British Land Co PLC

Annual / Quarterly Financial Statement • May 16, 2016

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RNS Number : 2775Y

British Land Co PLC

16 May 2016

consolidated income statement

for the year ended 31 march 2016

			2016				20152
	Note		Underlying1 £m	Capital and other £m	Total £m		Underlying1 £m	Capital and other £m	Total £m
---	---	---	---	---	---	---	---	---	---
Revenue	3		569	21	590		505	51	556
Costs	3		(128)	(11)	(139)		(115)	(45)	(160)
	3		441	10	451		390	6	396
Joint ventures and funds (see also below)	8		135	262	397		129	597	726
Administrative expenses			(93)	-	(93)		(85)	-	(85)
Valuation movement	4		-	616	616		-	884	884
Profit on disposal of investment properties and investments			-	35	35		-	20	20
Net financing costs
- financing income	5		5	65	70		7	-	7
- financing charges	5		(111)	(34)	(145)		(112)	(47)	(159)
			(106)	31	(75)		(105)	(47)	(152)
Profit on ordinary activities before taxation			377	954	1,331		329	1,460	1,789
Taxation	6			33	33			(24)	(24)
Profit for the year after taxation					1,364				1,765
Attributable to non-controlling interests			14	5	19		16	39	55
Attributable to shareholders of the Company			363	982	1,345		313	1,397	1,710
Earnings per share:
- basic	2				131.2p				168.3p
- diluted	2				124.1p				167.3p

All results derive from continuing operations.

			2016				20152
	Note		Underlying1 £m	Capital and other £m	Total £m		Underlying1 £m	Capital and other £m	Total £m
---	---	---	---	---	---	---	---	---	---
Results of joint ventures and funds accounted for using the equity method
Underlying Profit			135	-	135		129	-	129
Valuation movement	4		-	245	245		-	589	589
Profit on disposal of investment properties, trading properties and investments			-	18	18		-	6	6
Taxation			-	(1)	(1)		-	2	2
	8		135	262	397		129	597	726

1 See definition in glossary.

2 The prior year comparatives have been restated. See note 1.

consolidated statement OF COMPREHENSIVE INCOME

for the year ended 31 march 2016

	2016 £m	2015 £m
Profit for the year after taxation	1,364	1,765
Other comprehensive income:
Items that will not be reclassified subsequently to profit or loss:
Net actuarial loss on pension scheme	(1)	(5)
Valuation movements on owner-occupied property	19	10
	18	5
Items that may be reclassified subsequently to profit or loss:
(Losses) gains on cash flow hedges
- Group	(24)	(71)
- Joint ventures and funds	(3)	3
- Reclassification of items from the statement of comprehensive income	-	30
	(27)	(38)
Transferred to the income statement (cash flow hedges)
- Foreign currency derivatives	2	(11)
- Interest rate derivatives	10	8
	12	(3)
Exchange differences on translation of foreign operations
- Hedging and translation	(3)	6
- Other	3	(6)
	-	-
Deferred tax on items of other comprehensive income	(15)	10
Other comprehensive loss for the year	(12)	(26)
Total comprehensive income for the year	1,352	1,739
Attributable to non-controlling interests	19	53
Attributable to shareholders of the Company	1,333	1,686

consolidated BALANCE SHEET

AS AT 31 march 2016

	Note		2016 £m	2015 £m
ASSETS
Non-current assets
Investment and development properties	7		9,643	9,120
Owner-occupied property	7		95	60
			9,738	9,180
Other non-current assets
Investments in joint ventures and funds	8		3,353	2,901
Other investments	9		142	379
Deferred tax assets	13		3	-
Interest rate and currency derivative assets	14		167	139
			13,403	12,599
Current assets
Trading properties	7		325	274
Debtors	10		33	20
Cash and short-term deposits	14		114	108
			472	402
Total assets			13,875	13,001
LIABILITIES
Current liabilities
Short-term borrowings and overdrafts	14		(74)	(102)
Creditors	11		(218)	(261)
Corporation tax			(18)	(9)
			(310)	(372)
Non-current liabilities
Debentures and loans	14		(3,687)	(3,847)
Other non-current liabilities	12		(122)	(79)
Deferred tax liabilities	13		-	(12)
Interest rate and currency derivative liabilities	14		(137)	(126)
			(3,946)	(4,064)
Total liabilities			(4,256)	(4,436)
Net assets			9,619	8,565
EQUITY
Share capital			260	258
Share premium			1,295	1,280
Merger reserve			213	213
Other reserves			(93)	(82)
Retained earnings			7,667	6,563
Equity attributable to shareholders of the Company			9,342	8,232
Non-controlling interests			277	333
Total equity			9,619	8,565
EPRA NAV per share*	2		919p	829p

* As defined in glossary.

consolidated statement OF CASH FLOWS

for the year ended 31 march 2016

	Note		2016 £m	20151 £m
Rental income received from tenants			435	397
Fees and other income received			58	49
Operating expenses paid to suppliers and employees			(152)	(128)
Cash generated from operations			341	318
Interest paid			(124)	(124)
Interest received			11	18
Corporation taxation repayments received			8	-
Distributions and other receivables from joint ventures and funds	8		58	73
Net cash inflow from operating activities			294	285
Cash flows from investing activities
Development and other capital expenditure			(256)	(157)
Purchase of investment properties			(243)	(172)
Sale of investment and trading properties			564	415
Payments received in respect of future trading property sales			40	32
Purchase of investments			-	(7)
Acquisition of Speke Unit Trust			-	(90)
Tesco property swap			-	(93)
Investment in and loans to joint ventures and funds			(241)	(173)
Capital distributions and loan repayments from joint ventures and funds			366	134
Net cash inflow (outflow) from investing activities			230	(111)
Cash flows from financing activities
Issue of ordinary shares			5	12
Dividends paid	15		(235)	(228)
Dividends paid to non-controlling interests			(16)	(19)
Acquisition of units in Hercules Unit Trust			(61)	(93)
Closeout of interest rate derivatives			15	(12)
Cash collateral transactions			(24)	10
Decrease in bank and other borrowings			(919)	(581)
Drawdowns on bank and other borrowings			373	703
Issue of zero coupon 2015 convertible bond			344	-
Net cash outflow from financing activities			(518)	(208)
Net increase (decrease) in cash and cash equivalents			6	(34)
Cash and cash equivalents at 1 April			108	142
Cash and cash equivalents at 31 March			114	108
Cash and cash equivalents consists of:
Cash and short-term deposits	14		114	108

1 The prior year comparatives have been restated. See note 1.

consolidated statement OF CHANGES IN EQUITY

for the year ended 31 march 2016

	Share capital £m	Share premium £m	Hedging and translation reserve1 £m	Re- valuation reserve £m	Merger reserve £m	Retained earnings £m	Total £m	Non-controlling interests £m	Total equity £m
Balance at 1 April 2015	258	1,280	(76)	(6)	213	6,563	8,232	333	8,565
Profit for the year after taxation	-	-	-	-	-	1,345	1,345	19	1,364
Losses on cash flow hedges	-	-	(24)	-	-	-	(24)	-	(24)
Revaluation of owner-occupied property	-	-	-	19	-	-	19	-	19
Exchange and hedging movements in joint ventures and funds	-	-	-	(3)	-	-	(3)	-	(3)
Reclassification of gains on cash flow hedges
- Foreign currency derivatives	-	-	2	-	-	-	2	-	2
- Interest rate derivatives	-	-	10	-	-	-	10	-	10
Exchange differences on translation of foreign operations	-	-	(3)	3	-	-	-	-	-
Net actuarial loss on pension schemes	-	-	-	-	-	(1)	(1)	-	(1)
Deferred tax on items of other comprehensive income	-	-	(16)	1	-	-	(15)	-	(15)
Other comprehensive (loss) income	-	-	(31)	20	-	(1)	(12)	-	(12)
Total comprehensive income for the year	-	-	(31)	20	-	1,344	1,333	19	1,352
Share issues	2	15	-	-	-	(12)	5	-	5
Fair value of share and share option awards	-	-	-	-	-	8	8	-	8
Purchase of units from non-controlling interests	-	-	-	-	-	-	-	(59)	(59)
Loss on purchase of units from non-controlling interests	-	-	-	-	-	(1)	(1)	-	(1)
Dividends payable in year (28.0p per share)	-	-	-	-	-	(287)	(287)	-	(287)
Dividends payable by subsidiaries	-	-	-	-	-	-	-	(16)	(16)
Adjustment for scrip dividend element	-	-	-	-	-	52	52	-	52
Balance at 31 March 2016	260	1,295	(107)	14	213	7,667	9,342	277	9,619
Balance at 1 April 2014	255	1,257	(32)	(38)	213	5,091	6,746	371	7,117
Profit for the year after taxation	-	-	-	-	-	1,710	1,710	55	1,765
Losses on cash flow hedges	-	-	(69)	-	-	-	(69)	(2)	(71)
Revaluation of owner-occupied property	-	-	-	10	-	-	10	-	10
Exchange and hedging movements in joint ventures and funds	-	-	-	3	-	-	3	-	3
Reclassification of items from the statement of comprehensive income	-	-	-	30	-	-	30	-	30
Reclassification of (losses) gains on cash flow hedges
- Foreign currency derivatives	-	-	(11)	-	-	-	(11)	-	(11)
- Interest rate derivatives	-	-	8	-	-	-	8	-	8
Exchange differences on translation of foreign operations	-	-	6	(6)	-	-	-	-	-
Net actuarial loss on pension schemes	-	-	-	-	-	(5)	(5)	-	(5)
Deferred tax on items of other comprehensive income	-	-	22	(5)	-	(7)	10	-	10
Other comprehensive (loss) income	-	-	(44)	32	-	(12)	(24)	(2)	(26)
Total comprehensive income for the year	-	-	(44)	32	-	1,698	1,686	53	1,739
Share issues	3	23	-	-	-	(10)	16	-	16
Non-controlling interest on acquisition of subsidiary	-	-	-	-	-	-	-	31	31
Fair value of share and share option awards	-	-	-	-	-	10	10	-	10
Purchase of units from non-controlling interests	-	-	-	-	-	2	2	(103)	(101)
Dividends payable in year (27.3p per share)	-	-	-	-	-	(277)	(277)	-	(277)
Dividends payable by subsidiaries	-	-	-	-	-	-	-	(19)	(19)
Adjustment for scrip dividend element	-	-	-	-	-	49	49	-	49
Balance at 31 March 2015	258	1,280	(76)	(6)	213	6,563	8,232	333	8,565

