British Land Co PLC

Quarterly Report • May 14, 2013

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RNS Number : 6166E British Land Co PLC 14 May 2013  Consolidated Income Statement for the year ended 31 March 2013 2013 2012 Underlying Capital Underlying Capital pre-tax and other Total pre-tax and other Total Note £m £m £m £m £m £m Gross rental and related income 3 329 - 329 332 - 332 Net rental and related income 3 281 - 281 286 - 286 Fees and other income 4 15 - 15 16 - 16 Joint ventures and funds (see also below) 130 (63) 67 113 69 182 Administrative expenses (72) - (72) (69) - (69) Net valuation movement (includes result on disposals) 5 - 88 88 - 143 143 Financing costs - financing income 6 21 2 23 24 2 26 - financing charges 6 (101) (41) (142) (101) (4) (105) (80) (39) (119) (77) (2) (79) Profit (loss) on ordinary activities before taxation 274 (14) 260 269 210 479 Taxation - current tax income (expense) 7 8 8 (2) (2) - deferred tax income 7 16 16 3 3 24 24 1 1 Profit for the year after taxation attributable to shareholders of the Company 284 480 Earnings per share: - basic 2 31.7 p 54.1 p - diluted 2 31.5 p 53.8 p Share of results of joint ventures and funds Underlying profit before taxation 130 - 130 113 - 113 Net valuation movement (includes result on disposals) - (62) (62) - 72 72 Non-recurring items - (4) (4) - (3) (3) Current tax income (expense) - 2 2 - (1) (1) Deferred tax income - 1 1 - 1 1 Share of results of joint ventures and funds 9 130 (63) 67 113 69 182 All results derive from continuing operations. As defined in note 2 Consolidated Statement of Comprehensive Income for the year ended 31 March 2013 2013 2012 £m £m Profit for the year after taxation 284 480 Other comprehensive income: Items that will not be reclassified subsequently to profit or loss: Net actuarial loss on pension scheme (2) (3) (2) (3) Items that may be reclassified subsequently to profit or loss: Losses on cash flow hedges - Group (16) (65) - Joint ventures and funds (6) (50) (22) (115) Transferred to the income statement (cash flow hedges) - foreign currency derivatives (5) - - interest rate derivatives 26 18 21 18 Exchange differences on translation of foreign operations - hedging and translation (4) 9 - other 6 (8) 2 1 Other comprehensive loss for the year (1) (99) Total comprehensive income for the year attributable to shareholders of the Company 283 381 Consolidated Balance Sheet as at 31 March 2013 2013 2012 Note £m £m ASSETS Non-current assets Investment and development properties 8 5,488 5,346 Owner-occupied property 8 42 41 5,530 5,387 Other non-current assets Investments in joint ventures and funds 9 2,336 2,191 Other investments 10 76 28 Interest rate derivative assets 15 92 73 8,034 7,679 Current assets Trading properties 8 40 47 Debtors 11 60 95 Liquid investments 15 - 200 Cash and short-term deposits 15 135 137 235 479 Total assets 8,269 8,158 LIABILITIES Current liabilities Short-term borrowings and overdrafts 15 (44) (49) Creditors 12 (259) (261) Corporation tax (17) (23) (320) (333) Non-current liabilities Debentures and loans 15 (2,134) (2,572) Other non-current liabilities 13 (26) (25) Deferred tax liabilities 14 (16) (32) Interest rate derivative liabilities 15 (86) (92) (2,262) (2,721) Total liabilities (2,582) (3,054) Net assets 5,687 5,104 Equity Share capital 18 249 225 Share premium 1,242 1,237 Merger reserve 213 - Other reserves (163) (164) Retained earnings 4,146 3,806 Total equity attributable to shareholders of the Company 5,687 5,104 EPRA NAV per share 2 596 p 595 p * Comparatives have been re-presented, see note 1. ** As defined in note 2. Consolidated Statement of Cash Flows for the year ended 31 March 2013 2013 2012 Note £m £m Rental income received from tenants 266 271 Fees and other income received 19 21 Operating expenses paid to suppliers and employees (88) (81) Cash generated from operations 197 211 Interest paid (113) (89) Interest received 31 17 UK corporation tax received 1 3 Distributions and other receivables from joint ventures and funds 74 64 Net cash inflow from operating activities 190 206 Cash flows from investing activities Development and other capital expenditure (230) (106) Purchase of investment properties (442) (382) Sale of investment properties 699 59 Purchase of investments - (22) Sale of investments 2 - Deferred consideration received 18 12 Investment in and loans to joint ventures and funds (318) (110) Capital distributions received from joint ventures and funds 72 - Indirect taxes (paid) received in respect of investing activities (3) 2 Net cash outflow from investing activities (202) (547) Cash flows from financing activities Issue of ordinary shares 493 - Dividends paid 16 (203) (212) Closeout of interest rate derivatives 4 - Movement in other financial liabilities 2 (4) Disposal of liquid investments 15 210 - Decrease in bank and other borrowings (889) (406) Drawdowns on bank and other borrowings - 1,040 Proceeds on convertible bond issue 393 - Net cash inflow from financing activities 10 418 Net (decrease) increase in cash and cash equivalents (2) 77 Cash and cash equivalents at 1 April 137 60 Cash and cash equivalents at 31 March 135 137 Cash and cash equivalents consists of: Cash and short-term deposits 15 135 137 Consolidated Statement of Changes in Equity for the year ended 31 March 2013 Hedging and Share Share translation Revaluation Merger Retained capital * premium reserve * reserve * reserve * earnings Total £m £m £m ** £m £m £m Balance at 1 April 2012 225 1,237 (72) (92) - 3,806 5,104 Profit for the year after taxation - - - - - 284 284 Losses on cash flow hedges - - (16) - - - (16) Joint ventures and funds revaluations - - - (6) - - (6) Reclassification of losses on cash flow hedges - foreign currency derivatives - - (5) - - - (5) - interest rate derivatives - - 26 - - - 26 Exchange differences on translation of foreign operations - - (4) 6 - - 2 Net actuarial loss on pension schemes - - - - - (2) (2) Other comprehensive income (loss) - - 1 - - (2) (1) Total comprehensive income for the year - - 1 - - 282 283 Share issues 24 5 - - 464 - 493 Adjustment for share and share option awards - - - - - 9 9 Dividends payable in year (26.3p per share) - - - - - (234) (234) Transfer - - - - (251) 251 - Adjustment for scrip dividend element - - - - - 32 32 Balance at 31 March 2013 249 1,242 (71) (92) 213 4,146 5,687 Balance at 1 April 2011 224 1,237 (34) (34) - 3,537 4,930 Profit for the year after taxation - - - - - 480 480 Losses on cash flow hedges - - (65) - - - (65) Joint ventures and funds revaluations - - - (50) - - (50) Reclassification of losses on cash flow hedges - interest rate derivatives - - 18 - - - 18 Exchange differences on translation