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Strategic Report
At a glance
Chairman’s statement
Our purpose
Case study: 1 Triton Square
Chief Executive’s review
Investment case
Business model
Places
Our portfolio
Strategic focus
Strategic performance and KPIs
Development pipeline
People
Customer and community stories
Stakeholder engagement and s172
People and culture
Employee-led networks
Sustainability
Task Force on Climate-Related
Financial Disclosures (TCFD)
GHG emissions
Non-financial reporting disclosure
Prefer
Market insights
Performance review
Financial review
Financial policies and principles
Managing risk
Principal risks
Viability statement
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22
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30
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46
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54
56
68
75
78
82
88
Underlying EPS
32.7p
2019: 34.9p
IFRS loss after tax
£(1,114)m
2019: £(320)m
EPRA NAV per share
774p
2019: 905p
Total accounting return
(11.0)%
2019: (3.3)%
IFRS EPS
(110.0)p
2019: (30.0)p
Senior unsecured
credit rating
A
2019: A
Customer
satisfaction
8.3
2019: 8.2/10
Underlying Profit
£306m
2019: £340m
IFRS net assets
£7,147m
2019: £8,689m
Dividend per share
15.97p
2019: 31.00p
Carbon intensity reduction
versus 2009
73%
2019: 64%
Bright Lights skills and
employment programme
504
people supported with work
2019: 389
90
92
96
98
104
108
Corporate Governance Report
Chairman’s introduction
Board of Directors
Stakeholder engagement statement
Corporate Governance Report
Report of the Nomination Committee
Report of the Audit Committee
Report of the Corporate Social
114
Responsibility Committee
116
Workforce engagement statement
Directors’ Remuneration Report
118
Directors’ Report and additional disclosures 134
137
Directors’ responsibilities statement
Financial Statements
Report of the auditors
Primary statements and notes
Company balance sheet
Supplementary disclosures
Other Information
Other information (unaudited)
Sustainability performance measures
Ten year record
Shareholder information
138
147
195
207
213
221
224
225
Visit www.britishland.com
for more information
Presentation of financial information
The Group financial statements are prepared under IFRS where the
Group’s interests in joint ventures and funds are shown as a single line
item on the income statement and balance sheet and all subsidiaries are
consolidated at 100%.
Management considers the business principally on a proportionally
consolidated basis when setting the strategy, determining annual priorities,
making investment and financing decisions and reviewing performance.
This includes the Group’s share of joint ventures and funds on a line-by-line
basis and excludes non-controlling interests in the Group’s subsidiaries.
The financial key performance indicators are also presented on this basis.
Refer to the Financial review for a discussion of the IFRS results.
We supplement our IFRS figures with non-GAAP measures, which management
uses internally. IFRS measures are labelled as such. See our supplementary
disclosures which start on page 207 for reconciliations, and the glossary
found at www.britishland.com/glossary.
Integrated reporting
We integrate social and environmental information throughout this Report in
line with the International Integrated Reporting Framework. This reflects
how sustainability is integrated into our placemaking strategy, governance
and business operations. Our industry-leading sustainability strategy is a
powerful tool to deliver lasting value for all our stakeholders.
Disclaimer: This Report was signed off by the Board on 26 May 2020.
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At British Land, our purpose is to create and
manage outstanding places which deliver
positive outcomes for all our stakeholders on a
long term, sustainable basis.
PLACES
Outstanding places which
make a positive contribution
We do this by understanding the evolving needs
of the people and organisations who use our
places and the communities who live in and
around them. The changing way people work,
shop and live is what shapes our strategy,
enabling us to drive enduring demand for our
space and deliver value over the long term.
This year’s annual report is split into chapters
focused on our purpose and demonstrates how
we engage with key stakeholder groups, which
are denoted by the following icons:
Our customers
Communities, partners and suppliers
Our people
Shareholders
Dealing with Covid-19
Since March 2020, our business has been focused on responding to the
Covid-19 crisis. Our people have demonstrated a remarkable
commitment to supporting our customers, suppliers, partners and local
communities in difficult circumstances. They are a key strength of our
business, positioning us well to deal with the months ahead. The early
effects of the crisis are discussed throughout this report.
PEOPLE
Our team, our customers, the
people who work, shop and live
in and around our places
PREFER
Aligning our offer with long
term market trends and
changing customer needs
16
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British Land Annual Report and Accounts 2020
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BRITISH LAND
OUR PORTFOLIO
We are a leading UK property
company. We create and
manage outstanding places to
deliver positive outcomes for
our stakeholders, on a long
term, sustainable basis.
Our long term aspiration is to build an
increasingly mixed use business. Our
London campuses combine workspace with
retail and leisure and at Canada Water we
are creating a new urban centre for
London. Our high quality Retail assets meet
a broad range of needs nationwide.
Our assets
Managed
£14.8bn
Owned by
British Land
£11.2bn
22.8m
sq ft of floor
space
96.6%
occupancy
rate
£516m
annualised
rent
5.8 yrs
average lease
length
41,500
people work across British Land
campuses
76%
of our portfolio is in London
and the South East
8m
sq ft pipeline of development
opportunities across the portfolio
2
British Land Annual Report and Accounts 2020
Retail
A modern, well located UK network
MANAGED ENVIRONMENT 84%
OFFICE-LED CAMPUSES 49%
CITY 29%
WEST END 20%
CANADA
WATER &
RESID-
ENTIAL
5%
MULTI-LET RETAIL 30%
RETAIL PARKS
16%
Canada Water
Masterplan
53 acre redevelopment
scheme in zone 2
Broadgate
32 acre office-led campus
adjacent to Liverpool Street
station, with Crossrail on site
Regent’s Place
13 acre office-led campus in London’s
Knowledge Quarter
Paddington Central
11 acre office-led campus close to Paddington station
MULTI-LET RETAIL 30%
RETAIL PARKS
16%
SHOPPING CENTRES
14%
SINGLE USE ASSET 16%
STAND-ALONE
OFFICES
11%
OTHER
RETAIL
5%
MANAGED ENVIRONMENT 84%
WE CREATE PLACES
PEOPLE PREFER
From leasing and asset management,
to development, finance, marketing and
our use of data and technology, we have
the depth and breadth of talent within
our team to deliver on our purpose.
Supporting our focus on creating value
for our stakeholders
At British Land, we have created a diverse team,
with a broad range of skills, experiences and
perspectives, helping us to make balanced and
well informed decisions across our business.
This approach is key to understanding the needs
of our customers, helping us to design and build
space that meets their needs. A more diverse team
also means we work more effectively across our
stakeholder groups, including our local communities
and suppliers, partnering to grow social value and
wellbeing, as well as promoting ethical practices
throughout our supply chain.
Read more about how we engage with our stakeholders
on page 32
Employee
engagement score
75%
Employees who
are proud to work
at British Land
91%
British Land Annual Report and Accounts 2020
3
A resilient performance,
but challenges ahead
C
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British Land benefits from a strong balance sheet,
high quality assets, a clear strategy and great people.
Our purpose
At British Land, our purpose is to
create and manage outstanding places
which deliver positive outcomes for all
our stakeholders on a long term,
sustainable basis.
We do this by understanding the
evolving needs of the people and
organisations who use our places and
the communities who live in and around
them. The changing way people work,
shop and live is what shapes our
strategy, enabling us to drive enduring
demand for our space and deliver value
over the long term.
After six years on the Board, this has
been an extraordinary start to my
Chairmanship. In recent months, our
business has faced challenges on an
unprecedented scale as a result of the
Covid-19 crisis, but I am extremely proud
of the way our people have responded.
Without exception, they have delivered
day in, day out often in extremely difficult
circumstances. Nevertheless, it is
inevitable that our business, like many
others, will be impacted. However, we
have worked hard over several years to
strengthen our balance sheet, refine our
portfolio and re-focus our strategy,
meaning we are well placed to respond
to the current challenge, today and
long term.
4
British Land Annual Report and Accounts 2020
Robust financial position
We finished the year on a sound financial
footing. Our loan to value is 34% and we
have access to £1.3bn of cash and
undrawn facilities with no need to
refinance until 2024, and significant
headroom against Group level
covenants. However, considering the
potential impact of Covid-19, we are
taking a more prudent approach to
preserving our cash flow. We have
therefore temporarily suspended
dividends. This decision was not taken
lightly, but until we have sufficient clarity
on the outlook, the Board felt it was the
most appropriate course of action.
This should also be seen in the context
of our status as a REIT and our broader
approach to capital allocation. The Board
is mindful of the importance of the
dividend to many shareholders, and will
seek to resume dividends at an appropriate
level as soon as there is sufficient clarity
of outlook. For this we would need to
see a significant improvement in rent
collection and have more visibility on the
post lockdown productivity of our assets,
principally how quickly retail customers
and office workers return.
Progress and performance
Covid-19 emerged in our fourth quarter
and notwithstanding the challenges
brought about by the crisis, we made
further good progress across the year.
Our London campuses sit at the heart of
our strategy and our excellent leasing
performance was a strong endorsement
of that approach. We leased 946,000 sq ft
of London office space, of which 650,000
sq ft was at existing and refurbished
campus space, demonstrating the appeal
of these locations. Inevitably, activity has
slowed since March, but we are confident
that demand for well connected, world
class space in vibrant and attractive
locations will endure over the long term.
With developments now 88% pre-let, we
are well placed to embark on the next
stage of our programme and would look
to commit to 1 Broadgate and Norton
Folgate when the time is right.
At our campuses, our focus is on
creating neighbourhoods where
businesses and their people can thrive.
In today’s market as more occupiers
seek buildings which are sustainable
and support wellbeing, our space stands
out. I was delighted that 1 Triton Square
at Regent’s Place was one of the winners
at the 2020 BREEAM awards and 100
Liverpool Street is on track to achieve a
BREEAM Excellent rating.
At Canada Water we achieved some
important milestones, with a resolution
to grant planning for our overall
masterplan as well as confirmation from
the Mayor of London that he will not be
calling in the application for further
consideration. This progress reflects the
hard work of our team and the strong
relationships they have built with our
partners at Southwark Council and
across the local community over the last
five years.
For retailers, the Covid-19 crisis has
accelerated the structural shift towards
online, which increased significantly as
people stayed at home. At British Land,
we remain committed to providing
flexibility to our customers and this is
clearly demonstrated by our response to
these challenges. While the short term
impact of the actions we have taken so
far is relatively limited for us, ongoing
negative sentiment plus an adjustment
for the Covid-19 crisis meant that retail
valuations were down 26%. Longer term,
we remain committed to our strategy of
refining our Retail portfolio, but in the
current environment we expect that
progress will be slower.
Integrating a more sustainable
approach
We were pleased to launch our 2030
sustainability strategy in May. We have
committed to cutting our embodied
carbon intensity by 50% and our
operational carbon intensity by 75%,
with all future developments to be
net zero embodied carbon and the
entire portfolio to be net zero carbon
by 2030. We know these are challenging
targets, but we also recognise the
very real urgency to make progress.
Covid-19 and the Board
The Board’s decision to temporarily
suspend dividend provided us with
additional flexibility to support our
stakeholders. This includes protecting our
employees, supporting the hardest hit retail
and leisure customers and in turn the
communities they operate within, whilst
preserving long term shareholder value and
financial resilience. In view of this, the
Board has waived a portion of their salaries.
Read more about the Board’s decision
making during the Covid-19 crisis within
our Stakeholder engagement statement
on page 96
We are similarly focused on growing
social value and wellbeing at our places,
something that’s become even more
important over recent months. I know
these priorities are shared by our occupiers,
our shareholders and indeed our own
people. Our strong track record in delivering
sustainable, inclusive space is already
helping to differentiate our offer and we
are seeing this reflected in the price and
pace at which we are letting space.
Looking to the future
The impact of Covid-19 will rightly and
inevitably dominate both our own and the
national agenda for the coming months.
At the same time, we are very conscious
of our broader responsibilities to deliver
value for our shareholders on a long
term, sustainable basis. In this context,
the enduring demand of our London
campuses, the unique development
opportunities we have created and the
way we are integrating sustainability into
our overall approach stand us in good
stead. However, these are early days and
we do not yet have clarity around how the
crisis will play out long term, so we will
remain alert as things develop and
flexible in our approach, including
evolving or adapting our strategy as
appropriate. Our prudent approach to
managing the business today will leave
us in better shape for the future.
I would like to thank my fellow Directors
and the whole British Land team who
have shown great initiative, resilience and
spirit in these challenging times.
Tim Score
Non-executive Chairman
For the Chairman’s introduction, see page 90
British Land Annual Report and Accounts 2020
5
PLACES
PEOPLE
PREFER
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Our purpose: creating and managing Places People Prefer.
Outstanding places which deliver positive outcomes for all
our stakeholders on a long term, sustainable basis.
