level Trading Level
3 3 3 3 3 properties 3 Total
GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
========================== ====== ============== ====== ============ ============ =========== ========= ======
Carrying value at
1 April 2016 5,617 3,436 256 334 9,643 325 95 10,063
-------------------------- ------ -------------- ------ ------------ ------------ ----------- --------- ------
Additions
-------------------------- ------ -------------- ------ ------------ ------------ ----------- --------- ------
- property purchases 80 - 8 - 88 - - 88
-------------------------- ------ -------------- ------ ------------ ------------ ----------- --------- ------
- development expenditure 12 4 10 55 81 56 - 137
-------------------------- ------ -------------- ------ ------------ ------------ ----------- --------- ------
- capitalised interest
and staff costs - - 2 3 5 5 - 10
-------------------------- ------ -------------- ------ ------------ ------------ ----------- --------- ------
- capital expenditure
on asset
management initiatives 82 9 1 - 92 - - 92
-------------------------- ====== ============== ====== ============ ============ =========== ========= ======
174 13 21 58 266 61 - 327
-------------------------- ====== ============== ====== ============ ============ =========== ========= ======
Depreciation - - - - - - (1) (1)
-------------------------- ------ -------------- ------ ------------ ------------ ----------- --------- ------
Disposals (624) (39) - (7) (670) (26) - (696)
-------------------------- ------ -------------- ------ ------------ ------------ ----------- --------- ------
Reclassifications - 271 27 (271) 27 (27) - -
-------------------------- ------ -------------- ------ ------------ ------------ ----------- --------- ------
Revaluations included
in income statement (105) (57) (18) 36 (144) - - (144)
-------------------------- ------ -------------- ------ ------------ ------------ ----------- --------- ------
Movement in tenant
incentives and contracted
rent uplift balances (41) (8) - - (49) 1 - (48)
-------------------------- ====== ============== ====== ============ ============ =========== ========= ======
Carrying value at
31 March 2017 5,021 3,616 286 150 9,073 334 94 9,501
-------------------------- ====== ============== ====== ============ ============ =========== ========= ======
Head lease liabilities
(note 12) (64)
-------------------------- ------ -------------- ------ ------------ ------------ ----------- --------- ------
Valuation surplus on
trading properties 83
================================== ============== ====== ============ ============ =========== ========= ======
Group property portfolio
valuation at 31 March
2017 9,520
---------------------------------- -------------- ------ ------------ ------------ ----------- --------- ------
Non-controlling
interests (310)
========================== ====== ============== ====== ============ ============ =========== ========= ======
Group property portfolio valuation at
31 March 2017 attributable to shareholders 9,210
====================================================================================== =========== ========= ======
Property valuation
The different valuation method levels are defined below:
Level 1: Quoted prices (unadjusted) in active markets for identical assets or liabilities.
Level 2: Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e. as prices)
or indirectly (i.e. derived from prices).
Level 3: Inputs for the asset or liability that are not based on observable market data (unobservable inputs).
These levels are specified in accordance with IFRS 13 'Fair Value Measurement'. Property valuations are inherently subjective as they are made on the basis of assumptions made by the valuer which may not prove to be accurate. For these reasons, and consistent with EPRA's guidance, we have classified the valuations of our property portfolio as Level 3 as defined by IFRS 13. The inputs to the valuations are defined as 'unobservable' by IFRS 13 and these are analysed in a table on the following page. There were no transfers between levels in the period.
The Group's total property portfolio was valued by external valuers on the basis of fair value, in accordance with the RICS Valuation - Professional Standards 2014, ninth edition, published by The Royal Institution of Chartered Surveyors.
The information provided to the valuers, and the assumptions and valuations models used by the valuers are reviewed by the property portfolio team, the Head of Offices, the Head of Retail and the Chief Financial Officer. The valuers meet with the external auditors and also present directly to the Audit Committee at the interim and year end review of results.
Investment properties, excluding properties held for development, are valued by adopting the 'investment method' of valuation. This approach involves applying capitalisation yields to current and future rental streams net of income voids arising from vacancies or rent-free periods and associated running costs. These capitalisation yields and future rental values are based on comparable property and leasing transactions in the market using the valuers' professional judgement and market observation. Other factors taken into account in the valuations include the tenure of the property, tenancy details and ground and structural conditions.
In the case of ongoing developments, the approach applied is the 'residual method' of valuation, which is the investment method of valuation as described above, with a deduction for all costs necessary to complete the development, including a notional finance cost, together with a further allowance for remaining risk. Properties held for development are generally valued by adopting the higher of the residual method of valuation, allowing for all associated risks, or the investment method of valuation for the existing asset.
Copies of the valuation certificates of Knight Frank LLP, CBRE and Jones Lang LaSalle can be found at www.britishland.com/reports
A breakdown of valuations split between the Group and its share of joint ventures and funds is shown below:
2017 2016
============================== ======================== =========================
Joint Joint
ventures ventures
and and
Group funds Total Group funds Total
GBPm GBPm GBPm GBPm GBPm GBPm
============================== ===== ========= ====== ====== ========= ======
Knight Frank LLP 7,031 2,883 9,914 7,529 3,576 11,105
------------------------------ ----- --------- ------ ------ --------- ------
CBRE 2,489 1,380 3,869 2,582 1,361 3,943
------------------------------ ----- --------- ------ ------ --------- ------
Jones Lang LaSalle - 538 538 - - -
============================== ===== ========= ====== ====== ========= ======
Total property portfolio
valuation 9,520 4,801 14,321 10,111 4,937 15,048
------------------------------ ----- --------- ------ ------ --------- ------
Non-controlling interests (310) (71) (381) (324) (76) (400)
============================== ===== ========= ====== ====== ========= ======
Total property portfolio
valuation
attributable to shareholders 9,210 4,730 13,940 9,787 4,861 14,648
============================== ===== ========= ====== ====== ========= ======
Information about fair value measurements using unobservable inputs (Level 3) for the year ended 31 March 2017
ERV per sq Equivalent Costs to complete
ft Yield per sq ft
=============== ====== ============ =================== ================= =====================
Fair
value
at
31
March
2017 Valuation Min Max Average Min Max Average Min Max Average
Investment GBPm technique GBP GBP GBP % % % GBP GBP GBP
=============== ====== ============ ==== ==== ======= === === ======= ===== ===== =======
Investment
Retail 4,987 methodology 2 77 22 4 11 5 - 48 6
--------------- ------ ------------ ---- ---- ------- --- --- ------- ----- ----- -------
Investment
Offices1,2 3,695 methodology 7 117 54 4 7 5 - 150 20
--------------- ------ ------------ ---- ---- ------- --- --- ------- ----- ----- -------
Investment
Canada Water 271 methodology 15 25 22 2 5 3 - 18 10
--------------- ------ ------------ ---- ---- ------- --- --- ------- ----- ----- -------
Residual
Developments2 150 methodology 18 72 54 2 6 4 - 616 508
=============== ====== ============ ==== ==== ======= === === ======= ===== ===== =======
Total 9,103
--------------- ------ ------------ ---- ---- ------- --- --- ------- ----- ----- -------
Trading
properties
at fair
value 417
=============== ====== ============ ==== ==== ======= === === ======= ===== ===== =======
Group property
portfolio
valuation 9,520
=============== ====== ============ ==== ==== ======= === === ======= ===== ===== =======
1 Includes owner-occupied.
2 Includes Residential with an average capital value per sq ft of GBP981 including developments at end value and mixed use.
All other factors being equal:
- a higher equivalent yield or discount rate would lead to a decrease in the valuation of an asset;
- an increase in the current or estimated future rental stream would have the effect of increasing the capital value; and
- an increase in the costs to complete would lead to a decrease in the valuation of an asset.
However, there are interrelationships between the unobservable inputs which are partially determined by market conditions, which would impact on these changes. There were no transfers between valuation levels in the period.
8 Joint ventures and funds
Summary movement for the year of the investments in joint ventures and funds
Joint
ventures Funds Total Equity Loans Total
GBPm GBPm GBPm GBPm GBPm GBPm
=============================== ========= ===== ===== ====== ===== =====
At 1 April 2016 3,109 244 3,353 2,833 520 3,353
------------------------------- --------- ----- ----- ------ ----- -----
Additions 59 3 62 13 49 62
------------------------------- --------- ----- ----- ------ ----- -----
Disposals (30) - (30) - (30) (30)
------------------------------- --------- ----- ----- ------ ----- -----
Share of profit on ordinary
activities after taxation 44 8 52 52 - 52
------------------------------- --------- ----- ----- ------ ----- -----
Distributions and dividends:
------------------------------- --------- ----- ----- ------ ----- -----
Capital (73) - (73) (73) - (73)
------------------------------- --------- ----- ----- ------ ----- -----
Revenue (45) (14) (59) (59) - (59)
------------------------------- --------- ----- ----- ------ ----- -----
Hedging and exchange movements 1 - 1 1 - 1
------------------------------- --------- ----- ----- ------ ----- -----
Reclassification of venture
as held for sale asset (see
page 8) (540) - (540) (355) (185) (540)
=============================== ========= ===== ===== ====== ===== =====
At 31 March 2017 2,525 241 2,766 2,412 354 2,766
=============================== ========= ===== ===== ====== ===== =====
Additional investments in joint ventures and funds covenant information
At 31 March 2017 the investments in joint ventures included within the total investments in joint ventures and funds and joint venture held for sale was GBP3,299m (2015/16: GBP3,348m), being the GBP2,766m total investment shown above, plus the GBP540m joint venture held for sale, less the net investment of GBP7m (2015/16: GBP5m) in PREF, a property fund in Continental Europe.