of foreign operations - - 9 (8) - - 1 Net actuarial loss on pension schemes - - - - - (3) (3) Other comprehensive loss - - (38) (58) - (3) (99) Total comprehensive (loss) income for the year - - (38) (58) - 477 381 Share issues 1 - - - - - 1 Adjustment for share and share option awards - - - - - 5 5 Dividends payable in year (26.0p per share) - - - - - (231) (231) Adjustment for scrip dividend element - - - - - 18 18 Balance at 31 March 2012 225 1,237 (72) (92) - 3,806 5,104 * refer to note 18. ** The balance at 1 April 2012 includes £11m relating to foreign exchange and (£83m) relating to hedging. Notes to the accounts for the year ended 31 March 2013 1. Basis of preparation The financial information set out above does not constitute the Company's statutory accounts for the years ended 31 March 2013 or 2012, but is derived from those accounts. Statutory accounts for 2012 have been delivered to the Registrar of Companies and those for 2013 will be delivered following the Company's annual general meeting. The auditor has reported on those accounts; their reports were unqualified, did not draw attention to any matters by way of emphasis and did not contain statements under s498(2) or (3) of Companies Act 2006 or equivalent preceding legislation. The financial statements for the year ended 31 March 2013 have been prepared on the historical cost basis, except for the revaluation of properties, investments and derivatives. The financial statements have also been prepared in accordance with International Financial Reporting Standards (IFRSs) as adopted by the European Union and therefore comply with Article 4 of the EU IAS Regulation. While the financial information included in this preliminary announcement has been prepared in accordance with the recognition and measurement criteria of IFRSs, this announcement does not itself contain sufficient information to comply with IFRSs. The Company expects to publish full financial statements that comply with IFRSs in June 2013. The accounting policies used are consistent with those contained in the Group's last annual report and accounts for the year ended 31 March 2012. Standards and interpretations issued but not effective for the current accounting period were: IFRS 9 - Financial Instruments; IFRS 10 - Consolidated Financial Statements; IFRS 11 - Joint Arrangements; IFRS 12 - Disclosure of Interests in Other Entities; IFRS 13 - Fair Value Measurement; IAS 1 (amended) - Presentation of Items of Other Comprehensive Income; IAS 12 (amended) - Deferred Tax: recovery of assets; IAS 19 (revised) - Employee Benefits; IAS 27 (revised) - Separate Financial Statements; IAS 28 (revised) - Investments in Associates and Joint Ventures and IAS 32 (amended) - Financial Instruments: Presentation. The balance sheet has been re-presented to show interest rate derivative assets, interest rate derivative liabilities and corporation tax creditor on the face of the balance sheet, in accordance with IAS 1. Comparatives on the balance sheet and in the notes to the accounts have been re-presented accordingly. The tax withheld on dividends, previously disclosed within corporation tax creditors, has been re-presented in other taxation and social security. The Directors do not expect that the adoption of the standards listed above will have a material impact on the financial statements of the Group in future periods except as follows: IFRS 9 will impact both the measurement and disclosures of financial instruments; IFRS 12 will impact the disclosure of interests the Group has in other entities; IFRS 13 will impact the disclosure of fair value measurements and IAS 19 (revised) will impact the measurement of the various components representing movements in the defined benefit pension obligation. The financial statements have been prepared on the going concern basis as stated in the directors' responsibility statement. 2. Performance measures 2013 2012 Earnings per share (diluted) Earnings Pence per share Earnings Pence per share £m £m Underlying pre-tax profit - income statement 274 269 Tax charge relating to underlying profit (1) (4) Underlying earnings 273 30.3 p 265 29.7 p Mark-to-market on / profit on disposal of liquid investments (held for trading assets) 9 (3) Mark-to-market on convertible bond (7) - Non-recurring items (7) - EPRA earnings 268 29.7 p 262 29.4 p Profit for the year after taxation 284 31.5 p 480 53.8 p Non-recurring items for the year ended 31 March 2013 relate to £7m of issue costs for the convertible bond. The European Public Real Estate Association (EPRA) issued Best Practices Recommendations most recently in September 2011 and additional guidance in January 2013, which gives guidelines for performance measures. Comparatives have been re-presented in line with the additional guidance. The EPRA earnings measure excludes investment property revaluations and gains or losses on disposals, intangible asset movements and their related taxation. A summary of the EPRA Performance Measures is provided in table B within the Supplementary Disclosures. Underlying earnings consists of the EPRA earnings measure, with additional company adjustments. Adjustments include mark-to-market adjustments on, or profits on disposal of, held for trading assets, mark-to-market adjustments on the convertible bond and issue costs of the convertible bond. The weighted average number of shares in issue for the year was: basic: 895m (2012: 887m); diluted for the effect of share options: 901m (2012: 892m). Basic undiluted earnings per share for the year, calculated using profit for the year after taxation of £284m (2012: £480m), was 31.7p (2012: 54.1p). Earnings per share shown in the table above are diluted. 31 March 31 March Net asset value (NAV) (diluted) 2013 2012 £m £m Balance sheet net assets 5,687 5,104 Deferred tax arising on revaluation movements 14 31 Mark-to-market on effective cash flow hedges and related debt adjustments 198 189 Surplus on trading properties 10 - Dilution effect of share options 58 57 EPRA NAV 5,967 5,381 EPRA NAV per share 596 p 595 p The EPRA NAV per share excludes the mark-to-market on effective cash flow hedges and related debt adjustments, deferred taxation on revaluations and is calculated on a fully diluted basis. At 31 March 2013, the number of shares in issue was: basic: 986m (2012: 888m); diluted for the effect of share options: 1,001m (2012: 904m). Total accounting return per share for the year ended 31 March 2013 of 4.6% includes dividends paid of 26.4p (see note 16) in addition to the increase in EPRA NAV of 1p. Total accounting return per share for the year ended 31 March 2012 was 9.5%. 