Informed by the needs
of our stakeholders…
…as we work towards our long
term aspiration…
We engage with those who contribute to
and are impacted by what we do:
To build an increasingly mixed use business,
focused on three core areas:
Our customers
Communities,
partners and
suppliers
Our people
Shareholders
All on a low carbon basis
– Office-led London campuses
– A smaller, more focused Retail portfolio, and
– A growing residential business
――› Read more on page 32
――› Read more on page 22
All of which is underpinned by our values, which we extend to the partners and suppliers we work with
Bring your whole self
Listen and understand
――› Read more on page 34
6
British Land Annual Report and Accounts 2020
guided by our strategic
framework…
… to deliver
positive outcomes
Our activities are focused on four key areas
and we measure our performance against these:
On a long term, sustainable basis across all
our stakeholder groups:
Customer
Orientation
Right Places
Expert People
Capital Efficiency
Active partnerships which help our
customers succeed
Great places inside and out, which are
inclusive and make a positive local contribution
A diverse and inclusive workplace, where
people can achieve their full potential
Sustainable long term income and
value creation
――› Read more about our KPIs on page 24
――› Read more on pages 15, 24 and 25
Be smarter together
Build for the future
British Land Annual Report and Accounts 2020
7
“There’s a perception in the
industry that new buildings
are worth more than re-used
ones. This needs to change.
When you regenerate a
building imaginatively and
to a high standard, the
quality of space is often
more characterful and
diverse than a new build.”
Simon Swietochowski,
Associate Director at Arup
Architecture
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1
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An outstanding
place with a
positive impact
8
British Land Annual Report and Accounts 2020
“1 Triton Square
is an outstanding
example of how
we can achieve our
2030 sustainability
goals when we
work in partnership
with suppliers
and customers.
It lays down the
benchmark for
all of our projects
going forwards.”
Juliette Morgan,
Head of Sustainable
Development
British Land
Customers
Dentsu Aegis Network
We are transforming an existing office
block into one of the biggest and most
sustainable office buildings in London.
Dentsu’s new global headquarters will
consolidate their businesses into a
single hub, with more modern and
collaborative workspace.
Suppliers
A long term relationship
We are working with Arup, who designed
the original building, on the redevelopment
alongside contractor Lendlease who
have delivered several of our projects at
Regent’s Place. We sought input from
both at an early stage to encourage a
more wide-ranging and effective plan
from the start.
Community
Playing a real role in community life
The Triton team has volunteered
hundreds of hours supporting local
employment and education activities,
including apprenticeships for local
people. We have created a public park
and a community garden run by Global
Generation, an organisation connecting
young people with nature, and we support
local charities such as Camden Giving.
Local authorities
Providing places to work and live
As part of the scheme, we’re delivering
22 affordable housing units adjacent
to the park and well positioned within
the campus. At 1 Triton, we’re providing
10,000 sq ft of affordable workspace which
will be available to local businesses.
Sustainability
A circular approach
Working with Arup and Lendlease,
we were able to retain virtually all the
superstructure whilst also doubling the
lettable office area. We set up a pop up
factory nearby to refurbish 3,500m2 of
glass panels rather than buying new,
which reduced our carbon footprint,
saved 25,000 transport miles, supported
local employment and achieved a 66%
cost saving versus a new equivalent.
62,000
tonnes of carbon avoided over 20 years
Overall, our development and
operational efficiencies will avoid an
estimated 62,000 tonnes of carbon over
20 years, with 56% less embodied carbon
than a typical new build and 43% greater
operational efficiency than a typical
commercial building.
Read more about how we
are engaging with our
stakeholders on page 32
British Land Annual Report and Accounts 2020
9
Delivering Future
British Land
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Covid-19 has brought about an
unprecedented situation for our
business and our people, as we have
had to adapt quickly to new working
conditions. One of our company values
is to be smarter together, and never has
this been more evident right across
British Land. The resilience, humour
and efficiency with which our team has
responded, many working under very
challenging circumstances, at our
assets, or at home, has been remarkable
– and I thank them all on behalf of the
Board and leadership team. Reflecting
the Covid-19 situation, my review will
start with an update on current conditions
before covering the financial year.
Covid-19 impact and response
Our immediate priority has been to work
alongside and support the communities
in which we operate, our suppliers and
those customers most affected to protect
the long term value of our business. To
help do this, we have released smaller
retail, food & beverage and leisure
customers from their rental obligations for
the three months to June; the financial
impact of this in terms of lost rent is £2m.
Recognising that many other customers,
particularly those operating in the retail,
food & beverage and leisure sectors are
experiencing challenges as a result of
Covid-19, we offered to defer their March
rents, and will spread repayment over six
quarters from September 2020. Around
£35m of rent deferrals have been agreed.
Overall, we have collected 68% of the rent
originally due for the March quarter (97% for
Offices and 43% for Retail), which equates to
91% adjusting for rent deferred, forgiven or
moved to monthly payments. The balance
owing is primarily from strong retailers.
The value of the retail portfolio declined
26.1% as ongoing structural challenges
were exacerbated at the year end
valuation date by the early effects of
Covid-19. Offices saw an uplift of 2.3%
so overall the portfolio was down 10.1%.
10
British Land Annual Report and Accounts 2020
For our customers, creating Places People Prefer
means being an active partner to deliver dynamic
neighbourhoods that help their businesses thrive.
Our longer term commitment to responsible urbanism
means we work with them and local communities
to do this in the most sustainable way. Our approach
is built around the customer and has five key elements.
1
2
3
4
5
Access to an extensive network of locations
Our London campuses and high quality retail centres
Great places, both inside and out
Inspiring architecture and sustainable, tech-enabled
buildings; with green urban spaces and local neighbourhoods,
supporting wellbeing and making life more enjoyable
The flexibility to meet their needs
A range of options from unfitted to fully furnished and serviced,
and the agility to help them adapt their space over time
Added value services to help customers be successful
This includes how they fit out and run their space, reducing
their costs, their impact on the environment and helping them
make more efficient use of their space
A vibrant community
We work with our customers and community partners to bring
people together so everyone benefits
We successfully completed our first ESG
linked RCF of £450m and extended £925m
of facilities, providing additional flexibility
and meaning that we have no requirement
to refinance until 2024. We have significant
headroom to our debt covenants, meaning
we could withstand a fall in asset values
across the portfolio of 45% prior to
taking any mitigating actions. There are
no income or interest cover covenants
on the Group’s unsecured debt.
Longer term, it is our view that many of
the macro trends that have informed our
strategy will accelerate. This includes
the growth of online shopping, reinforcing
our focus on delivering a smaller, more
focused retail business. We continue
to believe there remains a role for the
right kind of retail within our portfolio
especially assets that can play a key role
for retailers in terms of fulfilment of
online sales, returns and click and
collect. This will particularly be the
case for well located, open air retail
parks, which lend themselves to more
mission-based shopping and people
may feel more comfortable visiting, as
well as those London assets located
conveniently in and around key transport
hubs. We also expect demand to polarise
towards workspace which is high quality,
modern and sustainable and supports
more flexible working patterns, and this
plays well to the space we provide
including through Storey. However, it
remains early days and we do not yet
have clarity around what long term
trends will emerge so we will remain
alert as things develop and flexible in
our approach, including evolving or
adapting our strategy as appropriate.
British Land Annual Report and Accounts 2020
11
In Offices, occupiers are working on plans
to get back to the workplace and most feel
that it is too early to make fundamental
long term changes around their
requirements. However, we are mindful
that the trend towards greater flexibility
may accelerate following this prolonged
period of working from home. At the same
time, there will be a greater focus on high
quality, modern and safe environments,
which provide more space per person and
we expect the trend towards higher density
offices and hot desking to reverse. We
continue to make progress on leasing
discussions, particularly larger space
requirements, which are generally on a
longer time frame. Supply at this end of
the market remains constrained. Where
occupiers are looking for smaller spaces,
on a shorter timeframe progress has been
delayed due to remote working, and
uncertainty around fit out and timing of
occupation. We are conducting virtual
viewings and have now commenced
physical viewings and are encouraged by
the level of activity we are seeing.
We suspended work on our developments
in March for health and safety reasons,
although this has now recommenced at
all major sites, including our two largest
development sites at 100 Liverpool Street
and 1 Triton Square. This work has started
with a clear focus on social distancing and
safety, meaning that the numbers of
people on site is reduced and our
productivity is lower. 100 Liverpool Street
is now expected to complete in calendar
Q3 2020 and subject to social distancing
requirements, we are targeting calendar
Q2 2021 at 1 Triton Square. We completed
135 Bishopsgate in the year, and the space
is now being fitted out, albeit progress will
inevitably be slower. When appropriate,
we are ready to start work on the next
phase of our development programme at
1 Broadgate and Norton Folgate.
We benefit from the work we have done
over several years to strengthen our
balance sheet. Our leverage increased
modestly to 34% and we have access to
£1.3bn of undrawn bank facilities and cash.
CHIEF EXECUTIVE’S REVIEW CONTINUED
Why mixed use?
The way people use real estate is changing and the most
effective way to drive enduring demand for our space is
to evolve our offer in line with those trends. Today, this
means providing a wider mix of uses in one place.
The benefits of our mixed use portfolio
For our customers
Well connected
Flexible and affordable
Attracts a skilled
workforce
Complementary
businesses nearby
For their people
Well connected
Places to shop
and socialise
Safe and promotes
wellbeing
Technology-enabled
Aligned to brand
Sustainable and
eco friendly
Vibrant local
neighbourhoods
Excellent facilities
and services
Near term, it is clear that the management
and maintenance of places and buildings
is likely to become more important to
businesses, their customers and their
people, as they place an even greater
focus on the safety and quality of their
environments. As a result, our property
management expertise is likely to
become even more of a positive
differentiator for our business.
Review of the year ended March 2020
Occupancy remains high at 97% across
our London campuses and 96% in Retail.
We signed 946,000 sq ft of lettings and
renewals in London and 1,361,000 sq ft
in Retail over the year. Our progress on
development leasing means that £54m
of future rental income is secured and
speculative exposure is low at just 0.6%
of portfolio value.
Reflecting the broader appeal of our
campuses, we saw strong demand for
repurposed as well as new space with
challenger bank Monzo signing at Broadgate
and Visa recommitting at Paddington
Central. Storey is operational across
297,000 sq ft and occupancy on the stabilised
portfolio is 92%. The Offices portfolio saw
an uplift in value of 2.3%, led by a strong
performance at Broadgate, up 4.7%.
In Retail, we have been pragmatic in our
approach to leasing, accepting lower
rents and shorter leases where it makes
sense to maintain occupancy. Overall,
deals of more than one year were 4%
below previous passing rent. CVAs and
administrations impacted 118 units in
the year of which 29% were unaffected;
rent reductions resulted in a loss of
£5.5m in contracted rent, with store
closures accounting for a further £5.8m,
together totalling £11.3m on an annualised
basis. Several of our customers entered
administration post year end, accounting
for a further £5.1m of lost contracted
rent. Overall, reflecting ongoing
challenges in the market and with
uncertainty heightened as a result of
Covid-19, valuations were down 26.1%
in Retail.
At Canada Water, our valuation increased
9.8% reflecting progress on planning
and we were delighted to receive a
resolution to grant planning on our
53 acre scheme with detailed permission
on the first three buildings. This is
a major milestone for our process
and is the culmination of five years
masterplanning and engagement with
the local community.
12
British Land Annual Report and Accounts 2020
Capital Allocation
In November 2018 we announced a
plan to reduce Retail to 30-35% of
our portfolio over the medium term.
Because of valuation declines in Retail,
we have now reached this level.
However, that does not mean we have
achieved our aspirations and over time
we expect to make further selective
retail sales. Our revised plan is for Retail
to comprise 25-30% of the portfolio.
We have made £296m of retail disposals
(our share) in the year, bringing total
retail sales since we set out our plan in
November 2018 to £610m. Making sales
is more challenging in the current
market, with a lack of liquidity and
depressed values, and so our immediate
focus will be on driving value through
intensive asset management, keeping
our centres as full as possible and
exploiting demand for assets which
support instore fulfilment and click
and collect.
In March, the Board took the difficult
decision to temporarily suspend the
dividend. This was the appropriate
course of action given the circumstances
and uncertainty of outlook despite our
financial resilience and performance
during FY20. Going forward, the Board
understands the importance of the
dividend to shareholders and is mindful
of our obligations as a REIT. We will seek
to resume dividends at an appropriate
level as soon as there is sufficient clarity
of outlook. For this we will need to
see a significant improvement in rent
collection and have more visibility on the
post lockdown productivity of our assets,
principally how quickly retail customers
and office workers return.
Looking ahead, our business benefits
from several key attributes that position
us to succeed: we have established a
unique network of campuses located in
some of the most exciting parts of
London; our development pipeline is
focused on further enhancing these
places, and is unmatched in scale and
optionality; we have a robust financial
position and a broad range of skills
and expertise across our business
which has been very much in evidence
in recent months.
