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Half Yearly Report - Part 2

20th Nov 2012 07:00

RNS Number : 5105R

British Land Co PLC

20 November 2012

Consolidated Income Statement

Year ended31 March 2012						Six months ended30 September 2012			Six months ended30 September 2011
Year ended31 March 2012						Six months ended30 September 2012			Six months ended30 September 2011
Audited						Unaudited			Unaudited

Underlying	Capital					Underlying	Capital		Underlying	Capital
pre tax*	and other	Total				pre tax*	and other	Total	pre tax*	and other	Total
£m	£m	£m			Note	£m	£m	£m	£m	£m	£m



332		332	Gross rental and related income		2	165		165	162		162

286		286	Net rental and related income		2	142		142	139		139

16		16	Fees and other income		2	8		8	8		8

113	69	182	Joint ventures and funds (see also below)			63	(19)	44	54	87	141

(69)		(69)	Administrative expenses			(37)		(37)	(35)		(35)

	143	143	Net valuation movement (includes profits & losses on disposals)		2		6	6		112	112

			Net financing costs

24	2	26	- financing income			13	3	16	14	4	18
(101)	(4)	(105)	- financing charges			(52)	(18)	(70)	(48)	(4)	(52)

(77)	(2)	(79)			2	(39)	(15)	(54)	(34)		(34)


269	210	479	Profit on ordinary activities before taxation			137	(28)	109	132	199	331

			Taxation

	(2)	(2)	- current tax income (expense)		2		1	1		(1)	(1)
	3	3	- deferred tax income (expense)		2		2	2		2	2

	1	1			2		3	3		1	1

		480	Profit for the period after taxation attributable to shareholders of the Company					112			332

		54.1p	Earnings per share:	basic	1			12.6p			37.4p
		53.8p		diluted	1			12.5p			37.2p



Share of results of joint ventures and funds
113		113	Underlying profit before taxation			63		63	54		54
	72	72	Net valuation movement (includes profits & losses on disposals)				(19)	(19)		90	90
	(3)	(3)	Non-recurring items				(3)	(3)		(2)	(2)
	(1)	(1)	Current tax income (expense)				3	3		(1)	(1)
	1	1	Deferred tax income (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
2,191	Investments in joint ventures and 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

5,104	Total equity attributable to 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)

(99)	Other comprehensive (loss) income for the 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
(81)	Operating expenses paid to suppliers 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)
64	Distributions received from joint ventures and funds	4	62	35
206	Net cash inflow from operating activities		102	96

	Cash flows from investing activities
(106)	Development and other capital 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
(110)	Investment in and loans to joint ventures and funds		(182)	(52)
2	Indirect taxes in respect of investing activities		(6)	(7)
(547)	Net cash (outflow) inflow from investing activities		(238)	(454)

	Cash flows from financing activities
	Issue of ordinary shares		4
(212)	Dividends paid		(122)	(97)
(4)	Movement in other financial 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
418	Net cash inflow (outflow) from financing activities		106	409

77	Net increase (decrease) in cash and 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
Earnings	Penceper share	Earnings per share (diluted)	Earnings	Penceper share	Earnings	Penceper share
£m	Penceper share		£m	Penceper share	£m	Penceper share

269		Underlying pre tax profit - income statement	137		132
(4)		Tax charge relating to underlying profit	(1)		(2)

265	29.7p	Underlying earnings per share	136	15.2p	130	14.6p

(3)		Mark to market on liquid investments (held for trading assets)	4		(3)

(3)		Non-recurring items *	(7)		(2)

259	29.0p	EPRA earnings per share (diluted)	133	14.9p	125	14.0p

480	53.8p	Profit for the period after 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.






31 March					30 September	30 September
2012		Net asset value (NAV)			2012	2011
£m					£m	£m

5,104		Balance sheet net assets			5,077	5,064

31		Deferred tax arising on revaluation movements			29	33
189		Mark to market on effective cash flow hedges and related debt adjustments			229	193
		Surplus on trading properties			6
57		Dilution effect of share options			51	53

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 ended								Six months ended
31 March								30 September
2012								2012		2011
£m								£m		£m
	Gross and net rental income

259	Rent receivable							134		126
41	Spreading of tenant incentives and 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

12	Performance & management fees (from joint 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
72	Share of valuation movements of joint 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)

(2)	Current tax:					UK corporation tax (30 September 2012: 24%; 30 September 2011: 26%)		1		(1)


(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							30 September		30 September
2012							2012		2011