3. Gross and net rental and related income 2013 2012 £m £m Rent receivable 269 259 Spreading of tenant incentives and guaranteed rent increases 24 41 Surrender premia 1 - Gross rental income 294 300 Service charge income 35 32 Gross rental and related income 329 332 Service charge expenses (35) (32) Property operating expenses (13) (14) Net rental and related income 281 286 The cash element of net rental income recognised during the year ended 31 March 2013 from properties which were not subject to a security interest was £159m (2012: £126m). Property operating expenses relating to investment properties that did not generate any rental income were £1m (2012: £1m). Contingent rents of £1m (2012: £1m) were recognised in the year. 4. Fees and other income 2013 2012 £m £m Performance and management fees (from joint ventures and funds) 10 12 Other fees and commissions 5 4 Fees and other income 15 16 5. Net revaluation gains on property and investments 2013 2012 £m £m Consolidated income statement Revaluation of properties 71 143 Result on property and investment disposals 8 3 Revaluation of investments 9 (3) 88 143 Share of valuation movements of joint ventures and funds (62) 72 Net revaluation gains on property and investments 26 215 6. Net financing costs 2013 2012 £m £m Interest payable on: Bank loans and overdrafts 37 27 Other loans 75 76 Obligations under finance leases 1 1 113 104 Development interest capitalised (17) (8) 96 96 Interest receivable on: Deposits, securities and liquid investments (11) (17) Loans to joint ventures (3) - (14) (17) Other finance (income) costs: Expected return on pension scheme assets (7) (7) Interest on pension scheme liabilities 5 5 Valuation movements on translation of foreign currency debt 5 - Hedging reserve recycling (5) - Net financing expenses - underlying 80 77 Capital and other: Valuation movements on fair value debt 18 66 Valuation movements on fair value derivatives (14) (68) Net capital movement on convertible bond 14 - Recycling of fair value movement on close-out of derivatives 20 - Valuation movement on translation of foreign currency net assets (2) - Fair value movement on non-hedge accounted derivatives 3 4 Net financing costs - capital 39 2 Net financing costs 119 79 Total financing income (23) (26) Total financing charges 142 105 Net financing costs 119 79 Interest on development expenditure is capitalised at a rate of 4.00% (2012: 4.48%). 7. Taxation 2013 2012 £m £m Tax (income) expense Current tax: UK corporation tax: 24% (2012: 26%) 1 2 1 2 Adjustments in respect of prior periods (9) - Total current tax expense (income) (8) 2 Deferred tax on revaluations (16) (3) Group total taxation (net) (24) (1) Attributable to joint ventures and funds (3) - Total taxation income (27) (1) Tax reconciliation Profit on ordinary activities before taxation 257 479 Less: profit attributable to joint ventures and funds (64) (182) Group profit on ordinary activities before taxation 193 297 Tax on profit on ordinary activities at UK corporation tax rate of 24% (2012: 26%) 46 77 Effects of: REIT exempt income and gains (41) (70) Tax losses (6) (8) Adjustments in respect of prior years (23) - Group total taxation income (24) (1) A current tax credit of £2m (2012: charge of £1m) and a deferred tax credit of £1m (2012: credit of £1m) arose on profits attributable to joint ventures and funds. The low charges reflect the Group's REIT status. Tax expense attributable to underlying profits for the year ended 31 March 2013 was £1m (2012: £4m). The underlying tax rate for the year ended 31 March 2013 was 0.5% (2012: 1.5%). Corporation tax payable at 31 March 2013 was £17m (2012: £23m) as shown on the balance sheet. 8. Property Property reconciliation 12 months to 31 March 2013 Investment & Trading Owner- Development Properties occupied Total £m £m £m £m Carrying value at 1 April 2012 5,346 47 41 5,434 Additions: - property purchases 453 - - 453 - development expenditure 201 5 - 206 - capitalised interest 15 1 - 16 - capital expenditure on asset management initiatives 28 - - 28 697 6 - 703 Depreciation - - (1) (1) Disposals (651) (13) - (664) Revaluations included in income statement 72 - 2 74 Movement in tenant incentives and contracted rent uplift balances 24 - - 24 Carrying value at 31 March 2013 5,488 40 42 5,570 Head lease liabilities (note 13) (26) Surplus on trading properties 10 Total Group property portfolio valuation at 31 March 2013 5,554 At 31 March 2013, the Group book value of properties of £5,554m (2012: £5,414m) comprises freeholds of £3,502m (2012: £4,034m); virtual freeholds of £709m (2012: £107m); and long leaseholds of £1,343m (2012: £1,273m). The historical cost of properties was £4,229m (2012: £4,264m). The property valuation does not include any investment properties held under operating leases (2012: £nil). Properties valued at £1,724m (2012: £1,827m) were subject to a security interest and other properties of non-recourse companies amounted to £40m (2012: £49m). Included within the property valuation is £91m (2012: £86m) in respect of accrued contracted rental uplift income, against which the Group holds a provision of £5m (2012: £5m). The balance arises through the IFRS treatment of leases containing such arrangements which requires the recognition of rental income on a straight line basis over the lease term, with the difference between this and the cash receipt changing the carrying value of the property against which revaluations are measured. Cumulative interest capitalised against investment properties amounts to £56m (2012: £78m). Included in investment properties are £904m of properties which are in the course of development (2012: £444m). The Group's total property portfolio was valued by external valuers on the basis of fair value, in accordance with the RICS Valuation - Professional Standards 2012, eighth edition, published by The Royal Institution of Chartered Surveyors. Copies of the valuation certificates of Knight Frank LLP and CBRE can be found on the website at: www.britishland.com/investors/operational-performance.aspx A breakdown of valuations split between the Group and its share of joint ventures and funds is shown below: 2013 2012 Group Joint Ventures and Funds Total Group Joint Ventures and Funds Total £m £m £m £m £m £m Knight Frank LLP 5,084 2,680 7,764 5,133 2,577 7,710 CBRE 470 2,265 2,735 281 2,346 2,627 5,554 4,945 10,499 5,414 4,923 10,337 9. Joint ventures and funds Summary movement for the year of the investments in joint ventures and funds Joint Ventures Funds Total Equity Loans Total £m £m £m £m £m £m At 1 April 2012 1,687 504 2,191 1,992 199 2,191 Additions 315 70 385 139 246 385 Disposals (65) (35) (100) (65) (35) (100) Share of profit after taxation 128 (61) 67 67 - 67 Distributions and dividends: Capital (72) - (72) (72) - (72) Revenue (110) (24) (134) (134) - (134) Hedging and exchange movements 3 (4) (1) (1) - (1) At 31 March 2013 1,886 450 2,336 1,926 410 2,336 PREF, a fund owning a portfolio of retail property in Europe (in which British Land has a net investment of £82m) is externally valued by CBRE. CBRE have included market uncertainty clauses in the valuation reports of the Spanish, Italian and Portuguese properties due to the lack of transactional evidence and uncertainty over the economic situation in these markets. In the 2014 calendar year PREF has €89m of bank loans that are due to mature, discussions are on-going with the existing lenders in relation to loan extensions and other alternatives are being explored. At 31 March 2013 the investment in joint ventures included within the total investment in joint ventures and funds was £1,889m (2012: £1,690m). Distributions in the year include the receipt of £24m from the Broadgate joint venture, £63m from the Meadowhall joint venture, £23m from the Sainsbury joint venture, £36m from Tesco joint ventures, £17m from HUT, £5m from PREF and £9m from Auchinlea. Of the total distributions made in the year £146m were settled in cash and £60m were settled via the transfer of other assets. At 31 March 2013, the valuation of the Group's share of joint ventures and funds properties was £4,945m (2012: £4,923m); external net debt was £2,427m (2012: £2,576m) and the mark-to-market adjustment for external debt was £193m liability (2012: £5m asset). 9. Joint ventures and funds (continued): Joint ventures' summary financial statements A detailed breakdown of the 100% results of specific joint ventures and funds is set out on the two following pages. The total column represents the Group's share of all joint ventures and funds. All disclosures have been restated to British Land accounting policies under IFRS eliminating all profits and losses resulting from upstream and downstream transactions with the Group. Bluebutton Properties Ltd MSC Property Intermediate Holdings Ltd BL Sainsbury Superstores Ltd Tesco Joint Ventures * USS Joint Ventures Leadenhall Holding Co (Jersey) Ltd Partners Blackstone Group LP funds Norges Bank Investment Management J Sainsbury plc Tesco PLC Universities Superannuation Scheme Oxford Properties Property sector City Offices Shopping Centres Superstores Superstores Shopping Centres City Offices Broadgate Meadowhall Leadenhall Group share 50% 50% 50% 50% 50% 50% Date established November 2009 February 2009 March 2008 November 1996 May 2007 Dec 2010 Accounting period 31 March 31 March 31 March 31 March 31 March 31 March 2013 2013 2013 2013 2013 2013 Summarised income statements £m £m £m £m £m £m Gross rental and related income 198 93 65 106 4 - Net rental and related income 160 77 65 100 3 - Other income and expenditure (1) (8) (1) (2) - - Net interest payable (receivable) (95) (51) (31) (58) - - Underlying profit before taxation 64 18 33 40 3 - Surplus (deficit) on revaluation 53 24 (18) (11) 18 5 Disposal of fixed assets - - (1) (1) - - Non-recurring items - 1 - (2) (2) - Profit (loss) on ordinary activities before taxation 117 43 14 26 19 5 Current tax - - - - - - Deferred tax - - - - - - Profit (loss) on ordinary activities after taxation 117 43 14 26 19 5 Summarised balance sheets £m £m £m £m £m £m Investment properties 3,042 1,530 1,203 1,700 164 318 Current assets 22 2 1 1 - 5 Upstream loans to joint venture shareholders - - - - - - Cash and deposits 266 38 21 33 6 1 Gross assets 3,330 1,570 1,225 1,734 170 324 Current liabilities (238) (43) (35) (174) (3) (12) Bank debt falling due within one year (185) - - - - - Bank debt falling due after one year (52) - - (1,007) - - Securitised debt (1,809) (766) (609) - - - Other non-current liabilities - - - - - - Obligations under finance leases - (5) - - - - Deferred tax - - - - - - Gross liabilities (2,284) (814) (644) (1,181) (3) (12) Net external assets 1,046 756 581 553 167 312 Represented by: Shareholder loans 15 204 15 95 12 259 Ordinary shareholders' funds/partners' capital 1,031 552 566 458 155 53 Total investment 1,046 756 581 553 167 312 Tesco joint ventures include BLT Holdings (2010) Limited, the Tesco British Land Property Partnership, Tesco BL Holdings Limited, Shopping Centres Limited and the Tesco Aqua Limited Partnership. ** USS joint ventures include the Eden Walk Shopping Centre Unit Trust and the Fareham Property Partnership. 9. Joint ventures and funds (continued): joint ventures' and funds' summary financial statements A detailed breakdown of the 100% results of specific joint ventures and funds is set out on the current and previous page. The total column represents the Group's share of all joint ventures and funds. All disclosures have been restated to British Land accounting policies under IFRS eliminating all profits and losses resulting from upstream and downstream transactions with the Group. Joint Ventures and Funds Joint Ventures and Funds Hercules Pillar Retail Other TOTAL TOTAL Unit Europark joint ventures Group share Group share Trust Fund + and funds + 2013 2012 Partners Property sector Retail Retail Parks Parks Group share 41.24% 65.30% Date established September 2000 March 2004 Accounting period 31 March 31 March 2013 2013 Summarised income statements £m £m £m £m £m Gross rental and related income 95 28 16 306 298 Net rental and related income 85 19 10 260 260 Other income and expenditure (3) (1) 4 (4) (6) Net interest payable (receivable) (28) (7) 8 (126) (141) Underlying profit before taxation 54 11 22 130 113 Surplus (deficit) on revaluation (83) (91) (3) (61) 71 Disposal of fixed assets - - - (1) 1 Non-recurring items (4) - (1) (4) (3) Profit (loss) on ordinary activities before taxation (33) (80) 18 64 182 Current tax - - 2 2 (1) Deferred tax - 3 (1) 1 1 Profit (loss) on ordinary activities after taxation (33) (77) 19 67 182 Summarised balance sheets Investment properties 1,496 204 220 4,949 4,931 Current assets 5 36 21 62 67 Upstream loans to joint venture shareholders - - 4 4 14 Cash and deposits 38 15 7 215 146 Gross assets 1,539 255 252 5,230 5,158 Current liabilities (36) (55) (37) (340) (303) Bank debt falling due within one year - (51) (1) (127) (63) Bank debt falling due after one year (619) (24) (28) (828) (702) Securitised debt - - - (1,592) (1,842) Other non-current liabilities - - - - (45) Obligations under finance leases - - (2) (5) (9) Deferred tax - - (2) (2) (3) Gross liabilities (655) (130) (70) 2,894 (2,967) Net external assets 884 125 182 2,336 2,191 Represented by: Shareholder loans - 62 135 477 266 Ordinary shareholders' funds/partners' capital 884 63 47 1,859 1,925 Total investment 884 125 182 2,336 2,191 +Although the Group's ownership share is 65.30%, it does not exercise control over significant decisions. The Group therefore equity accounts for its interest in Pillar Retail Europark Fund (PREF). +Included in the column headed 'Other joint ventures and funds' are contributions from the following: the BL Goodman Limited Partnership, the Scottish Retail Property Limited Partnership, BL Gazeley Limited, BL Canada Quays Limited, Eurofund Investments Zaragoza S.L., Hercules Income Fund (HIF), the City of London Office Unit Trust (CLOUT), Auchinlea Partnership and Group consolidation adjustments. Amounts are included in this column at the relevant percentage for the Group's interest. 