23rd May 2006 07:04
British Land Co PLC23 May 2006 PRELIMINARY ANNOUNCEMENT OF FINANCIAL RESULTS For the year ended 31 March 2006 Consolidated Income Statement for the year ended 31 March 2006 2006 - Unaudited 2005 ------------------- ------------------- Capital, Capital Underlying tax and Underlying tax and pre tax * other Total pre tax * other Total Note £m £m £m £m £m £m ---- --- ---- --- ---- --- ---- --- ---- ----Gross rental and related 3 690 690 604 604income -------- ------ ------ -------- ------- ----- Net rent and 3 589 589 517 517related income Fees and other 4 50 50 8 8income Amortisation 11 (10) (10)of intangibleasset Funds and joint ventures 9 39 272 311 31 127 158(see also below) Administrative (81) (81) (49) (49)expenses Net valuation gains 5 1,462 1,462 610 610(includes profits ondisposals) Goodwill 11 (240) (240)impairment Net financingcosts -------- ------ ------ -------- ------- -----financing 50 50 28 28incomefinancing (419) (419) (354) (354)expensesrefinancing (122) (122) (180) (180)charges -------- ------ ------ -------- ------- ----- 6 (369) (122) (491) (326) (180) (506) -------- ------ ------ -------- ------- ----- Profit on ordinary 228 1,362 1,590 181 557 738activities beforetaxation ======== ========Taxation(expense) ------ ------ ------- -----creditcurrent (7) (7) 46 46deferred (334) (334) (130) (130) ------ ------ ------- ----- 7 (341) (341) (84) (84) Profit for the year aftertaxation ------ ------ ------- -----attributable to 1,021 1,249 473 654shareholders of the ====== ====== ======= =====Company Earnings per basic 2 241 p 129 pshare: ======= ====== diluted 2 240 p 126 p ======= ======= underlying 2 36 p 27 p ======= ======= ------------- -------- ----- --- -------- --- ------- --- ------- ---- -------- --- ------- ---- ------- Share of results of fundsand joint venturesUnderlying 39 39 31 31profit pre-taxNet valuation gains 378 378 169 169(includes profits ondisposals)Current tax (9) (9) (10) (10)Deferred tax (97) (97) (32) (32) -------- ------- ------- -------- ------- ------- 9 39 272 311 31 127 158 ======== ======= ======= ======== ======= ======= ------------- -------- ----- --- -------- --- ------- --- ------- ---- -------- --- ------- ---- ------- * As defined in note 2 Consolidated Balance Sheet as at 31 March 2006 2006 2005 Unaudited Note £m £m ---- ----ASSETS --- ---Non-current assetsInvestment properties 8 11,081 10,877Development properties 8 597 212 --------- -------- 11,678 11,089 Other non-current assetsInvestments in funds and joint ventures 9 1,234 700Other investments 11 248 153Intangible assets 11 65Goodwill 11 73 --------- -------- 13,225 12,015 --------- -------- Current assetsTrading properties (at cost) 8 36 36Debtors 12 118 76Cash and short-term deposits 15 133 151 --------- -------- 287 263 --------- --------Total assets 13,512 12,278 --------- -------- LIABILITIESCurrent liabilitiesShort-term borrowings and overdrafts 15 (129) (408)Creditors 13 (417) (351) --------- -------- (546) (759) --------- -------- Non-current liabilitiesDebentures and loans 15 (5,575) (5,754)Other non-current liabilities 14 (44) (37)Deferred tax liabilities 7 (1,331) (945) --------- -------- (6,950) (6,736) --------- --------Total liabilities (7,496) (7,495) --------- --------Net assets 6,016 4,783 ========= ======== EQUITYShare capital 130 130Share premium 1,253 1,249Other reserves 79 12Retained earnings 4,554 3,392 --------- --------Total equity attributable to shareholders of the company 6,016 4,783 ========= ======== EPRA NAV per share 2 1,486 p 1,128 p ========= ======== (The EPRA Net Asset Value (NAV) per share includes the external valuation surplus ontrading properties but excludes the fair value adjustments for debt and related derivativesand deferred taxation on revaluations and capital allowances, calculated on a fully dilutedbasis.) The financial information in this preliminary announcement was approved bythe Board on 22 May 2006 Consolidated statement of changes in equity for the year ended 31 March 2006 Unaudited Share Share Other Retained Note capital premium reserves earnings Total £m £m £m £m £m ---- ---- ---- ---- ---- At 1 April 2005 130 1,249 12 3,392 4,783 ------ ------- ------- ------- ------ Profit for the year after taxation 1,249 1,249 ------ ------- ------- ------- ------ Valuation movements on development properties 5 102 102 Gains (losses) on cash flow hedges (26) (26) Actuarial loss on pension scheme (1) (1) Tax on items taken direct to equity 7 (29) (29) ------ ------- ------- ------- ------ Net income recognised directly in 47 (1) 46equity Transferred to the Income statement Revaluation of funds and joint 2 2 ventures Foreign currency derivatives (14) (14) Cash flow hedges 32 32 ------ ------- ------- ------- ------ Total recognised income and expense for the period 67 1,248 1,315 Purchase of ESOP shares (10) (10) Dividends paid (final: 2005; 18 (84) (84)interim: 2006) Share issues 4 4 Share option awards 8 8-------------------------- ---- ------ --- ------- --- ------- --- ------- --- ------At 31 March 2006 130 1,253 79 4,554 6,016-------------------------- ---- ------ --- ------- --- ------- --- ------- --- ------ Consolidated Cash Flow Statementfor the year ended 31 March 2006 2006 2005 Unaudited Note £m £m --- ---- ---- Cash generated from operations 16 455 464Interest paid (392) (351)Interest received 13 10UK Corporation tax (10) (10)paidForeign tax paid (3) (3)Dividends received: funds and joint ventures 25 16 other investments 16 -------- --------Net cash inflow from operating activities 104 126 -------- -------- Cash flows from investing activitiesPurchase of investment properties and development expenditure (402) (509)Foreign tax paid on property sales (8) (1)Sale of investment properties 1,889 81Sale of investments 4Purchase of investments (3) (98)Investment in and loans to funds and joint (21) (23)venturesCapital distributions received from funds and joint ventures 277 Amounts repaid by funds and joint ventures 69 55Purchase of subsidiary companies (net of cash (815) (36)acquired) -------- --------Net cash inflow (outflow) from investing 986 (527)activities -------- -------- Cash flows from financing activitiesIssue of ordinary 4 1sharesPurchase of ESOP shares (10) (11)Dividends paid (84) (77)Issue of BL Superstores Finance PLC securitised 753debtRedemption of BLSSP (Funding) PLC securitised debt (705)Issue of Broadgate Estate securitised debt 2,081Redemption of Broadgate Funding PLC securitised (1,439)debtRedemption of 135 Bishopsgate Financing Ltd (138)securitised debtRepayment of debt acquired with subsidiary (398) (649)companies(Decrease) increase in bank and other borrowings (669) 614 -------- --------Net cash (outflow) inflow from financing (1,109) 382activities -------- -------- Net decrease in cash and cash equivalents (19) (19)Cash and cash equivalents at 1 April 2005 147 166 -------- --------Cash and cash equivalents at 31 March 2006 128 147 ======== ======== Cash and cash equivalents consists of:Cash and short-term deposits 133 151Overdrafts (5) (4) -------- -------- 128 147 ======== ======== Notes to the accounts for the year ended 31 March 2006 1. Basis of preparation The financial statements for the year ended 31 March 2006 have been prepared on the historical cost basis,except for the revaluation of certain properties, investments, intangible assets and financial instruments.The financial statements have also been prepared, for the first time, in accordance with InternationalFinancial Reporting Standards (IFRSs) as adopted for use in the European Union and therefore comply withArticle 4 of the EU IAS Regulation. The principal impacts of adopting IFRS and the Group's IFRS accounting policies, along with comparativesfor the year ended 31 March 2005 contained within this report, were published in a press release on 14 July2005. Further details and reconciliations explaining the transition to IFRS are available on the Group'swebsite, www.britishland.com. These accounting policies have been applied consistently in all materialrespects throughout the year and the comparative figures in respect of 2005 have been restated to reflectIFRS adjustments.