1 The balance at the beginning of the year includes £10m in relation to translation and (£86m) in relation to hedging.

Notes to the accounts

1 Basis of preparation, significant accounting

policies and accounting judgements

The financial information set out above does not constitute the Company's statutory accounts for the years ended 31 March 2016 or 2015, but is derived from those accounts. Statutory accounts for 2015 have been delivered to the Registrar of Companies and those for 2016 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 2016 have been prepared on a historical cost basis, except for the revaluation of properties, investments held for trading and derivatives. The financial statements have also been prepared in accordance with International Financial Reporting Standards (IFRSs) as adopted by the European Union and therefore comply with Article 4 of the EU IAS Regulation.

While the financial information included in this preliminary announcement has been prepared in accordance with the recognition and measurement criteria of International Financial Reporting Standards (IFRSs), this announcement does not itself contain sufficient information to comply with IFRSs. The Company expects to publish full financial statements that comply with IFRSs in June 2016.

In the current financial year the Group has adopted Annual Improvements to IFRSs 2010-2012 cycle and 2011-2013 cycle and Defined Benefit Plans: Employee Contributions - Amendments to IAS 19.

The adoption of these standards has not had a material impact on the Group and otherwise the accounting policies used are consistent with those contained in the Group's previous Annual Report and Accounts for the year ended 31 March 2015.

A number of new standards and amendments to standards and interpretations have been issued but are not yet effective for the current accounting period. None of these are expected to have a material impact on the consolidated financial statements of the Group, except the following set out below:

IFRS 9 - Financial Instruments, will impact both the measurement and disclosures of financial instruments and is effective for the Group's year ending 31 March 2019. The Group has not yet completed its evaluation of the effect of the adoption.

IFRS 15 - Revenue from contracts with customers, does not apply

to gross rental income, but does apply to service charge income, management and performance fees and trading property disposals and is effective for the Group's year ending 31 March 2019. The Group does not expect adoption of IFRS 15 to have a material impact on the measurement of revenue recognition, but additional disclosures will be required with regards to the above sources of income.

IFRS 16 - Leases, will impact both the measurement and disclosures of the Group's head leases and is effective for the Group's year ending 31 March 2020. The Group has not yet completed its evaluation of the effect of the adoption.

Restatement

During the year, the accounting for Broadgate Estates, a wholly owned subsidiary of the Group which acts as a property manager, has been reviewed resulting in a reclassification of items presented in the Consolidated Income Statement and the Consolidated Statement

of Cash Flows.

This reclassification had no impact on either IFRS profit before tax or Underlying Profit. It resulted in a £29m increase in other fees and commissions received offset by a £26m increase in other fees and commissions expenses and a £3m increase in administrative expenses.

This reclassification had no impact on the net cash inflow from operating activities presented in the Consolidated Statement of Cash Flows. It resulted in £35m increase in fees and other income received and a £35m increase in operating expenses paid to suppliers and employees. In addition, the format of the Consolidated Income Statement has been changed to aid the clarity and usability of the financial statements and the prior-year comparatives have been re presented to reflect this change.

Accounting judgements and estimates

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

Significant areas of estimation are:

Valuation of properties and investments held for trading: The Group uses external professional valuers to determine the relevant amounts. The primary source of evidence for property valuations should be recent, comparable market transactions on an arms-length basis. However, the valuation of the Group's property portfolio and investments held for trading are inherently subjective, as they are made on the basis of assumptions made by the valuers which may not prove to be accurate.

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

The key areas of accounting judgement are:

REIT status: British Land is a Real Estate Investment Trust (REIT) and does not pay tax on its property income or gains on property sales, provided that at least 90% of the Group's property income is distributed as a dividend to shareholders, which becomes taxable in their hands. In addition, the Group has to meet certain conditions such as ensuring the property rental business represents more than 75% of total profits and assets. Any potential or proposed changes to the REIT legislation are monitored and discussed with HMRC. It is Management's intention that the Group will continue as a REIT for the foreseeable future.

Accounting for joint ventures and funds: In accordance with IFRS 10 'Consolidated financial statements', IFRS 11 'Joint arrangements', and IFRS 12 'Disclosures of interests in other entities' an assessment is required to determine the degree of control or influence the Group exercises and the form of any control to ensure that the financial statement treatment is appropriate.

Interest in the Group's joint ventures is commonly driven by the terms of the partnership agreements which ensure that control is shared between the partners. These are accounted for under the equity method, whereby the consolidated balance sheet incorporates the Group's share of the net assets of its joint ventures and associates. The consolidated income statement incorporates the Group's share of joint venture and associate profits after tax.

Accounting for transactions: Property transactions are complex in nature and can be material to the financial statements. Assessment is required to determine the most appropriate accounting treatment of assets acquired and of potential contractual arrangements in the legal documents for both acquisitions and disposals. Management consider each transaction separately and, when considered appropriate, seek independent accounting advice.

2 Performance measures

Earnings per share

The Group measures financial performance with reference to underlying earnings per share, the European Public Real Estate Association (EPRA) earnings per share and IFRS earnings per share. The relevant earnings and weighted average number of shares (including dilution adjustments) for each performance measure are shown below, and a reconciliation between these is shown within the supplementary disclosures (Table B).

EPRA earnings per share is calculated using EPRA earnings, which is the IFRS profit after taxation attributable to shareholders of the Company excluding investment and development property revaluations, gains/losses on investing and trading property disposals, changes in the fair value of financial instruments and associated close-out costs and their related taxation. EPRA earnings (diluted) also takes into account dilution due to the 2012 convertible bond.

Underlying earnings per share is calculated using Underlying Profit adjusted for underlying taxation (see note 6). Underlying Profit is the pre-tax EPRA earnings measure, with additional Company adjustments. No Company adjustments were made in either the current or prior year. For the year ended 31 March 2015 the 2012 convertible bond was not dilutive for underlying earnings, as the contingent conditions associated to the bond had not been met. The convertible conditions period ended on 25 September 2015 and therefore the bond was treated as dilutive in the current year.

	2016				2015
Earnings per share	Relevant earnings £m	Relevant  number of shares million	Earnings per share pence		Relevant earnings £m	Relevant number of shares million	Earnings per share pence
---	---	---	---	---	---	---	---
Underlying
Underlying basic	365	1,025	35.6		313	1,016	30.8
Underlying diluted	371	1,089	34.1		313	1,022	30.6
EPRA
EPRA basic	365	1,025	35.6		313	1,016	30.8
EPRA diluted	371	1,089	34.1		319	1,080	29.5
IFRS
Basic	1,345	1,025	131.2		1,710	1,016	168.3
Diluted	1,351	1,089	124.1		1,710	1,022	167.3

Net asset value

The Group measures financial position with reference to EPRA net asset value (NAV) per share and EPRA triple net asset value (NNNAV) per share. The net asset value and number of shares for each performance measure is shown below. A reconciliation between IFRS net assets and EPRA net assets, and the relevant number of shares for each performance measure, is shown within the supplementary disclosures (Table B). EPRA net assets is a proportionally consolidated measure that is based on IFRS net assets excluding the mark-to-market on effective cash flow hedges and related debt adjustments, the mark-to-market on the convertible bonds as well as deferred taxation on property and derivative valuations. They include the valuation surplus on trading properties and are adjusted for the dilutive impact of share options and the £400 million convertible bond maturing in 2017.

	2016				2015
Net asset value per share	Relevant net assets £m	Relevant number of shares million	Net asset value per share pence		Relevant net assets £m	Relevant number of shares million	Net asset value per share pence
---	---	---	---	---	---	---	---
EPRA
EPRA NAV	10,074	1,096	919		9,035	1,090	829
EPRA NNNAV	9,640	1,096	880		8,359	1,090	767
IFRS
Basic	9,619	1,029	935		8,565	1,020	840
Diluted	10,019	1,096	914		8,565	1,032	830

Total accounting return

The Group also measures financial performance with reference to total accounting return. This is calculated as the increase in EPRA net asset value per share and dividend paid in the year as a percentage of the EPRA net asset value per share at the start of the year.