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 Bluebutton Properties Limited, the Eden Walk Shopping Centre Unit Trust, Leadenhall Holding Co (Jersey) Limited and the Scottish Retail Property Limited Partnership which are domiciled in Jersey and Eurofund Investments Zaragoza S.L. which is domiciled in Spain. Of the funds, Hercules Unit Trust (HUT) and Hercules Income Fund (HIF) are domiciled in Jersey and PREF in Luxembourg. 9. Joint ventures and funds (continued) Operating cash flows of joint ventures and funds (Group share) 2013 2012 £m £m Rental income received from tenants 264 277 Operating expenses paid to suppliers and employees (22) (28) Cash generated from operations 242 249 Interest paid (133) (144) UK corporation tax paid (7) (8) Cash inflow from operating activities 102 97 Cash inflow from operating activities deployed as: Surplus cash retained within joint ventures and funds 28 33 Revenue distributions to British Land 74 64 102 97 10. Other investments £m At 1 April 2012 28 Additions 53 Disposals (4) Depreciation (1) At 31 March 2013 76 Included within additions is £53m in relation to a loan to Bluebutton Properties Limited, a joint venture company. 11. Debtors 2013 2012 £m £m Trade and other debtors+ 15 29 Amounts owed by joint ventures 40 57 Prepayments and accrued income 5 9 Debtors 60 95 + Included within this balance is deferred consideration of £4m (2012: £4m) arising on the sale of investment properties for which the timing of the receipt is contingent and therefore may fall due after one year. Comparatives have been re-presented, see note 1. Trade and other debtors are shown after deducting a provision for bad and doubtful debts of £11m (2012: £10m). The charge to the income statement was £1m (2012: £1m). The Directors consider that the carrying amount of trade and other debtors approximates to their fair value. There is no concentration of credit risk with respect to trade debtors as the Group has a large number of customers who are paying their rent in advance. 12. Creditors 2013 2012 £m £m Trade creditors 94 88 Amounts owed to joint ventures 4 15 Other taxation and social security 24 27 Accruals and deferred income 137 131 Creditors 259 261 Comparatives have been re-presented, see note 1. Trade creditors are interest-free and have settlement dates within one year. The Directors consider that the carrying amount of trade and other creditors approximates to their fair value. 13. Other non-current liabilities 2013 2012 £m £m Trade and other creditors - 5 Head leases 26 20 Other non-current liabilities 26 25 14. Deferred Taxation Deferred tax is calculated on temporary differences under the liability method using a tax rate of 23% (2012: 24%). The movement in deferred tax is shown below: 1 April Credited 31 March 2012 to income 2013 £m £m £m Property and investment revaluations 28 (16) 12 Other timing differences 4 - 4 Deferred taxation 32 (16) 16 Under the REIT regime development properties which are sold within three years of completion do not benefit from tax exemption. At 31 March 2013 the value of such properties is £nil (2012: £763m) and if these properties were to be sold and tax exemption was not available the tax arising would be £nil (2012: £30m) The deferred tax charge for the year ended 31 March 2013 includes a credit of £1m to reflect reduced deferred tax liabilities arising from the forthcoming reduction in the UK corporation tax rate to 23% (effective from 1 April 2013). Deferred tax assets of £40m (2012: £41m) arising on losses from previous years have not been recognised in the financial year. 15. Net debt 2013 2012 Footnote £m £m Secured on the assets of the Group 9.125% First Mortgage Debenture Stock 2020 1 37 37 6.125% First Mortgage Debenture Stock 2014 1 45 46 5.264% First Mortgage Debenture Bonds 2035 345 341 5.0055% First Mortgage Amortising Debentures 2035 101 102 5.357% First Mortgage Debenture Bonds 2028 334 322 6.75% First Mortgage Debenture Bonds 2020 181 179 Loan notes 5 5 1,048 1,032 Unsecured 5.50% Senior Notes 2027 98 98 6.30% Senior US Dollar Notes 2015 2 101 96 3.895% Senior US Dollar Notes 2018 3 28 26 4.635% Senior US Dollar Notes 2021 3 158 145 4.766% Senior US Dollar Notes 2023 3 97 89 5.003% Senior US Dollar Notes 2026 3 62 57 1.5% Convertible Bond 2017 407 - Bank loans and overdrafts 179 1,078 1,130 1,589 Gross debt 4 2,178 2,621 Interest rate derivatives: liabilities 86 92 Interest rate derivatives: assets (92) (73) 2,172 2,640 Liquid investments 4.405% Medium Term Note 2015 - (100) 4.395% Medium Term Note 2015 - (100) - (200) Cash and short-term deposits 5 (135) (137) Net debt 2,037 2,303 Total borrowings where any instalments are due after five years are £103m (2012: £104m). 2013 2012 1 These borrowings are obligations of ring-fenced, special purpose companies, with no recourse to other companies or assets in the Group: £m £m BLD Property Holdings Ltd 82 83 2 Principal and interest on this borrowing was fully hedged into Sterling at the time of issue. 3 Principal and interest on this borrowing was fully hedged into Sterling at a floating rate at the time of issue. 4 The principal amount of gross debt at 31 March 2013 was £2,063m (2012: £2,562m). Included in this, the principal amount of secured borrowings and other borrowings of non-recourse companies was £981m (2012: £982m). 