----------------------------------------------------------------------------------------------------------- Whilst the financial information included in this preliminary announcement has been computed in accordancewith IFRSs, this announcement does not itself contain sufficient information to comply with IFRSs. TheCompany expects to publish full financial statements that comply with IFRSs in June 2006. Therefore thefinancial information set out herein does not constitute the Group's statutory accounts for the years ended31 March 2006 or 2005. The financial information for the year ended 31 March 2005 has been derived from the statutory accounts forthat year which have been delivered to the Registrar of Companies. The auditors reported on those accounts;their report was unqualified and did not contain a statement under section 237 (2) or 237 (3) of theCompanies Act 1985. These accounts were subsequently restated for IFRS, as noted above. The statutoryaccounts for the year ended 31 March 2006 will be finalised on the basis of the financial informationpresented by the directors in this preliminary announcement, and will be delivered to the Registrar ofCompanies following the Company's annual general meeting. Subsidiaries, joint ventures and associates (including funds) The consolidated accounts include the accounts of The British Land Company PLC and all subsidiaries(entities controlled by British Land). Control is assumed where British Land has the power to govern thefinancial and operating policies of an investee entity so as to gain benefits from its activities. The results of subsidiaries, joint ventures or associates acquired or disposed of during the year areincluded from the effective date of acquisition or to the effective date of disposal. Accounting practicesof subsidiaries, joint ventures or associates which differ from Group accounting policies are adjusted onconsolidation. Business combinations are accounted for under the acquisition method. Any excess of the purchase price ofbusiness combinations over the fair value of the assets, liabilities and contingent liabilities acquiredand resulting deferred tax thereon is recognised as goodwill. Any discount received is credited to theincome statement in the period of acquisition. All intra-group transactions, balances, income and expensesare eliminated on consolidation. Joint ventures and associates, including funds, are accounted for under the equity method, whereby theconsolidated Balance Sheet incorporates the Group's share of the net assets of its joint ventures andassociates. The consolidated income statement incorporates the Group's share of joint venture and associateprofits after tax. Their profits include revaluation movements on investment properties. Other investments Other investments are shown at fair value. Any surplus or deficit arising on revaluation is recogniseddirectly in the income statement. Properties Properties are externally valued on an open market basis at the balance sheetdate. Investment and development properties are recorded at valuation; tradingproperties at the lower of cost and valuation. Any surplus or deficit arising on revaluing investment properties is recognisedin the income statement for the year. Where an investment property is beingredeveloped, any movement in valuation is recognised in the income statement. Valuation surpluses arising on other development properties, those not previouslyinvestment properties, are reflected in the revaluation reserve, unless a deficitreduces the value below cost, in which case the deficit is charged to the incomestatement. The cost of properties in the course of development includes attributableinterest and other associated outgoings. Interest is calculated on thedevelopment expenditure by reference to specific borrowings where relevant andotherwise on the average rate applicable to short-term loans. Interest is notcapitalised where no development activity is taking place. A property ceases tobe treated as a development property on practical completion. Disposals are recognised on completion: profits and losses arising are recognisedthrough the income statement, the profit on disposal is determined as thedifference between the sales proceeds and the carrying amount of the asset at thecommencement of the accounting period plus additions in the period. In determining whether leases and related properties represent operating orfinance leases consideration is given to whether the tenant or landlord bears therisks and rewards of ownership. Properties acquired in corporate vehicles are generally treated as business notasset acquisitions resulting in any contingent capital gains liabilities assumed beingreflected in the acquisition balance sheet rather than recorded as contingencies.In adopting this policy the directors place value on transparencyand consistency, even though the liabilities are recorded under IFRS on a fullprovision basis, significantly above their fair value. Head leases Where an investment property is held under a head lease it is initiallyrecognised as an asset as the sum of the premium paid on acquisition and thepresent value of minimum ground rent payments. The corresponding rent liabilityto the head leaseholder is included in the Balance Sheet as a finance leaseobligation. Intangible assets Intangible assets, such as customer contracts, acquired through businesscombinations, are measured initially at fair value and are amortised on astraight line basis over their estimated useful lives, and are subject to regularreviews for impairment. Goodwill Goodwill arising on consolidation represents the excess of the cost ofacquisition over the Group's interest in the fair value of the identifiableassets and liabilities of the subsidiary, associate or jointly controlled entityat the time of acquisition. Goodwill normally arises as a result of deferred taxbeing provided on a full provision basis on acquisition of property companies,without regard to the fair value of the tax liabilities absorbed. Goodwill isrecognised as an asset and reviewed for impairment annually. Any impairment isrecognised immediately in the Income statement and is not subsequently reversed. Financial instruments Financial obligations and cash Debt instruments are stated at their net proceeds on issue. Finance chargesincluding premiums payable on settlement or redemption and direct issue costs arespread over the period to redemption, using the effective interest method. As defined by IAS39, cash flow hedges are carried at fair value in the BalanceSheet. Changes in the fair value of derivatives that are designated and qualify aseffective cash flow hedges are recognised directly in the hedging reserve and anyineffective portion is recognised in the income statement. Fair value hedges are carried at fair value in the Balance Sheet. Changes in thefair value of derivatives that are designated and qualify