British Land Co PLC

Annual / Quarterly Financial Statement • May 14, 2014

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RNS Number : 0383H British Land Co PLC 14 May 2014  Consolidated Income Statement for the year ended 31 March 2014 2014 2013 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 3 384 - 384 329 - 329 Net rental and related income 3 313 - 313 281 - 281 Fees and other income 4 15 - 15 15 - 15 Joint ventures and funds (see also below) 124 253 377 130 (63) 67 Administrative expenses (72) - (72) (72) - (72) Net valuation movement (includes result on disposals) 5 - 615 615 - 88 88 Financing costs - financing income 6 9 3 12 21 2 23 - financing charges 6 (90) (60) (150) (101) (41) (142) (81) (57) (138) (80) (39) (119) Profit (loss) on ordinary activities before taxation 299 811 1,110 274 (14) 260 Taxation - current tax income 7 3 3 8 8 - deferred tax income 7 3 3 16 16 6 6 24 24 Profit for the year after taxation 1,116 284 Attributable to non- controlling interests 2 8 10 - - - Attributable to shareholders of the Company 297 809 1,106 274 10 284 Earnings per share - basic 2 110.7 p 31.7 p - diluted 2 110.2 p 31.5 p * As defined in note 2 All results derive from continuing operations. 2014 2013 Underlying Capital Underlying Capital pre-tax and other Total pre-tax and other Total Note £m £m £m £m £m £m Share of results of joint ventures and funds Underlying profit before taxation 124 - 124 130 - 130 Net valuation movement (includes result on disposals) - 258 258 - (62) (62) Non-recurring items - - - - (4) (4) Current tax income (expense) - (5) (5) - 2 2 Deferred tax income - - - - 1 1 9 124 253 377 130 (63) 67 * As defined in note 2 Consolidated Statement of Comprehensive Income for the year ended 31 March 2014 2014 2013 £m £m Profit for the year after taxation 1,116 284 Other comprehensive income: Items that will not be reclassified subsequently to profit or loss: Net actuarial loss on pension scheme (2) (2) (2) (2) Items that may be reclassified subsequently to profit or loss: Gains (losses) on cash flow hedges - Group 14 (16) - Joint ventures and funds 48 (6) 62 (22) Transferred to the income statement (cash flow hedges) - Foreign currency derivatives 8 (5) - Interest rate derivatives 15 26 23 21 Exchange differences on translation of foreign operations - Hedging and translation 2 (4) - Other 1 6 3 2 Deferred tax taken to equity 5 - 5 - Other comprehensive profit (loss) for the year 91 (1) Total comprehensive income for the year attributable to shareholders of the Company 1,207 283 Attributable to non-controlling interests 10 - Attributable to shareholders of the Company 1,197 283 Consolidated Balance Sheet as at 31 March 2014 2014 2013 Note £m £m ASSETS Non-current assets Investment and development properties 8 7,272 5,488 Owner-occupied property 8 47 42 7,319 5,530 Other non-current assets Investments in joint ventures and funds 9 2,712 2,336 Other investments 10 262 76 Interest rate derivative assets 15 32 92 10,325 8,034 Current assets Trading properties 8 271 40 Debtors 11 41 60 Cash and short-term deposits 15 142 135 454 235 Total assets 10,779 8,269 LIABILITIES Current liabilities Short-term borrowings and overdrafts 15 (495) (44) Creditors 12 (263) (259) Corporation tax (8) (17) (766) (320) Non-current liabilities Debentures and loans 15 (2,803) (2,134) Other non-current liabilities 13 (32) (26) Deferred tax liabilities 14 (4) (16) Interest rate derivative liabilities 15 (57) (86) (2,896) (2,262) Total liabilities (3,662) (2,582) Net assets 7,117 5,687 EQUITY Share capital 19 255 249 Share premium 1,257 1,242 Merger reserve 213 213 Other reserves (70) (163) Retained earnings 5,091 4,146 Equity attributable to shareholders of the Company 6,746 5,687 Non-controlling interests 371 - Total Equity 7,117 5,687 EPRA NAV per share 2 688 p 596 p * As defined in note 2. Consolidated Statement of Cash Flows for the year ended 31 March 2014 2014 2013 Note £m £m Rental income received from tenants 312 266 Fees and other income received 19 19 Operating expenses paid to suppliers and employees (88) (88) Cash generated from operations 243 197 Interest paid (116) (113) Interest received 29 31 UK corporation tax received - 1 Distributions and other receivables from joint ventures and funds 63 74 Net cash inflow from operating activities 219 190 Cash flows from investing activities Development and other capital expenditure (175) (230) Purchase of investment properties (569) (442) Sale of investment properties 352 699 Purchase of investments (84) - Sale of investments 8 2 Deferred consideration received 5 18 Acquisition of Hercules Unit Trust 18 (145) - Cash aquired on acquisition of subsidiary 18 18 - Purchase of joint ventures and funds (113) - Sale of joint ventures and funds 179 - Investment in and loans to joint ventures and funds (162) (318) Capital distributions and loan repayments from joint ventures and funds 28 72 Indirect taxes (paid) received in respect of investing activities (2) (3) Net cash outflow from investing activities (660) (202) Cash flows from financing activities Issue of ordinary shares 11 493 Dividends paid 16 (159) (203) Closeout of interest rate derivative (16) 4 Movement in other financial liabilities (8) 2 Disposal of liquid investments 15 - 210 Decrease in bank and other borrowings (49) (889) Drawdowns on bank and other borrowings 669 - Proceeds on convertible bond issue - 393 Net cash inflow from financing activities 448 10 Net (decrease) increase in cash and cash equivalents 7 (2) Cash and cash equivalents at 1 April 135 137 Cash and cash equivalents at 31 March 142 135 Cash and cash equivalents consists of: Cash and short-term deposits 15 142 135 Consolidated Statement of Changes in Equity for the year ended 31 March 2014 Share capital * Share premium Hedging and translation reserve , Revaluation reserve * Merger reserve * Retained earnings Total Non-controlling interest Total Equity £m £m £m £m £m £m £m £m £m Balance at 1 April 2013 249 1,242 (71) (92) 213 4,146 5,687 - 5,687 Profit for the year after taxation 1,106 1,106 10 1,116 Losses on cash flow hedges 14 14 14 Revaluation through statement of changes in equity 1 1 1 Joint ventures and funds revaluations 48 48 48 Reclassification of gains (losses) on cash flow hedges - Foreign currency derivatives 8 8 8 - Interest rate derivatives 15 15 15 Exchange differences on translation of foreign operations 2 1 (1) 2 2 Net actuarial loss on pension schemes (2) (2) (2) Deferred tax taken to equity 5 5 5 Other comprehensive income (loss) - - 39 54 - (2) 91 - 91 Total comprehensive income for the year - - 39 54 - 1,104 1,197 10 1,207 Share issues 6 15 (8) 13 13 Non-controlling interest on acquisition of subsidiary 374 374 Purchase of units from non-controlling interest (13) (13) Adjustment for share and share option awards 10 10 10 Dividends payable in year (26.7p per share) (266) (266) (266) Transfer - Adjustment for scrip dividend element 105 105 105 Balance at 31 March 2014 255 1,257 (32) (38) 213 5,091 6,746 371 7,117 Balance at 1 April 2012 225 1,237 (72) (92) - 3,806 5,104 - 5,104 Profit for the year after taxation 284 284 284 Losses on cash flow hedges (16) (16) (16) Joint ventures and funds revaluations (6) (6) (6) Reclassification of gains (losses) on cash flow hedges - - Foreign currency derivatives (5) (5) (5) - Interest rate derivatives 26 26 26 Exchange differences on translation of foreign operations (4) 6 2 2 Net actuarial loss on pension schemes (2) (2) (2) Other comprehensive income (loss) - - 1 - - (2) (1) - (1) Total comprehensive income for the year - - 1 - - 282 283 - 283 Share issues 24 5 464 493 493 Adjustment for share and share option awards 9 9 9 Dividends payable in year (26.3p per share) (234) (234) (234) Transfer (251) 251 - Adjustment for scrip dividend element 32 32 32 Balance at 31 March 2013 249 1,242 (71) (92) 213 4,146 5,687 - 5,687 * refer to note 19 ** The balance at the beginning of the period includes £2m relating to translation and £(73)m relating to hedging. Notes to the accounts for the year ended 31 March 2014 1. Basis of preparation The financial information set out above does not constitute the Company's statutory accounts for the years ended 31 March 2014 or 2013, but is derived from those accounts. Statutory accounts for 2013 have been delivered to the Registrar of Companies and those for 2014 will be delivered following the Company's annual general meeting. The auditor has reported on those accounts; their report was unqualified, did not draw attention to any matters by way of emphasis and did not contain statements under s498(2) or (3) of Companies Act 2006 or equivalent preceding legislation. The financial statements for the year ended 31 March 2014 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 International Financial Reporting Standards (IFRSs), this announcement does not itself contain sufficient information to comply with IFRSs. The Company expects to publish full financial statements that comply with IFRSs in June 2014. In the current financial year the Group has adopted the amendments to IAS 1 "Presentation of Items of Other Comprehensive Income", IFRS 13 "Fair Value Measurement" and IAS 19 (revised) "Employee Benefits". • The amendments to IAS 1 require items of other comprehensive income to be grouped by those items that will be reclassified subsequently to profit or loss and those that will never be reclassified, as well as their associated income tax. The amendments have been applied retrospectively and hence the presentation of items of comprehensive income has been re-grouped accordingly. • IFRS 13 impacts the disclosure of investment and owner-occupied properties, as set out in note 8. • IAS 19 (revised) and the related consequential amendments have impacted the accounting for the Group's defined benefit pension scheme, by replacing the interest cost and expected return on plan assets with a net interest charge on the net defined benefit liability. The impact of adopting IAS 19 (revised) is not considered material. Otherwise the accounting policies used are consistent with those contained in the Group's last annual report and accounts for the year ended 31 March 2013. Standards and interpretations issued but not effective for the current accounting period were: • IFRS 9 - Financial Instruments; • IAS 32 (amended) - Financial Instruments: Presentation; • IFRS 10 - Consolidated Financial Statements; • IFRS 11 - Joint Arrangements; • IFRS 12 - Disclosure of Interests in Other Entities; • IAS 12 (amended) - Deferred Tax: recovery of underlying assets; • IAS 27 (revised) - Separate Financial Statements; • IAS 28 (revised) - Investments in Associates and Joint Ventures; and • IAS 36 - Recoverable Amount Disclosures for Non-Financial Assets. 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. The financial statements have been prepared on the going concern basis as stated in the directors' responsibility statement. 