Chris Grigg
Chief Executive
I
n
v
e
s
t
m
e
n
t
c
a
s
e
The British Land
investment case
1
2
3
4
The scale and quality of our portfolio
Our 23m sq ft portfolio of high quality assets is underpinned by our
resilient balance sheet and financial strength
Assets under management
£14.8bn
British Land owned assets
£11.2bn
Read about our places
on pages 16 to 21
and 48 to 53
Our operational expertise and customer insight
Our broad skill set, which includes investing, developing, leasing, marketing
and financing, is underpinned by our understanding of the customer
Customer surveys completed
in the year
24,000
Customer satisfaction
rating out of 10
8.3
Read about our people on
page 34
Our clear strategy and distinctive business model
We are increasing our focus on mixed use places and will be growing
our London campuses and building a residential business while refining
our Retail business
Development opportunities
at our campuses
7.1m sq ft
Residential homes planned
at Canada Water
3,000
Read about our business
model on page 14 and
strategy on page 22
A well positioned development pipeline, with opportunities
across our portfolio
We have created attractive options for development across our London
campuses supporting earnings growth and value creation long term
Recently completed/
committed developments
pre-let
88%
EPS uplift from recently
completed/committed
developments when fully let
4.2p
Read about our pipeline of
developments on page 26
British Land Annual Report and Accounts 2020
13
BUSINESS MODEL
Designed for positive,
sustainable long term
outcomes
Our key inputs
Our portfolio
Financial strength
– Strong financial footing
– Appropriate leverage
– Diverse, efficient and flexible finance
– Partnerships which mitigate risks
and add expertise
Strong relationships
– Customers
– Local communities and
local government
– Suppliers and contractors
– Partners
Expert People
– Broad range of skills, experience
and perspectives
– Diverse and inclusive environment
where people can achieve
their potential
– Culture of teamwork and
collaboration
A diverse and high quality portfolio with a focus on
London and the South East
London campuses
Standalone offices
Canada Water & Residential
Retail Parks
Shopping Centres
Other retail
London and South East
49%
11%
5%
16%
14%
5%
76%
14
British Land Annual Report and Accounts 2020
Our differentiators
Positive outcomes
for stakeholders
makin g
e
c
a
l
P
In
v
e
s
t
a
n
d
d
e
v
e
l
o
p
PLACES
PEOPLE
PREFER
Manage our s p a
e
c
Invest and develop
– Creating
development
opportunities
Manage our space
– Right mix of uses
and occupiers
– World class property
– Sourcing attractive
management
– Appropriate facilities
and services
investments
– Allocating capital
to deliver growth
and returns
– Smart and
sustainable
buildings
Placemaking
– Design-led places
in tune with modern
lifestyles
– Enhancing and
enlivening our
space to create a
positive experience
– Minimising our
impact on the
environment
– Connecting to
local communities
Our customers
Great places, inside and out,
developed and managed on a
sustainable basis, which help
our customers
Communities, partners
and suppliers
Active partnerships which create
inclusive places and help grow
social value and wellbeing
Our people
A diverse and inclusive workplace,
where people can achieve their
full potential
Shareholders
Sustainable long term income
and value creation
British Land Annual Report and Accounts 2020
15
P
L
A
C
E
S
Outstanding places to deliver
positive outcomes for all our
stakeholders on a long term,
sustainable basis.
Meadowhall • Regent’s Place • 20 Triton Street • Ealing Broadway • Paddington Central •
Drake Circus • Teesside Park, Stockton • 350 Euston Road • Broadgate Tower • Clarges,
Mayfair • 201 Bishopsgate • 10 Portman Square • 4 Kingdom Street • Norton Folgate •
Exchange House • 1 Sheldon Square • York House • New Mersey, Speke • 10 Triton Street
• 155 Bishopsgate • Kingston Centre, Milton Keynes • 3 Sheldon Square • 1 Finsbury
Avenue • Serpentine Green, Peterborough • 338 Euston Road • Broughton, Chester • Fort
Kinnaird, Edinburgh • St. Stephen’s, Hull • Giltbrook, Nottingham • Marble Arch House •
SouthGate, Bath • Broadwalk House • Nugent, Orpington • 1 & 2 Broadgate • Orbital,
Swindon • The Woolwich Estate • 1 Appold Street • 10 Exchange Square • Beaumont,
Leicester • Royal Victoria Place, Tunbridge Wells • Whiteley, Fareham • Old Market,
Hereford • 199 Bishopsgate • 100 Liverpool Street • Crownpoint, Denton • Mayflower,
Basildon • Forster Square, Bradford • Tollgate, Colchester • Elk Mill, Oldham • 3 Kingdom
St • Woodfields, Bury • Yalding House • 2 Finsbury Avenue • 158-164 Bishopsgate • 1-5
Baker Street • Queens, Stafford • 135 Bishopsgate • Eden Walk, Kingston • Deepdale,
Preston • 3 Finsbury Avenue • 30 Brock Street • 126-134 Baker Street • 17-19 Bedford
Street • 3 Sheldon Square • Botley Road, Oxford • 19-23 Wells Street • 19-33 Liverpool
Street • St. Peter’s, Mansfield • 6-9 Eldon Street • 20 Brock St • 4-8 Crown Place • Riverside,
Coleraine • 7–9 William Road • 31, 33 & 35 Sun Street • 18-20 Apex House • 1 Triton Square
Learn more about our places online
at www.britishland.com/our-places
Dealing with Covid-19
We have prioritised the safety of our people
and their families but have managed to keep
all but two of our Retail places open to provide
access to essential stores including
pharmacies and supermarkets. All our London
campuses remain open for access. We have
worked closely with customers, partners, local
communities and organisations around our
places to provide help where it is most needed
and ensure that it is delivered most effectively.
16
British Land Annual Report and Accounts 2020
Broadgate Tower, Broadgate
Broadgate is a 32 acre campus
owned in a 50:50 joint venture with
GIC. It is adjacent to Liverpool Street
station with access to Crossrail
and close to the vibrant areas of
Shoreditch and Spitalfields. Newest
occupiers on the campus include
advertising agency McCann and
IT security company Mimecast.
22,800
People work at
Broadgate
72
Office occupiers
at Broadgate
1.1m sq ft
Recently completed/
committed development
50%
Joint venture
with GIC
1m sq ft +
Near and medium
term development
opportunities
British Land Annual Report and Accounts 2020
17
P
L
A
C
E
S
Canada Water Masterplan
Our 53 acre site at Canada Water is one of the
largest mixed use regeneration projects in
London. We received a resolution to grant
planning for our overall masterplan in the year
which will deliver 3,000 homes alongside retail,
leisure and workspace. A new partnership with
TEDI-London will bring this design-led,
engineering higher education provider to
Canada Water.
3,000
New homes
2m sq ft
Workspace
5m sq ft
Development opportunity
1m sq ft
Leisure & Retail space
18
British Land Annual Report and Accounts 2020
Meadowhall, Sheffield
Yorkshire’s premier shopping
destination has continued to attract
popular modern brands including
Rituals, Frasers, Lovisa and
Deichmann this year.
96%
Occupancy
50%
Joint venture
with Norges
SouthGate Bath
Open air retail scheme, in
the centre of the historic
city of Bath, which has
UNESCO world heritage
status. Our scheme is
owned jointly with Aviva.
6.3m
Tourists visit Bath
each year
British Land Annual Report and Accounts 2020
19
P
L
A
C
E
S
Fort Kinnaird, Edinburgh
Destination retail and leisure centre with strong local connections.
Over 1,800 children have benefitted from our award-winning Young Readers
Programme here since 2012 and through our Recruitment & Skills Centre
we have supported local people into employment.
Ealing Broadway, London
Well connected for the
underground and Crossrail,
Ealing is regenerating and
our longer term plans will
increase the mix of uses.
Paddington Central
11 acre mixed use campus, beside Paddington station
and the Grand Union Canal. Acquired in 2013, the
campus is home to 18 international corporates
including Microsoft, Kingfisher, Prudential and Visa
who recommitted to their space this year.
7,200
People work at Paddington Central
27
Office occupiers
438,000 sq ft
Development opportunity at
5 Kingdom Street
20
British Land Annual Report and Accounts 2020
Regent’s Place, London
A 13 acre office-led campus in London’s Knowledge
Quarter, a cluster of academic and scientific
institutions in the West End. The campus has been
substantially redeveloped in recent years, including
10-30 Brock Street, which is now home to Facebook,
Santander and Manchester City FC.
11,500
People work at Regent’s Place
30
Office occupiers
366,000 sq ft
Development at 1 Triton Square
British Land Annual Report and Accounts 2020
21
STRATEGIC FOCUS
We are building an
increasingly mixed use
business
As the boundaries between work and leisure become more blurred,
we are increasing the range of uses at our places to reflect the changing
way people work, shop and live.
Our future business will be focused on three key areas
A smaller, more focused
Retail portfolio
High quality, well
located assets focused
on well connected
multi-let places
Canada Water & Residential
Plans for 3,000 homes
at Canada Water with
further opportunities within
our portfolio
Campus focused
London Offices
With a blend of core and
flexible space integrated
alongside world class retail
and leisure offerings
Storey – Flexible workspace
The evolution of our portfolio
British Land
portfolio today
Campus focused
London Offices
Storey
Retail
Canada Water & Residential
58%
2%
35%
5%
British Land portfolio
of the future
Campus focused
London Offices
Storey
Retail
Canada Water & Residential
55–60%
5%
25–30%
10%
The indicative business mix for the future portfolio was announced in November 2018 and based on September 2018 values; it is restated above for current valuations.
22
British Land Annual Report and Accounts 2020
Dealing with Covid-19
Covid-19 has impacted our business at every level. We are supporting those customers hardest hit with more flexible
rental provisions and we are providing funding to local communities most in need through our Community Investment
Fund. We are providing the resources our people need to work effectively from home as well as the networks which help
them feel connected to the broader team. We have demonstrated our thoughtful and disciplined approach to capital
allocation and benefit from the work we have done over several years to strengthen our balance sheet.
We are delivering this through
our strategic framework:
Customer Orientation
Responding to changing lifestyles
Our business is focused on our customers: the
Right Places
Creating great environments
Our insight into the customer helps us identify places
organisations which have taken space at our places. We also
consider carefully the needs of the people who work, shop at
or visit our places and the communities who live in the
surrounding neighbourhoods. We have developed a deep
understanding of how people use our space which informs our
approach to managing our assets and guides our investment
activity. This means we are always focused on the customer
and deliver places that are successful and sustainable
long term.
which can succeed long term. This underpins our focus on our
London campuses, where we can manage the environment to
deliver a broader mix of uses enabling people to combine their
work and leisure time, reflecting modern London lifestyles. We
apply the same principles to our Retail spaces, which are
around the country in places that are easily accessible from
strong catchment areas. Our 53 acre scheme at Canada Water,
which will be mixed use from the start, is the best illustration
of this approach.
Stakeholders: Aligned to customers
Stakeholders: Aligned to communities and suppliers
Sustainability: Aligned to wellbeing
Sustainability: Aligned to community
Expert People
Changing the way we work
Our people strategy focuses on creating a team
Capital Efficiency
Thoughtful use of capital
We are thoughtful in our approach to capital
which can deliver on our purpose. We do this by attracting and
retaining people with a broad range of skills and experience
and a diversity of backgrounds. We recognise that to keep
people engaged in our business, we must invest in their
development and in creating a working environment that
supports wellbeing and inclusion which we articulate in our
values (see page 34). We also recognise the importance of
investing in tomorrow’s workforce for our customers, suppliers
and local partners.
allocation and carefully evaluate investment opportunities to
support income and returns for our shareholders, while
minimising our impact on the environment. We have created
opportunities for development within our portfolio, which
typically deliver stronger returns, although are inherently
higher risk. We balance this against acquisition opportunities
we see in the market and investing in our own portfolio by
buying back shares. At the same time, we monitor our leverage
in the context of wider decisions made by the business.
Stakeholders: Aligned to our people
Stakeholders: Aligned to shareholders
Sustainability: Aligned to skills and opportunity
Sustainability: Aligned to futureproofing
British Land Annual Report and Accounts 2020
23
STRATEGIC PERFORMANCE AND KPIS
Monitoring our progress
Customer Orientation
Right Places
Achievements
against last year’s
priorities
Develop our Smart Places product
– Smart-specific guidance documents produced for
internal teams and supply chain
– Smart-enabled our head office, which will enable
us to control and manage space remotely
– Selected partner for our Campus app
Strengthened our operational expertise
– Storey operational across 297,000 sq ft including
Storey Club and our first standalone building at
Wells Street, W1
– Property Management business now fully integrated
Customer satisfaction
We extensively survey our customers and other
users of our places to assess our performance and
identify opportunities for improvement.
Performance
Progress developments, focusing on London campuses
– 135 Bishopsgate completed; 100 Liverpool Street
close to completion (delayed due to Covid-19)
– Enabling works commenced at Norton Folgate
Refine and re-focus our Retail business
– £296m sales of non-core assets
Progress at Canada Water
– Achieved resolution to grant planning for our
Masterplan and confirmation that it will not be
called in by the Mayor
Total property returns
We have underperformed the IPD benchmark this
year by 600bps, reflecting the continued strength of
industrials where we have no exposure.
LTIP
AI
2020
2019
2018
8.3 out of 10
8.2 out of 10
8.1 out of 10
2020
2019
2018
(6.4)%
(0.9)%
7.0%
Speculative development commitment
Development supports value and future income growth,
but adds risk. We keep our committed development
exposure at less than 15% of our investment portfolio,
with a maximum of 8% developed speculatively.