	2016				2015
	Increase in NAV per share pence	Dividend per share paid pence	Total accounting return		Increase in NAV per share pence	Dividend per share paid pence	Total accounting return
---	---	---	---	---	---	---	---
Total accounting return	90	28.02	14.2%		141	27.30	24.5%

3 Revenue and costs

	2016			2015
	Underlying £m	Capital and other £m		Underlying £m	Capital and other £m
---	---	---	---	---	---
Rent receivable	437	-		369	-
Spreading of tenant incentives and guaranteed rent increases	12	-		26	-
Surrender premia	2	-		4	-
Gross rental income	451	-		399	-
Trading property sales proceeds	-	21		-	51
Service charge income	72	-		65	-
Management and performance fees (from joint ventures and funds)	8	-		7	-
Other fees and commissions	38	-		34	-
Revenue	569	21		505	51
Trading property cost of sales	-	(11)		-	(45)
Service charge expenses	(72)	-		(65)	-
Property operating expenses	(26)	-		(24)	-
Other fees and commissions expenses	(30)	-		(26)	-
Costs	(128)	(11)		(115)	(45)
	441	10		390	6

The cash element of net rental income recognised during the year ended 31 March 2016 from properties which were not subject to a security

interest was £229m (2014/15: £182m). Property operating expenses relating to investment properties that did not generate any rental income were £1m (2014/15: £2m). Contingent rents of £3m (2014/15: £3m) were recognised in the year.

4 Valuation movements on property

	2016 £m	2015 £m
Consolidated income statement
Revaluation of properties	616	884
Revaluation of properties held by joint ventures and funds accounted for using the equity method	245	589
	861	1,473
Consolidated statement of comprehensive income
Revaluation of owner-occupied properties	19	10
	880	1,483

5 Net financing costs

	2016 £m	2015 £m
Underlying
Financing charges
Bank loans, overdrafts and derivatives	(30)	(36)
Other loans	(88)	(88)
Obligations under head leases	(2)	(2)
	(120)	(126)
Development interest capitalised	9	14
	(111)	(112)
Financing income
Deposits, securities and liquid investments	3	2
Loans to joint ventures	2	5
	5	7
Net financing charges - underlying	(106)	(105)
Capital and other
Financing charges
Valuation movements on translation of foreign currency debt	2	(11)
Hedging reserve recycling	(2)	11
Valuation movements on fair value derivatives	54	108
Valuation movements on fair value debt	(53)	(104)
Recycling of fair value movement on close-out of derivatives	(6)	(12)
Capital financing costs1	(29)	(2)
Fair value movement on convertible bonds	-	(35)
Valuation movement on translation of foreign currency net assets	-	(1)
Fair value movement on non-hedge accounted derivatives	-	(1)
	(34)	(47)
Financing income
Fair value movement on convertible bonds	64	-
Fair value movement on non-hedge accounted derivatives	1	-
	65	-
Net financing income (charges) - capital	31	(47)
Net financing costs
Total financing income	70	7
Total financing charges	(145)	(159)
Net financing costs	(75)	(152)

1 Primarily debenture bonds tender offer and purchase.

Interest payable on unsecured bank loans and related interest rate derivatives was £19m (2014/15: £24m). Interest on development expenditure

is capitalised at the Group's weighted average interest rate of 2.6% (2014/15: 3.3%). The weighted average interest rate on a proportionately consolidated basis at 31 March 2016 was 3.3% (2014/15: 3.8%).

6 Taxation

	2016 £m	2015 £m
Taxation income (expense)
Current taxation:
UK corporation taxation: 20% (2014/15: 21%)	(15)	(1)
Adjustments in respect of prior years	17	-
Total current taxation income (expense)	2	(1)
Deferred taxation on revaluations and derivatives	31	(23)
Group total taxation	33	(24)
Attributable to joint ventures and funds	(1)	2
Total taxation income (expense)	32	(22)
Taxation reconciliation
Profit on ordinary activities before taxation	1,331	1,789
Less: profit attributable to joint ventures and funds1	(397)	(726)
Group profit on ordinary activities before taxation	934	1,063
Taxation on profit on ordinary activities at UK corporation taxation rate of 20% (2014/15: 21%)	(187)	(223)
Effects of:
REIT exempt income and gains	161	232
Taxation losses	11	(10)
Deferred taxation on revaluations and derivatives	31	(23)
Adjustments in respect of prior years	17	-
Group total taxation income (expense)	33	(24)

1 A current taxation expense of £1m (2014/15: £2m expense) and a deferred taxation expense of £nil (2014/15: £4m credit) arose on profits attributable to joint ventures and funds.

Taxation attributable to Underlying Profit for the year ended 31 March 2016 was a credit of £2m (2014/15: £nil). Corporation taxation payable at 31 March 2016 was £18m (2014/15: £9m) as shown on the balance sheet.

7 Property

Property reconciliation for the year ended 31 March 2016

Canada Water was added as a property sector in the year, reflecting the key role the campus has in the strategy of the Group.

	Investment
	Retail & leisure Level 3 £m	Offices & residential Level 3 £m	Canada Water Level 3 £m	Developments Level 3 £m	Investment and development properties Level 3 £m	Trading properties £m	Owner- occupied Level 3 £m	Total £m
---	---	---	---	---	---	---	---	---
Carrying value at 1 April 2015	5,584	2,902	249	385	9,120	274	60	9,454
Additions
- property purchases	4	234	-	-	238	-	-	238
- development expenditure	4	6	1	43	54	59	-	113
- capitalised interest and staff costs	-	-	1	3	4	5	-	9
- capital expenditure on asset management initiatives	91	24	1	-	116	-	-	116
	99	264	3	46	412	64	-	476
Depreciation	-	-	-	-	-	-	(1)	(1)
Disposals	(372)	(130)	-	(7)	(509)	(11)	-	(520)
Reclassifications	135	22	-	(172)	(15)	(2)	17	-
Revaluations included in income statement	161	369	4	82	616	-	-	616
Revaluation included in OCI	-	-	-	-	-	-	19	19
Movement in tenant incentives and contracted rent uplift balances	10	9	-	-	19	-	-	19
Carrying value at 31 March 2016	5,617	3,436	256	334	9,643	325	95	10,063
Head lease liabilities (note 12)								(37)
Valuation surplus on trading properties								85
Group property portfolio valuation at 31 March 2016								10,111
Non-controlling interests								(324)
Group property portfolio valuation at 31 March 2016 attributable to shareholders								9,787

Property valuation

The different valuation method levels are defined below:

Level 1: Quoted prices (unadjusted) in active markets for identical assets or liabilities.

Level 2:

Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices).

Level 3: Inputs for the asset or liability that are not based on observable market data (unobservable inputs).

These levels are specified in accordance with IFRS 13 'Fair Value Measurement'. Property valuations are inherently subjective as they are made on the basis of assumptions made by the valuer which may not prove to be accurate. For these reasons, and consistent with EPRA's guidance, we have classified the valuations of our property portfolio as Level 3 as defined by IFRS 13. The unobservable inputs to the valuations are analysed in the table on the following page.

The Group's total property portfolio was valued by independent external valuers on the basis of fair value, in accordance with the RICS Valuation - Professional Standards 2014, ninth edition, published by The Royal Institution of Chartered Surveyors.

The information provided to the valuers, and the assumptions and valuations models used by the valuers are reviewed by the property portfolio team, the Head of Offices, the Head of Retail and the Chief Financial Officer. The valuers meet with the external auditors and also present directly to the Audit Committee at the interim and year end review of results. 

Investment properties, excluding properties held for development, are valued by adopting the "investment method" of valuation. This approach involves applying capitalisation yields to current and future rental streams net of income voids arising from vacancies or rent-free periods and associated running costs. These capitalisation yields and future rental values are based on comparable property and leasing transactions in the market using the valuers' professional judgement and market observation. Other factors taken into account in the valuations include the tenure of the property, tenancy details and ground and structural conditions.

In the case of ongoing developments, the approach applied is the "residual method" of valuation, which is the investment method of valuation as described above, with a deduction for all costs necessary to complete the development, including a notional finance cost, together with a further allowance for remaining risk. Properties held for development are generally valued by adopting the higher of the residual method of valuation, allowing for all associated risks, or the investment method of valuation for the existing asset.

Copies of the valuation certificates of Knight Frank LLP and CBRE can be found at www.britishland.com/reports

Within their valuation report, CBRE have highlighted that they expect considerable uncertainty to arise if there is a decision for the UK to exit the EU following the referendum on 23 June 2016 and that this has the potential to reduce investment volumes and liquidity. This is a forward looking statement which has no impact on the valuations as at 31 March 2016.