as effective fair valuehedges, are recorded in the income statement, along with any changes in the fairvalue of the hedged item that is attributable to the hedged risk. Any ineffectiveportion is also recognised in the income statement. Cash equivalents are limited to instruments with a maturity of less than threemonths. Net rental income Rental income is recognised on an accruals basis. A rent adjustment based on openmarket estimated rental value is recognised from the rent review date in relation tounsettled rent reviews. Where a rent free period is included in a lease, the rentalincome foregone is allocated evenly over the period from the date of leasecommencement to the earliest termination date. Rental income from fixed and minimumguaranteed rent reviews is recognised on a straight line basis over the shorter ofthe entire lease term or the period to the first break option. Where such rentalincome is recognised ahead of the related cash flow, an adjustment is made to ensurethe carrying value of the related property including the accrued rent does notexceed the external valuation. Initial direct costs incurred in negotiating and arranging a new lease are amortisedon a straight-line basis over the period from the date of lease commencement to theearliest termination date. Where a lease incentive payment, including surrender premiums paid, does not enhancethe value of a property, it is amortised on a straight-line basis over the periodfrom the date of lease commencement to the earliest termination date. Upon receiptof a surrender premium for the early determination of a lease, the profit, net ofdilapidations and non-recoverable outgoings relating to the lease concerned isimmediately reflected in income. Management and performance fees Management and performance fees receivable are recognised in the period to whichthey relate, except for performance fee retentions subject to clawback, which arerecognised over the clawback performance period. In assessing the risk of clawback,account is taken of the unpredictability of future relative performance against thebenchmark. Taxation Current tax is based on taxable profit for the year and is calculated using taxrates that have been enacted or substantially enacted. Taxable profit differs fromnet profit as reported in the income statement because it excludes items of incomeor expense, that are never taxable (or tax deductible) or will be taxable at a laterdate - temporary differences. Temporary differences principally arise from usingdifferent balance sheet values for assets and liabilities than their respective taxbase values. Deferred tax is provided in respect of all these taxable temporarydifferences at the balance sheet date on an undiscounted basis. A deferred tax asset is regarded as recoverable and therefore recognised only when,on the basis of all available evidence, it can be regarded as more likely than notthat there will be suitable taxable profits from which the future reversal of theunderlying temporary differences can be deducted. On business combinations, thedeferred tax effect of fair value adjustments is incorporated in the consolidatedbalance sheet. Current and prior year tax payable and the recoverability of tax losses areestimated. The basis of calculating deferred tax depends on whether value is expectedto be achieved through sales or retention in the business. As British Land has aproven record of portfolio recycling through sales and a committed strategy to recycle its capital, the deferred tax provision is calculated on the basis that assets will be soldand takes account of available loss relief including indexation, but does not assume any mitigation that could be achieved through tax structuring. Employee costs The fair value of equity-settled share-based payments to employees is determined atthe date of grant and is expensed on a straight-line basis over the vesting periodbased on the Group's estimate of shares or options that will eventually vest. In thecase of options granted, fair value is measured by a Black-Scholes pricing model.Compensation linked to performance fees accrued by the Group is amortised over thevesting period. Defined benefit pension scheme assets are measured using fair values; pension schemeliabilities are measured using the projected unit credit method and discounted atthe rate of return of a high quality corporate bond of equivalent term to the schemeliabilities. The net surplus or deficit is recognised in full in the consolidatedbalance sheet. Any asset resulting from the calculation is limited to past servicecosts plus the present value of available refunds and reductions in futurecontributions to the plan. The current service cost and gains and losses on settlement and curtailments arecharged to operating profit. Past service costs are recognised in the incomestatement if the benefits have vested or, if they have not vested, are amortised ona straight line basis over the period until vesting occurs. Actuarial gains andlosses are recognised in full in the period in which they occur and are presented inthe consolidated statement of changes in equity. Contributions to the Group's defined contribution schemes are expensed on the basisof the contracted annual contribution. IFRS transitional arrangements When preparing the Group's IFRS balance sheet at 1 April 2004, the date oftransition, the following material optional exemptions from full retrospectiveapplication of IFRS accounting policies have been adopted: (i) Business combinations - the provisions of IFRS 3 'Business combinations' havebeen applied prospectively from 1 April 2004. The Group has chosen not to restatebusiness combinations that took place before the date of transition; and (ii) Employee benefits - the accumulated actuarial gains and losses in respect ofemployee defined benefit plans have been recognised in full through reserves. Financial Instruments - the Group has applied IAS 32 'Financial Instruments:Disclosure and Presentation' and IAS 39 'Financial Instruments: Recognition andMeasurement' for all periods presented and has therefore not taken advantage of theoption that would enable the Group to only apply these standards from 1 April 2005. 2. Performance measures 2006 2005 ------------- -------------Earnings per share (diluted) Earnings Pence Earnings Pence per per share share £m £m ---- --- ---- Underlying pre-tax profit - Income 228 181statementTax charge relating to underlying profit: (43) (42) ------- -------Underlying earnings per share 185 36 139 27 Include: debt refinancings (net of tax) (85) (126)Prior year tax movements 8 45Other items (1) 4 ------- -------EPRA earnings per share 107 21 62 12 ======= ====== ======= ======= Profit for the year after taxation 1,249 240 654 126 ======= ======= ======= ======= The European Public Real Estate Association (EPRA) measure, published, in January2006, guidelines for calculating earnings and net asset value performance measures.The EPRA earnings measure excludes gains on property disposals and investmentrevaluations and their related taxation, intangible asset movements and the capitalallowance effects of IAS 12 where applicable, less taxation arising on these items. Underlying earnings consists of the EPRA earnings measure, with additional companyadjustments. Adjustments have been made to reverse the effects of the refinancingcharges (note 6) arising in the current (£85m) and prior years (£126m) respectivelyand prior year tax items. The weighted average number of shares in issue for the year was: basic: 