2. Performance measures 2014 2013 Earnings per share (diluted unless otherwise stated) Earnings Pence per share Earnings Pence per share £m £m Underlying pre-tax profit attributable to shareholders of the company- income statement 297 274 Tax charge relating to underlying profit (2) (1) Underlying earnings 295 29.4 p 273 30.3 p Mark-to-market on / profit on disposal of liquid investments (held for trading assets) - 9 Mark-to-market adjustment on convertible bond - (7) Non-recurring items - (7) EPRA earnings - diluted 295 29.4 p 268 29.7 p Remove dilution of share options 0.1 p 0.2 p EPRA earnings - basic 29.5 p 29.9 p Profit for the year after taxation 1,106 110.2 p 284 31.5 p Non-recurring items for the year ended 31 March 2013 of £7m relate to the issue costs for the convertible bond. The European Public Real Estate Association (EPRA) has issued Best Practices Recommendations, the latest update of which was issued in January 2014, which give guidelines for performance measures. EPRA earnings is the profit after tax excluding investment and development property revaluations and gains or losses on disposals, changes in the fair value of financial instruments and associated close-out costs 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 (diluted) measure, with additional Company adjustments. Adjustments include mark to market adjustments on held for trading assets. The weighted average number of shares in issue for the year was: basic: 999m (2013: 895m); diluted for the effect of share options: 1,004m (2013: 901m). Basic undiluted earnings per share for the year, calculated using profit for the year after taxation of £1,106m (2013: £284m), was 110.7p (2013: 31.7p). Earnings per share shown in the table above are diluted. 31 March 31 March Net asset value (NAV) (diluted) 2014 2013 £m £m Balance sheet net assets 7,117 5,687 Less non-controlling interests (371) - Deferred tax arising on revaluation movements 6 14 Mark-to-market on effective cash flow hedges and related debt adjustments 173 198 Surplus on trading properties 63 10 Dilution effect of share options 39 58 EPRA NAV 7,027 5,967 EPRA NAV per share 688 p 596 p The EPRA NAV per share excludes the mark to market on effective cash flow hedges, related debt adjustments and the convertible bond, deferred taxation on revaluations and surplus on trading properties and is calculated on a fully diluted basis. The EPRA Best Practices Recommendations additional guidance, issued in January 2014, has adjusted the treatment of mark-to-market valuations on convertible bonds for the calculation of NAV per share. This update has provided a 1p increase in EPRA NAV per share in the current year. At 31 March 2014, the number of shares in issue was: basic: 1,008m (2013: 986m); diluted for the effect of share options: 1,021m (2013: 1001m). Total accounting return per share for the year ended 31 March 2014 of 20.0% includes dividends of 27.0p (see note 16) in addition to the increase in EPRA NAV of 92p. Total accounting return per share for the year ended 31 March 2013 was 4.6%. 3. Gross and net rental and related income 2014 2013 £m £m Rent receivable 310 269 Spreading of tenant incentives and guaranteed rent increases 20 24 Surrender premia 4 1 Gross rental income 334 294 Service charge income 50 35 Gross rental and related income 384 329 Service charge expenses (50) (35) Property operating expenses (21) (13) Net rental and related income 313 281 The cash element of net rental income recognised during the year ended 31 March 2014 from properties which were not subject to a security interest was £189m (2013: £159m). Property operating expenses relating to investment properties that did not generate any rental income were £1m (2013: £1m). Contingent rents of £1m (2013: £1m) were recognised in the year. 4. Fees and other income 2014 2013 £m £m Management and performance fees (from joint ventures and funds) 10 10 Other fees and commissions 5 5 15 15 5. Net revaluation gains on property and investments 2014 2013 £m £m Consolidated income statement Revaluation of properties 580 71 Result on property and investment disposals 31 8 Revaluation of investments 4 9 615 88 Share of valuation movements of joint ventures and funds 258 (62) Net revaluation gains on property and investments 873 26 Profit on trading property Sale proceeds 109 - Cost of sales (95) - Profit on trading property 14 - 6. Net financing costs 2014 2013 £m £m Interest payable on: Bank loans and overdrafts 29 37 Other loans 77 75 Obligations under finance leases 1 1 107 113 Development interest capitalised (17) (17) 90 96 Interest receivable on: Deposits, securities and liquid investments (3) (11) Loans to joint ventures (6) (3) (9) (14) Other finance (income) costs: Expected return on pension scheme assets - (7) Interest on pension scheme liabilities - 5 Valuation movements on translation of foreign currency debt (9) 5 Hedging reserve recycling 9 (5) Net financing costs - underlying 81 80 Capital and other: Valuation movements on fair value debt (62) 18 Valuation movements on fair value derivatives 62 (14) Net capital movement on convertible bond 50 14 Recycling of fair value movement on close-out of derivatives 10 20 Valuation movement on translation of foreign currency net assets (3) (2) Fair value movement on non-hedge accounted derivatives - 3 Net financing costs - capital 57 39 Net financing costs 138 119 Total financing income (12) (23) Total financing charges 150 142 Net financing costs 138 119 Interest on development expenditure is capitalised at a rate of 3.80% (2013: 4.00%). 7. Taxation 2014 2013 £m £m Tax (income) expense Current tax: UK corporation tax: 23% (2013: 24%) 2 1 2 1 Adjustments in respect of prior years (5) (9) Total current tax income (3) (8) Deferred tax on revaluations (3) (16) Group total taxation (net) (6) (24) Attributable to joint ventures and funds 5 (3) Total taxation income (1) (27) Tax reconciliation Profit on ordinary activities before taxation 1,105 257 Less: profit attributable to joint ventures and funds (382) (64) Group profit on ordinary activities before taxation 723 193 Tax on profit on ordinary activities at UK corporation tax rate of: 23% (2013: 24%) 166 46 Effects of: REIT exempt income and gains (160) (41) Tax losses (4) (6) Adjustments in respect of prior years (8) (23) Group total taxation income (6) (24) A current tax charge of £5m (2013: credit of £2m) and a deferred tax charge of £nil (2013: 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 2014 was £2m (2013: £1m). The underlying tax rate for the year ended 31 March 2014 was 0.7% (2013: 0.5%). Corporation tax payable at 31 March 2014 was £8m (2013: £17m) as shown on the balance sheet. 8. Property Property reconciliation 12 months to 31 March 2014 Investment UK Retail Offices & Residential Developments Subtotal Trading Properties Owner- occupied Total Level 3 Level 3 Level 3 Level 3 Level 3 £m £m £m £m £m £m £m Carrying value at 1 April 2013 3,360 1,267 861 5,488 40 42 5,570 Additions: - property purchases 53 428 83 564 - - 564 - acquisition of Hercules Unit Trust 1,006 - - 1,006 - - 1,006 - development expenditure 10 30 60 100 38 - 138 - capitalised interest - 6 4 10 7 - 17 - capital expenditure on asset management initiatives 25 4 - 29 - - 29 1,094 468 147 1,709 45 - 1,754 Depreciation - - - - - (1) (1) - Disposals (234) (11) - (245) (97) - (342) - Reclassifications (5) 538 (816) (283) 283 - - Revaluations included in income statement 240 270 65 575 - 5 580 - Revaluation included in SOCIE - - - - - 1 1 - Movement in tenant incentives and contracted rent uplift balances 6 18 4 28 - - 28 Carrying value at 31 March 2014 4,461 2,550 261 7,272 271 47 7,590 Head lease liabilities (note 13) (32) Surplus on trading properties 58 Total Group property portfolio valuation at 31 March 2014 7,616 Non-Controlling Interest (422) Total Group property portfolio valuation at 31 March 2014 attributable to shareholders 7,194 The different valuation method levels are defined below: Level 1: Quoted prices (unadjusted) in active markets for identical assets or liabilities. Level 2: Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices). Level 3: Inputs for the asset or liability that are not based on observable market data (unobservable inputs). These levels are specified in accordance with IFRS 13 'Fair Value Measurement'. Property valuations are inherently subjective as they are made on the basis of assumptions made by the valuer which may not prove to be accurate. For these reasons, and consistent with EPRA's guidance, we have classified the valuations of our property portfolio as Level 3 as defined by IFRS 13. Some of the inputs to the valuations are defined as 'unobservable' by IFRS 13. The Group's policy is to recognise transfers between fair value hierarchy levels as of the date of the event or change in circumstances that caused the transfer. There have been no transfers during the period. At 31 March 2014, the Group book value of properties of £7,616m (2013: £5,554m) comprises freeholds of £4,855m (2013: £3,502m); virtual freeholds of £695m (2013: £709m); and long leaseholds of £2,066m (2013: £1,343m). The historical cost of properties was £5,574m (2013: £4,229m). The property valuation does not include any investment properties held under operating leases (2013: £nil). Properties valued at £1,741m (2013: £1,724m) were subject to a security interest and other properties of non-recourse companies amounted to £1,066m (2013: £40m). During the year to 31 March 2014, a gross amount of £286m of investment properties were reclassified to trading properties, as since planning consent has been granted it is the Group's intention to redevelop and sell these properties. Some of these trading properties were subsequently sold in the period. Included within the property valuation is £100m (2013: £91m) in respect of accrued contracted rental uplift income, against which the Group holds a provision of £5m (2013: £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 £73m (2013: £56m). Valuation 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. The information provided to the valuers, and the assumptions and valuations models used by the valuers are reviewed by the property portfolio team, the Head of Offices, the Head of Retail and the Finance Director. The valuers meet with the External Auditors and also present directly to the Audit Committee at the interim and year-end review of results. A breakdown of valuations split between the Group and its share of joint ventures and funds is shown below: 2014 2013 Group Joint Ventures and Funds Total Group Joint Ventures and Funds Total £m £m £m £m £m £m Knight Frank LLP 6,036 2,903 8,939 5,084 2,680 7,764 CBRE 1,580 2,131 3,711 470 2,265 2,735 Total property portfolio valuation 7,616 5,034 12,650 5,554 4,945 10,499 Non-controlling interest share of property (422) (188) (610) - - - Total property portfolio valuation attributable to shareholders 7,194 4,846 12,040 5,554 4,945 10,499 9. Joint ventures and funds Summary movement for the year of the investments in joint ventures and funds Joint Ventures Funds Total Equity Loans 1 Total £m £m £m £m £m £m At 1 April 2013 1,886 450 2,336 1,843 493 2,336 Additions 175 445 620 569 51 620 Disposals (199) (436) (635) (481) (154) (635) Share of profit after taxation 370 7 377 377 - 377 Distributions and