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

	2016				2015
	Group £m	Joint ventures and funds £m	Total £m		Group £m	Joint ventures and funds £m	Total £m
---	---	---	---	---	---	---	---
Knight Frank LLP	7,529	3,576	11,105		6,795	3,313	10,108
CBRE	2,582	1,361	3,943		2,714	1,401	4,115
Total property portfolio valuation	10,111	4,937	15,048		9,509	4,714	14,223
Non-controlling interests	(324)	(76)	(400)		(441)	(105)	(546)
Total property portfolio valuation attributable to shareholders	9,787	4,861	14,648		9,068	4,609	13,677

Information about fair value measurements using unobservable inputs (Level 3)

Investment			ERV per sq ft				Equivalent Yield				Costs to complete per sq ft
Fair value at 31 March 2016 £m	Valuation technique	Min £	Max £	Average £		Min %	Max %	Average %		Min £	Max £	Average £
---	---	---	---	---	---	---	---	---	---	---	---	---	---
Retail & leisure	5,608	Investment methodology	2	75	22		3	11	5		-	45	8
Offices & residential1,2	3,492	Investment methodology	4	136	53		1	8	4		-	150	15
Canada Water	250	Investment methodology	15	25	22		1	5	3		-	5	4
Developments2	343	Residual methodology	65	107	73		4	5	4		-	664	447
Total	9,693
Trading properties at fair value	418
Group property portfolio valuation	10,111

1 Includes owner-occupied.

2 Includes Residential with an average capital value per sq ft of £1,028 including developments at end value and mixed use.

All other factors being equal:

·      a higher equivalent yield or discount rate would lead to a decrease in the valuation of an asset;

·      an increase in the current or estimated future rental stream would have the effect of increasing the capital value; and

·      an increase in the costs to complete would lead to a decrease in the valuation of an asset.

However, there are interrelationships between the unobservable inputs which are partially determined by market conditions, which would impact

on these changes. There were no transfers between valuation levels in the period.

8 Joint ventures and funds

Summary movement for the year of the investments in joint ventures and funds	Joint ventures £m	Funds £m	Total £m		Equity £m	Loans £m	Total £m
At 1 April 2015	2,586	315	2,901		2,598	303	2,901
Additions	246	-	246		14	232	246
Disposals	(2)	(13)	(15)		-	(15)	(15)
Share of profit on ordinary activities after taxation	365	32	397		397	-	397
Distributions and dividends:
- Capital	-	(76)	(76)		(76)	-	(76)
- Revenue	(90)	(13)	(103)		(103)	-	(103)
Hedging and exchange movements	4	(1)	3		3	-	3
At 31 March 2016	3,109	244	3,353		2,833	520	3,353

Additional investments in joint ventures and funds covenant information

At 31 March 2016 the investments in joint ventures included within the total investments in joint ventures and funds was £3,348m (2014/15: £2,869m), being the £3,353m total investment shown above, less the net investment of £5m (2014/15: £32m) in PREF, a property fund in Continental Europe.

The summarised income statements and balance sheets below show 100% of the results, assets and liabilities of joint ventures and funds. Where necessary these have been restated to the Group's accounting policies.

Joint ventures' and funds' summary financial statements for the year ended 31 March 2016

	Broadgate REIT Ltd	MSC Property Intermediate Holdings Ltd	BL Sainsbury Superstores Ltd	Tesco Joint Ventures1
Partners	Euro Bluebell LLP (GIC)	Norges Bank Investment Management	J Sainsbury plc	Tesco PLC
Property sector	City Offices Broadgate	Shopping Centres Meadowhall	Superstores	Superstores
Group share	50%	50%	50%	50%
Summarised income statements	£m	£m	£m	£m
Revenue5	244	102	56	19
Costs	(48)	(23)	(1)	-
	196	79	55	19
Administrative expenses	-	-	-	-
Net interest payable	(86)	(36)	(24)	(9)
Underlying Profit	110	43	31	10
Net valuation movement	334	50	(36)	(9)
Profit on disposal of investment properties and investments	-	-	2	-
Profit on ordinary activities before taxation	444	93	(3)	1
Taxation	-	-	-	1
Profit on ordinary activities after taxation	444	93	(3)	2
Other comprehensive income (expenditure)	5	-	-	3
Total comprehensive income	449	93	(3)	5
British Land share of total comprehensive income	225	46	(2)	3
British Land share of distributions payable	44	17	11	4
Summarised balance sheets	£m	£m	£m	£m
Investment and trading properties	4,622	1,786	946	354
Current assets	4	5	2	-
Cash and deposits	293	32	80	6
Gross assets	4,919	1,823	1,028	360
Current liabilities	(77)	(31)	(30)	(3)
Bank and securitised debt	(1,842)	(694)	(462)	(184)
Other non-current liabilities	(65)	(24)	-	(15)
Gross liabilities	(1,984)	(749)	(492)	(202)
Net external assets	2,935	1,074	536	158
British Land share of net assets	1,467	537	269	79

The SouthGate Limited Partnership	USS Joint Ventures2	Leadenhall Holding Co (Jersey) Ltd	Hercules Unit Trust joint ventures and sub-funds3	Other joint ventures and funds4	TOTAL 2016	TOTAL Group share 2016
Aviva Investors	Universities Superannuation Scheme Group PLC	Oxford Properties
Shopping Centres	Shopping Centres	City Offices Leadenhall	Retail Parks
50%	50%	50%	Various
£m	£m	£m	£m	£m	£m	£m
19	12	35	38	6	531	266
(6)	(3)	(10)	(7)	(1)	(99)	(44)
13	9	25	31	5	432	222
(1)	-	(1)	(6)	(2)	(10)	(5)
(1)	-	-	(8)	-	(164)	(82)
11	9	24	17	3	258	135
4	12	124	4	7	490	245
-	-	-	-	30	32	18
15	21	148	21	40	780	398
-	-	-	-	(3)	(2)	(1)
15	21	148	21	37	778	397
-	-	-	(2)	-	6	3
15	21	148	19	37	784	400
8	11	74	10	25	400
4	6	3	59	31	179
£m	£m	£m	£m	£m	£m	£m
267	252	942	612	108	9,889	4,944
2	1	-	4	14	32	18
5	7	5	9	33	470	239
274	260	947	625	155	10,391	5,201
(4)	(6)	(6)	(7)	(51)	(215)	(111)
-	-	-	(139)	-	(3,321)	(1,660)
(28)	-	-	(4)	(18)	(154)	(77)
(32)	(6)	(6)	(150)	(69)	(3,690)	(1,848)
242	254	941	475	86	6,701	3,353
121	128	471	237	44	3,353

1 Tesco joint ventures include BLT Holdings (2010) Limited as at 31 March 2016.

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

3 Hercules Unit Trust joint ventures and sub-funds includes 50% of the results of Deepdale Co-Ownership Trust, Gibraltar Limited Partnership and Valentine Co-Ownership Trust and  41.25% of Birstall Co-Ownership Trust. The balance sheet shows 50% of the assets of these joint ventures and sub-funds.

4Included in the column headed 'Other joint ventures and funds' are contributions from the following: BL Goodman Limited Partnership, The Aldgate Place Limited Partnership, Bluebutton Property

Management UK Limited, City of London Office Unit Trust and Pillar Retail Europark Fund (PREF). The Group's ownership share of PREF is 65%, however as the group is not able to exercise control over significant decisions of the fund, the Group equity accounts for its interest in PREF.

5 Revenue includes gross rental income at 100% share of £495m (2014/15: £451m).

The borrowings of joint ventures and funds and their subsidiaries are non-recourse to the Group. All joint ventures are incorporated in the United Kingdom, with

the exception of Broadgate REIT Limited, the Eden Walk Shopping Centre Unit Trust and Leadenhall Holding Co (Jersey) Limited which are incorporated in Jersey.

Of the funds, the Hercules Unit Trust (HUT) joint ventures and sub-funds are incorporated in Jersey and PREF in Luxembourg.

These financial statements include the results and financial position of the Group's interest in the Fareham Property Partnership, the Aldgate Place Limited Partnership, the BL Goodman Limited Partnership, the Auchinlea Partnership and the Gibraltar Limited Partnership. Accordingly, advantage has been taken of the exemptions provided by Regulation 7 of the Partnership (Accounts) Regulations 2008, not to attach the partnership accounts to these financial statements.

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

	2016 £m	2015 £m
Rental income received from tenants	208	234
Fees and other income received	1	1
Operating expenses paid to suppliers and employees	(18)	(26)
Cash generated from operations	191	209
Interest paid	(86)	(114)
Interest received	1	2
UK corporation tax paid	(3)	(7)
Foreign tax paid	(1)	(2)
Cash inflow from operating activities	102	88
Cash inflow from operating activities deployed as:
Surplus cash retained within joint ventures and funds	44	15
Revenue distributions per consolidated statement of cash flows	58	73
Revenue distributions split between controlling and non-controlling interests
Attributable to non-controlling interests	4	7
Attributable to shareholders of the Company	54	66

9 Other investments

	2016				2015
	Investment held for trading £m	Loans, receivables and other £m	Total £m		Investment held for trading £m	Loans, receivables and other £m	Total £m
---	---	---	---	---	---	---	---
At 1 April	99	280	379		92	170	262
Additions	-	35	35		-	113	113
Disposals	-	(272)	(272)		-	(2)	(2)
Revaluation	2	-	2		7	-	7
Depreciation	-	(2)	(2)		-	(1)	(1)
At 31 March	101	41	142		99	280	379

The investment held for trading comprises interests as a trust beneficiary. The trust's assets comprise freehold reversions in a pool of commercial properties, comprising Sainsbury's superstores. The interest was categorised as Level 3 in the fair value hierarchy, is subject to the same inputs as those disclosed in note 7, and its fair value was determined by independent external valuers.

