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British Land Co PLC Final Results

26/05/2021 7:00am

UK Regulatory (RNS & others)


British Land (LSE:BLND)
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From May 2021 to Jul 2021

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TIDMBLND

RNS Number : 7998Z

British Land Co PLC

26 May 2021

The British Land Company PLC Full Year Results

26 May 2021

Simon Carter, CEO said: "This has been an extraordinary year so I am enormously proud of the resilient performance the team delivered, and the strong progress we have made across the priority areas I set out in November. Our new strategy exploits our competitive strengths in development, active management and repositioning assets and sees us invest behind two key themes, Campuses and Retail & Fulfilment . Our London campuses are already a successful differentiator for us, benefitting from increasing customer focus on the best space, where supply is most constrained. In Retail, we are expanding our approach to include fulfilment, building on our market leading position in high quality, out of town retail parks which already play a key role in retailers' fulfilment models, and complementing this with development led investment in urban logistics, primarily in London. We see a value opportunity in retail parks, reflecting increased yields and a more stable occupational outlook. We have been further encouraged by how strongly footfall and sales have rebounded in recent weeks. In urban logistics, our experience delivering complex developments in Central London means we are well placed to deliver innovative solutions to meet the accelerating occupational demand.

While Covid-19 has clearly impacted our performance, with the portfolio value down 10.8%, we have a strong balance sheet and have already delivered excellent progress against our four priorities. We've sold GBP1.2bn of assets, overall 6.2% ahead of book value, completed our first net zero development at 100 Liverpool Street and committed to develop Norton Folgate and 1 Broadgate, where we have pre let nearly 30% of the office space to JLL. We have made our first logistics acquisition in north London and acquired GBP197m of high quality retail parks. Operationally, we have driven rent collection and leasing activity, which at 1.7m sq ft in Retail was our highest ever. I would like to thank the whole team for their incredible efforts this year.

Looking forward, we will further align our business to growth and value, benefitting from the pick up in economic activity that is now emerging. On our Campuses, we have an opportunity to introduce innovative growth sectors including life sciences at Regent's Place. At Canada Water our planning permission is deliberately flexible, enabling us to deliver a range of uses aligned to growth and long term trends. In Retail & Fulfilment we will continue to target value opportunities in retail parks and development-led, logistics in London. We will maintain our focus on the everyday management of our spaces: driving rent collection, supporting our customers and making our space more sustainable."

Performance summary

   --       Financial performance reflects the impact of Covid-19 

-- Underlying profit reduced 34.3% primarily reflecting an increase in provisions for rent receivables

   --        83% of FY21 rent collected. 99% Offices; 71% Retail 

-- Portfolio value down 10.8%; Offices down 3.8%, with moderate decline of 0.8% in the second half; Retail down 24.7% with the rate of decline slowing in Retail Parks; Developments broadly flat

   --        EPRA Net Tangible Assets (NTA) reduced 16.3% to 648p 
   --       Strong and flexible balance sheet 
   --        GBP556m retail assets sold since April 2020, 7.0% ahead of book value 
   --        GBP643m of standalone offices sold, 5.2% ahead of book value 
   --        GBP1.8bn undrawn facilities and cash with no requirement to refinance until early 2025 
   --        LTV down 200bps at 32%; 46% headroom to Group debt covenants 

-- FY21 dividend of 15.04p per share, representing 80% of underlying EPS, in line with our new policy

   --        Fitch Ratings affirmed unsecured credit rating at 'A' 
   --       Encouraging performance on reopening 

-- In the period since reopening, footfall and sales on our Retail portfolio were 88% and 104% of pre pandemic levels respectively; 100% and 109% for retail parks (all excluding F&B)

   --       Good progress against 2030 sustainability strategy 
   --        Delivered our first net zero carbon development at 100 Liverpool Street 
   --        Supported 364 people into employment at our places 
   --        GRESB 5* and awarded a green star rating for the 11th consecutive year 
   --        AAA MSCI rating, ranking within the top 11% overall 

Progress against our priorities

   --       Realising the potential of our Campuses: 

-- 168,000 sq ft of deals greater than one year in the period; lettings and renewals on the standing portfolio 2.3% ahead of ERV; occupancy at 94%

-- Total lettings and renewals at 395,000 sq ft; further 161,000 sq ft deals agreed post period end, including pre-let of 134,000 sq ft to JLL at 1 Broadgate; total leasing since 1 April 2020 of 556,000 sq ft

-- Recently completed and committed developments 50% pre-let; generating GBP85m of rent when fully let

   --        Under offer and in negotiation on a further 474,000 sq ft 
   --        Storey operational across 348,000 sq ft; launched at 100 Liverpool Street 

-- Completed headlease drawdown at Canada Water; signed TEDI-London, a higher education provider

   --       Progressing value accretive development 
   --        Commitment to develop 882,000 sq ft across 1 Broadgate and Norton Folgate 

-- Commenced enabling works for the first phase of our Canada Water masterplan with main build contracts to be placed in the coming months

   --       Targeting the opportunities in Retail & Fulfilment 

-- 962,000 sq ft of deals greater than one year; 19% below previous passing rent; occupancy at 94%

-- 737,000 sq ft of short and temporary deals, bringing total leasing to 1.7m sq ft, our highest ever

   --        583,000 sq ft under offer, 5.8% below March 2021 ERV and 29% below passing rent 

-- First urban logistics acquisition: 216,000 sq ft warehouse in Enfield with development potential, acquired for GBP87m

-- Exploiting value opportunity in retail parks: commitment to acquire the outstanding interest in HUT based on a GAV of GBP148m and GBP49m acquisition of The A1 Retail Park in Biggleswade

   --       Active capital recycling 
   --        GBP1.2bn assets sold, including GBP556m retail sales and GBP643m offices sales 
   --        Reinvesting proceeds into value accretive acquisitions and development 
   --        GBP1.6bn financing, including facility extensions and new loans 

Summary performance

 
 Year ended 31 March                               2020           2021       Change 
                                          -------------  ------------- 
 Income statement 
 Underlying Profit                              GBP306m        GBP201m      (34.3)% 
 Underlying earnings per share(2)                 32.7p          18.8p      (42.5)% 
 IFRS (loss) after tax                      GBP(1,114)m    GBP(1,083)m 
 IFRS basic earnings per share                 (110.0)p       (111.2)p 
 Dividend per share                              15.97p         15.04p 
----------------------------------------  -------------  -------------  ----------- 
 Total accounting return(2)                     (11.0)%        (15.1)% 
----------------------------------------  -------------  -------------  ----------- 
 Balance sheet 
 Portfolio at valuation (proportionally 
  consolidated)                              GBP11,157m      GBP9,132m   (10.8)%(1) 
 EPRA Net Tangible Assets per 
  share(2)                                         773p           648p      (16.3)% 
 IFRS net assets                              GBP7,147m      GBP5,983m 
 Loan to value ratio (proportionally 
  consolidated)                                   34.0%          32.0% 
----------------------------------------  -------------  -------------  ----------- 
 Operational Statistics 
 Lettings and renewals over                  1.6m sq ft     1.2m sq ft 
  1 year 
 Total lettings and renewals                 2.3m sq ft     2.2m sq ft 
 Gross investment activity                     GBP0.9bn       GBP1.7bn 
 Committed and recently completed            1.6m sq ft     1.8m sq ft 
  development 
----------------------------------------  -------------  -------------  ----------- 
 Sustainability Performance 
 MSCI ESG                                    AAA rating     AAA rating 
 GRESB                                     4* and Green   5* and Green 
                                                   Star           Star 
----------------------------------------  -------------  -------------  ----------- 
 

(1) Valuation movement during the year (after taking account of capex) of properties held at the balance sheet date, including developments (classified by end use), purchases and sales

(2) See Note 2 to the financial statements

Results Presentation Conference Call

A presentation of the results will be broadcast via conference call and slides to accompany the call will be displayed along with an audio broadcast via the website (Britishland.com) at 8.30am on 26 May 2021. The details for the conference call and weblink are as follows:

 
 UK Toll Free 
  Number:             0800 640 6441 
 Access code:                146721 
 Click for access:    Audio weblink 
 

A dial in replay will be available later in the day for 7 days. The details are as follows:

 
 Replay number:    020 3936 3001 
 Passcode:                218463 
 
 

The accompanying slides will be made available at britishland.com just prior to the event starting.

For Information Contact

Investors

   David Walker, British Land                                                   07753 928382 
   Joanna Waddingham, British Land                                       07714 901166 

Media

   Charlotte Whitley, British Land                                              07887 802535 
   Guy Lamming/Gordon Simpson, Finsbury                            020 7251 3801 

britishland@finsbury.com

CHIEF EXECUTIVE'S REVIEW

Introduction

This has been an extraordinary year so I am enormously proud of the resilient performance the team delivered, and the strong progress we have made across the priority areas I set out in November. Building on this, we are setting out our new strategy, exploiting our strengths in development, active management and repositioning assets and investing behind two strategic themes, Campuses and Retail & Fulfilment. Our performance this year clearly reflects the impact of Covid-19 but we have further strengthened our finances through timely asset sales and are well positioned for the opportunities that lie ahead.

Covid Impact & Response

The pandemic has spanned our entire financial year. Throughout that time, we have worked closely with our customers to adjust through three national lockdowns and subsequent re-openings. In Offices, we have effectively collected all our rents. In Retail, we have made good progress on rent collection as a result of continuous engagement with our customers across the year. For those customers most affected, primarily smaller independent businesses, we have agreed pragmatic and equitable solutions for the periods of closure which include monthly payments and concessions. We have also engaged on a case by case basis with larger customers facing cash flow difficulties, often combining our discussions on the payment of legacy rents with those on lease extensions and new space. As a result, retail rent collection was 71% for the year. Due to ongoing uncertainty, we have made further provisions totalling GBP59m against outstanding rents and service charge, which has contributed to the reduction in underlying profit of 34.3%. The value of the portfolio was down 10.8% contributing to a fall in EPRA NTA of 16.3% to 648p.

This year our Place Based community activities have focused on helping those most impacted by Covid-19. That has included funding expert strategic advice from The Business School helping 25 of our community partners to navigate the crisis, providing educational materials for more than 3,600 disadvantaged families and supporting local foodbanks. We supported a retail recovery plan in Edinburgh and in London our initiatives included four virtual work experience projects for 200 young people. Overall, this year we have supported 364 people into employment which is a significant achievement in the context of the pandemic and reflects how quickly we were able to mobilise support to where it was most needed.

New business model & strategy

Our strategy is to more actively focus our capital on our competitive strengths in development, active management and repositioning assets . We are investing behind two strategic themes:

   --      Campuses - Dynamic neighbourhoods focused on growth customers and sectors; and 

-- Retail & Fulfilment - Retail Parks and urban logistics aligned to the growth of convenience, online and last mile fulfilment

Starting in FY22, reflecting this approach, we will update our reporting segments to be Campuses (which will include Canada Water) and Retail & Fulfilment (which will include urban logistics).

Campuses

At Broadgate, Regent's Place and Paddington Central, we provide modern, high quality and sustainable space in some of the most exciting parts of London. The buildings and the spaces between them support wellbeing and are aligned to the changing ways people work. They have excellent transport connections, an engaging public realm and offer an authentic sense of community. We are delivering an exciting, 53 acre, fourth campus at Canada Water.

Our campus proposition is a key differentiator and an important advantage post Covid as occupiers focus on the best space for their businesses where supply is most constrained. That means space which supports recruitment, training, collaboration, culture and wellbeing. Our development pipeline includes opportunities on all our campuses, enabling us to increase investment in these unique assets, deliver attractive returns and refresh our offer with high quality, modern and sustainable space so we are well placed as demand polarises. All our developments will be net zero carbon and with sustainability now seen as a differentiator between the best space and the rest, our ability to deliver buildings which help occupiers reduce their own carbon footprint, is a key advantage.

The proximity of our campuses to hubs of growth and innovation is a further advantage which we will more actively pursue. Already, we have successfully repositioned Broadgate to appeal to a wider range of growing businesses, including creative and technology companies, benefitting from its proximity to areas like Shoreditch as well as its links to the City. Building on this, we are evaluating other opportunities to align our campuses to innovation sectors and see a similar opportunity in life sciences at Regent's Place, given its proximity to the academic and scientific institutions in the Knowledge Quarter. Our ability to deliver bespoke space for our customers and our track record of providing environments in which fast growing businesses can expand, for example through Storey, position us well in this market.

At Canada Water, our permission is deliberately flexible. We can deliver between 2,000 and c.4,000 residential units and from 500,000 sq ft to 2.5m sq ft of workspace enabling us to evolve our offer in line with demand. Already we have signed an engineering, higher education provider and are exploring other opportunities in this sector.

Retail & Fulfilment

In Retail, we are expanding our approach to include fulfilment, building on our market leading position in high quality, out of town retail parks which already play a key role in retailers' fulfilment models, and complementing this with development led investment in urban logistics, primarily in London. Retail parks account for 53% of our retail portfolio. These are increasingly preferred by retailers, because they are affordable and support an online offer by facilitating click & collect, returns and ship from store. They are also preferred by business which are more online resilient, including discount food and homeware retailers. We see a clear value opportunity in this space to leverage our asset management expertise to deliver attractive returns as rents and values stabilise. This rationale underpins our acquisition of the A1 Retail Park in Biggleswade and commitment to acquire the remaining 22% interest in HUT, which comprises ten prime retail parks, together totalling GBP197m.

We are complementing our retail parks with development led investment into urban logistics warehouses, primarily in London. These are in town or edge of town warehouses with good infrastructure connections and access to residential areas to support effective last mile delivery. This particular part of the market, where customer requirements are evolving rapidly and demand is strong but supply of the right kind of space is highly constrained, will require innovative solutions, such as multistorey and underground warehouses as well as potentially incorporating into mixed use schemes. This plays very well to our skill set in site assembly, planning and delivering complex development in Central London.

This is the rationale for our acquisition of a 216,000 sq ft logistics warehouse in Enfield. It is an 11-acre site within the M25, with low coverage for an urban scheme of 40% providing the opportunity to build up as well as out. We benefit from a supportive planning environment in Enfield and in the meantime the scheme is fully let and highly reversionary.

The Priorities for our business

To deliver our strategy, we identified four key priorities for our business in November. We have already made strong progress against these and have a clear plan in each area for the coming year.

 
 Priority                      Progress since November 
 Realising the potential 
  of our Campuses                *    Pre let 134,000 sq ft at 1 Broadgate to JLL 
 
 
                                 *    Completed the drawdown of the headlease at Canada 
                                      Water and signed TEDI-London, a higher education 
                                      provider 
 
 
                                 *    Launched Storey at 100 Liverpool Street, 37% let or 
                                      under offer 
                              -------------------------------------------------------------- 
 Progressing value 
  accretive development          *    Delivered 100 Liverpool Street, our first net zero 
                                      development 
 
 
                                 *    Commitments to develop 1 Broadgate and Norton Folgate, 
                                      together covering 882,000 sq ft 
 
 
                                 *    Commenced enabling works at the first phase of Canada 
                                      Water with main build contracts to be placed in the 
                                      coming months 
                              -------------------------------------------------------------- 
 Targeting the opportunities 
  in Retail & Fulfilment         *    Acquisition of A1 Retail Park, Biggleswade for GBP49m, 
                                      NIY 8.5%; opportunity to drive value through asset 
                                      management 
 
 
                                 *    Commitment to acquire the remaining 22% interest in 
                                      HUT based on a GAV of GBP148m, taking our ownership 
                                      to 100%, NIY over 8% (post year end) 
 
 
                                 *    Acquisition of 216,000 sq ft urban logistics 
                                      warehouse in Enfield with development potential for 
                                      GBP87m (post year end) 
                              -------------------------------------------------------------- 
 Active capital recycling 
                                 *    GBP1.2bn of asset sales since April 2020, overall 
                                      6.2% ahead of book value 
 
 
                                 *    882,000 sq ft of development commitments 
 
 
                                 *    GBP284m of Retail & Fulfilment acquisitions 
 
 
                                 *    GBP1.6bn of financing activity in the year 
                              -------------------------------------------------------------- 
 

Realising the potential of our Campuses

We will realise the potential of our Campuses through development, active asset management and by aligning them to innovation and growth sectors. At Regent's Place, we are actively targeting life sciences occupiers and at Broadgate, we will continue to focus on creative and technology sectors including FinTech as well as traditional finance. The improvements we have made at Broadgate to the leisure and retail element, including the UK's first Eataly are part of that approach. We are enhancing our space through new developments including 1 Broadgate and the delivery of Exchange Park, a 1.5 acre park in the middle of Broadgate and we have further opportunities at each of our campuses. At Canada Water, we are exploring a range of uses leveraging the flexible nature of our planning consent.

Progressing value accretive development

We committed to 882,000 sq ft of development in the year. Development is an important driver of value for British Land, generating GBP2bn of profit in offices in the last ten years. In addition, our campus developments have a positive impact on our places beyond the individual development, supporting rental growth across the campuses.

We have created further opportunities for development across our campuses and achieved planning consent for two new buildings in the year, 2-3 Finsbury Avenue (704,000 sq ft) at Broadgate and 5 Kingdom Street (438,000 sq ft) at Paddington Central. Having completed the drawdown of our 500-year headlease at Canada Water, we are delighted that we are now able to progress development of our fourth London campus. All of these developments will be net zero carbon and we are focused on delivering the most energy efficient space we can, supporting our ability to let space quicker and at higher rents.

Targeting the opportunities in Retail & Fulfilment

While the broader retail market remains challenging, we have adapted our priority to reflect the compelling opportunities we are now seeing in parts of the retail market, notably retail parks. Rather than "addressing the challenges in retail" as we set out in November, our focus now is on "targeting the opportunities in Retail & Fulfilment".

We have made GBP197m of retail park acquisitions (including our commitment to acquire the outstanding interest in HUT) and will look to make further value-led acquisitions in this space but will remain disciplined on returns. Similarly, we will look to acquire assets, primarily in London with urban logistics development potential and in addition have identified opportunities on our own portfolio, including Meadowhall and Teesside as well as on our campuses, which we will progress this year.

Shopping centres account for 34% of our retail portfolio, with open air covered schemes, including Bath and Ealing comprising 12% and traditional covered centres 22%. We are actively managing this space to drive occupancy and deliver more sustainable cash flows and once stabilised, will decide whether to continue to hold or exit these centres based on expected returns.

Active capital recycling

We will more actively crystallise value from mature and off strategy assets to invest into Campuses and Retail & Fulfilment, focusing on areas where we have a distinct competitive advantage, like development or asset management. We have sold GBP1.2bn of assets since April 2020, 6.2% ahead of book value. This included the sale of a 75% interest in three West End buildings to Allianz Real Estate for GBP401m representing a blended NIY of 4.3% and the offices element of Clarges, Mayfair for GBP177m. We expect to make further disposals this year.

We maintain good long term relationships with debt providers across the markets and have completed GBP1.6bn of financing in the year. This included extensions of RCFs of GBP1.1bn and arrangement of new loans in total of GBP460m involving 14 different lenders.

Full Year 2021 Operational performance

Offices leasing activity was understandably subdued with total lettings and renewals of 395,000 sq ft for the year, including 168,000 sq ft of deals over one year. In addition, we let 161,000 sq ft of space post period end, including 134,000 sq ft pre let to JLL at 1 Broadgate, bringing total leasing since 1 April 2020 to 556,000 sq ft. Office values were down 3.8%, but the movement was heavily weighted towards the first half and with a small uplift in developments. Occupancy remains high at 94%. With the roadmap out of lockdown, we are seeing more businesses from a range of sectors looking beyond Covid to secure space which enables them to perform at their best. The pre-let of 1 Broadgate to JLL is an excellent example of that and we are under offer and in negotiations on a further 474,000 sq ft of space.

In Retail, we maintained our focus on maximising occupancy, driving rent collection and delivering more sustainable cash flows. We proactively engaged with our customers across the portfolio, generating strong leasing volumes covering 1.7m sq ft, our highest ever, although pricing was lower at 19% vs previous passing rent. Encouragingly, our pipeline covers 583,000 sq ft of deals under offer. Valuations were down 24.7% but for Retail Parks, which account for more than half of the Retail portfolio, the pace of decline slowed in the second half, reflecting an increasing amount of capital targeting this sector.

Our people

This has been an exceptionally challenging year for our people. They have supported our customers consistently, often with additional caring responsibilities and without the ability to resolve issues through a face to face conversation. They have done a tremendous job with many remaining onsite to keep our assets open throughout the pandemic; I am hugely grateful for their commitment and delighted to see so many are returning to our office. The culture we have developed at British Land, and the depth and breadth of our people's expertise, is a key differentiator for us and positions us to deliver on the strategy we have set out.

I am pleased that Bhavesh Mistry joins us as Chief Financial Officer in July 2021 and to have welcomed Irvinder Goodhew and Loraine Woodhouse who joined the Board as non executive directors in the year. Rebecca Worthington and William Jackson stood down from the Board during the year and we would like to thank them for their valuable contributions. As announced on 25 May 2021, Mark Aedy will be joining the Board as a non executive director from 1 September 2021.

As a Board, we are committed to creating a diverse and inclusive workplace and were pleased that this year we ranked fourth in the Hampton-Alexander Review of FTSE 100 companies for women in leadership positions. We have met the recommendations of the Parker Review on ethnic diversity and will disclose our ethnicity pay gap in our annual report for the first time alongside our gender pay gap which we have disclosed since 2017.

Outlook & dividend

In October, we announced a new dividend policy, setting the dividend at 80% of Underlying EPS. This policy ensures dividends reflect the impact of development completions, acquisitions, disposals and trading conditions as they change over time and maximises future strategic and financial flexibility. We are pleased to announce a full year dividend of 15.04p with the payment of our final dividend in August 2021.

With a roadmap out of lockdown, confidence has strengthened and UK economic forecasts for calendar 2021 are being revised upwards. In offices, we expect demand for modern, high quality and sustainable space which helps businesses to perform at their best, to be firm but across the market, our central case is for rents to fall by up to 5% before recovering. With supply of the best space tight, we would expect our Campuses to outperform and are encouraged by the conversations we are having on our space, particularly on our development pipeline, as well as the pick up in activity we are seeing at Storey. We anticipate downward pressure on prime office yields as confidence improves and investors target the yield differential with other European cities. Retail occupational markets remain tough and we expect rents to decline further. However, we are seeing signs of stabilisation on retail parks and our central case is an additional rental decline of around 5%, with the potential for some yield compression given the increased capital targeting this space. Shopping centres, which have been more impacted by Covid-19, are likely to take a little longer to stabilise. We are encouraged by the strong rebound we are seeing on footfall and sales particularly on our retail parks, which are now in line with pre pandemic levels. Urban logistics in London should continue to see strong rental growth of 4-5% per annum benefitting from compelling underlying fundamentals.

Although it is early days, economic indicators are positive, and we are hopeful that we are starting to emerge from the pandemic. As we do so, British Land is well placed to benefit given our clear strategy, the diversity and expertise of our people across the business and our opportunities to drive growth and value. However, we are very mindful that the trajectory for this pandemic is highly uncertain with risk from future variants, so we take comfort from the strength of the balance sheet and our resilient performance over the last 12 months.

MARKET BACKDROP

Macro-economic context

The Covid-19 pandemic was the backdrop for the entire financial year. Three national lockdowns severely impacted economic activity, leading to the largest annual contraction in GDP on record at 9.9% for calendar year 2020. However, with good progress on the vaccination programme, the Government has set out a roadmap out of lockdown. In England, restrictions started to ease in March 2021 with further significant steps taken in April, including the opening of non-essential retail and outdoor hospitality and in May, indoor hospitality was permitted. As a result, growth is expected to pick up in the coming quarters with households having accumulated savings throughout the lockdown periods. Consumer confidence has strengthened, and the index is at its highest since the pandemic began. Unemployment has increased to 4.9%, only 0.9 percentage points higher than a year ago but reflecting continued support through the furlough scheme. However, the trajectory of the pandemic remains uncertain, with a clear risk to the recovery posed by variants.

London office market

After a subdued first half, investment activity rebounded strongly at the start of the second half, with nearly GBP5bn of transactions in the quarter to December 2020, representing nearly 60% of all deals in the period. Asia-Pacific and European investors have shown a particular readiness to look through the pandemic and invest in prime Central London real estate, reflecting its long term, secure income stream and attractive yields compared to other global cities. The reintroduction of travel restrictions during the third lockdown in January 2021 impacted activity in the final quarter but underlying fundamentals remain sound and interest rates low so we would expect activity to pick up as and when international travel can resume. Prime yields are c.4% and pricing has generally been in line with pre-pandemic levels.

Occupational markets have been severely disrupted by the pandemic, with activity significantly down as businesses focused on near term operational challenges and postponed decisions on new space. As a result, Central London take up in the year was 64% below the long term average although there has been an uptick in activity more recently. Prime, headline rents were broadly flat, albeit on low volumes but incentives have increased. The vacancy rate rose to 8.8% from 4.3% a year ago, but secondhand space accounts for more than 77% of supply with tenant led space an increasingly significant component. At the same time, Covid-19 has clearly accelerated trends in the way that companies use workspace, sharpening their focus on modern, high quality and sustainable space which supports more hybrid ways of working. As a result, there is encouraging interest on new space, particularly from businesses with requirements three to five years out and 34% of development under construction is currently pre-let.

Retail market

Investment activity was mixed in retail. Volumes were very low in shopping centres, where lot sizes are typically larger, and confidence weakened through the pandemic. Covid-19 has underlined the important role that well located, out of town retail can play in online fulfilment, strengthening investor appetite and driving volumes up 14% to GBP1.7bn in the period. Despite the national lockdowns, there is a strong buyer pool demonstrating renewed confidence in the sector. In particular, the market for assets which are small-to-medium in lot size, with secure, sustainable income streams, has seen more activity. Demand for standalone superstores was good throughout the period, again reflecting their security of income, and there remains good investor appetite for assets with alternative use potential.

Covid-19 has compounded existing structural challenges for retailers by accelerating the shift to online shopping, which now accounts for 33% of retail sales. As a result, more operators have entered CVA or administration, but stronger retailers are adapting their business models to be successful in this environment. Several operators, including Next and M&S have identified out of town retail parks as playing an important role. They are more affordable to retailers and can support an online strategy through click and collect, facilitating returns and ship from store. At the same time, shoppers are more confident visiting open-air locations they can access by car and where social distancing can be more easily managed so footfall and sales have generally recovered more quickly.

Logistics market

In logistics, investment volumes were very strong at nearly GBP12bn over the year with strong institutional demand reflecting the very positive fundamentals in this sector. In the occupational market, take up for the year was more than 50m sq ft, significantly ahead of the average of c.40m sq ft driven the growth of e-commerce, with e-commerce and online retailers accounting for over 60% of transactions. Vacancy rates are declining across the UK but in London, where space is most constrained and demand is very strong, vacancy is around 2%. Within the M25, supply is focused on Grade B and C space, which is less suitable for modern requirements and there is a lack of Grade A space.

BUSINESS REVIEW

Key metrics

 
 Year ended 31 March                    2020          2021 
                                 ----------- 
 Portfolio valuation              GBP11,157m     GBP9,132m 
 Occupancy                          96.6%(1)      94.1%(1) 
 Weighted average lease length       5.8 yrs       5.3 yrs 
  to first break 
 Total property return                (6.4)%        (7.0)% 
                                     +38 bps       +33 bps 
   *    Yield shift 
 
   *    ERV growth                    (4.7)%        (7.6)% 
 
   *    Valuation movement           (10.1)%       (10.8)% 
 
 Lettings/renewals (sq ft) 
  over 1 year                           1.6m          1.2m 
 Lettings/renewals over 1 
  year vs ERV                         (3.2)%        (8.9)% 
 
 Gross investment activity           GBP885m     GBP1,690m 
                                     GBP118m       GBP284m 
   *    Acquisitions 
                                   GBP(382)m   GBP(1,217)m 
   *    Disposals 
                                     GBP385m       GBP189m 
   *    Capital investment 
 Net investment/(divestment)         GBP121m     GBP(744)m 
-------------------------------  -----------  ------------ 
 

On a proportionally consolidated basis including the Group's share of joint ventures and funds

(1) Where occupiers have entered CVA or administration but are still liable for rates, these are treated as occupied. If units in administration are treated as vacant, then the occupancy rate would reduce from 94.1% to 92.4%

Portfolio performance

 
 At 31 March          Valuation   Valuation   ERV movement    Yield   Total property 
  2021                     GBPm    movement              %    shift           return 
                                          %                     bps                % 
                                 ----------  -------------  ------- 
 Offices                  6,032       (3.8)            0.7       +9            (0.8) 
 Retail                   2,592      (24.7)         (16.8)      +81           (19.1) 
  Retail Parks            1,367      (18.6)         (15.2)      +45           (12.3) 
  Shopping Centres          896      (35.7)         (20.3)     +143           (29.2) 
 Residential                121      (10.6)             na      +37           (10.2) 
 Canada Water               387       (2.5)             na       na            (1.0) 
-------------------  ----------  ----------  -------------  -------  --------------- 
 Total                    9,132      (10.8)          (7.6)      +33            (7.0) 
-------------------  ----------  ----------  -------------  -------  --------------- 
 

The value of the portfolio was down 10.8%. The value of the Offices portfolio was down 3.8%, weighted towards the first half with values down just 0.8% in the second half. Offices yields moved out in the first half but were flat in the second half. Pricing in the investment market was broadly in line with pre pandemic levels and supportive of values, although increased availability put pressure on lease incentives. Office developments again were up 0.9%.

Retail values were down 24.7%. Retail parks were down 18.6%, but the rate of decline slowed significantly in the second half, when values were down 6.5% compared to down 13.1% in the first half. Shopping centres were down 35.7% in the year. Both categories saw the rate of ERV decline slowing over the year, but there was a notable difference in yields, which for shopping centres increased by 143 bps weighted toward the second half, whilst the increase for retail parks was lower at 45 bps with the majority of the increase coming in the first half. Shopping centres have been acutely impacted by Covid-19 and investor sentiment here remains weak with little transactional evidence to underpin value, particularly for larger assets. Sentiment has improved in retail parks, where investment activity has picked up over the year.

The value of Canada Water fell 2.5%, down 6.0% in the first half reflecting our investment into the masterplan including a new marketing suite but up 3.4% in the second half on drawdown of the headlease following the successful clearing of the Judicial Review process.

Offices outperformed Central London Offices in the MSCI benchmark by 120 bps and were in line with the All Offices benchmark on a total returns basis. Retail underperformed the MSCI All Retail benchmark due to our exposure to shopping centres which significantly underperformed and where our weighting is higher than the index. As a result, and reflecting the continued strength of industrials, the portfolio underperformed the MSCI All Property total return index by 820 bps over the period.

Rent collection

Year to March 2021(1)

As at 18 May, we have collected 83% of rent due between 25 March 2020 and 24 March 2021. Of the remainder, 3% has been deferred, 5% has been forgiven, 2% relates to tenants that have subsequently moved into administration and the residual 7% is outstanding.

 
 Rent due between 25          Offices   Retail(2)    Total 
  March 2020 and 24 March 
  2021 
                             --------  ---------- 
 Received                       99%        71%        83% 
 Rent deferrals                 1%         5%         3% 
 Rent forgiven                   -         9%         5% 
 Moved into administration       -         3%         2% 
 Outstanding                     -         12%        7% 
---------------------------  --------  ----------  -------- 
 Total                         100%       100%       100% 
--------------------------- 
                              GBP225m    GBP305m    GBP530m 
---------------------------  --------  ----------  -------- 
 Collection of adjusted 
  billing(3)                   100%        83%        90% 
---------------------------  --------  ----------  -------- 
 

March 2021 Quarter(1)

As at 18 May, we have collected 84% of rent due between 25 March and 18 May. Of the remainder, 1% has been forgiven, 3% is being paid monthly and 12% is outstanding.

 
 Rent due between 25       Offices   Retail(2)   Total 
  March and 18 May 
                          --------  ---------- 
 Received                    98%        72%       84% 
 Rent deferrals               -          -         - 
 Rent forgiven                -         1%         1% 
 Customer paid monthly       1%         5%         3% 
 Outstanding                 1%         22%       12% 
------------------------  --------  ----------  ------- 
 Total(4)                   100%       100%       100% 
------------------------ 
                           GBP45m     GBP50m     GBP95m 
------------------------  --------  ----------  ------- 
 Collection of adjusted 
  billing(3)                 99%        76%       87% 
------------------------  --------  ----------  ------- 
 

(1) As at 18 May

(2) Includes non-office customers located within our London campuses

(3) Total billed rents exclusive of rent deferrals, rent forgiven and tenants moved to monthly payments

Capital activity

 
 From 1 April        Offices   Retail   Residential   Canada Water     Total 
  2020 
                        GBPm     GBPm          GBPm           GBPm      GBPm 
------------------  --------  -------  ------------  -------------  -------- 
 Purchases(1)              -      284             -              -       284 
 Sales(2)              (643)    (556)          (18)              -   (1,217) 
 Development 
  Spend                   98        3             2             26       129 
 Capital Spend            35       25             -              -        60 
------------------  --------  -------  ------------  -------------  -------- 
 Net Investment        (510)    (244)          (16)             26     (744) 
------------------  --------  -------  ------------  -------------  -------- 
 Gross Investment        776      868            20             26     1,690 
------------------  --------  -------  ------------  -------------  -------- 
 

On a proportionally consolidated basis including the Group's share of joint ventures and funds

(1) Includes the purchase of Heritage House, Enfield which exchanged and completed post period end, as well as the commitment to acquire the remaining 22% interest of HUT at a GAV of GBP148m.

(2) Includes Beaumont Leys sale for GBP9m which exchanged in the year and completed post period end and St Anne's sales for GBP6m which exchanged in the year.