519m (31 March 2005:509m); diluted: 521m (31 March 2005: 519m). Basic earnings per share for the year were241p (2005: 129p). Net asset value (NAV) - diluted 2006 2005 £m £m ---- ----Balance sheet net assets 6,016 4,783 Addback: Deferred tax arising on revaluation movements capital allowances and derivatives 1,636 1,013 Mark to market on interest rate swaps 33 24 Add: Surplus arising on trading properties 74 63 Dilution effect - options 43 30 --------- -------EPRA net assets 7,802 5,913 ========= ======= EPRA NAV 1,486 p 1,128 p ======= ======= The EPRA NAV per share includes the external valuation surplus on trading propertiesbut excludes the fair value adjustments for debt and related derivatives and deferredtaxation on revaluations and capital allowances, calculated on a fully diluted basis.The prior year deferred tax is net of the related goodwill. At 31 March 2006, the number of shares in issue was: basic: 519m (2005: 518m);diluted: 525m (2005: 524m). Total return per share (excluding re-financing charges) of 34.6% represents the growthper share in diluted EPRA NAV (358p) plus dividends paid of 16p (see note 18),excluding current year re-financing charges of 16p. 3. Gross and net rental income 2006 2005 £m £m ---- ----Rent receivable 571 509Spreading of tenant incentives and guaranteed rent 54 40increasesSurrender premiums 10 8Service charge income 55 47 ------- -------Gross rental and related income 690 604 Service charge expenses (57) (44)Property operating expenses (44) (43) ------- -------Net rental and related income 589 517 ======= ======= Net rental income for the year ended 31 March 2006from properties which were subject to a securityinterest or held by non recourse companies was £388m(2005: £374m). Property operating expenses relating to investmentproperties that did not generate any rental incomewere £7m (2005: £6m). 4. Fees and other income 2006 2005 £m £m ---- ----Performance and management fees 29 2Dividend received from Songbird Estates PLC 16Other fees and commission 5 6 ------- ------- 50 8 ======= ======= The £29m performance and management fees comprise£20m performance fees and £9m management fees fromfunds and joint ventures. The £48m HUT performance fee due to British Land forthe year to 31 December 2005 is reduced to £32mafter eliminating British Land's share. £18m hasbeen recognised in the current period, the remaining£14m is deferred to later years as it is potentiallysubject to clawback, depending on performance. Ifthere is no clawback, 50% of the undistributedperformance fee is payable in each subsequent year.The £2m HIF performance fee due to British Land forthe year to 31 December 2005 is reduced to £1m aftereliminating British Land's share, all of which hasbeen recognised in the current year. 5. Net revaluation gains on property and investments 2006 2005 £m £m ---- ----In income statement --- ---Revaluation of investments (note 11) 92 43Revaluation of properties 1,203 550Gains on property disposals 167 17 ------- ------- 1,462 610In consolidated statement of changes in equity Revaluation of properties 102 15 ------- ------- 1,564 625 ======= ======= Included above is a property derivative gain of £4mof which £2m is realised and £2m is included inrevaluation of properties of £1,203m, increasing thenet revaluation of £1,201m (note 8) attributable toproperties, which is taken to the income statement. Included in the tax charge is £16m (2005: £Nil) attributable to gain onproperty disposals. 6. Net financing costs 2006 2005 £m £m ---- ----Interest payableon:bank loans and overdrafts 115 84other loans 274 261loans from joint ventures 1obligations under finance leases 2 2 ------- -------- 392 347Deduct: capitalisation of development cost element (12) (8) ------- -------- 380 339 ------- --------Interest receivableon:deposits and securities (11) (10)loans to joint ventures (3) ------- -------- (11) (13) Other finance (income) costs: Expected return on pension scheme assets (3) (3)Interest on pension scheme liabilities 3 3 Valuation movements on fair value debt 22 7Valuation movements on fair value derivatives (22) (7) Valuation movements on translation of foreign 14 (5)currency debtHedging reserve (14) 5recycling ------- --------Net financing expenses 369 326 ------- -------- Refinancing chargesSainsburys Superstores securitisation 99Derivative close-out costs 23Broadgate 180securitisation ------- -------- 122 180 ------- -------- Net financing costs 491 506 ======= ======== Total financing (50) (28)incomeTotal financing 541 534expenses ------- --------Net financing costs 491 506 ======= ======== On 28 February 2006 the Group incurred a pre tax refinancing charge of£99m whilst redeeming the debt of its securitised Sainsbury's Superstoreportfolio, borrowed by BLSSP (Funding) PLC. On the same day British LandSuperstores Finance PLC issued £753m of new securitised debt (see note15). In addition, and after significant recent property disposals and therepayment of bank loans, derivatives have been closed out to maintain, inline with Group interest rate policy, an appropriate balance of fixed andfloating rate debt resulting in the realisation from equity to the incomestatement of a £23m charge. On 2 March 2005 the Group incurred a pre tax refinancing charge of £180mwhilst redeeming the securitised debt of Broadgate (Funding) PLC and 135Bishopsgate Financing Limited. On the same day Broadgate Financing PLCissued £2,080m of new securitised debt in respect of the Broadgate estate(see note 15). 7. Taxation 2006 2005 £m £m ---- ----Tax charge Current tax UK corporation tax (30%) (3) (3) Foreign tax 11 2 -------- -------- 8 (1)Adjustments in respect of prior years (1) (45) -------- --------Total current tax charge (credit) 7 (46)Deferred tax on income and revaluations 334 130 -------- --------Group total taxation (net) 341 84 ======== ======== Tax reconciliation Profit on ordinary activities before taxation 1,590 738Less: profit attributable to funds and joint ventures (311) (158) -------- --------Group profit on ordinary activities before taxation 1,279 580 -------- -------- Tax on profit on ordinary activities at UK corporation tax rate of 30% (2005: 30%) 384 174 Effects of: Indexation relief on investment properties (18) (48) Goodwill impairment 72 Capital allowances (8) (10) Tax losses and other timing differences (77) 11 Expenses not deductible for tax purposes (11) 2 Adjustments in respect of prior years (1) (45) -------- --------Group total taxation 341 84 ======== ======== Tax attributable to underlying profits for the year ended 31 March 2006 is £43m(2005: £42m). Balance sheet tax itemsCorporation tax receivable at 31 March 2006 was £8m (2005: £22m) as shown innote 12.The net deferred tax provision is set out below: Deferred tax 2006 2005 £m £m ---- ----Capital allowances 124 123Property and investment revaluations 1,216 851Other timing differences (29) (29)Intangible assets 20 -------- -------- 1,331 945 ======== ======== Deferred tax movements arising from: 1 April 2005 945 746Charge to income statement 334 130Charge (credit) to equity 29 (6)Acquisitions 23 75 -------- --------31 March 2006 1,331 945 ======== ======== 8. Investment, development and trading properties Investment Development Trading Total £m £m £m £m ---- ---- ---- ----Carrying value at 1 April 2005 10,877 212 36 11,125 ---------- --------- ------- -------- Additions: corporate acquisitions 495 495 property purchases 34 134 168 other capital 196 114 310 expenditure ---------- --------- ------- -------- 725 248 973 ---------- --------- ------- -------- Disposals (1,722) (1,722)Property transfer 7 (7)Exchange 1 1fluctuationsRevaluations: included in Income statement 1,159 42 1,201 included in Consolidated statement of changes in equity 102 102Increase in tenant incentives and guaranteed rent uplift balances 34 34 ---------- --------- ------- --------Carrying value of properties on balance sheet 11,081 597 36 11,714 ---------- --------- ------- -------- External valuation surplus on trading 67propertiesHead lease (28)liabilities --------Total Group property portfolio valuation 11,753 ======== At 31 March 2006, the Group book value of properties of £11,714m (2005: £11,125m) comprisesfreeholds of £11,017m (2005: £10,402m), virtual freeholds of £109m (2005: £96m); longleaseholds of £577m (£618m) and short leaseholds of £11m (2005: £9m). Investment, development and trading properties were valued by external valuers other thanwhere stated on the basis of open market value in accordance with the Appraisal andValuation Manual published by The Royal Institution of Chartered Surveyors: 2006 2005 £m £m ---- ---- Knight Frank 11,750ATIS REAL Weatheralls 10,802FPD Savills 2 282Jones Lang LaSalle (Republic of Ireland) 69CB Richard Ellis B.V. (Netherlands) 1 1 ------- --------Total Group property portfolio valuation 11,753 11,154 ======= ======== Properties valued at £7,709m (2005: £7,052m) were subject to a security interest and otherproperties of non-recourse companies amounted to £196m (2005: £42m). 9. Funds and joint ventures British Land's summary share of profits of funds and jointventures 2006 2005 £m £m ---- ----Gross rental income 123 73 ======== ======== Net rental income 112 68Other income and (6) (3)expenditureNet financing costs (67) (34) -------- --------Net underlying profit 39 31before taxNet valuation gains on property and investments 378 169 -------- --------Profit on ordinary activities before taxation 417 200Current tax (9) (10)Deferred tax (97) (32) -------- --------Profit on ordinary activities after taxation 311 158 ======== ======== Summary movement for the year of the investments in funds and jointventures Equity Loans Total £m £m £m ---- ---- ----At 1 April 2005 660 40 700Acquired with Pillar Property PLC 594 5 599Additions 1 11 12Disposals (50) (38) (88)Share of profit after taxation 311 311Distributions and dividends: capital (277) (277) revenue (25) (25) Hedging movements 2 2 -------- -------- --------At 31 March 2006 1,216 18 1,234 ======== ======== ======== At 31 March 2006, the total investment in funds and joint ventures of £1,234m comprises £599mof investment in funds being HUT, HIF and PREF and £635m investment in joint ventures, beingthe total of £589m and CLOUT of £46m. At 31 March 2005, there were no investments in funds. Distributions in the year include £65m (£59m capital) received from HUT; £31m (£28m capital)received from CLOUT and £190m received from The Scottish Retail Property Limited Partnership. With regard to funds and joint ventures, at 31 March 2006 the Group's share of: (i) their properties, including finance and trading lease surpluses is £2,661m (2005: £1,353m). (ii) their external net debt is £1,124m (2005: £502m). (iii) the market value of their debt was £2m more than the Group's share of the book value(2005: £4m). All fund and joint venture results have been shown for the period ended 31 March 2006. In thecase of some joint ventures this period exceeds 12 months as the Group has aligned all periodends as a consequence of moving to quarterly reporting. The effect is not considered materialto the current and prior year financial statements. 9. Funds and joint ventures continued: Funds' summary financial statements Pillar City of British Hercules Retail London LandAll disclosures have been restated Hercules Income Europark Office share to British Land accounting policies Unit Fund Fund Unit under IFRS including deferred tax Trust Trustand excluding performance andmanagement fees. ------- ------ ------ ------ ------- Percentage interest 34.64% 26.12% 34.16% 35.94% Date established 22 Sep 16 Sep 17 Mar 6 Nov 2000 2004 2004 2000 Accounting period 8 months 8 months 5 months 8 months ended ended ended ended 31 Mar 31 Mar 31 Dec 31 Mar 2006 2006 2005 2006 Summarised profit and loss accounts £m £m £m £m £m ---- ---- ---- ---- ---- Gross rental income 70 6 6 20 35 ========= ========= ========= ======== ======= Net rent and related income 68 5 5 19 34Other income and expenditure (3) (1) (1) (2)Profit (loss) on property trading --------- --------- --------- -------- -------Operating profit 65 5 4 18 32Surplus (deficit) on revaluation 445 22 8 15 169Disposal of fixed assets 2 1 13 6 --------- --------- --------- -------- -------Net interest - external (42) (2) (12) (20) - shareholders --------- --------- --------- -------- -------Net interest (payable) receivable (42) (2) (12) (20) --------- --------- --------- -------- -------Profit (loss) before tax 470 28 10 34 187Corporation tax (7) (1) (1) (1) (4)Deferred tax (89) (5) (8) (6) (37) --------- --------- --------- -------- -------Profit (loss) after tax 374 22 1 27 146 ========= ========= ========= ======== ======= Summarised balance sheets --- --- --- --- ---Investment properties at valuation 3,113 157 202 102 1,225Development and trading propertiesat costAssets held under finance leases --------- --------- --------- -------- -------Total properties 3,113 157 202 102 1,225Current assets 33 6 14 123 71 Cash and deposits 32 3 6 12 20 --------- --------- --------- -------- -------Gross assets 3,178 166 222 237 1,316 --------- --------- --------- -------- -------Current liabilities (44) (5) (10) (71) (54)Bank debt falling due within one (25) (7)yearBank debt falling due after one (298) (117) (38) (156)yearSecuritised debt (957) (332)DebenturesOther non-current liabilitiesDeferred tax (337) (5) (15) (122) --------- --------- --------- -------- -------Gross liabilities (1,636) (35) (142) (109) (671) --------- --------- --------- -------- -------Net external assets 1,542 131 80 128 645 ========= ========= ========= ======== ======= Represented by:Shareholder loansInvestors' capital 1,542 131 80 128 645 --------- --------- --------- -------- -------Total investment 1,542 131 80 128 645 ========= ========= ========= ======== ======= Capital commitments 42 14 ========= ========= ========= ======== ======= 9. Funds and joint ventures continued: Joint ventures' summary financial statements The ScottishAll disclosures have Retail The Tescobeen restated to Property BL BLT British Tesco British Land accounting Limited Davidson Properties Land Property BL Holdings policies under IFRS. Partnership Ltd Ltd Partnership Ltd -------- ---------- ---------- ---------- ---------- All joint ventures areheld equally on a 50:50basis Land MannyPartners Securities Davidson, Group PLC his family Tesco plc Tesco plc Tesco plc & trusts Date established March 2004 September November February November 2001 1996 1998 1999 Accounting period Year ended 15 months 15 months 15 months 15 months ended ended ended ended 31 Mar 2006 31 Mar 2006 31 Mar 2006 31 Mar 2006 31 Mar 2006 Summarised profit and loss accounts £m £m £m £m £m ---- ---- ---- ---- ---- Gross rent and related 50 41 19 12 34income ======== ========== ========== ========== ========== Net rent and related 34 39 18 11 33incomeOther income and (2) (3) (1) (1)expenditureProfit (loss) on 1property trading -------- ---------- ---------- ---------- ----------Operating profit 32 37 18 10 32Surplus (deficit) on 41 99 61 28 128revaluationDisposal