The summarised income statements and balance sheets below and on the following page show 100% of the results, assets and liabilities of joint ventures and funds. Where necessary these have been restated to the Group's accounting policies.
Joint ventures' and funds' summary financial statements for the year ended 31 March 2017
Hercules
Unit
MSC Leadenhall Trust Other
Property BL The Holding joint joint Total
Broadgate Intermediate Sainsbury Tesco SouthGate USS Co ventures ventures Group
REIT Holdings Superstores Joint Limited Joint (Jersey) and and Total share
Ltd1 Ltd Ltd Ventures2 Partnership Ventures3 Ltd4 sub-funds5 funds6 2017 2017
=============== ========= ============ =========== =========== =========== ============== ========== ========== ======== ======= =======
Universities
Euro Norges Superannuation
Bluebell Bank Scheme
LLP Investment J Sainsbury Tesco Aviva Group Oxford
Partners (GIC) Management plc PLC Investors PLC Properties
=============== ========= ============ =========== =========== =========== ============== ========== ========== ======== ======= =======
City Shopping City
Offices Centres Shopping Shopping Offices Retail
Property sector Broadgate Meadowhall Superstores Superstores Centres Centres Leadenhall Parks
=============== ========= ============ =========== =========== =========== ============== ========== ========== ======== ======= =======
Group share 50% 50% 50% 50% 50% 50% 50% Various
=============== ========= ============ =========== =========== =========== ============== ========== ========== ======== ======= =======
Summarised
income
statements GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
=============== ========= ============ =========== =========== =========== ============== ========== ========== ======== ======= =======
Revenue(7) 245 99 49 19 17 14 43 35 1 522 260
--------------- --------- ------------ ----------- ----------- ----------- -------------- ---------- ---------- -------- ------- -------
Costs (52) (23) - - (5) (5) (10) (4) (1) (100) (50)
=============== ========= ============ =========== =========== =========== ============== ========== ========== ======== ======= =======
193 76 49 19 12 9 33 31 - 422 210
--------------- --------- ------------ ----------- ----------- ----------- -------------- ---------- ---------- -------- ------- -------
Administrative
expenses - - - (2) (1) - - - (1) (4) (2)
--------------- --------- ------------ ----------- ----------- ----------- -------------- ---------- ---------- -------- ------- -------
Net interest
payable (82) (35) (21) (9) (1) - - (4) - (152) (76)
--------------- ========= ============ =========== =========== =========== ============== ========== ========== ======== ======= =======
Underlying
profit 111 41 28 8 10 9 33 27 (1) 266 132
--------------- --------- ------------ ----------- ----------- ----------- -------------- ---------- ---------- -------- ------- -------
Net valuation
movement (185) (1) (46) (29) (6) (7) 107 (16) - (183) (93)
--------------- --------- ------------ ----------- ----------- ----------- -------------- ---------- ---------- -------- ------- -------
Capital
financing
costs - - (12) - - - - - - (12) (6)
--------------- --------- ------------ ----------- ----------- ----------- -------------- ---------- ---------- -------- ------- -------
Profit on
disposal
of investment
properties and
investments - - 3 (3) - - - - 34 34 18
--------------- ========= ============ =========== =========== =========== ============== ========== ========== ======== ======= =======
(Loss) profit
on ordinary
activities
before
taxation (74) 40 (27) (24) 4 2 140 11 33 105 51
--------------- --------- ------------ ----------- ----------- ----------- -------------- ---------- ---------- -------- ------- -------
Taxation - - - 2 - - - - - 2 1
=============== ========= ============ =========== =========== =========== ============== ========== ========== ======== ======= =======
(Loss) profit
on ordinary
activities
after
taxation (74) 40 (27) (22) 4 2 140 11 33 107 52
=============== ========= ============ =========== =========== =========== ============== ========== ========== ======== ======= =======
Other
comprehensive
income 1 - - 1 - - - - - 2 1
=============== ========= ============ =========== =========== =========== ============== ========== ========== ======== ======= =======
Total
comprehensive
income (73) 40 (27) (21) 4 2 140 11 33 109 53
=============== ========= ============ =========== =========== =========== ============== ========== ========== ======== ======= =======
British Land
share of total
comprehensive
(expense)
income (37) 20 (15) (10) 2 1 70 5 17 53
=============== ========= ============ =========== =========== =========== ============== ========== ========== ======== ======= =======
British Land
share of
distributions
payable 32 17 55 4 1 - 5 14 4 132
=============== ========= ============ =========== =========== =========== ============== ========== ========== ======== ======= =======
Summarised
balance
sheets GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
=============== ========= ============ =========== =========== =========== ============== ========== ========== ======== ======= =======
Investment and
trading
properties 4,478 1,842 769 325 264 247 - 603 1 8,529 4,265
--------------- --------- ------------ ----------- ----------- ----------- -------------- ---------- ---------- -------- ------- -------
Current assets 2 5 - - 1 1 3 52 64 32
--------------- --------- ------------ ----------- ----------- ----------- -------------- ---------- ---------- -------- ------- -------
Cash and
deposits 290 37 17 2 8 7 - 10 28 399 200
--------------- ========= ============ =========== =========== =========== ============== ========== ========== ======== ======= =======
Gross assets 4,770 1,884 786 327 273 255 - 616 81 8,992 4,497
--------------- ========= ============ =========== =========== =========== ============== ========== ========== ======== ======= =======
Current
liabilities (88) (41) (22) (2) (4) (6) - (10) (19) (192) (96)
--------------- --------- ------------ ----------- ----------- ----------- -------------- ---------- ---------- -------- ------- -------
Bank and
securitised
debt (1,794) (668) (367) (185) - - - (139) - (3,153) (1,577)
--------------- --------- ------------ ----------- ----------- ----------- -------------- ---------- ---------- -------- ------- -------
Loans from
joint
venture
partners (357) (317) - - - (22) - - (12) (708) (354)
--------------- --------- ------------ ----------- ----------- ----------- -------------- ---------- ---------- -------- ------- -------
Other
non-current
liabilities (56) (23) - (4) (28) - - (4) - (115) (58)
--------------- ========= ============ =========== =========== =========== ============== ========== ========== ======== ======= =======
Gross
liabilities (2,295) (1,049) (389) (191) (32) (28) - (153) (31) (4,168) (2,085)
=============== ========= ============ =========== =========== =========== ============== ========== ========== ======== ======= =======
Net assets 2,475 835 397 136 241 227 - 463 50 4,824 2,412
=============== ========= ============ =========== =========== =========== ============== ========== ========== ======== ======= =======
British Land
share of net
assets less
shareholder
loans 1,237 417 199 68 121 114 - 231 25 2,412
=============== ========= ============ =========== =========== =========== ============== ========== ========== ======== ======= =======
1 Included within the Broadgate REIT net valuation movement is a GBP20m payment received in December 2016 from UBS A.G. in relation to the development and occupation of 5 Broadgate, and subsequent vacation of 100 Liverpool Street, including 8-10 Broadgate.
2 Tesco joint ventures include BLT Holdings (2010) Limited as at 31 March 2017.
3 USS joint ventures include the Eden Walk Shopping Centre Unit Trust and the Fareham Property Partnership.
4 The Leadenhall column shows the equity accounted profit and loss for the period. Due to the transaction which exchanged in March 2017, the net investment in this venture was reclassified as a held for sale asset.
5 Hercules Unit Trust joint ventures and sub-funds includes 50% of the results of Deepdale Co-Ownership Trust, Gibraltar Limited Partnership and Valentine Co-Ownership Trust and 41.25% of Birstall Co-Ownership Trust. The balance sheet shows 50% of the assets of these joint ventures and sub-funds.
6 Included in the column headed 'Other joint ventures and funds' are contributions from the following: BL Goodman Limited Partnership, The Aldgate Place Limited Partnership, Bluebutton Property Management UK Limited, City of London Office Unit Trust and Pillar Retail Europark Fund (PREF). The Group's ownership share of PREF is 65%, however as the Group is not able to exercise control over significant decisions of the fund, the Group equity accounts for its interest in PREF.
7 Revenue includes gross rental income at 100% share of GBP437m (2015/16: GBP451m).
The borrowings of joint ventures and funds and their subsidiaries are non-recourse to the Group. All joint ventures are incorporated in the United Kingdom, with
the exception of Broadgate REIT Limited, the Eden Walk Shopping Centre Unit Trust and Leadenhall Holding Co (Jersey) Limited which are incorporated in Jersey.
Of the funds, the Hercules Unit Trust (HUT) joint ventures and sub-funds are incorporated in Jersey and PREF in Luxembourg.
These financial statements include the results and financial position of the Group's interest in the Fareham Property Partnership, the Aldgate Place Limited Partnership, the BL Goodman Limited Partnership, the Auchinlea Partnership and the Gibraltar Limited Partnership. Accordingly, advantage has been taken of the exemptions provided by Regulation 7 of the Partnership (Accounts) Regulations 2008, not to attach the partnership accounts to these financial statements.
Joint venture held for sale
On 1 March 2017 the Group exchanged conditional contracts on an agreement to sell its interest in Leadenhall Holding Co (Jersey) Limited, a joint venture with Oxford Properties. The transaction is expected to complete in the first half of the next financial year, and therefore the net investment in the joint venture has been recognised as a held-for-sale asset from the date of exchange. The net investment as at 31 March 2017 is summarised below.