The total gross value of our investment activity since 1 April 2020 was GBP1,690m. We made GBP1.2bn of asset disposals, overall 6.2% ahead of book value on a blended NIY of 4.6%. In Offices, we sold GBP643m of assets 5.2% ahead of book value; the most significant was the sale of a 75% interest in three West End buildings to Allianz Real Estate for GBP401m representing a blended NIY of 4.3%. This included York House where our head office is based. We also sold the offices and retail element of our Clarges scheme in Mayfair for GBP177m at a NIY of 3.5%, and Yalding House for GBP42m at a NIY of 4.4%.

In Retail, we sold GBP556m of assets overall 7.0% ahead of book value. The most significant transactions were the sale of two Tesco superstores at our centres in Milton Keynes and Peterborough together totalling GBP149m and four standalone B&Q stores totalling GBP100m. We sold our Beaumont Leys shopping centre for GBP72m in two separate transactions and two small retail parks in Lincoln and Newmarket for a combined total of GBP21m. We sold our share of a portfolio of reversionary interests in Sainsbury's superstores for GBP102m and made further sales of standalone assets, including a Tesco in Brislington for GBP42m and a David Lloyd gym in Northwood for GBP51m.

In residential, we sold St Anne's, our affordable housing development at Regent's Place for GBP6m and are under offer on the final residential unit at Clarges.

We made several notable acquisitions in Retail. In March 2021 we acquired The A1 Retail Park in Biggleswade, Bedfordshire for GBP49m on a NIY of 8.5%. This is a strong trading, modern, well located scheme, easily accessible from the A1 and within the Oxford-Cambridge arc. We expect to deliver attractive financial returns off stabilised rents and reflecting our asset management expertise. We saw a similar opportunity in HUT (Hercules Unit Trust, which comprises ten prime retail parks) and in February we voted to extend its terms, effectively committing to the acquisition of the 22% interest we do not own at March 2021 valuation. HUT had a look-through blended NIY of over 8%, and acquisition of the remaining interest is anticipated for June 2021 at a gross asset value of GBP148m.

In May 2021, post period end, we completed on the acquisition of Heritage House a 216,000 sq ft urban logistics warehouse in Enfield for GBP87m. This asset is currently fully let to high quality occupiers Waitrose (for their North London customer fulfilment centre) and Crown Records Management and offers significant redevelopment potential given the opportunity to increase density.

Sustainability

We launched our 2030 Sustainability Strategy in June, and building on our progress over recent years, we achieved some important milestones as we work towards our 2030 ambitions. Recognising our strong performance, we achieved a GRESB 5* rating and our climate commitments have been validated by the Science Based Target initiative as being in line with a 1.5(O) C global warming trajectory.

Net Zero

We are committed to achieving a net zero carbon portfolio by 2030 and this year completed our first net zero carbon development at 100 Liverpool Street. We were able to retain half of the existing structure at this building and made low carbon choices throughout its construction so embodied carbon was low at 389 kg CO(2) e per sqm, below our 2030 target of 500 kg CO(2) e per sqm. We offset residual embodied carbon through accredited schemes from the Verified Carbon Standard, split equally between restoring 30,000 hectares of forest on the Tibetan plateau and a teak afforestation project in Mexico. We mirrored that with an additional commitment in the UK, supporting the planting of 150,000 trees in Cumbria and Scotland. As these forests mature, they are expected to offset an additional c.26,000 tonnes of CO(2) e, which may contribute to the offsetting of future development projects. We were also pleased to achieve BREEAM Outstanding certification and are on track for a WELL Gold Standard certification for this building.

We committed to two new developments in the year; in line with our strategy both developments will be net zero carbon. At 1 Broadgate, we will deliver our most energy efficient building yet with energy intensity in line with our stretching 2030 target and the UKGBC's 2030-35 efficiency target. It is a pioneer project for adopting the NABERS UK Design for Performance approach, which provides a methodology against which we can design and test our plans to ensure we stay on track to achieve our target energy efficiency. The building will have solar panels on the roof and use energy efficient lighting and lifts. It includes more than 47,000 sq ft of roof terraces and space for over 1,000 bikes. We are targeting a BREEAM Outstanding certification, WELL Platinum rating for wellbeing and WIRED Platinum rating for digital connectivity. Its embodied carbon is above our 2030 target at 901 kg CO(2) e per sqm mainly due to the design which includes terraces and a retail walkway, improving the experience for occupiers and visitors but resulting in a higher carbon footprint. However, we have a good track record of reducing embodied carbon against concept design. In addition, we are actively salvaging materials from the current building for re-use, including the existing granite façade which will be repurposed as flooring. At Norton Folgate, which comprises three buildings, embodied carbon is in line with our 2030 targets at 540kg CO(2) e per sqm. The office buildings will be all electric and include solar panels on the roof and we are on track for a BREEAM Excellent rating in offices and Very Good in retail. Its operational energy performance will also support progress towards our 2030 commitments with a base build efficiency in line with the UKGBC's 2020-2025 interim efficiency target. Overall, average embodied carbon in our development pipeline is 640 kg CO(2) e per sqm comparing well to our 2030 target of 500 kg CO(2) e per sqm.

On the standing portfolio, building on the strong progress we have made to improve the energy efficiency of our buildings, we are piloting net zero asset audits to identify further energy saving interventions, which if actioned, would enable us to achieve our target of a 25% energy intensity reduction by 2030. Six audits have completed to date. This will be supported by our Transition Vehicle, which was set up to finance the retrofitting of our standing portfolio and pay for certified offsets and is funded by an internal carbon levy of GBP60 per tonne of embodied carbon on new developments as well as a GBP5m annual float. One of the first projects to benefit has been an LED lighting upgrade at Regent's Place, saving c.100 tonnes of carbon pa.

Place Based approach

This year, our community activities focused on supporting the people in and around our places who have been most impacted by Covid-19. The strong local partnerships we built up over more than ten years of community engagement were instrumental in ensuring that we provided the appropriate support to those who needed it most. We funded a bespoke coaching programme through The Business School (formerly Cass) helping 25 local partners navigate the crisis. We supported local foodbanks including Lifeafterhummus at Regent's Place, where our site teams and some of our occupiers volunteered, the Euston Foodbank and the Nourish Community Foodbank, through Royal Victoria Place. Recognising the severe impact that prolonged school closures had on many disadvantaged children, we worked with the National Literacy Trust to provide them with books and activity packs, benefitting an estimated 3,600 families.

With retail and hospitality industries most acutely impacted by this year's lockdown, our efforts have focused on supporting people who became unemployed in those sectors as a result. In Edinburgh, we worked with long term partner Capital City Partnership on a rapid retail recovery plan that assisted over 80 businesses with recruitment and workforce needs including advice on funding and furlough, delivered training and information sessions to over 60 people and supported 30 jobseekers into employment. In London initiatives included four virtual work experience projects for over 200 young people, involving our customers and local partners. Overall, nearly 1,000 people received meaningful employment support, of which 364 moved into employment (compared to 508 last year), which is a fantastic achievement in the context of the pandemic and reflects how quickly we were able to mobilise support.

To inform our longer term programme, this year we commissioned independent research into the social and economic issues facing the diverse communities around 25 of our places. This work demonstrated that while there were shared themes, such as education and employment, there were also specific local challenges. In the coming year we will work with local partners to target the issues where we can make the greatest impact.

REAL ESTATE PERFORMANCE REVIEW

Campus focused London offices

Key metrics

 
 As at 31 March                         2020        2021 
                                  ---------- 
 Portfolio Valuation (BL share)    GBP6,773m   GBP6,032m 
                                   GBP5,518m   GBP5,405m 
   *    Of which campuses 
 Occupancy                             97.3%       94.1% 
 Weighted average lease length       5.7 yrs     5.5 yrs 
  to first break 
 
 Total property return                 +5.7%      (0.8)% 
                                     (4) bps      +9 bps 
   *    Yield shift 
 
   *    ERV growth                     +3.2%       +0.7% 
 
   *    Valuation movement             +2.3%      (3.8)% 
 
 Total lettings/renewals (sq 
  ft)                                946,000     395,000 
 Lettings/renewals (sq ft) over 
  1 year                             733,000     168,000 
 Lettings/renewals over 1 year 
  vs ERV                              +11.3%       +2.3% 
--------------------------------  ----------  ---------- 
 

On a proportionally consolidated basis including the Group's share of joint ventures and funds

Campus operational and financial highlights

   --      Office values down 3.8%, with the City down 4.6% and the West End down 3.2% 
   --      9 bps yield expansion, more pronounced in the West End (+13 bps); City (+2 bps) 

-- ERVs marginally up overall; down 1.6% in the City; up 2.0% in the West End. The increase reflects valuation assumptions regarding future building refurbishments, excluding these, ERVs are down c.1% overall

   --      Like-for-like income down 1.0%, driven by expiries ahead of refurbishment 
   --      Leasing activity subdued at 168,000 sq ft (deals greater than one year) in the year 

-- Total lettings and renewals at 395,000 sq ft; further 161,000 sq ft deals agreed post period end, including pre-let of 134,000 sq ft to JLL at 1 Broadgate, bringing total leasing since 1 April to 556,000 sq ft

   --      Under offer and in negotiations on a further 474,000 sq ft 
   --      Investment lettings and renewals over one year, 2.3% ahead of ERV 
   --      469,000 sq ft rent reviews agreed 9.7% ahead of passing rent adding GBP1.7m to rents 
   --      Occupancy of 94.1% 
   --      Rent collection high at 99% for FY21 

Campus operational review

Campuses now account for nearly 90% of our offices portfolio. Located in some of London's most exciting neighbourhoods, they are well-connected, high quality environments which foster innovation and creativity. As the nature of demand changes, we are well placed to target successful businesses in innovative growth sectors as we have done successfully at Broadgate. One clear opportunity is in life sciences at Regent's Place, benefiting from its location in the Knowledge Quarter.

Occupancy remains high at 94.1%. We benefit from a diverse portfolio of high quality occupiers focused on financial, corporate and media & technology sectors. As a result, we have collected virtually all our rent for the full year (99%).

Leasing activity was inevitably impacted by Covid-19 as occupiers postponed decisions on new space to manage their Covid response. As a result, total leasing activity was 395,000 sq ft, including 168,000 sq ft of deals over one year (2.3% ahead of ERV). However, interest returned towards the end of the year, particularly on our development space, where occupiers with sizeable requirements, two to three years in the future are looking to secure space which enables them to perform at their best. Encouragingly, we let a further 161,000 sq ft post period end bringing total leasing since 1 April 2020 to 556,000 sq ft, we are under offer or in negotiations on a further 474,000 sq ft.

Broadgate

Total leasing activity in the year covered 229,000 sq ft, including 124,000 sq ft of long term deals. Post period end, we let a further 134,000 sq ft to JLL for their UK flagship office at 1 Broadgate. This deal represented nearly 30% of the offices space in the building and demonstrates JLL's continuing conviction in the importance of modern, high quality and sustainable space. Similarly, TP ICAP increased the size of their office at 135 Bishopsgate, signing for a further 20,000 sq ft and taking them to 143,000 sq ft. We signed deals with William Blair at Broadgate Tower (25,000) sq ft and Western Asset Management at 10 Exchange Square (12,000) sq ft, all ahead of ERV. We also let 17,000 sq ft of fitted space to Vorboss at Broadwalk House, completing in just four weeks despite the lockdown restrictions. Rent reviews were agreed on 257,000 sq ft, 4.2% ahead of passing rent including 146,000 sq ft to Mayer Brown at 201 Bishopsgate.

We continue to modernise our existing space with asset management initiatives across the campus, the largest of which is at 155 Bishopsgate (GBP35m our share). Other projects include the part refurbishment of Broadwalk House, which completed in the year, and we are on site with partial refurbishments of Exchange House and 10 Exchange Square. This investment ensures that existing as well as new space is well positioned to benefit as occupiers increasingly focus on the best space for their business. We are also on site at Exchange Park, which will deliver 1.5 acres of green space, including amphitheatre style seating and outside events space which will be open to all and a range of tree and plant life to support biodiversity. Works are due to complete at the end of the year.

A number of exciting new brands have opened at Broadgate, including the first UK Eataly, an Italian market concept including restaurants and bars over two floors and a terrace which opened at 135 Bishopsgate in April 2021. The new retail line up at 100 Liverpool Street is now open, including Gant, Watches of Switzerland, Tommy Hilfiger and Kiehls and the UK's first John Reed Gym, with live DJs is due to open in the summer. Storey is now open at 100 Liverpool Street, offering 48,000 sq ft of flexible workspace, including Storey Club following its success at Paddington Central.

The campus saw a valuation fall of 3.6% reflecting mild yield expansion of 2bps (all in the first half) and an overall ERV decline of 1.3%, comprising a fall of 1.5% in the first half, offset by growth in the second half. Occupancy is 92.0%, which is lower than September 2020, with the inclusion of 100 Liverpool Street which reached practical completion in the year.

Regent's Place

At Regent's Place, technology business Anaplan signed for 13,000 sq ft at 338 Euston Road. We agreed 59,000 sq ft of deals and a further 40,000 sq ft of rent reviews, 21% ahead of previous passing rent.

Aligning our campuses towards innovative growth sectors and businesses is a key area of focus. At Regent's Place we see a clear opportunity in life sciences, reflecting its location within London's Knowledge Quarter a unique part of London between Kings Cross, Euston Road and Bloomsbury which is home to over 100 academic, cultural, research, scientific and media organisations. We are starting to see early signs of interest and are under offer on 20,000 sq ft to two occupiers in this sector.

The campus was down 3.9% in value, but benefited from an uplift at 1 Triton Square, due to profit release given the proximity to practical completion. Yield expansion was 17 bps overall, but weighted towards the first half, partially offset by ERV growth of 4.2% with a number of buildings now being valued on a refurbishment basis. Occupancy is 96.1%.

Paddington Central

At Paddington, cyber security software company Trend Micro extended their 7,000 sq ft lease at 2 Kingdom Street by a further two years. We have agreed rent reviews covering 109,000 sq ft, 17% ahead of passing rent.

Pergola, the outdoor dining pop up on the site of 5 Kingdom Street has performed exceptionally well on re-opening and The Cheese Barge, the latest addition to our food & beverage offer opened in May.

This year, we were pleased to secure planning permission for an extensive upgrade to the public realm which will transform the landscaping and revitalise the amphitheatre with work due to commence in the Autumn. Working with our occupiers and local partners, we launched a community garden in April 2021 for local schools and community groups and we are supporting The Paddington Partnership to deliver a wayfinding narrative trail around the area, inspired by community stories and art.

The campus saw a valuation fall of 2.4%, reflecting yield expansion of 7 bps (all in the first half) and ERV decline of 0.3%. Values benefited from progress made on planning at 5 Kingdom Street. Occupancy is 98.4%.

Storey: our flexible workspace brand

Storey our flexible workspace offer, is now operational across 348,000 sq ft. This year, we launched a further 48,000 sq ft of Storey space at 100 Liverpool Street which was 37% let or under offer at launch to customers including ITAU BBA International and Aperion Investment Group. 13,000 sq ft has been allocated to Storey Club, which opened on 17 May 2021, providing ad hoc meeting and events space, as well as lounge and café areas.

We have been encouraged by the increase in activity in recent months, with viewings and enquiries returning to pre pandemic levels. Leasing activity covered 61,000 sq ft for the year with 14,000 sq ft let since 1 April 2021. We have seen good demand from larger overseas corporates looking for a main UK office, generally taking larger spaces on longer terms. We have also seen several of our existing customers scale up, including recruitment company Storm 2, BAI Communications and Levin Group. We are under offer on a further 48,000 sq ft and occupancy at stabilised buildings (let and under offer) is now 79%.

We are still achieving rents at a premium of more than 30% to a traditional lease and average lease length is 26 months.

Storey has proved resilient, with rent collection for the year at 100% reflecting the strength of its customer base. The majority of occupiers are UK / European headquarters, scale up businesses or large multinationals. Only five customers deferred rents in the first half and no further deferrals were required in the second half.

Retail

Key metrics

 
 As at 31 March                                2020        2021 
                                         ---------- 
 Portfolio valuation (BL share)           GBP3,873m   GBP2,592m 
                                          GBP1,839m   GBP1,367m 
        *    Of which Retail Parks 
                                          GBP1,510m     GBP896m 
        *    Of which Shopping Centres 
 Occupancy(1)                                 95.7%       94.1% 
 Weighted average lease length              5.9 yrs     5.1 yrs 
  to first break 
 
 
 Total property return                      (22.6)%     (19.1)% 
                                           +101 bps     +81 bps 
   *    Yield shift 
 
   *    ERV growth                          (11.7)%     (16.8)% 
 
   *    Valuation movement                  (26.1)%     (24.7)% 
 
 Total lettings/renewals (sq ft)          1,361,000   1,699,000 
 Lettings/renewals (sq ft) over 
  1 year                                    865,000     962,000 
 Lettings/renewals over 1 year 
  vs ERV                                    (20.9)%     (11.5)% 
---------------------------------------  ----------  ---------- 
 

On a proportionally consolidated basis including the Group's share of joint ventures and funds

(1) Where occupiers have entered CVA or administration but are still liable for rates, these are treated as occupied. If units in administration are treated as vacant, then the occupancy rate for Retail would reduce from 94.1% to 90.6%

Retail operational and financial highlights

-- Total Retail portfolio value down 24.7% reflecting the ongoing impact of Covid-19 and higher vacancies due to CVA and administrations

-- Yield expansion of 81bps overall; +143bps for shopping centres, weighted to the second half and +45bps for retail parks, weighted to the first half

-- ERVs down 16.8%; down 20.3% for shopping centres and down 15.2% for retail parks, weighted to the first half

   --      Like-for-like income down 17.4% including the impact of CVAs and administrations 

-- Leasing activity ahead of last year with 962,000 sq ft deals greater than one year; 19% below passing rent

   --      Total lettings and renewals at 1.7m sq ft 

-- Strong pipeline with 583,000 sq ft under offer, 5.8% below March 2021 ERV and 29% below passing rent

   --      Further 524,000 sq ft of rent reviews agreed 2.3% ahead of passing rent 
   --      Good occupancy levels at 94.1% 

-- Footfall since re-opening 88% of same period in 2019; like-for-like sales 104% of the same period in 2019 (both excluding F&B)

   --      71% of FY21 rent collected; 72% of March 2021 quarter rent now collected 

Performance review

Operational performance

Our priority has been helping our occupiers to trade safely when permitted, keeping our centres full with the right mix of retailers who are additive to our places and maximising rent collection. We are pragmatic and proactive in our approach, working with successful, financially strong retailers to ensure leasing structures are appropriate and deliver sustainable cash flows. Often this has meant accepting rents which are below previous passing rents, but are more appropriate in the current environment and sustainable longer term.

Despite a challenging occupational market, overall leasing volumes were ahead of last year, with deals over one year accounting for 79% of activity (by rent) but were 11.5% below ERV and 19% below previous passing rent. We have a strong pipeline of deals, with 583,000 sq ft under offer, of which 348,000 sq ft is at our retail parks.

Retail parks, which account for 53% of our Retail assets, have proved more resilient throughout the pandemic. They are well connected and affordable to retailers meaning they play an important role in a successful online retail strategy facilitating click and collect, returns and ship from store. We have seen this trend accelerate as rates of online shopping have increased with shoppers more confident visiting open-air locations they can access easily by car and where social distancing can be more effectively managed. Shopping centres account for 34% of our retail portfolio, with open air covered schemes comprising 12% and traditional covered centres 22%. Many of our open air schemes were deliberately acquired for their development potential, including Ealing Broadway where we have the potential to deliver a fifth London Campus.

More retailers are assessing their physical footprint to ensure they have the right space for their business model. Examples include Home Bargains, who have taken space at two of our retail parks, the Kingston Centre, Milton Keynes (20,000 sq ft) and Mayflower, Basildon (15,000 sq ft) and Aldi, who have also taken space at the Kingston Centre (23,300) sq ft and Crown Point retail park in Denton (20,000 sq ft). We negotiated five renewals and one new letting with Sports Direct at our retail parks together totalling 87,800 sq ft and four renewals with Next totalling 56,600 sq ft. We were delighted that Amazon Fresh chose our Ealing Broadway centre for their first physical store outside North America. We also agreed 53 rent reviews, delivering a 2.3% increase in rent on average.

Footfall and sales have recovered strongly since reopening, as set out below:

 
                                          FY21 performance                   Performance 
                                                                            since reopening 
                                                                                 (1,2) 
                             % of FY20   Benchmark outperformance(3,4,5)    % same period 
                                                                                in 2019 
                            ----------                                    ----------------- 
 Footfall 
 
        *    Portfolio         60.3%                +21.3ppt                    88.3% 
 
        *    Retail parks      69.3%                +30.3ppt                    99.8% 
 Retailer sales 
 
        *    Portfolio         56.8%                +14.6ppt                    104.1% 
 
        *    Retail parks      63.9%                +21.7ppt                    109.2% 
                            ----------  --------------------------------  ----------------- 
 

1 Excludes F&B and excludes assets for periods when non-essential retail was required to close

2 The period 11 April 2021 - 16 May 2021

3 Footfall benchmark: ShopperTrak UK National Footfall Index

4 Retailer sales benchmark: BDO High Street Index

5 Footfall benchmark average includes year on two-year for the month of March 2021, retailer sales benchmark average excludes the last week of March 2021 due lockdown annualising

Inevitably, Covid-19 related restrictions affected the cash flow of many of our occupiers and hence their ability to pay rent. We have collected 71% of rent for FY21 and 72% of rent for the March 2021 quarter (see Supplementary Tables for full disclosure).

We have made good progress on rent collection as a result of continuous engagement with our customers across the year. For those customers most affected, primarily smaller independent businesses, we have agreed pragmatic and equitable solutions for the periods of closure which include monthly payments and concessions. We have also engaged on a case by case basis with larger customers facing cash flow difficulties, often combining our discussions on the payment of legacy rents with those on lease extensions and leasing new space.

CVAs and administrations

Over the year, there has been an increase in CVAs and administrations. We have seen 49 occupiers enter into CVAs or Administration accounting for 205 units. Of these units, 66 have closed, 110 have seen reduced rents and 29 were unaffected. Overall, this has resulted in a GBP25.3m reduction in annualised rents. DEVELOPMENT

 
 At 31 March 2021      Sq ft   Current     Cost to    ERV     ERV 
                                 Value    complete            Let 
                        '000      GBPm        GBPm   GBPm    GBPm 
--------------------  ------  --------  ----------  -----  ------ 
 Recently completed      520       403           -   19.4    15.5 
--------------------  ------  --------  ----------  -----  ------ 
 Committed             1,247       657         488   65.1    26.9 
--------------------  ------  --------  ----------  -----  ------ 
 Near term             1,156       191         806   53.7       - 
--------------------  ------  --------  ----------  -----  ------ 
 Medium term           6,847 
--------------------  ------  --------  ----------  -----  ------ 
 

On a proportionally consolidated basis including the Group's share of joint ventures and funds (except area which is shown at 100%)

Portfolio

Progressing value accretive development is one of our four priorities and we have made excellent progress in the year. Recently completed and committed developments now total 1.8m sq ft and are 50% pre let, securing GBP42m of future rent. Total development exposure is now 5.3% of portfolio gross asset value with speculative exposure at 6.6% (which is based on ERV), within our internal risk parameters of 12.5%.

The majority of space in our development pipeline is either income producing or held at low cost, enhancing our flexibility, so we have attractive options we can progress as and when appropriate. If we were to commit to our near term pipeline, our speculative exposure would increase to 10.7% of portfolio ERV. We continue to create options for development across our portfolio with 1.7m sq ft of detailed planning permissions achieved in the year and a further 1.2m sq ft under consideration; we also delivered over 8m sq ft of outline planning permissions (based on gross external area, primarily at Canada Water).

The construction market has been impacted by lockdown so cost inflation remains low at c.0.5%. The FY20/21 pipeline has shifted outwards, with reduced competition driving down prices, but with some upward pressure likely given reduced labour availability, constrained logistics and fluctuating material costs as a result of Covid-19 and Brexit. Our Brexit risks were tightly controlled with limited effects felt from the transition. Overall, inflation is expected to be flat in the current year, increasing steadily through 2022 and 2023 to recent norms of 3%.

Campus developments: further enhancing the mix of uses

Development is one of the key ways in which we realise the potential of our Campuses. Through development and comprehensive refurbishments, we are providing modern, sustainable space, built around the evolving needs of our customers. More than ever, the ability to deliver this into environments which are safe and engaging will be an advantage, generating a lasting positive impact beyond the individual buildings.

Completed developments

We reached practical completion at 100 Liverpool Street (520,000 sq ft) in October 2020 and in March 2021, 100 Liverpool Street became our first net zero carbon development, when we offset the residual carbon associated with this building. The building is 81% let, rising to 89% including 48,000 sq ft allocated to Storey which launched in February 2021. Occupiers at the building include Peel Hunt, SMBC Europe and Milbank Tweed. 68% of the retail space is let or under offer and with let space now open in line with Government regulations.

Committed developments

Our committed pipeline now stands at 1.2m sq ft, comprising 1 Triton Square at Regent's Place, Norton Folgate and 1 Broadgate. 1 Broadgate (546,000 sq ft) will be one of the most energy efficient buildings we have delivered and aligns with JLL's net zero carbon ambitions. Demolition of the existing buildings commenced in May 2021. Norton Folgate is a 336,000 sq ft scheme, comprising 302,000 sq ft of office space, alongside retail and leisure space creating a mixed use development which is in keeping with the historic fabric of the area. Benefitting from its location in Shoreditch, close to Shoreditch High Street and Spitalfields market, this building is ideally suited to technology and creative firms and we expect to generate higher rents closer to completion when the buildings can be viewed.

At 1 Triton Square, Regent's Place, we are fully pre-let on the office space to Dentsu Aegis Network on a 20-year lease. Progress at this development has been slower as a result of social distancing requirements but we reached practical completion after the year end in May 2021.

Near Term pipeline

Our near term pipeline now covers 1.2m sq ft with the first phase of Canada Water, comprising three buildings, accounting for half of that. Building A1 at Canada Water provides a mix of office, retail and residential space over 272,000 sq ft. A2 is an office-led building, including a new leisure centre built for the London Borough of Southwark, altogether covering 248,000 sq ft. K1 is a solely residential building, providing 79 affordable homes. We are targeting BREEAM Outstanding on all the office space and Home Quality Mark Beta 3* on the residential. Enabling works have commenced and we expect to place the main build contracts in the coming months.

At 5 Kingdom Street, Paddington Central, our planning application to increase our consented scheme from 206,000 sq ft to 438,000 sq ft was approved by the Mayor in October 2020. Phase 2 of our mixed use development at Aldgate accounts for the remaining 136,000 sq ft. This phase will deliver 159 build to rent homes with 19,000 sq ft of office space as well as retail accommodation. We have planning consent for the building and will be in a position to start on site in calendar Q4 2021.

Medium Term Pipeline

The most significant campus scheme in our medium term pipeline, outside Canada Water, is 2-3 Finsbury Avenue at Broadgate where we received consent for our revised scheme covering 704,000 sq ft in the year. Our new plans add more than 130,000 sq ft to the previous consent. This building will target the BREEAM 'Outstanding' certification in construction. The building is currently generating an income through short term, more flexible lettings, including 40,000 sq ft allocated to Storey. The further phases at Canada Water cover 4.5m sq ft of mixed use space.

Retail & Fulfilment development: enhancing and repositioning our portfolio for the future

We are unlikely to undertake standalone retail development in the near term but we are actively identifying opportunities for the development of urban logistics space on our portfolio and potential acquisitions. In addition, we have a number of mixed use opportunities at our retail centres which align well to our strategy.

Opportunities to add uses

At Ealing Broadway, we completed the successful refurbishment of 54 The Broadway, our first office scheme in Ealing in December 2020 which is fully let to the Department of Work and Pensions. We are working up plans for a comprehensive refurbishment of International House, which is returned to us in mid 2022, as well as an exciting redevelopment of 10-40 The Broadway, an office led mixed use scheme covering 303,000 sq ft that will sit adjacent to our Ealing Broadway shopping centre outside the new Crossrail entrance. At Eden Walk, Kingston (jointly owned with USS) our consented mixed use development plans include 380 new homes, alongside shops, restaurants and 35,000 sq ft of flexible office space.

We are scoping the broader retail portfolio for alternative and additional use opportunities. Following an initial assessment, we have identified 2.4m sq ft of opportunities with the most significant being logistics on the surrounding land at Meadowhall and Teesside (together c. 1m sq ft). At Meadowhall, we have existing outline planning permission on a development plot separate from the shopping centre and would expect to submit a reserved matters application this year. At Teesside, we have a similar opportunity on land outside the retail park and are working up our plans for a logistics use. We made our first logistics acquisition of a warehouse in Enfield covering 216,000 sq ft in April 2021. Located inside the M25, this site is a prime urban logistics site and the coverage is low at c.40% presenting a clear opportunity to increase densification by expanding the footprint as well as through multi-level development. The planning environment in Enfield is supportive for intensification of uses, particularly logistics. In the meantime, the site is fully let and is highly reversionary.

Canada Water: 53 acre masterplan for a new urban centre in Central London

Highlights

   --      Planning secured on Canada Water Masterplan, a 5m sq ft mixed use scheme in May 2020 
   --      Drawdown of 500 year headlease with Southwark Council completed in December 2020 
   --      Signed first pre let with higher education enterprise, TEDI-London for their new campus 
   --      Targeting annual development returns in the low teens 
   --      Advancing plans to bring in partners to support the delivering of the wider scheme 

-- Net valuation movement down 2.5% but with an uplift of 3.4% in the second half, reflecting headlease drawdown

At Canada Water, we are working with the London Borough of Southwark to deliver a 5m sq ft mixed use scheme, including around 3,000 new homes alongside a mix of commercial, retail and community space. The site is located on the Jubilee line and the London Overground, making it easily accessible from London Bridge, the West End, Canary Wharf, Shoreditch and South West London. It will also be an indirect beneficiary of Crossrail, which will free up capacity on the Jubilee Line between Canary Wharf and Bond Street. It covers 53 acres including the dock area, providing 48 acres of developable land.

In May 2020 we secured outline planning permission on the entire 5m sq ft masterplan, including detailed consent on the first three buildings, covering 582,000 sq ft. In December, having successfully overcome a Judicial Review challenge, we completed the drawdown of the 500-year headlease with Southwark Council, effectively combining the ownership of all our assets at Canada Water into a single 500-year headlease with Southwark Council as the Lessor. The headlease allows for the comprehensive redevelopment and investment in the site, with Southwark Council owning an initial 20% interest and with the ability to participate in the development, up to a maximum of 20% with returns pro-rated accordingly.

This is a ten to twelve year programme for which we will target annual development returns in the low teens. In parallel, we are advancing plans to bring in partners to support the delivery of the wider scheme and have had some encouraging conversations. We have commenced enabling works for the first phase and expect to place the main build contract in the coming months.

The first three buildings will deliver 265 homes, of which over 35% will be affordable (split 70% social rent and 30% intermediate housing), as well as commercial space, public spaces and improved pedestrian connections. As part of our commitment to the early delivery of affordable housing, we will deliver building K1 which is solely residential, comprising 79 homes (all affordable) in Phase 1. The other buildings in that phase are A1, which provides 186 homes (including eight affordable) alongside offices and a small amount of retail space, together covering 272,000 sq ft and A2, which is offices-led but includes a 56,000 sq ft leisure centre within the 248,000 sq ft building.

We are exploring a range of alternative uses, including healthcare, life sciences, senior living and higher education, and we are pleased that, higher education provider, TEDI-London a global partnership with King's College London, Arizona State University and UNSW Sydney has chosen Canada Water as the location for its new campus. TEDI-London has taken an initial 13,000 sq ft for their modular campus with the option to expand to 40,000 sq ft which we will deliver in phases as the organisation grows. Longer term, we plan to work with TEDI to deliver a permanent home for around 1,000 students within the Canada Water masterplan. These plans align with our wider strategy to focus the business on growing sectors and demonstrates strong progress against our priority to realise the potential of our campuses. Our planning permission at Canada Water is deliberately flexible so as we move forward, we can take account of changes in demand by amending our offices, residential and retail allocations as appropriate.

Sustainability

The Canada Water Masterplan will be one of the most genuinely sustainable regeneration projects in the UK. Sustainability is engrained in all aspects of the masterplan, with a key focus on delivering net-zero carbon, promoting wellbeing and significantly increasing biodiversity.

We are reducing embodied carbon in construction and minimising carbon emissions during operation through efficient design, the use of low carbon materials (such as high recycled content in steel and 'earth-friendly' concrete) and new building technologies. We are also adopting NABERS UK Design for Performance modelling to design to the highest efficiency and performance, whilst also allowing for future adaptation to suit emerging green technologies. K1 will be one of our first all-electric buildings.

All buildings will target BREEAM Certification (Commercial Outstanding, Retail Excellent, Residential Home Quality Mark) and as part of our holistic approach to sustainability, the Canada Water Masterplan will also achieve BREEAM Communities Certification.

Wellbeing principles are at the heart of the Canada Water Masterplan and we aim to create an environment, accessible to all, that links people and places. We will enhance the individual experience through the use of smart technologies, by improving local air quality and providing access to nature. We will increase biodiversity through the enhancement of existing green spaces and creation of 12 acres of open space, including a 3.5 acre park, connected to 130 acres of parks, woodlands and water.

Working with local communities

We are excited to be making progress at Canada Water and we recognise that developing such a large part of London carries real responsibilities to the community that lives, works and studies in and around the area. We worked with Southwark Council to develop a Social Regeneration Charter to capture local residents' priorities for the development, which commits us to working in partnership to deliver on these. This approach is now a model for development across the Borough.

This year we have worked closely with our community partners to support those most impacted by Covid-19. We provided increased funding to grassroots organisations and local charities such as Time & Talents, who ran a foodbank close to Canada Water and five of our local partners now receive professional coaching support via The Business School to support them and their organisations to emerge from this crisis. Our partnership with Construction Youth Trust continues to grow; despite the restrictions, they delivered meaningful employer engagement to over 800 students at schools local to Canada Water. We are continuing to work with Tree Shepherd to provide low-cost workspace with business support and advice to help local entrepreneurs get their businesses off the ground. The project aims to become self-sustaining and create a network of local entrepreneurs to inform the ongoing programme and maximise outreach within the local community. We have also signed up to the Southwark Stands Together pledge which sets out five commitments to tackle racism and inequality in the borough of Southwark.