dividends: Capital 0 (1) (1) (1) - (1) Revenue (71) (31) (102) (102) - (102) Reclassification of amounts owed from joint ventures 44 0 44 44 44 Hedging and exchange movements 69 4 73 73 - 73 At 31 March 2014 2,274 438 2,712 2,278 434 2,712 1. Comparatives have been re-presented between equity and loans to better reflect the nature of historical investments. PREF, a fund owning a portfolio of retail property in Europe (in which British Land has a net investment of £54m), has its properties externally valued by CBRE. CBRE have included a market uncertainty clause in the valuation report of the Portuguese and Spanish properties, due to a lack of transactional evidence and uncertainty over the economic situation in those markets. In 2013 PREF made partial early repayments of debt totalling €18m. In March 2014, following the sale of its Italian asset, €44m of debt was repaid. PREF now has €37m of bank loans that are due to mature in the calendar year 2015. In December 2013 a one year extension of the fund to 26 March 2015 was approved. At 31 March 2014 the investment in joint ventures included within the total investment in joint ventures and funds was £2,658m (2013:£1,889m). Distributions in the year include the receipt of £6m from the Broadgate joint venture, £2m from the Meadowhall joint venture, £4m from Sainsbury's joint venture, £17m from Tesco joint ventures and £23m from HUT. At 31 March 2014, the valuation of the Group's share of joint ventures and funds properties was £5,034m (2013: £4,945m); surplus on the Group's share of joint ventures and funds' trading properties was £5m (2013: £nil); external net debt was £2,113m (2013: £2,427m) and the mark-to-market adjustment for external debt was £123m liability (2013: £193m liability). 9. Joint ventures and funds (continued): Joint ventures' and funds' summary financial statements A detailed breakdown of the Group's share of results of specific joint ventures and funds for the year ended 31 March 2014 is set out on the two following pages. 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. In the prior year the detailed breakdown contained 100% of the results of the specific joint ventures and funds. It is considered that the change in presentation, to our share, results in a more understandable disclosure. Bluebutton Properties Ltd MSC Property Intermediate Holdings Ltd BL Sainsbury Superstores Ltd Tesco Joint Ventures The Southgate Limited Partnership USS Joint Ventures* Euro Clover Private Ltd (GIC) Norges Bank Investment Management Universities Superannuation Scheme Group PLC Partners J Sainsbury plc Tesco PLC Aviva Investors Property sector City Offices Broadgate Shopping Centres Meadowhall Superstores Superstores Shopping Centres Shopping Centres Group share 50% 50% 50% 50% 50% 50% Summarised income statements £m £m £m £m £m £m Gross rental and related income 108 46 32 51 4 5 Net rental and related income 81 38 32 47 2 4 Other income and expenditure (1) Net interest payable (45) (19) (15) (28) Underlying profit before taxation 36 19 17 18 2 4 Surplus (deficit) on revaluation 143 4 3 43 2 10 Disposal of fixed assets Non-recurring items Profit (loss) on ordinary activities before taxation 179 23 20 61 4 14 Current tax (1) Deferred tax Profit (loss) on ordinary activities after taxation (British Land share) 179 23 20 60 4 14 Summarised balance sheets £m £m £m £m £m £m Investment properties 1,712 770 604 898 103 99 Current assets 4 1 1 2 Upstream loans to joint venture shareholders Cash and deposits 135 16 10 16 2 4 Gross assets 1,851 787 614 915 107 103 Current liabilities (63) (21) (16) (60) (3) (2) Bank debt (165) (504) Securitised debt (881) (372) (294) Obligations under finance leases (2) Deferred tax 5 1 (9) Gross liabilities (1,104) (395) (309) (573) (3) (2) Net external assets (British Land share) 747 392 305 342 104 101 Represented by: Shareholder loans 52 105 4 52 7 Ordinary shareholders' funds/partners' capital 695 287 301 290 104 94 Total investment (British Land share) 747 392 305 342 104 101 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 Group's share of 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. Leadenhall Hercules Unit Trust Other TOTAL TOTAL Holding Co Joint Ventures joint ventures Group share Group share (Jersey) Ltd and Sub-Funds and funds + 2014 2013 Oxford Partners Properties Property sector City Offices Retail Leadenhall Parks Group share 50% Various Summarised income statements £m £m £m £m £m Gross rental and related income - 40 21 307 306 Net rental and related income 34 15 253 260 Other income and expenditure - (1) (4) (6) (4) Net interest payable - (12) (4) (123) (126) Underlying profit before taxation 21 7 124 130 Surplus (deficit) on revaluation 67 6 (16) 262 (61) Disposal of fixed assets - (4) - (4) (1) Non-recurring items - (4) Profit (loss) on ordinary activities before taxation 67 23 (9) 382 64 Current tax - (4) (5) 2 Deferred tax - 1 Profit (loss) on ordinary activities after taxation (British Land share) 67 23 (13) 377 67 Summarised balance sheets £m £m £m £m £m Investment properties 265 456 124 5,031 4,949 Current assets 1 2 20 31 62 Upstream loans to joint venture shareholders - - 4 4 4 Cash and deposits 1 6 9 199 215 Gross assets 267 464 157 5,265 5,230 Current liabilities (3) (5) (44) (217) (340) Bank debt (75) (39) (783) (955) Securitised debt - - (1,547) (1,592) Obligations under finance leases - (1) (3) (5) Deferred tax - - (3) (2) Gross liabilities (3) (80) (84) (2,553) (2,894) Net external assets (British Land share) 264 384 73 2,712 2,336 Represented by: Shareholder loans 157 - 57 434 493 Ordinary shareholders' funds / Partners' capital 107 384 16 2,278 1,843 Total investment (British Land share) 264 384 73 2,712 2,336 *** On 17th February 2014 Hercules Unit Trust (HUT) became a subsidiary of the Group (note 18). The income statement results for HUT includes the Group's share of results from the HUT consolidated group up to and including 17th February 2014. Thereafter, only the Group's share of results of the HUT joint ventures and sub-fund are shown. This includes 50% of the results of Deepdale Co-Ownership Trust, Speke Unit Trust, Gibraltar Limited Partnership and Valentine Co-Ownership Trust and 41.25% of Birstall Co-Ownership Trust. The balance sheet shows our ownership of the assets of these joint ventures and sub-funds detailed above. Comparatives have been re-presented to better reflect the nature of our historical investments. + Included in the column headed 'Other joint ventures and funds' are contributions from the following: BL Goodman Limited Partnership, BL Gazeley Limited, Eurofund Investments Zaragoza S.L (disposed of during the year), The Scottish Retail Property Limited Partnership (disposed of during the year), The Aldgate Place Limited Partnership, Bluebutton Property Management UK Limited, BL Residential Limited Partnership, Pillar Retail Europark Fund (PREF) and City of London Office Unit Trust (CLOUT). The Group's ownership share of PREF is 65%, however as the group does not exercise control over significant decisions of the fund, the Group equity accounts for its interest in PREF. 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 and Leadenhall Holding Co (Jersey) Limited which are domiciled in Jersey. Of the funds, Hercules Unit Trust (HUT) is domiciled in Jersey and PREF in Luxembourg. 9. Joint ventures and funds (continued) Operating cash flows of joint ventures and funds (Group share) 2014 2013 £m £m Rental income received from tenants 274 264 Operating expenses paid to suppliers and employees (33) (22) Cash generated from operations 241 242 Interest paid (135) (133) Interest Received 1 UK corporation tax paid (6) (7) Foreign Tax Paid (3) Cash inflow from operating activities 98 102 Cash inflow from operating activities deployed as: Surplus cash retained within joint ventures and funds 35 28 Revenue distributions to British Land 63 74 98 102 10. Other investments 2014 2013 Investments held for trading Loans and receivables Total Investments held for trading Loans and receivables Total £m £m £m £m £m £m At 1 April 2013 - 76 76 - 28 28 Additions 83 104 187 - 53 53 Disposals - (10) (10) - (4) (4) Revaluation 9 - 9 - Depreciation - - - - (1) (1) At March 2014 92 170 262 - 76 76 The investment held for trading comprises interests as a trust beneficiary. The trusts' assets comprise freehold reversions in a pool of commercial properties, comprising Sainsbury's superstores. The investment has been categorised as level 3 in the fair value hierarchy (see note 8). Fair value of the interest has been determined by the Directors, supported by an external valuation from CBRE. The superstore assets are subject to the same assumption ranges and sensitivities disclosed in note 8. Included within additions to loans and receivables is £92m (2012/13: £53m) in relation to a loan to Bluebutton Properties Limited, a joint venture company. 11. Debtors 2014 2013 £m £m Trade and other debtors+ 35 15 Amounts owed by joint ventures - 40 Prepayments and accrued income 6 5 41 60 + Included within this balance is deferred consideration of £1m (2013: £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. Trade and other debtors are shown after deducting a provision for bad and doubtful debts of £15m (2013: £11m). The charge to the income statement was £nil (2013: £1m). The Directors consider that the carrying amount of trade and other debtors are 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 2014 2013 £m £m Trade creditors 85 94 Amounts owed to joint ventures 4 4 Other taxation and social security 21 24 Accruals and deferred income 153 137 263 259 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. 13. Other non-current liabilities 2014 2013 £m £m Head leases 32 26 32 26 14. Deferred Tax Liabilities Deferred tax is calculated on temporary differences under the liability method using a tax rate of 20% (2013: 23%). The movement on deferred tax is as shown below: 1 April Credited Transferred to 31 March 2013 to income joint ventures 2014 £m £m £m £m Property and investment revaluations 12 (3) (9) - Other timing differences 4 - - 4 16 (3) (9) 4 Under the REIT regime development properties which are sold within three years of completion do not benefit from tax exemption. At 31 March 2014 the value of such properties is £455m (2013: £nil) and if these properties were to be sold and tax exemption was not available the tax arising would be £34m (2013: £nil). The deferred tax charge for the year ended 31 March 2014 includes a credit of £2m to reflect reduced deferred tax liabilities arising from the forthcoming reduction in the UK corporation tax rate to 20% (effective from 1 April 2015). Deferred tax assets of £39m (2013: £40m) arising on losses from previous years have not been recognised in the financial year. 15. Net debt 2014 2013 Footnote £m £m Secured on the assets of the Group 9.125% First Mortgage Debenture Stock 2020 1.1 36 37 6.125% First Mortgage Debenture Stock 2014 1.1 44 45 5.264% First Mortgage Debenture Bonds 2035 344 345 5.0055% First Mortgage Amortising Debentures 2035 100 101 5.357% First Mortgage Debenture Bonds 2028 327 334 6.75% First Mortgage Debenture Bonds 2020 176 181 Bank loans 1.2 523 - Loan notes 2 5 1,552 1,048 Unsecured 5.50% Senior Notes 2027 98 98 6.30% Senior US Dollar Notes 2015 2 92 101 3.895% Senior US Dollar Notes 2018 3 25 28 4.635% Senior US Dollar Notes 2021 3 136 158 4.766% Senior US Dollar Notes 2023 3 83 97 5.003% Senior US Dollar Notes 2026 3 52 62 3.81% Senior Notes 2026 99 - 3.97% Senior Notes 2026 101 - 1.5% Convertible Bond 2017 458 407 Bank loans and overdrafts 602 179 1,746 1,130 Gross debt 4 3,298 2,178 Interest rate derivatives liabilities 57 86 Interest rate derivatives assets (32) (92) 3,323 2,172 Cash and short-term deposits 5,6 (142) (135) Total net debt 3,181 2,037 Net debt attributable to non-controlling interests (204) - Net debt attributable to shareholders of the Company 2,977 2,037 Total borrowings where any instalments are due after five years are £102m (2013: £103m). 