British Land Co PLC BLND Half Yearly Report - Part 2

  British Land Co PLC (BLND) - Half Yearly Report - Part 2

RNS Number : 5105R
British Land Co PLC
20 November 2012




Consolidated Income Statement
       Year ended                                        Six months ended         Six months ended
     31 March 2012                                      30 September 2012        30 September 2011
        Audited                                             Unaudited                Unaudited
Underlying Capital                                   Underlying Capital       Underlying Capital
               and                                                  and                      and
  pre tax*   other Total                               pre tax*   other Total   pre tax*   other Total
        £m      £m    £m                        Note         £m      £m    £m         £m      £m    £m
                         Gross rental
                         and related
       332           332 income                  2          165           165        162           162
                         Net rental and
       286           286 related income          2          142           142        139           139
                         Fees and other
        16            16 income                  2            8             8          8             8
                         Joint ventures
                         and funds (see
       113      69   182 also below)                         63    (19)    44         54      87   141
                         Administrative
      (69)          (69) expenses                          (37)          (37)       (35)          (35)
                         Net valuation
                         movement
                         (includes
                         profits &
                         losses on
               143   143 disposals)              2                    6     6                112   112
                         Net financing
                         costs
                         - financing
        24       2    26 income                              13       3    16         14       4    18
                         - financing
     (101)     (4) (105) charges                           (52)    (18)  (70)       (48)     (4)  (52)
      (77)     (2)  (79)                         2         (39)    (15)  (54)       (34)          (34)
                         Profit on
                         ordinary
                         activities
                         before
       269     210   479 taxation                           137    (28)   109        132     199   331
                         Taxation
                         - current tax
                         income
               (2)   (2) (expense)               2                    1     1                (1)   (1)
                         - deferred tax
                         income
                 3     3 (expense)               2                    2     2                  2     2
                 1     1                         2                    3     3                  1     1
                         Profit for the
                         period after
                         taxation
                     480 attributable                                     112                      332
                         to
                         shareholders
                         of the Company
                   54.1p Earnings per                                   12.6p                    37.4p
                         share:         basic    1
                   53.8p                diluted  1                      12.5p                    37.2p




Share of results of joint ventures and
funds


                         Underlying
                         profit before
       113           113 taxation                            63            63         54            54
                         Net valuation
                         movement
                         (includes
                         profits &
                         losses on
                72    72 disposals)                                (19)  (19)                 90    90
                         Non-recurring
               (3)   (3) items                                      (3)   (3)                (2)   (2)
                         Current tax
                         income
               (1)   (1) (expense)                                    3     3                (1)   (1)
                         Deferred tax
                         income
                 1     1 (expense)
       113      69   182                         4           63    (19)    44         54      87   141
* As defined in note 1



Consolidated Balance Sheet
31 March                                             30 September 30 September
    2012                                                     2012         2011
 Audited                                                Unaudited    Unaudited
      £m                                        Note           £m           £m
         Assets
         Non-current assets
   5,346 Investment and development properties   3          5,389        5,323
      41 Owner-occupied property                 3             42           39
   5,387                                                    5,431        5,362
         Other non-current assets
         Investments in joint ventures and
   2,191 funds                                   4          2,308        2,131
      28 Other investments                       5             48           59
   7,606                                                    7,787        7,552
         Current assets
      47 Trading properties                      3             49
     168 Debtors                                              218          142
     200 Liquid investments                      6            100          200
     137 Cash and short-term deposits            6            107          111
     552                                                      474          453
   8,158 Total assets                                       8,261        8,005
         Liabilities
         Current liabilities
    (49) Short-term borrowings and overdrafts    6          (252)        (104)
   (376) Creditors                                          (366)        (376)
   (425)                                                    (618)        (480)
         Non-current liabilities
 (2,572) Debentures and loans                    6        (2,507)      (2,402)
    (25) Other non-current liabilities                       (29)         (26)
    (32) Deferred tax liabilities                            (30)         (33)
 (2,629)                                                  (2,566)      (2,461)
 (3,054) Total liabilities                                (3,184)      (2,941)
   5,104 Net assets                                         5,077        5,064
         Equity
     225 Share capital                                        226          224
   1,237 Share premium                                      1,242        1,237
   (164) Other reserves                                     (197)        (171)
   3,806 Retained earnings                                  3,806        3,774
         Total equity attributable to
   5,104 shareholders of the Company                        5,077        5,064
    595p EPRA NAV per share*                     1           596p         591p
* As defined in note 1