Valuation

The net valuation movement for Canada Water over the year showed a fall of 2.5% to GBP387m with values down 6.0% in the first half, reflecting continued investment to support the delivery of the Masterplan, such as a new marketing suite. We saw an uplift of 3.4% in the second half reflecting the drawdown of the headlease.

FINANCE REVIEW

 
 Year ended 31 March                    2020          2021 
 Underlying Profit(1,2)              GBP306m       GBP201m 
 Underling earning per 
  share(1,2)                           32.7p         18.8p 
 IFRS (loss) after tax           GBP(1,114)m   GBP(1,083)m 
 Dividend per share                   15.97p        15.04p 
 Total accounting return(1,3)        (11.0%)       (15.1%) 
------------------------------  ------------  ------------ 
 EPRA Net Tangible Assets 
  per share(1,2)                        773p          648p 
 IFRS net assets                   GBP7,147m     GBP5,983m 
------------------------------  ------------  ------------ 
 LTV (1,4,5)                           34.0%         32.0% 
 Weighted average interest 
  rate (5)                              2.5%          2.9% 
------------------------------  ------------  ------------ 
 

(1) See Glossary on website for definitions. (2) See Table B within supplementary disclosure for reconciliations to IFRS metrics. (3) See Note 2 within condensed financial statements for calculation. (4) See Note 14 within condensed financial statements for calculation and reconciliation to IFRS metrics. (5) On a proportionally consolidated basis including the Group's share of joint ventures and funds.

Overview

Financial performance for the year has been significantly impacted by Covid-19 and an already challenged retail environment. Underlying Profit is down 34.3% at GBP201m, while underlying earnings per share (EPS) is down 42.5% at 18.8p.

Underlying Profit

 
                                                                             GBPm 
 
 Underlying Profit for the year ended 31 March 2020                           306 
 Like-for-like rent (incl. CVA and administrations)                          (43) 
 Provisions for outstanding rents, service charge and deferred rents(1)      (59) 
 Provisions for tenant incentives                                               2 
 Finance cost reductions                                                        8 
 Net divestment                                                              (21) 
 Developments                                                                  10 
 Fees & other income                                                          (2) 
 Underlying Profit for the year ended 31 March 2021                           201 
 
 

(1) The year on year impact of provisions for outstanding rents, service charge and deferred rents was GBP59m. This reflects the difference between the GBP65m charge to the income statement in the year to 31 March 2021 (as disclosed in Note 10 of condensed financial statements) and the GBP6m charge in the year to 31 March 2020.

Underlying Profit decreased by GBP105m, primarily due to provisions for outstanding rent, service charge and rent deferrals made in light of Covid-19, as well as a reduction in like-for-like rents and the impact of disposals made during the period. Lower market interest rates alongside our hedging approach and financing activity increased Underlying Profit by GBP8m.

Net divestment decreased earnings by GBP21m in the year. Proceeds from sales have and will be deployed into our value accretive development programme. The recently completed and committed schemes are expected to generate earnings accretion of GBP50m, of which 50% is already pre-let.

Since April 2020, we have completed GBP1.2bn of asset disposals, overall 6.2% ahead of book value. This included GBP556m of retail disposals, primarily the sale of three Tesco superstores totalling GBP191m and four standalone B&Q stores totalling GBP100m. We sold our Beaumont Leys shopping centre for GBP72m in two separate transactions and two retail parks in Lincoln and Newmarket for a combined total of GBP21m. We sold our share of a portfolio of reversionary interests in Sainsbury's superstores for GBP102m and made further sales of standalone retail assets, including a Tesco in Brislington for GBP42m and a David Lloyd gym in Northwood for GBP51m.

We completed GBP643m of office disposals since November; the most significant transaction was the sale of a 75% interest in a portfolio of three buildings in the West End to Allianz Real Estate for GBP401m representing a blended NIY of 4.3%. We also sold the offices and retail element of our Clarges scheme in Mayfair for GBP177m at a NIY of 3.5% and Yalding House for GBP42m at a NIY of 4.4%.

Overall valuations have reduced by 10.8% on a proportionally consolidated basis resulting in an overall EPRA NTA per share decline of 16.3%.

Financing activity of GBP1.6bn included the extension by a further year of GBP1.1bn unsecured bank facilities: GBP650m RCFs were extended to 2025 and in March 2021 our GBP450m ESG-linked RCF was extended to 2026. New loans of GBP460m were arranged, for British Land, HUT and our new Joint Venture with Allianz.

LTV has decreased by 200bps during the year to 32.0%. The primary driver of the movement was asset disposals which reduced LTV by 780bps. This was partially offset by valuation declines adding 420bps and development spend adding 140bps.

As a result, our financial position remains strong with GBP1.8bn of undrawn facilities and cash and no requirement to refinance until early 2025. We retain significant headroom to our debt covenants, meaning the Group could withstand a further fall in asset values across the portfolio of 46% prior to taking any mitigating actions.

Fitch Ratings as part of the annual review in August 2020 affirmed all our credit ratings, including the senior unsecured rating at 'A', with a Stable Outlook.

Presentation of financial information

The Group financial statements are prepared under IFRS where the Group's interests in joint ventures and funds are shown as a single line item on the income statement and balance sheet and all subsidiaries are consolidated at 100%.

Management considers the business principally on a proportionally consolidated basis when setting the strategy, determining annual priorities, making investment and financing decisions and reviewing performance. This 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 financial key performance indicators are also presented on this basis.

A summary income statement and summary balance sheet which reconcile the Group income statement and balance sheet to British Land's interests on a proportionally consolidated basis are included in Table A within the supplementary disclosures.

Management monitors Underlying Profit as this more accurately reflects the underlying recurring performance of our core property rental activity, as opposed to IFRS metrics which include the non-cash valuation movement on the property portfolio. It is based on the Best Practices Recommendations of the European Public Real Estate Association (EPRA) which are widely used alternate metrics to their IFRS equivalents.

This year, the Group has adopted the new EPRA NAV metrics; Net Reinvestment Value (NRV), Net Tangible Assets (NTA) and Net Disposal Value (NDV). We are reporting NTA in place of the previous EPRA net asset value (NAV). Similarly, NDV replaces the previous EPRA triple net asset value measure (NNNAV). The total accounting return is now calculated based on EPRA NTA. Definitions of these metrics are shown in Table B of the supplementary disclosures.

Management monitors EPRA NTA as this provides a transparent and consistent basis to enable comparison between European property companies. Linked to this, the use of Total Accounting Return allows management to monitor return to shareholders based on movements in a consistently applied metric, being EPRA NTA, and dividends paid.

Loan to value (proportionally consolidated) is also monitored by management as a key measure of the level of debt employed by the Group to meet its strategic objectives, along with a measurement of risk. It also allows comparison to other property companies who similarly monitor and report this measure.

Income statement

   1.   Underlying Profit 

Underlying Profit is the measure that we use to assess income performance. This is presented below on a proportionally consolidated basis. No company adjustments have been made in the current or prior year and therefore this is the same as the pre-tax EPRA earnings measure which includes a number of adjustments to the IFRS reported loss after tax.

 
                                            Section       2020       2021 
                                                          GBPm       GBPm 
-----------------------------------------  --------  ---------  --------- 
 Gross rental income                                       560        508 
 Property operating expenses                              (82)      (141) 
-----------------------------------------  --------  ---------  --------- 
 Net rental income                              1.2        478        367 
 Net fees and other income                                  13         11 
 Administrative expenses                        1.3       (74)       (74) 
 Net financing costs                            1.4      (111)      (103) 
-----------------------------------------  --------  ---------  --------- 
 Underlying Profit                                         306        201 
-----------------------------------------  --------  ---------  --------- 
 Underlying tax charge                                       -       (26) 
 Non-controlling interests in Underlying 
  Profit                                                    12          3 
 EPRA adjustments(1)                                   (1,432)    (1,261) 
-----------------------------------------  --------  ---------  --------- 
 IFRS (loss) after tax                            2    (1,114)    (1,083) 
-----------------------------------------  --------  ---------  --------- 
 Underlying EPS                                 1.1      32.7p      18.8p 
 IFRS basic EPS                                   2   (110.0)p   (111.2)p 
 Dividend per share                               3     15.97p     15.04p 
-----------------------------------------  --------  ---------  --------- 
 

(1) EPRA adjustments consist of investment and development property revaluations, gains/losses on investment and trading property disposals, changes in the fair value of financial instruments and associated close out costs. These items are presented in the 'capital and other' column of the consolidated income statement.

1.1 Underlying EPS

Underlying EPS is 18.8p, down 42.5%. This reflects the Underlying Profit decline of 34.3% and an underlying tax charge of GBP26m, partially offset by the impact of prior year share buybacks. The tax charge follows the temporary suspension of the dividend which resulted in a shortfall in our REIT property income distributions, creating a corporation tax liability. With the reinstatement of the dividend, we do not expect this to repeat in future years.

1.2 Net rental income

 
                                                             GBPm 
 
 Net rental income for the year ended 31 March 2020           478 
 Net divestment                                              (25) 
 Developments                                                  14 
 Like-for-like rent (incl. CVA and administrations)          (43) 
 Provisions for outstanding rents and service charge(1)      (53) 
 Provisions for deferred rents                                (6) 
 Provisions for tenant incentives                               2 
----------------------------------------------------------  ----- 
 Net rental income for the year ended 31 March 2021           367 
----------------------------------------------------------  ----- 
 

(1) The year on year impact of provisions for outstanding rents and service charge was GBP53m. This reflects the difference between the GBP59m charge to the income statement in the year to 31 March 2021 (as disclosed in Note 10 of condensed financial statements) and the GBP6m charge in the year to 31 March 2020.

Net sales of income producing assets over the last 24 months reduced net rents by GBP25m in the year. Proceeds from sales are being reinvested in the committed development pipeline which is expected to deliver GBP85m in rents in future years and including the recent commitment of Norton Folgate and 1 Broadgate, is already 50% pre-let.

Retail like-for-like net rental decline is 17.4% in the year. This reflects the impact of CVAs and administrations, declining ERVs, longer void periods and reduced car park income over the closure period. The offices portfolio saw a like-for-like decline of 1.0%, which was primarily driven by expiries at Exchange House and 155 Bishopsgate ahead of refurbishment. Office developments contributed GBP14m of new rental income, with 135 Bishopsgate and 100 Liverpool Street completing earlier in the year.

In light of Covid-19, provisions made against trade debtors increased by GBP53m compared to the prior year. In the March 2020 quarter we deferred rent of GBP10m which is held as accrued income, and an impairment of GBP6m was made against this to account for risk to recoverability over the next three quarters

We take a systematic approach to provisioning for rent receivables, based on both aging profile and credit quality. We are provided at 66% on rent receivables and service charge based on balances outstanding at year end. When taking into account post year end rent receipts of GBP24m this increases to 85% for trade debtors. Further detail on balances, provisions and the charge in FY21 made against them are set out in the table below:

 
Receivables          Debtor balance   Provision balance   % provided   FY 21 
                                                              for      impact 
-------------------  ---------------  ------------------  ----------  ------- 
Less than 90 days        GBP45m             GBP14m           31%      GBP14m 
90 - 182 days            GBP20m             GBP14m           70%      GBP14m 
182 - 365 days           GBP31m             GBP31m           100%     GBP31m 
More than 365 days       GBP13m             GBP13m           100%        - 
-------------------  ---------------  ------------------  ----------  ------- 
 Trade debtors           GBP109m            GBP72m           66%      GBP59m 
-------------------  ---------------  ------------------  ----------  ------- 
 Deferred rents          GBP10m             GBP6m            60%       GBP6m 
-------------------  ---------------  ------------------  ----------  ------- 
  Total                  GBP119m            GBP78m           66%      GBP65m 
-------------------  ---------------  ------------------  ----------  ------- 
 

The above balances are presented on a proportionally consolidated basis, net of VAT.

The table below presents trade debtors and the associated provision balance by both aging profile and level of credit risk:

 
                                 Trade debtors                                 Provision balance 
                  Low     Medium    High      CVAs       Total     Low    Medium    High      CVAs      Total 
                                             & admins                                        & admins 
                -------  -------  -------  ----------  --------  ------  -------  -------  ----------  ------- 
 Less than       GBP22m   GBP5m    GBP10m     GBP8m     GBP45m    GBP1m   GBP1m    GBP4m      GBP8m     GBP14m 
  90 days 
 90 - 182 days   GBP6m    GBP2m    GBP4m      GBP8m     GBP20m    GBP1m   GBP1m    GBP4m      GBP8m     GBP14m 
 182 - 365       GBP5m    GBP3m    GBP6m     GBP17m     GBP31m    GBP5m   GBP3m    GBP6m     GBP17m     GBP31m 
  days 
 More than       GBP2m      -      GBP3m      GBP8m     GBP13m    GBP2m     -      GBP3m      GBP8m     GBP13m 
  365 days 
                -------  -------  -------  ----------  --------  ------  -------  -------  ----------  ------- 
 Total           GBP35m   GBP10m   GBP23m    GBP41m     GBP109m   GBP9m   GBP5m    GBP17m    GBP41m     GBP72m 
                -------  -------  -------  ----------  --------  ------  -------  -------  ----------  ------- 
 

The above balances are presented on a proportionally consolidated basis, net of VAT.

The impact of provisions made against tenant incentives decreased by GBP2m compared to the previous year, with a GBP18m provision charge recognised in the year.

1.3 Administrative expenses

Administrative expenses have been of particular focus across the business this year, and despite the cost resulting from our Covid response, they have remained flat on the prior year, at GBP74m. The Group's EPRA operating cost ratio increased to 37.9% (2019/20: 23.5%) as a result of a significant increase in property outgoing expenses due to provisions made in respect of rental debtors, accrued income and tenant incentive, as well as lower rental income following sales activity. Excluding provisions made in respect of tenant debtors, accrued income and tenant incentives, the Group's operating cost ratio is 20.7% (2019/20: 18.7%).

1.4 Net financing costs

 
                                                 GBPm 
 
 Net financing costs for the year ended 31 
  March 2020                                    (111) 
 Financing activity                                 5 
 Lower market rates                                 7 
 Net divestment                                     4 
 Developments                                     (4) 
 Convertible bond maturity                        (2) 
 Other                                            (2) 
---------------------------------------------  ------ 
 Net financing costs for the year ended 31 
  March 2021                                    (103) 
---------------------------------------------  ------ 
 

Financing activity undertaken over the last 24 months has reduced costs by GBP5m in the year, predominantly as a result of prior year debt liability management, partially offset by the repayment of the GBP350m zero coupon convertible bond at its maturity in June as planned using existing facilities.

We have a balanced approach to interest rate risk management. At 31 March 2021, we were fully hedged on a spot basis, and we had interest rate hedging on 78% of our projected debt on average over the next five years. Our use of interest rate caps as part of our hedging means that the cost of around half of our debt benefits while market rates remain low and, compared to the prior year, we've seen a GBP7m reduction in finance costs from the impact of lower market rates year on year. Our weighted average interest rate remained low at 2.9%.

The reduction in finance costs from net divestment is due to the proceeds from GBP1.2bn of asset disposals, being used to repay our revolving credit facilities, as well as being reinvested into development pipeline.

   2.     IFRS loss after tax 

The main difference between IFRS loss after tax and Underlying Profit is that IFRS includes the valuation movement on investment and trading properties, fair value movements on financial instruments and capital financing costs. In addition, the Group's investments in joint ventures and funds are equity accounted in the IFRS income statement but are included on a proportionally consolidated basis within Underlying Profit.

The IFRS loss after tax for the year was GBP1,083m, compared with a loss after tax for the prior year of GBP1,114m. IFRS basic EPS was (111.2)p per share, compared to (110.0)p per share in the prior year. The IFRS loss after tax for the year primarily reflects the downward valuation movement on the Group's properties of GBP888m, the capital and other income loss from joint ventures and funds to GBP409m and the Underlying profit of GBP201m. The Group valuation movement and capital and other income loss from joint ventures and funds was driven principally by outward yield shift of 33bps and ERV decline of 7.6% in the portfolio resulting in a valuation a decline of 10.8%.

The basic weighted average number of shares in issue during the year was 927m (2019/20: 934m).

   3.     Dividends 

In October we announced the intention to resume paying dividends semi-annually, calculated at 80% of Underlying EPS based on the most recently completed six-month period. Applying this policy, the Board are proposing a final dividend for the year ended 31 March 2021 of 6.64p per share. Payment will be made on Friday 6 August 2021 to shareholders on the register at close of business on Friday 25 June 2021. The dividend will be a Property Income Distribution and no SCRIP alternative will be offered.

Balance sheet

 
 As at March                      Section      2020      2021 
                                               GBPm      GBPm 
-------------------------------  --------  --------  -------- 
 Property assets                             11,177     9,140 
 Other non-current assets                       131        51 
-------------------------------  --------  --------  -------- 
                                             11,308     9,191 
 Other net current liabilities                (252)     (203) 
 Adjusted net debt                      6   (3,854)   (2,938) 
 Other non-current liabilities                    -         - 
-------------------------------  --------  --------  -------- 
 EPRA Net Tangible Assets                     7,202     6,050 
-------------------------------  --------  --------  -------- 
 EPRA NTA per share                     4      773p      648p 
-------------------------------  --------  --------  -------- 
 Non-controlling interests                      112        59 
 Other EPRA adjustments(1)                    (167)     (126) 
-------------------------------  --------  --------  -------- 
 IFRS net assets                        5     7,147     5,983 
-------------------------------  --------  --------  -------- 
 

Proportionally consolidated basis

(1) EPRA Net Tangible Assets NTA is a proportionally consolidated measure that is based on IFRS net assets excluding the mark-to-market on derivatives and related debt adjustments, the carrying value of intangibles, the mark-to-market on the convertible bonds, as well as deferred taxation on property and derivative valuations. The metric includes the valuation surplus on trading properties and is adjusted for the dilutive impact of share options. Details of the EPRA adjustments are included in Table B within the supplementary disclosures.

   4.   EPRA Net Tangible Assets per share 
 
                                          pence 
 
 EPRA NTA per share at 31 March 2020        773 
 Valuation performance                    (137) 
 Underlying Profit                           19 
 Property disposals                           3 
 Dividend                                   (8) 
 Finance liability management               (1) 
 Other                                      (1) 
---------------------------------------  ------ 
 EPRA NTA per share at 31 March 2021        648 
---------------------------------------  ------ 
 

The 16.3% decrease in EPRA NTA per share reflects a valuation decrease of 10.8% combined with the Group's gearing.

Office valuations were down 3.8%, primarily due to the uncertainty of economic outlook and potential changes as a result of Covid-19. As a result, and coupled with lower investment market activity, yields moved out 9bps although ERV was marginally up. Developments again outperformed the standing portfolio and saw a valuation gain of 0.9%.

Valuations in Retail were down 24.7%, with outward yield shift of 81bps and ERV decline of 16.8%. These values reflect ongoing structural challenges faced by occupiers, compounded by Covid-19 and limited investment market activity. Across our largest assets, yields have moved between 60-170bps. For retail parks, improving liquidity in the market provided some valuation evidence, particularly for smaller parks.

Our external valuers have included an explanatory note in relation to Covid-19 in their valuation reports, recognising that it continues to affect real estate markets globally. However, their opinions are not subject to "material valuation uncertainty" (as defined by VPS 3 and VPGA 10 of the RICS Valuation - Global Standards), concluding that there was an adequate quantum of market evidence upon which to base their opinions of value. The current market uncertainty has been reflected in the valuations in a number of ways, depending on the relevant property sub-market. For retail, as well as adjusting yields and reflecting agreed concessions, our valuers have reduced assumed turnover rent. Where concessions have not been agreed, and rent collection has been inconsistent, they have deducted 3-6 months rent as a capital sum. For offices, the uncertainty has principally been reflected through assumed void periods and incentive packages.

   5.   IFRS net assets 

IFRS net assets at 31 March 2021 were GBP5,983m, a decrease of GBP1,164m from 31 March 2020. This was primarily due to IFRS loss after tax of GBP1,083m and the interim dividend paid in the year of GBP78m.

Cash flow, net debt and financing

   6.   Adjusted net debt(1) 
 
                                            GBPm 
 
 Adjusted net debt at 31 March 2020      (3,854) 
 Disposals                                 1,186 
 Acquisitions                               (52) 
 Development and capex                     (230) 
 Net cash from operations                    149 
 Dividend                                   (76) 
 Corporation tax                            (33) 
 Other                                      (28) 
--------------------------------------  -------- 
 Adjusted net debt at 31 March 2021      (2,938) 
--------------------------------------  -------- 
 

(1) Adjusted net debt is a proportionally consolidated measure. It represents the Group net debt as disclosed in Note 14 to the condensed financial statements and the Group's share of joint venture and funds' net debt excluding the mark-to-market on derivatives, related debt adjustments and non-controlling interests. A reconciliation between the Group net debt and adjusted net debt is included in Table A within the supplementary disclosures.

Net sales reduced debt by GBP1,134m whilst development spend totalled GBP185m with a further GBP45m on capital expenditure related to asset management on the standing portfolio. The value of recently completed and committed developments is GBP1,060m, with GBP488m costs to come. Speculative development exposure is 6.6% of ERV. There are 1.2m sq ft of developments in our near term pipeline with anticipated cost of GBP806m.

   7.   Financing 
 
                                      Group            Proportionally consolidated 
                                   2020        2021            2020            2021 
 Net debt / adjusted net      GBP3,247m   GBP2,249m       GBP3,854m       GBP2,938m 
  debt (1) 
 Principal amount of gross    GBP3,294m   GBP2,291m       GBP4,158m       GBP3,183m 
  debt 
 Loan to value                    28.9%       25.1%           34.0%           32.0% 
 Weighted average interest 
  rate                             1.9%        2.2%            2.5%            2.9% 
 Interest cover                     5.8         4.3             3.8             3.0 
 Weighted average maturity    6.8 years   7.0 years       7.5 years       7.6 years 
  of drawn debt 
                             ----------  ----------  --------------  -------------- 
 

(1) Group data as presented in note 14 of the condensed financial statements. The proportionally consolidated figures include the Group's share of joint venture and funds' net debt and exclude the mark-to-market on derivatives and related debt adjustments and non-controlling interests.

At 31 March 2021, our proportionally consolidated LTV was 32.0%, down from 34.0% at 31 March 2020. The impact of asset disposals reduced LTV by 780 bps. This was partially offset by valuation declines which added 420 bps, as well as development spend which added 140 bps. Note 14 of the condensed financial statements sets out the calculation of the Group and proportionally consolidated LTV.

We are committed to maintaining good long-term relationships with debt providers in the different markets, with around 30 lenders in bank facilities and private placements alone. This year we have carried out financing of GBP1.6bn involving 14 different lenders.

In March 2021, we extended our GBP450m ESG-linked RCF by a further year to 2026 with all eight banks in agreement. Earlier in the year, we extended an additional GBP650m of RCFs, by a further year to 2025. Our GBP350m convertible bond was repaid at its scheduled maturity in June 2020 as planned using RCFs.

In December 2020 we signed a GBP100m unsecured loan facility with Homes England to fund specified infrastructure works which will accelerate the delivery of up to 3,000 homes at Canada Water. The loan facility has a seven-year term which may be extended at our request, subject to Homes England's approval.

For HUT, one of the bank facilities which was due to mature in September 2020 was refinanced in May 2020 with a GBP200m facility to December 2023, secured on a portfolio of HUT's retail parks.

In March 2021, we also raised a GBP160.5m seven-year loan from SMBC for our new Joint Venture with Allianz in which we have a 25% stake, secured on the assets of the JV.

This is a SONIA based loan and we are considering the processes for transition of our existing range of LIBOR based debt and derivatives to reference SONIA, alongside emerging market practice.

As a result of this activity, at 31 March 2021 British Land had GBP1.8bn of undrawn facilities and cash and no requirement to refinance until early 2025.

Our debt and interest rate management approach has enabled us to maintain a low weighted average interest rate of 2.9%. This is a 40bps increase from 31 March 2020, and is due to the repayment of our RCFs with proceeds from disposals, which will be redrawn as we deploy proceeds into developments or acquisitions. Our use of interest rate caps as part of our hedging means that the cost on around half of our debt benefits while market rates remain low.

Fitch Ratings, as part of their annual review in August 2020 affirmed our senior unsecured credit rating 'A', our long term IDR credit rating 'A-' and short term IDR credit rating 'F1' , with Stable Outlook.

The current environment reinforces the importance of a strong balance sheet.

David Walker

Interim Chief Financial Officer

About British Land

Our portfolio of high quality UK commercial property is focused on London Campuses and Retail & Fulfilment assets throughout the UK. We own or manage a portfolio valued at GBP12.7bn (British Land share: GBP9.1bn) as at 31 March 2021 making us one of Europe's largest listed real estate investment companies.

We create Places People Prefer, delivering the best, most sustainable places for our customers and communities. Our strategy is to leverage our best in class platform and proven expertise in development, repositioning and active management, investing behind two key themes: Campuses and Retail & Fulfilment.

Our three Campuses at Broadgate, Paddington Central and Regent's Place are dynamic neighbourhoods, attracting growth customers and sectors, and offering some of the best connected, highest quality and most sustainable space in London. We are delivering our fourth campus at Canada Water, where we have planning consent to deliver 5 million sq ft of residential, commercial, retail and community space over 53 acres. Our campuses account for 70% of our portfolio.

Retail & Fulfilment accounts for 25% of the portfolio and is focused on retail parks which are aligned to the growth of convenience, online and last mile fulfilment. We are complementing this with urban logistics primarily in London, focused on development-led opportunities.

Sustainability is embedded throughout our business. In 2020, we set out our sustainability strategy which focuses on two time-critical areas where British Land can create the most benefit: making our whole portfolio net zero carbon by 2030, and partnering to grow social value and wellbeing in the communities where we operate.

Further details can be found on the British Land website at www.britishland.com

RISK MANAGEMENT AND PRINCIPAL RISKS

We maintain a comprehensive risk management process which serves to identify, assess and respond to the range of financial and non-financial risks facing our business, including those risks that could threaten solvency and liquidity, as well as identifying emerging risks. Our approach is not intended to eliminate risk entirely, but instead to manage our risk exposures across the business, whilst at the same time making the most of our opportunities. Our approach to risk management is centred on being risk-aware, clearly defining our risk appetite, responding to changes to our risk profile quickly and having a strong risk management culture among employees with clear roles and accountability. Our organisational structure ensures close involvement of senior management in all significant decisions as well as in-house management of our property management activities and development.

The continually evolving circumstances caused by the Covid-19 pandemic, coupled with the backdrop of geopolitical and macroeconomic uncertainty, has, and continues to present a rapidly changing near term operating environment for our business to navigate and affect our entire risk landscape. Whilst our performance has been impacted, our financial position remains strong and demonstrates the importance of our risk management to protect our business through this period of uncertainty and adapt to a rapidly-changing environment. We have robust crisis management and business continuity plans in place and acted swiftly in dealing with the exceptional challenges posed by Covid-19; our focus has been to ensure the safety of our people; our assets are securely maintained and to support our customers, suppliers and local communities. Looking forward, whilst the successful rollout of the Government's vaccination programme provides optimism, we are mindful that the trajectory for this pandemic is highly uncertain given the risk of future variants. Therefore, risk management and the Group's continued ability to be flexible in responding to the risks as they evolve will be fundamental to our business.

The Board confirms that a robust assessment of the principal and emerging risks facing the Company, including those that would threaten its business model, future performance, solvency or liquidity, was carried out during the year taking into account the evolving Covid-19 risk and the economic and political environment. In accordance with our risk management process, Covid-19 is viewed as an overarching risk rather than a single principal risk. It has had a material negative impact on our business, in particular resulting in reduced rent collection in our Retail business, an increase in failures amongst our retailer customer base and reduced physical occupancy at our office-led assets. Changes in Government regulation and intervention in leasing contracts have occurred which also present a risk to our business, such as the rent moratorium.

Our current assessment is that the majority of our principal risks we flagged as elevated last year remain heightened. While the good progress on the vaccination programme and a roadmap out of lockdown provides optimism, the trajectory of the pandemic remains a key area of uncertainty and thus it is too early to conclude that the risks to our business have reduced. Albeit, the risks to the Economic Outlook and Investment Markets have reduced from the elevated levels immediately after the outset of the pandemic, whilst the risks to our Development Strategy and People, have increased slightly (as detailed overleaf). We have also added one principal risk as a standalone risk being Environmental Sustainability in light of the significance to the business and our customers.

Our principal external and internal risks are summarised below, including an assessment of how the risks have changed in the year. A more comprehensive explanation of the Group's approach to risk management will be included in the 2021 Annual Report.