2014 2013 1 These are non-recourse borrowings with no recourse for repayment to other companies or assets in the Group: £m £m 1.1 BLD Property Holdings Ltd 80 82 1.2 Hercules Unit Trust 523 - 603 82 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 2014 was £3,209m (2013: £2,063m). Included in this is the principal amount of secured borrowings and other borrowings of non-recourse companies of £1,505m, of which the proportion of the borrowings of the partly-owned subsidiary, Hercules Unit Trust, not beneficially owned by the Group is £219m. 5 Included within cash and short-term deposits is the cash and short-term deposits of Hercules Unit Trust, of which £14m is the proportion not beneficially owned by the Group. 6 Cash and deposits not subject to a security interest amount to £93m (2013: £106m). Maturity analysis of net debt 2014 2013 £m £m Repayable: within one year and on demand 495 44 Between: one and two years 90 188 two and five years 1,084 522 five and ten years 465 441 ten and fifteen years 783 602 fifteen and twenty years 6 5 twenty and twenty five years 375 376 2,803 2,134 Gross debt 3,298 2,178 Interest rate and currency derivatives 25 (6) Cash and short-term deposits (142) (135) Net debt 3,181 2,037 15. Net debt (continued) British Land Unsecured Financial Covenants 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 2014, the ratio was 40%: i. Net borrowings were £2,896m, being the principal amount of gross debt of £3,209m, less the relevant proportion of borrowings of the partly-owned subsidiary of £219m, plus amounts owed to joint ventures of £4m (see note 12), plus TPP Investments Ltd of £30m (see note 17), less the beneficially owned cash and deposits of £128m (being £142m less the relevant proportion of cash and deposits of the partly-owned subsidiary of £14m); and ii. Adjusted Capital and Reserves were £7,301m, being share capital and reserves of £6,746m (see balance sheet), adjusted for £6m of deferred tax (see note 2), £63m trading property surpluses (see notes 8 and 9), £313m exceptional refinancing charges (see below) and £173m fair value adjustments on financial assets and liabilities (being £115m mark-to-market on interest derivatives and £58m adjustment on the convertible bond). Net Unsecured Borrowings not to exceed 70% of Unencumbered Assets At 31 March 2014 the ratio was 31%: i. Net Unsecured Borrowings were £1,615m, being the principal amount of gross debt of £3,209m, plus amounts owed to joint ventures of £4m (see note 12) less cash and deposits not subject to a security interest of £93m less the principal amount of secured and non-recourse borrowings of £1,505m; and ii. Unencumbered Assets were £5,125m being properties of £7,616m (see note 8) plus investments in joint ventures and funds of £2,712m (see balance sheet) and other investments of £262m (see balance sheet) less investments in joint ventures of £2,658m (see note 9) and encumbered assets of £2,807m (see note 8). In calculating Adjusted Capital and Reserves for the purpose of the unsecured debt financial covenants, there is an adjustment of £313m 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 2014 2013 £m £m Fixed rate 2,208 1,848 Variable rate (net of cash) 973 189 Net debt 3,181 2,037 Reconciliation of movement in Group Net Debt to Cash Flow Statement 2013 Cash flow Non cash 2014 £m £m £m £m Per Cash Flow Statement: Cash and short-term deposits (135) (7) - (142) Cash and cash equivalents (135) (7) - (142) Term debt (excluding overdrafts) 2,178 620 500 3,298 Fair value of interest rate derivatives (6) (16) 47 25 Net debt 2,037 597 547 3,181 The Group Loan to Value (LTV) ratio at 31 March 2014 is 29%, being principal value of gross debt of £3,209m less the relevant portion of borrowings of the partly-owned subsidiary of £219m, less cash and short-term deposits of £128m (being £142m less the relevant proportion of cash and deposits of the partly-owned subsidiary of £14m), divided by total Group property of £7,616m (see note 8) plus investments in joint ventures and funds of £2,712m (see balance sheet) and other investments of £262m (see balance sheet) less the relevant portion of property and investments of the partly-owned subsidiary of £581m. 15. Net debt (continued) Maturity of committed undrawn borrowing facilities 2014 2013 £m £m Maturity date: over five years 160 - between four and five years 310 108 between three and four years 140 870 Total facilities available for more than three years 610 978 between two and three years 942 - between one and two years - 757 within one year 410 369 Total 1,962 2,104 The above facilities are available to be drawn for Group purposes. Comparison of market values and book values at 31 March 2014 Level Market Book Value Value Difference £m £m £m Debentures and unsecured bonds 2 1,722 1,713 9 Convertible bond 1 458 458 - Bank debt and other floating rate debt 2 1,138 1,127 11 Cash and short-term deposits 1 (142) (142) - 3,176 3,156 20 Other financial (assets) liabilities: - interest rate derivative assets 2 (32) (32) - - interest rate derivative liabilities 2 57 57 - 25 25 - Total 3,201 3,181 20 Short-term debtors and creditors have been excluded from the disclosures. The fair values of debt, debentures and the convertible bond 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. Fair value heirachy The table below analyses financial instruments carried at fair value, by the valuation method. The different levels are defined as follows: Level 1: Quoted prices (unadjusted) in active markets for identical assets or liabilities. Level 2: Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices). Level 3: Inputs for the asset or liability that are not based on observable market data (unobservable inputs). 2014 Level 1 Level 2 Level 3 Total £m £m £m £m Interest rate and currency derivative assets - (32) - (32) Assets - (32) - (32) Interest rate and currency derivative liabilities - 57 - 57 Convertible bond 458 - - 458 Liabilities 458 57 - 515 Total 458 25 - 483 16. Dividend The fourth quarter dividend of 6.75 pence per share, totalling £68m (2012/13: 6.6 pence per share, totalling £65m) was approved by the Board on 13 May 2014 and is payable on 8 August 2014 to shareholders on the register at the close of business on 4 July 2014. 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 4 business days before the ex-dividend date of 2 July 2014. The Board expects to announce the split between Property Income Distributions ('PID') and non-PID income at that time. Any Scrip Dividend Alternative will not be enhanced. PID dividends are paid, as required by REIT legislation, after deduction of withholding tax at the basic rate (currently 20%), where appropriate. Certain classes of shareholders may be able to elect to receive dividends gross. Please refer to our website (www.britishland.com) for details. Payment Date Dividend PID Non PID Pence per share 2014 £m 2013 £m Current year dividends 08.08.2014 2014 4th interim 6.75 6.75 02.05.2014 2014 3rd interim 6.75 * 6.75 14.02.2014 2014 2nd interim 6.75 6.75 68 08.11.2013 2014 1st interim 6.75 6.75 67 27.00 Prior year dividends 09.08.2013 2013 4th interim 6.60 * 6.60 65 10.05.2013 2013 3rd interim 6.60 * 6.60 66 15.02.2013 2013 2nd interim 6.60 * 6.60 59 09.11.2012 2013 1st interim 6.60 * 6.60 59 26.40 10.08.2012 2012 4th interim 3.30 3.30 6.60 58 09.05.2012 2012 3rd interim 6.50 6.50 58 Dividends in Consolidated Statement of Changes in Equity 266 234 Dividends settled in shares (105) (32) Dividends settled in cash 161 202 Timing difference relating to payment of withholding tax (2) 1 Dividends in Cash Flow Statement 159 203 * 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 (2013: £30m) and recourse is only to the partnership assets. 18. Acquisition of a Subsidiary (Business Combination) On 17 February 2014, the Group acquired additional units of the Hercules Unit Trust, a Unit Trust registered in Jersey which is engaged in property investment, resulting in a cumulative ownership of 57.2% of the outstanding units and control of the underlying entity. Management determined that the acquisition of control should be accounted for as a business combination in accordance with IFRS 3 'Business Combinations'. Following this transaction additional units were purchased bringing cumulative ownership to 58.6% at 31st March 2014. The fair value of the Group's 49.2% equity interest in the Hercules Unit Trust held before the business combination amounted to £430m. No gain or loss was recognised as a result of measuring the equity interest at fair value. Subsequent to 31 March 2014 further purchases resulted in a cumulative ownership of 59.8%. The acquired subsidiary has contributed net revenues of £12m and profit of £18m to the Group for the period from the date of acquisition to 31 March 2014. If the acquisition had occurred on 1 April 2013 with all other variables held constant Group net revenue for 2014 would have increased by £49m, and underlying profit for 2014 would have increased by £23m. Details of the assets and bargain purchase arising are as follows: Attributed fair value £m Investment Property 1,006 Investments in joint ventures and funds 376 Other net current liabilities (4) Cash and cash equivalents 18 Debenture and loans (522) Fair value of acquired interest in net assets of subsidiary 874 Bargain purchase (negative goodwill) (3) Total purchase consideration 871 Less: Fair value of previously held interest (430) Non-controlling interest (374) Cash consideration 67 Additional units purchased in the year 78 Total acquisition of Hercules Unit Trust 145 The purchase consideration disclosed above comprises cash and cash equivalents paid to the acquiree's previous owner of £67m. The bargain purchase is a result of unit acquisitions trading at a discount in the secondary market. The gain on bargain purchase is recognised in net valuation movement. The non-controlling interest (42.8% ownership interest in Hercules Unit Trust) recognised at the acquisition date was measured by reference to the present ownership interest's proportionate share in the acquiree's recognised amounts of the identifiable net assets and amounted to £374m. The valuation of investment property at the acquisition date was performed by an external professional appraiser with experience of the relevant market. The fair value of cash and cash equivalents was considered equal to the carrying value representing the entity's bank deposits; fair value of borrowings and trade and other payables was calculated based on discounted cash flow models. The acquired bank loans and overdrafts have no recourse to other companies or assets in the Group. 