% of standing investments
0.6% £0.1bn
2.3%
£0.3bn
2020
2019
2018
4.5% £0.6bn
Future priorities
– Incorporate sustainability principles as standard
– Make further disposals in retail to progress our
within our leasing offer
– Develop our Smart Places product to become an
integral part of our campus offer
– Active networks supporting our customers,
communities and suppliers
– Leverage our data and insights to develop
our office offer and support masterplanning of
major schemes
plan to deliver a smaller, more focused
Retail business
– Continued investment in campus development
including 1 Broadgate; progress at Norton Folgate
– Commence development at Canada Water
– Make our places net zero carbon and increase
their resilience to climate change
Risk indicators
– Monitor concentration of exposure to individual
occupiers or sectors
– Consumer confidence
– Employment forecasts for relevant sectors
– Market letting risk (vacancies, expiries,
speculative development)
– Property capital return and ERV growth forecasts
– Total and speculative development exposure
– Progress of developments against plan
– Execution of targeted acquisitions and disposals
in line with capital allocation plan
– Review of prospective performance of individual
assets and their business plans
Links to remuneration:
LTIP Long-Term Incentive Plan
AI
Annual Incentive Award
24
British Land Annual Report and Accounts 2020
Expert People
Capital Efficiency
Office and Retail businesses fully integrated
– Efficiencies achieved in common functions
including marketing and finance
– Leasing and asset management strategies
benefitting from more diverse skill set
Median gender pay gap reduced
– Reduced to 27.9% from 34.9% across British Land
EnaBLe network formed
– Focused on providing opportunities and
Maintain appropriate leverage
– Debt low with LTV at 34.0%
– Flexible finance: £550m new debt finance
arranged; £925m of facilities extended
– £1.3bn of undrawn facilities and cash with no
requirement to refinance until 2024
Recycle capital to improve returns
– £86m residential and £296m retail sales
– £125m share buyback completed; total of
excellent customer services to all
£625m returned since July 2017
Employee engagement score
75% employee engagement score, 6% higher
than the United Kingdom benchmark.
Loan to value (LTV) – proportionally consolidated
We manage our LTV through the property cycle
such that our financial position would remain
robust in the event of a significant fall in value.
2020
2019
2018
75%
75%
78%
2020
2019
2018
34.0%
28.1%
28.4%
2018 data was collated prior to the combination
of British Land and British Land Property
Management and relates to British Land only.
Weighted average interest rate – proportionally
consolidated
Our low cost of finance at 2.5% has contributed
to reducing our interest cost, supporting our
financial performance. Our use of caps as well
as swaps for interest rate hedging means we
benefit if market rates remain low.
2020
2019
2018
2.5%
2.9%
2.8%
Group
indicators
LTIP
Total accounting
return (TAR)
TAR is our overall
measure of
performance. It is the
dividend paid plus the
change in EPRA NAV
per share expressed as
a percentage of EPRA
NAV at the beginning of
the period.
This year our TAR was
(11.0)% comprising a
dividend of 15.97p per
share offset by a fall in
EPRA NAV of 14.5% to
774p per share.
TAR
(11.0)%
2019: (3.3)%
– Embed Sustainability knowledge more firmly
across the business with clear team and
department objectives
– Take capital allocation decisions based
on relative value and in accordance with
our strategy
– Generate efficiencies and leverage
– Maintain balance sheet resilience with
experience through new team structure
– Continue to reduce our gender pay gap
sufficient liquidity for business requirements
– Consider Sustainable and ESG linked Finance
Delivering long term,
sustainable value.
– Voluntary staff turnover
– Employee engagement
– Financial covenant headroom
– Available facilities and cash
– Period until refinancing is required
– Execution of debt financing, availability and
cost of finance in the market
Read more on our Principal risks on page 82
British Land Annual Report and Accounts 2020
25
DEVELOPMENT PIPELINE
Well positioned for future
market opportunities
Our approach is to pre-let developments, effectively de-risking them and
with Completed and Committed developments now 88% let we are well
positioned in the current environments.
Completed
Committed
Near term
1 Triton Square
Office-led development at Regent’s Place, the office space
is fully pre-let to Dentsu Aegis Network, an existing
occupier on the campus.
366,000 sq ft
1 Finsbury Avenue
Office-led refurbishment at Broadgate
including a cinema, cafés and flexible
workspace. The building is 85% let
with technology companies Mimecast
and Product Madness among those
taking space.
287,000 sq ft
135 Bishopsgate
Office-led development at Broadgate.
90% let with occupiers including
advertising agency McCann, financial
services firm TP ICAP and Italian
marketplace Eataly.
335,000 sq ft
100 Liverpool St
Office-led
development
adjacent to Liverpool
Street station. 84%
of office space let to
occupiers including
financial services
firms SMBC Europe
and Peel Hunt,
law firm Milbank
and German
gym operator,
JOHN REED.
524,000
sq ft
26
British Land Annual Report and Accounts 2020
Norton Folgate
Office-led
redevelopment
in Shoreditch,
integrating 258,000
sq ft of office space
alongside retail
and residential to
create a mixed use
space that draws
on the historic
fabric of the area.
336,000
sq ft
Dealing with Covid-19
In the wake of Covid-19, and to ensure the safety and wellbeing of those working on site, construction work was
suspended at all our developments but working closely with our construction partners, we have been able to re-open all
our major development sites whilst adhering to social distancing measures, including 100 Liverpool Street and 1 Triton
Square, but inevitably productivity is lower.
We have assembled a pipeline of attractive opportunities and when there is greater clarity on the outlook, we would
expect to progress, starting 1 Broadgate at our Broadgate campus and Norton Folgate, which is nearby.
Near term
Medium term
1 Broadgate
Office-led development at Broadgate including 137,000 sq
ft of retail connecting Finsbury Avenue Square with 100
Liverpool Street and the Broadgate Circle creating a
retail, leisure and dining hub.
538,000 sq ft
2&3 Finsbury Avenue
Office-led development at Broadgate, including ground
floor retail, a publicly accessible restaurant, café and
roof terrace.
563,000 sq ft
Aldgate Place,
Phase 2
Build-to-rent,
residential-led
scheme in Aldgate,
delivering 159 homes
with 19,000 sq ft of
office space.
133,000
sq ft
Canada Water
The first phase comprises three buildings, delivering a
mix of office, retail, leisure and residential with 265 homes
planned across a range of tenures and affordability.
580,000 sq ft
See page 65 for more details on our development pipeline
British Land Annual Report and Accounts 2020
27
P
E
O
P
L
E
Understanding the needs of
our customers, our partners
and our people helps us deliver
outstanding places.
Our customers
Our customers are the organisations who have taken space at our assets as well as the
people who visit them. Our campus customers cover a broad mix of sectors, including
government, media, technology and financial services and our Retail customers are
amongst the best in today’s challenging market.
Communities, partners and suppliers
Our communities are the people who live in and around our assets. We work closely with
community partners and local authorities and collaborate with them ahead of any
significant projects. We work with local suppliers wherever possible and promote social,
ethical and environmental responsibility through our Supplier Code of Conduct.
Our people
We recognise that to deliver on our purpose, we need a diverse team, with a range of skills,
experiences, and perspectives. This underpins the way we recruit new people, the way we
engage with our existing team and the way we invest in and develop talent.
Shareholders
Our focus on creating outstanding and sustainable places drives enduring demand for our
space, supporting rental growth and value appreciation over the long term.
Dealing with Covid-19
Supporting our stakeholders has been our priority throughout
the Covid-19 crisis. We are supporting those customers hardest
hit with more flexible rental provisions and we are supporting
local communities most in need through our Community
Investment Fund. We are providing the resources our people
need to work effectively from home as well as the networks
which help them feel connected to the broader team, and we
have maintained a continuing dialogue with shareholders,
including public updates and one-to-one discussions.
28
British Land Annual Report and Accounts 2020
British Land Annual Report and Accounts 2020
29
P
E
O
P
L
E
Customer and community stories
From the people who make our places.
Peel Hunt, Broadgate
Financial services firm Peel Hunt is
consolidating two of its offices into
a single floor at our 100 Liverpool
Street development covering
40,000 sq ft.
East London Business Alliance,
Broadgate
British Land works with the East
London Business Alliance through
Broadgate Connect, part of our
Bright Lights skills and employment
programme, supporting local people
into work in and around Broadgate.
Central Market,
Tunbridge Wells
Central Market provides shoppers
at Royal Victoria Place with
somewhere to meet, eat gourmet
street food and listen to live music
in the centre of Tunbridge Wells.
“100 Liverpool Street stood out
for us because the design was
exceptional. The floor plates
enabled us to consolidate our
businesses onto a single level
which was a priority and it gave
us a real identity, because we’re
one of only a few companies in
the building. Plus, Broadgate
is a vibrant hub with strong
environmental credentials and
that has real value for our people.
British Land demonstrated a real
willingness to accommodate us at
every step, and we’ve been thrilled
with the result.”
Steven Fine,
CEO Peel Hunt
“British Land plays a key role in our
community. Over eight years, they
have partnered with us and their
suppliers and customers to
connect over 400 local jobseekers
with employment opportunities in
and around Broadgate. More
recently, they have been working
to cushion the Covid-19 impact on
our communities. This includes
reinforcing support for people we
have placed into jobs over the last
two years, connecting them to new
opportunities where needed and
delivering training so they are
resilient for the future.”
Julie Hutchinson,
Managing Director at London
Works and Skills & Employment
Director at ELBA
“British Land gave us the
opportunity to launch our food
market concept at Royal Victoria
Place. It’s become a great venue
for local producers to trade and
for local people to meet up with
friends so we feel strongly
anchored in the local community.
British Land were incredibly
supportive throughout the
process and as a new business,
that was invaluable.”
Thibault Bouquet de Joliniere,
Initiative Group
See pages 32 and 96 for stakeholder engagement and page 116 for workforce engagement
30
British Land Annual Report and Accounts 2020
Lendlease, construction partner,
Regent’s Place
Lendlease, an international property and
infrastructure group headquartered at
Regent’s Place, delivered a number of
earlier projects at this campus and is
partnering with us on the delivery of
1 Triton Square.
“British Land brought the design team
and construction team together to
think about how we could do things
differently from an early stage. They
engaged Lendlease as construction
partner as early as possible, which
meant we could give input to the design
team and cost consultants, together
finding solutions to problems before
they even happened. 1 Triton Square
shows what’s possible when clients
involve the whole lifecycle team early
on and encourage everyone to work
collaboratively together towards
shared goals.”
Urban Farms, Paddington
Square Mile Farms launched their first
urban farm at Paddington Central and
now supply local restaurants on the
campus including the London Shell
Company and our own Storey Club.
“At Square Mile Farms, we’re improving
the wellbeing of urban communities
by integrating urban farms into the
workplace. At Paddington Central,
we work with occupiers on campus
to create a culture of sustainable,
low impact living, with the backdrop
of vertical, hydroponic farms that
produce fresh veg and herbs for
employees to take home. British Land
share our vision and have been
incredibly supportive. Not only have
they provided space, but they’ve helped
us engage with campus occupiers.”
Chris Carragher,
Project Director at Lendlease
Johnno Ransom,
Square Mile Farms
Mental health professional,
Canada Water
British Land works with the
charity Tree Shepherd to establish a
temporary low cost workspace, Thrive,
and business support programmes for
local entrepreneurs and SMEs.
Millicent is one of 42 people we
have supported.
“While working as a therapist in the
Forensic Mental Health Service, I saw a
real need for a counselling service in
Canada Water and set up a private
practice part-time. When I retired,
I decided to run this as a full-time
business, but I needed help getting it off
the ground. British Land supported me
with affordable, flexible workspace in a
great location, so it’s convenient for me
and my customers.”
Millicent Martin,
Volunteer Chairperson for
Southwark’s Independent Custody
Visitor’s Panel for the Mayor’s Office
for Policing and Crime
British Land Annual Report and Accounts 2020
31
STAKEHOLDER ENGAGEMENT
A continuous dialogue
Through broad engagement, our thinking is shaped by a wide range
of perspectives. This helps us deliver outstanding places and
positive outcomes for all our stakeholders – Places People Prefer.