External risks

 
 Risks and impacts             How we monitor                     Change in risk assessment 
                                and manage the                     in year 
                                risk 
 1 Economic outlook 
 The UK economic               -- The Risk Committee              -- The Covid-19 pandemic 
  climate present               reviews quarterly                  has brought substantial economic 
  risks                         the                                contraction, with the UK's 
  and opportunities             economic environment               GDP falling 9.9% for the 
  in property and               in which we operate                calendar year 2020, severely 
  financing markets             to                                 impacting both our markets 
  and to the businesses         assess whether                     and the businesses of our 
  of our customers              changes to the                     customers. 
  which can impact              economic outlook                   -- The combination of strong 
  both the delivery             justify a reassessment             Government spending (in particular 
  of our strategy               of the risk appetite               the Job Retention Scheme), 
  and our financial             of the business.                   low inflation and low interest 
  performance.                  -- Key indicators                  rates helped mitigate some 
                                including forecast                 of the impact of Covid-19. 
                                GDP growth, employment             -- Economic growth is expected 
                                rates, business                    to bounce back relatively 
                                and consumer                       quickly as restrictions ease 
                                confidence, interest               and the Government has set 
                                rates and inflation/deflation      out a four-stage roadmap 
                                are considered,                    with a view to lifting all 
                                as well as central                 restrictions by 21 June 2021. 
                                bank guidance                      -- Overall, the risk to the 
                                and government                     economic outlook has slightly 
                                policy updates.                    reduced from the elevated 
                                -- We stress                       level last year, in view 
                                test our business                  of the good progress with 
                                plan against                       the vaccination programme 
                                a                                  and the economy is on track 
                                downturn in economic               for full reopening in June. 
                                outlook to ensure                  Albeit, the trajectory of 
                                our financial                      the pandemic remains a key 
                                position is sufficiently           area of uncertainty and any 
                                flexible and                       significant re-emergence 
                                resilient.                         of Covid-19 or new variants 
                                -- Our business                    could result in the imposition 
                                model focuses                      of restrictions and further 
                                on a high quality                  economic damage and there 
                                portfolio underpinned              are also concerns that inflation 
                                by our balance                     may rise. 
                                sheet and financial                -- The Board and executive 
                                strength.                          team have taken appropriate 
                                                                   action to help us navigate 
                                                                   the near term challenges 
                                                                   and determine the longer 
                                                                   term strategic direction 
                                                                   of the business focused on 
                                                                   four priorities. 
                              -------------------------------    ------------------------------------------ 
 2 Political and regulatory outlook 
 Significant political         -- Whilst we                       -- The political risk outlook 
  events and regulatory         cannot influence                   remains high dictated by 
  changes, including            the outcome of                     the national and global response 
  the UK's decision             significant political              to Covid-19. Furthermore, 
  to leave the                  events, we do                      the global geopolitical and 
  EU, and Government            take the                           trade environments remain 
  policy response               uncertainty related                uncertain. 
  to the                        to such events                     -- While the UK managed to 
  pandemic, bring               and the range                      secure a deal with the EU, 
  risks principally             of possible outcomes               avoiding major disruption 
  in four areas:                into account                       to trade, the realities of 
  -- reluctance                 when making strategic              the new trading relationship 
  of investors                  investment and                     are expected to dampen economic 
  and businesses                financing decisions.               growth in the short term. 
  to make investment            -- Internally                      Also, further uncertainty 
  and                           we review and                      remains until the agreement 
  occupational                  monitor proposals                  in respect of financial services 
  decisions whilst              and emerging                       is finalised. 
  the outcome remains           policy and legislation             -- Changes in Government 
  uncertain                     to ensure that                     regulation and 
  -- the impact                 we take the necessary              intervention in leasing contracts 
  on the case for               steps to ensure                    have occurred, which have 
  investment                    compliance, if                     presented a risk to our business, 
  in the UK, and                applicable. Additionally,          such as the rent moratorium. 
  on specific policies          we engage public                   Also, the very recent court 
  and                           affairs consultants                decisions on CVAs and Restructuring 
  regulation introduced,        to ensure that                     Plans have clarified the 
  particularly                  we are properly                    methods occupiers can use 
  those which directly          briefed on the                     to adversely alter their 
  impact real                   potential policy                   rental and other obligations 
  estate or our                 and regulatory                     to property owners. There 
  customers                     implications                       is also increased potential 
  -- the potential              of political                       for tax rises on businesses. 
  for a change                  events. We also                    -- We continue to regularly 
  of leadership                 monitor public                     monitor proposed and actual 
  or political                  trust in business.                 changes in legislation and 
  direction                     -- Where appropriate,              regulations and with the 
  -- the impact                 we act with other                  help of professional bodies, 
  on the businesses             industry participants              if possible, mitigate the 
  of our occupiers              and representative                 risks to our business. During 
  as well as our                bodies to contribute               the year, we have engaged 
  own business.                 to policy and                      with the British Property 
                                regulatory debate.                 Federation in their response 
                                We monitor and                     to the Government's call 
                                respond to social                  for evidence on how to address 
                                and political                      the impact of Covid-19 on 
                                reputational                       commercial rents. 
                                challenges relevant 
                                to the industry 
                                and apply our 
                                own evidence-based 
                                research to engage 
                                in thought leadership 
                                discussions, 
                                such as with 
                                Design for Life. 
                              -------------------------------    ------------------------------------------ 
 3 Commercial property investor demand 
 Reduction in                  -- The Risk Committee              London Offices 
  investor                      reviews the property               -- Whilst the London investment 
  demand for UK                 market quarterly                   market was understandably 
  real                          to assess whether                  subdued in the period following 
  estate may result             any                                the initial outbreak of Covid-19, 
  in falls in asset             changes to the                     in the second half of the 
  valuations and                market outlook                     year, overseas investors 
  could arise from              present risks                      have shown an increased readiness 
  variations in:                and opportunities                  to look through the pandemic 
  -- the health                 which should                       and invest in prime London 
  of the UK                     be reflected                       offices, and thus this risk 
  economy                       in the execution                   has reduced. The final quarter 
  -- the attractiveness         of our strategy                    of calendar year 2020 saw 
  of                            and our capital                    c.GBP5bn of transactions. 
  investment in                 allocation plan.                   -- Whilst the reintroduction 
  the UK                        The                                of travel restrictions during 
  -- availability               Committee considers                the third lockdown in January 
  of finance                    indicators such                    2021 impacted activity in 
  -- relative attractiveness    as                                 the last quarter, transaction 
  of other asset                the margin between                 volumes are expected to pick 
  classes                       property yields                    up as restrictions are lifted, 
                                and                                particularly in the context 
                                borrowing costs                    of low interest rates. The 
                                and property                       London Office investment 
                                capital growth                     market is expected to remain 
                                forecasts, which                   attractive globally given 
                                are considered                     its transparency, liquidity 
                                alongside the                      and its yield differential. 
                                Committee members'                 -- This year, benefitting 
                                knowledge and                      from the resilient office 
                                experience of                      investment market, we made 
                                market activity                    timely sales of GBP643m of 
                                and trends.                        standalone office buildings. 
                                -- We focus on                     Retail 
                                prime assets                       -- The retail investment 
                                and sectors                        market was significantly 
                                which we believe                   weaker, reflecting challenges 
                                will be less                       in the occupational market, 
                                susceptible over                   resulting in yield expansion 
                                the medium term                    particularly in the first 
                                to a reduction                     half of the year. 
                                in occupier and                    -- There has been limited 
                                investor demand.                   liquidity and lack of transactional 
                                -- We maintain                     evidence, particularly for 
                                strong relationships               shopping centres, where lot 
                                with agents and                    sizes are typically larger, 
                                direct investors                   and confidence weakened through 
                                active in the                      the pandemic. However, sentiment 
                                market.                            has improved in retail parks, 
                                -- We stress                       which have weathered the 
                                test our business                  pandemic better and where 
                                plan for the                       investment activity has picked 
                                effect of a change                 up with GBP1.7bn of transactions 
                                in property yields.                in the year, slightly lowering 
                                                                   this risk to our business. 
                                                                   In particular, the market 
                                                                   for assets which are small 
                                                                   to medium in lot size, with 
                                                                   secure, sustainable income 
                                                                   streams, has seen more activity. 
                                                                   -- This year, benefitting 
                                                                   from pockets of demand in 
                                                                   the retail investment market, 
                                                                   we have sold GBP556m of retail 
                                                                   assets focused on standalone 
                                                                   units and superstores where 
                                                                   we have limited potential 
                                                                   to drive value through asset 
                                                                   management. 
                              -------------------------------    ------------------------------------------ 
 4 Occupier demand and tenant default 
 Underlying income,            -- The Risk Committee              London Offices 
  rental growth                 reviews indicators                 -- The Covid-19 pandemic 
  and capital performance       of                                 affected leasing activity 
  could be adversely            occupier demand                    which is significantly down 
  affected by weakening         quarterly including                as businesses focused on 
  occupier demand               consumer confidence                near term operational challenges 
  and occupier                  surveys and employment             and postponed decisions on 
  failures resulting            and ERV growth                     new space, and will undoubtedly 
  from variations               forecasts,                         cause many businesses to 
  in the health                 alongside the                      consider how to use their 
  of the UK economy             Committee members'                 offices most productively 
  and corresponding             knowledge and                      and safely going forward. 
  weakening of                  experience of                      As a result, the type of 
  consumer                      occupier                           space businesses need will 
  confidence, business          plans, trading                     evolve, and this risk remains 
  activity and                  performance and                    elevated. 
  investment.                   leasing activity                   -- Across the market, prime 
  Changing consumer             in guiding execution               headline rents have generally 
  and business                  of our strategy.                   been flat, albeit on low 
  practices                     -- We have a                       volumes and incentives have 
  including the                 high quality,                      increased. The vacancy rate 
  growth of                     diversified occupier               rose to 8.8% from 4.3% a 
  internet retailing,           base and monitor                   year ago, but secondhand 
  flexible working              concentration                      space accounts for most of 
  practices (including          of exposure to                     supply with tenant-led space 
  more working                  individual occupiers               an increasingly significant 
  from home) and                or sectors. We                     component. 
  demand for energy             perform rigorous                   -- Covid-19 has accelerated 
  efficient buildings,          occupier covenant                  a focus on quality space, 
  new                           checks ahead                       with occupiers increasingly 
  technologies,                 of approving                       focused on the best space 
  new                           deals and on                       for their business, their 
  legislation and               an ongoing basis                   people and the environment. 
  alternative locations         so that we can                     We are seeing encouraging 
  may result in                 be proactive                       interest in new space, particularly 
  earlier than                  in managing exposure               from businesses with requirements 
  anticipated                   to weaker occupiers.               two to three years in the 
  obsolescence                  -- Through our                     future for modern, high quality 
  of our buildings              Key Occupier                       and sustainable space which 
  if evolving                   Account                            supports more hybrid ways 
  occupier and                  programme, we                      of working. 
  regulatory                    work together                      Retail 
  requirements                  with our customers                 -- Covid-19 has had a significant 
  are not met.                  to find ways                       impact on retail, which was 
  Some or all of                to best meet                       already facing structural 
  these trends                  their evolving                     challenges as a result of 
  could be                      requirements.                      the growth of online. The 
  accelerated by                -- Our Sustainability              risks to the retail occupational 
  the                           Strategy links                     market have remained high 
  pandemic.                     action on                          in the near term; and have 
                                customer wellbeing,                played out in several ways, 
                                energy efficiency,                 including rent reductions, 
                                community and                      rent deferments and non-payment, 
                                sustainable design                 but also an increase in retailers 
                                to our business                    entering CVAs or administrations. 
                                strategy. Our                      We had elevated this risk 
                                social and environmental           last year in response to 
                                targets enhance                    Covid-19 and this risk remains 
                                our customer                       heightened. 
                                offer; for example,                -- Stronger retailers are 
                                all our new developments           increasingly focused on how 
                                are net zero                       best to align their models 
                                carbon and we                      to the growth of online; 
                                facilitate customer                this has included a growing 
                                networks and                       interest in retail parks 
                                local                              which are more affordable 
                                partnerships                       and can support an online 
                                on all our campuses.               strategy through click & 
                                                                   collect. 
                                                                   -- Our priority has been 
                                                                   on keeping our centres full 
                                                                   of the right mix of retailers 
                                                                   who are additive to our places. 
                                                                   We are pragmatic and proactive 
                                                                   in our approach, working 
                                                                   with successful, financially 
                                                                   strong retailers to ensure 
                                                                   leasing structures are appropriate 
                                                                   and deliver sustainable cash 
                                                                   flows. At times, this has 
                                                                   meant accepting rents which 
                                                                   are below previous passing 
                                                                   rents, but are more appropriate 
                                                                   in the current environment 
                                                                   and sustainable longer term. 
                              -------------------------------    ------------------------------------------ 
 5 Availability and cost of finance 
 Reduced availability          -- Market borrowing                -- Markets were adversely 
  of finance may                rates and real                     affected globally by the 
  adversely impact              estate debt availability           Covid-19 outbreak. Governments 
  ability to refinance          are monitored                      and central banks responded 
  debt and/or drive             by the Risk Committee              with significant interest 
  up cost. These                quarterly and                      rate cuts (to all-time lows) 
  market factors                reviewed regularly                 and economic stimulus packages 
  may also result               in order to guide                  to offset the effects and 
  in weaker investor            our financing                      support economies. 
  demand for real               actions in executing               -- In the UK, lenders' appetite 
  estate.                       our strategy.                      and support varies in different 
  Regulation and                -- We monitor                      debt markets. Strength of 
  capital costs                 our projected                      sponsor and quality of property 
  of lenders may                LTV and our debt                   remain key factors. 
  increase cost                 requirements                       -- Availability of finance 
  of finance, as                using several                      for retail assets significantly 
  could increased               internally generated               reduced, but there is more 
  risk in terms                 reports focused                    support for logistics, offices 
  of economic outlook.          on borrowing                       and build to rent residential. 
                                levels, debt                       Initial LTVs reduced and 
                                maturity, available                margins increased throughout 
                                facilities and                     2020; however, overall costs 
                                interest rate                      of finance remain low reflecting 
                                exposure.                          low market interest rates. 
                                -- Should inflationary             -- British Land maintains 
                                pressure result                    good access to its primary 
                                in increased                       sources of funds in the unsecured 
                                interest rates,                    markets, given our 'A' credit 
                                funding costs                      rating, as well as to secured 
                                may increase.                      markets for joint ventures 
                                We have interest                   and funds, and the risk to 
                                rate hedging                       our business in this respect 
                                on 78% of our                      has remained broadly stable. 
                                projected debt 
                                on average over 
                                the next five 
                                years 
                                -- We maintain 
                                good long term 
                                relationships 
                                with our key 
                                financing partners. 
                                -- The scale 
                                and quality of 
                                our business 
                                enable us to 
                                access a diverse 
                                range of sources 
                                of finance with 
                                a spread of repayment 
                                dates. We aim 
                                always to have 
                                a significant 
                                level of undrawn, 
                                committed, unsecured 
                                revolving facilities 
                                to ensure we 
                                have adequate 
                                financing available 
                                to support business 
                                requirements 
                                and opportunities. 
                                -- We work with 
                                industry bodies 
                                and other relevant 
                                organisations 
                                to participate 
                                in debate on 
                                emerging finance 
                                regulations where 
                                our interests 
                                and those of 
                                our industry 
                                are affected. 
                              -------------------------------    ------------------------------------------ 
 6 Catastrophic business event 
 An external event             -- We maintain                     -- This risk was increased 
  such as a civil               a comprehensive                    last year (and remains elevated) 
  emergency, including          crisis response                    as the Group's operations 
  a large-scale                 plan across all                    have been severely impacted 
  terrorist attack,             business units                     in the year by the Covid-19 
  cybercrime, pandemic          as well as a                       pandemic. Our core crisis 
  disease, extreme              head office business               management team overseen 
  weather occurrence,           continuity plan.                   by the Executive Committee 
  environmental                 -- The Risk Committee              coordinated the Group's operational 
  disaster or power             monitors the                       response to the pandemic, 
  shortage, could               Home Office terrorism              including managing communications 
  severely disrupt              threat level,                      with stakeholders and implementing 
  global markets                and we have access                 health and safety procedures. 
  (including property           to security threat                 Also, this involved managing 
  and                           information services.              the various lockdown restrictions 
  finance) and                  -- Asset emergency                 which closed non-essential 
  cause significant             procedures are                     retail across our portfolio 
  damage and disruption         regularly reviewed,                and required measures to 
  to British Land's             and scenario                       be implemented to allow occupiers 
  portfolio, operations,        tested. Physical                   to continue to use their 
  customers and                 security                           offices. 
  people.                       measures are                       -- Terrorism and social unrest 
                                in place at properties             remain a threat and our crisis 
                                and                                management team have regular 
                                development sites.                 training and carry out mock 
                                -- Our Sustainability              incidents to test processes 
                                Committee continues                and procedures. 
                                to                                 -- The wider use and enhancement 
                                monitor environmental              of digital 
                                risks and we                       technology across the Group 
                                have                               increases the risks associated 
                                established a                      with information and cyber 
                                TCFD Steering                      security, with an increasing 
                                Committee to                       risk from legacy system vulnerabilities, 
                                review our management              social engineering and phishing. 
                                processes for                      In the wider market, there 
                                climate-related                    has been an increase in cyber 
                                risks and opportunities.           attacks being perpetrated 
                                -- Asset risk                      and in response we have further 
                                assessments are                    enhanced our security position 
                                carried out to                     and controls. In addition, 
                                assess a range                     all staff continue to undertake 
                                of risks including                 mandatory cyber security 
                                security, flood,                   awareness training. During 
                                environmental                      the year, we have established 
                                and health and                     an InfoSec Committee reporting 
                                safety.                            to the Risk Committee which 
                                -- We have implemented             will oversee further enhancing 
                                corporate cyber                    our cyber security and IT 
                                security systems,                  infrastructure and review 
                                governance and                     and improve our key IT controls. 
                                processes which 
                                are 
                                supplemented 
                                by incident management, 
                                disaster recovery 
                                and business 
                                continuity plans, 
                                all of which 
                                are regularly 
                                reviewed to be 
                                able to respond 
                                to changes in 
                                the threat landscape 
                                and 
                                organisational 
                                requirements. 
                                -- We also have 
                                appropriate insurance 
                                in place across 
                                the portfolio 
                                for physical 
                                damage. 
                              -------------------------------    ------------------------------------------ 
 

Internal risks

 
 Risks and impacts               How we monitor                   Change in risk assessment 
                                  and manage the                   in year 
                                  risk 
 7 Investment strategy 
 In order to meet                -- Our investment                -- We have reviewed the 
  our strategic                   strategy is determined           capital plan in light of 
  objectives, we                  to be consistent                 Covid-19 and are focused 
  aim to invest                   with our target                  on recycling capital out 
  in and exit                     risk appetite                    of mature retail and office 
  from the right                  and is based                     assets into value accretive 
  properties at                   on the evaluation                development and new growth 
  the right time.                 of the external                  sectors. 
  Underperformance                environment.                     -- We have made good progress, 
  could result                    -- Progress against              executing GBP1.7bn of capital 
  from changes                    the strategy                     activity since April 2020. 
  in market sentiment             and continuing                   This includes GBP1.2bn of 
  as well as inappropriate        alignment with                   sales, overall, at 6.2% 
  determination                   our risk appetite                ahead of valuation. 
  and execution                   is discussed                     -- Recycling capital out 
  of our property                 at                               of assets which do not offer 
  investment strategy,            each Risk Committee              opportunities for us to 
  including:                      with reference                   add value through asset 
  -- sector selection             to the                           management or development 
  and weighting                   property markets                 and into assets that do 
  -- timing of                    and the external                 is central to our business 
  investment and                  economic                         model going forward. Overall, 
  divestment                      environment.                     the risk remains broadly 
  decisions                       -- The Board                     the same as last year. 
  -- exposure to                  carries out an 
  developments                    annual review 
  -- asset, occupier,             of the overall 
  region concentration            corporate strategy 
  -- co-investment                including the 
  arrangements                    current and prospective 
                                  asset portfolio 
                                  allocation. 
                                  -- Individual 
                                  investment decisions 
                                  are subject to 
                                  robust risk evaluation 
                                  overseen by our 
                                  Investment Committee 
                                  including consideration 
                                  of returns relative 
                                  to risk adjusted 
                                  hurdle rates. 
                                  -- Review of 
                                  prospective performance 
                                  of individual 
                                  assets and their 
                                  business plans. 
                                  -- We foster 
                                  collaborative 
                                  relationships 
                                  with our 
                                  co-investors 
                                  and enter into 
                                  ownership 
                                  agreements which 
                                  balance the interests 
                                  of 
                                  the parties. 
                                -----------------------------    ----------------------------------- 
 8 Development strategy 
 Development provides            -- We manage                     -- Progressing value accretive 
  an opportunity                  our levels of                    development is one of our 
  for outperformance              total and speculative            key priorities and is a 
  but usually involves            development exposure             fundamental driver of value, 
  elevated risk.                  within targeted                  but is inherently higher 
  This is reflected               ranges                           risk, particularly when 
  in our decision                 considering associated           pursued on a speculative 
  making process                  risks and the                    basis. We actively manage 
  around                          impact on                        our development risk and 
  which schemes                   key financial                    pre-letting our space is 
  to develop, the                 metrics. This                    an important part of that 
  timing                          is monitored                     approach. We limit our total 
  of the development,             quarterly by                     development exposure to 
  as well as the                  the Risk Committee               12.5% of the total portfolio 
  execution of                    along with progress              by value as well as limiting 
  these projects.                 of developments                  our speculative development 
  Development strategy            against plan.                    exposure to 12.5% of the 
  addresses several               -- Prior to committing           total portfolio ERV. 
  development risks               to a development,                -- During the year, our 
  that could adversely            a detailed appraisal             development sites initially 
  impact underlying               is undertaken.                   experienced delays following 
  income                          This includes                    shutdowns due to the pandemic. 
  and capital performance         consideration                    All our sites are now operational 
  including:                      of returns relative              and strict Covid-19 protocols 
  -- development                  to risk adjusted                 have been introduced, in 
  letting exposure                hurdle rates                     accordance with the current 
  -- construction                 and is overseen                  Construction Leadership 
  timing and costs                by our Investment                Council Site Operating 
  (including construction         Committee.                       Procedures. Since April 
  cost inflation)                 -- Pre-lets are                  2020, we have successfully 
  -- major contractor             used to reduce                   completed both 100 Liverpool 
  failure                         development letting              Street and 1 Triton Square. 
  -- adverse planning             risk were considered             -- We have flexibility to 
  judgements                      appropriate.                     commit to our near term 
                                  -- Competitive                   development programme as 
                                  tendering of                     and when 
                                  construction                     appropriate. During the 
                                  contracts                        year, we have committed 
                                  and, where appropriate,          to Norton Folgate and 1 
                                  fixed price contracts            Broadgate, increasing total 
                                  entered into.                    development exposure to 
                                  We measure inflationary          5.3% of the portfolio value 
                                  pressure on construction         and our speculative exposure 
                                  materials and                    to 6.6% of portfolio ERV 
                                  labour costs                     (and thereby slightly 
                                  and make appropriate             increasing the risk). Also, 
                                  allowances in                    we have commenced enabling 
                                  our cost estimates               works for the first phase 
                                  and include within               of our Canada Water masterplan. 
                                  our fixed price                  We will continue to exploit 
                                  contracts.                       our development pipeline 
                                  -- Detailed selection            but ensure we mitigate risk 
                                  and close monitoring             through a combination of 
                                  of                               timing, pre-lets and joint 
                                  contractors and                  ventures. 
                                  key subcontractors 
                                  including covenant 
                                  reviews. 
                                  -- Experienced 
                                  development management 
                                  team 
                                  closely monitors 
                                  design, construction 
                                  and overall 
                                  delivery process. 
                                  -- Early engagement 
                                  and strong relationships 
                                  with planning 
                                  authorities. 
                                  The Board considers 
                                  the s.172 factors 
                                  to ensure the 
                                  impact on the 
                                  environment and 
                                  communities is 
                                  adequately addressed. 
                                  -- Through our 
                                  Place Based approach, 
                                  we engage with 
                                  communities where 
                                  we operate to 
                                  incorporate stakeholder 
                                  views in our 
                                  development activities, 
                                  as detailed in 
                                  our Sustainability 
                                  Brief. 
                                  -- We engage 
                                  with our development 
                                  suppliers to 
                                  manage environmental 
                                  and social risks, 
                                  including through 
                                  our Supplier 
                                  Code of Conduct, 
                                  Sustainability 
                                  Brief and Health 
                                  and Safety Policy. 
                                -----------------------------    ----------------------------------- 
 9 Capital structure - leverage 
 Our capital structure           -- We manage                     -- The current uncertain 
  recognises the                  our use of debt                  environment reinforces the 
  balance between                 and equity finance               importance of a strong balance 
  performance,                    to balance the                   sheet. Over the last few 
  risk and flexibility:           benefits of leverage             years, we have actively 
  -- leverage magnifies           against the risks,               lowered our leverage, and 
  property returns,               including magnification          continued to benefit from 
  both positive                   of property valuation            a strong 
  and negative                    movements.                       financial position. This 
  -- an increase                  -- We aim to                     risk remains unchanged, 
  in leverage increases           manage our loan                  with our proportionally 
  the                             to value (LTV)                   consolidated LTV of 32%, 
  risk of a breach                through the property             despite valuation falls. 
  of covenants                    cycle such that                  We have retained significant 
  on borrowing                    our                              headroom to our Group debt 
  facilities and                  financial position               covenants which could withstand 
  may increase                    would remain                     a further fall in values 
  finance costs                   robust in the                    of c.46%, before any mitigating 
                                  event of a significant           actions. 
                                  fall in property 
                                  values. This 
                                  means we do not 
                                  adjust our approach 
                                  to leverage based 
                                  only on changes 
                                  in property 
                                  market yields. 
                                  -- We manage 
                                  our investment 
                                  activity, the 
                                  size and timing 
                                  of which can 
                                  be uneven, as 
                                  well as our development 
                                  commitments to 
                                  ensure that our 
                                  LTV level remains 
                                  appropriate. 
                                  -- We leverage 
                                  our equity and 
                                  achieve benefits 
                                  of scale while 
                                  spreading risk 
                                  through joint 
                                  ventures and 
                                  funds which are 
                                  typically partly 
                                  financed by debt 
                                  without recourse 
                                  to British Land. 
                                -----------------------------    ----------------------------------- 
 10 Finance strategy 
 Finance strategy                -- Five key principles           -- Despite the challenging 
  addresses risks                 guide our financing,             market conditions, the scale 
  both                            employed together                of our business and quality 
  to continuing                   to manage the                    of our assets have enabled 
  solvency and                    risks in this                    us to access a broad range 
  profits generated.              area: diversify                  of debt finance on attractive 
  Failure to manage               our sources of                   terms in different markets 
  refinancing requirements        finance, phase                   and this risk remains stable. 
  may result in                   maturity of debt                 -- Our strong senior unsecured 
  a shortage of                   portfolio, maintain              rating 'A', long term IDR 
  funds to sustain                liquidity, maintain              credit rating 'A-' and short 
  the operations                  flexibility,                     term IDR credit rating 'F1' 
  of the business                 and maintain                     were all affirmed by Fitch 
  or repay facilities             strong metrics.                  during the year, with a 
  as they fall                    -- We monitor                    stable outlook. 
  due.                            the period until                 -- During the year we have 
                                  financing is                     extended GBP650m of revolving 
                                  required, which                  credit facilities to 2025, 
                                  is a key determinant             and GBP450m to 2026, and 
                                  of financing                     have GBP1.8bn of undrawn 
                                  activity. Debt                   facilities and cash and 
                                  and capital market               no requirement to refinance 
                                  conditions are                   until early 2025. 
                                  reviewed regularly 
                                  to identify financing 
                                  opportunities 
                                  that meet our 
                                  business requirements. 
                                  -- Financial 
                                  covenant headroom 
                                  is evaluated 
                                  regularly and 
                                  in conjunction 
                                  with transactions. 
                                  -- We are committed 
                                  to maintaining 
                                  and enhancing 
                                  relationships 
                                  with our key 
                                  financing partners. 
                                  -- We are mindful 
                                  of relevant emerging 
                                  regulation which 
                                  has the potential 
                                  to impact the 
                                  way that we finance 
                                  the business. 
                                -----------------------------    ----------------------------------- 
 11 Environmental sustainability 
 A failure to                    -- We are currently              -- The Board recognises 
  anticipate and                  undertaking TCFD-aligned         the scale of the climate 
  prepare for                     scenario analyses                emergency, its potential 
  (i) environmental               to assess our                    impact on real estate and 
  risks and (ii)                  exposure to climate-related      therefore the urgent need 
  preventative                    physical and                     to take mitigating action; 
  steps taken by                  transition risks.                and we have added this as 
  government and                  This workstream                  a standalone risk this year. 
  society represent               is overseen by                   During the year we launched 
  a principal and                 the Risk and                     our 2030 Sustainability 
  emerging risk.                  Sustainability                   Strategy, which sets out 
  This risk category              Committees, with                 ambitious targets to be 
  includes the:                   Board-level oversight            net zero carbon by 2030 
  -- increased                    from the Audit                   and includes a focus on 
  exposure of assets              and CSR Board                    environmental leadership. 
  to environmental                Committees.                      -- In this first year, we 
  hazards, driven                 -- Underpinned                   have achieved some 
  by climate change               by our SBTi-approved             important milestones including 
  -- policy risk                  climate                          our first net zero carbon 
  from the cost                   targets, our                     development at 100 Liverpool 
  of complying                    guiding corporate                Street, our Pathway to Net 
  with new climate                policies (the                    Zero Carbon and the launch 
  regulations with                Pathway to Net                   of our Transition Vehicle, 
  specific performance            Zero and the                     to finance energy efficient 
  and/or                          Sustainability                   improvements across the 
  technology requirements         Brief) establish                 portfolio. The Science Based 
  -- overall compliance           a series of climate              Targets initiative also 
  requirements                    and energy targets               validated our climate 
  from existing                   to ensure our                    targets as being aligned 
  and emerging                    alignment with                   with a 1.5degC global 
  environmental                   a societal transition            warming trajectory. 
  regulation                      to net zero that                 -- We continue to work towards 
  -- leasing risk                 limits global                    full TCFD alignment in climate 
  as a result of                  warming to 1.5degC.              risk disclosure by 2022, 
  less sustainable                -- Our property                  and undertook a portfolio-wide 
  / non-compliant                 management department            physical risk scenario analysis 
  buildings                       operates                         in the year. As occupying 
                                  an environmental                 sustainable buildings becomes 
                                  management system                increasingly important to 
                                  (EMS) aligned                    occupiers, our guiding policies 
                                  with ISO 14001.                  - the Sustainability Brief 
                                  In 2020, our                     and Pathway to Net Zero 
                                  commercial offices               - play an important role 
                                  achieved formal                  in setting standards aligned 
                                  third party ISO                  to external expectations. 
                                  14001                            For example, our new developments 
                                  certification.                   target ambitious sustainability 
                                  -- We actively                   ratings (`Outstanding' targeted 
                                  engage with the                  for new office 
                                  communities in                   developments) and operational 
                                  which we operate,                efficiency through NABERS 
                                  as detailed in                   Design for Performance. 
                                  our Local 
                                  Charter, to ensure 
                                  we provide places 
                                  that meet the 
                                  needs of all 
                                  relevant stakeholders. 
                                -----------------------------    ----------------------------------- 
 12 People 
 A number of critical            Our HR strategy                  -- We have a broad range 
  business processes              is designed to                   of expertise across our 
  and decisions                   minimise risk                    business which is critical 
  lie in the hands                through:                         to the successful delivery 
  of a few people.                -- informed and                  of our strategy. 
  Failure to recruit,             skilled recruitment              -- The Covid-19 crisis presented 
  develop and retain              processes                        a health & safety risk to 
  staff and Directors             -- talent performance            our people and made day-to-day 
  with the right                  management and                   operations more difficult 
  skills and experience           succession planning              and complex, however this 
  may result in                   for key roles                    risk has lessened as a result 
  significant underperformance    -- highly competitive            of the successful vaccination 
  or impact the                   compensation                     roll-out. The 
  effectiveness                   and benefits                     health and wellbeing of 
  of operations                   -- people development            our people remains our priority 
  and decision                    and training                     and we were quick to encourage 
  making, in turn                 The risk is measured             all our office-based staff 
  impacting business              through employee                 to work from home and followed 
  performance.                    engagement surveys,              Government guidelines. 
                                  wellbeing surveys,               -- As we entered the next 
                                  employee turnover                phase of Covid-19 and third 
                                  and retention                    lockdown we saw a more tangible 
                                  metrics. We                      impact on our employees 
                                  monitor this                     both in terms of their physical 
                                  through voluntary                and mental health and wellbeing, 
                                  staff turnover                   clearly indicated by the 
                                  in addition to                   results of our pulse wellbeing 
                                  conducting exit                  surveys. We have taken a 
                                  interviews.                      number of steps to promote 
                                  We engage with                   wellbeing, but it is clear 
                                  our employees                    that Covid-19 has negatively 
                                  and suppliers                    impacted the wellbeing of 
                                  to make clear                    our employees, notwithstanding 
                                  our requirements                 all the measures we have 
                                  in managing key                  put in place. 
                                  risks including                  -- Despite this backdrop 
                                  health and safety,               our people have delivered 
                                  fraud and bribery                great progress this year. 
                                  and other social                 Our voluntary staff turnover 
                                  and environmental                was low at 6% in the year, 
                                  risks, as detailed               albeit we anticipate this 
                                  in our policies                  to increase slightly as 
                                  and codes of                     the recruitment market opens 
                                  conduct.                         up post lockdown. During 
                                                                   the year, there have been 
                                                                   a number of changes to our 
                                                                   senior leadership team and 
                                                                   we have set out our new 
                                                                   strategy to more actively 
                                                                   focus on development, active 
                                                                   management and repositioning 
                                                                   assets. 
                                -----------------------------    ----------------------------------- 
 13 Income sustainability 
 We are mindful                  -- We undertake                  -- Our income has been negatively 
  of maintaining                  comprehensive                    impacted by the challenges 
  sustainable income              profit and cash                  facing the retail market, 
  streams which                   flow forecasting                 compounded by the pandemic, 
  underpin shareholder            incorporating                    as Covid-19 and related 
  returns and provide             scenario                         restrictions have affected 
  the platform                    analysis to model                the cash flow of many of 
  from which to                   the impact of                    our occupiers, primarily 
  grow the business.              proposed                         in our retail business, 
  This could be                   transactions.                    and hence their ability 
  adversely affected              -- We take a                     to pay rent. 
  by non-payment                  proactive asset                  -- Our income risk was heightened 
  of rent; occupier               management                       at last year end and remains 
  failures; inability             approach to maintain             so; encompassing higher 
  to re-let space                 a strong occupier                levels of non payment of 
  on equivalent                   line-up. We monitor              rent; an increase in occupiers 
  terms; as                       our market letting               entering CVAs or administrations; 
  well as potential               exposure including               and the inability to re-let 
  structural changes              vacancies, upcoming              space on equivalent terms; 
  to lease obligations.           expiries and                     as well as potential structural 
  We consider sustainability      breaks and speculative           changes to lease obligations 
  of our                          development as                   (which may result in increased 
  income streams                  well as our weighted             income volatility). Also, 
  in:                             average                          the very recent court decisions 
  -- execution                    unexpired lease                  on CVAs and Restructuring 
  of investment                   term.                            Plans have clarified the 
  strategy                        -- We have a                     methods occupiers can use 
  and capital recycling,          high quality                     to adversely alter their 
  notably timing                  and diversified                  rental and other obligations 
  of reinvestment                 occupier base                    to property owners. 
  of sale                         and monitor concentration        -- We have been actively 
  proceeds                        of exposure to                   monitoring our rental collection 
  -- nature and                   individual occupiers             together with our exposure 
  structure of                    or sectors.                      to occupiers at risk of 
  leasing activity                -- We are proactive              default and administration. 
  -- nature and                   in addressing                    Our approach has been both 
  timing of asset                 key lease                        pragmatic and proactive 
  management and                  breaks and expiries              to maximise occupancy and 
  development activity            to minimise periods              rent collection. For those 
                                  of                               customers most affected, 
                                  vacancy.                         primarily smaller independent 
                                                                   retailers, we have agreed 
                                                                   pragmatic and equitable 
                                                                   solutions for the 
                                                                   periods of closure which 
                                                                   include monthly payments 
                                                                   and partial concessions. 
                                                                   We have also engaged on 
                                                                   a case by case basis with 
                                                                   larger customers facing 
                                                                   cash flow difficulties, 
                                                                   often combining our discussions 
                                                                   on the payment of legacy 
                                                                   rents with those on lease 
                                                                   extensions and new space. 
                                                                   As a result, we have now 
                                                                   collected 83% of rent for 
                                                                   FY21 (Office 99%; Retail 
                                                                   71%). 
                                -----------------------------    ----------------------------------- 
 

Key:

Change in risk assessment from last year

Increase

No change

Decrease

New risk

Directors' Responsibilities Statement

The Directors' Responsibilities Statement below has been prepared in connection with the full Annual Report and financial statements for the year ended 31 March 2021. Certain parts of the Annual Report and financial statements have not been included in this announcement as set out in Note 1 to the condensed financial information.

The Directors are responsible for preparing the Annual Report and the financial statements in accordance with applicable law and regulation.

Company law requires the Directors to prepare financial statements for each financial year. Under that law the Directors have prepared the Group and Company financial statements in accordance with international accounting standards in conformity with the requirements of the Companies Act 2006. Additionally, the Financial Conduct Authority's Disclosure Guidance and Transparency Rules require the Directors to prepare the Group financial statements in accordance with international financial reporting standards adopted pursuant to Regulation (EC) No 1606/2002 as it applies in the European Union.

Under company law the Directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the Group and Company and of the profit or loss of the Group and Company for that period. In preparing the financial statements, the Directors are required to:

   --      select suitable accounting policies and then apply them consistently 

-- state whether, for the Group and Company, international accounting standards in conformity with the requirements of the Companies Act 2006 and, for the Group, international financial reporting standards adopted pursuant to Regulation (EC) No 1606/2002 as it applies in the European Union have been followed, subject to any material departures disclosed and explained in the financial statements

   --      make judgements and accounting estimates that are reasonable and prudent 

-- prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Group and Company will continue in business

The Directors are responsible for keeping adequate accounting records that are sufficient to show and explain the Group and Company's transactions and disclose with reasonable accuracy at any time the financial position of the Group and Company and enable them to ensure that the financial statements and the Directors' Remuneration Report comply with the Companies Act 2006 and, as regards the Group financial statements, Article 4 of the IAS Regulation.

The Directors are also responsible for safeguarding the assets of the Group and Company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

The Directors are responsible for the maintenance and integrity of the Company's website. Legislation in the United Kingdom governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.