£m							£m		£m

5,346		Investment properties					5,389		5,323
41		Owner-occupied property					42		39
5,387		Carrying value of properties on balance sheet					5,431		5,362

47		Trading properties					49
5,434		Carrying value of properties on balance sheet					5,480		5,362

(20)		Head lease liabilities					(20)		(20)
		Surplus on trading properties					6

5,414		Total British Land Group property portfolio 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

272		Gross rental income					135		137

260		Net rental and related income					130		130
(6)		Other income and expenditure					(2)		(3)
(141)		Net financing costs					(65)		(73)

113		Underlying profit before taxation					63		54

72		Net valuation and disposal movements					(19)		90
(3)		Non-recurring items					(3)		(2)

182		Profit on ordinary activities before taxation					41		142

(1)		Current tax expense					3		(1)
1		Deferred tax income (expense)

182		Profit on ordinary activities after taxation					44		141

Where a joint venture has net liabilities, as required under IFRS, the Group does not account for its share of the deficit in its total share of joint venture results.

4. Joint ventures and funds (continued)

Operating cash flows 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

277	Rental income received from tenants		124		143
(28)	Operating expenses paid to suppliers and employees		(17)		(20)

249	Cash generated from operations		107		123

(144)	Interest paid		(66)		(74)
(8)	UK corporation tax paid		(3)		(5)

97	Cash inflow from operating activities		38		44

	Cash inflow from operating activities deployed as:
33	Surplus cash (distributed by) retained within joint ventures and funds		(24)		9

64	Total distributed to British Land		62		35

97	Cash inflow from operating activities		38		44

5. Other investments

Other investments includes a £21m loan to the Bluebutton joint venture under a secured commercial development facility. The investment in the HUT convertible bond of £43m was repaid during the year ended 31 March 2012.


6. Net Debt
31 March				30 September		30 September
2012				2012		2011
£m				£m		£m

1,027		Debentures		1,048		1,051
1,078		Bank loans and overdrafts		787		926
516		Other bonds and loan notes		924		529

2,621		Gross debt		2,759		2,506

92		Interest rate and currency derivative liabilities		110		93
(73)		Interest rate and currency derivative assets		(105)		(81)
2,640				2,764		2,518
(200)		Liquid investments		(100)		(200)
(137)		Cash and short-term deposits		(107)		(111)

2,303		Net debt		2,557		2,207

Gross debt includes £252m due within one year at 30 September 2012 (31 March 2012: £49m; 30 September 2011: £104m).


Undrawn committed bank facilities at 30 September 2012 amounted to £1,535m.

The two financial covenants applicable to the Group unsecured debt are:
Net Borrowings not to exceed 175% of Adjusted Capital and Reserves.
At 30 September 2012 the ratio is 46%
i. Net Borrowings are £2,600m, being the principal amount of gross debt of £2,672m plus amounts owed to joint ventures of £5m (see note 4) plus TPP Investments Ltd of £30m (see note 9), less the cash and short-term deposits of £107m; and

ii. Adjusted Capital and Reserves are £5,673m, being share capital and reserves of £5,077m (see Consolidated Statement of Changes in Equity), adjusted for £29m of deferred tax (see note 1), £332m exceptional refinancing charges (see below), £229m mark to market on interest rate swaps (see note 1) and £6m surplus on trading properties (see note 3).




Net Unsecured Borrowings not to exceed 70% of Unencumbered Assets.
At 30 September 2012 the ratio is 37%
i. Net Unsecured Borrowings are £1,618m, being the principal amount of gross debt of £2,672m plus amounts owed from joint ventures of £5m less cash and deposits not subject to a security interest of £78m less the principal amount of secured and non-recourse borrowings of £981m; and


ii. Unencumbered Assets are £4,366m being properties of £5,466m (see note 3) plus investments in joint ventures and funds of £2,308m (see note 4) and other investments of £148m (see balance sheet: liquid investments of £100m and other investments of £48m) less investments in joint ventures of £1,817m (see note 4) and encumbered assets of £1,739m (see note 3).





In calculating Adjusted Capital and Reserves for the purpose of the unsecured debt financial covenants, there is an adjustment of £332m to reflect the cumulative net amortised exceptional items relating to the refinancings in the years ended 31 March 2005, 2006 and 2007.



The Group Loan to Value (LTV) ratio at 30 September 2012 is 32%, being principal value of gross debt of £2,672m less cash, short-term deposits and liquid investments of £207m, divided by total Group property of £5,466m (see note 3) plus investments in joint ventures and funds of £2,308m (balance sheet) and other investments of £48m (balance sheet).