of fixed (1)assets -------- ---------- ---------- ---------- ----------Net interest - external (22) (20) (13) (5) (22)- shareholders 1 -------- ---------- ---------- ---------- ----------Net interest (payable) (22) (20) (12) (5) (22)receivable -------- ---------- ---------- ---------- ----------Profit (loss) before 51 115 67 33 138taxCorporation tax (3) (5) (1) 13 (3)Deferred tax (29) (28) (18) (8) (36) -------- ---------- ---------- ---------- ----------Profit (loss) after tax 19 82 48 38 99 ======== ========== ========== ========== ========== Summarised balance sheets --- --- --- --- ---Investment properties 665 698 344 181 630at valuationDevelopment and trading 8properties at costAssets held underfinance leases -------- ---------- ---------- ---------- ----------Total properties 665 706 344 181 630Current assets 31 18 3 6 20Upstream loans to joint 17venture shareholdersCash and deposits 16 16 12 5 18 -------- ---------- ---------- ---------- ----------Gross assets 712 740 376 192 668 -------- ---------- ---------- ---------- ----------Current liabilities (41) (31) (11) (18) (33)Bank debt falling due within one (30)yearBank debt falling due after one (83) (185) (87) (315)yearSecuritised debt (427)Debentures (114)Other non-current (10) (4)liabilitiesDeferred tax (69) (115) (48) (17) (80) -------- ---------- ---------- ---------- ----------Gross liabilities (547) (377) (244) (122) (428) -------- ---------- ---------- ---------- ----------Net external assets 165 363 132 70 240 ======== ========== ========== ========== ========== Represented by:Shareholder loansOrdinary shareholders' 165 363 132 70 240funds / Partners' -------- ---------- ---------- ---------- ----------capitalTotal investment 165 363 132 70 240 ======== ========== ========== ========== ========== Capital commitments 32 17 1 ======== ========== ========== ========== ========== 9. Funds and joint ventures continued: Joint ventures' summary financial statements BL Other British British Land shareAll disclosures have been restated Fraser Joint Land 2,005to British Land accounting policiesunder IFRS. Ltd Ventures share Comparative ----------- ------- ------ ----------All joint ventures are held equally on a 50:50basis House ofPartners Fraser plc Date established July 1999 Accounting period 14 months ended 31 Mar 2006 Summarised profit and loss accounts £m £m £m £m ---- ---- ---- ---- Gross rent and related income 16 3 88 73 =========== ======= ====== ========== Net rent and related income 16 5 78 68Other income and expenditure (1) (4) (3)Profit (loss) on property trading 17 9 3 ----------- ------- ------- ----------Operating profit 15 22 83 68Surplus (deficit) on revaluation 26 5 194 160Disposal of fixed assets 1 6 ----------- ------- ------- ----------Net interest - external (10) (4) (48) (31)- shareholders 1 1 (3) ----------- ------- ------- ----------Net interest (payable) receivable (10) (3) (47) (34) ----------- ------- ------- ----------Profit (loss) before tax 32 24 230 200Corporation tax (4) (7) (5) (10)Deferred tax (1) (60) (32) ----------- ------- ------- ----------Profit (loss) after tax 28 16 165 158 =========== ======= ======= ========== Summarised balance sheets --- --- --- ---Investment properties at valuation 286 32 1,418 1,325Development and trading properties 4 25at costAssets held under finance leases 14 7 8 ----------- ------- ------- ----------Total properties 286 46 1,429 1,358Current assets 3 49 65 12Upstream loans to joint venture 31 24 26shareholdersCash and deposits 7 20 47 56 ----------- ------- ------- ----------Gross assets 296 146 1,565 1,452 ----------- ------- ------- ----------Current liabilities (11) (52) (98) (73)Bank debt falling due within one (4) (17) (81)yearBank debt falling due after one year (130) (2) (401) (412)Securitised debt (214)Debentures (57) (57)Other non-current liabilities (2) (8) (11)Deferred tax (29) (4) (181) (118) ----------- ------- ------- ----------Gross liabilities (176) (58) (976) (752) ----------- ------- ------- ----------Net external assets 120 88 589 700 =========== ======= ======= ========== Represented by:Shareholder loans 1 35 18 40Ordinary shareholders' funds / 119 53 571 660Partners' capital ----------- ------- ------- ----------Total investment 120 88 589 700 =========== ======= ======= ========== Capital commitments 16 33 33 =========== ======= ======= ========== 10. Pillar Acquisition On 28 July 2005 the Group acquired 100% of the issued share capital of Pillar PropertyPLC; the fair value of the consideration was £816m. An adjustment of £75m has beenrecognised to reflect the value of the fund management contracts (note 11). Deferred taxarising on this intangible asset is calculated to show the difference between itsaccounting and tax base costs and is recognised in the Group on acquisition. On 18 April 2005 the Group purchased the remaining 50% of the issued share capital of theBL West companies. The fair value of the consideration was £50m and there was no goodwillarising on acquisition. Book value acquired --------- --------- Pillar Accounting Fair value Fair value Property policy adjustment to Group PLC adjustment £m £m £m £mProperties 311 311Investment in unit 682 3 685trustsIntangible asset - fund management 75 75contractsOther assets 53 (7) 46Cash 24 24Creditors (88) (88)Borrowings (283) (283)Loan notes (12) (12) --------- --------- --------- --------- 687 (4) 75 758 Deferred tax (on units and intangible assets) (86) (23) (109) Goodwill 167 --------- 816 =========Satisfied by: Cash paid 816Non cashconsideration ---------Total 816consideration Repayment of: borrowings 283 loan notes 7 ---------Total amounts payable 1,106 ========= 11. Other non-current assets Other Intangible investments assets Goodwill £m £m £m ---- ---- ----At 1 April 2005 153 73Additions 3On corporate acquisition (Note 10) 75 167 Revaluation 92Amortisation (10)Impaired in the year (240) --------- --------- --------At 31 March 2006 248 65 ========= ========= ======== Other investments includes British Land's investment in Songbird Estates PLC which was acquired for £98m in June 2004 and valued by a major independentfirm of Chartered Accountants on the basis of market value at £233m as at 31 March 2006 (2005: £140m). Intangible assets relate to fund management contracts whichare amortised over the expected remaining life of eachcontract. Goodwill has been tested for impairment by comparing the carrying value of thecash generating unit including goodwill to its recoverable amount. For the purpose of impairment testing, the Spirit portfolio, Debenhams portfolio and the investment in HUT, are each regarded as cash-generating units. The recoverable amount of each cash-generating unit is based on the fair value less costs to sell, with fair value being determined in the light of external property values. Asa result of these impairment tests, a non-cash impairment charge of £240m has beenrecognised to write off goodwill in full. The Board's in principle decision to become a REIT will result in the derecognitionof deferred tax provisions in the foreseeable future. Further, there has been asubstantial rise in the values of the acquired assets. These two factors havegiven rise to the goodwill impairment. 12. Debtors 2006 2005 £m £m ---- ----Trade and other debtors 72 39Prepayments and accrued income 12 5Corporation tax 8 22Interest rate derivatives 26 10* --------- -------- 118 76 ========= ======== 13. Creditors 2006 2005 £m £m ---- ----Trade creditors 67 38Amounts owed to joint 26 28venturesOther taxation and social security 7 13Accruals and deferred 269 212incomeInterest rate derivatives* 48 60 --------- -------- 417 351 ========= ======== * Includes contracted cash flow with a maturity greater thanone year at fair value. 