Included within the loans, receivables and other balance is £nil (2014/2015: £243m) in relation to a loan to the Broadgate joint venture, which is carried at amortised cost, and was fully repaid in the year.

10 Debtors

	2016 £m	2015 £m
Trade and other debtors	24	16
Prepayments and accrued income	9	4
	33	20

Trade and other debtors are shown after deducting a provision for bad and doubtful debts of £16m (2014/15: £16m). The charge to the income statement in relation to bad and doubtful debts was £1m (2014/15: £1m).

The Directors consider that the carrying amount of trade and other debtors is approximate to their fair value. There is no concentration of credit risk with respect to trade debtors as the Group has a large number of customers who are paying their rent in advance.

As at 31 March, trade and other debtors outside their payment terms yet not provided for are as follows:

			Outside credit terms but not impaired
	Total £m	Within credit terms £m	0-1 month £m	1-2 months £m	More than 2 months £m
2016	24	12	11	1	-
2015	16	9	7	-	-

11 Creditors

	2016 £m	2015 £m
Trade creditors	39	61
Other taxation and social security	34	31
Accruals	72	98
Deferred income	73	71
	218	261

Trade creditors are interest-free and have settlement dates within one year. The Directors consider that the carrying amount of trade and other creditors is approximate to their fair value.

12 Other non-current liabilities

	2016 £m	2015 £m
Other creditors	70	32
Head leases1	46	41
Net pension liabilities	6	6
	122	79

1 Includes £9m in relation to head lease liabilities on trading properties held at cost.

13 Deferred tax

The movement on deferred tax is as shown below:

Deferred tax assets year ended 31 March 2016

	1 April 2015 £m	Credited to income £m	Credited (debited) to equity £m	Transferred to joint ventures £m	31 March 2016 £m
Interest rate and currency derivative revaluations	-	-	5	-	5
Other timing differences	-	6	-	-	6
	-	6	5	-	11

Deferred tax liabilities year ended 31 March 2016

	£m	£m	£m	£m	£m
Property and investment revaluations	(5)	-	(2)	-	(7)
Interest rate and currency derivative revaluations	(4)	25	(21)	-	-
Other timing differences	(3)	-	-	2	(1)
	(12)	25	(23)	2	(8)
Net deferred tax (liability) asset	(12)	31	(18)	2	3

Deferred tax assets year ended 31 March 2015

	1 April 2014 £m	Expensed to income £m	Credited to equity £m	Transferred to joint ventures £m	31 March 2015 £m
	-	-	-	-	-

Deferred tax liabilities year ended 31 March 2015

	£m	£m	£m	£m	£m
Property and investment revaluations	-	(5)	-	-	(5)
Interest rate and currency derivative revaluations	-	(19)	15	-	(4)
Other timing differences	(4)	1	-	-	(3)
	(4)	(23)	15	-	(12)
Net deferred tax (liability) asset	(4)	(23)	15	-	(12)

The following corporation tax rates have been substantively enacted; 20% effective from 1 April 2015 reducing to 19% effective from 1 April 2017

and 18% effective from 1 April 2020. The deferred tax assets and liabilities have been calculated at the tax rate effective in the period that the tax is expected to crystallise.

The Group has recognised a deferred tax asset calculated at 18% (2014/2015: 20%) of £6m (2014/2015: £nil) in respect of capital losses from previous years available for offset against future capital profit. Further unrecognised deferred tax assets in respect of capital losses of £60m (2014/2015: £87m) exist at 31 March 2016.

The Group has recognised deferred tax assets on derivative revaluations to the extent that future matching taxable profits are expected to arise.

At 31 March 2016 the Group had an unrecognised deferred tax asset calculated at 18% (2014/2015: 20%) of £51m (2014/2015: £38m) in respect of UK revenue tax losses from previous years.

Under the REIT regime, development properties which are sold within three years of completion do not benefit from tax exemption. At 31 March 2016 the value of such properties is £967m (2014/2015: £1,008m) and if these properties were to be sold and no tax exemption was available, the tax arising would be £56m (2014/15: £66m).

14 Net debt

	Footnote	2016 £m	2015 £m
Secured on the assets of the Group
9.125% First Mortgage Debenture Stock 2020	1.1	34	35
5.264% First Mortgage Debenture Bonds 2035		371	355
5.0055% First Mortgage Amortising Debentures 2035		100	99
5.357% First Mortgage Debenture Bonds 2028		349	344
6.75% First Mortgage Debenture Stock 2020		62	176
Bank loans	1.2, 1.3	733	963
Loan notes		2	2
		1,651	1,974
Unsecured
5.50% Senior Notes 2027		101	98
6.30% Senior US Dollar Notes 2015		-	104
3.895% Senior US Dollar Notes 2018	2	28	28
4.635% Senior US Dollar Notes 2021	2	165	158
4.766% Senior US Dollar Notes 2023	2	105	99
5.003% Senior US Dollar Notes 2026	2	69	64
3.81% Senior Notes 2026		113	111
3.97% Senior Notes 2026		116	114
1.5% Convertible Bond 2017		445	493
0% Convertible Bond 2020		334	-
Bank loans and overdrafts		634	706
		2,110	1,975
Gross debt	3	3,761	3,949
Interest rate and currency derivative liabilities		137	126
Interest rate and currency derivative assets		(167)	(139)
Cash and short-term deposits	4,5	(114)	(108)
Total net debt		3,617	3,828
Net debt attributable to non-controlling interests		(104)	(190)
Net debt attributable to shareholders of the Company		3,513	3,638

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

	2016 £m	2015 £m
1.1 BLD Property Holdings Ltd	34	35
1.2 Hercules Unit Trust	443	645
1.3 TBL Properties Limited and subsidiaries	290	318
	767	998

2 Principal and interest on this borrowing was fully hedged into Sterling at a floating rate at the time of issue.

3 The principal amount of gross debt at 31 March 2016 was £3,552m (2014/15: £3,717m). Included in this is the principal amount of secured borrowings and other borrowings of non-recourse companies of £1,563m of which the borrowings of the partly-owned subsidiary, Hercules Unit Trust, not beneficially owned by the Group

is £109m.

4 Included within cash and short-term deposits is the cash and short-term deposits of Hercules Unit Trust, of which £8m is the proportion not beneficially owned

by the Group.

5 Cash and deposits not subject to a security interest amount to £93m (2014/15: £84m).

Maturity analysis of net debt

	2016 £m	2015 £m
Repayable: within one year and on demand	74	102
Between:  one and two years	504	71
two and five years	1,491	1,707
five and ten years	807	943
ten and fifteen years	500	747
fifteen and twenty years	385	6
twenty and twenty five years	-	373
	3,687	3,847
Gross debt	3,761	3,949
Interest rate and currency derivatives	(30)	(13)
Cash and short-term deposits	(114)	(108)
Net debt	3,617	3,828

1.5% Convertible bond 2012 (maturity 2017)

On 10 September 2012 British Land (Jersey) Limited (the 2012 Issuer), a wholly-owned subsidiary of the Group, issued £400 million 1.5% guaranteed convertible bonds due 2017 (the 2012 bonds) at par. The 2012 Issuer is fully guaranteed by the Company in respect of the 2012 bonds.

Subject to their terms, the 2012 bonds are convertible into preference shares of the 2012 Issuer which are automatically transferred to the Company in exchange for ordinary shares in the Company or, at the Company's election, any combination of ordinary shares and cash. Bondholders may exercise their conversion right at any time up to (but excluding) the 20th dealing day before 10 September 2017 (the maturity date).

The initial exchange price was 693.07 pence per ordinary share. The exchange price is adjusted based on certain events.

From 25 September 2015, the Company has the option to redeem the 2012 bonds at par if the Company's share price has traded above 130% of the exchange price for a specified period, or at any time once 85% by nominal value of the 2012 bonds have been converted, redeemed, or purchased and cancelled. The 2012 bonds will be redeemed at par on 10 September 2017 (the maturity date) if they have not already been converted, redeemed or purchased and cancelled. No redemption of the bonds occurred in the year.

0% Convertible bond 2015 (maturity 2020)

On 9 June 2015 British Land (White) 2015 Limited (the 2015 Issuer), a wholly owned subsidiary of the Group, issued £350 million zero coupon guaranteed convertible bonds due 2020 (the 2015 bonds) at par. The 2015 Issuer is fully guaranteed by the Company in respect of the 2015 bonds.

Subject to their terms, the 2015 bonds are convertible into preference shares of the Issuer which are automatically transferred to the Company in exchange for ordinary shares in the Company or, at the Company's election, any combination of ordinary shares and cash. From 20 July 2015 up to and including 29 June 2018, a bondholder may exercise its conversion right if the share price has traded at a level exceeding 130% of the exchange price for a specified period. Thereafter, and up to but excluding the 7th dealing day before 9 June 2020 (the maturity date), a bondholder may convert at any time.