19. Share capital and reserves 2014 2013 Number of ordinary shares in issue at 1 April 997,691,488 900,199,638 Share issues 22,074,993 97,491,850 At 31 March 1,019,766,481 997,691,488 Of the issued 25p ordinary shares, 169,990 shares were held in the ESOP trust (2013: 275,497), 11,266,245 shares were held as treasury shares (2013: 11,266,245) and 1,008,330,246 shares were in free issue (2013: 986,149,746). No treasury shares were acquired by the ESOP trust during the year. All issued shares are fully paid. Hedging and translation reserve The hedging and translation reserve comprises the effective portion of the cumulative net change in the fair value of cash flow and foreign currency hedging instruments, as well as all foreign exchange differences arising from the translation of the financial statements of foreign operations. The foreign exchange differences also include the translation of the liabilities that hedge the Company's net investment in a foreign subsidiary. Revaluation reserve The revaluation reserve relates to owner-occupied properties and investments in joint ventures and funds. Merger reserve This comprises the premium on the share placing in March 2013. No share premium is recorded in the Company's financial statements, through the operation of the merger relief provisions of the Companies Act 2006. 20. Segment Information Operating segments 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. The Office sector includes residential, as this is often incorporated into Office schemes, and Retail includes leisure, for a similar rationale. The prior year comparatives have been updated to reflect these changes. The relevant revenue, net rental income, operating result, assets and capital expenditure, being the measures 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 2014 2013 2014 2013 2014 2013 2014 2013 £m £m £m £m £m £m £m £m Revenue British Land Group 99 88 235 206 - - 334 294 Share of joint ventures and funds 84 83 168 171 15 19 267 273 Total 183 171 403 377 15 19 601 567 Net rental income British Land Group 91 85 222 196 - - 313 281 Share of joint ventures and funds 81 80 160 165 12 15 253 260 Total 172 165 382 361 12 15 566 541 Operating Result British Land Group 80 76 218 190 (42) (42) 256 224 Share of joint ventures and funds 80 80 157 162 10 14 247 256 Total 160 156 375 352 (32) (28) 503 480 Reconciliation to underlying profit before taxation 2014 2013 British Land Group £m £m Total Operating Result 503 480 British Land Group net financing costs (81) (80) Share of funds and joint ventures net financing costs (123) (126) Capital and other 811 (14) Total profit on ordinary activities before tax 1,110 260 Of the total revenues above, £15m (2013: £19m) was derived from outside the UK. Segment Assets Offices Retail Other / unallocated Total 2014 2013 2014 2013 2014 2013 2014 2013 £m £m £m £m £m £m £m £m Property assets British Land Group 3,082 2,179 4,534 3,373 - 2 7,616 5,554 Share of funds and joint ventures 2,017 1,684 2,928 3,005 89 256 5,034 4,945 Total 5,099 3,863 7,462 6,378 89 258 12,650 10,499 Segment assets British Land Group 3,036 2,175 4,554 3,393 477 365 8,067 5,933 Share of funds and joint ventures 2,153 1,839 2,997 3,116 98 263 5,248 5,218 Total 5,189 4,014 7,551 6,509 575 628 13,315 11,151 Other assets British Land Group - - - - 477 363 477 363 Share of funds and joint ventures 141 155 67 107 9 7 217 269 Total 141 155 67 107 486 370 694 632 Capital expenditure British Land Group 607 391 1,140 315 - 47 1,747 753 Share of funds and joint ventures 86 109 13 26 29 - 128 135 Total 693 500 1,153 341 29 47 1,875 888 Reconciliation to net assets 2014 2013 British Land Group £m £m Segment Assets British Land Group 8,067 5,933 Share of funds and joint ventures 5,248 5,218 Total 13,315 11,151 Share of funds and joint ventures liabilities (2,536) (2,882) Current liabilities (766) (320) Non-current liabilities (2,896) (2,262) Net Assets 7,117 5,687 Other assets include other investments of £262m (2013: £76m), debtors of £41m (2013: £60m), liquid investments of £nil (2013: £nil), cash and short-term deposits of £142m (2013: £135m) and derivatives of £32m (2013: £92m). Supplementary Disclosures Table A: SUMMARY INCOME STATEMENT AND BALANCE SHEET Summary income statement based on proportional consolidation for the year ended 31 March 2014 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. Year ended 31 March 2014 Year ended 31 March 2013 Group Joint ventures Less non- Proportionally Group Joint ventures Proportionally and funds controlling interests Consolidated and funds Consolidated £m £m £m £m £m £m £m Gross rental income 334 267 (4) 597 294 273 567 Property operating expenses (21) (14) - (35) (13) (13) (26) Net rental income 313 253 (4) 562 281 260 541 Administrative expenses (72) (6) - (78) (72) (4) (76) Fees & other income 15 - - 15 15 - 15 Ungeared Income Return 256 247 (4) 499 224 256 480 Net interest (81) (123) 2 (202) (80) (126) (206) Underlying profit before taxation 175 124 (2) 297 144 130 274 Underlying tax (2) - - (2) (1) - (1) Underlying profit after taxation 173 124 (2) 295 143 130 273 Underlying earnings per share - diluted basis 29.4 p 30.3 p Valuation movement 873 26 Other capital & tax (net) 53 (4) Capital and other 926 22 Total return 1,221 295 The underlying earnings per share is calculated on underlying profit before taxation of £297m, tax attributable to underlying profits of £2m and 1,004m shares on a diluted basis for the year ended 31 March 2014. Includes other comprehensive income, movement in dilution of share options and the movement in items excluded for EPRA NAV. Supplementary Disclosures (continued) Table A (continued): Summary balance sheet based on proportional consolidation as at 31 March 2014 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 Less non-controlling interest Share options Deferred tax Mark-to-Market on effective cash flow hedges and related debt adjustments Head Leases Valuation surplus on trading properties EPRA Net assets 2014 EPRA Net assets 2013 £m £m £m £m £m £m £m £m £m £m Retail properties 4,554 2,930 (610) - - - (22) - 6,852 6,378 Office properties 3,036 2,012 - - - - (12) 63 5,099 3,863 Other properties - 89 - - - - - - 89 258 Total properties 7,590 5,031 (610) - - - (34) 63 12,040 10,499 Investments in joint 2,712 (2,712) - - - - - - - - ventures and funds Other investments 262 (68) - - - - - - 194 53 Other net (liabilities) assets (266) (138) 8 39 6 - 34 - (317) (319) Net debt (3,181) (2,113) 231 - - 173 - - (4,890) (4,266) Net assets 7,117 - (371) 39 6 173 - 63 7,027 5,967 EPRA NAV per share (note 2) 688 p 596 p Property segments have been re-presented in line with note 20. EPRA Net Assets Movement Year ended Year ended 31 March 2014 31 March 2013 £m Pence per share £m Pence per share Opening EPRA NAV 5,967 596 5,381 595 Income return 295 29 273 30 Capital return 926 90 22 2 Dividend paid (161) (27) (202) (27) Dilution due to issues of shares - - 493 (4) Closing EPRA NAV 7,027 688 5,967 596 Supplementary Disclosures (continued) Table B: EPRA PERFORMANCE MEASURES EPRA Performance measures summary table 2014 2013 £m Pence per share £m Pence per share EPRA Earnings - basic 295 29.5 p 268 29.9 p - diluted 295 29.4 p 268 29.7 p EPRA NAV 7,027 688 p 5,967 596 p EPRA NNNAV 6,700 656 p 5,522 552 p EPRA Net Initial Yield 4.8 % 5.5 % EPRA 'topped-up' Net Initial Yield 5.3 % 5.7 % EPRA Vacancy Rate 5.2 % 3.4 % Calculation of EPRA earnings and EPRA earnings per share 2014 2013 £m £m Profit for the year after taxation 1,106 284 Exclude: Group - non-underlying current tax (5) (9) Group - deferred tax (3) (16) Joint ventures and funds - non-underlying current tax 5 (2) Joint ventures and funds - deferred tax - (1) Group - net valuation movement (including result on disposals) (615) (79) Joint ventures and funds - net valuation movement (including result on disposals) (258) 62 Amortisation of intangible assets - 1 Changes in fair value of financial instruments and associated close-out costs 57 28 Non-controlling interest in respect of the above 8 - EPRA earnings 295 268 Mark-to-market on / profit on disposal of liquid investments (held for trading assets) - (9) Mark-to-market on convertible bond - 7 Non-recurring items - 7 Underlying earnings 295 273 * Comparatives have been re-presented in line with updated EPRA guidance. ** Non-recurring items for the year ended 31 March 2014 relate to £7m of issue costs for the convertible bond. 2014 2013 Number Number million million Weighted average number of shares 1,010 907 Adjustment for Treasury shares (11) (11) Adjustment for ESOP shares - (1) Weighted average number of shares (basic) 999 895 Dilutive effect of share options 2 2 Dilutive effect of ESOP shares 3 4 Weighted average number of shares (diluted) 1,004 901 2014 2013 Pence Pence Earnings per share (basic) 110.7 31.7 Earnings per share (diluted) 110.2 31.5 Underlying earnings per share (diluted) 29.4 30.3 EPRA earnings per share - basic 29.5 29.9 - diluted 29.4 29.7 Supplementary Disclosures (continued) Table B (continued): Net assets per share 2014 2013 £m Pence per share £m Pence per share Balance sheet net assets 7,117 5,687 Deferred tax arising on revaluation movements 6 14 Mark-to-market on effective cash flow hedges and related debt adjustments 173 198 Dilution effect of share options 39 58 Surplus on trading properties 63 10 Less non-controlling interests (371) - EPRA NAV 7,027 688 p 5,967 596 p Deferred tax arising on revaluation movements (6) (14) Mark-to-market on effective cash flow hedges and related debt adjustments (173) (198) Mark-to-market on debt (148) (233) EPRA NNNAV 6,700 656 p 5,522 552 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 2014 2013 £m £m Investment property - wholly-owned 7,194 5,554 Investment property - share of joint ventures and funds 4,757 4,945 Less developments, residential and land (1,192) (1,340) Completed property portfolio 10,759 9,159 Allowance for estimated purchasers' costs 639 552 Gross up completed property portfolio valuation 11,398 9,711 Annualised cash passing rental income 554 541 Property outgoings (8) (11) Annualised net rents 546 530 Rent expiration of rent-free periods and fixed uplifts 53 27 'Topped-up' net annualised rent 599 557 EPRA Net Initial Yield 4.8 % 5.5 % EPRA 'topped-up' Net Initial Yield 5.3 % 5.7 % Including fixed/minimum uplifts received in lieu of rental growth 26 26 Total 'topped-up' net rents 625 583 Overall 'topped-up' Net Initial Yield 5.5 % 6.0 % 'Topped-up' net annualised rent 599 557 ERV vacant space 33 19 Reversions (9) (13) Total ERV 623 563 Net Reversionary Yield 5.5 % 5.8 % * The period over which rent-free periods expire is 2 years (2013: 2 years). The current period above is stated for the UK portfolio