Joint venture held for sale - summarised balance sheet for the year ended 31 March
Leadenhall Holding
Co (Jersey) Limited
================================================== ======================
2017 2016
GBPm GBPm
================================================== ========== ==========
Investment property 1,075 -
-------------------------------------------------- ---------- ----------
Current assets 17 -
-------------------------------------------------- ---------- ----------
Current liabilities (13) -
-------------------------------------------------- ---------- ----------
Loans from joint venture partners (371) -
-------------------------------------------------- ========== ==========
Net assets 708 -
================================================== ========== ==========
British Land share of net assets less shareholder
loans 355 -
================================================== ========== ==========
Operating cash flows of joint ventures and funds (Group share)
2017 2016
GBPm GBPm
=================================================== ===== =====
Rental income received from tenants 207 208
--------------------------------------------------- ----- -----
Fees and other income received - 1
--------------------------------------------------- ----- -----
Operating expenses paid to suppliers and employees (20) (18)
--------------------------------------------------- ===== =====
Cash generated from operations 187 191
--------------------------------------------------- ===== =====
Interest paid (84) (86)
--------------------------------------------------- ----- -----
Interest received 1 1
--------------------------------------------------- ----- -----
UK corporation tax paid (2) (3)
--------------------------------------------------- ----- -----
Foreign tax paid - (1)
=================================================== ===== =====
Cash inflow from operating activities 102 102
=================================================== ===== =====
Cash inflow from operating activities deployed
as:
--------------------------------------------------- ----- -----
Surplus cash retained within joint ventures
and funds 43 44
--------------------------------------------------- ----- -----
Revenue distributions per consolidated statement
of cash flows 59 58
--------------------------------------------------- ----- -----
Revenue distributions split between controlling
and non-controlling interests
=================================================== ===== =====
Attributable to non-controlling interests 4 4
--------------------------------------------------- ----- -----
Attributable to shareholders of the Company 55 54
=================================================== ===== =====
9 Other investments
2017 2016
============= =============================== ===============================
Investment Loans, Investment Loans,
held receivables held receivables
for and for and
trading other Total trading other Total
GBPm GBPm GBPm GBPm GBPm GBPm
============= ========== ============ ===== ========== ============ =====
At 1 April 101 41 142 99 280 379
------------- ---------- ------------ ----- ---------- ------------ -----
Additions - 25 25 - 35 35
------------- ---------- ------------ ----- ---------- ------------ -----
Disposals - (2) (2) - (272) (272)
------------- ---------- ------------ ----- ---------- ------------ -----
Revaluation (8) - (8) 2 - 2
------------- ---------- ------------ ----- ---------- ------------ -----
Depreciation - (3) (3) - (2) (2)
============= ========== ============ ===== ========== ============ =====
At 31 March 93 61 154 101 41 142
============= ========== ============ ===== ========== ============ =====
The investment held for trading comprises interests as a trust beneficiary. The trust's assets comprise freehold reversions in a pool of commercial properties, comprising Sainsbury's superstores. The interest was categorised as Level 3 in the fair value hierarchy, is subject to the same inputs as those disclosed in note 7, and its fair value was determined by the Directors, supported by an external valuation.
10 Debtors
2017 2016
GBPm GBPm
============================================ ===== =====
Trade and other debtors 22 24
-------------------------------------------- ----- -----
Deposits received relating to held for sale
asset(1) 144 -
-------------------------------------------- ----- -----
Prepayments and accrued income 5 9
============================================ ===== =====
171 33
============================================ ===== =====
1 Relates to deposit received on held for sale joint venture transaction (see note 8) recognised as a financial asset, the realisation of which is conditional and not guaranteed as at the balance sheet date.
Trade and other debtors are shown after deducting a provision for bad and doubtful debts of GBP14m (2015/16: GBP16m). The charge to the income statement in relation to bad and doubtful debts was GBP1m (2015/16: GBP1m).
The Directors consider that the carrying amount of trade and other debtors is approximate to 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.
As at 31 March, trade and other debtors outside their payment terms yet not provided for are as follows:
Outside credit
terms but not
impaired
===== ===== ======= ==========================
Within More
credit 0-1 1-2 than
Total terms month months 2 months
GBPm GBPm GBPm GBPm GBPm
===== ===== ======= ====== ======= =========
2017 22 7 9 4 2
===== ===== ======= ====== ======= =========
2016 24 12 11 1 -
===== ===== ======= ====== ======= =========
11 Creditors
2017 2016
GBPm GBPm
============================================ ===== =====
Trade creditors 127 39
-------------------------------------------- ----- -----
Deposits received relating to held for sale
asset(1) 144 -
-------------------------------------------- ----- -----
Other taxation and social security 32 34
-------------------------------------------- ----- -----
Accruals 83 72
-------------------------------------------- ----- -----
Deferred income 72 73
============================================ ===== =====
458 218
============================================ ===== =====
1 Relates to deposit received on held for sale joint venture transaction (see note 8) recognised as a financial lability, the realisation of which is conditional and not guaranteed as at the balance sheet date.
Trade creditors are interest-free and have settlement dates within one year. The Directors consider that the carrying amount of trade and other creditors is approximate to their fair value.
12 Other non-current liabilities
2017 2016
GBPm GBPm
======================== ===== =====
Other creditors 1 70
------------------------ ----- -----
Head leases(1) 64 46
------------------------ ----- -----
Net pension liabilities 13 6
======================== ===== =====
78 122
======================== ===== =====
1 Includes GBPnil in relation to head lease liabilities on trading properties held at cost (2015/16: GBP9m).
13 Deferred tax
The movement on deferred tax is as shown below:
Deferred tax assets year ended 31 March 2017
Credited Transferred
1 April Credited (debited) to corporation 31 March
2016 to income to equity tax 2017
GBPm GBPm GBPm GBPm GBPm
=========================== ======= ========== ========== =============== ========
Interest rate and currency
derivative revaluations 5 (1) - - 4
--------------------------- ------- ---------- ---------- --------------- --------
Other timing differences 6 1 - - 7
=========================== ======= ========== ========== =============== ========
11 - - - 11
=========================== ======= ========== ========== =============== ========
Deferred tax liabilities year ended 31 March 2017
GBPm GBPm GBPm GBPm GBPm
=========================== ==== ==== ==== ==== ====
Property and investment
revaluations (7) - - - (7)
--------------------------- ---- ---- ---- ---- ----
Interest rate and currency
derivative revaluations - - - - -
--------------------------- ---- ---- ---- ---- ----
Other timing differences (1) - - 1 -
=========================== ==== ==== ==== ==== ====
(8) - - 1 (7)
=========================== ==== ==== ==== ==== ====
Net deferred tax assets 3 - - 1 4
=========================== ==== ==== ==== ==== ====
Deferred tax assets year ended 31 March 2016
Credited Transferred
1 April Credited (debited) to joint 31 March
2015 to income to equity ventures 2016
GBPm GBPm GBPm GBPm GBPm
=========================== ======= ========== ========== =========== ========
Interest rate and currency
derivative revaluations - - 5 - 5
--------------------------- ------- ---------- ---------- ----------- --------
Other timing differences - 6 - - 6
=========================== ======= ========== ========== =========== ========
- 6 5 - 11
=========================== ======= ========== ========== =========== ========
Deferred tax liabilities year ended 31 March 2016
GBPm GBPm GBPm GBPm GBPm
============================= ==== ==== ==== ==== ====
Property and investment
revaluations (5) - (2) - (7)
----------------------------- ---- ---- ---- ---- ----
Interest rate and currency
derivative revaluations (4) 25 (21) - -
----------------------------- ---- ---- ---- ---- ----
Other timing differences (3) - - 2 (1)
============================= ==== ==== ==== ==== ====
(12) 25 (23) 2 (8)
============================= ==== ==== ==== ==== ====
Net deferred tax (liability)
assets (12) 31 (18) 2 3
============================= ==== ==== ==== ==== ====
The following corporation tax rates have been substantively enacted; 19% effective from 1 April 2017 reducing to 17% effective from 1 April 2020. The deferred tax assets and liabilities have been calculated at the tax rate effective in the period that the tax is expected to crystallise.
The Group has recognised a deferred tax asset calculated at 17% (2015/2016: 18%) of GBP5m (2015/2016: GBP6m) in respect of capital losses from previous years available for offset against future capital profit. Further unrecognised deferred tax assets in respect of capital losses of GBP129m (2015/2016: GBP60m) exist at 31 March 2017.
The Group has recognised deferred tax assets on derivative revaluations to the extent that future matching taxable profits are expected to arise.
At 31 March 2017, the Group had an unrecognised deferred tax asset calculated at 17% (2015/2016: 18%) of GBP50m (2015/2016: GBP51m) in respect
of UK revenue tax losses from previous years.
Under the REIT regime, development properties which are sold within three years of completion do not benefit from tax exemption. At 31 March 2017, the value of such properties is GBP176m (2015/2016: GBP967m) and if these properties were to be sold and no tax exemption was available, the tax arising would be GBP13m (2015/16: GBP56m).