7. Dividends
The 2013 second quarter dividend of 6.6 pence per share, totalling £59m, is payable on 15 February 2013 to shareholders on the register at close of business on 11 January 2013.


The Board will announce the availability of the Scrip Dividend Alternative via the Regulatory News Service and on its website (www.britishland.com), no later than 4 business days before the ex-dividend date of 9 January 2013. The Board expects to announce the split between PID and non-PID income at that time. A Scrip Dividend Alternative will not be enhanced. PID dividends are paid, as required by REIT legislation, after deduction of withholding tax at the basic rate (currently 20%), where appropriate. Certain classes of shareholders may be able to elect to receive dividends gross. Please refer to our website (www.britishland.com) for details.






The 2013 first quarter dividend of 6.6 pence per share, totalling £59m, was paid on 9 November 2012. 39% of shareholders opted for the Non-PID Scrip Dividend Alternative. The total cash paid by the Group was £36m, being £30m paid to shareholders and £6m of withholding tax. A cash saving of £23m resulted from settling the balance by issuing of shares.




In respect of the 2012 fourth quarter PID dividend of 3.3 pence per share and non-PID dividend of 3.3 pence per share, totalling £58m, no scrip alternative was offered in lieu of cash. The dividend was paid on 10 August 2012.

The Consolidated Statement of Changes in Equity shows total dividends in the six months to 30 September of £116m, £58m being the third quarter 2012 dividend of 6.5 pence per share paid on 9 May 2012, no scrip alternative was offered in lieu of cash.

8. Segment Information

The segmental note has been updated to reflect changes to internal management reporting. The Group allocates resources to investment and asset management according to the sectors it expects to perform over the medium term. Its two principal sectors are currently Offices and Retail. Prior year comparatives have been updated to reflect this change.The relevant revenue, net rental income, operating result, assets and capital expenditure, being the measure of segment revenue, segment result and segment assets used by the management of the business, are set out below. Revenue is derived from the rental of buildings. Operating result is the net of net rental income, fee income and administration expenses. No customer exceeds 10% of the Group's revenues.

Segment Result	Offices		Retail		Other		Total
	2012	2011	2012	2011	2012	2011	2012	2011
	£m	£m	£m	£m	£m	£m	£m	£m


Revenue
British Land Group	42	42	91	91	16	13	149	146
Share of funds and joint ventures	41	41	94	96			135	137
Total	83	83	185	187	16	13	284	283

Net rental income
British Land Group	40	41	86	86	16	12	142	139
Share of funds and joint ventures	40	40	90	90			130	130
Total	80	81	176	176	16	12	272	269

Operating Result
British Land Group	35	36	82	84	(4)	(8)	113	112
Share of funds and joint ventures	40	40	88	87			128	127
Total	75	76	170	171	(4)	(8)	241	239

Reconciliation to underlying profit before taxation
British Land Group net financing costs							(39)	(34)
Share of funds and joint ventures net financing costs							(65)	(73)
Capital and other							(28)	199
Total profit on ordinary activities before tax							109	331


Segment Assets	Offices		Retail		Other		Total
	2012	2011	2012	2011	2012	2011	2012	2011
	£m	£m	£m	£m	£m	£m	£m	£m


Property assets (includes head leases liabilities)
British Land Group	2,153	1,912	2,883	2,966	430	464	5,466	5,342
Share of funds and joint ventures	1,606	1,498	3,311	3,317	5	6	4,922	4,821
Total	3,759	3,410	6,194	6,283	435	470	10,388	10,163

Segment assets
British Land Group	2,159	1,918	2,886	2,969	908	987	5,953	5,874
Share of funds and joint ventures	1,699	1,583	3,415	3,496	11	23	5,125	5,102
Total	3,858	3,501	6,301	6,465	919	1,010	11,078	10,976

Other assets
British Land Group					473	512	473	512
Share of funds and joint ventures	93	85	96	171	6	17	195	273
Total	93	85	96	171	479	529	668	785

Capital expenditure
British Land Group	79	85	13	23	4	326	96	434
Share of funds and joint ventures	53	62	71	52			124	114
Total	132	147	84	75	4	326	220	548

Other assets include other investments of £48m (31 March 2012: £51m; 30 September 2011: £59m), debtors of £218m (31 March 2012: £90m; 30 September 2011: £142m), liquid investments of £100m (31 March 2012: £203m; 30 September 2011: £200m) and cash of £107m (31 March 2012: £60m; 30 September 2011: £111m).
9. Contingent liabilities

TPP Investments Limited, a wholly owned ring-fenced special purpose subsidiary, is a partner in The Tesco British Land Property Partnership and, in that capacity, has entered into a secured bank loan under which its liability is limited to £30m (31 March 2012: £30m, 30 September 2011: £30m) and recourse is only to the partnership assets.