The initial exchange price was 1103.32 pence per ordinary share. The exchange price is adjusted based on certain events (such as the Company paying dividends in any year above 14.18 pence per ordinary share).

From 30 June 2018, the Company has the option to redeem the 2015 bonds at par if the Company's share price has traded above 130% of the exchange price for a specified period, or at any time once 85% by nominal value of the 2015 bonds have been converted, redeemed, or purchased and cancelled. The 2015 bonds will be redeemed at par on 9 June 2020 (the maturity date) if they have not already been converted, redeemed or purchased and cancelled.

Fair value and book value of net debt

	2016				2015
	Fair value £m	Book value £m	Difference £m		Fair value £m	Book value £m	Difference £m
---	---	---	---	---	---	---	---
Debentures and unsecured bonds	1,637	1,613	24		1,925	1,785	140
Convertible bonds	779	779	-		493	493	-
Bank debt and other floating rate debt	1,384	1,369	15		1,691	1,671	20
Gross debt	3,800	3,761	39		4,109	3,949	160
Interest rate and currency derivative liabilities	137	137	-		126	126	-
Interest rate and currency derivative assets	(167)	(167)	-		(139)	(139)	-
Cash and short-term deposits	(114)	(114)	-		(108)	(108)	-
Net debt	3,656	3,617	39		3,988	3,828	160
Net debt attributable to non-controlling interests	(106)	(104)	(2)		(192)	(190)	(2)
Net debt attributable to shareholders of the Company	3,550	3,513	37		3,796	3,638	158

The fair values of debt, debentures and the convertible bonds 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.

Short-term debtors and creditors and other investments have been excluded from the disclosures on the basis that the fair value is equivalent

to the book value.

Group loan to value (LTV)

	2016 £m	2015 £m
Group loan to value (LTV)	25%	28%
Principal amount of gross debt	3,552	3,717
Less debt attributable to non-controlling interests	(109)	(200)
Less cash and short-term deposits (balance sheet)	(114)	(108)
Plus cash attributable to non-controlling interests	8	10
Total net debt for LTV calculation	3,337	3,419
Group property portfolio valuation (note 7)	10,111	9,509
Investments in joint ventures and funds (note 8)	3,353	2,901
Other investments (note 9)	142	379
Less property and investments attributable to non-controlling interests	(384)	(528)
Total assets for LTV calculation	13,222	12,261

Proportionally consolidated loan to value (LTV)

	2016 £m	2015 £m
Proportionally consolidated loan to value (LTV)	32%	35%
Principal amount of gross debt	5,217	5,404
Less debt attributable to non-controlling interests	(128)	(200)
Less cash and short-term deposits	(353)	(300)
Plus cash attributable to non-controlling interests	9	10
Total net debt for proportional LTV calculation	4,745	4,914
Group property portfolio valuation (note 7)	10,111	9,509
Share of property of joint ventures and funds (note 7)	4,937	4,714
Other investments (note 9)	142	379
Less other investments attributable to joint ventures and funds	(4)	(123)
Less property attributable to non-controlling interests	(400)	(546)
Total assets for proportional LTV calculation	14,786	13,933

British Land Unsecured Financial Covenants

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

	2016 £m	2015 £m
Net Borrowings not to exceed 175% of Adjusted Capital and Reserves	34%	38%
Principal amount of gross debt	3,552	3,717
Less the relevant proportion of borrowings of the partly-owned subsidiary / non-controlling interests	(109)	(200)
Less cash and deposits (balance sheet)	(114)	(108)
Plus the relevant proportion of cash and deposits of the partly-owned subsidiary / non-controlling interests	8	10
Net Borrowings	3,337	3,419
Share capital and reserves (balance sheet)	9,619	8,565
EPRA deferred tax adjustment (EPRA Table A)	5	13
Trading property surpluses (EPRA Table A)	93	96
Exceptional refinancing charges (see below)	287	300
Fair value adjustments of financial instruments (EPRA Table A)	198	257
Less reserves attributable to non-controlling interests (balance sheet)	(277)	(333)
Adjusted Capital and Reserves	9,925	8,898

In calculating Adjusted Capital and Reserves for the purpose of the unsecured debt financial covenants, there is an adjustment of £287m (2014/15: £300m) to reflect the cumulative net amortised exceptional items relating to the refinancings in the years ended 31 March 2005, 2006 and 2007.

	2016 £m	2015 £m
Net Unsecured Borrowings not to exceed 70% of Unencumbered Assets	29%	28%
Principal amount of gross debt	3,552	3,717
Less cash and deposits not subject to a security interest (being £93m less the relevant proportion of cash and deposits of the partly owned subsidiary / non-controlling interests of £5m)	(88)	(77)
Less principal amount of secured and non-recourse borrowings	(1,563)	(1,906)
Net Unsecured Borrowings	1,901	1,734
Group property portfolio valuation (note 7)	10,111	9,509
Investments in joint ventures and funds (note 8)	3,353	2,901
Other investments (note 9)	142	379
Less investments in joint ventures (note 8)	(3,348)	(2,869)
Less encumbered assets (note 7)	(3,803)	(3,844)
Unencumbered Assets	6,455	6,076

Reconciliation of movement in Group net debt for the year ended 31 March 2016

	2015	Cash flows	Business combinations	Transfers3	Foreign exchange	Fair value	Arrangement costs amortisation	2016
Short term borrowings	102	(104)	-	74	2	-	-	74
Long term borrowings	3,847	(98)	-	(74)	14	(9)	7	3,687
Derivatives1	(13)	22	-	-	(13)	(26)	-	(30)
Total liabilities from financing activities	3,936	(180)	-	-	3	(35)	7	3,731
Cash and cash equivalents	(108)	(6)	-	-	-	-	-	(114)
Net debt	3,828	(186)	-	-	3	(35)	7	3,617

Reconciliation of movement in Group net debt for the year ended 31 March 2015

	2014	Cash flows	Business combinations	Transfers3	Foreign exchange	Fair value	Arrangement costs amortisation	2015
Short term borrowings	495	(495)	-	102	-	-	-	102
Long term borrowings	2,803	616	379	(102)	40	104	7	3,847
Derivatives2	25	(4)	-	-	(47)	13	-	(13)
Total liabilities from financing activities	3,323	117	379	-	(7)	117	7	3,936
Cash and cash equivalents	(142)	34	-	-	-	-	-	(108)
Net debt	3,181	151	379	-	(7)	117	7	3,828

1 Cash flows on derivatives include £7m of net receipts on derivative interest.

2 Cash flows on derivatives include £8m of net receipts on derivative interest.

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

Fair value hierarchy

The table below provides an analysis of financial instruments carried at fair value, by the valuation method. The fair value hierarchy levels are defined in note 7.

	2016					2015
	Level 1 £m	Level 2 £m	Level 3 £m	Total £m		Level 1 £m	Level 2 £m	Level 3 £m	Total £m
---	---	---	---	---	---	---	---	---	---
Interest rate and currency derivative assets	-	(167)	-	(167)		-	(139)	-	(139)
Other investments - held for trading	-	-	(101)	(101)		-	-	(99)	(99)
Assets	-	(167)	(101)	(268)		-	(139)	(99)	(238)
Interest rate and currency derivative liabilities	-	137	-	137		-	126	-	126
Convertible bonds	779	-	-	779		493	-	-	493
Liabilities	779	137	-	916		493	126	-	619
Total	779	(30)	(101)	648		493	(13)	(99)	381

Categories of financial instruments

	2016 £m	2015 £m
Financial assets
Fair value through income statement
Other investments - held for trading	101	99
Derivatives in designated hedge accounting relationships	164	139
Derivatives not in designated hedge accounting relationships	3	-
Amortised cost
Trade and other debtors	24	16
Cash and short term deposits	114	108
Other investments - loans and receivables	41	280
	447	642
Financial liabilities
Fair value through income statement
Convertible bonds	(779)	(493)
Derivatives in designated hedge accounting relationships	(137)	(126)
Amortised cost
Gross debt	(2,982)	(3,456)
Head leases payable	(46)	(41)
Creditors	(133)	(178)
	(4,077)	(4,294)
Total	(3,630)	(3,652)

Gains and losses on financial instruments, as classed above, are disclosed in note 5 (net financing costs), note 10 (debtors), note 4 (valuation movements on property), the consolidated income statement and the consolidated statement of comprehensive income. The Directors consider that the carrying amounts of other investments and head leases payable are approximate to their fair value, and that the carrying amounts are recoverable.

Maturity of committed undrawn borrowing facilities

	2016 £m	2015 £m
Maturity date: over five years	-	-
between four and five years	1,113	930
between three and four years	95	-
Total facilities available for more than three years	1,208	930
Between two and three years	85	61
Between one and two years	-	235
Within one year	60	10
Total	1,353	1,236

The above facilities are comprised of British Land undrawn facilities of £1,150m, plus undrawn facilities of Hercules Unit Trust totalling £203m.