only. Supplementary Disclosures (continued) Table B (continued): EPRA Vacancy Rate 2014 2013 £m £m Annualised potential rental value of vacant premises 33 19 Annualised potential rental value for the completed property portfolio 626 563 EPRA Vacancy Rate 5.2% 3.4% The current period above is stated for the UK portfolio only. EPRA Cost Ratios 2014 2013 £m £m Property outgoings 21 13 Administrative expenses 72 72 Share of joint ventures and funds expenses 20 17 Less: Performance & management fees (from joint ventures & funds) (10) (10) Other fees and commission (5) (5) Ground rent costs (2) (1) EPRA Costs (including direct vacancy costs) (A) 96 86 Direct vacancy costs (13) (14) EPRA Costs (excluding direct vacancy costs) (B) 83 72 Gross Rental Income less ground rent costs 330 294 Share of joint ventures and funds (GRI less ground rent costs) 265 273 Total Gross Rental Income (C) 595 567 EPRA Cost Ratio (including direct vacancy costs) (A/C) 16.2 % 15.3 % EPRA Cost Ratio (excluding direct vacancy costs) (B/C) 13.9 % 12.8 % Overhead and operating expenses capitalised (including share of joint ventures and funds) - - No overhead or operating expenses, including employee costs, are capitalised. Supplementary Disclosures (continued) Table C: GROSS RENTAL INCOME AND ACCOUNTING RETURN Calculation of gross rental income Year ended 31 March 31 March 2014 2013 £m £m Rent receivable 574 538 Spreading of tenant incentives and guaranteed rent increases 23 28 Surrender premia 4 1 Gross rental income 601 567 Year ended Year ended 31 March 2014 31 March 2013 Total accounting return 20.0 % 4.6 % SUPPLEMENTARY TABLES (Data includes Group's share of Joint Ventures and Funds) Portfolio Valuation At 31 March 2014 Total1 Change %² £m H1 H2 FY Retail3: Retail parks 2,767 1.1 2.7 3.7 Superstores 1,321 2.0 0.7 2.8 Shopping centres 1,862 0.3 1.8 2.1 Department stores 564 6.5 11.1 18.3 Leisure 338 2.0 8.4 10.5 Retail 6,852 1.5 2.9 4.4 Offices3: City 2,038 3.6 8.1 11.8 West End 2,720 6.0 10.0 16.6 Provincial 96 4.0 6.6 10.9 All Offices 4,854 5.0 9.1 14.4 Residential4 245 2.6 13.2 15.4 All Offices & Residential 5,099 4.9 9.3 14.5 Total 11,951 2.8 5.5 8.3 Table shows UK total, excluding assets held in Europe. Total portfolio valuation including Europe of £12.0bn at year end, +8.0% valuation movement. 1 Including Group's share of properties in joint ventures and funds 2 Valuation movement during the period (after taking account of capital expenditure) of properties held at the balance sheet date, including developments (classified by end use), purchases and sales ³ Including developments 4 Stand-alone residential Portfolio Yield & ERV Movements At 31 March 2014 ERV NEY ERV Growth %1 NEY Yield Compression bps2 £m % H1 H2 FY H1 H2 FY Retail: Retail parks 165 5.7 1.0 0.0 1.0 7 18 25 Superstores 70 5.1 0.5 0.2 0.7 5 3 9 Shopping centres 112 5.5 0.0 2.3 2.4 5 6 11 Department stores 24 5.4 0.1 0.1 0.2 38 58 94 Leisure 21 7.7 2.0 2.6 4.6 6 65 71 Retail 392 5.6 0.6 0.9 1.5 8 18 26 Offices: City 98 5.3 1.2 6.6 7.93 9 30 39 West End 137 5.1 2.3 2.3 4.6 16 28 41 Provincial 5 6.1 0.0 0.0 0.0 23 24 47 All Offices 240 5.2 1.7 4.1 5.8 13 29 40 Total 632 5.5 0.9 2.0 3.0 10 22 31 Table shows UK total, excluding assets held in Europe. 1 Like for like (as calculated by IPD) 2 Including notional purchaser's costs 3 City up 4.0% on a like-for-like basis Total Property Return (as calculated by IPD excluding Europe) FY to 31 March 2014 Retail Offices Total % British Land IPD British Land IPD British Land IPD Capital Return 4.6 4.2 15.3 12.9 8.9 7.5 - ERV Growth 1.5 0.0 5.8 4.9 3.0 1.7 - Yield Compression1 26 bps 33 bps 40 bps 52 bps 31 bps 45 bps Income Return 5.9 5.7 3.5 5.0 4.9 5.7 Total Property Return 10.7 10.1 19.3 18.5 14.2 13.6 1 Net equivalent yield movement Portfolio Weighting At 31 March 2013 2014 2014 2014 (current) (current) (pro-forma1) % % £m % Retail: Retail parks 24.5 23.1 2,767 21.5 Superstores 12.6 11.1 1,321 10.1 Shopping centres 17.6 15.6 1,862 14.4 Department stores 4.6 4.7 564 4.3 Leisure 3.0 2.8 338 2.6 Retail 62.3 57.3 6,852 52.9 Offices: City 17.1 17.1 2,038 16.9 West End 18.4 22.7 2,720 25.3 Provincial 0.8 0.8 96 1.7 All Offices 36.3 40.6 4,854 43.9 Residential2 1.4 2.1 245 3.2 All Offices & Residential 37.7 42.7 5,099 47.1 Total 100.0 100.0 11,951 100.0 Table shows UK total, excluding assets held in Europe. 1 Pro forma for developments to date at estimated end value (as determined by the Group's external valuers) 2 Stand-alone residential Portfolio Net Yields1 At 31 March 2014 (excluding developments) EPRA net initial yield % EPRA topped up net initial yield %2 Overall topped up net initial yield %3 Net reversionary yield % Net equivalent yield % Retail: Retail parks 5.3 5.6 5.7 5.6 5.7 Superstores 4.9 5.1 5.1 5.0 5.1 Shopping centres 5.3 5.4 5.4 5.6 5.5 Department stores 5.0 5.0 7.1 4.0 5.4 Leisure 7.1 7.1 8.9 5.6 7.7 Retail 5.3 5.5 5.8 5.4 5.6 Offices: City 5.5 5.8 5.9 6.2 5.3 West End 2.9 4.3 4.4 5.3 5.1 Provincial 6.9 6.9 6.9 5.6 6.1 All Offices 4.0 4.9 5.0 5.6 5.2 Total 4.8 5.3 5.5 5.5 5.5 Table shows UK total, excluding assets held in Europe. 1 Including notional purchaser's costs 2 Including rent contracted from expiry of rent-free periods and fixed uplifts not in lieu of rental growth 3 Including fixed/minimum uplifts (excluded from EPRA definition) Annualised Rent & Estimated Rental Value (ERV) At 31 March 2014 (excluding developments) Annualised rent (valuation basis) £m1 ERV £m Average rent £psf Total Total Contracted2 ERV2 Retail: Retail parks 157 165 24.5 24.6 Superstores 68 70 21.8 21.6 Shopping centres 104 112 30.2 31.9 Department stores 30 24 13.6 10.9 Leisure 25 21 14.1 11.6 Retail 384 392 22.7 22.4 Offices: City 88 98 47.5 48.7 West End 76 137 48.4 52.0 Provincial 6 5 27.1 21.9 All Offices 170 240 46.9 49.2 Residential3 3 - All Offices & Residential 173 240 Total 557 632 26.6 27.7 Table shows UK total, excluding assets held in Europe. 1 Gross rents plus, where rent reviews are outstanding, any increases to ERV (as determined by the Group's external valuers), less any grounds rents payable under head leases, excludes contracted rent subject to rent free and future uplift 2 Office average rent and ERV £psf is based on office space only 3 Stand-alone residential Gross Rental Income1 (Accounting Basis) 12 mths to 31 March 2014 Annualised as at 31 March 2014 £m Total Total Retail: Retail parks 150 159 Superstores 72 71 Shopping centres 115 103 Department stores 33 33 Leisure 29 29 Retail 399 395 Offices: City 89 87 West End 84 93 Provincial 6 6 All Offices 179 186 Residential2 3 3 All Offices & Residential 182 189 Total 581 584 Table shows UK total, excluding assets held in Europe. 1 Gross rental income will differ from annualised rents due to accounting adjustments for fixed & minimum contracted rental uplifts and lease incentives 2 Stand-alone residential Lease Length & Occupancy At 31 March 2014 Average lease length yrs Occupancy rate % (excluding developments) To expiry To break Occupancy Occupancy (underlying)1 Retail: Retail parks 9.1 8.2 96.8 98.3 Superstores 15.0 14.8 100.0 100.0 Shopping centres 9.1 8.1 95.6 97.3 Department stores 26.6 23.3 100.0 100.0 Leisure 20.7 20.7 100.0 100.0 Retail 12.3 11.3 97.4 98.5 Offices: City 9.1 7.3 96.8 96.9 West End 11.2 9.4 85.7 88.4 Provincial 8.3 8.0 100.0 100.0 All Offices 10.2 8.4 90.5 92.1 Total 11.5 10.3 94.8 96.1 Table shows UK total, excluding assets held in Europe. 1 Including accommodation under offer or subject to asset management Rent Subject to Lease Break or Expiry At 31 March 2015 2016 2017 2018 2019 2015-17 2015-19 £m £m £m £m £m £m £m Retail: Retail parks 7 8 6 12 13 21 46 Superstores - - - - - - - Shopping centres 8 7 9 9 5 24 38 Department stores - - - 1 - - 1 Leisure - - - - - - - Retail 15 15 15 22 18 45 85 Offices: City 1 1 19 4 17 21 42 West End 1 4 7 8 10 12 30 Provincial - - - - - - - All Offices 2 5 26 12 27 33 72 Total 17 20 41 34 45 78 157 % of contracted rent 2.7% 3.1% 6.5% 5.4% 7.3% 12.4% 25.1% Potential uplift at current ERV 2 2 4 (2) 1 7 6 Table shows UK total, excluding assets held in Europe Rent Subject to Open Market Rent Review 12 months to 31 March 2015 2016 2017 2018 2019 2015-17 2015-19 £m £m £m £m £m £m £m Retail: Retail parks 19 18 16 22 25 53 100 Superstores 15 20 5 4 8 40 52 Shopping centres 9 14 14 15 10 37 62 Department stores 2 5 - - - 7 7 Leisure - - - - - - - Retail 45 57 35 41 43 137 221 Offices: City 11 14 2 15 14 27 56 West End 6 17 13 13 20 36 69 Provincial - 6 - - - 6 6 All Offices 17 37 15 28 34 69 131 Total 62 94 50 69 77 206 352 Potential uplift at current ERV 2 2 - - - 4 4 Table shows UK total, excluding assets held in Europe Major Holdings At 31 March 2014 BL Share Sq ft Rent Occupancy Lease (excl. developments under construction) % '000 £m pa1 rate %2 length yrs3 Broadgate, London EC2 50 3,963 177 96.8 7.2 Regent's Place, London NW1 100 1,589 70 98.3 9.4 Meadowhall Shopping Centre, Sheffield 50 1,448 81 98.0 8.1 Sainsbury's Superstores 52 2,864 68 100.0 15.1 Tesco Superstores 51 2,808 63 100.0 14.7 Paddington Central 100 608 23 94.2 10.1 Teeside Shopping Park, Stockton-on-Tees 100 422 15 98.6 7.0 Drake Circus Shopping Centre, Plymouth 100 414 16 99.2 6.3 Debenhams, Oxford Street 100 363 11 100.0 25.0 10 Portman Square, W1 100 134 5 68.2 12.0 1 Annualised contracted rent including 100% of Joint Ventures & Funds 2 Includes accommodation under offer or subject to asset management 3 Weighted average to first break Occupiers Representing over 0.5% of Total Contracted Rent At 31 March 2014 % of contracted rent % of contracted rent Tesco plc 7.7 Facebook 0.9 Sainsbury Group 6.0 Asda Group 0.9 Debenhams 5.8 JPMorgan 0.8 UBS AG 3.2 Reed Smith 0.8 Home Retail Group 2.7 C&W Plc (Cable & Wireless plc) 0.8 Kingfisher (B&Q) 2.7 JD Sports 0.8 HM Government 2.5 Gazprom 0.7 Next plc 2.4 Deutsche Bank AG 0.7 Virgin Active 2.0 Mayer Brown 0.7 Arcadia Group 2.0 Hennes 0.7 Spirit Group 1.6 Mothercare 0.6 Alliance Boots 1.6 ICAP Plc 0.6 Herbert Smith 1.4 Pets at Home 0.6 DSG International 1.3 Credit Agricole 0.6 Marks & Spencer Plc 1.3 Carlson (TGI Friday's) 0.6 Royal Bank of Scotland plc 1.2 AstraZeneca 0.6 Hutchison Whampoa 1.1 Nokia 0.6 Aegis Group 1.1 Henderson 0.5 House of Fraser 1.0 Steinhoff 0.5 New Look 1.0 Lewis Trust (River Island) 0.5 SportsDirect 0.9 Aramco 0.5 TJX Cos Inc (TK Maxx) 0.9 Lend Lease 0.5 INVESTMENT ACTIVITY Acquisitions and Disposals FY to 31 March 2014 Price (gross) BL Share Annual Passing Acquisitions Area £m £m Rent £m3 Completed Paddington Central Offices London 470 470 21 Aldgate Place Residential London 40 20 - The Shoreditch Estate1 Mixed Use London 6 6 - Hercules Unit Trust unit purchase2 Retail Various 262 262 16 Sainsbury's superstore portfolio4 Retail Various 83 83 - SouthGate Bath (50%) Retail South West 202 101 5 Hilden Block, Ealing Broadway Shopping Centre Retail London 29 29 2 Tesco Extra, Craigavon Retail N Ireland 23 23 1 1-5 Baker Street Offices London 22 22 1 Harmsworth Quays, Canada Water Residential London 11 11 - Other 6 6 - Total 1,154 1,033 46 1 Entered into an option agreement with The City of London Corporation to draw down a development agreement subject