Our customers
Our communities, partners
and suppliers
Our people
Our customers are the organisations
who have taken space at our assets,
as well as the people who work, shop
or visit our places
Key issues
The way people work, shop and live
is changing and they expect to do
more of these things in a single
place while minimising their impact
on the environment
Why we engage with customers
Understanding how customer demands
are changing helps us to provide places
which meet more of their needs, driving
long term demand for our space
How we engage with customers
We have undertaken 24,000 visitor
surveys this year. For our retail
occupiers, we have built a digital
platform that enables data sharing
and a BL:comm app to enable closer
interaction and we leverage social media
to keep our customers informed across
the business
Our communities are the people
who live in and around our assets
and our suppliers are some of the
organisations we partner with to
deliver Places People Prefer
Key issues
Social challenges around equality,
health, skills, employment, in-work
poverty and social cohesion as well as
environmental and local concerns
Why we engage with communities,
partners and suppliers
Our places thrive when our communities
and the people who support them
prosper, helping us create more
successful, inclusive places that make a
positive contribution to the wider
neighbourhood and attract customers
How we engage with communities
and suppliers
Our Local Charter and our Supplier Code
of Conduct guide how we engage with
local people and partners to make a
positive difference. They are integrated
into all our placemaking plans and
activities, including community
engagement and partnership projects
Our people strategy is focused on
creating a diverse team with a range
of skills and experiences
Key issues
Attracting and retaining talent in a
competitive market and allowing them
to fulfil their potential
Why we engage with employees
Understanding what motivates our
employees and how we can support
their wellbeing helps us to provide a
supportive workplace with opportunities
that enrich skills and experience,
helping us attract and retain talent
How we engage with employees
We encourage open and constructive
discussions throughout the business;
employees have regular opportunities
to provide feedback through company
surveys, at regular town hall meetings or
through a range of employee networks
How we respond
How we respond
How we respond
Strategy: Aligned to
Customer Orientation
Strategy: Aligned to
Right Places
Strategy: Aligned to
Expert People
Sustainability: Aligned to
wellbeing
Sustainability: Aligned to
community
Sustainability: Aligned to
skills & opportunity
32
British Land Annual Report and Accounts 2020
Statement on s172 of the
Companies Act 2006
s172(1) of the Companies Act requires Directors of a company
to act in the way they consider, in good faith, would be most
likely to promote the success of the company for the benefit of
its members as whole, taking into account:
– the likely consequences of any decision in the long term;
– the interests of the company’s employees;
– the need to foster the company’s business relationships
with suppliers, customers and others;
– the impact of the company’s operations on the community
and the environment;
– the desirability of the company maintaining a reputation for
high standards of business conduct; and
– the need to act fairly as between members of the company.
The nature of our business means that we have a continuous
dialogue with a wide group of stakeholders and the views of our
stakeholders are taken into account before decisions are put to
the Board for a decision.
In order to ensure that the Directors are aware of these factors
and can take proper account of them, all papers submitted to the
Board for decision include a checklist of these factors, stating:
1. Whether or not the factor is a relevant factor in taking the
decision; and
2. Where there is a relevant factor to be considered, a short
description of the issue or reference to the section of the
paper where the factor is discussed.
In that way, the Directors are confident that they have
considered the factors in s172 when making their decision.
Read more about stakeholder engagement:
We discuss how stakeholder engagement has
affected Board decisions within our stakeholder
engagement statement on page 96
We outline the Company’s workforce
engagement mechanisms within the workforce
engagement statement on page 116
Our Chairman discusses the Board’s response to
Covid-19 and how that was shaped by the needs
of our stakeholders, and especially our
customers, on page 4
We outline our employee networks
on page 36
We highlight the work we do in our local
communities on page 37
British Land Annual Report and Accounts 2020
33
Our shareholders
Our focus is on creating outstanding
and sustainable places to deliver
value for shareholders over the
long term
Key issues
Delivering long term, sustainable
income and capital growth, while
meeting investors’ expectations around
environmental and social responsibilities
Why we engage with shareholders
We have a clear responsibility to engage
with shareholders as the owners of our
business as well as appealing to new
shareholders so their views are an
important driver of our strategy
How we engage with shareholders
Key shareholders regularly meet
management on a one-to-one basis,
and we engage with shareholders
more broadly through investor events.
A range of information from financial
performance to blogs from our CEO
and people across our business is also
available on our website
How we respond
Strategy: Aligned to
Capital Efficiency
Sustainability: Aligned to
futureproofing
PEOPLE AND CULTURE
Nurturing a working
environment that supports
our culture
We remain focused on creating a motivated and engaged workforce to
deliver our strategy.
Over the past 12 months we have
continued to make significant advances
in ensuring that British Land remains a
great place to work, so that our employees
can focus on the Company’s purpose.
Employee engagement is at the core
of our people strategy and our 2019
employee engagement survey provided a
rich set of results which has shaped our
thinking during the 2019/20 period.
We continue to ensure that our values
(set out below) remain at the heart of
all our decisions, enabling us to again
support the Company’s long term
aspiration to build an increasingly mixed
use business. Some examples of our
people strategy achievements in the
past 12 months are covered below.
Engagement
It is important to us to understand what
motivates our employees to perform
their best. It is also important to get
feedback so that we continue to develop
as a business and support our employees.
In the year, 89% of our colleagues
took part in an engagement survey
(up from 72% the previous year)
which provided very positive results.
Our overall engagement score remained
at 75% (same as the previous year)
which is 6% above the UK benchmark
score. The two areas of focus for the
future of our culture is to be more
collaborative and have more effective
two-way communication.
Retaining and developing our employees
is important to ensure that people are
engaged in their work and are developing
their skill sets; training is key to this and
during the year over 8,000 hours were
spent on training across the Company.
We promote people internally wherever
possible, and are pleased that in the
last year we have had 68 internal moves
or promotions, representing 12% of
the Company.
Integration of Property Management
(formerly Broadgate Estates) into
British Land
We recognise that in order to
successfully deliver Places People
Prefer, a unified workforce is necessary.
In 2018 we sold the third party portfolio
within our property management
business to focus on our own assets
and the remaining colleagues were
integrated within British Land to create a
new department, Property Management.
This integration has given us the
opportunity to work more collaboratively
and flexibly with our Property Management
colleagues, forming closer links between
head office and the centre managers and
estates directors.
This integration was also a great
opportunity to further embed our values
into our working culture and we have
held 24 values training sessions across
our London, Glasgow, Sheffield,
Teesside, Bath and Plymouth sites
over the past year.
Championing an inclusive culture
At British Land we are an employer that
champions diversity and inclusivity; a
place where people can bring their whole
selves and be their best. We attract the
best talent and support them in reaching
their full potential. Many initiatives are led
by groups of employees. Above all British
Land is a place where employees can
be themselves.
Our values
Bring your whole self
– Feel free to be ourselves
and help others feel
the same
– Bring all our passion and
energy to what we do
– Be open and inclusive
Listen and understand
– Take the time to listen
and feed back
– Listen with respect and
without judgement
– Base our actions on
what we learn
Be smarter together
– Bring together the
right team
– Own our responsibilities
– Support each other
to succeed
Build for the future
– Anticipate needs and
lead with courage
– Grow our expertise and
earn from our experience
– Be accountable for the
legacy we leave
34
British Land Annual Report and Accounts 2020
Gender diversity1
Female
Male
Board of
Directors
Senior
managers
Throughout
British Land
2019 inner ring
2020 outer ring
23%
30%
77%
70%
2019 inner ring
2020 outer ring
33%
35%
67%
65%
2019 inner ring
2020 outer ring
52%
51%
48%
49%
1. On an FTE basis.
Note: On a headcount basis, as at 31 March 2020, our workforce comprises 565 employees (293 female, 272 male), with 123 senior managers (44 female, 79 male).
‘Senior managers’ represents the Executive Committee, members of the British Land Leadership Team and employees in certain other senior roles. The Board
comprises 10 members (3 female and 7 male).
This year British Land was named
by the Social Mobility Foundation as
one of the top 50 employers who
have taken the most action to improve
social mobility in the workplace.
The Index ranks employers on the
actions they are taking to ensure they
are open to accessing and progressing
talent from all class backgrounds and
enabling those from lower socio-economic
backgrounds to succeed. We recognise
that diversity of backgrounds leads to
diversity of ideas and can help us to
engage better and understand our
community and customers better. We
continue to work in our communities to
support the Pathways to Property
programme and each year welcome
more apprentices to our business.
For the fifth consecutive year Chris Grigg
was ranked in the top 30 of Ally Executives
by OUTstanding. We are also proud that
our Stonewall Index rank has climbed
156 places since 2018 and we are in the
top quartile for being an inclusive
employer of LGBTQ+. Of the employees
that took part in the Stonewall survey,
96% said they feel able to be themselves
at work and 81% feel comfortable
disclosing being LGBTQ+ to their
colleagues. This represents the efforts
by so many to make British Land a
great place to work where we live our
“bring your whole self” value.
The past year has also seen several
positive steps being taken in relation to
our Diversity and Inclusion networks.
We created the “EnaBLe” network (our
seventh network) to celebrate ability, as
we believe that no one should ever feel
disabled. In July 2019, members of all
seven networks showcased their current
plans and future aspirations at our
successful diversity and inclusion
conference. We have also committed to
sharing some of our networks’ best
practices with occupiers on our
campuses. Following a series of on site
meetings with occupier representatives,
we have established great links with
organisations looking to replicate some
of the things we have done within their
businesses. The meetings have also
enabled us to align better with our
customers’ needs in the areas of
wellbeing, sustainability and collaboration,
whilst also bringing some new skills and
techniques back into British Land.
These networks and committees
have hosted around 60 events this
year. You can read more about this
on page 36.
Leadership
The British Land Leadership Team
(BLLT), made up of the Executive
Committee and senior managers,
was formed to unlock new levels of
performance and teamwork going
forward, particularly by focusing on how
we lead our teams and how we interact
as a group. It further aims to strengthen
our culture of continuous improvement,
which we believe is something that
distinguishes great companies.
The team’s first task was to ensure
that communication and collaboration
were consistent and effective within
their departments.
As leaders in the property industry, we
understand that we have a responsibility
to the people who occupy, visit or live in/
around our spaces but also to the
environment. Our CSR Committee was
therefore established and is chaired
by Alastair Hughes, a member of our
Board, to ensure that British Land
(i) is a first-class employer, (ii) is a
first-class builder of real estate,
(iii) takes into account the impact its
business has on the community, and (iv)
does all this in a sustainable manner.
Over the past year, the committee has
worked to connect the Board with the
extensive work done on employee
engagement, culture and diversity
and inclusion.
One example of community engagement
is our annual volunteering day, which
last year saw the majority of our employees
join 30 community events in a single
day in July. Since 2017, 42 employees
have signed up to the Step on Board
programme, an external service that
supports employees to volunteer as
non-executive directors and trustees of
charities and voluntary organisations.
To read more on the gender pay gap see page
119 and www.britishland.com/gender-pay-gap
British Land Annual Report and Accounts 2020
35
EMPLOYEE-LED NETWORKS
Delivering positive change at
British Land and beyond
At British Land, we have well-established, employee-led networks focused
on the things that really matter to our people. We’re supporting our
occupiers as they roll out similar networks across our campuses, making
these places stronger and more successful communities.
Ethnic Diversity network
Throughout the year, we
celebrated religious events
and held a series of networking
and wellbeing events to
support our ethnic minority
employees. We welcomed
renowned author Abir
Mukherjee to our offices to
discuss his thriller “A Rising
Man”. We celebrated Black
History Month with a talk
from reporter and producer
Dr Aida Holly-Nambi, whose
work includes telling the
stories of LGBT+ Africans.
Several families from near
our Paddington campus also
shared what Black History
month meant to them.
Parents & Carers network
Our Parents & Carers
network welcomed speakers
and hosted webinars on
issues ranging from how to
choose the right school to
managing sibling rivalry.
BL Pride
In July, our team organised
events in support of London
Pride and throughout the year
we hosted film nights and
workshops which explored
LGBT+ issues. We worked
in collaboration with other
networks, such as our Ethnic
Diversity and Parents & Carers
networks and this year hosted
a Procurement Workshop
with 40 of our suppliers.
We collaborate with HR to
review and update internal
policies so all parental leave
and healthcare is LGBT+
inclusive and now includes
cover for staff who may be
transitioning. We were
thrilled to achieve a rank of
118 out of 503 submissions
in the 2020 Stonewall
Workplace Equality Index,
our highest rank yet.
See Just Like Us case
study opposite.
Women’s network
This year we hosted a
number of inspirational
“In conversation with…”
talks with successful
women in and outside real
estate and held a theatrical
show, “Ada Ada Ada”, telling
the story of the life and work
of Ada Lovelace.
Wellbeing Committee
In the year, we provided
training for 161 employees,
helping them to recognise
colleagues who may be living
with poor mental health or be
in need of support. We have
introduced new stress
management and wellbeing
policies and our wellbeing
room continues to be a calm
retreat which colleagues can
use during the working day
when they need to.
EnaBLe
Our newest network ‘enaBLe’
was set up in May 2019 to
celebrate ability. We focus on
the positive contributions that
people can make and
encourage a disability smart
approach in our workplace
and assets. We work with our
employees, customers and
local organisations to identify
opportunities to promote
understanding and improve
our facilities. Over the last
12 months we held a number
of events including Deaf
Awareness Day, Purple
Tuesday, and International
Day for People with Disabilities
to raise awareness and
celebrate difference.
36
British Land Annual Report and Accounts 2020
Just Like Us
EXTENDING THE NETWORK TO OUR
CAMPUSES…
Paddington Central
At Paddington Central, a Diversity & Inclusion
network was set up by our occupiers and supported
by British Land. We have hosted meetings and events
at our Storey Club space and our Community
Managers are reaching out to more occupiers.
From this, smaller groups focused on Women,
LGBT+ and Diversity have emerged.
Regent’s Place
In June, campus occupiers including Dentsu Aegis
Network, Facebook and Lendlease joined forces with
community partners to create a Pride network for
Regent’s Place. This network provides a forum for
occupiers to pool ideas and resources which promote
inclusion. We also launched a Regen Network in
partnership with climate change group Common VC,
which is occupier led and has attracted support from
community groups including Global Generation, who
have space at Canada Water and Regent’s Place.