15 Dividend

The fourth quarter interim dividend of 7.09 pence per share, totalling £73m (2014/15: 6.92 pence per share, totalling £71m) was approved by the Board

on 16 May 2016 and is payable on 5 August 2016 to shareholders on the register at the close of business on 1 July 2016.

The Board will announce the availability of the Scrip Dividend Alternative, if available, via the Regulatory News Service and on its website (www.britishland.com/dividends), no later than four business days before the ex-dividend date of 30 June 2016. The Board expects to announce the split between Property Income Distributions (PID) and non-PID income at that time. Any Scrip Dividend Alternative will not be enhanced. PID dividends are paid, as required by REIT legislation, after deduction of withholding tax at the basic rate (currently 20%), where appropriate. Certain classes of shareholders may be able to elect to receive dividends gross. Please refer to our website www.britishland.com/dividends for details.

Payment date	Dividend	Pence per share	2016 £m	2015 £m
Current year dividends
05.08.2016	2016 4th interim	7.09
06.05.2016	2016 3rd interim	7.09
12.02.2016	2016 2nd interim	7.09	73
06.11.2015	2016 1st interim	7.09	72
		28.36
Prior year dividends
07.08.2015	2015 4th interim	6.921	71
06.05.2015	2015 3rd interim	6.92	71
13.02.2015	2015 2nd interim	6.92		71
07.11.2014	2015 1st interim	6.92		70
		27.68
08.08.2014	2014 4th interim	6.751		68
Dividends in consolidated statement of changes in equity			287	277
Dividends settled in shares			(52)	(49)
Dividends settled in cash			235	228
Timing difference relating to payment of withholding tax			-	-
Dividends in cash flow statement			235	228

1 Scrip alternative treated as non-PID for this dividend.

16 Share capital and reserves

	2016	2015
Number of ordinary shares in issue at 1 April	1,031,788,286	1,019,766,481
Share issues	8,774,037	12,021,805
At 31 March	1,040,562,323	1,031,788,286

Of the issued 25p ordinary shares, 627 shares were held in the ESOP trust (2014/15: 98,453), 11,266,245 shares were held as treasury shares (2014/15: 11,266,245) and 1,029,295,451 shares were in free issue (2014/15: 1,020,423,588). No treasury shares were acquired by the ESOP trust during the year. All issued shares are fully paid.

Hedging and translation reserve

The hedging and translation reserve comprises the effective portion of the cumulative net change in the fair value of cash flow and foreign currency hedging instruments, as well as all foreign exchange differences arising from the translation of the financial statements of foreign operations.

The foreign exchange differences also include the translation of the liabilities that hedge the Company's net investment in a foreign subsidiary.

Revaluation reserve

The revaluation reserve relates to owner-occupied properties and investments in joint ventures and funds.

Merger reserve

This comprises the premium on the share placing in March 2013. No share premium is recorded in the Company's financial statements, through

the operation of the merger relief provisions of the Companies Act 2006.

17 Segment information

The Group allocates resources to investment and asset management according to the sectors it expects to perform over the medium term. Its three principal sectors are Offices, Retail and Canada Water. The Office sector includes residential, as this is often incorporated into Office schemes, and Retail includes leisure, for a similar rationale. Canada Water was added as a principal sector in the year, reflecting the key role the campus has in the strategy of the Group. Consequently the prior year comparatives in this note have been restated to reflect this additional principal sector.

The relevant gross rental income, net rental income, operating result and property assets, being the measures of segment revenue, segment result and segment assets used by the management of the business, are set out below. Management reviews the performance of the business principally on a proportionally consolidated basis, which includes the Group's share of joint ventures and funds on a line-by-line basis and excludes non-controlling interests in the Group's subsidiaries. The chief operating decision maker for the purpose of segment information is the Executive Committee.

Gross rental income is derived from the rental of buildings. Operating result is the net of net rental income, fee income and administrative expenses. No customer exceeded 10% of the Group's revenues in either year.

Segment result

	Offices and residential			Retail and leisure			Canada Water			Other/unallocated			Total
	2016 £m	2015 £m		2016 £m	2015 £m		2016 £m	2015 £m		2016 £m	2015 £m		2016 £m	2015 £m
Gross rental income
British Land Group	133	121		291	248		8	6		-	-		432	375
Share of joint ventures and funds	114	89		104	146		-	-		4	8		222	243
Total	247	210		395	394		8	6		4	8		654	618
Net rental income
British Land Group	124	112		277	233		7	6		-	-		408	351
Share of joint ventures and funds	110	85		99	141		-	-		3	8		212	234
Total	234	197		376	374		7	6		3	8		620	585
Operating result
British Land Group	112	101		260	218		7	6		(46)	(41)		333	284
Share of joint ventures and funds	109	82		102	138		-	-		(1)	10		210	230
Total	221	183		362	356		7	6		(47)	(31)		543	514
Reconciliation to Underlying Profit													2016 £m	2015 £m
Operating result													543	514
Net financing costs													(180)	(201)
Underlying Profit													363	313
Reconciliation to profit on ordinary activities before taxation
Underlying Profit													363	313
Capital and other													954	1,460
Underlying Profit attributable to non-controlling interests													14	16
Total profit on ordinary activities before taxation													1,331	1,789

Of the total revenues above, £4m (2014/15: £8m) was derived from outside the UK.

Segment assets

	Offices and residential			Retail and leisure			Canada Water			Other/unallocated			Total
	2016 £m	2015 £m		2016 £m	2015 £m		2016 £m	2015 £m		2016 £m	2015 £m		2016 £m	2015 £m
Property assets
British Land Group	4,181	3,520		5,323	5,275		283	273		-	-		9,787	9,068
Share of joint ventures and funds	2,843	2,530		2,018	2,039		-	-		-	40		4,861	4,609
Total	7,024	6,050		7,341	7,314		283	273		-	40		14,648	13,677
Reconciliation to net assets
British Land Group													2016 £m	2015 £m
Property assets													14,648	13,677
Other non-current assets													138	256
Non-current assets													14,786	13,933
Other net current liabilities													(257)	(307)
Adjusted net debt													(4,765)	(4,918)
Other non-current liabilities													(90)	(73)
EPRA net assets (undiluted)													9,674	8,635
Convertible dilution													400	400
EPRA net assets (diluted)													10,074	9,035
Non-controlling interests													277	333
EPRA adjustments													(732)	(803)
Net assets													9,619	8,565

SUPPLEMENTARY DISCLOSURES

Table A: Summary income statement and balance sheet

Summary income statement based on proportional consolidation for the year ended 31 March 2016

The following pro forma information is unaudited and does not form part of the consolidated primary statements or the notes thereto. It presents the results of the Group, with its share of the results of joint ventures and funds included on a line-by-line basis and excluding non-controlling interests.

	Year ended 31 March 2016					Year ended 31 March 2015
	Group £m	Joint ventures and funds £m	Less non-controlling interests £m	Proportionally consolidated £m		Group £m	Joint ventures and funds £m	Less non-controlling interests £m	Proportionally consolidated £m
Gross rental income	451	231	(28)	654		399	250	(31)	618
Property operating expenses	(26)	(9)	1	(34)		(24)	(10)	1	(33)
Net rental income	425	222	(27)	620		375	240	(30)	585
Administrative expenses	(93)	(5)	4	(94)		(85)	(4)	1	(88)
Net fees and other income	16	-	1	17		15	-	2	17
Ungeared Income Return	348	217	(22)	543		305	236	(27)	514
Net financing costs	(106)	(82)	8	(180)		(105)	(107)	11	(201)
Underlying Profit	242	135	(14)	363		200	129	(16)	313
Underlying taxation	2	-	-	2		-	-	-	-
Underlying Profit after taxation	244	135	(14)	365		200	129	(16)	313
Valuation movement				861					1,473
Other capital and taxation (net)1				48					50
Capital and other				909					1,523
Total return				1,274					1,836

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

Table A (continued)

Summary balance sheet based on proportional consolidation as at 31 March 2016

The following pro forma information is unaudited and does not form part of the consolidated primary statements or the notes thereto. It presents

the composition of the EPRA net assets of the Group, with its share of the net assets of the joint venture and fund assets and liabilities included

on a line-by-line basis, and excluding non-controlling interests, and assuming full dilution.