Consolidated Statement of Comprehensive Income
for the period ended 30 September 2012
    Year                                               Six months   Six months
   ended                                                    ended        ended
31 March                                             30 September 30 September
    2012                                                     2012         2011
 Audited                                                Unaudited    Unaudited
      £m                                                       £m           £m
     480 Profit for the period after taxation                 112          332
         (Losses) gains on cash flow hedges
    (65) - Group                                             (32)         (47)
    (50) - Joint ventures and funds                          (17)         (55)
   (115)                                                     (49)        (102)
         Transferred (from) to the income statement
         (cash flow hedges)
         - foreign currency derivatives                         1          (9)
      18 - interest rate derivatives                           13            8
      18                                                       14          (1)
         Exchange differences on translation of
         foreign operations
       9 - hedging and translation                             9            4
     (8) - other                                             (7)          (4)
     (3) Actuarial loss on pension scheme                     (1)
         Other comprehensive (loss) income for the
    (99) period                                              (34)        (103)
     381 Total comprehensive income for the period             78          229



Consolidated Statement of Cash Flows
for the period ended 30 September 2012
    Year                                               Six months   Six months
   ended                                                    ended        ended
31 March                                             30 September 30 September
    2012                                                     2012         2011
 Audited                                                Unaudited    Unaudited
      £m                                        Note           £m           £m
     271 Rental income received from tenants                  125          138
      21 Fees and other income received                        11           10
         Operating expenses paid to suppliers
    (81) and employees                                       (44)         (44)
     211 Cash generated from operations                        92          104
    (89) Interest paid                                       (61)         (51)
      17 Interest received                                     10            8
       3 UK corporation tax received (paid)                   (1)
         Distributions received from joint
      64 ventures and funds                      4             62           35
         Net cash inflow from operating
     206 activities                                           102           96
         Cash flows from investing activities
         Development and other capital
   (106) expenditure                                         (93)         (49)
   (382) Purchase of investment properties                   (47)        (362)
      59 Sale of investment properties                         77            7
    (22) Purchase of investments
      12 Deferred consideration received                       13            9
         Investment in and loans to joint
   (110) ventures and funds                                 (182)         (52)
         Indirect taxes in respect of investing
       2 activities                                           (6)          (7)
         Net cash (outflow) inflow from
   (547) investing activities                               (238)        (454)
         Cash flows from financing activities
         Issue of ordinary shares                               4
   (212) Dividends paid                                     (122)         (97)
         Movement in other financial
     (4) liabilities                                            4          (1)
         Disposal of liquid investments                       100
   (406) Decrease in bank and other borrowings              (350)        (271)
   1,040 Drawdowns on bank and other borrowings                70          778
         Proceeds on convertible bond issue                   400
         Net cash inflow (outflow) from
     418 financing activities                                 106          409
         Net increase (decrease) in cash and
      77 cash equivalents                                    (30)           51
      60 Opening cash and cash equivalents                    137           60
     137 Closing cash and cash equivalents                    107          111
         Cash and cash equivalents consists of:
     137 Cash and short-term deposits                         107          111



Consolidated Statement of Changes in Equity
for the period ended 30 September 2012
                                          Hedging &
                        Share     Share translation Revaluation Retained
                      capital * premium     reserve     reserve earnings Total
                           £m        £m          £m          £m       £m    £m
Six month movements
in Equity
Balance at 1 April
2012                      225     1,237        (72)        (92)    3,806 5,104
Total comprehensive
income for the period                           (9)        (24)      111    78
Share issues                1         5                                      6
Adjustment for share
and share option
awards                                                                 5     5
Dividends payable in
the six month period                                               (116) (116)
Balance at 30
September 2012            226     1,242        (81)       (116)    3,806 5,077
Balance at 1 April
2011                      224     1,237        (34)        (34)    3,537 4,930
Total comprehensive
income for the period                          (48)        (55)      332   229
Adjustment for share
and share option
awards                                                                 2     2
Dividends payable in
the six month period                                               (115) (115)
Adjustment for scrip
dividend element                                                      18    18
Balance at 30
September 2011            224     1,237        (82)        (89)    3,774 5,064
Prior year movements
in Equity
Balance at 1 April
2011                      224     1,237        (34)        (34)    3,537 4,930
Total comprehensive
income for the period                          (38)        (58)      477   381
Share issues                1                                                1
Adjustment for share
and share option
awards                                                                 5     5
Dividends payable in
the year                                                           (231) (231)
Adjustment for scrip
dividend element                                                      18    18
Balance at 31 March
2012                      225     1,237        (72)        (92)    3,806 5,104
* See note 11 for a summary of the number of shares in issue