14 Net debt
2017 2016
Footnote GBPm GBPm
=================================================== ======== ===== =====
Secured on the assets of the Group
--------------------------------------------------- -------- ----- -----
9.125% First Mortgage Debenture Stock 2020 1.1 34 34
--------------------------------------------------- -------- ----- -----
5.264% First Mortgage Debenture Bonds 2035 377 371
--------------------------------------------------- -------- ----- -----
5.0055% First Mortgage Amortising Debentures
2035 99 100
--------------------------------------------------- -------- ----- -----
5.357% First Mortgage Debenture Bonds 2028 348 349
--------------------------------------------------- -------- ----- -----
6.75% First Mortgage Debenture Stock 2020 - 62
--------------------------------------------------- -------- ----- -----
1.2,
Bank loans 1.3 475 733
--------------------------------------------------- -------- ----- -----
Loan notes 2 2
--------------------------------------------------- -------- ===== =====
1,335 1,651
--------------------------------------------------- -------- ----- -----
Unsecured
--------------------------------------------------- -------- ----- -----
5.50% Senior Notes 2027 102 101
--------------------------------------------------- -------- ----- -----
3.895% Senior US Dollar Notes 2018 2 32 28
--------------------------------------------------- -------- ----- -----
4.635% Senior US Dollar Notes 2021 2 181 165
--------------------------------------------------- -------- ----- -----
4.766% Senior US Dollar Notes 2023 2 113 105
--------------------------------------------------- -------- ----- -----
5.003% Senior US Dollar Notes 2026 2 73 69
--------------------------------------------------- -------- ----- -----
3.81% Senior Notes 2026 114 113
--------------------------------------------------- -------- ----- -----
3.97% Senior Notes 2026 117 116
--------------------------------------------------- -------- ----- -----
1.5% Convertible Bond 2017 406 445
--------------------------------------------------- -------- ----- -----
0% Convertible Bond 2020 331 334
--------------------------------------------------- -------- ----- -----
Bank loans and overdrafts 477 634
--------------------------------------------------- -------- ===== =====
1,946 2,110
=================================================== ======== ===== =====
Gross debt 3 3,281 3,761
=================================================== ======== ===== =====
Interest rate and currency derivative liabilities 144 137
--------------------------------------------------- -------- ----- -----
Interest rate and currency derivative assets (217) (167)
--------------------------------------------------- -------- ----- -----
Cash and short term deposits 4,5 (114) (114)
=================================================== ======== ===== =====
Total net debt 3,094 3,617
=================================================== ======== ===== =====
Net debt attributable to non-controlling
interests (103) (104)
=================================================== ======== ===== =====
Net debt attributable to shareholders of
the Company 2,991 3,513
=================================================== ======== ===== =====
1 These are non-recourse borrowings with no recourse for repayment to other companies or assets in the Group:
2017 2016
GBPm GBPm
============================================ ===== =====
1.1 BLD Property Holdings Ltd 34 34
-------------------------------------------- ----- -----
1.2 Hercules Unit Trust 475 443
-------------------------------------------- ----- -----
1.3 TBL Properties Limited and subsidiaries - 290
============================================ ===== =====
509 767
============================================ ===== =====
2 Principal and interest on these borrowing were fully hedged into Sterling at a floating rate at the time of issue.
3 The principal amount of gross debt at 31 March 2017 was GBP3,069m (2015/16: GBP3,552m). Included in this is the principal amount of secured borrowings and other borrowings of non-recourse companies of GBP1,238m of which the borrowings of the partly-owned subsidiary, Hercules Unit Trust, not beneficially owned by the Group is GBP112m.
4 Included within cash and short term deposits is the cash and short term deposits of Hercules Unit Trust, of which GBP9m is the proportion not beneficially owned by the Group.
5 Cash and deposits not subject to a security interest amount to GBP99m (2015/16: GBP93m).
Maturity analysis of net debt
2017 2016
GBPm GBPm
========================================== ===== =====
Repayable: within one year and on demand 464 74
------------------------------------------ ===== =====
Between: one and two years 31 504
------------------------------------------ ----- -----
two and five years 1,283 1,491
------------------------------------------ ----- -----
five and ten years 783 807
------------------------------------------ ----- -----
ten and fifteen years 332 500
------------------------------------------ ----- -----
fifteen and twenty years 388 385
------------------------------------------ ----- -----
twenty and twenty five years - -
------------------------------------------ ===== =====
2,817 3,687
------------------------------------------ ===== =====
Gross debt 3,281 3,761
------------------------------------------ ===== =====
Interest rate and currency derivatives (73) (30)
------------------------------------------ ----- -----
Cash and short term deposits (114) (114)
========================================== ===== =====
Net debt 3,094 3,617
========================================== ===== =====
1.5% Convertible bond 2012 (maturity 2017)
On 10 September 2012, British Land (Jersey) Limited (the 2012 Issuer), a wholly-owned subsidiary of the Group, issued GBP400 million 1.5% guaranteed convertible bonds due 2017 (the 2012 bonds) at par. The 2012 Issuer is fully guaranteed by the Company in respect of the 2012 bonds.
Subject to their terms, the 2012 bonds are convertible into preference shares of the 2012 Issuer which are automatically transferred to the Company in exchange for ordinary shares in the Company or, at the Company's election, any combination of ordinary shares and cash. Bondholders may exercise their conversion right at any time up to (but excluding) the 20th dealing day before 10 September 2017 (the maturity date).
The initial exchange price was 693.07 pence per ordinary share. The exchange price is adjusted based on certain events.
From 25 September 2015, the Company has the option to redeem the 2012 bonds at par if the Company's share price has traded above 130% of the exchange price for a specified period, or at any time once 85% by nominal value of the 2012 bonds have been converted, redeemed, or purchased and cancelled. The 2012 bonds will be redeemed at par on 10 September 2017 (the maturity date) if they have not already been converted, redeemed or purchased and cancelled. No redemption of the bonds occurred in the year.
0% Convertible bond 2015 (maturity 2020)
On 9 June 2015, British Land (White) 2015 Limited (the 2015 Issuer), a wholly owned subsidiary of the Group, issued GBP350 million zero coupon guaranteed convertible bonds due 2020 (the 2015 bonds) at par. The 2015 Issuer is fully guaranteed by the Company in respect of the 2015 bonds.
Subject to their terms, the 2015 bonds are convertible into preference shares of the 2015 Issuer which are automatically transferred to the Company in exchange for ordinary shares in the Company or, at the Company's election, any combination of ordinary shares and cash. From 20 July 2015 up to and including 29 June 2018, a bondholder may exercise its conversion right if the share price has traded at a level exceeding 130% of the exchange price for a specified period. Thereafter, and up to but excluding the 7th dealing day before 9 June 2020 (the maturity date), a bondholder may convert at any time.
The initial exchange price was 1103.32 pence per ordinary share. The exchange price is adjusted based on certain events (such as the Company paying dividends in any quarter above 3.418 pence per ordinary share). As at 31 March 2017 the exchange price was 1063.79 pence per ordinary share.
From 30 June 2018, the Company has the option to redeem the 2015 bonds at par if the Company's share price has traded above 130% of the exchange price for a specified period, or at any time once 85% by nominal value of the 2015 bonds have been converted, redeemed, or purchased and cancelled. The 2015 bonds will be redeemed at par on 9 June 2020 (the maturity date) if they have not already been converted, redeemed or purchased and cancelled.
Fair value and book value of net debt
2017 2016
============================= ========================== ==========================
Fair Book Fair Book
value value Difference value value Difference
GBPm GBPm GBPm GBPm GBPm GBPm
============================= ====== ====== ========== ====== ====== ==========
Debentures and unsecured
bonds 1,682 1,590 92 1,637 1,613 24
----------------------------- ------ ------ ---------- ------ ------ ----------
Convertible bonds 737 737 - 779 779 -
----------------------------- ------ ------ ---------- ------ ------ ----------
Bank debt and other floating
rate debt 963 954 9 1,384 1,369 15
============================= ====== ====== ========== ====== ====== ==========
Gross debt 3,382 3,281 101 3,800 3,761 39
============================= ====== ====== ========== ====== ====== ==========
Interest rate and currency
derivative liabilities 144 144 - 137 137 -
----------------------------- ------ ------ ---------- ------ ------ ----------
Interest rate and currency
derivative assets (217) (217) - (167) (167) -
----------------------------- ------ ------ ---------- ------ ------ ----------
Cash and short term deposits (114) (114) - (114) (114) - ============================= ====== ====== ========== ====== ====== ========== Net debt 3,195 3,094 101 3,656 3,617 39 ============================= ====== ====== ========== ====== ====== ========== Net debt attributable to non-controlling interests (105) (103) (2) (106) (104) (2) ----------------------------- ------ ------ ---------- ------ ------ ---------- Net debt attributable to shareholders of the Company 3,090 2,991 99 3,550 3,513 37 ============================= ====== ====== ========== ====== ====== ==========
The fair values of debentures, unsecured bonds and the convertible bonds have been established by obtaining quoted market prices from brokers. The bank debt and other floating rate debt has been valued assuming it 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.
Short term debtors and creditors and other investments have been excluded from the disclosures on the basis that the fair value is equivalent to the book value. The fair value hierarchy level (as defined in note 7) of debt held at amortised cost whose fair value is disclosed is level 2.