5 Cash and deposits not subject to a security interest amount to £106m (2012: £132m). Maturity analysis of net debt 2013 2012 £m £m Repayable: within one year and on demand 44 49 between: one and two years 188 405 two and five years 522 776 five and ten years 441 422 ten and fifteen years 602 260 fifteen and twenty years 5 332 twenty and twenty five years 376 377 2,134 2,572 Gross debt 2,178 2,621 Interest rate and currency derivatives (6) 19 Liquid Investments - (200) Cash and short-term deposits (135) (137) Net debt 2,037 2,303 15. Net debt (continued) The two financial covenants applicable to the Group unsecured debt including convertible bonds are: Net Borrowings not to exceed 175% of Adjusted Capital and Reserves At 31 March 2013, the ratio is 31%: i. Net Borrowings are £1,962m, being the principal amount of gross debt of £2,063m plus amounts owed to joint ventures of £4m plus TPP Investments Ltd of £30m (see note 17), less the cash and short-term deposits of £135m; and ii. Adjusted Capital and Reserves are £6,242m, being share capital and reserves of £5,687m (see consolidated statement of changes in equity), adjusted for £14m of deferred tax (see note 2), £10m trading property surplus, £326m exceptional refinancing charges (see below) and £205m fair value adjustments on financial assets and liabilities (£198m mark-to-market on interest rate swaps and £7m fair value adjustment on the convertible bond). Net Unsecured Borrowings not to exceed 70% of Unencumbered Assets At 31 March 2013 the ratio is 23%: i. Net Unsecured Borrowings are £980m, being the principal amount of gross debt of £2,063m plus amounts owed to joint ventures of £4m less cash and deposits not subject to a security interest of £106m less the principal amount of secured and non-recourse borrowings of £981m; and ii. Unencumbered Assets are £4,313m being properties of £5,554m (see note 8) plus investments in joint ventures and funds of £2,336m (see note 9) and other investments of £76m (see balance sheet) less investments in joint ventures of £1,889m (see note 9) and encumbered assets of £1,764m (see note 8). In calculating Adjusted Capital and Reserves for the purpose of the unsecured debt financial covenants, there is an adjustment of £326m to reflect the cumulative net amortised exceptional items relating to the refinancings in the years ended 31 March 2005, 2006 and 2007. Interest rate profile - including effect of derivatives 2013 2012 £m £m Fixed rate 1,848 1,976 Variable rate (net of cash) 189 327 Net debt 2,037 2,303 Reconciliation of movement in Group net debt to cash flow statement 2012 Cash flow Non cash 2013 £m £m £m £m Per cash flow statement: Cash and short-term deposits (137) 2 - (135) Cash and cash equivalents (137) 2 - (135) Term debt (excluding overdrafts) 2,621 (496) 53 2,178 Fair value of interest rate derivatives 19 - (25) (6) Liquid investments (200) 210 (10) - Net debt 2,303 (284) 18 2,037 The Group Loan to Value (LTV) ratio at 31 March 2013 is 24%, being principal value of gross debt of £2,063m less cash and short-term deposits of £135m, divided by total Group property of £5,554m (see note 8) plus investments in joint ventures and funds of £2,336m (balance sheet) and other investments of £76m (see balance sheet). 15. Net debt (continued) Maturity of committed undrawn borrowing facilities 2013 2012 £m £m Maturity date: between four and five years 108 825 between three and four years 870 - Total facilities available for more than three years 978 825 between two and three years - 280 between one and two years 757 100 within one year 369 35 Total 2,104 1,240 The above facilities are available to be drawn for Group purposes. Comparison of market values and book values at 31 March 2013 Market Book Value Value Difference £m £m £m Debentures and unsecured bonds 1,622 1,587 35 Convertible bond 407 407 - Bank debt and other floating rate debt 189 184 5 Cash and short-term deposits (135) (135) - 2,083 2,043 40 Other financial (assets) liabilities: - interest rate derivative assets (92) (92) - - interest rate derivative liabilities 86 86 - (6) (6) - Total 2,077 2,037 40 Short-term debtors and creditors have been excluded from the disclosures. The fair values of debt and debentures have been established by obtaining quoted market prices from brokers. The bank debt and loan notes have been valued assuming they could be renegotiated at contracted margins. The derivatives have been valued by calculating the present value of expected future cash flows, using appropriate market discount rates, by an independent treasury advisor. Convertible Bond On 10 September 2012 British Land (Jersey) Limited (the Issuer) issued £400 million 1.5 per cent guaranteed convertible bonds due 2017 (the bonds) at par. The Company has unconditionally and irrevocably guaranteed the due and punctual performance by the Issuer of all of its obligations (including payments) in respect of the bonds and the obligations of the Company, as guarantor, constitute direct, unsubordinated unconditional and unsecured obligations of the Company. Subject to their terms, the bonds are convertible into preference shares of the Issuer which are automatically transferred to the Company in exchange for ordinary shares in the Company or, at the Company's election, any combination of ordinary shares and cash. The bonds can be converted from 22 October 2012 up to and including 24 September 2015 if the share price has traded at a level exceeding 130 per cent of the exchange price for a specified period and from 25 September 2015 to (but excluding) the 20th dealing day before 10 September 2017 (the maturity date) at any time. The initial exchange price was 693.07 pence per ordinary share. Under the terms of the bonds, the exchange price is adjusted on the happening of certain events including the payment of dividends by the Company above 26.4 pence in any year. On or after 25 September 2015, the bonds may be redeemed at par at the Company's option subject to the Company's ordinary shares having traded at a price exceeding 130 per cent of the exchange price for a specified period, or at any time once 85 per cent by nominal value of the bonds originally issued have been converted, redeemed, or purchased and cancelled. If not previously converted, redeemed or purchased and cancelled, the bonds will be redeemed at par on the maturity date. 16. Dividend The fourth quarter dividend of 6.6 pence per share, totalling £65m (2012: 6.6 pence per share, totalling £58m) was approved by the Board on 13 May 2013 and is payable on 9 August 2013 to shareholders on the register at the close of business on 5 July 2013. The Board will announce the availability of the Scrip Dividend Alternative via the Regulatory News Service and on its website (www.britishland.com), no later than four business days before the ex-dividend date of 3 July 2013. The Board expects to announce the split between PID (Property Income Distribution) and non-PID income at that time. Any Scrip Dividend Alternative will not be enhanced. PID dividends are paid, as required by REIT legislation, after deduction of withholding tax at the basic rate (currently 20%), where appropriate. Certain classes of shareholders may be able to elect to receive dividends gross. Please refer to our website (www.britishland.com) for details. Payment Date Dividend PID Non PID Pence per share 2013 £m 2012 £m Current year dividends 09.08.2013 2013 4th interim 6.60 - - 10.05.2013 2013 3rd interim 6.60 * 6.60 - - 15.02.2013 2013 2nd interim 6.60 * 6.60 59 - 09.11.2012 2013 1st interim 6.60 * 6.60 59 - 26.40 Prior year dividends 10.08.2012 2012 4th interim 3.30 3.30 6.60 58 - 9.05.2012 2012 3rd interim 6.50 6.50 58 - 17.02.2012 2012 2nd interim 6.50 6.50 - 58 11.11.2011 2012 1st interim 6.50 6.50 - 58 26.10 12.08.2011 2011 4th interim 6.50 6.50 - 58 13.05.2011 2011 3rd interim 6.50 6.50 - 57 Dividends in consolidated statement of changes in equity 234 231 Dividends settled in shares (32) (18) Dividends settled in cash 202 213 Timing difference relating to payment of withholding tax 1 (1) Dividends in cash flow statement 203 212 * Scrip alternative treated as non-PID for this dividend. 