14. Other non-current liabilities 2006 2005 £m £m ---- ----Obligations under finance leases 28 28Minority interest 5 5Retirement benefit 11 4obligations --------- -------- 44 37 ========= ======== 15. Net debt Footnote 2006 2005 £m £m ---- ----Secured on the assets of the Group------------------------------------Class A4 4.821% Bonds 2036 1.1 396 3965.920% Secured Notes 2035 1.2 62 59Class C2 5.098% Bonds 2035 1.1 217 215Class B 4.999% Bonds 2033 1.1 365 365Class A3 4.851% Bonds 2033 1.1 175 174Class A1 Floating Rate Bonds 2032 1.1 224 224Class A2 4.949% Bonds 2031 1.1 308 314Class A2 4.482% Bonds 2030 1.3, 2 257Class M1 Floating Rate Bonds 2030 1.3, 2 83Class B2 5.270% Bonds 2030 1.3, 2 239Class B3 5.578% Bonds 2030 1.3, 2 49Class C1 Floating Rate Bonds 2030 1.3, 2 69Class D1 Floating Rate Bonds 2030 1.3, 2 53Class D Floating Rate Bonds 2025 1.1 147 1497.743% Secured Notes 2025 1.4, 3 20Class C1 Floating Rate Bonds 2022 1.1 234 2348.875% First Mortgage Debenture Bonds 247 24720359.375% First Mortgage Debenture Stock 197 197202810.5% First Mortgage Debenture Stock 13 132019/2411.375% First Mortgage Debenture Stock 20 202019/246.75% First Mortgage Debenture Bonds 1.5 205 20620206.75% First Mortgage Debenture Bonds 1.5 103 1032011Bank loan 1.6, 4 45Loan notes 5 --------- -------- 3,668 2,981 --------- --------Unsecured-----------Class A1 5.260% Unsecured Notes 2035 1.2 586 572Class B 5.793% Unsecured Notes 2035 1.2 97 99Class C Fixed Rate Unsecured Notes 1.2 87 842035Class A2 (C) 6.457% Unsecured Notes 1.4, 3 2122025Class B2 6.998% Unsecured Notes 2025 1.4, 3 206Class B3 7.243% Unsecured Notes 2025 1.4, 3 21Class A1 6.389% Unsecured Notes 2016 1.4, 3 80Class B1 7.017% Unsecured Notes 2016 1.4, 3 80Class A2 5.555% Unsecured Notes 2013 1.2 35 40 --------- -------- 805 1,394 6.30% Senior US Dollar Notes 2015 5 88 8110.25% Bonds 2012 2 27.35% Senior US Dollar Notes 2007 5 92 85Bank loans and overdrafts 1,049 1,619 --------- -------- 2,036 3,181 --------- --------Gross debt 6 5,704 6,162 --------- -------- Interest rate derivatives: liabilities 48 60Interest rate derivatives: assets (26) (10) --------- -------- 5,726 6,212Cash and short term deposits 7 (133) (151) --------- --------Net debt 5,593 6,061 ========= ======== 15. Net debt (continued) 2006 2005 £m £m ---- ----1 These borrowings are obligations of ring-fenced, special purpose companies, with no recourse to other companies or assets in the Group. --- 1.1 Broadgate Financing PLC 2,066 2,071 1.2 MSC (Funding) PLC 867 854 1.3 BL Superstores Finance PLC 750 1.4 BLSSP (Funding) PLC 619 1.5 BL Universal PLC 308 309 1.6 BLU Nybil Ltd 45 2 A total of £753m Bonds were issued by BL Superstores Finance PLC on 28 February 2006.3 All the outstanding Notes of BLSSP (Funding) PLC were redeemed on 28 February 2006.4 The outstanding balance drawn under the BLU Nybil Ltd Term Loan was repaid on 31 March 2006.5 Principal and interest on these borrowings were fully hedged into Sterling at the time of issue.6 The principal amount of gross debt at 31 March 2006 was £5,716m (2005: £6,209m). Included in this, the principal amount of secured borrowings and other borrowings of non-recourse companies was £4,470m (2005: £4,393m).7 Cash and deposits not subject to a security interest amount to £36m (2005: £54m). Maturity analysis of net debt 2006 2005 £m £m ---- ----Repayable:within one year and on demand 129 408 -------- -------- between: one and two years 64 259two and five years 1,348 1,328five and ten years 576 533ten and fifteen years 746 795fifteen and twenty years 835 580twenty and twenty five years 854 948twenty five and thirty years 1,152 1,001thirty and thirty five years 310 -------- -------- 5,575 5,754 -------- --------Gross debt 5,704 6,162 -------- --------Interest rate derivatives 22 50Cash and short term deposits (133) (151) -------- --------Net debt 5,593 6,061 ======== ======== 15. Net debt (continued) Maturity of committed undrawn borrowingfacilities 2006 2005 £m £m ---- ----Expiring: within one year 822 114 between: one and two years 25 95two and three years 554 10three and four years 118 442four and five years 763 132over five years 25 --------- ---------Total 2,282 818 ========= ========= Interest rate profile - including effect ofderivatives 2006 2005 £m £m ---- ---- Fixed rate 5,203 5,360Capped rate 100 100Variable rate (net of cash) 290 601 --------- ---------Net debt 5,593 6,061 ========= ========= Comparison of market values and book values at 31 March 2006 Market Book Value Value Difference £m £m £m ---- --- ---- ---- Securitisations 3,765 3,683 82Debentures and unsecured bonds 1,269 967 302Bank debt and other floating rate debt 1,054 1,054Cash and short-term deposits (133) (133) -------- --------- --------- 5,955 5,571 384 ======== ========= ========= Other financial (assets) liabilities:interest rate derivative assets (26) (26)interest rate derivative liabilities 48 48 -------- --------- --------- 22 22 -------- --------- ---------Total 5,977 5,593 384 ======== ========= ========= The differences are shown before any tax relief. 16. Notes to the cash flow statement Reconciliation of profit on ordinary activities before tax to cash generated fromoperations 2006 2005 £m £m --- ---- ----Profit on ordinary activities before tax 1,590 738 Non-cash movements:Net valuation gains on investment properties and investments Revaluation of properties (1,203) (550) Revaluation of investments (92) (43) Gains on investment property disposals and (166) (16) property derivatives -------- ------- (1,461) (609) -------- -------Share of profits after tax of funds and joint ventures (311) (158)Spreading of tenant incentives, guaranteed rent uplifts and (55) (38)letting feesImpairment of goodwill 240Negative goodwill (2)Depreciation and amortisation 11 1Share options, share awards and pension funding 20 8 -------- ------- (1,556) (798) -------- ------- Changes to working capital and other cash movements:Net financing costs 369 326Refinancing charges (as described in note 6) 122 180Dividends received (16)Share options, share awards and pension funding (6)Decrease in trading properties 6(Increase) decrease in debtors (9) 1(Decrease) increase in creditors (39) 11 -------- ------- 421 524 -------- -------Cash generated from operations 455 464 ======== ======= 17. Share capital 2006 2005 m m --- ---Actual shares in issueAt 1 April 2005 518 488 Conversion of convertible bonds 30Other issues 1 -------- -------At 31 March 2006 519 518 -------- ------- Adjustment for fully diluted (NAV basis) Dilution for share options 6 6 -------- -------Fully diluted shares 525 524 ======== ======= Weighted average number of shares in issue for the year 519 509Dilution forConvertible bonds to date of conversion 9Share options 2 1 -------- -------Fully diluted shares for the year 521 519 ======== ======= 18. Dividend The proposed final dividend of 11.8 pence per share, totalling £61m (2005: 10.9 pence per share,totalling £57m) was approved by the Board on 22 May 2006 and is payable on 18 August 2006 toshareholders on the register at the close of business on 21 July 2006. The consolidated statement of changes in equity shows total dividends paid per share of 16.1pcomprising the 2006 interim dividend of £27 million, representing 5.2 pence per share, that waspaid on 17 February 2006, as well as the 2005 final dividend, that was paid on 19 August 2005. 