Notes to the accounts (unaudited)
1. Performance measures
   Year ended                         Six months ended     Six months ended
  31 March 2012                       30 September 2012   30 September 2011
                                                                        Pence
            Pence Earnings per share               Pence            per share
 Earnings     per (diluted)             Earnings     per   Earnings
       £m   share                             £m   share         £m         
                  Underlying pre tax
                  profit - income
      269         statement                  137                132
                  Tax charge
                  relating to
      (4)         underlying profit          (1)                (2)
                  Underlying
      265   29.7p earnings per share         136   15.2p        130     14.6p
                  Mark to market on
                  liquid investments
                  (held for trading
      (3)         assets)                      4                (3)
                  Non-recurring
      (3)         items *                    (7)                (2)
                  EPRA earnings per
      259   29.0p share (diluted)            133   14.9p        125     14.0p
                  Profit for the
                  period after
      480   53.8p taxation                   112   12.5p        332     37.2p
*Non-recurring items for the six months ended 30 September 2012 of £7m relate
to the issue costs for the convertible bond (30 September 2011: £2m relate to
the debt break costs in HUT; 31 March 2012: £3m relate to the debt break
costs in HUT).


Underlying earnings consists of the EPRA earnings (diluted) measure, with
additional company adjustments. Adjustments include mark to market
adjustments on held for trading assets, fair value adjustments on the buy
back of debentures and debt break costs.

The European Public Real Estate Association (EPRA) issued Best Practices
Recommendations most recently in August 2011, which gives guidelines for
performance measures. The results have been presented to be in line with
these recommendations. The EPRA earnings (diluted) measure excludes
investment property revaluations and gains or losses on disposals, intangible
asset movements and their related taxation. A summary of the EPRA
Performance Measures is provided in table B within the Supplementary
Disclosures.
The weighted average number of shares in issue for the six month period  was: 
basic: 888m (six months  ended 30 September 2011:  887m; year ended 31  March 
2012: 887m); diluted for the effect of share options: 894m (six months  ended 
30 September 2011: 893m;  year ended 31 March  2012: 892m). Basic  undiluted 
earnings per share for the  six month period was  12.6p (six months ended  30 
September 2011: 37.4p; year ended 31  March 2012: 54.1p). Earnings per  share 
shown in the table above are diluted.
                                                                 30        30
 31 March                                                 September September
                  Net asset value
     2012         (NAV)                                        2012      2011
       £m                                                        £m        £m
                  Balance sheet net
    5,104         assets                                      5,077     5,064
       31         Deferred tax                                   29        33
                  arising on
                  revaluation
                  movements
      189         Mark to market on effective                   229       193
                  cash flow hedges and related
                  debt adjustments
                  Surplus on trading                              6
                  properties
       57         Dilution effect of                             51        53
                  share options
    5,381         EPRA NAV                                    5,392     5,343
     595p         EPRA NAV per share                           596p      591p
The EPRA NAV per  share excludes the  mark to market  on effective cash  flow 
hedges and  related  debt  adjustments, deferred  taxation  on  revaluations, 
surplus on trading properties and is calculated on a fully diluted basis.
At 30 September  2012, the number  of shares  in issue was:  basic: 888m  (31 
March 2012: 888m; 30 September 2011:  888m); diluted for the effect of  share 
options: 904m (31 March 2012: 904m; 30 September 2011: 904m).
REIT total return per share for the six months ended 30 September 2012 of
2.4% includes dividends paid of 13.2p (see note 7) in addition to the
increase in EPRA NAV of 1p. Total return per share for the six months ended
30 September 2011 was 6.5% and the year ended 31 March 2012 was 9.5%.



2. Income statement notes                                                       
                                                                                    
   Year                                                                Six months   
  ended                                                                  ended
     31                                                                             
  March                                                               30 September
   2012                                                                 2012   2011 
     £m                                                                   £m     £m 
        Gross and net rental income                                                 
                                                                                    
    259 Rent receivable                                                  134    126 
        Spreading of tenant incentives and                                          
     41 guaranteed rent increases                                         14     20
        Surrender premia                                                   1        
                                                                                    
    300 Gross rental income                                              149    146 
                                                                                    
     32 Service charge income                                             16     16 
                                                                                    
    332 Gross rental and related income                                  165    162 
                                                                                    
   (32) Service charge expenses                                         (16)   (16) 
   (14) Property operating expenses                                      (7)    (7) 
                                                                                    
    286 Net rental and related income                                    142    139 
                                                                                    
        Fees and other income                                                       
                                                                                    
        Performance & management fees (from joint                                   
     12 ventures & funds)                                                  5      6
      4 Other fees and commission                                          3      2 
                                                                                    
     16                                                                    8      8 
        Net revaluation movements on property and                                   
        investments
                                                                                    