10. Related party transactions

Details of transactions with joint ventures and funds are given in notes 2, 5 and 9. Amounts owed to joint ventures are detailed in note 4.

There have been no material changes in the related party transactions described in the last annual report.

11. Note to the Consolidated Statement of Changes in Equity

At 30 September 2012, of the issued 25p ordinary shares, 1m were held in the ESOP Trust (31 March 2012: 1m; 30 September 2011: 1m), 11m were held as Treasury shares (31 March 2012: 11m; 30 September 2011: 11m) and 900m shares were in free issue (31 March 2012: 888m; 30 September 2011: 900m). All shares are fully paid.



12. Basis of preparation

The financial information for the year ended 31 March 2012 does not constitute statutory accounts as defined in section 434 of the Companies Act 2006. A copy of the statutory accounts for that year has been delivered to the Registrar of Companies. The auditor report on those accounts was not qualified, did not include a reference to any matters to which the auditors drew attention by way of emphasis without qualifying the report, and did not contain statements under section 498(2) or (3) of the Companies Act 2006.




The financial information included in this announcement has been prepared on a going concern basis using accounting policies consistent with International Financial Reporting Standards (IFRS) and in accordance with IAS 34 'Interim Financial Reporting'. The same accounting policies, estimates, presentation and methods of computation are followed in the half year report as applied in the Group's latest annual audited financial statements. The current period financial information presented in this document is unaudited.




The Group's business activities, financial position, cash flows, liquidity position and financing structure are discussed on pages 6 to 20. The Directors have a reasonable expectation that the company has adequate resources to continue in operational existence for the foreseeable future. Thus they continue to adopt the going concern basis of accounting in preparing the financial statements. The Group's business is not seasonal.



The interim financial information was approved by the Board on 19 November 2012.

Supplementary Disclosures

Table A: REIT Income and Capital Return

Summary income statement based on proportional consolidation for the period ended 30 September 2012

The following pro forma information is unaudited and does not form part of the consolidated primary statements or the notes thereto. It presents the results of the Group, with its share of the results of joint ventures and funds included on a line by line, i.e. proportional basis. The underlying profit before taxation and total profit after taxation are the same as presented in the consolidated income statement.

Year ended 31 March 2012

Six months ended 30 September 2012

Six months ended 30 September 2011

Group

JVs &

Prop

Group

JVs &

Prop

Group

JVs &

Prop

funds

Consol

funds

Consol

funds

Consol

£m

300

272

572

Gross rental income

149

135

284

146

137

283

(14)

(12)

(26)

Property operating expenses

(7)

(5)

(12)

(7)

(14)

286

260

546

Net rental income

142

130

272

139

130

269

(69)

(7)

(76)

Administrative expenses

(37)

(2)

(39)

(35)

(3)

(38)

Fees & other income

233

254

487

Profit before interest and tax

113

128

241

112

127

239

(77)

(141)

(218)

Net interest

(39)

(65)

(104)

(34)

(73)

(107)

156

113

269

Underlying profit before tax

137

132

29.7p

Underlying earnings per share - diluted basis

15.2p

14.6p

The underlying earnings per share is calculated on underlying profit before taxation of £137m, tax attributable to underlying profits of £1m and 894m shares on a diluted basis, for the six months ended 30 September 2012.

Half Yearly Summary
Year ended		Six months ended	Six months ended
31 March		30 September	30 September
2012		2012	2011
£m		£m	£m

	REIT Income Return

572	Gross rental income	284	283

(26)	Property operating expenses	(12)	(14)

546	Net rental income	272	269

(76)	Administrative expenses	(39)	(38)

17	Fees and other income	8	8

487	Ungeared income return	241	239

(218)	Net interest	(104)	(107)

269	Underlying profit before taxation	137	132

(4)	Underlying tax	(1)	(2)

265	REIT income return	136	130

	REIT Capital Return

215	Valuation movement	(13)	202

13	Other capital and tax (net)*	4	7

228	REIT capital return	(9)	209

493	REIT total return	127	339

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

Supplementary Disclosures (continued)

Table A (continued): EPRA Net Assets

Summary balance sheet based on proportional consolidation as at 30 September 2012
The following pro forma information is unaudited and does not form part of the consolidated primary statements or the notes thereto. It presents the composition of the EPRA net assets of the Group, with its share of the net assets of the joint venture and fund assets and liabilities included on a line by line, i.e. proportional basis and assuming full dilution.