17. Contingent liabilities The Group has contingent liabilities in respect of legal claims, guarantees and warranties arising in the ordinary course of business. It is not anticipated that any material liabilities will arise from contingent liabilities. TPP Investments Limited, a wholly owned, ring-fenced special purpose subsidiary, is a partner in The Tesco British Land Property Partnership and, in that capacity, has entered into a secured bank loan under which its liability is limited to £30m (2012: £30m) and recourse is only to the partnership assets. 18. Share capital and reserves 2013 2012 Number of ordinary shares in issue at 1 April 900,199,638 897,042,298 Share issues 97,491,850 3,157,340 At 31 March 997,691,488 900,199,638 Of the issued 25p ordinary shares, 275,497 shares were held in the ESOP trust (2012: 1,370,161), 11,266,245 shares were held as treasury shares (2012: 11,266,245) and 986,149,746 shares were in free issue (2012: 887,563,232). No treasury shares were acquired by the ESOP trust during the year. All issued shares are fully paid. On 12 March 2013, the Company announced the placing of 89,674,604 new ordinary shares at a price of 550 pence per share. The new shares are fully paid and rank pari passu in all respects with those ordinary shares of the Company in issue prior to the placing. Hedging and translation reserve The hedging and translation reserve comprises the effective portion of the cumulative net change in the fair value of cash flow and foreign currency hedging instruments, as well as all foreign exchange differences arising from the translation of the financial statements of foreign operations. The foreign exchange differences also include the translation of the liabilities that hedge the Company's net investment in a foreign subsidiary. Revaluation reserve The revaluation reserve relates to owner-occupied properties and investments in joint ventures and funds. Merger reserve This comprises the premium on the share placing in March 2013. No share premium is recorded in the Company's financial statements, through the operation of the Merger Relief provisions of the Companies Act 2006. 19. Segment Information Operating segments The segmental note has been updated to reflect changes to internal management reporting. The Group allocates resources to investment and asset management according to the sectors it expects to perform over the medium term. Its two principal sectors are currently offices and retail. Prior year comparatives have been updated to reflect this change. The relevant revenue, net rental income, operating result, assets and capital expenditure, being the measure of segment revenue, segment result and segment assets used by the management of the business, are set out below. Revenue is derived from the rental of buildings. Operating result is the net of net rental income, fee income and administration expenses. No customer exceeds 10% of the Group's revenues in either year. Segment Result Offices Retail Other / unallocated Total 2013 2012 2013 2012 2013 2012 2013 2012 £m £m £m £m £m £m £m £m Revenue British Land Group 85 87 176 184 33 29 294 300 Share of joint ventures and funds 83 82 190 189 - 1 273 272 Total 168 169 366 373 33 30 567 572 Net rental income British Land Group 82 77 167 175 32 34 281 286 Share of joint ventures and funds 80 80 180 180 - - 260 260 Total 162 157 347 355 32 34 541 546 Operating Result British Land Group 72 77 159 174 (7) (18) 224 233 Share of joint ventures and funds 80 80 175 172 1 2 256 254 Total 152 157 334 346 (6) (16) 480 487 Reconciliation to underlying profit before taxation 2013 2012 British Land Group £m £m Total operating result 480 487 British Land Group net financing costs (80) (77) Share of joint ventures and funds net financing costs (126) (141) Capital and other (14) 210 Total profit on ordinary activities before tax 260 479 Of the total revenues above, £19m (2012: £17m) was derived from outside the UK. Segment Assets Offices Retail Other / unallocated Total 2013 2012 2013 2012 2013 2012 2013 2012 £m £m £m £m £m £m £m £m Property assets (includes head leases liabilities) British Land Group 2,033 2,017 3,071 2,946 450 451 5,554 5,414 Share of joint ventures and funds 1,684 1,545 3,256 3,372 5 6 4,945 4,923 Total 3,717 3,562 6,327 6,318 455 457 10,499 10,337 Segment assets British Land Group 2,039 2,023 3,080 2,949 814 995 5,933 5,967 Share of joint ventures and funds 1,839 1,628 3,367 3,517 12 14 5,218 5,159 Total 3,878 3,651 6,447 6,466 826 1,009 11,151 11,126 Other assets British Land Group - - - - 363 533 363 533 Share of joint ventures and funds 155 83 107 137 7 8 269 228 Total 155 83 107 137 370 541 632 761 Capital expenditure British Land Group 391 148 315 27 47 347 753 522 Share of joint ventures and funds 109 113 26 83 - - 135 196 Total 500 261 341 110 47 347 888 718 Other assets include other investments of £76m (2012: £28m), debtors of £60m (2012: £95m), liquid investments of £nil (2012: £200m), cash of £135m (2012: £137m) and derivatives of £92m (2012: £73m). Supplementary Disclosures Table A: SUMMARY INCOME STATEMENT AND BALANCE SHEET Summary income statement based on proportional consolidation for the year ended 31 March 2013 The following pro forma information is unaudited and does not form part of the consolidated primary statements or the notes thereto. It presents the results of the Group, with its share of the results of joint ventures and funds included on a line by line, i.e. proportional, basis. The underlying profit before taxation and underlying profit after taxation are the same as presented in the consolidated income statement. 