to securing revised planning consent on the sites 2 Units purchased over the course of the financial year 3 BL share of net rent topped up for rent frees 4 26% equity interest FY to 31 March 2014 Price (gross) BL Share Annual Passing Disposals Area £m £m Rent £m1 Completed Puerto Venecia, Zaragoza Retail Spain 242 121 7 Bon Accord & St Nicholas, Aberdeen Retail Scotland 189 94 6 The Triton Building (NEQ) residential Residential London 96 96 - Eastgate Shopping Centre, Basildon Retail South East 89 89 7 St James Retail Park, Northampton Retail Midlands 53 53 3 St James Retail Park, Dumbarton Retail Scotland 46 46 3 PREF, Udine Retail Italy 40 26 2 West Cornwall Shopping Park, Hayle Retail South West 26 11 1 Marble Arch House residential Residential London 17 17 - 6 and 7-9 Eldon St (Princes Trust House) Offices London 17 17 1 Marsh Mills Retail Park, Plymouth Retail South West 13 13 1 New Century Park land Offices Midlands 13 13 - Other 60 53 3 Exchanged Cwmbran Retail Park Retail Wales 32 32 2 Residential sales Residential London 29 29 - Total 962 710 36 1 BL share of net rent topped up for rent frees DEVELOPMENT Recently Completed & Committed Developments At 31 March 2014 Sector BL Share Sq ft PC Calendar Year Current Value Cost to complete ERV Pre-let Resi End Value3 % '000 £m £m1 £m2 £m £m 2010 Programme: 10 - 30 Brock Street, Regents Place4 Mixed Use 100 505 Completed 402 3 20.5 19.1 118 10 Portman Square Offices 100 134 Completed 183 4 9.8 4.9 - Marble Arch House5 Mixed Use 100 87 Completed 70 4 4.4 - 19 39 Victoria Street Offices 100 93 Completed 82 3 5.4 0.0 - 199 Bishopsgate Offices 50 144 Completed 60 1 3.5 2.0 - Whiteley Shopping, Fareham Retail 50 321 Completed 55 0 2.6 2.4 - Bedford Street Residential 100 24 Completed 34 1 0.0 0.0 28 Glasgow Fort (Leisure) Retail 59 46 Completed 11 3 0.7 0.7 - The Leadenhall Building Offices 50 605 2014 265 29 18.9 9.0 - 5 Broadgate Offices 50 710 2015 251 63 19.2 19.2 - Total 2010 Programme: 2,669 1,413 111 85.0 57.3 165 Recently Committed: Milton Keynes, Kingston Centre Retail 50 21 Completed 5 - 0.3 0.3 - Old Market, Hereford7 Retail 100 305 2014 66 15 4.8 3.9 - Craven Hill Gardens Residential 100 25 2014 47 4 - - 58 Fort Kinnaird, Edinburgh Retail 29 55 2014 3 3 0.4 0.3 - Broadgate Circle Offices 50 45 2014 10 8 1.2 - - Broughton Park, Chester Retail 59 54 2014 3 6 0.6 0.6 - Whiteley Leisure, Fareham Retail 50 58 2014 1 6 0.6 0.4 - Meadowhall Surrounding Land Retail 50 22 2015 1 3 0.4 0.4 - Glasgow Fort, M&S & Retail Terrace Retail 59 112 2015 1 20 1.6 0.7 - Deepdale, Preston Retail 29 71 2015 1 4 0.4 0.4 - Yalding House Offices 100 29 2015 11 12 1.5 - - The Hempel Residential 100 40 2016 44 26 - - 92 Aldgate Place, Phase 16 Residential 50 221 2016 16 45 - - 65 Clarges Mayfair8 Mixed Use 100 195 2017 213 183 5.7 - 449 Total Recently Committed: 1,253 422 335 17.5 7.0 664 Total Committed Under Construction 2,547 933 427 55.3 34.9 664 Data includes Group's share of properties in Joint Ventures & Funds (except area which is shown at 100%) 1 From 1 April 2014 to practical completion (PC) 2 Estimated headline rental value net of rent payable under head leases (excluding tenant incentives) 3 Residential development of which £148m completed or exchanged and a further £16m under offer 4 Includes 126,000 sq ft of residential of which £102m has now sold and completed 5 Includes 10,000 sq ft of residential of which £17m has now sold and completed during the year 6 End value excludes sale of hotel site, receipts of £6m (BL Share)estimated 7 Completed post year end 8 Includes 104,000 sq ft of residential Near-Term Pipeline At 31 March 2014 Sector BL Share Sq ft Total Cost Status '000 £m1 Blossom Street, Shoreditch Mixed Use 100 322 164 Pre-submission 5 Kingdom Street2 Offices 100 240 162 Consented 4 Kingdom Street Offices 100 147 99 Consented Glasgow Fort (Restaurant & Car Park) Retail 59 10 5 Consented Total Near-Term 719 430 1 Total cost including site value 2 210,000 sq ft of which is consented Medium-Term Pipeline At 31 March 2014 Sector BL Share Sq ft Status '000 100 Liverpool Street Offices 50 512 Pre-submission Power Court, Luton Retail 100 149 Pre-submission Aldgate Place, Phase 2 Residential 50 145 Consented Drake Circus Leisure Retail 100 105 Pre-submission Fort Kinnaird, Edinburgh (Debenhams) Retail 29 30 Pre-submission Glasgow Fort (Additional Retail Unit) Retail 59 30 Consented Lancaster Retail 100 300 Pre-submission Eden Walk Shopping Centre, Kingston Mixed Use 50 500 - 600 Pre-submission Surrey Quays Mixed Use 100 1,500 - 2,000 Pre-submission Harmsworth Quays Mixed Use 100 1,000 - 1,500 Pre-submission Total Medium-Term 4,271 - 5,371 GLOSSARY Annualised rent is the gross property rent receivable on a cash basis as at the reporting date. Additionally, it includes the external valuers' estimate of additional rent in respect of unsettled rent review, turnover rent and sundry income such as that from car parks and commercialisation, less any ground rents payable under head leases. Assets under management is the full value of all assets managed by British Land and includes 100% of the value of all joint ventures and funds. BREEAM(Building Research Establishment Environmental Assessment Method) assesses the sustainability of buildings against a range of criteria. Capital return is calculated as the change in capital value of the UK portfolio, less any capital expenditure incurred, expressed as a percentage of capital employed over the period, as calculated by IPD. Capital returns are calculated monthly and indexed to provide a return over the relevant period. Capped rents are subject to a maximum level of uplift at the specified rent reviews as agreed at the time of letting. Collar rents are subject to a minimum level of uplift at the specified rent reviews as agreed at the time of letting. Contracted rent is annualised rent adding in rent which is currently subject to a rent free period. Developer's profit is the profit on cost estimated by the valuers. The developer's profit is typically calculated by the valuers to be a percentage of the estimated total development costs, including land and notional finance costs. Development uplift is the total increase in the value (after taking account of capital expenditure and capitalised interest) of properties held for development during the period. It also includes any developer's profit recognised by valuers in the period. Development construction cost is the total cost of construction of a project to completion, excluding site values and finance costs (finance costs are assumed by the valuers at a notional rate of 5.75% per annum). EPRA is the European Public Real Estate Association, the industry body for European REITs. EPRA Cost Ratio (including direct vacancy costs) is the ratio of net overheads and operating expenses against gross rental income (with both amounts excluding ground rents payable). Net overheads and operating expenses relate to all administrative and operating expenses including the share of joint ventures' overheads and operating expenses, net of any service fees, recharges or other income specifically intended to cover overhead and property expenses. EPRA Cost Ratio (excluding direct vacancy costs) is the ratio calculated above, but with direct vacancy costs removed from net overheads and operating expenses balance. EPRA earnings is the profit after taxation excluding investment and development property revaluations and gains/losses on disposals, changes in the fair value of financial instruments and associated close-out costs and their related taxation. EPRA NAV per share is EPRA NAV divided by the diluted number of shares at the period end. EPRA net assets (EPRA NAV) are the balance sheet net assets excluding the mark-to-market on effective cash flow hedges and related debt adjustments and deferred taxation on revaluations. EPRA net initial yield is the annualised rents generated by the portfolio, after the deduction of an estimate of annual recurring irrecoverable property outgoings, expressed as a percentage of the portfolio valuation (adding notional purchaser's costs), excluding development and residential properties. EPRA NNNAV is the EPRA NAV adjusted to reflect the fair value of debt and derivatives and to include deferred taxation on revaluations. EPRA Topped Up Net Initial Yield is the current annualised rent, net of costs, topped up for contracted uplifts, where these are not in lieu of rental growth, expressed as a percentage of capital value, after allowing for notional purchaser's costs. EPRA vacancy rate is the estimated market rental value (ERV) of vacant space divided by ERV of the whole portfolio, excluding developments and residential property. This is the inverse of the occupancy rate. Estimated Rental Value (ERV) is the external valuers' opinion as to the open market rent which, on the date of valuation, could reasonably be expected to be obtained on a new letting or rent review of a property. Fair value movement is accounting adjustment to change the book value of an asset or liability to its market value. Gearing see loan to value (LTV). Gross investment activity as measured by our share of acquisitions, sales and investment in committed development. Gross rental income is the gross accounting rent receivable (quoted either for the period or on an annualised basis) prepared under IFRS which requires that rental income from fixed/minimum guaranteed rent reviews and tenant incentives is spread on a straight-line basis over the entire lease to first break. This can result in income being recognised ahead of cash flow. Gross Value Added (GVA) provides a snapshot of a company's overall contribution to the UK economy, both directly through activities and indirectly through spending. Group is The British Land Company PLC and its subsidiaries and excludes its share of joint ventures and funds (where not treated as a subsidiary) on a line-by-line basis (i.e. not proportionally consolidated). Headline rent is the contracted gross rent receivable which becomes payable after all the tenant incentives in the letting have expired. IFRS are the International Financial Reporting Standards as adopted by the European Union. Income return is calculated as net income expressed as a percentage of capital employed over the period, as calculated by IPD. Income returns are calculated monthly and indexed to provide a return over the relevant period. Interest cover is the number of times net interest payable is covered by underlying profit before net interest payable and taxation. IPD is Investment Property Databank Ltd which produces an independent benchmark of property returns and British Land UK portfolio returns. Lettings and lease renewals are divided between short-term (less than two years' lease length) and long-term (more than two years' lease length). Lettings and renewals are compared both to the previous passing rent as at the start of the financial year and the ERV immediately prior to letting. Both comparisons are made on a net effective basis. Like-for-like ERV growth is the change in ERV over a period on the standing investment properties expressed