19. Contingent liabilities There were no contingent liabilities of the Parent for guarantees to third parties at 31 March2006 (2005: £Nil). TPP Investments Limited, a wholly owned ring-fenced special purpose subsidiary, is a partner inThe Tesco British Land Property Partnership and, in that capacity, has entered into a securedbank loan under which its liability is limited to £44m (2005: £44m) and recourse is only to thepartnership assets. Table A--------- Summary income statement based on proportionalconsolidation The following pro forma information does not form part of the consolidatedprimary statements or the notes thereto. It presents the results of thegroup, with funds and joint ventures consolidated on a line by line, ieproportional basis. The underlying profit before tax (£228m) and totalprofit after tax (£1,249m) are the same as presented in the financialstatements. Year Year ended ended 31 March 31 March 2006 2005 £m £m ---- ---- --- ---Gross rental income 751 630 ---------- ---------- Net rental income 701 585 Fees and other income 51 9 Administrative expenses (88) (53) Net interest costs (436) (360) ---------- ---------- Underlying profit before tax 228 181 Debt refinancing costs (122) (180) Revaluation of properties and investments 1,658 753 Gains on property disposals 182 26 Amortisation of intangible asset (10) Impairment of goodwill (240) ---------- ---------- Profit on ordinary activities before tax 1,696 780 Tax (charge) credit relating to underlying (43) (42)profitOther tax arising (404) (84) ---------- ---------- (447) (126) ---------- ---------- Profit for the year after taxation 1,249 654 ========== ========== Underlying earnings per share - diluted 36 p 27 pbasis ========== ========== The underlying earnings per share is calculated on pre tax profit of £228m(2005: £181m), tax attributable to underlying profits of £43m (2005: £42m)and fully diluted shares numbering 521m (2005: 519m). Gross rental income excludes service charge receivable. Table B--------- Pro-forma summary balance sheets based on proportionalconsolidation The following pro forma information does not form part of theconsolidated primary statements or the notes thereto. Itpresents the composition of the EPRA net assets of the group,with share of funds and joint venture assets and liabilitiesincuded on a line by line ie proportional basis and assumingfull dilution. 2006 2005 £m £m --- ---- --- ----Retail properties 8,775 6,879Office properties 5,200 4,849Other properties 439 779 -------- --------Total properties 14,414 12,507 Other investments 250 153Intangible assets 65 Other net liabilities (243) (209) Net debt (6,684) (6,538) -------- -------- EPRA net assets 7,802 5,913 ======== ========------------------------------------------ -------- ---- --------EPRA NAV per share 1,486 p 1,128 p------------------------------------------ -------- ---- -------- Calculation of EPRA NNNAV per share 2006 2005 £m £m ---- --- ----EPRA net assets 7,802 5,913 Less:Deferred tax arising on revaluation movements (1,530) (963) Mark-to-market on interest rate swaps (33) (24)Mark-to-market on debt (386) (278)Tax relief arising thereon 125 90 -------- --------EPRA net net net asset value 5,978 4,738 ======== ======== EPRA NNNAV per share 1,139 p 904 p ======== ======== Total property valuations including share of funds and joint ventures 2006 2005 £m £m ---- ----British Land Group 11,753 11,154 Share of funds and joint venturesInvestment properties 2,651 1,321Development properties 4Trading properties at cost 4 25Finance lease properties 7 8External valuation surplus on trading properties 3 2External valuation surplus on finance lease properties 4 4Head lease liabilities (8) (11) -------- -------- 2,661 1,353 -------- --------Total property portfolio valuation 14,414 12,507 ======== ======== Table B--------- Pro-forma summary balance sheets based on proportional consolidation and assuming full dilution Mark to Surplus EPRA EPRA Share Share of market of on Dilution Net Net of joint Deferred interest trading effect of Head assets assets Group funds ventures tax rate properties options lease 2006 2005 swaps £m £m £m £m £m £m £m £m £m £m --- ---- ---- ---- ---- ---- ---- ---- ---- --- ---- --- ----ASSETSTotal 11,714 1,225 1,429 74 (28) 14,414 12,507properties Investment 1,234 (645) (589)in fundsand jvs Other 248 248 153investmentsIntangible 65 65assets Other net (1,652) (105) (191) 1,636 43 28 (241) (209)liabilities Net debt (5,593) (475) (649) 33 (6,684) (6,538) ------ ------ ------- ------- -------- -------- ------ ----- --- ------ ------ Net assets 6,016 1,636 33 74 43 7,802 5,913 ====== ====== ======= ======= ======== ======== ====== ===== === ====== ======-------------- ------- ------- ------- -------- -------- ------- ------ ----- ------- ---- -------EPRA NAV per share 1,486 p 1,128 p-------------- ------- ------- ------- -------- -------- ------- ------ ----- ------- ---- ------- Detailed Consolidated Income Statement for the year ended31 March 2006 Year ended Year Six months ended Three months ended Three months ended 31 ended March 31 30 September 2005 31 December 2005 31 March 2006 2006 March ------------ ------------ ------------ ------ 2005 Under Capital, Under Capital, Under Capital, -lying tax -lying tax -lying tax pre tax and pre tax and pre tax and * other * other * other £m Note £m £m £m £m £m £m £m ---- ---- --- ---- --- ---- --- ---- --- ---- --- ---- --- ---- 604 Gross rental 3 340 180 170 690 ------ and related ------ ------ ------ ------ ------ ------ ----- income 517 Net rent and 3 305 147 137 589 related income 8 Fees and other 4 9 25 16 50 income Amortisation of 11 (3) (3) (4) (10) intangible asset 158 Funds and joint 9 14 66 11 129 14 77 311 ventures (see also below) (49) Administrative (36) (18) (27) (81) expenses 610 Net valuation 5 596 420 446 1,462 gains (includes profits on disposals) Goodwill 11 (240) (240) impairment Net financing costs ------ ------ ------ ------ ------ ------ ------ ----- 28 financing 35 26 (11) 50 income (354) financing (225) (120) (74) (419) expenses (180) refinancing (122) (122) ------ charges ------ ------ ------ ------ ------ ------ ------ (506) 6 (190) (94) (207) (491) ------ ------ ------ ------ ------ ------ ------ ------ 738 Profit on 102 659 71 546 (67) 279 1,590 ordinary activities before taxation ====== ====== ====== Taxation credit (expense) ------ ------ ------ ------ ------ 46 current (11) 3 1 (7) (130) deferred (135) (112) (87) (334) ------ ------ ------ ------ ------ (84) 7 (146) (109) (86) (341) Profit for the ------ period after taxation ------ ------ ------ ----- 654 attributable to 615 508 126 1,249 ====== shareholders of the ====== ====== ====== ===== company 27 p Earnings per 2 15 p 12 p 9 p 36 p======= share: ======= ======= ======= ===== underlying diluted *------- ---- --- ---------- ----- --- ------- --- ------- ---- ------- --- ------- ---- ------- --- ------- ---- Share of results of funds and joint ventures 31 Operating 14 11 14 39 profit pre-tax 169 Net valuation 82 184 112 378 gains on property and investments (10) Current tax (4) (4) (1) (9) (32) Deferred tax (12) (51) (34) (97)------- ------- ------- ------- ------- ------- ------- ------ 158 9 14 66 11 129 14 77 311======= ======= ======= ======= ======= ======= ======= ==== ------- ---- --- ---------- ----- --- ------- --- ------- ---- ------- --- ------- ---- ------- --- ------- ---- * As defined in note 2 This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
British Land