Broadgate
At Broadgate we have supported the launch and roll
out of a Mental Health network and held events at
the Winter Forest in aid of the mental health charity,
Mind in the City, Hackney and Waltham Forest.
Virtual events were also held in the lockdown period.
Dealing with Covid-19
Our networks have been an exceptional source of
strength and community throughout the Covid-19
crisis. From providing tips on how to homeschool
while working from home, to virtual quiz nights and
coffee mornings, employees have been connected
to each other and the wider business. Thanks to the
expertise and hard work of our technology team,
we have been able to deliver on our day-to-day jobs
throughout this challenging period.
“British Land’s support has had a
transformational impact on our programme
to tackle homophobia, biphobia and
transphobia in schools.
With an office in the dynamic Broadgate
Estate, we’re better able to support our
volunteers, LGBT+ young people aged 18-25,
to deliver anti-bullying workshops in
schools. It also gives us the chance to
explore new ideas and opportunities with
local businesses. Thanks to the support of
the LGBT+ network and the Paddington
Storey Club, we were also able to launch a
new programme by hosting training to help
teachers and pupils from 25 schools to set
up LGBT+ and ally groups in their school in
the Paddington Storey Club.”
Tim Ramsey,
CEO Just Like Us
Just Like Us presented to the BL team at an event hosted
by the BL Pride network on “Challenging Conversations”
and British Land hosted a day of workshops and training
for around 100 secondary school students and teachers
taking part in the Just Like Us Pride Group programme.
British Land Annual Report and Accounts 2020
37
SUSTAINABILITY
A new approach to
sustainability
Introduction from Simon Carter
P
L
A
C
E
S
P
R
E
F
E
R
P
E
O
P
L
E
Building on the solid track record we
have established over the last decade,
we intend to accelerate progress and
have set stretching new targets for the
decade ahead.
Through our new strategy, we are
intensifying focus on two areas where
British Land can create the most benefit:
1) making our whole portfolio net zero
carbon, and 2) partnering to grow social
value and wellbeing in the communities
where we operate. While concentrating
on these areas, we will maintain
strong performance on social and
environmental priorities, in line with
our purpose and values.
Environmentally, we will accelerate the
reduction of embodied carbon in our
developments, which typically
represents around half our annual
carbon footprint. To this end, we have
already committed to prioritise retro-fit
above new build, trial new materials and
employ circular economy principles.
Underpinning our commitment, from
April 2020 any remaining embodied
carbon emissions will be offset, meaning
every development we deliver from now
on will be net zero.
To drive improvement across our
23m sq ft operational portfolio, we are
creating a bespoke Transition Fund.
This will finance our journey to operational
net zero carbon, imposing an actual
financial cost of carbon on every
development to create the ring-fenced
capital we require to become net zero
carbon nationwide by 2030.
Turning to our contribution to society,
over the last decade the immense
opportunity we can leverage as a long
term investor in our places has become
clear. At several of our places, we have
been uniquely positioned to bring people
and organisations together around
common local goals, pooling resources,
ideas, talent and time to achieve a
shared objective.
A great example is at Fort Kinnaird,
where the award-winning Recruitment &
Skills Centre, supported by British Land
and a range of local organisations,
helped local people into employment.
Another is the enthusiasm of our
customers who continually collaborate
with us to support the local community
through the Regent’s Place Community
More on our strategy and performance can be found in our Sustainability Accounts at
www.britishland.com/data
38
British Land Annual Report and Accounts 2020
Fund. From this year, this place-based
perspective will become our corporate
approach, and at each place we will
progressively bring together customers,
suppliers, community groups and
representatives with our own people to
maximise the local value produced from
our shared resources. This will not only
build a stronger community for all our
stakeholders at each place, but align us
more closely with the local narrative,
which will improve our business decisions.
And the way we think about sustainability
has changed. For us, it must be
‘business as usual’. This means
ensuring that every decision taken by
each of us at British Land every day is
environmentally and socially intelligent,
as well as making sound financial sense.
For us, this is central to creating Places
People Prefer.
Simon Carter
Chief Financial Officer
Our performance on
sustainability indices
We use industry-recognised
indices to track our sustainability
performance.
GRESB 2019:
4 star rating,
Green Star
CDP 2019:
B score
MSCI ESG
Rating 2019: AAA
FTSE4Good
Index 2019:
Top 98th percentile
Good progress on our 2020 targets
but more to do
Achieved or exceeded
– 73% reduction in carbon intensity
(Scopes 1 and 2) across our
portfolio versus 2009 baseline
(target: 55% index scored)
– 55% reduction in landlord energy
intensity across our portfolio
versus 2009 baseline (target: 55%
index scored)
– 16% average reduction in
embodied carbon versus concept
design on our major developments
(target: 15%)
– 1,745 people supported into jobs
through Bright Lights, our skills
and employment programme,
since 2016 (target: 1,700), working
with suppliers, customers and
local partners
More challenging but strong progress
– 96% of electricity purchased from
renewable sources (target 100%)
– 94% progress on our Local Charter
at our places (target: 100%),
investing £2.8m in our local
communities
For progress on all of our 2020 targets
see page 221
2020 sustainability performance
In 2015, we embarked on our second
challenging five-year programme to drive
a step change in our environmental
performance and contribution to the
communities where we work. As this
programme comes to an end, we are
pleased with the progress achieved in many
areas, and better informed as a result of the
challenges we have faced in others.
Our success in more than halving landlord
operational energy use per sq ft against
our 2009 baseline has contributed to a
73% decrease in the carbon intensity of
our portfolio, far beyond the 55% target we
set and a material leap towards our net
zero carbon future.
In the communities where we work,
we have helped 1,745 people into
employment and now design all our
places around seven wellbeing principles.
This helps the millions of people who use
them lead more active, social and creative
lives, accessing opportunities and green
spaces that support social cohesion and
collaboration. Research we commissioned
last year demonstrates that building
wellbeing into the fabric of our places has
a direct impact on the businesses and
communities that use them, as well as the
public purse.
Working in close partnership with our
suppliers has enabled us to promote
responsible business and the benefits
of greater diversity throughout our
operations. This is driven by our Code
of Conduct, which 96% of our strategic
suppliers have now formally adopted.
As well as safeguarding fair employment
conditions, it helps our local communities
access wider opportunities and develop
deeper skills that contribute to local
wellbeing and prosperity.
This year marks the ninth of our
partnership with the National Literacy
Trust, which has resulted in relationships
with over 500 schools local to our places.
Over this period, we and our customers
have helped 42,700 children in the UK
develop a love of reading, a key factor in
determining the opportunities they will be
able to access throughout their lives. The
positive impact of long term, place-based
partnerships, such as these, is also
demonstrated at Fort Kinnaird through our
work with the Skills & Recruitment centre
and at Regent’s Place, where collaboration
with our customers has established a
community fund working to support local
initiatives. Over the long term, fostering
strong local connections such as these is
key to the success of our places.
We are also pleased that 19% of our own
employees have held skills-based
volunteering roles in a range of non-profits
such as the West Euston Partnership,
Hackney CVS, New Diorama Theatre and
the Spitalfields Crypt Trust. For British
Land and our people, supporting and
encouraging skills-based volunteering
helps develop better professional skills
and deeper understanding of the needs of
our communities, resulting in better
decision making.
How sustainability adds value
There is growing evidence which supports the commercial case for more sustainable
buildings in terms of generating a rental premium and increasing the pace of letting space.
Research by JLL demonstrates that:
– Buildings rated BREEAM Outstanding or Excellent generally achieve a premium of
10% in Central London compared to prime (grade A) rents without a rating, and in
the City, this premium has increased over time
– The average vacancy rate in buildings rated BREEAM Outstanding or Excellent was
c.7% compared to 20% for a building rated Very Good, 24 months post completion
With the number of companies based in London signing up to science-based
sustainability targets doubling since December 2018 the demand for sustainable real
estate is expected to increase significantly.
British Land Annual Report and Accounts 2020
39
SUSTAINABILITY CONTINUED
Transition Fund: accelerating net zero carbon
Our journey to a net zero carbon portfolio will take 10 years to
achieve and involve work across the standing portfolio.
As we are prioritising reductions in embodied carbon, we have
devised a powerful incentive for our teams to adopt low carbon
materials and methods of development, which will in turn
support the transition of the wider portfolio. Every tonne of
embodied carbon we produce from this year until 2030 will
trigger an additional £60 payment. A proportion of this will be
used to purchase accredited offsets, with the balance being
ring-fenced in our new Transition Fund to provide capital to
retro-fit our standing assets.
During FY21, a transition plan will be created for each of our
assets, detailing the measures required to reduce operational
emissions and strengthen their resilience to climate change.
These will aggregate up into a portfolio-wide transition plan,
detailing our journey to net zero in 2030.
In the same way that the Community Investment Fund has
supported our social contribution over the last 10 years, the
Transition Fund will create a ring-fenced source of funding to
help transition our portfolio to a more resilient, low carbon state.
Our new 2030 strategy
The lessons we have learnt over the last decade and
recognition of the need to accelerate progress underpin
our new 2030 sustainability strategy, launched this spring.
To concentrate the business on driving progress in the
most urgent areas, we have chosen two primary focuses:
achieving a net zero carbon portfolio and a place-based
approach to social contribution.
1. Creating a net zero carbon portfolio by 2030
The main elements of this will be:
– All developments delivered after April 2020 to be net
zero embodied carbon
– A 50% reduction in embodied carbon emissions at our
developments, to below 500kg CO2e / m2 by 2030
– A 75% reduction in operational carbon emissions across
our portfolio by 2030
– Creation of a Transition Fund, resourced by an internal
carbon fee at £60/tonne levied on new developments, to
finance retrofitting of our standing portfolio, as well as
low carbon research and development
2. A place-based approach to social contribution
– Partnering with local stakeholders
– Education and employment partnerships at each place
– Using our Local Charter
Achieving net zero carbon at 100 Liverpool Street
Reducing embodied carbon
– Half the existing structure retained
– Low carbon materials sourced
Reducing operational carbon
– Targeting BREEAM Excellent
– EPC A (offices)
Trialling new innovations
– Using recycled materials and alternatives to cement
– Piloting WELL Certification
– Smart-enabled to optimise operational efficiency
British Land pathway to net zero
2020
– Launch
Transition Fund
– Developments
net zero
2022
– Asset audits
complete
2022/3
– Achieve scope 1
and 2 SBTi targets
met – REGO/PPAs
2025
– Review strategy
at interim stage
– Embodied carbon
750kg CO2e / m2
2029
– Commence
design of new
strategy
40
British Land Annual Report and Accounts 2020
Our 2030 sustainability focus areas align
to the UN’s Sustainable Development Goals:
12 – responsible consumption and production,
and 8 – decent work and economic growth, and
will be underpinned by 17 – partnership for the
goals. Our long-standing partnership approach
produces greater value for more people.
3. Environmental Leadership
As we do this, we will demonstrate leadership across
leading international environmental benchmarks, including
the Global Real Estate Sustainability Benchmark (GRESB),
where we are targeting a 5 star rating.
4. Advocating Responsible Business
Across our business, including our customers and supply
chain we will continue to advocate responsible business
practices, including:
– promoting diversity and inclusion, everywhere
– being active against modern slavery
– mandating prompt payment
– integrating wellbeing, everywhere
– being a champion of responsible employment
Low upfront payment to achieve net zero
26,700 tonnes
£60/tonne1
Total embodied carbon
Internal price of carbon
0.4%
0.2%
of total construction costs
of net development value
Total embodied carbon of
Exceeding our 2030 target
395kg CO2e / m²
500kg CO2e / m²
1. Commitment to mitigate embodied carbon at £60/tonne is for
British Land share of developments.
2030
– Begin annual offset of portfolio emissions – BBP target
– 75% reduction in carbon emissions across the portfolio
– Embodied carbon 500kg CO2e / m2
– UKGBC 2030 targets achieved for new developments
More information on our strategy can be found at
www.britishland.com/sustainability/strategy
Community Investment Fund: tackling Covid-19
Established in 2008, our Community Investment Fund now
commits over £1.3m of funding per year. Through regular
review, the feedback provided by our community partners, site
teams, project beneficiaries and customers has enabled us to
evolve our approach and develop a range of very successful,
often award-winning, initiatives and incredibly strong charity
and community partnerships. Today the fund focuses on local
initiatives that benefit the communities around our places;
much of it is focused on multi-year commitments to our long
term partners with ring-fenced funding to give them certainty of
resource. Together with our site teams, suppliers and, where
appropriate, customers, we work together to achieve the
greatest impact possible in our local communities. We ensure
funds are directed to strong community and charity projects
around our properties and beyond, to help deliver our Local
Charter. We also provide matched funding for employee
fundraising and contributions to employee payroll giving
donations – helping support causes that matter to our people.
In March this year, we quickly recognised the impact of Covid-19
on our community partners and local people, and moved at
speed to re-focus the Fund to support them through this crisis.