as a percentage of the ERV at the start of the period. Like-for-like ERV growth is calculated monthly and compounded for the period subject to measurement, as calculated by IPD. Like-for-like rental income growth is the growth in net rental income on properties owned throughout the current and previous periods under review. This growth rate includes revenue recognition and lease accounting adjustments but excludes properties held for development in either period and properties with guaranteed rent reviews. Loan to value (LTV) is the ratio of principal value of gross debt less cash, short-term deposits and liquid investments to the aggregate value of properties and investments. Mark-to-market is the difference between the book value of an asset or liability and its market value. Multi-channel retailing is the use of a variety of channels in a customer's shopping experience, including research, before a purchase. Such channels include: retail stores, online stores, mobile stores, mobile app stores, telephone sales and any other method of transacting with a customer. Transacting includes browsing, buying, returning as well as pre- and post- sale service. Net Development Value is the estimated end value of a development project as determined by the external valuers for when the building is completed and fully let (taking into account tenant incentives and notional purchaser's costs). It is based on the valuers view on ERVs, yields, letting voids and rent-frees. Net effective rent is the contracted gross rent receivable taking into account any rent-free period or other tenant incentive. The incentives are treated as a cost-to-rent and spread over the lease to the earliest termination date. Net equivalent yield is the weighted average income return (after allowing for notional purchaser's costs) a property will produce based upon the timing of the income received. In accordance with usual practice, the equivalent yields (as determined by the external valuers) assume rent is received annually in arrears. Net Initial Yield is the current annualised rent, net of costs, expressed as a percentage of capital value, after allowing for notional purchaser's costs. Net rental income is the rental income receivable in the period after payment of direct property outgoings which typically comprise ground rents payable under head leases, void costs, net service charge expenses and other direct irrecoverable property expenses. Net rental income is quoted on an accounting basis. Net rental income will differ from annualised net cash rents and passing rent due to the effects of income from rent reviews, net property outgoings and accounting adjustments for fixed and minimum contracted rent reviews and lease incentives Net reversionary yield is the anticipated yield to which the initial yield will rise (or fall) once the rent reaches the estimated rental value. Occupancy rate is the estimated rental value of let units as a percentage of the total estimated rental value of the portfolio, excluding development properties. It includes accommodation under offer or subject to asset management (where they have been taken back for refurbishment and are not available to let as at the balance sheet date). Omni-channel retailing is the evolution of multi-channel retailing, but is consent rated more on a seamless approach to the consumer experience through all available shopping channels i.e. mobile internet devices, computers, bricks and mortar, television, radio, direct mail, catalogue, etc. Over rented is the term used to describe when the contracted rent is above the estimated rental value (ERV). Overall 'topped-up' net initial yield is the EPRA Net 'topped-up' Initial Yield, adding all contracted uplifts to the annualised rents. Passing rent is the gross rent, less any ground rent payable under head leases. Portfolio valuation movement is the increase in value of the portfolio of properties held at the balance sheet date and net sales receipts of those sold during the period, expressed as a percentage of the capital value at the start of the period plus net capital expenditure, capitalised interest and transaction costs. Property Income Distributions (PIDs) are profits distributed to shareholders which are subject to tax in the hands of the shareholders as property income. PIDs are normally paid net of withholding tax currently at 20% which the REIT pays to the tax authorities on behalf of the shareholder. Certain types of shareholder (i.e. pension funds) are tax exempt and receive PIDs without withholding tax. Property companies also pay out normal dividends, called non-PIDs, which are treated as normal dividends and not subject to withholding tax. Property valuation is reported by the Group's external valuers. In accordance with usual practice, they report valuations net, after the deduction of the notional purchaser's costs, including stamp duty land tax, agent and legal fees. Rack rented is the term used to describe when the contracted rent is in line with the estimated rental value (ERV), implying a nil reversion. Rent-free period see Tenant (or lease) incentives. Rent reviews take place at intervals agreed in the lease (typically every five years) and their purpose is usually to adjust the rent to the current market level at the review date. For upwards-only rent reviews, the rent will either remain at the same level or increase (if market rents have increased) at the review date. Rents with fixed and minimum uplifts are either where rents are subject to contracted uplifts at a level agreed at the time of letting; or where the rent is subject to an agreed minimum level of uplift at the specified rent review. Retail planning consents are separated between A1, A2 and A3 - as set out in The Town and Country Planning (Use Classes) Order 2005. Within the A1 consent category, Open A1 consent grants planning for any type of retail, while Restricted A1 consent places limits on the types of retail that can operate (this is typically a restriction that only bulky goods operators are allowed to trade at that site). Class Description Use for all/any of the following purposes A1 Shops Retail sale of goods other than hot food; post office; sale of tickets or as a travel agency; sale of sandwiches or other cold food off the premises; hairdressing; direction of funerals; display of goods for sale; hiring out of domestic or personal goods/articles; the reception of goods to be washed, cleaned or repaired; a retail warehouse club being a retail club where goods are sold, or displayed for sale, only to persons who are members of that club; or as a night club. Financial and professional services Financial services; professional services (other than health or medical); or other services (including betting) appropriate for a shopping area. D2 Assembly and leisure Cinemas, music and concert halls, bingo and dance halls (but not night clubs), swimming baths, skating rinks, gymnasiums or area for indoor or outdoor sports and recreations. Reversion is the increase in rent estimated by the external valuers, where the passing rent is below the estimated rental value. The increases to rent arise on rent reviews and lettings. Scrip dividend British Land offers its shareholders the opportunity to receive dividends in the form of shares instead of cash. This is known as a Scrip dividend. Standing Investments are assets which are directly held and not in the course of development. Tenant (or lease) incentives are incentives offered to occupiers to enter into a lease. Typically this will be an initial rent-free period, or a cash contribution to fit-out. Under accounting rules the value of lease incentives is amortised through the income statement on a straight-line basis to the earliest lease termination date. TMTstands for technology, media and telecommunications. The residual site value of a development is calculated as the estimated (net) development value, less development profit, all development construction costs, finance costs (assumed at a notional rate) of a project to completion and notional site acquisition costs. The residual is determined to be the current site value. Topping out is a traditional construction ceremony to mark the occasion when the structure of the building reaches the highest point. Total property return is calculated as the change in capital value, less any capital expenditure incurred, plus net income, expressed as a percentage of capital employed over the period, as calculated by IPD. Total property returns are calculated monthly and indexed to provide a return over the relevant period. Total return (total accounting return) is the growth in EPRA NAV plus dividends paid, and this can be expressed as a percentage of EPRA NAV per share at the beginning of the period. Total Shareholder Return is the growth in value of a shareholding over a specified period, assuming dividends are reinvested to purchase additional units of stock. Total tax contribution is a more comprehensive view of tax contributions than the accountancy-defined tax figure quoted in most financial statements. It comprises taxes and levies paid directly, as well as taxes collected from others which we administered. Turnover rents is where all or a portion of the rent is linked to the sales or turnover of the occupier. Under rented is the term used to describe when the contracted rent is below the estimated rental value (ERV), implying a positive reversion. Underlying earnings per share (EPS) consists of underlying profit after tax divided by the diluted weighted average number of shares in issue during the period. Underlying profit before tax is the pre-tax 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. Virtual freeholdrepresents a long leasehold tenure for a period of up to 999 years. A 'peppercorn', or nominal, rent is paid annually. Weighted average debt maturity - each tranche of Group debt is multiplied by the remaining period to its maturity and the result is divided by total Group debt in issue at the period end. Weighted average interest rateis the Group loan interest and derivative costs per annum at the period end, divided by total Group debt in issue at the period end. Weighted average unexpired lease term is the average lease term remaining to first break, or expiry, across the portfolio weighted by contracted rental income (including rent-frees). The calculation excludes residential leases and properties allocated as developments. Yield compressionoccurs when the net equivalent yield of a property decreases, measured in basis points. Yield on cost is the estimated annual rent of the completed development divided by the total cost of development including site value and finance costs, accruing at a rate of 4% per annum to the point of assumed rent commencement, expressed as a percentage return. Yield shift is a movement (usually expressed in bps) in the yield of a property asset, or like-for-like portfolio, over a given period. Yield compression is a commonly-used term for a reduction in yields. This information is provided by RNS The company news service from the London Stock Exchange END FR USRARSRAVARR