    143 Revaluation of properties                                          1    118 
      3 Result on property disposals                                       1    (3) 
    (3) Revaluation of investments                                         4    (3) 
                                                                                    
    143                                                                    6    112 
        Share of valuation movements of joint                                       
     72 ventures and funds (note 4)                                     (19)     90
                                                                                    
                                                                                    
    215                                                                 (13)    202 
                                                                                    
Included in the £15m of net financing costs in the Capital and Other column are £7m
of issue costs relating to the £400m convertible bond, £5m being the realisation of 
fair value movements on the close out of cash flow hedges and a net £3m movement on
the fair value of non-hedge accounted derivatives.
                                                                                    
        Tax income (expense)                                                        
                                                                                    
                                                   UK corporation
                                                   tax (30 September                
    (2) Current tax:                               2012: 24%; 30           1    (1)
                                                   September 2011:                  
                                                   26%)
                                                                                    
    (2)                                                                    1    (1) 
        Adjustments in respect of prior periods                                     
    (2) Total current tax expense                                          1    (1) 
      3 Deferred tax on revaluations                                       2      2 
                                                                                    
      1 Group total taxation (net)                                         3      1 
                                                                                    
        Attributable to joint ventures and funds                           3        
                                                                                    
      1 Total taxation                                                     6      1 
                                                                                    
Tax expense attributable to underlying profits for the six months ended 30          
September 2012 was £1m (six months ended 30 September 2011: £2m; year ended 31      
March 2012: £4m).                                                                   
The deferred tax charge for the six months ended 30 September 2012 has been         
calculated using the future enacted UK corporation tax rate of 23% (effective from  
1 April 2013).                                                                      
3.
Property
Total property interests are £10,388m at 30 September 2012 comprising properties held
by the Group  of £5,466m, share  of properties held  by funds of  £776m and share  of 
properties held by joint ventures of £4,146m. Properties were valued on the basis  of 
market value, supported  by market  evidence, in  accordance with  the Appraisal  and 
Valuation Standards published by The Royal Institution of Chartered Surveyors.
31 March                                                    30September 30 September
    2012                                                            2012         2011
      £m                                                              £m           £m
         Investment
   5,346 properties                                                5,389        5,323
         Owner-occupied
      41 property                                                     42           39
         Carrying value
         of properties
         on balance
   5,387 sheet                                                     5,431        5,362
         Trading
     47 properties                                                   49
         Carrying value
         of properties
         on balance
   5,434 sheet                                                     5,480        5,362
         Head lease
    (20) liabilities                                                (20)         (20)
         Surplus on
         trading
         properties                                                    6
         Total British
         Land Group
         property
         portfolio
   5,414 valuation                                                 5,466        5,342
At 30 September 2012 Group  properties valued at £1,700m  were subject to a  security 
interest (31 March 2012: £1,827m; 30 September 2011: £1,911m) and other properties of
non-recourse companies amounted  to £39m  (31 March  2012: £50m;  30 September  2011: 
£115m).
Interest capitalised on development expenditure for the six months ended 30 September
2012 was £7m (six months ended 30 September 2011: £3m; year ended 31 March 2012:
£8m).


4. Joint ventures
and funds
Summary of British Land's share of investments in joint
ventures and funds at 30 September 2012
                        Underlying
                            profit
                              (six        Net     Property         Other        Gross
                           months) Investment      assets*        assets liabilities*
                                £m         £m           £m            £m           £m
Share of funds                  15        495          776            40        (321)
Share of
joint
ventures                        48      1,813        4,146           157      (2,490)
Total                           63      2,308        4,922           197      (2,811)
* Head lease liabilities included
in property assets


A market uncertainty clause is included in the valuation report of the Portuguese,
Spanish and Italian properties within PREF, a fund owning a portfolio of retail
property in Europe (in which British Land has a net investment of £122m), due to a
lack of transactional evidence and uncertainty over the economic situation in those
markets.
At 30 September 2012 the investment in  Joint Ventures included within the total  net 
investment in  joint ventures  and funds  was  £1,817m (31  March 2012:  £1,690m;  30 
September 2011: £1,640m).
Amounts owed to joint ventures at 30 September 2012 were £5m (31 March 2012: £15m; 30
September 2011: £47m). Amounts owed from joint ventures at 30 September 2012 were
£107m (31 March 2012: £79m; 30 September 2011: £102m).
British Land's share of the results of joint
ventures and funds


    Year                                                      Six months   Six months
                                                                              
   ended                                                    ended        ended
31 March                                                    30 September 30 September
    2012                                                            2012         2011
      £m                                                              £m           £m
                                   The story
                                   has been
                                   truncated,
                                  
[TRUNCATED]