The Directors consider that the Annual Report and Accounts, taken as a whole, is fair, balanced and understandable and provides the information necessary for shareholders to assess the Group and the Company's position and performance, business model and strategy.

Each of the Directors, whose names and functions are set out on the British Land website, confirm that, to the best of their knowledge:

-- the Company financial statements, which have been prepared in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards, comprising FRS 101 "Reduced Disclosure Framework", and applicable law), give a true and fair view of the assets, liabilities, financial position and profit or loss of the Company

-- the Group financial statements, which have been prepared in accordance with international accounting standards in conformity with the requirements of the Companies Act 2006 and international financial reporting standards adopted pursuant to Regulation (EC) No 1606/2002 as it applies in the European Union, give a true and fair view of the assets, liabilities, financial position and profit or loss of the group

-- the Strategic Report and the Directors' Report include a fair review of the development and performance of the business and the position of the Group and Company, together with a

   --      description of the principal risks and uncertainties they face. 

By order of the Board.

Simon Carter

Chief Executive

25 May 2021

Consolidated income sheet

For the year ended 31 March 2021

 
                                                           2021                              2020 
=====================================  ====  --------------------------------  -------------------------------- 
                                                            Capital                           Capital 
                                                                and                               and 
                                             Underlying(1)    other     Total  Underlying(1)    other     Total 
                                       Note           GBPm     GBPm      GBPm           GBPm     GBPm      GBPm 
=====================================  ====  =============  =======  ========  =============  =======  ======== 
Revenue                                   3            468        -       468            526       87       613 
Costs(2)                                  3          (180)        -     (180)          (148)     (70)     (218) 
-------------------------------------  ----  -------------  -------  --------  -------------  -------  -------- 
                                          3            288        -       288            378       17       395 
Joint ventures and funds (see 
 also below) (3)                          8             52    (409)     (357)             79    (306)     (227) 
Administrative expenses                               (74)        -      (74)           (73)        -      (73) 
Valuation movement                        4              -    (888)     (888)              -  (1,105)   (1,105) 
Profit on disposal of investment 
 properties and investments                              -       28        28              -        1         1 
Net financing costs 
  financing income                        5              -       15        15              1        -         1 
  financing charges                       5           (62)      (3)      (65)           (67)     (41)     (108) 
                                             -------------  -------  --------  -------------  -------  -------- 
                                                      (62)       12      (50)           (66)     (41)     (107) 
-------------------------------------  ----  -------------  -------  --------  -------------  -------  -------- 
Profit (loss) on ordinary activities 
 before taxation                                       204  (1,257)   (1,053)            318  (1,434)   (1,116) 
Taxation                                  6           (26)      (4)      (30)              -        2         2 
-------------------------------------  ----  -------------  -------  --------  -------------  -------  -------- 
Profit (loss) for the year after 
 taxation                                              178  (1,261)   (1,083)            318  (1,432)   (1,114) 
-------------------------------------  ----  -------------  -------  --------  -------------  -------  -------- 
Attributable to non-controlling 
 interests                                               3     (55)      (52)             12     (99)      (87) 
Attributable to shareholders 
 of the Company                                        175  (1,206)   (1,031)            306  (1,333)   (1,027) 
-------------------------------------  ----  -------------  -------  --------  -------------  -------  -------- 
Earnings per share: 
  basic                                   2                          (111.2)p                          (110.0)p 
  diluted                                 2                          (111.2)p                          (110.0)p 
                                                                     --------                          -------- 
 

All results derive from continuing operations.

 
                                                        2021                           2020 
====================================  ====  =============================  ============================= 
                                                           Capital                        Capital 
                                                               and                            and 
                                            Underlying(1)    other  Total  Underlying(1)    other  Total 
                                      Note           GBPm     GBPm   GBPm           GBPm     GBPm   GBPm 
====================================  ====  =============  =======  =====  =============  =======  ===== 
Results of joint ventures and 
 funds accounted 
 for using the equity method 
Underlying Profit                                      52        -     52             79        -     79 
Valuation movement                       4              -    (409)  (409)              -    (284)  (284) 
Capital financing costs                                 -        -      -              -     (22)   (22) 
Loss on disposal of investment 
 properties, 
 trading properties and investments                     -      (1)    (1)              -        -      - 
Taxation                                 6              -        1      1              -        -      - 
====================================  ====  =============  =======  =====  =============  =======  ===== 
                                         8             52    (409)  (357)             79    (306)  (227) 
====================================  ====  =============  =======  =====  =============  =======  ===== 
 

1. See definition in Note 2 and a reconciliation between Underlying Profit and IFRS profit in Note 17.

2. Included within 'Costs' is a charge relating to provision for impairment of tenant debtors, accrued income and tenant incentives of GBP60m (2019/2020: GBP24m), disclosed in further detail in Note 7 and Note 10.

3. Included within 'Joint ventures and funds' is a charge relating to provision for impairment of loans to joint ventures of GBP144m (2019/20: GBPnil), disclosed in further detail in Note 8.

Consolidated statement of comprehensive income

For the year ended 31 March 2021

 
                                                                2021     2020 
                                                                GBPm     GBPm 
===========================================================  =======  ======= 
Loss for the year after taxation                             (1,083)  (1,114) 
Other comprehensive income: 
Items that will not be reclassified subsequently to profit 
 or loss: 
Net actuarial loss on pension scheme                            (13)        - 
Valuation movement on owner-occupied properties                  (1)        1 
                                                             =======  ======= 
                                                                (14)        1 
                                                             =======  ======= 
Items that may be reclassified subsequently to profit or 
 loss: 
Gains (losses) on cash flow hedges 
   Group                                                           2        2 
   Joint ventures and funds                                        1      (1) 
                                                             =======  ======= 
                                                                   3        1 
                                                             =======  ======= 
 
Deferred tax on items of other comprehensive income                6        - 
 
Other comprehensive (loss) income for the year                   (5)        2 
===========================================================  =======  ======= 
Total comprehensive loss for the year                        (1,088)  (1,112) 
===========================================================  =======  ======= 
Attributable to non-controlling interests                       (52)     (86) 
Attributable to shareholders of the Company                  (1,036)  (1,026) 
===========================================================  =======  ======= 
 

Consolidated balance sheet

As at 31 March 2021

 
                                                              2021     2020 
                                                     Note     GBPm     GBPm 
===================================================  ====  =======  ======= 
ASSETS 
Non-current assets 
Investment and development properties                   7    6,326    8,188 
Owner-occupied properties                               7        2       68 
                                                           =======  ======= 
                                                             6,328    8,256 
                                                           =======  ======= 
Other non-current assets 
Investments in joint ventures and funds                 8    2,120    2,358 
Other investments                                       9       20      125 
Property, plant and equipment                                   30        6 
Interest rate and currency derivative assets           14      135      231 
Debtors                                                          6        - 
                                                             8,639   10,976 
                                                           =======  ======= 
Current assets 
Trading properties                                      7       26       20 
Debtors                                                10       56       56 
Cash and short term deposits                           14      154      193 
                                                           =======  ======= 
                                                               236      269 
===================================================  ====  =======  ======= 
Total assets                                                 8,875   11,245 
===================================================  ====  =======  ======= 
LIABILITIES 
Current liabilities 
Short term borrowings and overdrafts                   14    (161)    (637) 
Creditors                                              11    (219)    (253) 
Corporation tax                                                (7)     (17) 
                                                           =======  ======= 
                                                             (387)    (907) 
                                                           =======  ======= 
Non-current liabilities 
Debentures and loans                                   14  (2,249)  (2,865) 
Other non-current liabilities                          12    (128)    (156) 
Deferred tax liabilities                               13        -      (1) 
Interest rate and currency derivative liabilities      14    (128)    (169) 
                                                           -------  ------- 
                                                           (2,505)  (3,191) 
===================================================  ====  =======  ======= 
Total liabilities                                          (2,892)  (4,098) 
===================================================  ====  =======  ======= 
Net assets                                                   5,983    7,147 
===================================================  ====  =======  ======= 
EQUITY 
Share capital                                                  234      234 
Share premium                                                1,307    1,307 
Merger reserve                                                 213      213 
Other reserves                                                  16       38 
Retained earnings                                            4,154    5,243 
===================================================  ====  =======  ======= 
Equity attributable to shareholders of the Company           5,924    7,035 
Non-controlling interests                                       59      112 
===================================================  ====  =======  ======= 
Total equity                                                 5,983    7,147 
===================================================  ====  =======  ======= 
 
 
EPRA NTA per share(1)                                   2     648p     773p 
===================================================  ====  =======  ======= 
 

1. As defined in Note 2.

Consolidated statement of cash flows

For the year ended 31 March 2021

 
                                                                    2021   2020 
                                                           Note     GBPm   GBPm 
=========================================================  ====  =======  ===== 
Rental income received from tenants                                  320    415 
Fees and other income received                                        38     42 
Operating expenses paid to suppliers and employees                 (125)  (146) 
Indirect taxes (paid) received in respect of operating 
 activities                                                         (15)     11 
Sale of trading properties                                             -     82 
                                                                 =======  ===== 
Cash generated from operations                                       218    404 
                                                                 =======  ===== 
 
Interest paid                                                       (70)   (79) 
Interest received                                                      -      5 
Corporation taxation payments                                       (33)    (4) 
Distributions and other receivables from joint ventures 
 and funds                                                    8       34     49 
                                                                 =======  ===== 
Net cash inflow from operating activities                            149    375 
                                                                 =======  ===== 
 
Cash flows from investing activities 
Development and other capital expenditure                          (172)  (259) 
Purchase of investment properties                                   (52)   (52) 
Sale of investment properties                                      1,073     77 
Acquisition of remaining share of Aldgate JV                           -   (21) 
Acquisition of investment in WOSC joint venture                        -   (57) 
Purchase of investments                                              (5)    (9) 
Sale of investments                                                  108     19 
Indirect taxes (paid) received in respect of investing 
 activities                                                          (2)      1 
Loan repayments from joint ventures and funds                         40      - 
Investment in and loans to joint ventures and funds                 (84)  (191) 
Capital distributions from joint ventures and funds                    4    131 
                                                                 =======  ===== 
Net cash inflow (outflow) from investing activities                  910  (361) 
                                                                 =======  ===== 
 
Cash flows from financing activities 
Issue of ordinary shares                                               -      5 
Purchase of own shares                                                 -  (125) 
Dividends paid                                               15     (76)  (295) 
Dividends paid to non-controlling interests                          (1)   (13) 
Capital payments in respect of interest rate derivatives            (10)   (14) 
Decrease in lease liabilities                                        (7)    (8) 
Decrease in bank and other borrowings                            (1,218)  (189) 
Drawdowns on bank and other borrowings                               214    576 
                                                                 =======  ===== 
Net cash outflow from financing activities                       (1,098)   (63) 
                                                                 =======  ===== 
 
Net decrease in cash and cash equivalents                           (39)   (49) 
Cash and cash equivalents at 1 April                                 193    242 
=========================================================  ====  =======  ===== 
Cash and cash equivalents at 31 March                                154    193 
=========================================================  ====  =======  ===== 
 
Cash and cash equivalents consists of: 
Cash and short term deposits                                 14      154    193 
=========================================================  ====  =======  ===== 
 

Consolidated statement of changes in equity

For the year ended 31 March 2021

 
                                              Hedging 
                                                  and         Re-                                        Non- 
                        Share     Share   translation   valuation    Merger   Retained            controlling    Total 
                      capital   premium    reserve(1)     reserve   reserve   earnings    Total     interests   equity 
                         GBPm      GBPm          GBPm        GBPm      GBPm       GBPm     GBPm          GBPm     GBPm 
===================  ========  ========  ============  ==========  ========  =========  =======  ============  ======= 
Balance at 1 April 
 2020                     234     1,307            12          26       213      5,243    7,035           112    7,147 
===================  ========  ========  ============  ==========  ========  =========  =======  ============  ======= 
Loss for the year 
 after taxation             -         -             -           -         -    (1,031)  (1,031)          (52)  (1,083) 
Revaluation of 
 owner-occupied 
 property                   -         -             -         (1)         -          -      (1)             -      (1) 
Gains on cash flow 
 hedges - 
 Group                      -         -             2           -         -          -        2             -        2 
Gains on cash flow 
 hedges - 
 joint ventures             -         -             -           1         -          -        1             -        1 
Reserves transfer 
 on disposal 
 of owner-occupied 
 property                   -         -             -        (30)         -         30        -             -        - 
Net actuarial loss 
 on pension 
 scheme                     -         -             -           -         -       (13)     (13)             -     (13) 
Deferred tax on 
 items of other 
 comprehensive 
 income                     -         -             -           6         -          -        6             -        6 
                     ========  ========  ============  ==========  ========  =========  =======  ============  ======= 
Other comprehensive 
 income                     -         -             2        (24)         -         17      (5)             -      (5) 
===================  ========  ========  ============  ==========  ========  =========  =======  ============  ======= 
Total comprehensive 
 income for 
 the year                   -         -             2        (24)         -    (1,014)  (1,036)          (52)  (1,088) 
-------------------  --------  --------  ------------  ----------  --------  ---------  -------  ------------  ------- 
Fair value of share 
 and share 
 option awards              -         -             -           -         -          3        3             -        3 
Dividends payable 
 in year (8.40p 
 per share)                 -         -             -           -         -       (78)     (78)             -     (78) 
Dividends payable 
 by subsidiaries            -         -             -           -         -          -        -           (1)      (1) 
===================  ========  ========  ============  ==========  ========  =========  =======  ============  ======= 
Balance at 31 March 
 2021                     234     1,307            14           2       213      4,154    5,924            59    5,983 
===================  ========  ========  ============  ==========  ========  =========  =======  ============  ======= 
 
Balance at 1 April 
 2019                     240     1,302            11          26       213      6,686    8,478           211    8,689 
===================  ========  ========  ============  ==========  ========  =========  =======  ============  ======= 
Loss for the year 
 after taxation             -         -             -           -         -    (1,027)  (1,027)          (87)  (1,114) 
Revaluation of 
 owner-occupied 
 property                   -         -             -           1         -          -        1             -        1 
Gains on cash flow 
 hedges - 
 Group                      -         -             1           -         -          -        1             1        2 
Losses on cash flow 
 hedges - 
 joint ventures             -         -             -         (1)         -          -      (1)             -      (1) 
Deferred tax on             -         -             -           -         -          -        -             -        - 
items of other 
comprehensive 
income 
                     ========  ========  ============  ==========  ========  =========  =======  ============  ======= 
Other comprehensive 
 income                     -         -             1           -         -          -        1             1        2 
===================  ========  ========  ============  ==========  ========  =========  =======  ============  ======= 
Total comprehensive 
 income for 
 the year                   -         -             1           -         -    (1,027)  (1,026)          (86)  (1,112) 
===================  ========  ========  ============  ==========  ========  =========  =======  ============  ======= 
Share issues                -         5             -           -         -          -        5             -        5 
Fair value of share 
 and share 
 option awards              -         -             -           -         -        (2)      (2)             -      (2) 
Purchase of own 
 shares                   (6)         -             -           -         -      (119)    (125)             -    (125) 
Dividends payable 
 in year (31.47p 
 per share)                 -         -             -           -         -      (295)    (295)             -    (295) 
Dividends payable 
 by subsidiaries            -         -             -           -         -          -        -          (13)     (13) 
===================  ========  ========  ============  ==========  ========  =========  =======  ============  ======= 
Balance at 31 March 
 2020                     234     1,307            12          26       213      5,243    7,035           112    7,147 
===================  ========  ========  ============  ==========  ========  =========  =======  ============  ======= 
 

1. The balance at the beginning of the current year includes GBP15m in relation to translation and (GBP3m) in relation to hedging (2019/20: GBP15m and (GBP4m)). Opening and closing balances in relation to hedging relate to continuing hedges only.

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 2021 or 2020, but is derived from those accounts. Statutory accounts for 2020 have been delivered to the Registrar of Companies and those for 2021 will be delivered following the Company's Annual General Meeting. The auditor has reported on those accounts; their reports on those accounts were unqualified, but for the year ended 31 March 2020 included a reference to matters to which the auditor drew attention by way of emphasis without qualifying the report, in relation to the material uncertainty clause attached to the valuation of investment and development properties, either held directly or through joint ventures. The auditors' report did not contain statements under section 498(2) or (3) of the Companies Act 2006.

The financial statements for the year ended 31 March 2021 have been prepared on the historical cost basis, except for the revaluation of properties, investments classified as fair value through profit or loss and derivatives. The financial statements are prepared in accordance with international accounting standards in conformity with the requirements of the Companies Act 2006 ('IFRS') and the applicable legal requirements of the Companies Act 2006. In addition to complying with international accounting standards in conformity with requirements of the Companies Act 2006, the consolidated financial statements also comply with international financial reporting standards adopted pursuant to Regulation (EC) No 1606/2002 as it applies in the European Union.

On 31 December 2020 EU-adopted IFRS was brought into UK law and became UK-adopted international accounting standards, with future changes to IFRS being subject to endorsement by the UK Endorsement Board. The consolidated financial statements will transition to UK-adopted international accounting standards for financial periods beginning 1 April 2021.

While the 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 July 2021.

In the current financial year the Group has adopted a number of minor amendments to standards effective in the year issued by the IASB, none of which have had a material impact on the Group.

These amendments include IAS 1 and IAS 8 (amended) - Definition of Material, IFRS 3 (amended) - Definition of a Business, IFRS 9 (amended) - criteria for hedge accounting on transition from LIBOR to IBOR and IFRS 16 (amended).

A number of new standards and amendments to standards and interpretations have been issued but are not yet effective for the current accounting period. These amendments include amendments to IFRS 16, 'Leases' - Covid-19 related rent concessions, amendments to IFRS 7, IFRS 4 and IFRS 16 Interest Rate Benchmark Reform - Phase 2, amendments to IAS 1, Presentation of financial statements' on classification of liabilities, a number of narrow-scope amendments to IFRS 3, IAS 16, IAS 17 and some annual improvements on IFRS 1, IFRS 9, IAS 41 and IFRS 16 and narrow scope amendments to IAS 1, Practice statement 2 and IAS 8. The above amendments are not expected to have a significant impact on the Group's results.

Going concern

The financial information is prepared on a going concern basis. Whilst the balance sheet shows that the Group is in a net current liability position, predominantly as a result of the $220m of Senior US Dollar Loan Notes that are reaching maturity within the next 12 months, the Group has access to GBP1.8bn of undrawn facilities and cash, which provides the Directors with a reasonable expectation that the Group will be able to meet these current liabilities as they fall due. In making this assessment the Directors took into account forecast cash flows and covenant compliance, including stress testing through the impact of sensitivities as part of a 'severe downside scenario'. Before factoring in any income receivable, the undrawn facilities and cash would also be sufficient to cover forecast capital expenditure, property operating costs, administrative expenses, maturing debt and interest over the next 12 months.

Having assessed the Principal risks, the Directors believe that the Group is well placed to manage its financing and other business risks satisfactorily despite the uncertain economic climate, and have a reasonable expectation that the Company and the Group have adequate resources to continue in operation for at least 12 months. Accordingly, they believe the going concern basis is an appropriate one.

Accounting judgements and estimates

In applying the Group's accounting policies, the Directors are required to make judgements and estimates that affect the financial information.

The general risk environment in which the Group operates remained heightened during the period, which is largely due to the continued level of uncertainty associated with the impact of Covid-19, the significant deterioration in the UK retail market and relatively weak investment markets.

Significant areas of estimation are:

Valuation of investment, trading and owner-occupied properties and investments classified as fair value through profit or loss. The Group uses 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 classified as fair value through profit or loss are inherently subjective, as they are based upon valuer assumptions which may prove to be inaccurate.

Impairment provisioning of lease debtors (including accrued income) and lease incentives, which are presented within investment properties, are now considered to be an area of significant estimation. The impact of Covid-19 has given rise to an increase in lease debtors due from tenants along with higher loss rates. Consequently the impairment provisions, calculated using the expected credit loss model under IFRS 9 against these balances, are higher than in previous periods.

The key assumptions within the expected credit loss model include the tenants' credit risk rating and the related loss rates assumed for each risk rating depending on the ageing profile. In the current environment as a result of Covid-19, more weighting is given to risk rating when determining expected credit losses. Tenant risk ratings are determined by management, taking into consideration information available surrounding a tenant's credit rating, financial position and historical loss rates. Consideration is also given for the current impact of Covid-19 and its potential impact over the next 12 months on their business along with industry trends. Tenants are classified as being in Administration or CVA, high, medium or low risk based on this information. The assigned loss rates for these risk categories are reviewed at each balance sheet date. The same key assumptions are applied in the expected credit loss model for tenant incentives, without the consideration of the ageing profile which is not relevant for these balances. The loss rates attributed to each credit risk rating for tenant incentives is lower than that attributed to lease debtors on the basis that the associated credit risk on these balances, which relate to the tenant's future lease liabilities, is lower than that associated to current tenant debtors outstanding as a result of Covid-19.

Other less significant areas of estimation include the valuation of interest rate derivatives, the determination of share-based payment expense, the actuarial assumptions used in calculating the Group's retirement benefit obligations and taxation provisions.

The following items are ongoing areas of accounting judgement, however, significant judgment has not been required for any of these items in the current financial year.

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. The assessment undertaken by management includes consideration of the structure, legal form, contractual terms and other facts and circumstances relating to the relevant entity. This assessment is updated annually and there have been no changes in the judgement reached in relation to the degree of control the Group exercises within the current or prior year. Group shares in joint ventures and funds resulting from this process are disclosed in Note 8 to the financial information.

Joint ventures 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. Judgements made in relation to transactions include whether an acquisition is a business combination or an asset; whether held for sale criteria have been met for transactions not yet completed; accounting for transaction costs and contingent consideration; and application of the concept of linked accounting. Management consider each transaction separately in order to determine the most appropriate accounting treatment, and, when considered necessary, seek independent advice.

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 loss 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.

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.

 
                                  2021                             2020 
===================  ===============================  =============================== 
                                  Relevant  Earnings               Relevant  Earnings 
                      Relevant      number       per   Relevant      number       per 
                      earnings   of shares     share   earnings   of shares     share 
Earnings per share        GBPm     million     pence       GBPm     million     pence 
===================  =========  ==========  ========  =========  ==========  ======== 
Underlying 
Underlying basic           175         927      18.9        306         934      32.8 
Underlying diluted         175         930      18.8        306         937      32.7 
===================  =========  ==========  ========  =========  ==========  ======== 
EPRA 
EPRA basic                 175         927      18.9        306         934      32.8 
EPRA diluted               175         930      18.8        306         937      32.7 
===================  =========  ==========  ========  =========  ==========  ======== 
IFRS 
Basic                  (1,031)         927   (111.2)    (1,027)         934   (110.0) 
Diluted                (1,031)         927   (111.2)    (1,027)         934   (110.0) 
===================  =========  ==========  ========  =========  ==========  ======== 
 

Net asset value

The Group adopted the EPRA issued new best practice guidelines in the year ending 31 March 2021, incorporating three new measures of net asset value: EPRA Net Tangible Assets (NTA), Net Reinvestment Value (NRV) and Net Disposal Value (NDV). EPRA NTA is considered to be the most relevant measure for the Group and is now the primary measure of net assets, replacing the previously reported EPRA Net Asset Value metric. The total accounting return is now calculated based on EPRA NTA. Further detail on the adopted metrics is included within the supplementary disclosures (Table B).

The net assets and number of shares for each performance measure are shown below. A reconciliation between IFRS net assets and the three EPRA net asset valuation metrics, and the relevant number of shares for each performance measure, are shown within the supplementary disclosures (Table B). EPRA NTA is a measure that is based on IFRS net assets excluding the mark-to-market on derivatives and related debt adjustments, the carrying value of intangibles and deferred taxation on property and derivative valuations. The metric includes the valuation surplus on trading properties and is adjusted for the dilutive impact of share options.

 
                                         2021                            2020 
==========================  ===============================  ============================= 
                                                  Net asset            Relevant  Net asset 
                            Relevant    Relevant      value  Relevant    number      value 
                                 net      number        per       net        of        per 
                              assets   of shares      share    assets    shares      share 
Net asset value per share       GBPm     million      pence      GBPm   million      pence 
==========================  ========  ==========  =========  ========  ========  ========= 
EPRA 
EPRA NTA                       6,050         933        648     7,202       932        773 
EPRA NRV                       6,599         933        707     7,872       932        845 
EPRA NDV                       5,678         933        609     6,762       932        726 
IFRS 
Basic                          5,983         927        645     7,147       927        771 
Diluted                        5,983         933        641     7,147       932        767 
==========================  ========  ==========  =========  ========  ========  ========= 
 

Total accounting return

The Group also measures financial performance with reference to total accounting return. This is calculated as the movement in EPRA Net Tangible Assets per share and dividend paid in the year as a percentage of the EPRA Net Tangible Assets per share at the start of the year.

 
                                       2021                              2020 
========================  ===============================  ================================= 
                          Decrease  Dividend                 Decrease  Dividend 
                                in       per                       in       per 
                           NTA per     share        Total         NTA     share        Total 
                             share      paid   accounting   per share      paid   accounting 
                             pence     pence       return       pence     pence       return 
========================  ========  ========  ===========  ==========  ========  =========== 
Total accounting return      (125)      8.40      (15.1%)       (131)     31.47      (11.0%) 
========================  ========  ========  ===========  ==========  ========  =========== 
 

3 Revenue and costs

 
                                                       2021                        2020 
                                            ==========================  ========================== 
                                                        Capital                     Capital 
                                                            and                         and 
                                            Underlying    other  Total  Underlying    other  Total 
                                                  GBPm     GBPm   GBPm        GBPm     GBPm   GBPm 
==========================================  ==========  =======  =====  ==========  =======  ===== 
Rent receivable                                    370        -    370         431        -    431 
Spreading of tenant incentives and 
 guaranteed rent increases                           7        -      7         (3)        -    (3) 
Surrender premia                                     -        -      -           5        -      5 
==========================================  ==========  =======  =====  ==========  =======  ===== 
Gross rental income                                377        -    377         433        -    433 
==========================================  ==========  =======  =====  ==========  =======  ===== 
Trading property sales proceeds                      -        -      -           -       87     87 
Service charge income                               64        -     64          64        -     64 
Management and performance fees (from 
 joint ventures and funds)                           7        -      7           8        -      8 
Other fees and commissions                          20        -     20          21        -     21 
==========================================  ==========  =======  =====  ==========  =======  ===== 
Revenue                                            468        -    468         526       87    613 
==========================================  ==========  =======  =====  ==========  =======  ===== 
 
Trading property cost of sales                       -        -      -           -     (70)   (70) 
Service charge expenses                           (59)        -   (59)        (61)        -   (61) 
Property operating expenses                       (45)        -   (45)        (46)        -   (46) 
Provision for impairment of trade 
 debtors and accrued income                       (52)        -   (52)         (4)        -    (4) 
Provision for impairment of tenant 
 incentives and guaranteed rent increases          (8)        -    (8)        (20)        -   (20) 
Other fees and commissions expenses               (16)        -   (16)        (17)        -   (17) 
==========================================  ==========  =======  =====  ==========  =======  ===== 
Costs                                            (180)        -  (180)       (148)     (70)  (218) 
==========================================  ==========  =======  =====  ==========  =======  ===== 
                                                   288        -    288         378       17    395 
==========================================  ==========  =======  =====  ==========  =======  ===== 
 

The cash element of net rental income (gross rental income less property operating expenses) recognised during the year ended 31 March 2021 from properties which were not subject to a security interest was GBP202m (2019/20: GBP316m). Property operating expenses relating to investment properties that did not generate any rental income were GBPnil (2019/20: GBPnil). Contingent rents of GBP5m (2019/20: GBP3m) were recognised in the year.

Further detail on the provision for impairment of trade debtors, accrued income, tenant incentives and guaranteed rent increases is disclosed in Note 7 and Note 10.

4 Valuation movements on property

 
                                                                2021     2020 
                                                                GBPm     GBPm 
===========================================================  =======  ======= 
Consolidated income statement 
Revaluation of properties                                      (886)  (1,105) 
Revaluation of owner-occupied properties                         (2)        - 
Revaluation of properties held by joint ventures and funds 
 accounted for using the equity method                         (409)    (284) 
===========================================================  =======  ======= 
                                                             (1,297)  (1,389) 
===========================================================  =======  ======= 
Consolidated statement of comprehensive income 
Revaluation of owner-occupied properties                         (1)        1 
===========================================================  =======  ======= 
                                                             (1,298)  (1,388) 
===========================================================  =======  ======= 
 

5 Net financing costs

 
                                                                   2021   2020 
                                                                   GBPm   GBPm 
================================================================  =====  ===== 
Underlying 
 
Financing charges 
Facilities and overdrafts                                          (22)   (25) 
Derivatives                                                          31     30 
Other loans                                                        (74)   (76) 
Obligations under head leases                                       (4)    (4) 
                                                                  =====  ===== 
                                                                   (69)   (75) 
Development interest capitalised                                      7      8 
                                                                  =====  ===== 
                                                                   (62)   (67) 
                                                                  -----  ----- 
Financing income 
Deposits, securities and liquid investments                           -      1 
                                                                  =====  ===== 
                                                                      -      1 
================================================================  =====  ===== 
Net financing charges - underlying                                 (62)   (66) 
================================================================  =====  ===== 
 
Capital and other 
 
Financing charges 
Valuation movement on fair value hedge accounted derivatives(1)    (83)     62 
Valuation movement on fair value hedge accounted debt(1)             83   (62) 
Capital financing costs                                               -      3 
Fair value movement on convertible bonds                            (3)    (4) 
Valuation movement on non-hedge accounted derivatives                 -   (40) 
                                                                  =====  ===== 
                                                                    (3)   (41) 
                                                                  =====  ===== 
Financing income 
Valuation movement on non-hedge accounted derivatives                15      - 
                                                                  =====  ===== 
                                                                     15      - 
                                                                  =====  ===== 
Net financing charges - capital                                      12   (41) 
================================================================  =====  ===== 
 
 
Net financing costs 
Total financing income                                               15      1 
Total financing charges                                            (65)  (108) 
================================================================  =====  ===== 
Net financing costs                                                (50)  (107) 
================================================================  =====  ===== 
 

1. The difference between valuation movement on designated fair value hedge accounted derivatives (hedging instruments) and the valuation movement on fair value hedge accounted debt (hedged item) represents hedge ineffectiveness for the period of GBPnil (2019/20: GBPnil).

Interest payable on unsecured bank loans and related interest rate derivatives was GBP11m (2019/20: GBP9m). Interest on development expenditure is capitalised at the Group's weighted average interest rate of 2.2% (2019/20: 1.9%). The weighted average interest rate on a proportionately consolidated basis at 31 March 2021 was 2.9% (2019/20: 2.5%).

6 Taxation

 
                                                                     2021     2020 
                                                                     GBPm     GBPm 
================================================================  =======  ======= 
Taxation (expense) income 
Current taxation 
 Underlying profit 
Current period UK corporation taxation (2020/21: 19%; 2019/20: 
 19%)                                                                 (2)        - 
Underlying profit adjustments in respect of prior periods(1)         (24)        - 
                                                                  -------  ------- 
Total current underlying profit taxation expense                     (26)        - 
                                                                  -------  ------- 
Capital profit 
 Current period UK corporation taxation (2020/21: 19%; 2019/20: 
 19%)                                                                   -      (1) 
Capital profit adjustments in respect of prior periods                  1        5 
                                                                  -------  ------- 
Total current capital profit taxation income                            1        4 
                                                                  -------  ------- 
 
Total current taxation (expense) income                              (25)        4 
Deferred taxation on revaluations and derivatives                     (5)      (2) 
================================================================  =======  ======= 
Group total taxation (expense) income                                (30)        2 
Attributable to joint ventures and funds                                1        - 
================================================================  =======  ======= 
Total taxation (expense) income                                      (29)        2 
================================================================  =======  ======= 
 
Taxation reconciliation 
Loss on ordinary activities before taxation                       (1,053)  (1,116) 
Less: loss attributable to joint ventures and funds(2)                358      227 
                                                                  =======  ======= 
Group loss on ordinary activities before taxation                   (695)    (889) 
                                                                  =======  ======= 
Taxation on loss on ordinary activities at UK corporation 
 taxation rate of 19% (2019/20: 19%)                                  132      169 
Effects of: 
REIT exempt income and gains                                        (134)    (165) 
Taxation losses                                                         -      (5) 
Deferred taxation on revaluations and derivatives                     (5)      (2) 
Adjustments in respect of prior years                                (23)        5 
================================================================  =======  ======= 
Group total taxation (expense) income                                (30)        2 
================================================================  =======  ======= 
 

1. Includes the GBP28m corporation tax charge in relation to the year ended 31 March 2020, discussed below, offset by other credits in respect of prior periods of GBP4m relating to tax provisions in respect of historic taxation matters and points of uncertainty.

2. A current taxation income of GBP1m (2019/20: GBPnil) and a deferred taxation credit of GBPnil (2019/20: GBPnil) arose on profits attributable to joint ventures and funds. The low tax charge reflects the Group's REIT status.

Taxation expense attributable to Underlying Profit for the year ended 31 March 2021 was GBP26m (2019/20: GBPnil). Taxation income attributable to Capital and other profit was GBP1m (2019/20: income of GBP4m). Corporation taxation payable at 31 March 2021 was GBP7m (2019/20: GBP17m) as shown on the balance sheet.

A REIT is required to pay Property Income Distributions (PIDs) of at least 90% of the taxable profits from its UK property rental business within 12 months of the end of each accounting period.

Following the temporary suspension of the dividend to best ensure we could effectively support our customers who were hardest hit and protect the long term value of the business as a result of Covid-19, there was a shortfall in the required distributions for the year ended 31 March 2020. We agreed with HMRC that we would remain compliant with the REIT regime requirements through payment of corporation tax at 19% on the underpayment of the PID requirement for the year to 31 March 2020 arising as a consequence of Covid-19. The taxable PID underpayment is expected to be GBP149m and the resulting corporation tax thereon of GBP28m has been paid in the year ended 31 March 2021.