EPRA Net assets31 March 2012		Group	Share of joint ventures & funds	Share options	Deferred tax	Mark to Market of interest rate swaps	Head Leases	Valuation surplus on trading properties	EPRA Net assets30 September 2012	EPRA Net assets30 September 2011
£m		£m	£m	£m	£m	£m	£m	£m	£m	£m

6,318	Retail properties	2,886	3,319				(11)		6,194	6,283

3,562	Office properties	2,159	1,606				(6)		3,759	3,410

457	Other properties	435	5				(11)	6	435	470


10,337	Total properties	5,480	4,930				(28)	6	10,388	10,163

	Investments in joint ventures and funds	2,308	(2,308)


28	Other investments	48	(2)						46	55

	Intangible assets

(294)	Other net (liabilities) assets	(202)	(160)	51	29		28		(254)	(230)

(4,690)	Net debt	(2,557)	(2,460)			229			(4,788)	(4,645)

5,381	Net assets	5,077		51	29	229		6	5,392	5,343

595p	EPRA NAV per share (note 1)								596p	591p

EPRA Net Assets Movement

Year ended							Six months ended		Six months ended
31 March 2012							30 September 2012		30 September 2011
£m	Pence per share						£m	Pence per share	£m	Pence per share

5,101	567p	Opening EPRA NAV					5,381	595p	5,101	567p

265	29p	REIT income return					136	15p	130	14p

228	25p	REIT capital return					(9)	(1)p	209	23p

(213)	(26)p	Dividend paid					(116)	(13)p	(97)	(13)p

5,381	595p	Closing EPRA NAV					5,392	596p	5,343	591p

Supplementary Disclosures (continued)

Table B: EPRA Performance Measures

EPRA Performance measures summary table

			Six months		Six months
Year ended			ended		ended
31 March 2012			30 September 2012		30 September 2011
£m	Pence per share		£m	Pence per share	£m	Pence per share

259	29.0p	EPRA Earnings (diluted)	133	14.9p	125	14.0p

5,381	595p	EPRA NAV	5,392	596p	5,343	591p

5,148	569p	EPRA NNNAV	5,015	555p	5,124	567p

	5.2%	EPRA Net Initial Yield		5.2%		5.2%

	5.8%	EPRA 'topped-up' Net Initial Yield		5.7%		5.8%

	2.4%	EPRA Vacancy Rate		2.7%		2.5%


Calculation of EPRA earnings (diluted) per share

			Six months		Six months
Year ended			ended		ended
31 March 2012			30 September 2012		30 September 2011
£m	Pence per share		£m	Pence per share	£m	Pence per share

480	53.8p	Profit for the period after taxation	112	12.5p	332	37.2p
		Exclude
		Group - non-underlying current tax	(2)	(0.2)p
(3)	(0.3)p	Group - deferred tax	(2)	(0.2)p	(2)	(0.2)p
(1)	(0.1)p	Joint Ventures and Funds - non-underlying current tax	(3)	(0.3)p
(1)	(0.1)p	Joint Ventures and Funds - deferred tax
(146)	(16.4)p	Group - net valuation movement (including resulton disposals)	(2)	(0.2)p	(115)	(12.9)p
(72)	(8.1)p	Joint ventures and funds - net valuation movement(including result on disposals)	19	2.1p	(90)	(10.1)p
		Amortisation of intangible assets	1	0.1p
2	0.2p	Fair value movement on non-hedge accounted derivatives	10	1.1p

259	29.0p	EPRA Earnings (diluted) per Share (EPS)	133	14.9p	125	14.0p

Calculation of EPRA NNNAV per share

Year					Six months	Six months
ended					ended	ended
31 March					30 September	30 September
2012					2012	2011
£m					£m	£m

5,381		EPRA NAV			5,392	5,343
(31)		Deferred tax arising on revaluation movements			(29)	(33)
(189)		Mark to market on effective cash flow hedges and related debt adjustments			(229)	(193)
(13)		Mark to market on debt			(119)	7

5,148		EPRA NNNAV			5,015	5,124

569p		EPRA NNNAV per share			555p	567p

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.