	Group £m	Share of joint ventures & funds £m	Less non-controlling interests £m	Share options £m	Deferred tax £m	Mark-to-market on effective cash flow hedges and related debt adjustments £m	Head leases £m	Convertible bond adjustment £m	Valuation surplus on trading properties £m	EPRA Net assets 31 March 2016 £m	EPRA Net assets 31 March 2015 £m
Retail properties	5,662	2,109	(400)	-	-	-	(30)	-	-	7,341	7,314
Office properties	4,118	2,835	-	-	-	-	(16)	-	87	7,024	6,050
Canada Water properties	283	-	-	-	-	-	(6)	-	6	283	273
Other properties	-	-	-	-	-	-	-	-	-	-	40
Total properties	10,063	4,944	(400)	-	-	-	(52)	-	93	14,648	13,677
Investments in joint ventures and funds	3,353	(3,353)	-	-	-	-	-	-	-	-	-
Other investments	142	(4)	-	-	-	-	-	-	-	138	256
Other net (liabilities) assets	(322)	(121)	3	36	5	-	52	-	-	(347)	(380)
Net debt	(3.617)	(1,466)	120	-	-	198	-	-	-	(4,765)	(4,918)
Dilution due to convertible bond	-	-	-	-	-	-	-	400	-	400	400
Net assets	9,619	-	(277)	36	5	198	-	400	93	10,074	9,035
EPRA NAV per share (note 2)										919p	829p

EPRA Net Assets Movement

	Year ended 31 March 2016			Year ended 31 March 2015
	£m	Pence per share		£m	Pence per share
Opening EPRA NAV	9,035	829		7,027	688
Income return	365	34		313	31
Capital return	909	77		1,523	145
Dividend paid	(235)	(21)		(228)	(27)
Dilution due to 2012 convertible bond	-	-		400	(8)
Closing EPRA NAV	10,074	919		9,035	829

Table B: EPRA Performance measures

EPRA Performance measures summary table

		2016			2015
		£m	Pence per share		£m	Pence per share
EPRA Earnings	- basic	365	35.6		313	30.8
	- diluted	371	34.1		319	29.5
EPRA Net Initial Yield			4.1%			4.3%
EPRA 'topped-up' Net Initial Yield			4.5%			4.8%
EPRA Vacancy Rate			2.0%			2.9%

		2016			2015
		Net assets	Net asset value per share pence		Net assets	Net asset value per share pence
EPRA NAV		10,074	919		9,035	829
EPRA NNNAV		9,640	880		8,359	767

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

	2016 £m	2015 £m
Profit attributable to the shareholders of the Company	1,345	1,710
Exclude:
Group - current taxation	(2)	1
Group - deferred taxation	(31)	23
Joint ventures and funds - current taxation	1	2
Joint ventures and funds - deferred taxation	-	(4)
Group - valuation movement	(616)	(884)
Group - profit on disposal of investment properties and investments	(35)	(20)
Group - profit on disposal of trading properties	(10)	(6)
Joint ventures and funds - net valuation movement (including result on disposals)	(263)	(595)
Changes in fair value of financial instruments and associated close-out costs	(31)	47
Non-controlling interests in respect of the above	5	39
Underlying Profit	363	313
Group - underlying current taxation	2	-
EPRA earnings - basic	365	313
Dilutive effect of 2012 convertible bond	6	6
EPRA earnings - diluted	371	319
Profit attributable to the shareholders of the Company	1,345	1,710
Dilutive effect of 2012 convertible bond	6	-
IFRS earnings - diluted	1,351	1,710

	2016 Number million	2015 Number million
Weighted average number of shares	1,036	1,027
Adjustment for Treasury shares	(11)	(11)
IFRS/EPRA Weighted average number of shares (basic)	1,025	1,016
Dilutive effect of share options	2	2
Dilutive effect of ESOP shares	4	4
Dilutive effect of 2012 convertible bond	58	-
IFRS Weighted average number of shares (diluted)	1,089	1,022
Dilutive effect of 2012 convertible bond	-	58
EPRA Weighted average number of shares (diluted)	1,089	1,080

Net assets per share

	2016			2015
	£m	Pence per share		£m	Pence per share
Balance sheet net assets	9,619			8,565
Deferred tax arising on revaluation movements	5			13
Mark-to-market on effective cash flow hedges and related debt adjustments	198			257
Dilution effect of share options	36			37
Surplus on trading properties	93			96
Convertible bond adjustment	400			400
Less non-controlling interests	(277)			(333)
EPRA NAV	10,074	919		9,035	829
Deferred tax arising on revaluation movements	(24)			(13)
Mark-to-market on effective cash flow hedges and related debt adjustments	(153)			(257)
Mark-to-market on debt	(257)			(406)
EPRA NNNAV	9,640	880		8,359	767

EPRA NNNAV is the EPRA NAV adjusted to reflect the fair value of the debt and derivatives and to include the deferred taxation on revaluations and derivatives.

	2016 Number million	2015 Number million
Number of shares at year end	1,040	1,031
Adjustment for treasury shares	(11)	(11)
IFRS / EPRA number of shares (basic)	1,029	1,020
Dilutive effect of share options	2	4
Dilutive effect of ESOP shares	7	8
Dilutive effect of 2012 convertible bond	58	-
IFRS number of shares (diluted)	1,096	1,032
Dilutive effect of 2012 convertible bond	-	58
EPRA number of shares (diluted)	1,096	1,090

EPRA Net Initial Yield and 'topped-up' Net Initial Yield

	2016 £m	2015 £m
Investment property - wholly-owned	9,787	9,068
Investment property - share of joint ventures and funds	4,861	4,569
Less developments, residential and land	(894)	(1,148)
Completed property portfolio	13,754	12,489
Allowance for estimated purchasers' costs	985	784
Gross up completed property portfolio valuation	14,739	13,273
Annualised cash passing rental income	607	575
Property outgoings	(8)	(8)
Annualised net rents	599	567
Rent expiration of rent-free periods and fixed uplifts1	63	64
'Topped-up' net annualised rent	662	631
EPRA Net Initial Yield	4.1%	4.3%
EPRA 'topped-up' Net Initial Yield	4.5%	4.8%
Including fixed/minimum uplifts received in lieu of rental growth	24	26
Total 'topped-up' net rents	686	657
Overall 'topped-up' Net Initial Yield	4.7%	4.9%
'Topped-up' net annualised rent	662	631
ERV vacant space	14	20
Reversions	42	18
Total ERV	718	669
Net Reversionary Yield	4.9%	5.0%

1 The weighted average period over which rent-free periods expire is 1 year (2014/15: 1 year).

The above is stated for the UK portfolio only.

EPRA Net Initial Yield (NIY) basis of calculation

EPRA NIY is calculated as the annualised net rent (on a cash flow basis), divided by the gross value of the completed property portfolio. The valuation of our completed property portfolio is determined by our external valuers as at 31 March 2016, plus an allowance for estimated purchaser's costs. Estimated purchaser's costs are determined by the relevant stamp duty liability, plus an estimate by our valuers of agent and legal fees on notional acquisition. The net rent deduction allowed for property outgoings is based on our valuers' assumptions on future recurring non-recoverable revenue expenditure.

In calculating the EPRA 'topped-up' NIY, the annualised net rent is increased by the total contracted rent from expiry of rent-free periods and future contracted rental uplifts where defined as not in lieu of growth. Overall 'topped-up' NIY is calculated by adding any other contracted future uplift to the 'topped-up' net annualised rent.

The net reversionary yield is calculated by dividing the total estimated rental value (ERV) for the completed property portfolio, as determined by our external valuers, by the gross completed property portfolio valuation.

The EPRA vacancy rate is calculated as the ERV of the unrented, lettable space as a proportion of the total rental value of the completed property portfolio.

EPRA Vacancy Rate

	2016 £m	2015 £m
Annualised potential rental value of vacant premises	14	20
Annualised potential rental value for the completed property portfolio	728	692
EPRA Vacancy Rate	2.0%	2.9%
The above is stated for the UK portfolio only.

EPRA Cost Ratios

		2016 £m	2015 £m
Property operating expenses		25	23
Administrative expenses		90	84
Share of joint ventures and funds expenses		13	14
Less:	Performance & management fees (from joint ventures & funds)	(9)	(9)
	Net other fees and commissions	(8)	(8)
	Ground rent costs	(3)	(3)
EPRA Costs (including direct vacancy costs) (A)		108	101
Direct vacancy costs		(11)	(11)
EPRA Costs (excluding direct vacancy costs) (B)		97	90
Gross Rental Income less ground rent costs		429	374
Share of joint ventures and funds (GRI less ground rent costs)		222	241
Total Gross Rental Income less ground rent costs (C)		651	615
EPRA Cost Ratio (including direct vacancy costs) (A/C)		16.6%	16.4%
EPRA Cost Ratio (excluding direct vacancy costs) (B/C)		14.9%	14.6%
Overhead and operating expenses capitalised (including share of joint ventures and funds)		4	-

In the current year, employee costs in relation to staff time on development projects have been capitalised into the base cost of relevant development assets.

Table C: Gross rental income

	2016 £m	2015 £m
Rent receivable	615	581
Spreading of tenant incentives and guaranteed rent increases	36	33
Surrender premia	3	4
Gross rental income	654	618

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

Table D: Property related capital expenditure

	2016				2015
	Group	Joint ventures and funds	Total		Group	Joint ventures and funds	Total
---	---	---	---	---	---	---	---
Acquisitions	238	-	238		147	-	147
Development	104	58	162		64	83	147
Like-for-like portfolio	99	6	105		67	23	90
Other	25	15	40		25	8	33
Total property related capex	466	79	545		303	114	417

The above is presented on a proportionally consolidated basis, excluding non-controlling interests and business combinations. The 'Other' category contains amounts owing to tenant incentives of £27m (2014/15: £18m), capitalised staff costs of £4m (2014/15: £nil) and capitalised interest of £9m (2014/15: £15m).

This information is provided by RNS

The company news service from the London Stock Exchange

END

FR AIMMTMBTBTLF

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