Following the resumption of the dividend, it is expected that the PID requirement for the year to 31 March 2021 and subsequent years will be satisfied in full on a timely basis through dividend payments.

7 Property

Property reconciliation for the year ended 31 March 2021

 
                                                                           Investment 
                                          Offices                                 and 
                                              and  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 
 2020                         3,188         3,941     400           659         8,188           20         68    8,276 
Additions 
   property purchases            52             -       -             -            52            -          -       52 
   development expenditure        3           (3)      25            76           101            -          3      104 
   capitalised interest and 
    staff costs                   -             -       4             7            11            -          -       11 
   capital expenditure on 
    asset management 
    initiatives                  20             8       -             6            34            -          -       34 
   right-of-use assets            -             2       -             -             2            -          -        2 
                             ======  ============  ======  ============  ============  ===========  =========  ======= 
                                 75             7      29            89           200            -          3      203 
                             ======  ============  ======  ============  ============  ===========  =========  ======= 
Disposals                     (421)         (699)       -          (10)       (1,130)            -       (66)  (1,196) 
Right-of-use assets 
 disposals                        -             -    (36)             -          (36)            -          -     (36) 
Reclassifications                16             -       -          (22)           (6)            6          -        - 
Revaluations included in 
 income statement             (683)         (202)     (7)             6         (886)            -        (2)    (888) 
Revaluations included in 
 OCI                              -             -       -             -             -            -        (1)      (1) 
Movement in tenant 
 incentives 
 and contracted rent uplift 
 balances                         1           (5)       -             -           (4)            -          -      (4) 
                             ======  ============  ======  ============  ============  ===========  =========  ======= 
Carrying value at 31 March 
 2021                         2,176         3,042     386           722         6,326           26          2    6,354 
                             ======  ============  ======  ============  ============  ===========  =========  ======= 
Lease liabilities (Notes 
 11 and 12) (1)                                                                                                  (108) 
Less valuation surplus 
 on right-of-use assets(2)                                                                                         (8) 
Valuation surplus on trading 
 properties                                                                                                          9 
===================================  ============  ======  ============  ============  ===========  =========  ======= 
Group property portfolio valuation 
 at 31 March 2021                                                                                                6,247 
Non-controlling interests                                                                                        (137) 
===========================  ======  ============  ======  ============  ============  ===========  =========  ======= 
Group property portfolio valuation at 31 March 2021 
 attributable to shareholders                                                                                    6,110 
=====================================================================================  ===========  =========  ======= 
 

1. The GBP25m difference between lease liabilities of GBP108m and GBP133m per Notes 11 and 12 relates to a GBP25m lease liability where the right-of-use asset is classified as property, plant and equipment.

2. Relates to properties held under leasing agreements. The fair value of right-of-use assets is determined by calculating the present value of net rental cash flows over the term of the lease agreements. IFRS 16 right-of-use assets are not externally valued, their fair value is determined by management, and are therefore not included in the Group property portfolio valuation of GBP6,247m above.

Property valuation

The different valuation method levels are defined below:

 
Level  Quoted prices (unadjusted) in active markets for identical assets 
 1:     or liabilities. 
Level  Inputs other than quoted prices included within Level 1 that are 
 2:     observable for the asset or liability, either directly 
        (i.e. as prices) or indirectly (i.e. derived from prices). 
Level  Inputs for the asset or liability that are not based on observable 
 3:     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 below. There were no transfers between levels in the year.

The general risk environment in which the Group operates remained heightened during the period, which is largely due to the impact of Covid-19, uncertainty regarding the impact of the UK's exit from the EU, the significant deterioration in the UK retail market and weak investment markets. This environment has had, and may continue to have, a significant impact upon property valuations.

The Group's total property portfolio was valued by external valuers on the basis of fair value, in accordance with the RICS Valuation - Global Standards 2019, published by The Royal Institution of Chartered Surveyors.

The Covid-19 pandemic has continued to impact global financial markets and market activity in many sectors, with some real estate markets having experienced lower levels of transactional activity and liquidity. In some cases, 'lockdowns' have been applied - in varying degrees - to reflect further 'waves' of Covid-19. While these may imply a new stage of the crisis, they are not unprecedented in the same way as the initial impact. As at the valuation date property markets are mostly functioning again, with transaction volumes and other relevant evidence returning to levels which our valuers consider to be an adequate quantum of market evidence upon which to base their opinions of value. Accordingly, and for the avoidance of doubt, our valuers have not reported their valuations as being subject to 'material valuation uncertainty' as defined by VPS 3 and VPGA 10 of the RICS Valuation- Global Standards. Our valuers have, however, highlighted the market context under which their opinions have been prepared and, in recognition of the potential for market conditions to move rapidly in response to changes in the control or future spread of Covid-19, the importance of the valuation date.

In preparing their valuations, our valuers have considered the impact of concessions agreed with tenants at the balance sheet date, which mainly relate to rent deferrals and rent free periods, on valuations, primarily of retail assets. They have also given consideration to occupiers in higher risk sectors, and those assumed to be at risk of default, in determining the appropriate yields to apply.

At 31 March 2020 all of our external valuation reports included a "material valuation uncertainty" declaration, which emphasised that less certainty - and a higher degree of caution - should be attached to the valuations than would normally be the case. In light of this, we reviewed the ranges used for our sensitivity analysis, and adopted expanded ranges to reflect this increased uncertainty. No such declaration was included in our valuation reports at 31 March 2021, with our external valuers concluding that there was an adequate quantum of market evidence upon which to base opinions of value.

There has been no change in the valuation methodology used for investment property as a result of Covid-19.

The information provided to the valuers, and the assumptions and valuation models used by the valuers, are reviewed by the property portfolio team, the Head of Real Estate and the Interim 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, Jones Lang LaSalle and Cushman & Wakefield can be found at britishland.com/reports.

A breakdown of valuations split between the Group and its share of joint ventures and funds is shown below:

 
                                              2021                      2020 
===================================  =======================  ======================== 
                                                Joint                    Joint 
                                             ventures                 ventures 
                                                  and                      and 
                                     Group      funds  Total  Group      funds   Total 
                                      GBPm       GBPm   GBPm   GBPm       GBPm    GBPm 
===================================  =====  =========  =====  =====  =========  ====== 
Knight Frank LLP                     1,375         40  1,415  1,420         54   1,474 
CBRE                                 1,642        124  1,766  2,097        183   2,280 
Jones Lang LaSalle                     849        506  1,355  1,348        765   2,113 
Cushman & Wakefield                  2,381      2,378  4,759  3,241      2,270   5,511 
===================================  =====  =========  =====  =====  =========  ====== 
Total property portfolio valuation   6,247      3,048  9,295  8,106      3,272  11,378 
Non-controlling interests            (137)       (26)  (163)  (185)       (36)   (221) 
===================================  =====  =========  =====  =====  =========  ====== 
Total property portfolio valuation 
 attributable to shareholders        6,110      3,022  9,132  7,921      3,236  11,157 
===================================  =====  =========  =====  =====  =========  ====== 
 

Information about fair value measurements using unobservable inputs (Level 3) for the year ended 31 March 2021

 
                                                                                              Costs to complete 
                                                    ERV per sq ft       Equivalent yield          per sq ft 
=====================  ==========  ============  ===================  ====================  ===================== 
                       Fair value 
                               at 
                         31 March 
                             2021     Valuation   Min   Max  Average   Min   Max   Average    Min    Max  Average 
Investment                   GBPm     technique   GBP   GBP      GBP     %     %         %    GBP    GBP      GBP 
=====================  ==========  ============  ====  ====  =======  ====  ====  ========  =====  =====  ======= 
                                     Investment 
Retail                      2,118   methodology     2    32       18     5    14         8      -     46       13 
                                     Investment 
Offices                     2,918   methodology     9   176       58     4     6         5      -    475       85 
                                       Residual 
Canada Water(1)               387   methodology    22    53       50     5     6         5    162    343      260 
                                     Investment 
Residential                    66   methodology     2     2        2     5     5         5      -      -        - 
                                       Residual 
Developments                  723   methodology    65    90       77     4    14         6      2     89       48 
=====================  ==========  ============  ====  ====  =======  ====  ====  ========  =====  =====  ======= 
Total                       6,212 
Trading properties 
 at fair value                 35 
=====================  ==========  ============  ====  ====  =======  ====  ====  ========  =====  =====  ======= 
Group property 
 portfolio valuation        6,247 
=====================  ==========  ============  ====  ====  =======  ====  ====  ========  =====  =====  ======= 
 

1. Includes owner-occupied.

Provision for impairment of tenant incentives and guaranteed rent increases

A provision of GBP23m (31 March 2020: GBP17m) has been made for impairment of tenant incentives and contracted rent uplift balances (guaranteed rents). The charge to the income statement in relation to write-offs and provisions for impairment for tenant incentives and guaranteed rents was GBP8m (2019/20: GBP20m) (see Note 3). The Directors consider that the carrying amount of tenant incentives is approximate to their fair value.

The table below shows the movement in provisions for impairment of tenant incentives during the year ending 31 March 2021 on a Group and on a proportionally consolidated basis.

 
                                                                    Proportionally 
                                                             Group    consolidated 
Movement in provisions for impairment of tenant incentives    GBPm            GBPm 
===========================================================  =====  ============== 
 
Provisions for impairment of tenant incentives as at 1 
 April 2020                                                     17              17 
 
Write-offs of tenant incentives                                (2)             (6) 
 
Increase in provision for impairment of tenant incentives        8              18 
                                                             -----  -------------- 
Total provision charge recognised in income statement            8              18 
                                                             -----  -------------- 
 
Provisions for impairment of tenant incentives as at 31 
 March 2021                                                     23              29 
===========================================================  =====  ============== 
 

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 2020                            2,188    170  2,358   1,659    699  2,358 
Additions                                    209      -    209      63    146    209 
Disposals                                   (41)   (12)   (53)    (13)   (40)   (53) 
Share of loss on ordinary activities 
 after taxation(1)                         (330)   (27)  (357)   (213)  (144)  (357) 
Distributions and dividends: 
Capital                                      (4)      -    (4)     (4)      -    (4) 
Revenue                                     (26)    (8)   (34)    (34)      -   (34) 
Hedging and exchange movements                 1      -      1       1      -      1 
=====================================  =========  =====  =====  ======  =====  ===== 
At 31 March 2021                           1,997    123  2,120   1,459    661  2,120 
=====================================  =========  =====  =====  ======  =====  ===== 
 

1. The share of loss on ordinary activities after taxation comprises equity accounted losses of GBP213m and IFRS 9 impairment charges against loans of GBP144m, relating to loans owed by MSC Property Intermediate Holdings Limited (GBP131m) and WOSC Partners Limited Partnership (GBP13m). In accordance with IFRS 9, management has assessed the recoverability of loans to joint ventures. Amounts due are expected to be recovered by a joint venture selling its properties and investments and settling financial assets, net of financial liabilities. The net asset value of a joint venture is considered to be a reasonable approximation of the available assets that could be realised to recover the amounts due and the requirement to recognise expected credit losses.

The summarised income statements and balance sheets below 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 2021

 
                                                                 MSC Property 
                                                     Broadgate   Intermediate 
                                                          REIT       Holdings            WOSC Partners 
                                                           Ltd         Ltd(5)   Limited Partnership(5) 
===============================================  =============  =============  ======================= 
Partners                                         Euro Bluebell    Norges Bank              Norges Bank 
                                                           LLP     Investment               Investment 
                                                         (GIC)     Management               Management 
===============================================  =============  =============  ======================= 
Property sector                                   City Offices       Shopping                 West End 
                                                     Broadgate        Centres                  Offices 
                                                                   Meadowhall 
===============================================  =============  =============  ======================= 
Group share                                                50%            50%                      25% 
===============================================  =============  =============  ======================= 
 
Summarised income statements                              GBPm           GBPm                     GBPm 
===============================================  =============  =============  ======================= 
Revenue(4)                                                 216             85                       12 
Costs                                                     (79)           (49)                      (6) 
                                                 =============  =============  ======================= 
                                                           137             36                        6 
Administrative expenses                                      -              -                        - 
Net interest payable                                      (61)           (29)                        - 
                                                 =============  =============  ======================= 
Underlying Profit (loss)                                    76              7                        6 
Net valuation movement                                   (172)          (421)                     (57) 
Capital financing costs                                      -              -                        - 
Profit (loss) on disposal of investment 
 properties and investments                                  -              -                        - 
                                                 =============  =============  ======================= 
Loss on ordinary activities before taxation               (96)          (414)                     (51) 
Taxation                                                     -              -                        - 
===============================================  =============  =============  ======================= 
Loss on ordinary activities after taxation                (96)          (414)                     (51) 
===============================================  =============  =============  ======================= 
Other comprehensive income                                   -              3                        - 
===============================================  =============  =============  ======================= 
Total comprehensive expense                               (96)          (411)                     (51) 
===============================================  =============  =============  ======================= 
British Land share of total comprehensive 
 expense                                                  (48)          (205)                     (13) 
===============================================  =============  =============  ======================= 
British Land share of distributions payable                 22              1                        - 
===============================================  =============  =============  ======================= 
 
Summarised balance sheets 
===============================================  =============  =============  ======================= 
Investment and trading properties                        4,501            779                      163 
Current assets                                              13             17                        4 
Cash and deposits                                          160             20                        5 
                                                 =============  =============  ======================= 
Gross assets                                             4,674            816                      172 
                                                 =============  =============  ======================= 
Current liabilities                                       (94)           (37)                      (3) 
Bank and securitised debt                              (1,306)          (552)                        - 
Loans from joint venture partners                        (988)          (472)                    (218) 
Other non-current liabilities                                -           (17)                      (4) 
                                                 =============  =============  ======================= 
Gross liabilities                                      (2,388)        (1,078)                    (225) 
===============================================  =============  =============  ======================= 
Net assets (liabilities)                                 2,286          (262)                     (53) 
===============================================  =============  =============  ======================= 
British Land share of net assets (liabilities) 
 less shareholder loans                                  1,143              -                        - 
===============================================  =============  =============  ======================= 
 

1. USS joint ventures include the Eden Walk Shopping Centre Unit Trust and the Fareham Property Partnership.

4. Hercules Unit Trust joint ventures and sub-funds includes 50% of the results of Deepdale Co-Ownership Trust, Fort Kinnaird 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.

5. Included in the column headed 'Other joint ventures and funds' are contributions from the following: BL Goodman Limited Partnership, Bluebutton Property Management UK Limited, City of London Office Unit Trust and BL Sainsbury's Superstores Limited.

6. Revenue includes gross rental income at 100% share of GBP262m (2019/20: GBP284m).

7. In accordance with the Group's accounting policies, the Group recognises a nil equity investment in joint ventures in a net liability position at period end.

8. During the year ended 31 March 2021 the Group entered into a joint arrangement with Allianz SE, the new joint venture holds properties which were previously wholly owned by the Group.

 
                                                  Hercules Unit 
 BL West End  The SouthGate              USS              Trust            Other                  Total 
     Offices        Limited            joint     joint ventures   joint ventures    Total   Group share 
  Limited(6)    Partnership      ventures(1)   and sub-funds(2)     and funds(3)     2021          2021 
 ===========  =============  ===============  =================  ===============  =======  ============ 
  Allianz SE          Aviva     Universities 
                  Investors   Superannuation 
                                Scheme Group 
                                         PLC 
 ===========  =============  ===============  =================  ===============  =======  ============ 
    West End       Shopping         Shopping             Retail 
     Offices        Centres          Centres              Parks 
 ===========  =============  ===============  =================  ===============  =======  ============ 
         25%            50%              50%            Various 
 ===========  =============  ===============  =================  ===============  =======  ============ 
 
        GBPm           GBPm             GBPm               GBPm             GBPm     GBPm          GBPm 
 ===========  =============  ===============  =================  ===============  =======  ============ 
           6             10               12                 30                -      371           182 
         (1)           (10)             (10)               (14)                -    (169)          (85) 
 ===========  =============  ===============  =================  ===============  =======  ============ 
           5              -                2                 16                -      202            97 
           -              -                -                  -                -        -             - 
         (1)            (1)                -                (1)              (1)     (94)          (45) 
 ===========  =============  ===============  =================  ===============  =======  ============ 
           4            (1)                2                 15              (1)      108            52 
        (26)           (62)             (57)               (65)                -    (860)         (409) 
           -              -                -                  -                -        -             - 
           8              -                -                (7)                -        1           (1) 
 ===========  =============  ===============  =================  ===============  =======  ============ 
        (14)           (63)             (55)               (57)              (1)    (751)         (358) 
           -              -                -                  -                3        3             1 
 ===========  =============  ===============  =================  ===============  =======  ============ 
        (14)           (63)             (55)               (57)                2    (748)         (357) 
 ===========  =============  ===============  =================  ===============  =======  ============ 
           -              -                -                  -                -        3             1 
 ===========  =============  ===============  =================  ===============  =======  ============ 
        (14)           (63)             (55)               (57)                2    (745)         (356) 
 ===========  =============  ===============  =================  ===============  =======  ============ 
         (3)           (32)             (27)               (29)                1    (356) 
 ===========  =============  ===============  =================  ===============  =======  ============ 
           -              -                3                  8                4       38 
 ===========  =============  ===============  =================  ===============  =======  ============ 
 
 
         520            144              131                236                -    6,474         3,067 
           4              3                1                  1                1       44            22 
           6              5                5                 12                1      214           104 
 ===========  =============  ===============  =================  ===============  =======  ============ 
         530            152              137                249                2    6,732         3,193 
 ===========  =============  ===============  =================  ===============  =======  ============ 
         (9)            (4)              (5)                (9)                -    (161)          (78) 
       (158)              -                -                  -                -  (2,016)         (968) 
        (15)              -             (31)                  -              (3)  (1,727)         (805) 
        (11)           (28)                -                  -                -     (60)          (27) 
 ===========  =============  ===============  =================  ===============  =======  ============ 
       (193)           (32)             (36)                (9)              (3)  (3,964)       (1,878) 
 ===========  =============  ===============  =================  ===============  =======  ============ 
         337            120              101                240              (1)    2,768         1,315 
 ===========  =============  ===============  =================  ===============  =======  ============ 
          84             60               50                122                -    1,459 
 ===========  =============  ===============  =================  ===============  =======  ============ 
 

-- 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 and the Eden Walk Shopping Centre Unit Trust which are incorporated in Jersey. Of the funds, the Hercules Unit Trust (HUT) joint ventures and sub-funds are incorporated in Jersey.

Operating cash flows of joint ventures and funds (Group share)

 
                                                                       2021   2020 
                                                                       GBPm   GBPm 
====================================================================  =====  ===== 
Rental income received from tenants                                     119    131 
Operating expenses paid to suppliers and employees                     (26)   (27) 
                                                                      =====  ===== 
Cash generated from operations                                           93    104 
                                                                      =====  ===== 
Interest paid                                                          (47)   (56) 
Interest received                                                         -      1 
UK corporation tax paid                                                 (2)    (2) 
====================================================================  =====  ===== 
Cash inflow from operating activities                                    44     47 
====================================================================  =====  ===== 
Cash inflow from operating activities deployed as: 
Surplus (deficit) cash retained within joint ventures and 
 funds                                                                   10    (2) 
Revenue distributions per consolidated statement of cash 
 flows                                                                   34     49 
Revenue distributions split between controlling and non-controlling 
 interests 
====================================================================  =====  ===== 
Attributable to non-controlling interests                                 2      2 
Attributable to shareholders of the Company                              32     47 
====================================================================  =====  ===== 
 

9 Other investments

 
                                         2021                                    2020 
                        ======================================  ====================================== 
                            Fair                                    Fair 
                           value                                   value 
                         through                                 through 
                          profit  Amortised  Intangible           profit  Amortised  Intangible 
                         or loss       cost      assets  Total   or loss       cost      assets  Total 
                            GBPm       GBPm        GBPm   GBPm      GBPm       GBPm        GBPm   GBPm 
======================  ========  =========  ==========  =====  ========  =========  ==========  ===== 
At 1 April                   111          3          11    125       114          5          10    129 
Additions                      3          -           5      8         4          2           4     10 
Transfers / disposals      (109)        (1)           -  (110)         -        (4)           -    (4) 
Revaluation                    1          -           -      1       (7)          -           -    (7) 
Amortisation                   -          -         (4)    (4)         -          -         (3)    (3) 
======================  ========  =========  ==========  =====  ========  =========  ==========  ===== 
At 31 March                    6          2          12     20       111          3          11    125 
======================  ========  =========  ==========  =====  ========  =========  ==========  ===== 
 

The amount included in the fair value through profit or loss relates to private equity / venture capital investments of GBP6m (2019/20: GBP2m) which are categorised as Level 3 in the fair value hierarchy and government bonds of GBPnil (2019/20: GBP16m) which are classified as Level 1. The fair values of private equity / venture capital investments are determined by the Directors.

As at 31 March 2020, fair value through profit or loss included GBP93m comprising interests as a trust beneficiary. The trust's assets comprise freehold reversions in a pool of commercial properties, comprising Sainsbury's superstores. This interest was sold for GBP102m in the year ending 31 March 2021.

10 Debtors

 
                                  2021   2020 
                                  GBPm   GBPm 
===============================  =====  ===== 
Trade and other debtors             38     29 
Prepayments and accrued income      14     10 
Rental deposits                      4     17 
===============================  =====  ===== 
                                    56     56 
===============================  =====  ===== 
 

Trade and other debtors are shown after deducting a provision for impairment against tenant debtors of GBP57m (2019/20: GBP14m). Accrued income is shown after deducting a provision for impairment of GBP5m (2019/20: GBPnil). The provision for impairment is calculated as an expected credit loss on trade and other debtors in accordance with IFRS 9.

The charge to the income statement for the year in relation to provisions for impairment of trade receivables and accrued income was GBP52m (2019/20: GBP4m), as disclosed in Note 3. Within this charge, GBP9m (2019/20: GBPnil) represents provisions for impairment made against receivable balances related to billed rental income due on 25 March rent quarter day. Rental income is recognised on a straight-line basis over the lease term in accordance with IFRS 16. The majority of rental income relating to 25 March rent quarter day has, therefore, not yet been recognised in the income statement in the current year and is instead recognised as deferred income, within current liabilities as at 31 March 2021. As the rent due on 25 March has been billed to the tenant, however, the Group is required to provide for expected credit losses at the balance sheet date in accordance with IFRS 9. This creates a mismatch in the period between the recognition of rental income and the impairment of the associated rent receivable.

The increase in provisions for impairment of trade debtors and accrued income of GBP48m (2019/20: GBP3m) is equal to the charge to the income statement of GBP52m (2019/20: GBP4m), less write-offs of trade debtors of GBP4m (2019/20: GBP1m).

The Directors consider that the carrying amount of trade and other debtors is approximate to their fair value.

The table below summarises the movement in provisioning for impairment of tenant debtors and accrued income during the year ending 31 March 2021.

 
                                                                 Proportionally 
Movement in provisions for impairment of tenant debtors   Group    consolidated 
 and accrued income                                        GBPm            GBPm 
========================================================  =====  ============== 
 
Provisions for impairment of tenant debtors and accrued 
 income as at 1 April 2020                                   14              17 
 
Write-offs of tenant debtors                                (4)             (4) 
 
Increase in provision for impairment of tenant debtors       47              59 
Increase in provision for impairment of accrued income        5               6 
                                                          -----  -------------- 
Total increase in provision charge recognised in income 
 statement                                                   52              65 
                                                          =====  ============== 
 
Provision for impairment of tenant debtors and accrued 
 income as at 31 March 2021                                  62              78 
========================================================  =====  ============== 
 

11 Creditors

 
                                      2021   2020 
                                      GBPm   GBPm 
===================================  =====  ===== 
Trade creditors                         55     55 
Other taxation and social security      25     27 
Accruals                                68     89 
Deferred income                         62     58 
Lease liabilities                        5      7 
Rental deposits due to tenants           4     17 
===================================  =====  ===== 
                                       219    253 
===================================  =====  ===== 
 

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

 
                     2021   2020 
                     GBPm   GBPm 
==================  =====  ===== 
Lease liabilities     128    156 
==================  =====  ===== 
                      128    156 
==================  =====  ===== 
 

13 Deferred tax

The movement on deferred tax is as shown below:

Deferred tax assets year ended 31 March 2021

 
                                 Debited 
                        1 April       to    Credited  31 March 
                           2020   income   to equity      2021 
                           GBPm     GBPm        GBPm      GBPm 
======================  =======  =======  ==========  ======== 
Temporary differences         5      (5)           -         - 
======================  =======  =======  ==========  ======== 
                              5      (5)           -         - 
======================  =======  =======  ==========  ======== 
 

Deferred tax liabilities year ended 31 March 2021

 
                                       GBPm  GBPm  GBPm  GBPm 
=====================================  ====  ====  ====  ==== 
Property and investment revaluations    (6)     -     6     - 
=====================================  ====  ====  ====  ==== 
                                        (6)     -     6     - 
=====================================  ====  ====  ====  ==== 
 
Net deferred tax liabilities            (1)   (5)     6     - 
=====================================  ====  ====  ====  ==== 
 

Deferred tax assets year ended 31 March 2020

 
                                                                 Debited 
                                                     1 April          to       Credited  31 March 
                                                        2019   income(1)   to equity(2)      2020 
                                                        GBPm        GBPm           GBPm      GBPm 
===================================================  =======  ==========  =============  ======== 
Interest rate and currency derivative revaluations         1         (1)              -         - 
Temporary differences                                      6         (1)              -         5 
===================================================  =======  ==========  =============  ======== 
                                                           7         (2)              -         5 
===================================================  =======  ==========  =============  ======== 
 

Deferred tax liabilities year ended 31 March 2020

 
                                        GBPm  GBPm  GBPm  GBPm 
======================================  ====  ====  ====  ==== 
Property and investment revaluations     (6)     -     -   (6) 
======================================  ====  ====  ====  ==== 
                                         (6)     -     -   (6) 
======================================  ====  ====  ====  ==== 
 
Net deferred tax assets (liabilities)      1   (2)     -   (1) 
======================================  ====  ====  ====  ==== 
 

1. A GBP1m credit in respect of the deferred tax asset, credited to income, results from the change in the tax rate used to calculate the deferred tax to 19% (2018/19: 17%).

2. A GBP1m debit in respect of the deferred tax liability, debited to equity, results from the change in the tax rate used to calculate deferred tax to 19% (2018/19: 17%).

The following corporation tax rate has been substantively enacted: 19% effective from 1 April 2017. 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 19% (2019/20: 19%) of GBPnil (2019/20: GBP4m) 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 GBP137m (2019/20: GBP135m) exist at 31 March 2021.

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 2021, the Group had an unrecognised deferred tax asset calculated at 19% (2019/20: 19%) of GBP45m (2019/20: GBP52m) 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 2021, the value of such properties is GBP801m (2019/20: GBP254m) and if these properties were to be sold and no tax exemption was available, the tax arising would be GBP0.3m (2019/20: GBP21m).

14 Net debt

 
                                                                           2021   2020 
                                                                Footnote   GBPm   GBPm 
==============================================================  ========  =====  ===== 
Secured on the assets of the Group 
5.264% First Mortgage Debenture Bonds 2035                                  361    375 
5.0055% First Mortgage Amortising Debentures 2035                            89     91 
5.357% First Mortgage Debenture Bonds 2028                                  241    249 
Bank loans                                                             1    358    515 
                                                                          1,049  1,230 
Unsecured 
4.635% Senior US Dollar Notes 2021                                     2    157    180 
4.766% Senior US Dollar Notes 2023                                     2    102    117 
5.003% Senior US Dollar Notes 2026                                     2     67     80 
3.81% Senior Notes 2026                                                     111    113 
3.97% Senior Notes 2026                                                     112    115 
0% Convertible Bond 2020                                                      -    347 
2.375% Sterling Unsecured Bond 2029                                         298    298 
4.16% Senior US Dollar Notes 2025                                      2     77     89 
2.67% Senior Notes 2025                                                      37     37 
2.75% Senior Notes 2026                                                      37     37 
Floating Rate Senior Notes 2028                                              80     80 
Floating Rate Senior Notes 2034                                             102    102 
Facilities and overdrafts                                                   181    677 
                                                                          =====  ===== 
                                                                          1,361  2,272 
==============================================================  ========  =====  ===== 
Gross debt                                                             3  2,410  3,502 
==============================================================  ========  =====  ===== 
Interest rate and currency derivative liabilities                           128    169 
Interest rate and currency derivative assets                              (135)  (231) 
Cash and short term deposits                                         4,5  (154)  (193) 
==============================================================  ========  =====  ===== 
Total net debt                                                            2,249  3,247 
==============================================================  ========  =====  ===== 
Net debt attributable to non-controlling interests                         (70)  (107) 
==============================================================  ========  =====  ===== 
Net debt attributable to shareholders of the Company                      2,179  3,140 
==============================================================  ========  =====  ===== 
 
Total net debt                                                            2,249  3,247 
==============================================================  ========  =====  ===== 
Amounts payable under leases (Notes 11 and 12)                              133    163 
==============================================================  ========  =====  ===== 
Total net debt (including lease liabilities)                              2,382  3,410 
==============================================================  ========  =====  ===== 
Net debt attributable to non-controlling interests (including 
 lease liabilities)                                                        (75)  (112) 
==============================================================  ========  =====  ===== 
Net debt attributable to shareholders of the Company 
 (including lease liabilities)                                            2,307  3,298 
==============================================================  ========  =====  ===== 
 

1. These are non-recourse borrowings with no recourse for repayment to other companies or assets in the Group.

 
                       2021   2020 
                       GBPm   GBPm 
====================  =====  ===== 
Hercules Unit Trust     358    515 
====================  =====  ===== 
                        358    515 
====================  =====  ===== 
 

2. Principal and interest on these borrowings were fully hedged into Sterling at a floating rate at the time of issue.

3. The principal amount of gross debt at 31 March 2021 was GBP2,291m (2019/20: GBP3,294m). Included in this is the principal amount of secured borrowings and other borrowings of non-recourse companies of GBP998m of which the borrowings of the partly-owned subsidiary, Hercules Unit Trust, not beneficially owned by the Group are GBP79m.

4. Included within cash and short term deposits is the cash and short term deposits of Hercules Unit Trust, of which GBP8m is the proportion not beneficially owned by the Group.

5. Cash and deposits not subject to a security interest amount to GBP145m (2019/20: GBP173m).

Maturity analysis of net debt

 
                                               2021   2020 
                                               GBPm   GBPm 
============================================  =====  ===== 
Repayable: within one year and on demand        161    637 
                                              =====  ===== 
Between:     one and two years                  169    188 
 two and five years                             846    829 
 five and ten years                             738  1,141 
 ten and fifteen years                          496    107 
 fifteen and twenty years                         -    600 
                                              =====  ===== 
                                              2,249  2,865 
                                              =====  ===== 
Gross debt                                    2,410  3,502 
Interest rate and currency derivatives          (7)   (62) 
Cash and short term deposits                  (154)  (193) 
============================================  =====  ===== 
Net debt                                      2,249  3,247 
============================================  =====  ===== 
 

0% Convertible bond 2015 (maturity 2020)

On 9 June 2020, the GBP350 million convertible bonds were redeemed at par in cash.

Fair value and book value of net debt

 
                                                      2021                        2020 
=========================================  ==========================  ========================== 
                                             Fair    Book                Fair    Book 
                                            value   value  Difference   value   value  Difference 
                                             GBPm    GBPm        GBPm    GBPm    GBPm        GBPm 
=========================================  ======  ======  ==========  ======  ======  ========== 
Debentures and unsecured bonds              1,978   1,871         107   2,022   1,964          58 
Convertible bonds                               -       -           -     347     347           - 
Bank debt and other floating rate 
 debt                                         546     539           7   1,197   1,191           6 
=========================================  ======  ======  ==========  ======  ======  ========== 
Gross debt                                  2,524   2,410         114   3,566   3,502          64 
=========================================  ======  ======  ==========  ======  ======  ========== 
Interest rate and currency derivative 
 liabilities                                  128     128           -     169     169           - 
Interest rate and currency derivative 
 assets                                     (135)   (135)           -   (231)   (231)           - 
Cash and short term deposits                (154)   (154)           -   (193)   (193)           - 
=========================================  ======  ======  ==========  ======  ======  ========== 
Net debt                                    2,363   2,249         114   3,311   3,247          64 
=========================================  ======  ======  ==========  ======  ======  ========== 
Net debt attributable to non-controlling 
 interests                                   (70)    (70)           -   (107)   (107)           - 
=========================================  ======  ======  ==========  ======  ======  ========== 
Net debt attributable to shareholders 
 of the Company                             2,293   2,179         114   3,204   3,140          64 
=========================================  ======  ======  ==========  ======  ======  ========== 
 

The fair values of debentures, unsecured bonds and the convertible bond 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 adviser.

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 of debt held at amortised cost is Level 2 (as defined in Note 7).

Group loan to value (LTV)

 
                                                                 2021    2020 
                                                                 GBPm    GBPm 
==============================================================  =====  ====== 
Group loan to value (LTV)                                       25.1%   28.9% 
==============================================================  =====  ====== 
 
Principal amount of gross debt                                  2,291   3,294 
Less debt attributable to non-controlling interests              (79)   (113) 
Less cash and short term deposits (balance sheet)               (154)   (193) 
Plus cash attributable to non-controlling interests                 8       6 
==============================================================  =====  ====== 
Total net debt for LTV calculation                              2,066   2,994 
==============================================================  =====  ====== 
Group property portfolio valuation (Note 7)                     6,247   8,106 
Investments in joint ventures and funds (Note 8)                2,120   2,358 
Other investments and property, plant and equipment (balance 
 sheet) (1)                                                        26     131 
Less property and investments attributable to non-controlling 
 interests                                                      (163)   (221) 
==============================================================  =====  ====== 
Total assets for LTV calculation                                8,230  10,374 
==============================================================  =====  ====== 
 

1. The GBP24m difference between other investments and plant, property and equipment per the balance sheet totalling GBP50m, relates to a right-of-use asset recognised under a lease which is classified as property, plant and equipment which is not included within Total assets for the purposes of the LTV calculation.