Group loan to value (LTV)
2017 2016
GBPm GBPm
============================================== ====== ======
Group loan to value (LTV) 22.6% 25.2%
============================================== ====== ======
Principal amount of gross debt 3,069 3,552
---------------------------------------------- ------ ------
Less debt attributable to non-controlling
interests (112) (109)
---------------------------------------------- ------ ------
Less cash and short term deposits (balance
sheet) (114) (114)
---------------------------------------------- ------ ------
Plus cash attributable to non-controlling
interests 9 8
============================================== ====== ======
Total net debt for LTV calculation 2,852 3,337
============================================== ====== ======
Group property portfolio valuation (note 7) 9,520 10,111
---------------------------------------------- ------ ------
Investments in joint ventures and funds (note
8) 2,766 3,353
---------------------------------------------- ------ ------
Joint venture held for sale (note 8) 540 -
---------------------------------------------- ------ ------
Other investments (note 9) 154 142
---------------------------------------------- ------ ------
Less property and investments attributable
to non-controlling interests (364) (384)
============================================== ====== ======
Total assets for LTV calculation 12,616 13,222
============================================== ====== ======
Proportionally consolidated loan to value (LTV)
2017 2016
GBPm GBPm
================================================ ====== ======
Proportionally consolidated loan to value
(LTV) 29.9% 32.1%
================================================ ====== ======
Principal amount of gross debt 4,649 5,217
------------------------------------------------ ------ ------
Less debt attributable to non-controlling
interests (128) (128)
------------------------------------------------ ------ ------
Less cash and short term deposits (323) (353)
------------------------------------------------ ------ ------
Plus cash attributable to non-controlling
interests 9 9
================================================ ====== ======
Total net debt for proportional LTV calculation 4,207 4,745
================================================ ====== ======
Group property portfolio valuation (note 7) 9,520 10,111
------------------------------------------------ ------ ------
Share of property of joint ventures and funds
(note 7) 4,801 4,937
------------------------------------------------ ------ ------
Other investments (note 9) 154 142
------------------------------------------------ ------ ------
Less other investments attributable to joint
ventures and funds (3) (4)
------------------------------------------------ ------ ------
Less property attributable to non-controlling
interests (381) (400)
================================================ ====== ======
Total assets for proportional LTV calculation 14,091 14,786
================================================ ====== ======
British Land Unsecured Financial Covenants
The two financial covenants applicable to the Group unsecured debt including convertible bonds are shown below:
2017 2016
GBPm GBPm
================================================== ===== =====
Net Borrowings not to exceed 175% of Adjusted
Capital and Reserves 29% 34%
================================================== ===== =====
Principal amount of gross debt 3,069 3,552
-------------------------------------------------- ----- -----
Less the relevant proportion of borrowings
of the partly-owned subsidiary/non-controlling
interests (112) (109)
-------------------------------------------------- ----- -----
Less cash and deposits (balance sheet) (114) (114)
-------------------------------------------------- ----- -----
Plus the relevant proportion of cash and deposits
of the partly-owned subsidiary/non-controlling
interests 9 8
================================================== ===== =====
Net Borrowings 2,852 3,337
================================================== ===== =====
Share capital and reserves (balance sheet) 9,476 9,619
-------------------------------------------------- ----- -----
EPRA deferred tax adjustment (EPRA Table A) 3 5
-------------------------------------------------- ----- -----
Trading property surpluses (EPRA Table A) 83 93
-------------------------------------------------- ----- -----
Exceptional refinancing charges (see below) 274 287
-------------------------------------------------- ----- -----
Fair value adjustments of financial instruments
(EPRA Table A) 155 198
-------------------------------------------------- ----- -----
Less reserves attributable to non-controlling
interests (balance sheet) (255) (277)
================================================== ===== =====
Adjusted Capital and Reserves 9,736 9,925
================================================== ===== =====
In calculating Adjusted Capital and Reserves for the purpose of the unsecured debt financial covenants, there is an adjustment of GBP274m (2015/16: GBP287m) to reflect the cumulative net amortised exceptional items relating to the refinancings in the years ended 31 March 2005, 2006 and 2007.
2017 2016
GBPm GBPm
===================================================================== ======= =======
Net Unsecured Borrowings not to exceed 70%
of Unencumbered Assets 26% 29%
===================================================================== ======= =======
Principal amount of gross debt 3,069 3,552
--------------------------------------------------------------------- ------- -------
Less cash and deposits not subject to a security
interest (being GBP99m less the relevant proportion
of cash and deposits of the partly owned subsidiary/non-controlling
interests of GBP3m) (96) (88)
--------------------------------------------------------------------- ------- -------
Less principal amount of secured and non-recourse
borrowings (1,238) (1,563)
===================================================================== ======= =======
Net Unsecured Borrowings 1,735 1,901
===================================================================== ======= =======
Group property portfolio valuation (note 7) 9,520 10,111
--------------------------------------------------------------------- ------- -------
Investments in joint ventures and funds (note
8) 2,766 3,353
--------------------------------------------------------------------- ------- -------
Joint venture held for sale (note 8) 540 - --------------------------------------------------------------------- ------- ------- Other investments (note 9) 154 142 --------------------------------------------------------------------- ------- ------- Less investments in joint ventures and joint venture held for sale (note 8) (3,299) (3,348) --------------------------------------------------------------------- ------- ------- Less encumbered assets (3,040) (3,803) ===================================================================== ======= ======= Unencumbered Assets 6,641 6,455 ===================================================================== ======= =======
Reconciliation of movement in Group net debt for the year ended 31 March 2017
Arrangement
Cash Foreign Fair costs
2016 flows Transfers3 exchange value amortisation 2017
========================== ===== ====== ========== ========= ====== ============= =====
Short term borrowings 74 (74) 464 - - - 464
-------------------------- ----- ------ ---------- --------- ------ ------------- -----
Long term borrowings 3,687 (423) (464) 49 (36) 4 2,817
-------------------------- ----- ------ ---------- --------- ------ ------------- -----
Derivatives(1) (30) 1 - (48) 4 - (73)
========================== ===== ====== ========== ========= ====== ============= =====
Total liabilities from
financing activities 3,731 (496) - 1 (32) 4 3,208
-------------------------- ----- ------ ---------- --------- ------ ------------- -----
Cash and cash equivalents (114) - - - - - (114)
========================== ===== ====== ========== ========= ====== ============= =====
Net debt 3,617 (496) - 1 (32) 4 3,094
========================== ===== ====== ========== ========= ====== ============= =====
Reconciliation of movement in Group net debt for the year ended 31 March 2016
Arrangement
Cash Foreign Fair costs
2015 flows Transfers3 exchange value amortisation 2016
========================== ===== ====== ========== ========= ====== ============= =====
Short term borrowings 102 (104) 74 2 - - 74
-------------------------- ----- ------ ---------- --------- ------ ------------- -----
Long term borrowings 3,847 (98) (74) 14 (9) 7 3,687
-------------------------- ----- ------ ---------- --------- ------ ------------- -----
Derivatives(2) (13) 22 - (13) (26) - (30)
========================== ===== ====== ========== ========= ====== ============= =====
Total liabilities from
financing activities 3,936 (180) - 3 (35) 7 3,731
-------------------------- ----- ------ ---------- --------- ------ ------------- -----
Cash and cash equivalents (108) (6) - - - - (114)
========================== ===== ====== ========== ========= ====== ============= =====
Net debt 3,828 (186) - 3 (35) 7 3,617
========================== ===== ====== ========== ========= ====== ============= =====
1 Cash flows on derivatives include GBP14m of net receipts on derivative interest.
2 Cash flows on derivatives include GBP7m of net receipts on derivative interest.
3 Transfers comprises debt maturing from long term to short term borrowings.
Fair value hierarchy
The table below provides an analysis of financial instruments carried at fair value, by the valuation method. The fair value hierarchy levels are defined in note 7.
2017 2016
===================== ========================== ==========================
Level Level Level Level Level Level
1 2 3 Total 1 2 3 Total
GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
===================== ===== ===== ===== ===== ===== ===== ===== =====
Interest rate and
currency derivative
assets - (217) - (217) - (167) - (167)
--------------------- ----- ----- ----- ----- ----- ----- ----- -----
Other investments
- available for
sale (14) - - (14) - - - -
--------------------- ----- ----- ----- ----- ----- ----- ----- -----
Other investments
- held for trading - - (93) (93) - - (101) (101)
===================== ===== ===== ===== ===== ===== ===== ===== =====
Assets (14) (217) (93) (324) - (167) (101) (268)
===================== ===== ===== ===== ===== ===== ===== ===== =====
Interest rate and
currency derivative
liabilities - 144 - 144 - 137 - 137
--------------------- ----- ----- ----- ----- ----- ----- ----- -----
Convertible bonds 737 - - 737 779 - - 779
===================== ===== ===== ===== ===== ===== ===== ===== =====
Liabilities 737 144 - 881 779 137 - 916
===================== ===== ===== ===== ===== ===== ===== ===== =====
Total 723 (73) (93) 557 779 (30) (101) 648
===================== ===== ===== ===== ===== ===== ===== ===== =====
Categories of financial instruments
2017 2016
GBPm GBPm
======================================================= ======= =======
Financial assets
------------------------------------------------------- ------- -------
Fair value through income statement
------------------------------------------------------- ------- -------
Other investments - held for trading 93 101
------------------------------------------------------- ------- -------
Derivatives in designated hedge accounting
relationships 215 164
------------------------------------------------------- ------- -------
Derivatives not in designated hedge accounting
relationships 2 3
------------------------------------------------------- ------- -------
Loans and receivables
------------------------------------------------------- ------- -------
Debtors 166 24
------------------------------------------------------- ------- -------
Cash and short term deposits 114 114
------------------------------------------------------- ------- -------
Other investments - loans and receivables 61 41
======================================================= ======= =======
651 447
------------------------------------------------------- ------- -------
Financial liabilities
------------------------------------------------------- ------- -------
Fair value through income statement
------------------------------------------------------- ------- -------
Convertible bonds (737) (779)
------------------------------------------------------- ------- -------
Derivatives in designated hedge accounting
relationships (143) (137)
------------------------------------------------------- ------- -------
Derivatives not in designated accounting relationships (1) -
------------------------------------------------------- ------- -------
Amortised cost
------------------------------------------------------- ------- -------
Gross debt (2,544) (2,982)
------------------------------------------------------- ------- -------
Head leases payable (64) (46)
------------------------------------------------------- ------- -------
Creditors (373) (133)
======================================================= ======= =======
(3,862) (4,077)
======================================================= ======= =======
Total (3,211) (3,630)
======================================================= ======= =======
Gains and losses on financial instruments, as classed above, are disclosed in note 5 (net financing costs), note 10 (debtors), note 4 (valuation movements on property), the consolidated income statement and the consolidated statement of comprehensive income. The Directors consider that the carrying amounts of other investments and head leases payable are approximate to their fair value, and that the carrying amounts are recoverable.