We have since funded a package of support, delivered by
experts at the Centre for Charity Effectiveness at Cass Business
School, to help leaders at key community organisations around
our places to navigate the acute range of challenges they now
face, as well as funding bespoke employment support
programmes through trusted partner organisations such as the
East London Business Alliance. In other places we have helped
individuals to develop new skills and donated equipment to
support non-profit organisations to work effectively from home.
At 20 of our places we are also working with the National
Literacy Trust to direct book bundles and activity packs to some
of the most vulnerable families via a network of foodbanks and
local community hubs.
Our strong and collaborative relationships with community
partners and well-established governance around funding
allocation enabled us to pivot quickly in the heat of the crisis,
directing resources immediately to where there was greatest need.
British Land Annual Report and Accounts 2020
41
TASK FORCE ON CLIMATE-RELATED FINANCIAL DISCLOSURES (TCFD)
Climate-Related Financial
Disclosures
The Board recognises the systemic threat posed by climate change and the need for urgent mitigating action. We have a track record
of improving environmental performance, we were one of the first real estate companies to introduce stretching carbon reduction
targets that go beyond the demands of the Science Based Targets initiative for Scope 1 and 2 emissions, and we are a founding
signatory of the Better Buildings Partnership’s Climate Change Commitment. Since 2009, we have reduced our operational carbon
intensity by 73%, and we are announcing an ambitious set of climate targets as part of our new pathway to net zero (see page 40).
Our roadmap to full disclosure in 2021/22
2019/20
Establish governance
Scoped potential risks
Potential risks identified
Roadmap agreed
Board-level oversight
1. Established the CSR Committee
2. Net zero strategy reviewed at
Two climate workshops, including:
– low carbon transition
risk scenario
the Board away days
– physical risk scenario
Operational Accountability
1. TCFD Steering Committee
established
Progress
– Our newly-formed TCFD Steering Committee undertook two climate risk scenarios workshops, where facilitators from Forum for
the Future took the group through the latest climate science and ran breakout sessions on climate risk identification and
organisational responses.
– As part of the new sustainability strategy, we worked with experts to develop our pathway to net zero, including aggressive
climate and energy targets. Our updated Sustainability Brief will enable asset-level delivery of this approach.
– The Board’s strategy away days in 2019/20 included the review and discussion of our new sustainability strategy including the
pathway to net zero.
2020/21
Establish exposure
Physical:
– Audit asset resilience
– Potential compound impact
– Identify opportunities
Transitional:
– Policy development
– Supplier resilience
– Identify opportunities
2021/22
Organisational response
Portfolio level:
Quantified exposure
to each risk event
Adapting corporate strategy
Adapting financial planning
Incorporate into enterprise
risk management
Mitigation targets
Risk management metrics
For more information, see our 2020 Sustainability Accounts at www.britishland.com/data
42
British Land Annual Report and Accounts 2020
Governance
Board oversight of climate-related
risks and opportunities
Our Board Director responsible for
climate-related issues is Simon Carter,
Chief Financial Officer. Simon chairs
our Risk and Sustainability Committees,
ensuring continuity and accountability.
As part of assuming these responsibilities,
Simon took part in The Prince of Wales’s
Business & Sustainability Programme
at the Cambridge Institute for
Sustainability Leadership.
The Board is updated on climate-related
issues at least annually and has
ultimate oversight of risk management.
Significant and emerging risks are
escalated to the Audit Committee and
climate risk is tracked as part of our
Catastrophic Business Event risk
category (see page 84).
Our Board CSR Committee meets
three times a year and oversees the
delivery of the sustainability strategy,
including the delivery of the Pathway
to net zero and the management
of climate-related risks.
Management’s role in assessing and managing climate-related
risks and opportunities
The Board delegates responsibility
for analysing:
– Climate-related opportunities to the
Sustainability Committee, which
consists of senior managers from
across the business including
strategy, asset management,
and leasing. The delivery of the
sustainability programme, including
our net zero targets, is overseen by
this Committee, which reports to the
Board’s Corporate Social
Responsibility Committee.
– Climate-related risks to the Risk
Committee, which consists of the
Executive Committee and leaders
from business units, including
procurement and property
management. Each business unit
maintains a comprehensive risk
register, which is reviewed quarterly
by the Risk Committee. Climate risks
are identified through a process
involving trend analysis and
stakeholder engagement. Identified
risks are incorporated into our risk
framework and managed by the
appropriate business areas.
– The TCFD Steering Committee
reports to the Risk and Sustainability
Committees, both of which meet
quarterly. Ultimate oversight is at
Board level, with our new Corporate
Social Responsibility Committee
playing a role from May 2019. Any
resulting disclosure requires approval
by the Audit Committee.
Board
Board of Directors
Audit Committee
Corporate Social Responsibility (CSR)
Committee
Risk Committee
Sustainability Committee
Executive and Management
TCFD Steering Committee
Members include representatives from across the business: Asset management,
Development, Finance, Investment, Procurement, Property management,
Risk management, Strategy and Sustainability
British Land Annual Report and Accounts 2020
43
TASK FORCE ON CLIMATE-RELATED FINANCIAL DISCLOSURES (TCFD) CONTINUED
Strategy
Impacts of climate-related risks and opportunities on our business
We consider climate-related issues within the time horizons used in our corporate strategy:
Short term
Less than 12 months
Medium term
1 to 5 years
Long term
Over 5 years
To date, we have focused on climate-related risks and opportunities for short and medium term horizons. We provide further
disclosure on these risks in our annual CDP response www.britishland.com/sustainabilityreport.
Examples of climate-related risks
Extreme weather
Short term risks
Higher flood risks could increase insurance costs. This could, in turn, increase service charge costs for customers.
Inability to sell or rent property assets at book value, due to flood risk.
Impact on corporate strategy
Flood risk assessments undertaken for our current portfolio.
100% of high risk assets have flood management plans.
Impact on financial planning
Flood risk is effectively priced into our valuations.
Flood risk factored into our process for acquisitions and developments.
Energy regulation
Medium term risks
Lease renewals subject to Minimum Energy Efficiency Standard (MEES) compliance and all leased properties subject to
MEES from April 2023, with few exemptions.
Impact on corporate strategy
Through our futureproofing programme we monitor the 5% of our portfolio with F or G Energy Performance Certificate
(EPC) ratings (by floor area). Property Managers will take action on F and G rated assets by 1 April 2023.
Impact on financial planning
MEES non-compliance would pose a risk of revenue loss and a potential liability from non-compliance penalties.
Energy prices
Medium term risks
Energy cost volatility.
Impact on corporate strategy
Through our efficiency programme, we reduce our energy consumption profile and ultimately our exposure
to price fluctuations.
Impact on financial planning
Financial modelling includes the expected occupancy of assets and their associated energy costs. Procurement manages
the financial risk of volatile energy prices.
Examples of climate-related opportunities
Resource efficiency
Short term opportunity
Energy savings from the UK Energy Savings Opportunity Scheme (ESOS).
Impact on corporate strategy
As part of complying with ESOS in 2019, we have identified initiatives representing £1.4m of capex investment that would
save £1.2m annually and payback in 13 months.
Impact on financial planning
The business cases for these capex investments are considered as part of our overarching financial process.
Energy sources
Short term opportunity
Revenue generated from solar PV installations on our assets.
Impact on corporate strategy
Installation of solar PV at 10 assets, generating 1,763 MWh in 2019/20.
Impact on financial planning
The cost savings and revenue from exporting to the grid are factored into our financial planning.
Products and services
Medium term opportunity
Earning a rental premium from high efficiency buildings with a Design for Performance approach.
Impact on corporate strategy
Our Sustainability Brief for Developments sets out our requirement for detailed energy modelling early in the design
stage to inform design and set operational performance benchmarks. To learn from industry best practice, we also
became a member of the Better Buildings Partnership’s Design for Performance initiative in 2020.
Impact on financial planning
Rental income for high efficiency and low efficiency assets would be factored into our revenue forecasts in the medium
term, as this would affect their marketability.
44
British Land Annual Report and Accounts 2020
Assessing the resilience of our strategy
British Land undertook an initial analysis of medium term portfolio risks in 2017. Informed by the internal scenarios workshops
held in summer 2019, we will carry out TCFD-aligned scenario analysis in 2020, including a scenario where global warming is
limited to 2ºC or lower.
Risk management
Climate-related risks are identified and
assessed using our risk management
framework, set out on page 78 of
this Report.
We consider climate change within
‘External risks: Catastrophic business
event’, which is a principal risk to our
business. We define principal risks as
those with a substantive financial or
strategic impact on the business,
high likelihood of occurrence and
medium/high potential impact on our
performance. Our integrated approach
combines a top down strategic view
with a complementary bottom up
operational process.
Identifying and assessing
climate-related risks
As part of our top down strategic view,
our risk heat mapping process allows
us to determine the relative significance
of principal risks. As a factor within a
principal risk category, climate change
is monitored by the Risk Committee.
Metrics and targets
Our risk register tracks:
i. Description of the risk
(identification)
ii. Impact-likelihood rating
(evaluation enabling prioritisation)
iii. Mitigants (mitigation)
iv. Risk owner (monitoring)
As part of our bottom up operational
process, we maintain Asset Plans
which include provisions for identifying
climate-related risks and opportunities,
such as flood risk assessments and
audits to identify energy saving
opportunities. Our Sustainability
Brief for Acquisitions sets out our
environmental criteria for acquiring
a new property, including energy
efficiency and flood risk categories.
Our Sustainability Brief for Developments
sets out our environmental criteria for
new constructions and renovations,
including requirements for energy
efficiency, flood risk, materials choice
and embodied carbon reductions.
Managing climate-related risks
Our process for mitigating, accepting
and controlling principal risks,
including climate-related risks, is set
out on page 78 of this Report.
We prioritise principal risks through
our corporate risk register and risk
heat map. The impact-likelihood rating,
which is evaluated during risk
identification, is our primary metric for
prioritising risks. As a factor within a
principal risk category, climate change
risks are logged in our corporate risk
register and reviewed quarterly by the
Risk Committee, which comprises the
Executive Committee and senior
management. The Board is ultimately
responsible for and determines the
nature and extent of principal risks
it is willing to take to achieve its
strategic objectives.
Through our TCFD Steering Committee work, we will quantify our total climate-related financial exposure.
Below are the climate-related metrics and targets against which we currently report.
Climate-related risks
Energy regulation
Extreme weather
EPCs rated F or G (% by floor area)
Portfolio at high risk of flood (% by value)
High flood risk assets with flood management plans (% by value)
Climate-related opportunities
Resource efficiency
Energy sources
Products and
services
Scope 1 and 2 carbon intensity reduction versus 2009 (2020 target: 55%
reduction, index scored)
Landlord energy intensity reduction versus 2009 (2020 target: 55%
reduction, index scored)
Electricity purchased from renewable sources (2020 target: 100%)
On-site renewable energy generation (MWh)
Portfolio with green building ratings (% by floor area)
Developments outperforming Building Regulations for carbon efficiency
(% better on average)
2020
5%
2%
100%
2019
5%
3%
100%
2018
5%
3%
100%
2020
2019
2018
73%
64%
54%
55%
96%
1,763
23%
44%
96%
1,131
18%
40%
97%
782
18%
27%
25%
26%
British Land Annual Report and Accounts 2020
45
GHG EMISSIONS
Reducing carbon intensity
Emissions intensity
Absolute emissions Scope 1 and 2:
Carbon intensity across our portfolio has reduced by 73%
versus our 2009 baseline, exceeding our 2020 reduction target,
through the National Grid decarbonisation and our own
efficiency improvements.
In 2020, we invested £880,000 in delivering over 20 energy
efficiency projects including a boiler upgrade, building
management systems optimisation, improved lighting controls,
and the installation of LEDs. These are expected to result in
annual energy savings of 2,250,000 kWh. Over the next
12 months, we will pursue ISO 50001 accreditation at our
commercial offices.