Supplementary Disclosures (continued)

Table B (continued): EPRA Performance Measures

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

Year ended		Six months ended	Six months ended
31 March 2012		30 September 2012	30 September 2011
£m		£m	£m
5,414	Investment property - wholly owned	5,466	5,342
4,923	Investment property - share of joint ventures and funds	4,922	4,821
(835)	Less developments	(907)	(695)

9,502	Completed property portfolio	9,481	9,468
521	Allowance for estimated purchasers' costs	543	519

10,023	Gross up completed property portfolio valuation	10,024	9,987

531	Annualised cash passing rental income	530	528
(8)	Property outgoings	(12)	(11)

523	Annualised net rents	518	517

57	Rent expiration of rent free periods and fixed uplifts*	58	58

580	'Topped-up' net annualised rent	576	575
5.2%	EPRA Net Initial Yield	5.2%	5.2%
5.8%	EPRA 'topped-up' Net Initial Yield	5.7%	5.8%

27	Including fixed/minimum uplifts received in lieu of rental growth	27	31

607	Total 'topped-up' net rents	603	606
6.1%	Overall 'topped-up' Net Initial Yield	6.0%	6.1%

580	'Topped-up' net annualised rent	576	575
14	ERV vacant space	16	15
(18)	Reversions	(10)	(19)
576	Total ERV	581	571
5.7%	Net Reversionary Yield	5.8%	5.7%
* The period over which rent free periods expire is 2.3 years (30 June 2011: 2.5 years; 31 March 2011: 3 years)


EPRA Vacancy Rate

Year ended		Six months ended	Six months ended
31 March 2012		30 September 2012	30 September 2011
£m		£m	£m
14	Annualised potential rental value of vacant premises	16	15
576	Annualised potential rental value for the completed property portfolio	581	571
2.4%	EPRA Vacancy Rate	2.7%	2.5%


Table C: Calculation of gross rental income

Year ended		Six months ended	Six months ended
31 March		30 September	30 September
2012		2012	2011
£m		£m	£m

533	Rent receivable	268	263
38	Spreading of tenant incentives and guaranteed rent increases	15	19
1	Surrender premia	1	1

572	Gross rental income	284	283

INDEPENDENT REVIEW REPORT TO THE BRITISH LAND COMPANY PLC

We have been engaged by the company to review the condensed set of financial statements in the half-yearly financial report for the six months ended 30 September 2012 which comprises the Consolidated Income Statement, the Consolidated Balance Sheet, the Consolidated Statement of Comprehensive Income, the Consolidated Statement of Cash Flows, the Consolidated Statement of Changes in Equity, and related notes 1 to 12. We have read the other information contained in the half-yearly financial report and considered whether it contains any apparent misstatements or material inconsistencies with the information in the condensed set of financial statements.

This report is made solely to the company in accordance with International Standard on Review Engagements (UK and Ireland) 2410 "Review of Interim Financial Information Performed by the Independent Auditor of the Entity" issued by the Auditing Practices Board. Our work has been undertaken so that we might state to the company those matters we are required to state to it in an independent review report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company, for our review work, for this report, or for the conclusions we have formed.

Directors' responsibilities

The half-yearly financial report is the responsibility of, and has been approved by, the directors. The directors are responsible for preparing the half-yearly financial report in accordance with the Disclosure and Transparency Rules of the United Kingdom's Financial Services Authority.

As disclosed in note 12, the annual financial statements of the group are prepared in accordance with IFRSs as adopted by the European Union. The condensed set of financial statements included in this half-yearly financial report has been prepared in accordance with International Accounting Standard 34, "Interim Financial Reporting", as adopted by the European Union.

Our responsibility

Our responsibility is to express to the Company a conclusion on the condensed set of financial statements in the half-yearly financial report based on our review.

Scope of Review

We conducted our review in accordance with International Standard on Review Engagements (UK and Ireland) 2410 "Review of Interim Financial Information Performed by the Independent Auditor of the Entity" issued by the Auditing Practices Board for use in the United Kingdom. A review of interim financial information consists of making inquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing (UK and Ireland) and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

Conclusion

Based on our review, nothing has come to our attention that causes us to believe that the condensed set of financial statements in the half-yearly financial report for the six months ended 30 September 2012 is not prepared, in all material respects, in accordance with International Accounting Standard 34 as adopted by the European Union and the Disclosure and Transparency Rules of the United Kingdom's Financial Services Authority.

Deloitte LLP

Chartered Accountants and Statutory Auditor

London, United Kingdom

19 November 2012

This information is provided by RNS

The company news service from the London Stock Exchange

END

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