Maturity of committed undrawn borrowing facilities
2017 2016
GBPm GBPm
=============================================== ===== =====
Maturity date: over five years 125 -
----------------------------------------------- ----- -----
between four and five years 1,110 1,113
----------------------------------------------- ----- -----
between three and four years 58 95
=============================================== ===== =====
Total facilities available for more than three
years 1,293 1,208
=============================================== ===== =====
Between two and three years 149 85
----------------------------------------------- ----- -----
Between one and two years - -
----------------------------------------------- ----- -----
Within one year 2 60
=============================================== ===== =====
Total 1,444 1,353
=============================================== ===== =====
The above facilities are comprised of British Land undrawn facilities of GBP1,322m, plus undrawn facilities of Hercules Unit Trust totalling GBP122m.
15 Dividend
The fourth quarter interim dividend of 7.30 pence per share, totalling GBP75m (2015/16: 7.09 pence per share, totalling GBP73m) was approved by the Board on 16 May 2017 and is payable on 4 August 2017 to shareholders on the register at the close of business on 30 June 2017.
The Board will announce the availability of the Scrip Dividend Alternative, if available, via the Regulatory News Service and on its website (www.britishland.com/dividends), no later than four business days before the ex-dividend date of 30 June 2017. The Board expects to announce the split between Property Income Distributions (PID) and non-PID income at that time. Any 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/dividends for details.
Pence
per 2017 2016
Payment date Dividend share GBPm GBPm
====================== ================= ======= ===== =====
Current year dividends
----------------------------------------- ------- ----- -----
05.08.2017 2017 4th interim 7.30
---------------------- ----------------- ------- ----- -----
06.05.2017 2017 3rd interim 7.30
---------------------- ----------------- ------- ----- -----
12.02.2017 2017 2nd interim 7.30 75
---------------------- ----------------- ------- ----- -----
06.11.2016 2017 1st interim 7.30 75
---------------------- ----------------- ======= ----- -----
29.20
---------------------------------------- ======= ----- -----
Prior year dividends
---------------------- ----------------- ------- ----- -----
05.08.2016 2016 4th interim 7.09(1) 73
---------------------- ----------------- ------- ----- -----
06.05.2016 2016 3rd interim 7.09 73
---------------------- ----------------- ------- ----- -----
12.02.2016 2016 2nd interim 7.09 73
---------------------- ----------------- ------- ----- -----
06.11.2015 2016 1st interim 7.09 72
---------------------- ----------------- ======= ----- -----
28.36
---------------------------------------- ======= ----- -----
07.08.2015 2015 4th interim 6.92(2) 71
---------------------- ----------------- ------- ----- -----
06.05.2015 2015 3rd interim 6.92 71
====================== ================= ======= ===== =====
Dividends in consolidated statement
of changes in equity 296 287
----------------------------------------- ------- ----- -----
Dividends settled in shares - (52)
========================================= ======= ===== =====
Dividends settled in cash 296 235
----------------------------------------- ------- ----- -----
Timing difference relating to payment
of withholding tax (1) -
========================================= ======= ===== =====
Dividends in cash flow statement 295 235
========================================= ======= ===== =====
1 Dividend split half PID, half non-PID.
2 Scrip alternative treated as non-PID for this dividend.
16 Share capital and reserves
2017 2016
====================================== ============== =============
Number of ordinary shares in issue at
1 April 1,040,562,323 1,031,788,286
-------------------------------------- -------------- -------------
Share issues 472,735 8,774,037
====================================== ============== =============
At 31 March 1, 041,035,058 1,040,562,323
====================================== ============== =============
Of the issued 25p ordinary shares, 7,783 shares were held in the ESOP trust (2015/16: 627), 11,266,245 shares were held as treasury shares (2015/16: 11,266,245) and 1,029,761,030 shares were in free issue (2015/16: 1,029,295,541). No treasury shares were acquired by the ESOP trust 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 differences 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 investments in joint ventures and funds.
Merger reserve
This comprises the premium on the share placing in March 2013. No share premium is recorded in the Company's financial statements, through the operation of the merger relief provisions of the Companies Act 2006.
17 Segment information
The Group allocates resources to investment and asset management according to the sectors it expects to perform over the medium term. Its three principal sectors are Offices, Retail and Canada Water. The Office sector includes residential, as this is often incorporated into Office schemes. The Offices sector also includes the British Land share of the Leadenhall joint venture (see note 8). The Retail sector includes leisure, as this is often incorporated into Retail schemes.
The relevant gross rental income, net rental income, operating result and property assets, being the measures of segment revenue, segment result and segment assets used by the management of the business, are set out below. Management reviews the performance of the business principally on a proportionally consolidated basis, which includes the Group's share of joint ventures and funds on a line-by-line basis and excludes non-controlling interests in the Group's subsidiaries. The chief operating decision maker for the purpose of segment information is the Executive Committee.
Gross rental income is derived from the rental of buildings and the sale of trading properties. Operating result is the net of net rental income, fee income and administrative expenses. No customer exceeded 10% of the Group's revenues in either year.
Segment result
Canada
Offices Retail Water Other/unallocated Total
================= ============ ============ ============ =================== ============
2017 2016 2017 2016 2017 2016 2017 2016 2017 2016
GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
================= ===== ===== ===== ===== ===== ===== ========= ======== ===== =====
Gross rental
income
----------------- ----- ----- ----- ----- ----- ----- --------- -------- ----- -----
British Land
Group 139 133 279 291 9 8 - - 427 432
----------------- ----- ----- ----- ----- ----- ----- --------- -------- ----- -----
Share of joint
ventures and
funds 116 114 100 104 - - - 4 216 222
================= ===== ===== ===== ===== ===== ===== ========= ======== ===== =====
Total 255 247 379 395 9 8 - 4 643 654
================= ===== ===== ===== ===== ===== ===== ========= ======== ===== =====
Net rental
income
----------------- ----- ----- ----- ----- ----- ----- --------- -------- ----- -----
British Land
Group 131 124 265 277 8 7 (1) - 403 408
----------------- ----- ----- ----- ----- ----- ----- --------- -------- ----- -----
Share of joint
ventures and
funds 112 110 95 99 - - - 3 207 212
================= ===== ===== ===== ===== ===== ===== ========= ======== ===== =====
Total 243 234 360 376 8 7 (1) 3 610 620
================= ===== ===== ===== ===== ===== ===== ========= ======== ===== =====
Operating result
----------------- ----- ----- ----- ----- ----- ----- --------- -------- ----- -----
British Land
Group 127 112 255 260 5 7 (50) (46) 337 333
----------------- ----- ----- ----- ----- ----- ----- --------- -------- ----- -----
Share of joint
ventures and
funds 109 109 96 102 - - (1) (1) 204 210
================= ===== ===== ===== ===== ===== ===== ========= ======== ===== =====
Total 236 221 351 362 5 7 (51) (47) 541 543
================= ===== ===== ===== ===== ===== ===== ========= ======== ===== =====
2017 2016
Reconciliation to Underlying Profit GBPm GBPm
================================================================================ ===== =====
Operating result 541 543
-------------------------------------------------------------------------------- ----- -----
Net financing costs (151) (180)
================================================================================ ===== =====
Underlying Profit 390 363
================================================================================ ===== =====
Reconciliation to profit on ordinary activities
before taxation
================================================================================ ===== =====
Underlying Profit 390 363
-------------------------------------------------------------------------------- ----- -----
Capital and other (209) 954
-------------------------------------------------------------------------------- ----- -----
Underlying Profit attributable to non-controlling
interests 14 14
================================================================================ ===== =====
Total profit on ordinary activities before
taxation 195 1,331
================================================================================ ===== =====
Of the total revenues above, GBPnil (2015/16: GBP4m) was derived from outside the UK.
Segment assets
Canada
Offices Retail Water Other/unallocated Total
================ ============ ============ ============ =================== ==============
2017 2016 2017 2016 2017 2016 2017 2016 2017 2016
GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
================ ===== ===== ===== ===== ===== ===== ========= ======== ====== ======
Property assets
---------------- ----- ----- ----- ----- ----- ----- --------- -------- ------ ------
British Land
Group 4,223 4,181 4,716 5,323 271 283 - - 9,210 9,787
---------------- ----- ----- ----- ----- ----- ----- --------- -------- ------ ------
Share of joint
ventures and
funds 2,792 2,843 1,938 2,018 - - - - 4,730 4,861
================ ===== ===== ===== ===== ===== ===== ========= ======== ====== ======
Total 7,015 7,024 6,654 7,341 271 283 - - 13,940 14,648
================ ===== ===== ===== ===== ===== ===== ========= ======== ====== ======
Reconciliation to net assets
------------------------------------------------
2017 2016
British Land Group GBPm GBPm
============================== ======= =======
Property assets 13,940 14,648
------------------------------ ------- -------
Other non-current assets 156 138
============================== ======= =======
Non-current assets 14,096 14,786
============================== ======= =======
Other net current liabilities (364) (257)
------------------------------ ------- -------
Adjusted net debt (4,223) (4,765)
------------------------------ ------- -------
Other non-current liabilities (11) (90)
============================== ======= =======
EPRA net assets (undiluted) 9,498 9,674
============================== ======= =======
Convertible dilution - 400
============================== ======= =======
EPRA net assets (diluted) 9,498 10,074
------------------------------ ------- -------
Non-controlling interests 255 277
------------------------------ ------- -------
EPRA adjustments (277) (732)
============================== ======= =======
Net assets 9,476 9,619
============================== ======= =======
SUPPLEMENTARY DISCLOSURES
UNAUDITED
Table A: Summary income statement and balance sheet
Summary income statement based on proportional consolidation for the year ended 31 March 2017
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 basis and excluding non-controlling interests.