Proportionally consolidated loan to value (LTV)

 
                                                                2021    2020 
                                                                GBPm    GBPm 
=============================================================  =====  ====== 
Proportionally consolidated loan to value (LTV)                32.0%   34.0% 
=============================================================  =====  ====== 
 
Principal amount of gross debt                                 3,262   4,271 
Less debt attributable to non-controlling interests             (79)   (113) 
Less cash and short term deposits                              (258)   (322) 
Plus cash attributable to non-controlling interests               10       6 
=============================================================  =====  ====== 
Total net debt for proportional LTV calculation                2,935   3,842 
=============================================================  =====  ====== 
Group property portfolio valuation (Note 7)                    6,247   8,106 
Share of property of joint ventures and funds (Note 7)         3,048   3,272 
Other investments and property, plant and equipment (balance 
 sheet) (1)                                                       26     131 
Less property attributable to non-controlling interests        (163)   (221) 
=============================================================  =====  ====== 
Total assets for proportional LTV calculation                  9,158  11,288 
=============================================================  =====  ====== 
 

1. The GBP24m difference between other investments and plant, property and equipment per the balance sheet totalling GBP50m, relates to a right-of-use asset recognised under a lease which is classified as property, plant and equipment which is not included within Total assets for the purposes of the LTV calculation.

British Land Unsecured Financial Covenants

The two financial covenants applicable to the Group unsecured debt including convertible bonds are shown below:

 
                                                                    2021   2020 
                                                                    GBPm   GBPm 
=================================================================  =====  ===== 
Net Borrowings not to exceed 175% of Adjusted Capital and 
 Reserves                                                            33%    40% 
=================================================================  =====  ===== 
 
Principal amount of gross debt                                     2,291  3,294 
Less the relevant proportion of borrowings of the partly-owned 
 subsidiary/non-controlling interests                               (79)  (113) 
Less cash and deposits (balance sheet)                             (154)  (193) 
Plus the relevant proportion of cash and deposits of the 
 partly-owned subsidiary/non-controlling interests                     8      6 
=================================================================  =====  ===== 
Net Borrowings                                                     2,066  2,994 
=================================================================  =====  ===== 
Share capital and reserves (balance sheet)                         5,983  7,147 
EPRA deferred tax adjustment (EPRA Table A)                            -      6 
Trading property surpluses (EPRA Table A)                              9     13 
Exceptional refinancing charges (see below)                          188    199 
Fair value adjustments of financial instruments (EPRA Table 
 A)                                                                  115    141 
Less reserves attributable to non-controlling interests (balance 
 sheet)                                                             (59)  (112) 
=================================================================  =====  ===== 
Adjusted Capital and Reserves                                      6,236  7,394 
=================================================================  =====  ===== 
 

In calculating Adjusted Capital and Reserves for the purpose of the unsecured debt financial covenants, there is an adjustment of GBP188m (2019/20: GBP199m) to reflect the cumulative net amortised exceptional items relating to the refinancings in the years ended 31 March 2005, 2006 and 2007.

 
                                                                       2021     2020 
                                                                       GBPm     GBPm 
==================================================================  =======  ======= 
Net Unsecured Borrowings not to exceed 70% of Unencumbered 
 Assets                                                                 25%      30% 
==================================================================  =======  ======= 
 
Principal amount of gross debt                                        2,291    3,294 
Less cash and deposits not subject to a security interest 
 (being GBP145m less the relevant proportion of cash and deposits 
 of the partly-owned subsidiary/non-controlling interests 
 of GBP6m)                                                            (139)    (169) 
Less principal amount of secured and non-recourse borrowings          (998)  (1,156) 
==================================================================  =======  ======= 
Net Unsecured Borrowings                                              1,154    1,969 
==================================================================  =======  ======= 
Group property portfolio valuation (Note 7)                           6,247    8,106 
Investments in joint ventures and funds (Note 8)                      2,120    2,358 
Other investments and property, plant and equipment (balance 
 sheet) (1)                                                              26      131 
Less investments in joint ventures                                  (2,120)  (2,358) 
Less encumbered assets                                              (1,592)  (1,733) 
==================================================================  =======  ======= 
Unencumbered Assets                                                   4,681    6,504 
==================================================================  =======  ======= 
 

1. The GBP24m difference between other investments and plant, property and equipment per the balance sheet totalling GBP50m, relates to a right-of-use asset recognised under a lease which is classified as property, plant and equipment which is not included within Unencumbered Assets for the purposes of the covenant calculation.

Reconciliation of movement in Group net debt for the year ended 31 March 2021

 
                                                                                             Arrangement 
                                                                      Foreign                      costs 
                                    2020  Cash flows  Transfers(3)   exchange  Fair value   amortisation   2021 
                                    GBPm        GBPm          GBPm       GBPm        GBPm           GBPm   GBPm 
=================================  =====  ==========  ============  =========  ==========  =============  ===== 
Short term borrowings                637       (637)           161          -         (2)              2    161 
Long term borrowings               2,865       (367)         (161)       (44)        (46)              2  2,249 
Derivatives(1)                      (62)          14             -         44         (3)              -    (7) 
=================================  =====  ==========  ============  =========  ==========  =============  ===== 
Total liabilities from financing 
 activities(4)                     3,440       (990)             -          -        (51)              4  2,403 
Cash and cash equivalents          (193)          39             -          -           -              -  (154) 
=================================  =====  ==========  ============  =========  ==========  =============  ===== 
Net debt                           3,247       (951)             -          -        (51)              4  2,249 
=================================  =====  ==========  ============  =========  ==========  =============  ===== 
 

Reconciliation of movement in Group net debt for the year ended 31 March 2020

 
                                                                                             Arrangement 
                                                                      Foreign                      costs 
                                    2019  Cash flows  Transfers(3)   exchange  Fair value   amortisation   2020 
                                    GBPm        GBPm          GBPm       GBPm        GBPm           GBPm   GBPm 
=================================  =====  ==========  ============  =========  ==========  =============  ===== 
Short term borrowings                 99       (121)           637          -          22              -    637 
Long term borrowings               2,932         507         (637)         21          37              5  2,865 
Derivatives(2)                      (24)           4             -       (21)        (21)              -   (62) 
=================================  =====  ==========  ============  =========  ==========  =============  ===== 
Total liabilities from financing 
 activities(5)                     3,007         390             -          -          38              5  3,440 
Cash and cash equivalents          (242)          49             -          -           -              -  (193) 
=================================  =====  ==========  ============  =========  ==========  =============  ===== 
Net debt                           2,765         439             -          -          38              5  3,247 
=================================  =====  ==========  ============  =========  ==========  =============  ===== 
 

1. Cash flows on derivatives include GBP24m of net receipts on derivative interest.

2. Cash flows on derivatives include GBP17m of net receipts on derivative interest.

3. Transfers comprises debt maturing from long term to short term borrowings.

4. Cash flows of GBP990m shown above represents net cash flows on capital payments in respect of interest rate derivatives of GBP10m, decrease in bank and other borrowings of GBP1,218m and drawdowns on bank and other borrowings of GBP214m shown in the consolidated statement of cash flows, along with GBP24m of net receipts on derivative interest.

5. Cash flows of GBP390m shown above represents net cash flows on capital payments in respect of interest rate derivatives of GBP14m, decrease in bank and other borrowings of GBP189m and drawdowns on bank and other borrowings of GBP576m shown in the consolidated statement of cash flows, along with GBP17m of net receipts on derivative interest.

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.

 
                                        2021                        2020 
===========================  ==========================  ========================== 
                             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               -  (135)      -  (135)      -  (231)      -  (231) 
Other investments - fair 
 value through profit or 
 loss (Note 9)                   -      -    (6)    (6)   (16)      -   (95)  (111) 
===========================  =====  =====  =====  =====  =====  =====  =====  ===== 
Assets                           -  (135)    (6)  (141)   (16)  (231)   (95)  (342) 
===========================  =====  =====  =====  =====  =====  =====  =====  ===== 
Interest rate and currency 
 derivative liabilities          -    128      -    128      -    169      -    169 
Convertible bonds                -      -      -      -    347      -      -    347 
===========================  =====  =====  =====  =====  =====  =====  =====  ===== 
Liabilities                      -    128      -    128    347    169      -    516 
===========================  =====  =====  =====  =====  =====  =====  =====  ===== 
Total                            -    (7)    (6)   (13)    331   (62)   (95)    174 
===========================  =====  =====  =====  =====  =====  =====  =====  ===== 
 

Categories of financial instruments

 
                                                                              2021     2020 
                                                                              GBPm     GBPm 
=========================================================================  =======  ======= 
Financial assets 
Amortised cost 
Cash and short term deposits                                                   154      193 
Trade and other debtors (Note 10)                                               42       46 
Other investments (Note 9)                                                       2        3 
Fair value through profit or loss 
Derivatives in designated fair value hedge accounting relationships(1,2)       126      209 
Derivatives not in designated hedge accounting relationships                     9       22 
Other investments (Note 9)                                                       6      111 
=========================================================================  =======  ======= 
                                                                               339      584 
=========================================================================  =======  ======= 
Financial liabilities 
Amortised cost 
Creditors (Note 11)                                                          (141)    (180) 
Gross debt                                                                 (2,410)  (3,155) 
Lease liabilities (Notes 11 and 12)                                          (133)    (163) 
Fair value through profit or loss 
Derivatives not in designated accounting relationships                       (128)    (167) 
Convertible bond                                                                 -    (347) 
Fair value through other comprehensive income 
Derivatives in designated cash flow hedge accounting relationships(1,2)          -      (2) 
=========================================================================  =======  ======= 
                                                                           (2,812)  (4,014) 
=========================================================================  =======  ======= 
Total                                                                      (2,473)  (3,430) 
=========================================================================  =======  ======= 
 

1. Derivative assets and liabilities in designated hedge accounting relationships sit within the derivative assets and derivative liabilities balances of the consolidated balance sheet.

2. The fair value of derivative assets in designated hedge accounting relationships represents the accumulated amount of fair value hedge adjustments on hedged items.

Gains and losses on financial instruments, as classed above, are disclosed in Note 5 (net financing costs), Note 10 (debtors), the consolidated income statement and the consolidated statement of comprehensive income. The Directors consider that the carrying amounts of other investments are approximate to their fair value, and that the carrying amounts are recoverable.

Maturity of committed undrawn borrowing facilities

 
                                                           2021   2020 
                                                           GBPm   GBPm 
========================================================  =====  ===== 
Maturity 
 date:         over five years                              347     50 
 between four and five years                              1,049  1,046 
 between three and four years                               294      - 
 -------------------------------------------------------  -----  ----- 
Total facilities available for more than three years      1,690  1,096 
--------------------------------------------------------  -----  ----- 
 
Between two and three years                                   -     20 
Between one and two years                                     -      - 
Within one year                                               -      - 
========================================================  =====  ===== 
Total                                                     1,690  1,116 
========================================================  =====  ===== 
 

The undrawn facilities are comprised of British Land undrawn facilities of GBP1,690m plus undrawn facilities of Hercules Unit Trust totalling GBPnil.

15 Dividends

As announced on 9 October 2020, dividend payments were resumed in the year ended 31 March 2021 following the temporary suspension in March 2020. Under the Group's revised dividend policy, going forward the dividend will be paid semi-annually, fixed at 80% of Underlying earnings per share based on the most recently completed six-month period.

The Final dividend payment for the six-month period ending 31 March 2021 will be 6.64p. Payment will be made on 6 August 2021 to shareholders on the register at close of business on 25 June 2021. The Final dividend will be a Property Income Distribution and no SCRIP alternative will be offered.

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   2021   2020 
Payment date                       Dividend                     share   GBPm   GBPm 
=================================  =========================  =======  =====  ===== 
Current year dividends 
06.08.2021                         2021 Final                    6.64 
19.02.2021                         2021 Interim                  8.40     78 
                                                                15.04 
                                                              ------- 
Prior year dividends 
07.02.2020                         2020 2nd interim            7.9825            74 
08.11.2019                         2020 1st interim            7.9825            74 
                                                              ------- 
                                                                15.97 
                                                              ------- 
 
02.08.2019                         2019 4th interim           7.75(1)            73 
03.05.2019                         2019 3rd interim              7.75            74 
---------------------------------  -------------------------  -------  -----  ----- 
Dividends in consolidated statement of changes in equity                  78    295 
Dividends settled in shares                                                -      - 
------------------------------------------------------------  -------  -----  ----- 
Dividends settled in cash                                                 78    295 
Timing difference relating to payment of withholding 
 tax                                                                     (2)      - 
------------------------------------------------------------  -------  -----  ----- 
Dividends in cash flow statement                                          76    295 
------------------------------------------------------------  -------  -----  ----- 
 

1. Dividend split half PID, half non-PID.

16 Share capital and reserves

 
                                                       2021          2020 
==============================================  ===========  ============ 
Number of ordinary shares in issue at 1 April   937,938,097   960,589,072 
Share issues                                         43,895     1,144,135 
Repurchased and cancelled                                 -  (23,795,110) 
==============================================  ===========  ============ 
At 31 March                                     937,981,992   937,938,097 
==============================================  ===========  ============ 
 

Of the issued 25p ordinary shares, 7,376 shares were held in the ESOP trust (2019/20: 7,376), 11,266,245 shares were held as treasury shares (2019/20: 11,266,245) and 926,708,371 shares were in free issue (2019/20: 926,664,476). No treasury shares were acquired by the ESOP trust during the year. All issued shares are fully paid.

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 Retail sector includes leisure, as this is often incorporated into Retail schemes. The Other/unallocated sector includes residential properties.

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. 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.

From 1 April 2021, the Group intends to change to reporting under two principal sectors, Campuses and Retail & Fulfilment, in line with changes to how management intends to review the performance of the business.

Segment result

 
                            Offices        Retail      Canada Water    Other/unallocated      Total 
========================  ============  ============  ==============  ===================  ============ 
                           2021   2020   2021   2020    2021    2020       2021      2020   2021   2020 
                           GBPm   GBPm   GBPm   GBPm    GBPm    GBPm       GBPm      GBPm   GBPm   GBPm 
========================  =====  =====  =====  =====  ======  ======  =========  ========  =====  ===== 
Gross rental income 
British Land Group          156    166    195    236       7       9          3         4    361    415 
Share of joint ventures 
 and funds                   86     71     56     71       -       -          -         -    142    142 
========================  =====  =====  =====  =====  ======  ======  =========  ========  =====  ===== 
Total                       242    237    251    307       7       9          3         4    503    557 
========================  =====  =====  =====  =====  ======  ======  =========  ========  =====  ===== 
 
Net rental income 
British Land Group          134    145    126    189       5       8          -         4    265    346 
Share of joint ventures 
 and funds                   69     63     28     66       -       -          -         -     97    129 
========================  =====  =====  =====  =====  ======  ======  =========  ========  =====  ===== 
Total                       203    208    154    255       5       8          -         4    362    475 
========================  =====  =====  =====  =====  ======  ======  =========  ========  =====  ===== 
 
Operating result 
British Land Group          133    146    121    193       1       3       (48)      (42)    207    300 
Share of joint ventures 
 and funds                   69     57     28     60       -       -          -         -     97    117 
========================  =====  =====  =====  =====  ======  ======  =========  ========  =====  ===== 
Total                       202    203    149    253       1       3       (48)      (42)    304    417 
========================  =====  =====  =====  =====  ======  ======  =========  ========  =====  ===== 
 
 
                                                                       2021     2020 
Reconciliation to Underlying Profit                                    GBPm     GBPm 
==================================================================  =======  ======= 
Operating result                                                        304      417 
Net financing costs                                                   (103)    (111) 
==================================================================  =======  ======= 
Underlying Profit                                                       201      306 
==================================================================  =======  ======= 
 
Reconciliation to loss on ordinary activities before taxation 
==================================================================  =======  ======= 
Underlying Profit                                                       201      306 
Capital and other                                                   (1,257)  (1,434) 
Underlying Profit attributable to non-controlling interests               3       12 
==================================================================  =======  ======= 
Loss on ordinary activities before taxation                         (1,053)  (1,116) 
==================================================================  =======  ======= 
 
Reconciliation to Group revenue 
==================================================================  =======  ======= 
Gross rental income per operating segment result                        503      557 
Less share of gross rental income of joint ventures and funds         (142)    (142) 
Plus share of gross rental income attributable to non-controlling 
 interests                                                               16       18 
==================================================================  =======  ======= 
Gross rental income (Note 3)                                            377      433 
==================================================================  =======  ======= 
 
Trading property sales proceeds                                           -       87 
Service charge income                                                    64       64 
Management and performance fees (from joint ventures and funds)           7        8 
Other fees and commissions                                               20       21 
==================================================================  =======  ======= 
Revenue (consolidated income statement)                                 468      613 
==================================================================  =======  ======= 
 

A reconciliation between net financing costs in the consolidated income statement and net financing costs of GBP103m (2019/20: GBP111m) in the segmental disclosures above can be found within Table A in the supplementary disclosures. Of the total revenues above, GBPnil (2019/20: GBPnil) was derived from outside the UK.

Segment assets

 
                            Offices        Retail      Canada Water    Other/unallocated       Total 
========================  ============  ============  ==============  ===================  ============= 
                           2021   2020   2021   2020    2021    2020       2021      2020   2021    2020 
                           GBPm   GBPm   GBPm   GBPm    GBPm    GBPm       GBPm      GBPm   GBPm    GBPm 
========================  =====  =====  =====  =====  ======  ======  =========  ========  =====  ====== 
Property assets 
British Land Group        3,622  4,470  1,988  2,960     387     364        121       147  6,118   7,941 
Share of joint ventures 
 and funds                2,418  2,323    604    913       -       -          -         -  3,022   3,236 
========================  =====  =====  =====  =====  ======  ======  =========  ========  =====  ====== 
Total                     6,040  6,793  2,592  3,873     387     364        121       147  9,140  11,177 
========================  =====  =====  =====  =====  ======  ======  =========  ========  =====  ====== 
 

Reconciliation to net assets

 
                                        2021     2020 
British Land Group                      GBPm     GBPm 
===================================  =======  ======= 
Property assets                        9,140   11,177 
Other non-current assets                  51      131 
===================================  =======  ======= 
Non-current assets                     9,191   11,308 
===================================  =======  ======= 
 
Other net current liabilities          (203)    (252) 
Adjusted net debt                    (2,938)  (3,854) 
Other non-current liabilities              -        - 
===================================  =======  ======= 
EPRA net tangible assets (diluted)     6,050    7,202 
Non-controlling interests                 59      112 
EPRA adjustments                       (126)    (167) 
===================================  =======  ======= 
Net assets                             5,983    7,147 
===================================  =======  ======= 
 

Supplementary disclosures

Unaudited unless otherwise stated

Table A: Summary income statement and balance sheet (Unaudited)

Summary income statement based on proportional consolidation for the year ended 31 March 2021

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 2021                         Year ended 31 March 2020 
                    ===============================================  =============================================== 
                                Joint     Less non-                              Joint     Less non- 
                             ventures   controlling  Proportionally           ventures   controlling  Proportionally 
                    Group   and funds     interests    consolidated  Group   and funds     interests    consolidated 
                     GBPm        GBPm          GBPm            GBPm   GBPm        GBPm          GBPm            GBPm 
==================  =====  ==========  ============  ==============  =====  ==========  ============  ============== 
Gross rental 
 income(1)            382         142          (16)             508    436         142          (18)             560 
Property operating 
 expenses           (105)        (45)             9           (141)   (70)        (13)             1            (82) 
                    =====  ==========  ============  ==============  =====  ==========  ============  ============== 
Net rental income     277          97           (7)             367    366         129          (17)             478 
 
Administrative 
 expenses            (74)           -             -            (74)   (73)         (1)             -            (74) 
Net fees and other 
 income                11           -             -              11     12           -             1              13 
                    =====  ==========  ============  ==============  =====  ==========  ============  ============== 
Ungeared income 
 return               214          97           (7)             304    305         128          (16)             417 
 
Net financing 
 costs               (62)        (45)             4           (103)   (66)        (49)             4           (111) 
==================  =====  ==========  ============  ==============  =====  ==========  ============  ============== 
Underlying Profit     152          52           (3)             201    239          79          (12)             306 
==================  =====  ==========  ============  ==============  =====  ==========  ============  ============== 
Underlying 
 taxation            (26)           -             -            (26)      -           -             -               - 
==================  =====  ==========  ============  ==============  =====  ==========  ============  ============== 
Underlying Profit 
 after 
 taxation             126          52           (3)             175    239          79          (12)             306 
==================  =====  ==========  ============  ==============  =====  ==========  ============  ============== 
Valuation movement                                          (1,298)                                          (1,389) 
Other capital and 
 taxation 
 (net)(2)                                                        87                                               57 
==================  =====  ==========  ============  ==============  =====  ==========  ============  ============== 
Result 
 attributable 
 to shareholders 
 of 
 the Company                                                (1,036)                                          (1,026) 
==================  =====  ==========  ============  ==============  =====  ==========  ============  ============== 
 

1. Group gross rental income includes GBP5m (2019/20: GBP3m) of all-inclusive rents relating to service charge income.

2. Includes other comprehensive income, movement in dilution of share options and the movement in items excluded for EPRA NTA.

Summary balance sheet based on proportional consolidation as at 31 March 2021

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 Tangible 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 
                            Share                                 on                Valuation                  EPRA     EPRA 
                         of joint         Less           derivatives                  surplus                   NTA      NTA 
                         ventures         non-           and related                       on                    31       31 
                              and  controlling    Share         debt        Lease     trading                 March    March 
                  Group     funds    interests  options  adjustments  liabilities  properties  Intangibles     2021     2020 
                   GBPm      GBPm         GBPm     GBPm         GBPm         GBPm        GBPm         GBPm     GBPm     GBPm 
==============  =======  ========  ===========  =======  ===========  ===========  ==========  ===========  =======  ======= 
Retail 
 properties       2,183       646        (163)        -            -         (74)           -            -    2,592    3,873 
Office 
 properties       3,663     2,421            -        -            -         (53)           9            -    6,040    6,793 
Canada Water 
 properties         387         -            -        -            -            -           -            -      387      364 
Other 
 properties         121         -            -        -            -            -           -            -      121      147 
==============  =======  ========  ===========  =======  ===========  ===========  ==========  ===========  =======  ======= 
Total 
 properties(1)    6,354     3,067        (163)        -            -        (127)           9            -    9,140   11,177 
Investments in 
 joint 
 ventures and 
 funds            2,120   (2,120)            -        -            -            -           -            -        -        - 
Other 
 investments         20        30            -        -            -            -           -         (12)       38      125 
Other net 
 (liabilities) 
 assets           (262)      (74)            5       14            -          127           -            -    (190)    (246) 
Net debt        (2,249)     (903)           99        -          115            -           -            -  (2,938)  (3,854) 
==============  =======  ========  ===========  =======  ===========  ===========  ==========  ===========  =======  ======= 
Net assets        5,983         -         (59)       14          115            -           9         (12)    6,050    7,202 
==============  =======  ========  ===========  =======  ===========  ===========  ==========  ===========  =======  ======= 
EPRA NTA per 
 share 
 (Note 2)                                                                                                      648p     773p 
==============  =======  ========  ===========  =======  ===========  ===========  ==========  ===========  =======  ======= 
 

1. Included within the total property value of GBP9,140m (2019/20: GBP11,177m) are right-of-use assets net of lease liabilities of GBP8m (2019/20: GBP20m), which in substance, relate to properties held under leasing agreements. The fair value of right-of-use assets are determined by calculating the present value of net rental cash flows over the term of the lease agreements.

EPRA Net Tangible Assets movement

 
                            Year ended        Year ended 
                           31 March 2021     31 March 2020 
=======================  ================  ================ 
                                    Pence             Pence 
                                      per               per 
                             GBPm   share      GBPm   share 
=======================  ========  ======  ========  ====== 
Opening EPRA NTA            7,202     773     8,639     904 
Income return                 175      19       306      33 
Capital return            (1,249)   (136)   (1,323)   (139) 
Dividend paid                (78)     (8)     (295)    (31) 
Purchase of own shares          -       -     (125)       6 
=======================  ========  ======  ========  ====== 
Closing EPRA NTA            6,050     648     7,202     773 
=======================  ========  ======  ========  ====== 
 

Table B: EPRA Performance measures

EPRA Performance measures summary table

 
                                                           2021            2020 
                                                       =============  =============== 
                                                               Pence            Pence 
                                                                 per              per 
                                                        GBPm   share   GBPm     share 
=====================================================  =====  ======  =====  ======== 
EPRA Earnings   - basic                                  175    18.9    306    32.8 
 - diluted                                               175    18.8    306    32.7 
 ====================================================  =====  ======  =====  ====== 
EPRA Net Initial Yield                                          4.6%             4.6% 
EPRA 'topped-up' Net Initial Yield                              5.2%             5.1% 
EPRA Vacancy Rate                                               8.3%             6.3% 
=====================================================  =====  ======  =====  ======== 
 
 
 
                   2021                   2020 
=========  =====================  ===================== 
                       Net asset              Net asset 
                           value                  value 
                             per                    per 
           Net assets      share  Net assets      share 
                 GBPm    (pence)        GBPm    (pence) 
=========  ==========  =========  ==========  ========= 
EPRA NTA        6,050        648       7,202        773 
EPRA NRV        6,599        707       7,872        845 
EPRA NDV        5,678        609       6,762        726 
=========  ==========  =========  ==========  ========= 
 

Calculation and reconciliation of EPRA/IFRS earnings and EPRA/IFRS earnings per share

 
                                                                         2021     2020 
(Audited)                                                                GBPm     GBPm 
====================================================================  =======  ======= 
Loss attributable to the shareholders of the Company                  (1,031)  (1,027) 
Exclude: 
Group - current taxation                                                   25      (4) 
Group - deferred taxation                                                   5        2 
Joint ventures and funds - taxation                                       (1)        - 
Group - valuation movement                                                888    1,105 
Group - profit on disposal of investment properties and investments      (28)      (1) 
Group - profit on disposal of trading properties                            -     (17) 
Joint ventures and funds - net valuation movement (including 
 result on disposals)                                                     410      284 
Joint ventures and funds - capital financing costs                          -       22 
Changes in fair value of financial instruments and associated 
 close-out costs                                                         (12)       41 
Non-controlling interests in respect of the above                        (55)     (99) 
====================================================================  =======  ======= 
Underlying Profit                                                         201      306 
====================================================================  =======  ======= 
Group - underlying current taxation                                      (26)        - 
====================================================================  =======  ======= 
EPRA earnings - basic and diluted                                         175      306 
====================================================================  =======  ======= 
 
Loss attributable to the shareholders of the Company                  (1,031)  (1,027) 
Dilutive effect of 2015 convertible bond                                    -        - 
====================================================================  =======  ======= 
IFRS earnings - diluted                                               (1,031)  (1,027) 
====================================================================  =======  ======= 
 
 
                                                          2021      2020 
                                                        Number    Number 
                                                       million   million 
====================================================  ========  ======== 
Weighted average number of shares                          938       945 
Adjustment for treasury shares                            (11)      (11) 
====================================================  ========  ======== 
IFRS/EPRA Weighted average number of shares (basic)        927       934 
====================================================  ========  ======== 
Dilutive effect of share options                             -         - 
Dilutive effect of ESOP shares                               3         3 
====================================================  ========  ======== 
EPRA Weighted average number of shares (diluted)           930       937 
====================================================  ========  ======== 
Remove anti-dilutive effect                                (3)       (3) 
====================================================  ========  ======== 
IFRS Weighted average number of shares (diluted)           927       934 
====================================================  ========  ======== 
 

Net assets per share (Audited)

EPRA published its latest Best Practices Recommendations in October 2019 which included three new Net Asset Valuation metrics, EPRA Net Tangible Assets (NTA), EPRA Net Reinstatement Value (NRV) and EPRA Net Disposal Value (NDV). These metrics are effective from 1 January 2020 and have been adopted in the current year. A reconciliation between the new EPRA net asset valuation metrics and the previous measures is shown below.

 
                                                     2021           2020 
===============================================  =============  ============= 
                                                         Pence          Pence 
                                                           per            per 
                                                  GBPm   share   GBPm   share 
===============================================  =====  ======  =====  ====== 
Balance sheet net assets                         5,983          7,147 
===============================================  =====  ======  =====  ====== 
Deferred tax arising on revaluation movements        -              6 
Mark-to-market on derivatives and related debt 
 adjustments                                       115            141 
Dilution effect of share options                    14             18 
Surplus on trading properties                        9             13 
Intangible assets                                 (12)           (11) 
Less non-controlling interests                    (59)          (112) 
===============================================  =====  ======  =====  ====== 
EPRA Net Tangible Assets (NTA)                   6,050     648  7,202     773 
===============================================  =====  ======  =====  ====== 
Intangible assets                                   12             11 
Purchasers' costs                                  537            659 
-----------------------------------------------  -----  ------  -----  ------ 
EPRA Net Reinstatement Value (NRV)               6,599     707  7,872     845 
-----------------------------------------------  -----  ------  -----  ------ 
Deferred tax arising on revaluation movements      (1)            (9) 
Purchasers' costs                                (537)          (659) 
Mark-to-market on derivatives and related debt 
 adjustments                                     (115)          (141) 
Mark-to-market on debt                           (268)          (301) 
===============================================  =====  ======  =====  ====== 
EPRA Disposal Value (NDV)                        5,678     609  6,762     726 
===============================================  =====  ======  =====  ====== 
 

EPRA NTA is considered to be the most relevant measure for the Group and is now the primary measure of net assets, replacing the previously reported EPRA NAV metric. EPRA NTA assumes that entities buy and sell assets, thereby crystallising certain levels of unavoidable deferred tax. Due to the Group's REIT status, deferred tax is only provided at each balance sheet date on properties outside the REIT regime. As a result deferred taxes are excluded from EPRA NTA for properties within the REIT regime. For properties outside of the REIT regime, deferred tax is included to the extent that it is expected to crystallise, based on the Group's track record and tax structuring. EPRA NRV reflects what would be needed to recreate the Group through the investment markets based on its current capital and financing structure. EPRA NDV reflects shareholders' value which would be recoverable under a disposal scenario, with deferred tax and financial instruments recognised at the full extent of their liability.

 
                                           2021      2020 
                                         Number    Number 
                                        million   million 
=====================================  ========  ======== 
Number of shares at year end                938       938 
Adjustment for treasury shares             (11)      (11) 
=====================================  ========  ======== 
IFRS/EPRA number of shares (basic)          927       927 
=====================================  ========  ======== 
Dilutive effect of share options              3         3 
Dilutive effect of ESOP shares                3         2 
=====================================  ========  ======== 
IFRS/EPRA number of shares (diluted)        933       932 
=====================================  ========  ======== 
 

Reconciliation of new EPRA net asset valuation metrics to previous metrics

 
                           31 March  31 March 
                               2021      2020 
                               GBPm      GBPm 
=========================  ========  ======== 
EPRA Net Tangible Assets      6,050     7,202 
Adjustment for: 
Intangibles                      12        11 
EPRA Net Asset Value          6,062     7,213 
-------------------------  --------  -------- 
Per share measure              650p      774p 
-------------------------  --------  -------- 
 
 
                               31 March  31 March 
                                   2021      2020 
                                   GBPm      GBPm 
=============================  ========  ======== 
EPRA Net Reinstatement Value      6,599     7,872 
Adjustment for: 
Purchasers' costs                 (537)     (659) 
EPRA Net Asset Value              6,062     7,213 
-----------------------------  --------  -------- 
Per share measure                  650p      774p 
-----------------------------  --------  -------- 
 

As the Group's EPRA NDV is the same as the EPRA NNNAV, there are no reconciling items.