31 March 2013 31 March 2012 Group Joint ventures Proportionally Group Joint ventures Proportionally and funds Consolidated and funds Consolidated £m £m £m £m £m £m Gross rental income 294 273 567 300 272 572 Property operating expenses (13) (13) (26) (14) (12) (26) Net rental income 281 260 541 286 260 546 Administrative expenses (72) (4) (76) (69) (7) (76) Fees and other income 15 - 15 16 1 17 Ungeared income return 224 256 480 233 254 487 Net interest (80) (126) (206) (77) (141) (218) Underlying profit before taxation 144 130 274 156 113 269 Underlying tax (1) - (1) (2) (2) (4) Underlying profit after taxation 143 130 273 154 111 265 Underlying earnings per share - diluted basis 30.3 p 29.7 p Valuation movement 26 215 Other capital and tax (net) (4) 13 Capital and other 22 228 Total return 295 493 includes other comprehensive income, movement in dilution of share options and the movement in items excluded for EPRA NAV. The underlying earnings per share is calculated on underlying profit before taxation of £274m, tax attributable to underlying profits of £1m and 901m shares on a diluted basis for the year ended 31 March 2013. Supplementary Disclosures (continued) Table A (continued): Summary balance sheet based on proportional consolidation as at 31 March 2013 The following pro forma information is unaudited and does not form part of the consolidated primary statements or the notes thereto. It presents the composition of the EPRA net assets of the Group, with its share of the net assets of the joint venture and fund assets and liabilities included on a line-by-line, i.e. proportional basis and assuming full dilution. Group Share of joint ventures & funds Share options Deferred tax Mark-to-Market of interest rate swaps Head Leases Valuation surplus on trading properties EPRA Net assets 2013 EPRA Net assets 2012 £m £m £m £m £m £m £m £m £m Retail properties 3,080 3,260 - - - (13) - 6,327 6,318 Office properties 2,039 1,684 - - - (6) - 3,717 3,562 Other properties 451 5 - - - (11) 10 455 457 Total properties 5,570 4,949 - - - (30) 10 10,499 10,337 Investments in joint 2,336 (2,336) - - - - - - - ventures and funds Other investments 76 (23) - - - - - 53 28 Other net (liabilities) assets (258) (163) 58 14 - 30 - (319) (294) Net debt (2,037) (2,427) - - 198 - - (4,266) (4,690) Net assets 5,687 - 58 14 198 - 10 5,967 5,381 EPRA NAV per share (note 2) 596 p 595 p EPRA Net Assets Movement 31 March 2013 31 March 2012 £m Pence per share £m Pence per share Opening EPRA NAV 5,381 595 p 5,101 567 p Income return 273 30 p 265 29 p Capital return 22 2 p 228 25 p Dividend paid (202) (27) p (213) (26) p Dilution due to issues of shares 493 (4) p - - Closing EPRA NAV 5,967 596 p 5,381 595 p Supplementary Disclosures (continued) Table B: EPRA PERFORMANCE MEASURES EPRA Performance measures summary table 2013 2012 £m Pence per share £m Pence per share EPRA earnings 268 29.7 p 262 29.4 p EPRA NAV 5,967 596 p 5,381 595 p EPRA NNNAV 5,522 552 p 5,148 569 p EPRA net initial yield 5.5 % 5.2 % EPRA 'topped-up' net initial yield 5.7 % 5.8 % EPRA vacancy rate 3.3 % 2.4 % Calculation of EPRA earnings and EPRA earnings per share 2013 2012 £m £m Profit for the year after taxation 284 480 Exclude Group - non-underlying current tax (9) - Group - deferred tax (16) (3) Joint ventures and funds - non-underlying current tax (2) (1) Joint ventures and funds - deferred tax (1) (1) Group - net valuation movement (including result on disposals) (79) (146) Joint ventures and funds - net valuation movement (including result on disposals) 62 (72) Amortisation of intangible assets 1 - Changes in fair value of financial instruments and associated close-out costs 28 5 EPRA earnings 268 262 Mark-to-market on / profit on disposal of liquid investments (held for trading assets) (9) 3 Mark-to-market on convertible bond 7 - Non-recurring items 7 - Underlying earnings 273 265 * Comparatives have been re-presented in line with updated EPRA guidance. Non-recurring items for the year ended 31 March 2013 relate to £7m of issue costs for the convertible bond. 2013 2012 Number Number million million Weighted average number of shares 907 899 Adjustment for treasury shares (11) (11) Adjustment for ESOP shares (1) (1) Weighted average number of shares (basic) 895 887 Dilutive effect of share options 2 2 Dilutive effect of ESOP shares 4 3 Weighted average number of shares (diluted) 901 892 2013 2012 Pence Pence Earnings per share (basic) 31.7 54.1 Earnings per share (diluted) 31.5 53.8 Underlying earnings per share (diluted) 30.3 29.7 EPRA earnings per share 29.7 29.4 . Supplementary Disclosures (continued) Table B (continued): Net assets per share 2013 2012 £m Pence per share £m Pence per share Balance sheet net assets 5,687 5,104 Deferred tax arising on revaluation movements 14 31 Mark-to-market on effective cash flow hedges and related debt adjustments 198 189 Dilution effect of share options 58 57 Surplus on trading properties 10 - EPRA NAV 5,967 596 p 5,381 595 p Deferred tax arising on revaluation movements (14) (31) Mark-to-market on effective cash flow hedges and related debt adjustments (198) (189) Mark-to-market on debt (233) (13) EPRA NNNAV 5,522 552 p 5,148 569 p EPRA NNNAV is the EPRA NAV adjusted to reflect the fair value of the debt and derivatives and to include the deferred taxation on revaluations. EPRA Net Initial Yield and 'topped-up' Net Initial Yield 2013 2012 £m £m Investment property - wholly-owned 5,554 5,414 Investment property - share of joint ventures and funds 4,945 4,923 Less developments, residential and land (1,340) (835) Completed property portfolio 9,159 9,502 Allowance for estimated purchasers' costs 552 521 Gross up completed property portfolio valuation 9,711 10,023 Annualised cash passing rental income 541 531 Property outgoings (11) (8) Annualised net rents 530 523 Rent expiration of rent-free periods and fixed uplifts* 27 57 'Topped-up' net annualised rent 557 580 EPRA Net Initial Yield 5.5 % 5.2 % EPRA 'topped-up' Net Initial Yield 5.7 % 5.8 % Including fixed/minimum uplifts received in lieu of rental growth 26 27 Total 'topped-up' net rents 583 607 Overall 'topped-up' Net Initial Yield 6.0 % 6.1 % 'Topped-up' net annualised rent 557 580 ERV vacant space 19 14 Reversions - (18) Total ERV 576 576 Net Reversionary Yield 5.9 % 5.7 % * The period over which rent-free periods expire is 2 years (2012: 3 years). EPRA Vacancy Rate 2013 2012 £m £m Annualised potential rental value of vacant premises 19 14 Annualised potential rental value for the completed property portfolio 576 576 EPRA vacancy rate 3.3 % 2.4 % Supplementary Disclosures (continued) Table C: GROSS RENTAL INCOME AND ACCOUNTING RETURN Calculation of gross rental income 31 March 31 March 2013 2012 £m £m Rent receivable 538 533 Spreading of tenant incentives and guaranteed rent increases 28 38 Surrender premia 1 1 Gross rental income 567 572 31 March 2013 31 March 2012 Total accounting return 4.6 % 9.5 % This information is provided by RNS The company news service from the London Stock Exchange END FR UORUROBAVAUR