Year ended 31 March Year ended 31 March
2017 2016
--------------- ================================================ =================================================
Joint Joint
ventures Less ventures Less
and non-controlling Proportionally and non-controlling Proportionally
Group funds interests consolidated Group funds interests consolidated
GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
=============== ===== ======== =============== ============== ===== ========= =============== ==============
Gross rental
income 442 220 (19) 643 451 231 (28) 654
--------------- ----- -------- --------------- -------------- ----- --------- --------------- --------------
Property
operating
expenses (25) (10) 2 (33) (26) (9) 1 (34)
--------------- ===== ======== =============== ============== ===== ========= =============== ==============
Net rental
income 417 210 (17) 610 425 222 (27) 620
--------------- ----- -------- --------------- -------------- ----- --------- --------------- --------------
Administrative
expenses (84) (2) - (86) (93) (5) 4 (94)
--------------- ----- -------- --------------- -------------- ----- --------- --------------- --------------
Net fees and
other income 17 - - 17 16 - 1 17
--------------- ===== ======== =============== ============== ===== ========= =============== ==============
Ungeared Income
Return 350 208 (17) 541 348 217 (22) 543
--------------- ----- -------- --------------- -------------- ----- --------- --------------- --------------
Net financing
costs (78) (76) 3 (151) (106) (82) 8 (180)
=============== ===== ======== =============== ============== ===== ========= =============== ==============
Underlying
Profit 272 132 (14) 390 242 135 (14) 363
=============== ===== ======== =============== ============== ===== ========= =============== ==============
Underlying
taxation - - - - 2 - - 2
=============== ===== ======== =============== ============== ===== ========= =============== ==============
Underlying
Profit
after taxation 272 132 (14) 390 244 135 (14) 365
=============== ===== ======== =============== ============== ===== ========= =============== ==============
Valuation
movement (237) 861 --------------- ----- -------- --------------- -------------- ----- --------- --------------- -------------- Other capital and taxation (net)(1) (433) 48 =============== ===== ======== =============== ============== ===== ========= =============== ============== Capital and other (670) 909 =============== ===== ======== =============== ============== ===== ========= =============== ============== Total return (280) 1,274 =============== ===== ======== =============== ============== ===== ========= =============== ==============
1 Includes other comprehensive income, movement in dilution of share options and the movement in items excluded for EPRA NAV.
Summary balance sheet based on proportional consolidation as at 31 March 2017
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 basis, and excluding non-controlling interests, and assuming full dilution.
Mark-to-market
on effective
cash
Share flow EPRA EPRA
of hedges Net Net
joint and Valuation assets assets
ventures Less related surplus 31 31
& non-controlling Share Deferred debt Head on trading March March
Group funds interests options tax adjustments leases properties 2017 2016
GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
============== ======= ======== =============== ======= ======== ============== ====== ========== ======= =======
Retail
properties 5,066 2,021 (381) - - - (52) - 6,654 7,341
-------------- ------- -------- --------------- ------- -------- -------------- ------ ---------- ------- -------
Office
properties 4,155 2,792 - - - - (15) 83 7,015 7,024
-------------- ------- -------- --------------- ------- -------- -------------- ------ ---------- ------- -------
Canada Water
properties 280 - - - - - (9) - 271 283
-------------- ------- -------- --------------- ------- -------- -------------- ------ ---------- ------- -------
Other
properties - - - - - - - - - -
============== ======= ======== =============== ======= ======== ============== ====== ========== ======= =======
Total
properties 9,501 4,813 (381) - - - (76) 83 13,940 14,648
-------------- ------- -------- --------------- ------- -------- -------------- ------ ---------- ------- -------
Investments
in joint
ventures
and funds 2,766 (2,766) - - - - - - - -
-------------- ------- -------- --------------- ------- -------- -------------- ------ ---------- ------- -------
Joint venture
held for sale 540 (540) - - - - - - - -
-------------- ------- -------- --------------- ------- -------- -------------- ------ ---------- ------- -------
Other
investments 154 (3) - - - - - - 151 138
-------------- ------- -------- --------------- ------- -------- -------------- ------ ---------- ------- -------
Other net
(liabilities)
assets (391) (101) 7 36 3 - 76 - (370) (347)
-------------- ------- -------- --------------- ------- -------- -------------- ------ ---------- ------- -------
Net debt (3,094) (1,403) 119 - - 155 - - (4,223) (4,765)
-------------- ------- -------- --------------- ------- -------- -------------- ------ ---------- ------- -------
Dilution due
to
convertible
bond - - - - - - - - - 400
============== ======= ======== =============== ======= ======== ============== ====== ========== ======= =======
Net assets 9,476 - (255) 36 3 155 - 83 9,498 10,074
============== ======= ======== =============== ======= ======== ============== ====== ========== ======= =======
EPRA NAV per
share (note
2) 915p 919p
============== ======= ======== =============== ======= ======== ============== ====== ========== ======= =======
EPRA Net Assets Movement
Year ended Year ended
31 March 2017 31 March 2016
================= ================ ================
Pence Pence
per per
GBPm share GBPm share
================= ======= ======= ======= =======
Opening EPRA NAV 10,074 919 9,035 829
----------------- ------- ------- ------- -------
Income return 390 36 365 34
----------------- ------- ------- ------- -------
Capital return (670) (13) 909 77
----------------- ------- ------- ------- -------
Dividend paid (296) (27) (235) (21)
================= ======= ======= ======= =======
Closing EPRA NAV 9,498 915 10,074 919
================= ======= ======= ======= =======
Table B: EPRA Performance measures
EPRA Performance measures summary table
2017 2016
====================== ============ ============
Pence Pence
per per
GBPm share GBPm share
====================================== ==== ====== ==== ======
EPRA Earnings - basic 390 37.9 365 35.6
---------------------- -------------- ---- ------ ---- ------
- diluted 390 37.8 371 34.1
===================================== ==== ====== ==== ======
EPRA Net Initial Yield 4.3% 4.1%
-------------------------------------- ---- ------ ---- ------
EPRA 'topped-up' Net Initial Yield 4.5% 4.5%
-------------------------------------- ---- ------ ---- ------
EPRA Vacancy Rate 4.8% 2.0%
====================================== ==== ====== ==== ======
2017 2016
=========== =============== ===============
Net Net
asset asset
value value
per per
Net share Net share
assets pence assets pence
=========== ======= ====== ======= ======
EPRA NAV 9,498 915 10,074 919
----------- ------- ------ ------- ------
EPRA NNNAV 8,938 861 9,640 880
=========== ======= ====== ======= ======
Calculation and reconciliation of EPRA/IFRS earnings and EPRA/IFRS earnings per share
2017 2016
GBPm GBPm
================================================== ===== ======
Profit attributable to the shareholders of
the Company 193 1,345
-------------------------------------------------- ----- ------
Exclude:
-------------------------------------------------- ----- ------
Group - current taxation (1) (2)
-------------------------------------------------- ----- ------
Group - deferred taxation - (31)
-------------------------------------------------- ----- ------
Joint ventures and funds - current taxation - 1
-------------------------------------------------- ----- ------
Joint ventures and funds - deferred taxation (1) -
-------------------------------------------------- ----- ------
Group - valuation movement 144 (616)
-------------------------------------------------- ----- ------ Group - loss (profit) on disposal of investment properties and investments 5 (35) -------------------------------------------------- ----- ------ Group - profit on disposal of trading properties (7) (10) -------------------------------------------------- ----- ------ Joint ventures and funds - net valuation movement (including result on disposals) 75 (263) -------------------------------------------------- ----- ------ Joint ventures and funds - capital financing costs 6 - -------------------------------------------------- ----- ------ Changes in fair value of financial instruments and associated close-out costs (13) (31) -------------------------------------------------- ----- ------ Non-controlling interests in respect of the above (11) 5 ================================================== ===== ====== Underlying Profit 390 363 ================================================== ===== ====== Group - underlying current taxation - 2 ================================================== ===== ====== EPRA earnings - basic 390 365 ================================================== ===== ====== Dilutive effect of 2012 convertible bond - 6 ================================================== ===== ====== EPRA earnings - diluted 390 371 ================================================== ===== ====== Profit attributable to the shareholders of the Company 193 1,345 -------------------------------------------------- ----- ------ Dilutive effect of 2012 convertible bond(1) (33) (42) ================================================== ===== ====== IFRS earnings - diluted(1) 160 1,303 ================================================== ===== ======
1 The 2016 comparative figures for the dilutive effect of the 2012 convertible bond and IFRS diluted earnings have been restated - see Note 1.