 
                          31 March  31 March 
                              2021      2020 
                              GBPm      GBPm 
========================  ========  ======== 
EPRA Net Disposal Value      5,678     6,762 
------------------------  --------  -------- 
EPRA NNNAV                   5,678     6,762 
------------------------  --------  -------- 
Per share measure             609p      726p 
------------------------  --------  -------- 
 

EPRA Net Initial Yield and 'topped-up' Net Initial Yield (Unaudited)

 
                                                                2021     2020 
                                                                GBPm     GBPm 
===========================================================  =======  ======= 
Investment property - wholly-owned                             6,118    7,941 
Investment property - share of joint ventures and funds        3,022    3,236 
Less developments, residential and land                      (1,224)  (1,140) 
                                                             =======  ======= 
Completed property portfolio                                   7,916   10,037 
Allowance for estimated purchasers' costs                        648      724 
===========================================================  =======  ======= 
Gross up completed property portfolio valuation (A)            8,564   10,761 
===========================================================  =======  ======= 
Annualised cash passing rental income                            425      517 
Property outgoings                                              (29)     (21) 
===========================================================  =======  ======= 
Annualised net rents (B)                                         396      496 
===========================================================  =======  ======= 
Rent expiration of rent-free periods and fixed uplifts(1)         51       49 
===========================================================  =======  ======= 
'Topped-up' net annualised rent (C)                              447      545 
EPRA Net Initial Yield (B/A)                                    4.6%     4.6% 
EPRA 'topped-up' Net Initial Yield (C/A)                        5.2%     5.1% 
===========================================================  =======  ======= 
Including fixed/minimum uplifts received in lieu of rental 
 growth                                                            5       10 
===========================================================  =======  ======= 
Total 'topped-up' net rents (D)                                  452      555 
Overall 'topped-up' Net Initial Yield (D/A)                     5.3%     5.2% 
===========================================================  =======  ======= 
'Topped-up' net annualised rent                                  447      545 
ERV vacant space                                                  42       38 
Reversions                                                        12       13 
===========================================================  =======  ======= 
Total ERV (E)                                                    501      596 
Net Reversionary Yield (E/A)                                    5.9%     5.5% 
===========================================================  =======  ======= 
 

1. The weighted average period over which rent-free periods expire is one year (2019/20: one year).

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 2021, plus an allowance for estimated purchasers costs. Estimated purchasers 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

 
                                                                2021   2020 
                                                                GBPm   GBPm 
=============================================================  =====  ===== 
Annualised potential rental value of vacant premises              42     38 
Annualised potential rental value for the completed property 
 portfolio                                                       507    603 
EPRA Vacancy Rate                                               8.3%   6.3% 
=============================================================  =====  ===== 
 

EPRA Cost Ratios (Unaudited)

 
                                                                      2021   2020 
                                                                      GBPm   GBPm 
===================================================================  =====  ===== 
Property operating expenses                                             96     69 
Administrative expenses                                                 74     73 
Share of joint ventures and funds expenses                              45     14 
        Performance and management fees (from joint ventures 
Less:    and funds)                                                    (7)    (8) 
 Net other fees and commissions                                        (4)    (5) 
 Ground rent costs and operating expenses de facto included 
  in rents                                                            (21)   (16) 
 ==================================================================  =====  ===== 
EPRA Costs (including direct vacancy costs) (A)                        183    127 
Direct vacancy costs                                                  (31)   (30) 
===================================================================  =====  ===== 
EPRA Costs (excluding direct vacancy costs) (B)                        152     97 
Gross Rental Income less ground rent costs and operating 
 expenses de facto included in rents                                   341    398 
Share of joint ventures and funds (GRI less ground rent costs)         142    142 
===================================================================  =====  ===== 
Total Gross Rental Income less ground rent costs (C)                   483    540 
 
EPRA Cost Ratio (including direct vacancy costs) (A/C)               37.9%  23.5% 
EPRA Cost Ratio (excluding direct vacancy costs) (B/C)               31.5%  18.0% 
===================================================================  =====  ===== 
 
Impairment of tenant debtors, tenant incentives and accrued 
 income (D)                                                             83     26 
Adjusted EPRA Cost ratio (including direct vacancy costs 
 and excluding impairment of tenant debtors, accrued income, 
 tenant incentives and guaranteed rent increases) (A-D)/C            20.7%  18.7% 
Adjusted EPRA Cost ratio (excluding direct vacancy costs 
 and excluding impairment of tenant debtors, accrued income, 
 tenant incentives and guaranteed rent increases) (B-D)/C            14.3%  13.1% 
===================================================================  =====  ===== 
 
Overhead and operating expenses capitalised (including share 
 of joint ventures and funds)                                            6      6 
===================================================================  =====  ===== 
 

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. In addition to the standard EPRA Cost ratios (both including and excluding direct vacancy costs), adjusted versions of these ratios have also been presented which remove the impact of the impairment of tenant debtors, tenant incentives and accrued income which are exceptional items in the current year, to show the impact of these items on the ratios.

Table C: Gross rental income

 
                                                                2021   2020 
                                                                GBPm   GBPm 
=============================================================  =====  ===== 
Rent receivable(1)                                               493    558 
Spreading of tenant incentives and guaranteed rent increases      11    (3) 
Surrender premia                                                   4      5 
=============================================================  =====  ===== 
Gross rental income                                              508    560 
=============================================================  =====  ===== 
 

1. Group gross rental income includes GBP5m (2019/20: GBP3m) of all-inclusive rents relating to service charge income.

The current and prior year information is presented on a proportionally consolidated basis, excluding non-controlling interests.

Table D: Property related capital expenditure

 
                                               Year ended 31 March      Year ended 31 March 
                                                       2021                     2020 
                                             =======================  ======================= 
                                                        Joint                    Joint 
                                                     ventures                 ventures 
                                                          and                      and 
                                             Group      funds  Total  Group      funds  Total 
                                              GBPm       GBPm   GBPm   GBPm       GBPm   GBPm 
===========================================  =====  =========  =====  =====  =========  ===== 
Acquisitions                                    52          -     52     94         54    148 
Development                                    104         25    129    156        126    282 
Investment properties 
  Incremental lettable space                     1          -      1      1          -      1 
  No incremental lettable space                 31         28     59     82         20    102 
  Tenant incentives                              2          5      7      9          6     15 
  Other material non-allocated types 
   of expenditure                                5          1      6      5          1      6 
Capitalised interest                             6          2      8      4          4      8 
-------------------------------------------  -----  ---------  -----  -----  ---------  ----- 
Total property related capital expenditure     201         61    262    351        211    562 
-------------------------------------------  -----  ---------  -----  -----  ---------  ----- 
Conversion from accrual to cash basis           34         14     48      9         11     20 
-------------------------------------------  -----  ---------  -----  -----  ---------  ----- 
Total property related capital expenditure 
 on cash basis                                 235         75    310    360        222    582 
===========================================  =====  =========  =====  =====  =========  ===== 
 

The above is presented on a proportionally consolidated basis, excluding non-controlling interests and business combinations. The 'Other material non-allocated types of expenditure' category contains capitalised staff costs of GBP6m (2019/20: GBP6m).

SUPPLEMENTARY TABLES

Data includes Group's share of Joint Ventures and Funds (includes Hercules Unit Trust)

FY21 rent collection(1)

 
 Rent due between 25         Offices   Retail(2)    Total 
  March 2020 and 24 March 
  2021 
                            --------  ---------- 
 Received                      99%        71%        83% 
 Rent deferrals                1%         5%         3% 
 Rent forgiven                  -         9%         5% 
 Moved to administration        -         3%         2% 
 Outstanding                    -         12%        7% 
--------------------------  --------  ----------  -------- 
 Total                        100%       100%       100% 
-------------------------- 
                             GBP225m    GBP305m    GBP530m 
--------------------------  --------  ----------  -------- 
 Collection of adjusted 
  billing(3)                  100%        83%        90% 
--------------------------  --------  ----------  -------- 
 

March 2021 rent collection(1)

 
 Rent due between 25       Offices   Retail(2)   Total 
  March and 18 May 
                          --------  ---------- 
 Received                    98%        72%       84% 
 Rent deferrals               -          -         - 
 Rent forgiven                -         1%         1% 
 Customer paid monthly       1%         5%         3% 
 Outstanding                 1%         22%       12% 
------------------------  --------  ----------  ------- 
 Total                      100%       100%       100% 
------------------------ 
                           GBP45m     GBP50m     GBP95m 
------------------------  --------  ----------  ------- 
 Collection of adjusted 
  billing(3)                 99%        76%       87% 
------------------------  --------  ----------  ------- 
 

(1) As at 18 May

(2) Includes non-office customers located within our London campuses

(3) Total billed rents exclusive of rent deferrals, rent forgiven and tenants moved to monthly payments

 
Since 1 April 2020                          Price        Price  Annual Passing 
                                           (100%)   (BL Share)            Rent 
Purchases                     Sector         GBPm         GBPm        GBPm (1) 
----------------------------  ----------  -------  -----------  -------------- 
Completed 
A1 Retail Park, Biggleswade   Retail           49           49               5 
Heritage House, Enfield(2)    Logistics        87           87               2 
 
Exchanged 
Hercules Unit Trust units                     148          148              12 
 
Total                                         284          284              19 
                                          -------  ----------- 
(1) BL share of annualised rent topped up for rent frees 
(2) Exchanged and completed post period end. 
 
 
Since 1 April 2020                                     Price        Price  Annual Passing 
                                                      (100%)   (BL Share)            Rent 
Sales                                  Sector           GBPm         GBPm        GBPm (1) 
-------------------------------------  ------------  -------  -----------  -------------- 
Completed 
Tescos, Milton Keynes & Peterborough   Retail            149          149               9 
Portfolio of Sainsbury's stores(2)     Retail            102          102               - 
B&Qs, Various                          Retail            100          100               8 
Beaumont Leys (Bradgate Mall)          Retail             63           63               5 
Beaumont Leys (Fletcher Mall)(3)       Retail              9            9               1 
David Lloyd, Northwood                 Retail             51           51               2 
Tesco, Brislington                     Retail             42           42               3 
Valentine Retail Park, Lincoln         Retail             24            9               1 
Picton Place / James Street, 
 London                                Retail             14           14               1 
Studlands Retail Park, New 
 Market                                Retail             11           11               1 
Debenhams, Chelmsford                  Retail              4            4               - 
Deepdale Retail Park (unit 
 A), Preston                           Retail              4            2               - 
Marble Arch House, York House 
 & 10 Portman Sq                       Offices           535          401              12 
Clarges, Mayfair                       Offices           177          177               5 
Yalding House, London                  Offices            42           42               2 
Orwell House, London                   Offices            23           23               1 
Clearwater Development, Theale         Residential        12           12               - 
 
Exchanged 
St Anne's, Regents Place               Residential         6            6               - 
 
Total                                                  1,368        1,217              51 
---------------------------------------------------  -------  -----------  -------------- 
(1) BL share of annualised rent topped up for rent frees 
(2) The portfolio was the indirect ownership (25.5%) of the reversionary 
 interest of 26 Sainsbury's stores. 
(3) Exchanged and completed post period end. 
 
 
Portfolio Valuation by Sector 
--------------------------------------------------------------------------------- 
At 31 March 2021               Group     JVs &   Total         Change%(1) 
                                         Funds 
                                GBPm      GBPm    GBPm       H1       H2       FY 
---------------------------  -------  --------  ------  -------  -------  ------- 
West End                       3,297       167   3,464    (2.5)    (0.8)    (3.2) 
City                             317     2,251   2,568    (4.0)    (0.7)    (4.6) 
Offices                        3,614     2,418   6,032    (3.1)    (0.8)    (3.8) 
---------------------------  -------  --------  ------  -------  -------  ------- 
Retail Parks                     831       536   1,367   (13.1)    (6.5)   (18.6) 
Shopping Centre                  409       487     896   (18.1)   (19.9)   (35.7) 
Superstores                       47         -      47    (0.2)      1.7      0.7 
Department Stores                 10         -      10   (34.3)   (32.3)   (55.3) 
High Street                       91         1      92   (14.0)    (9.8)   (22.4) 
Leisure                          162        18     180   (11.3)    (3.3)   (14.2) 
Retail                         1,550     1,042   2,592   (14.9)   (11.4)   (24.7) 
---------------------------  -------  --------  ------  -------  -------  ------- 
Residential(2)                   121         -     121    (9.1)    (1.9)   (10.6) 
---------------------------  -------  --------  ------  -------  -------  ------- 
Canada Water                     387         -     387    (6.0)      3.4    (2.5) 
---------------------------  -------  --------  ------  -------  -------  ------- 
Total                          5,672     3,460   9,132    (7.3)    (3.8)   (10.8) 
---------------------------  -------  --------  ------  -------  -------  ------- 
Standing Investments           4,559     3,357   7,916    (8.1)    (4.5)   (12.4) 
Developments                   1,113       103   1,216    (0.9)      1.9    (0.6) 
---------------------------  -------  --------  ------  -------  -------  ------- 
(1) Valuation movement during the Year (after taking account of 
 capital expenditure) of properties held at the balance sheet date, 
 including developments (classified by end use), purchases and sales 
(2) Stand-alone residential 
 
 
Gross Rental Income(1) 
----------------------------------------------------------------------------------------------------------------- 
Accounting Basis GBPm                          12 months to 31 March 2021        Annualised as at 31 March 2021 
                                                Group        JVs &      Total       Group        JVs &      Total 
                                                             Funds                               Funds 
-----------------------------------------  ----------  -----------  ---------  ----------  -----------  --------- 
West End                                          131           18        149         116            7        123 
City                                               16           80         96           6           77         83 
Offices                                           147           98        245         122           84        206 
-----------------------------------------  ----------  -----------  ---------  ----------  -----------  --------- 
Retail Parks                                       84           51        135          71           46        117 
Shopping Centre                                    50           43         93          40           40         80 
Superstores                                         5            -          5           3            -          3 
Department Stores                                   1            -          1           1            -          1 
High Street                                         5            -          5           5            -          5 
Leisure                                            12            1         13          12            1         13 
Retail                                            157           95        252         132           87        219 
-----------------------------------------  ----------  -----------  ---------  ----------  -----------  --------- 
Residential(2)                                      3            -          3           1            -          1 
-----------------------------------------  ----------  -----------  ---------  ----------  -----------  --------- 
Canada Water                                        7            -          7           -            -          - 
-----------------------------------------  ----------  -----------  ---------  ----------  -----------  --------- 
Total                                             314          193        507         255          171        426 
-----------------------------------------  ----------  -----------  ---------  ----------  -----------  --------- 
Canada Water is now excluded from the standing investment analysis as it is valued as a development 
 asset on a residualised basis 
 (1) Gross rental income will differ from annualised valuation rents due to accounting adjustments 
 for fixed & minimum contracted rental uplifts and lease incentives 
(2) Stand-alone residential 
 
 
Portfolio Net 
Yields(1,2) 
                                                      -------------------------------------------------------------- 
As at 31 March 2021                 EPRA net   EPRA topped up  Overall         Net         Net           Net     ERV 
                               initial yield      net initial   topped  equivalent  equivalent  reversionary  Growth 
                                           %            yield   up net       yield       yield         yield    %(5) 
                                                         %(3)  initial           %    movement             % 
                                                                 yield                     bps 
                                                                  %(4) 
                              --------------  ---------------  -------  ----------  ----------  ------------  ------ 
West End                                 3.7              4.4      4.4         4.5          13           5.3     2.0 
City                                     3.0              3.8      3.8         4.4           2           5.0   (1.6) 
Offices                                  3.4              4.1      4.1         4.5           9           5.1     0.7 
----------------------------  --------------  ---------------  -------  ----------  ----------  ------------  ------ 
Retail Parks                             7.8              8.1      8.2         7.5          45           7.4  (15.2) 
Shopping Centre                          6.8              7.1      7.3         7.6         143           7.1  (20.3) 
Superstores                              5.9              7.3      7.3         5.7        (31)           5.9     0.2 
Department Stores                      (0.4)            (0.4)    (0.4)         9.4        (23)          15.1  (23.5) 
High Street                              4.8              5.0      5.0         6.0          42           6.5  (17.1) 
Leisure                                  6.3              6.4      7.0         6.9          90           5.5  (10.3) 
Retail                                   7.1              7.5      7.6         7.4          81           7.2  (16.8) 
----------------------------  --------------  ---------------  -------  ----------  ----------  ------------  ------ 
Total                                    4.6              5.2      5.3         5.4          33           5.9   (7.6) 
----------------------------  --------------  ---------------  -------  ----------  ----------  ------------  ------ 
On a proportionally consolidated basis including the Group's share of joint ventures and funds 
 Canada Water is now excluded from the standing investment analysis as it is valued as a development 
 asset on a residualised basis 
(1) Including notional purchaser's costs 
(2) Excluding committed developments, assets held for development and residential assets 
(3) Including rent contracted from expiry of rent-free periods and fixed uplifts not in lieu 
 of rental growth 
(4) Including fixed/minimum uplifts (excluded from EPRA definition) 
(5) As calculated by MSCI 
 
 
 
 
Total Property Return (as calculated by MSCI) 
------------------------------------------------------------------------------- 
12 months to 31 March            Offices            Retail           Total 
 2021 
%                            British     MSCI   British    MSCI  British   MSCI 
                                Land               Land             Land 
--------------------------  --------  -------  --------  ------  -------  ----- 
Capital Return                 (3.6)    (4.5)    (24.7)  (12.9)   (10.8)  (3.2) 
    - ERV Growth                 0.7    (1.0)    (16.8)   (9.0)    (7.6)  (2.8) 
    - Yield Movement(1)        9 bps   20 bps    81 bps  30 bps   33 bps  1 bps 
Income Return                    3.0      3.8       7.3     5.5      4.2    4.5 
--------------------------  --------  -------  --------  ------  -------  ----- 
Total Property Return          (0.8)    (0.8)    (19.1)   (8.1)    (7.0)    1.2 
--------------------------  --------  -------  --------  ------  -------  ----- 
On a proportionally consolidated basis including the Group's share 
 of joint ventures and funds 
 (1) Net equivalent yield movement 
 
 
 Top 20 Tenants by Sector 
--------------------------------------------------------------------------- 
 As at 31 March 2021    % of retail                             % of office 
                               rent                                    rent 
---------------------  ------------  ------------------------  ------------ 
 Retail                               Offices 
---------------------  ------------  ------------------------  ------------ 
 Next                           5.4   Facebook                          8.6 
 Walgreens (Boots)              4.7   UK Government                     6.9 
 M&S Plc                        4.2   Dentsu Aegis(1)                   4.8 
 Tesco                          3.1   Visa                              4.3 
 J Sainsbury                    3.1   Herbert Smith Freehills           3.5 
 JD Sports                      2.9   Gazprom                           2.9 
 Dixons Carphone                2.9   Microsoft Corp                    2.7 
 Frasers Group                  2.6   TP ICAP Plc                       2.5 
 TJX (Tk Maxx)                  2.5   SMBC                              2.4 
 Virgin                         2.0   Vodafone                          2.2 
 Asda Group                     2.0   Deutsche Bank                     2.1 
 Hutchison Whampoa 
  Ltd                           1.9   Henderson                         1.9 
 DFS Furniture                  1.9   Reed Smith                        1.8 
                                      The Interpublic Group 
 TGI Fridays                    1.8    (McCann)                         1.7 
 River Island                   1.6   Mayer Brown                       1.6 
 H&M                            1.5   Ctrip.com (Skyscanner)            1.5 
 Primark                        1.5   Mimecast Ltd                      1.4 
 Wilkinson                      1.5   Credit Agricole                   1.3 
 Homebase                       1.5   Kingfisher                        1.3 
 Pets at Home                   1.2   Milbank LLP                       1.2 
---------------------  ------------  ------------------------  ------------ 
 

(1) Taking into account their pre-let of 310,000 sq ft at 1 Triton Square, and the break of existing space at 10 & 20 Triton St, % contracted rent would rise to 8.9%

 
Major Holdings 
-------------------------------------------------------------------------------------------------------------------- 
As at 31 March 2021                  BL Share           Sq ft        Rent (100%)       Occupancy               Lease 
                                            %            '000       GBPm pa(1,4)     rate %(2,4)     length yrs(3,4) 
---------------------------  ----------------  --------------  -----------------  --------------  ------------------ 
Broadgate                                  50           4,468                184            92.0                 7.3 
Regent's Place                            100           1,740                 78            96.1                 3.8 
Paddington Central                        100             958                 46            98.4                 5.3 
Meadowhall, Sheffield                      50           1,500                 72            94.9                 4.1 
Drake's Circus, Plymouth                  100           1,190                 14            87.0                 5.4 
Glasgow Fort                               78             510                 16            91.7                 5.4 
Ealing Broadway                           100             540                 13            90.7                 3.4 
Teesside, Stockton                        100             569                 14            90.9                 3.2 
New Mersey, Speke                          68             502                 13            95.8                 4.6 
Giltbrook, Nottingham                     100             198                  7           100.0                 5.6 
---------------------------  ----------------  --------------  -----------------  --------------  ------------------ 
(1) Annualised EPRA contracted rent including 100% of Joint Ventures & Funds 
(2) Includes accommodation under offer or subject to asset management 
(3) Weighted average to 
first break 
(4) Excludes committed and near term developments 
 
 
  Lease Length & Occupancy 
-------------------------------------------------------------------------------------------------------------------- 
As at 31 March 2021                          Average lease length yrs                    Occupancy rate % 
                                              To expiry             To break      EPRA Occupancy    Occupancy(1,2,3) 
-------------------------------------  ----------------  -------------------  ------------------  ------------------ 
West End                                            5.5                  4.3                96.3                96.6 
City                                                8.4                  7.2                84.6                90.7 
Offices                                             6.7                  5.5                91.3                94.1 
-------------------------------------  ----------------  -------------------  ------------------  ------------------ 
Retail Parks                                        6.4                  4.7                93.3                94.7 
Shopping Centre                                     5.7                  4.4                91.0                93.3 
Superstores                                         6.3                  6.3                96.6                96.6 
Department Stores                                  23.1                 22.9                97.0                97.0 
High Street                                         3.7                  3.1                91.0                93.7 
Leisure                                            13.0                 12.8                94.0                94.0 
Retail                                              6.5                  5.1                92.5                94.1 
-------------------------------------  ----------------  -------------------  ------------------  ------------------ 
Total                                               6.6                  5.3                91.8                94.1 
-------------------------------------  ----------------  -------------------  ------------------  ------------------ 
Canada Water is now excluded from the standing investment analysis as it is valued as a development 
 asset on a residualised basis 
 (1) Space allocated to Storey is shown as occupied where there is a Storey tenant in place 
 otherwise it is shown as vacant. Total occupancy would rise from 94.1% to 95.4% if Storey 
 space were assumed to be fully let. 
 (2) Includes accommodation under offer or subject to asset management 
 (3) Where occupiers have entered administration or CVA but are still liable for rates, these 
 are treated as occupied. If units in administration are treated as vacant, then the occupancy 
 rate for Retail would reduce from 94.1% to 90.6%, and total occupancy would reduce from 94.1% 
 to 92.4% 
 
 
 
Portfolio Weighting 
As at 31 March                           2020        2021         2021 
--------------------------  -----------------  ----------  ----------- 
                                            %           %         GBPm 
--------------------------  -----------------  ----------  ----------- 
West End                                 37.7        37.9        3,464 
City                                     23.0        28.1        2,568 
Offices                                  60.7        66.0        6,032 
--------------------------  -----------------  ----------  ----------- 
Retail Parks                             16.5        15.0        1,367 
Shopping Centre                          13.5         9.8          896 
Superstores                               0.8         0.5           47 
Department Stores                         0.3         0.1           10 
High Street                               1.2         1.0           92 
Leisure                                   2.4         2.0          180 
Retail                                   34.7        28.4        2,592 
--------------------------  -----------------  ----------  ----------- 
Residential(1)                            1.3         1.3          121 
--------------------------  -----------------  ----------  ----------- 
Canada Water                              3.3         4.3          387 
--------------------------  -----------------  ----------  ----------- 
Total                                   100.0       100.0        9,132 
--------------------------  -----------------  ----------  ----------- 
London Weighting                          71%         77%        6,984 
--------------------------  -----------------  ----------  ----------- 
(1) Stand-alone residential 
 
 
 
 
 
 
Annualised Rent & Estimated Rental Value (ERV) 
-------------------------------------------------------------------------------------------------------------------- 
As at 31 March 2021                                         Annualised rent          ERV GBPm   Average rent GBPpsf 
                                                        (valuation basis) GBPm(1) 
--------------------------------------------------- 
                                                       Group    JVs & Funds   Total     Total    Contracted(2)   ERV 
---------------------------------------------------  -------  -------------  ------  --------  ---------------  ---- 
West End (3)                                             108              7     115       165             59.9  69.0 
City (3)                                                   7             71      78       124             54.5  55.2 
Offices (3)                                              115             78     193       289             57.6  62.5 
Retail Parks                                              74             50     124       114             22.2  19.6 
Shopping Centre                                           42             43      85        88             24.1  24.1 
Superstores                                                3              -       3         3             17.8  14.4 
Department Stores                                          1              -       1         2              0.7   3.1 
High Street                                                5              -       5         7             11.5  14.5 
Leisure                                                   12              1      13        11             17.3  14.6 
Retail                                                   137             94     231       225             20.6  19.3 
Residential(4)                                             1              -       1         1             12.7  11.4 
Total                                                    253            172     425       515             28.1  30.6 
Canada Water is now excluded from the standing investment analysis as it is valued as a development 
 asset on a residualised basis 
 (1) Gross rents plus, where rent reviews are outstanding, any increases to ERV (as determined 
 by the Group's external valuers), less any ground rents payable under head leases, excludes 
 contracted rent subject to rent free and future uplift 
(2) Annualised rent, plus rent subject to rent free 
(3) GBPpsf metrics shown for office space only 
(4) Stand-alone residential 
 
 
Rent Subject to Open Market Rent Review 
For period to 31 March   2022  2023  2024  2025  2026  2022-24  2022-26 
As at 31 March 2021      GBPm  GBPm  GBPm  GBPm  GBPm     GBPm     GBPm 
West End                    7    22     4    15     1       33       49 
City                        -     1    16     8    27       17       52 
Offices                     7    23    20    23    28       50      101 
Retail Parks               11     9     6     7     6       26       39 
Shopping Centre             6     8     3     3     2       17       22 
Superstores                 -     1     1     -     -        2        2 
Department Stores           -     -     -     -     -        -        - 
High Street                 -     -     -     -     -        -        - 
Leisure                     -     -     -     1     -        -        1 
Retail                     17    18    10    11     8       45       64 
Residential                 1     -     -     -     -        1        1 
Total                      25    41    30    34    36       96      166 
 

On a proportionally consolidated basis including the Group's share of joint ventures and funds

Canada Water is now excluded from the standing investment analysis as it is valued as a development asset on a residualised basis

(1) Reflects standing investment only

 
Rent Subject to Lease Break or Expiry (1) 
------------------------------------------------------------------------------------------------------------------- 
For period to 31 March                         2022     2023     2024     2025     2026       2022-24       2022-26 
As at 31 March 2021                            GBPm     GBPm     GBPm     GBPm     GBPm          GBPm          GBPm 
West End                                         29       24       12        9       12            65            86 
City                                              7        4       13        4       16            24            44 
Offices                                          36       28       25       13       28            89           130 
Retail Parks                                     17       15       24       12       14            56            82 
Shopping Centre                                  16       15       10        8       13            41            62 
Superstores                                       -        2        -        -        -             2             2 
Department Stores                                 -        -        -        -        -             -             - 
High Street                                       2        1        1        1        -             4             5 
Leisure                                           -        -        -        -        1             -             1 
Retail                                           35       33       35       21       28           103           152 
Residential                                       -        -        -        -        -             -             - 
Total                                            71       61       60       34       56           192           282 
% of contracted rent                           14.8     12.8     12.8      7.2     11.8          40.4          59.4 
On a proportionally consolidated basis including the Group's share of joint ventures and funds 
 Canada Water is now excluded from the standing investment analysis as it is valued as a development 
 asset on a residualised basis 
 (1) Reflects standing investment only 
 
 
Recently Completed and Committed Developments 
As at                    Sector   BL Share   100%   PC Calendar Year  Current Value  Cost to come    ERV      Pre-let 
 31 March 2021                               sq ft 
                                         %    '000                             GBPm       GBPm(1)   GBPm(2)       GBPm 
 
100 Liverpool Street    Office          50     520           Q3 2020            403             -      19.4       15.5 
Total Recently Completed                       520                              403             -      19.4       15.5 
 
1 Triton Square(4)      Office         100     365           Q2 2021            443            32      22.8       21.9 
Norton Folgate          Office         100     336           Q3 2023            120           229      22.2          - 
1 Broadgate             Office          50     546           Q2 2025             94           227      20.1        5.0 
Total Committed                              1,247                              657           488      65.1       26.9 
Other Capital Expenditure(3)                                                                   34 
(1) From 1 April 2021. Cost to come excludes notional interest as interest is capitalised 
 individually on each development at our capitalisation rate 
(2) Estimated headline rental value net of rent payable under head leases (excluding tenant 
 incentives) 
(3) Capex committed and underway within our investment portfolio relating to leasing and 
 asset management 
 
 

(4) Completed post year end in May

 
Near Term Development Pipeline 
As at         Sector         BL Share    100%    Earliest      Current      Cost to      ERV        Let &  Planning 
31 March                                sq ft    Start on        Value         Come                 Under  Status 
2021                                                 Site                                           Offer 
                                    %    '000                     GBPm      GBPm(1)  GBPm(2)         GBPm 
 
5 Kingdom 
 Street       Office              100     438     Q2 2022          117          344     30.1            -  Consented 
Aldgate 
 Place, 
 Phase 2      Residential         100     136     Q3 2021           28           99      6.5            -  Consented 
Canada 
 Water, 
 Plot A1(3)   Mixed Use           100     272     Q3 2021           30          218      6.7            -  Consented 
Canada 
 Water, 
 Plot A2(3)   Mixed use           100     248     Q3 2021           16          120     10.4            -  Consented 
Canada 
 Water, 
 Plot K1(3)   Residential         100      62     Q3 2021            -           25        -            -  Consented 
Total Near Term                         1,156                      191          806     53.7            - 
Other Capital Expenditure 
 (4)                                                                             97 
(1) From 1 April 2021. Cost to come excludes notional interest as interest is capitalised 
 individually on each development at our capitalisation rate 
(2) Estimated headline rental value net of rent payable under head leases (excluding tenant 
 incentives) 
(3) The London Borough of Southwark has confirmed they will not be investing in Phase 1. 
 The BL ownership share will change over time as costs are incurred and is expected to be c.98-99% 
 by PC 
(4) Forecast capital commitments within our investment portfolio over the next 12 months 
 relating to leasing and asset enhancement 
 
 
Medium Term Development Pipeline 
As at                                         Sector              BL Share          100%      Planning Status 
 31 March 2021                                                           %         Sq ft 
                                                                                    '000 
 
2-3 Finsbury Avenue                           Office                    50           704      Consented 
Eden Walk Retail & Residential                Mixed Use                 50           452      Consented 
Ealing - 10-40 The Broadway                   Mixed Use                100           303      Pre-submission 
Ealing - International House                  Office                   100           165      Pre-submission 
Gateway Building                              Leisure                  100           105      Consented 
Euston Tower                                  Other                    100           620      Pre-submission 
Canada Water - Future phases(1)               Mixed Use                100         4,498      Consented 
Total Medium Term                                                                  6,847 
(1) The London Borough of Southwark has the right to invest in up to 20% of the completed 
 development. The BL ownership share will change over time depending on the level of contributions 
 made, but will be no less than 80% 
 
 

Forward-looking statements

This Press Release contains certain (and we may make other verbal or written) 'forward-looking' statements. These forward-looking statements include all matters that are not historical fact. Such statements reflect current views, intentions, expectations, forecasts and beliefs of British Land concerning, among other things, our markets, activities, projections, strategy, plans, initiatives, objectives, performance, financial condition, liquidity, growth and prospects, as well as assumptions about future events. Such 'forward-looking' statements can sometimes, but not always, be identified by their reference to a date or point in the future, the future tense, or the use of 'forward-looking' terminology, including terms such as 'believes', 'considers', 'estimates', 'anticipates', 'expects', 'forecasts', 'intends', 'continues', 'due', 'potential', 'possible', 'plans', 'seeks', 'projects', 'budget', 'goal', 'guidance', 'trends', 'future', 'outlook', 'schedule', 'target', 'aim', 'may', 'likely to', 'will', 'would', 'could', 'should' or similar expressions or in each case their negative or other variations or comparable terminology. By their nature, forward-looking statements involve inherent known and unknown risks, assumptions and uncertainties because they relate to future events and circumstances and depend on circumstances which may or may not occur and may be beyond our ability to control, predict or estimate. Forward-looking statements should be regarded with caution as actual outcomes or results, or plans or objectives, may differ materially from those expressed in or implied by such statements. Recipients should not place reliance on, and are cautioned about relying on, any forward-looking statements.

Important factors that could cause actual results (including the payment of dividends), performance or achievements of British Land to differ materially from any outcomes or results expressed or implied by such forward-looking statements include, among other things: (a) general business and political, social and economic conditions globally, (b) the consequences of the United Kingdom's withdrawal from the European Union, (c) industry and market trends (including demand in the property investment market and property price volatility), (d) competition, (e) the behaviour of other market participants, (f) changes in government and other regulation including in relation to the environment, health and safety and taxation (in particular, in respect of British Land's status as a Real Estate Investment Trust), (g) inflation and consumer confidence, (h) labour relations and work stoppages, (i) natural disasters and adverse weather conditions, (j) terrorism and acts of war, (k) British Land's overall business strategy, risk appetite and investment choices in its portfolio management, (l) legal or other proceedings against or affecting British Land, (m) reliable and secure IT infrastructure, (n) changes in occupier demand and tenant default, (o) changes in financial and equity markets including interest and exchange rate fluctuations, (p) changes in accounting practices and the interpretation of accounting standards (q) the availability and cost of finance and (r) the consequences of the covid-19 pandemic . The Company's principal risks are described in greater detail in the section of this Press Release headed "Risk Management and Principal Risks" and in the Company's latest annual report and accounts (which can be found at www.britishland.com ). Forward-looking statements in this Press Release, or the British Land website or made subsequently, which are attributable to British Land or persons acting on its behalf, should therefore be construed in light of all such factors.

Information contained in this Press Release relating to British Land or its share price or the yield on its shares are not guarantees of, and should not be relied upon as an indicator of, future performance, and nothing in this Press Release should be construed as a profit forecast or profit estimate, or be taken as implying that the earnings of British Land for the current year or future years will necessarily match or exceed the historical or published earnings of British Land. Any forward-looking statements made by or on behalf of British Land speak only as of the date they are made. Such forward-looking statements are expressly qualified in their entirety by the factors referred to above and no representation, assurance, guarantee or warranty is given in relation to them (whether by British Land or any of its associates, Directors, officers, employees or advisers), including as to their completeness, accuracy, fairness, reliability, the basis on which they were prepared, or their achievement or reasonableness.

Other than in accordance with our legal and regulatory obligations (including under the UK Financial Conduct Authority's Listing Rules, Disclosure Guidance and Transparency Rules, the UK Market Abuse Regulation, and the requirements of the Financial Conduct Authority and the London Stock Exchange), British Land does not intend or undertake any obligation to update or revise publicly forward-looking statements to reflect any changes in British Land's expectations with regard thereto or any changes in information, events, conditions, circumstances or other information on which any such statement is based (regardless of whether those forward-looking statements are affected as a result). This document shall not, under any circumstances, create any implication that there has been no change in the business or affairs of British Land since the date of this document or that the information contained herein is correct as at any time subsequent to this date.

Nothing in this document shall constitute, in any jurisdiction, an offer or solicitation to sell or purchase any securities or other financial instruments, nor shall it constitute a recommendation, invitation or inducement, or advice, in respect of any securities or other financial instruments or any other matter.

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