2017 2016
Number Number
million million
================================================= ======== ========
Weighted average number of shares 1,040 1,036
------------------------------------------------- -------- --------
Adjustment for Treasury shares (11) (11)
================================================= ======== ========
IFRS/EPRA Weighted average number of shares
(basic) 1,029 1,025
================================================= ======== ========
Dilutive effect of share options 1 2
------------------------------------------------- -------- --------
Dilutive effect of ESOP shares 3 4
------------------------------------------------- -------- --------
Dilutive effect of 2012 convertible bond 58 58
================================================= ======== ========
IFRS Weighted average number of shares (diluted) 1,091 1,089
================================================= ======== ========
Dilutive effect of 2012 convertible bond (58) -
================================================= ======== ========
EPRA Weighted average number of shares (diluted) 1,033 1,089
================================================= ======== ========
Net assets per share
2017 2016
========================================== ============= ==============
Pence Pence
per per
GBPm share GBPm share
========================================== ===== ====== ====== ======
Balance sheet net assets 9,476 9,619
========================================== ===== ====== ====== ======
Deferred tax arising on revaluation
movements 3 5
------------------------------------------ ----- ------ ------ ------
Mark-to-market on effective cash
flow hedges and related debt adjustments 155 198
------------------------------------------ ----- ------ ------ ------
Dilution effect of share options 36 36
------------------------------------------ ----- ------ ------ ------
Surplus on trading properties 83 93
------------------------------------------ ----- ------ ------ ------
Convertible bond adjustment - 400
------------------------------------------ ----- ------ ------ ------
Less non-controlling interests (255) (277)
========================================== ===== ====== ====== ======
EPRA NAV 9,498 915 10,074 919
========================================== ===== ====== ====== ======
Deferred tax arising on revaluation
movements (19) (24)
------------------------------------------ ----- ------ ------ ------
Mark-to-market on effective cash
flow hedges and related debt adjustments (155) (153)
------------------------------------------ ----- ------ ------ ------
Mark-to-market on debt (386) (257)
========================================== ===== ====== ====== ======
EPRA NNNAV 8,938 861 9,640 880
========================================== ===== ====== ====== ======
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 and derivatives.
2017 2016
Number Number
million million
========================================= ======== ========
Number of shares at year end 1,040 1,040
----------------------------------------- -------- --------
Adjustment for treasury shares (11) (11)
========================================= ======== ========
IFRS/EPRA number of shares (basic) 1,029 1,029
========================================= ======== ========
Dilutive effect of share options 3 2
----------------------------------------- -------- --------
Dilutive effect of ESOP shares 6 7
----------------------------------------- -------- --------
Dilutive effect of 2012 convertible bond 58 58
========================================= ======== ========
IFRS number of shares (diluted) 1,096 1,096
========================================= ======== ========
Dilutive effect of 2012 convertible bond (58) -
========================================= ======== ========
EPRA number of shares (diluted) 1,038 1,096
========================================= ======== ========
EPRA Net Initial Yield and 'topped-up' Net Initial Yield
2017 2016
GBPm GBPm
================================================ ====== ======
Investment property - wholly-owned 9,210 9,787
------------------------------------------------ ------ ------
Investment property - share of joint ventures
and funds 4,730 4,861
------------------------------------------------ ------ ------
Less developments, residential and land (798) (894)
------------------------------------------------ ====== ======
Completed property portfolio 13,142 13,754
------------------------------------------------ ------ ------
Allowance for estimated purchasers' costs 897 985
================================================ ====== ======
Gross up completed property portfolio valuation
(A) 14,039 14,739
================================================ ====== ======
Annualised cash passing rental income 607 607
------------------------------------------------ ------ ------
Property outgoings (9) (8)
================================================ ====== ======
Annualised net rents (B) 598 599
================================================ ====== ======
Rent expiration of rent-free periods and fixed
uplifts(1) 30 63
================================================ ====== ======
'Topped-up' net annualised rent (C) 628 662
------------------------------------------------ ------ ------
EPRA Net Initial Yield (B/A) 4.3% 4.1%
------------------------------------------------ ------ ------
EPRA 'topped-up' Net Initial Yield (C/A) 4.5% 4.5%
================================================ ====== ======
Including fixed/minimum uplifts received in
lieu of rental growth 11 24
================================================ ====== ======
Total 'topped-up' net rents (D) 639 686 ------------------------------------------------ ------ ------ Overall 'topped-up' Net Initial Yield (D/A) 4.6% 4.7% ================================================ ====== ====== 'Topped-up' net annualised rent 628 662 ------------------------------------------------ ------ ------ ERV vacant space 34 14 ------------------------------------------------ ------ ------ Reversions 38 42 ================================================ ====== ====== Total ERV (E) 700 718 ------------------------------------------------ ------ ------ Net Reversionary Yield (E/A) 5.0% 4.9% ================================================ ====== ======
1 The weighted average period over which rent-free periods expire is 1 year (2015/16: 1 year).
The above is stated for the UK portfolio only.
EPRA Net Initial Yield (NIY) basis of calculation
EPRA NIY is calculated as the annualised net rent (on a cash flow basis), divided by the gross value of the completed property portfolio. The valuation of our completed property portfolio is determined by our external valuers as at 31 March 2017, plus an allowance for estimated purchaser's costs. Estimated purchaser's costs are determined by the relevant stamp duty liability, plus an estimate by our valuers of agent and legal fees on notional acquisition. The net rent deduction allowed for property outgoings is based on our valuers' assumptions on future recurring non-recoverable revenue expenditure.
In calculating the EPRA 'topped-up' NIY, the annualised net rent is increased by the total contracted rent from expiry of rent-free periods and future contracted rental uplifts where defined as not in lieu of growth. Overall 'topped-up' NIY is calculated by adding any other contracted future uplift to the 'topped-up' net annualised rent.
The net reversionary yield is calculated by dividing the total estimated rental value (ERV) for the completed property portfolio, as determined by our external valuers, by the gross completed property portfolio valuation.
The EPRA vacancy rate is calculated as the ERV of the unrented, lettable space as a proportion of the total rental value of the completed property portfolio.
EPRA Vacancy Rate
2017 2016
GBPm GBPm
============================================ ===== =====
Annualised potential rental value of vacant
premises 34 14
-------------------------------------------- ----- -----
Annualised potential rental value for the
completed property portfolio 710 728
-------------------------------------------- ----- -----
EPRA Vacancy Rate 4.8% 2.0%
============================================ ===== =====
The above is stated for the UK portfolio only. A discussion of significant factors affecting vacancy rates is included within the Strategic Report within the British Land Annual Report and Accounts.
EPRA Cost Ratios
2017 2016
GBPm GBPm
==================================================== ===== =====
Property operating expenses 23 25
---------------------------------------------------- ----- -----
Administrative expenses 84 90
---------------------------------------------------- ----- -----
Share of joint ventures and funds expenses 12 13
---------------------------------------------------- ----- -----
Performance and management fees (from joint
Less: ventures and funds) (9) (9)
------ -------------------------------------------- ----- -----
Net other fees and commissions (8) (8)
--------------------------------------------------- ----- -----
Ground rent costs (2) (3)
=================================================== ===== =====
EPRA Costs (including direct vacancy costs)
(A) 100 108
---------------------------------------------------- ----- -----
Direct vacancy costs (12) (11)
==================================================== ===== =====
EPRA Costs (excluding direct vacancy costs)
(B) 88 97
---------------------------------------------------- ----- -----
Gross Rental Income less ground rent costs 412 429
---------------------------------------------------- ----- -----
Share of joint ventures and funds (GRI less
ground rent costs) 229 222
==================================================== ===== =====
Total Gross Rental Income less ground rent
costs (C) 641 651
---------------------------------------------------- ----- -----
EPRA Cost Ratio (including direct vacancy
costs) (A/C) 15.6% 16.6%
---------------------------------------------------- ----- -----
EPRA Cost Ratio (excluding direct vacancy
costs) (B/C) 13.7% 14.9%
---------------------------------------------------- ----- -----
Overhead and operating expenses capitalised
(including share of joint ventures and funds) 5 4
==================================================== ===== =====
In the current year, employee costs in relation to staff time on development projects have been capitalised into the base cost of relevant development assets.
Table C: Gross rental income
2017 2016
GBPm GBPm
============================================== ===== =====
Rent receivable 633 615
---------------------------------------------- ----- -----
Spreading of tenant incentives and guaranteed
rent increases 8 36
---------------------------------------------- ----- -----
Surrender premia 2 3
============================================== ===== =====
Gross rental income 643 654
============================================== ===== =====
The current and prior year information is presented on a proportionally consolidated basis, excluding non-controlling interests.
Table D: Property related capital expenditure
2017 2016
============================= ======================= =======================
Joint Joint
ventures ventures
and and
Group funds Total Group funds Total
============================= ===== ========= ===== ===== ========= =====
Acquisitions 88 - 88 238 - 238
----------------------------- ----- --------- ----- ----- --------- -----
Development 131 14 145 104 58 162
----------------------------- ----- --------- ----- ----- --------- -----
Like-for-like portfolio 67 47 114 99 6 105
----------------------------- ----- --------- ----- ----- --------- -----
Other 20 2 22 25 15 40
============================= ===== ========= ===== ===== ========= =====
Total property related capex 306 63 369 466 79 545
============================= ===== ========= ===== ===== ========= =====
The above is presented on a proportionally consolidated basis, excluding non-controlling interests and business combinations. The 'Other' category contains amounts owing to tenant incentives of GBP10m (2015/16: GBP27m), capitalised staff costs of GBP5m (2015/16: GBP4m) and capitalised interest of GBP7m (2015/16: GBP9m).
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR UNOWRBNAVAAR
(END) Dow Jones Newswires
May 17, 2017 02:00 ET (06:00 GMT)
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