22,318
26,815
34,269
7,615
8,105
8,842
14,239
2020
2019
2018
2017
2016
Location-based methodology
Market-based methodology
41,758
46,637
44,661
Scope 1 and 2 emissions intensity1,2 (Tonnes CO2e)
Year ended 31 March
Offices: per m2 net lettable area
Retail – enclosed: per m2
Retail – open air: per parking space
Total managed portfolio: per £m gross rental and related income3
Absolute Scope 1 and 2 emissions and associated energy use
Year ended 31 March
Scope 1 Combustion of fuel:
Managed portfolio gas use and fuel use in British Land owned vehicles
Scope 1 Operation of facilities: Managed portfolio refrigerant loss from
air conditioning
2020
0.032
0.037
0.044
38.05
20195
0.044
0.043
0.049
46.21
2009
0.118
0.174
0.106
–
Tonnes CO2e
MWh
2020
20195
2009
2020
20195
6,327
6,433
5,156
30,715
31,203
618
123
–
–
–
Location-based
15,373
20,258
41,186
62,880
74,752
Scope 2 Purchase of electricity, heat, steam and
cooling for our own use: Managed portfolio electricity
use for common parts and shared services
Market-based
Location-based
Total Scope 1 and 2 emissions and associated
energy use
Market-based
Proportion of Scope 1 and 2 emissions assured by an independent third party
Proportion that is UK-based
Absolute Scope 3 emissions – managed portfolio4 (Tonnes CO2e)
Year ended 31 March
Landlord purchased energy: occupier gas and electricity
consumption, upstream impacts of all purchased energy
(including the fuels of on site vehicles)
Landlord purchased water: upstream impacts
Waste management: downstream impacts
Proportion of Scope 3 emissions (above) assured by an independent third party
Market-based
Location-based
669
22,318
7,615
100%
100%
1,549
26,815
8,105
100%
100%
–
46,342
–
–
–
–
93,595
–
100%
100%
–
105,955
–
100%
100%
2020
2019
33,405
35,671
1,534
285
351
100%
nr
183
409
100%
1. We have reported on all emission sources required under the Companies Act 2006 (Strategic Report and Directors’ Reports) Regulations 2013 and the Companies
(Directors’ Report) and Limited Liability Partnerships (Energy and Carbon Report) Regulations 2018 (‘the 2018 Regulations’). These sources fall within our consolidated
financial statements and relate to head office activities and controlled emissions from our managed portfolio. Scope 1 and 2 emissions cover 99% of our multi-let
managed portfolio by value. We have used purchased energy consumption data, the GHG Protocol Corporate Accounting and Reporting Standard (revised edition) and
emission factors from the UK Government’s GHG Conversion Factors for Company Reporting 2019.
2. Omissions and estimations: Where asset energy and water data was partially unavailable, we used data from adjacent periods to estimate data for missing periods.
In 2020, this accounts for 1.6% of total reported energy consumption and 1.2% of total reported water consumption.
3. Gross Rental Income (GRI) from the managed portfolio comprises Group GRI of £436m (2019: £439m), plus 100% of the GRI generated by joint ventures and funds of
£287m (2019: £314m), less GRI generated assets outside the managed portfolio of £212m (2019: £173m).
4. For full Scope 3 greenhouse gas reporting, see the British Land Sustainability Accounts 2020 at www.britishland.com/data.
5. FY19 residential data has been restated as more accurate data became available.
46
British Land Annual Report and Accounts 2020
Non-financial
reporting disclosure
Reporting
requirement
Environmental
matters
Employees
Human rights
Social matters
Anti-bribery and
corruption
Business model
Non-financial KPIs
Key policies
include
Risk areas1
Where information can be found in this
Report on our impact
Page
– Sustainability Policy2
– Sustainability Brief2
6
– Stakeholder engagement
– A new approach to sustainability
– Reducing carbon intensity
– Managing risk in delivering our strategy
– Task Force on Climate-related Financial
Disclosures
– Sustainability performance measures
– Code of Conduct3
– Health and Safety
Policy3
– Code of Conduct3
– Modern Slavery Act
Statement2
– Sustainability Policy2
– Code of Conduct3
– Local Charter2
– Sustainability Brief2
– Health and Safety
Policy3
– Anti-Fraud Policy3
– Anti-Bribery and
Corruption Policy3
– Whistleblowing2
11
– People and culture
– Managing risk in delivering our strategy
B, F, G
– Managing risk in delivering our strategy
11, F
– Sustainability
– Managing risk in delivering our strategy
E
– Strategic focus
– Strategic performance and KPIs
– Sustainability
– Climate-related financial disclosures
32
38
46
78
42
221
34
78
78
38
78
22
24
38
42
1. Linkages to our Principal Risks and Other Group Risks which can be found on pages 78 to 87.
2. Available on www.britishland.com/policies.
3. Employee version available through our internal Employee Handbook. Supplier version available on www.britishland.com/policies.
Supply chain
We ask suppliers to work in a way we
believe is best practice to achieve our
social, environmental and ethical
standards. The effectiveness of our
policies in this area can be seen in our
sustainability performance measures
on pages 221 to 223. We set out our
supplier obligations in areas such as
health and safety, human rights, fair
working conditions, anti-bribery and
corruption, community engagement,
apprenticeships and environmental
management in our Supplier Code
of Conduct.
Human rights
Our respect for human rights is
embedded in how we do business.
We are a signatory to the UN Global
Compact which supports a core set of
values, including human rights, and have
made appropriate disclosures in respect
of the Modern Slavery Act. We are also a
member of APRES, an action
programme on responsible and ethical
sourcing across the construction
industry. For our performance on
aspects including fair wages and
diversity, see pages 221 to 223.
Anti-bribery and corruption
We are committed to the highest
legal and ethical standards in every
aspect of our business. It is our policy to
conduct business in a fair, honest and
open way, without the use of bribery or
corrupt practices to obtain an unfair
advantage. We provide clear guidance
for suppliers and employees, including
policies on anti-bribery and corruption,
anti-fraud and our code of conduct.
All employees receive training on
these issues appropriate to their roles
and responsibilities.
British Land Annual Report and Accounts 2020
47
P
R
E
F
E
R
Embracing the changing
way people live, work and
shop helps define our
strategy and delivers
long term value.
We understand what makes places preferred
and the importance of maintaining that preference
to drive enduring demand for our space
Connectivity
Our places benefit from excellent transport connections; our campuses are well
located for the underground and National Rail making them easily accessible across
London and two have Crossrail stations immediately adjacent.
Open and public spaces
The scale of our campuses and retail assets means we can curate the space around
our buildings to provide places where people can relax, socialise and be entertained.
Vibrant neighbourhoods
Our London campuses are focused in some of the most vibrant and interesting parts
of London; like our retail places they have deep connections with local people, creating
a strong sense of community.
The right mix of uses and occupiers
Our places offer an appropriate mix of retail, leisure and workspace which we actively
manage to reflect changing customer preferences. This experience is informing our
planning at Canada Water where we are building a new town centre.
Flexible and affordable offer
Our retail and workspaces are attractively priced; we offer a range of floor plates,
different levels of service and more flexible leases. We actively work with customers
to evolve space in line with their needs.
Dealing with Covid-19
By responding quickly, effectively and thoughtfully to the Covid-19 crisis we demonstrated our
commitment to our customers and the communities who live in and around our places. We have
provided financial flexibility as well as practical support to many of our occupiers experiencing
challenges and our campus networks have provided an important forum for occupiers to connect with
each other. We are working with employment organisations to redirect workers to areas where there
is a clear need or to provide longer term skills and employment support to people whose livelihoods
have been affected.
48
British Land Annual Report and Accounts 2020
British Land Annual Report and Accounts 2020
49
P
R
E
F
E
R
Campus stories
Creating places to work, shop and be entertained.
At our London campuses and Canada Water
we’re curating our space to be in line with
modern London lifestyles, reflecting the needs
of the people who use it.
Broadgate is successfully appealing to a
broader range of occupiers on both new and
refurbished space, demonstrating its unique
appeal. This year we let space on the existing
portfolio to challenger bank Monzo with Bank
of Montreal and Workday among those taking
space in our newest developments. We
added new restaurants Baraka and Bar
Douro with retailers Reiss and Waterstones
also taking space. In September, Finsbury
Avenue Square was transformed by the
“Please be seated” installation for London
Design Festival and our popular Winter
Forest returned for its third year.
97%
Occupancy
£162m
Rent
50
British Land Annual Report and Accounts 2020
Regent’s Place is fast becoming
a showcase for how to build
and manage space in a more
sustainable way. Our 1 Triton
Square development will be
one of the most sustainable
buildings in London and our
public realm improvements
are adding more green space.
At 338 Euston Road we
partnered with a circular
economy specialist to refit
space for a technology occupier
while minimising their carbon
footprint and saving money,
and this year we opened a new
cafe built entirely from recycled
materials which has a more
sustainable approach to food.
See case study on 1 Triton Square
on page 8
97%
Occupancy
£80m
Rent
British Land Annual Report and Accounts 2020
51
P
R
E
F
E
R
At Paddington Central, our enlivenment
activities focused on the canal-side, which is
a unique feature of this campus. We added a
fourth floating restaurant, the Grand Duchess,
and a fifth will open this year. We hosted a
floating market for five days in August and
the London Design Festival in September.
The “Sessions” launched at Storey Club,
with activities including chocolate making,
wine tasting and a zero-waste skincare
workshop. Visa, our largest single customer
at Paddington, recommitted to the campus
this year.
98%
Occupancy
£46m
Rent
52
British Land Annual Report and Accounts 2020
At Canada Water, we were delighted to
receive a resolution to grant planning for
our 53 acre masterplan, as well as
confirmation that the Mayor of London
will not be calling in the application for
further consideration. This reflects our
successful programme of engagement
with the local community and wider
stakeholders which has resulted in
significant changes to our masterplan
over the last five years.
We continued to work with the Vibration
Group to provide a temporary world
class live music and events space at the
Printworks, significantly raising the profile
of the area and demonstrating the real
potential we have to create a cultural
hub at Canada Water. We announced
a new partnership with TEDI-London,
an education programme addressing
the skills and diversity gaps within
engineering, and we have continued to
ensure that the local community benefits
from our activities, partnering with
community organisations and our
supply chain.
“British Land demonstrated a real and proactive approach
to community engagement at Canada Water. Through events,
exhibitions, conversations and the day-to-day delivery of
community projects, British Land listened to local people
and reflected this feedback in their masterplan. They have
gone beyond the formal planning process to improve the area
for residents, for example by changing the location of the leisure
centre and the dock crossing, as well as responding positively
to our need for more social housing.”
Peter John, Leader Southwark Council
British Land Annual Report and Accounts 2020
53
MARKET INSIGHTS
Understanding our markets
Our business is well positioned to respond to the challenges and
opportunities in our markets.
Heightened economic uncertainty
Continued challenges in retail
War for talent
Forecast real GDP growth %
Online % total retail sales
Unemployment in London
40
30
20
10
0
-10
-20
-30
-40
25
20
15
10
5
0
2.1m
Jobs in the UK digital
economy
+150%
Increase in digital tech
jobs since 2015
8
1
0
2
4
Q
9
1
0
2
1
Q
9
1
0
2
2
Q
9
1
0
2
3
Q
9
1
0
2
4
Q
0
2
0
2
1
Q
0
2
0
2
2
Q
0
2
0
2
3
Q
0
2
0
2
4
Q
1
2
0
2
1
Q
1
2
0
2
2
Q
1
2
0
2
3
Q
1
2
0
2
4
Q
0
1
N
A
J
1
1
N
A
J
2
1
N
A
J
3
1
N
A
J
4
1
N
A
J
5
1
N
A
J
6
1
N
A
J
7
1
N
A
J
8
1
N
A
J
9
1
N
A
J
0
2
N
A
J
Source: Office for Budget Responsibility, April 2020
Source: ONS
Source: Technation
Covid-19 has introduced an unprecedented
level of uncertainty for our business and
our markets. It is extremely difficult
to quantify how deep or how prolonged
its effect will be and consequently
estimates of the economic impact vary
significantly. In the short term, it has
fundamentally changed the way people
work and shop and it is not yet clear
whether or to what extent these changes
will become permanent.
Already this uncertainty has caused
occupational and investment markets
across our business to stall. For Offices,
the fundamental attractions of London
remain sound so recovery, when
restrictions are lifted, is expected to
come sooner, but the impact may be
more prolonged in Retail.
These challenges come at a time
when our trading relationship with
the EU has yet to be formerly defined,
creating an additional layer of
uncertainty for UK businesses.
Our response
We have actively strengthened our balance
sheet over a number of years so are
well placed in the current environment.
We temporarily suspended the dividend
to provide further flexibility enabling us
to support those customers hardest hit.
The growth of online retail is a well-
established trend, but many retailers
have struggled to adapt their models to
this new way of shopping. This structural
theme has accelerated as a result of
Covid-19 which saw more people shop
online than ever before. At the same
time, with people obliged to stay at
home, they saw fewer reasons to shop
for non-essentials, such as new clothes
or beauty products.
As a result, several operators whose
business models were already struggling,
entered CVA or administration. In the
short term, many businesses have
benefitted from landlord or Government
support, but how long this can remain in
place is not clear. Longer term only
businesses which successfully evolve
their offer to be compatible with online
will be successful.
Our response
We are working with retailers throughout
the Covid-19 crisis to support successful
businesses which are struggling at this
time. We offered rental waivers to small,
retail, food & beverage, and leisure
operators and for larger businesses
affected by the crisis, we deferred rents.
Longer term, retail has an important
role to play within our mixed use
environments but we are committed to
reducing our overall retail exposure.
Notwithstanding the impact of Covid-19,
the war for talent in London is having a
real influence on the type of space
occupiers are looking for.
London and the South East host more
than half of European HQs for the
world’s largest 500 companies and in
2019, London received $9.7bn of venture
capital funding into the technology sector,
ranking it fourth globally. This reflects
London’s exceptional pool of talent,
spanning finance, technology and
creative industries. With many sectors
competing for the same skills, it has
become harder to attract key talent.
In this context, employers are using
new and different means to appeal to
employees. This includes office space
which supports their wellbeing, more
flexible ways of working and a more
green and ethical approach to business.
Our response
Our newest developments deliver
high quality, technology-enabled space.
At 100 Liverpool Street, we are on track
to receive a WELL Gold Certification for
wellbeing and a WiredScore platinum
rating for internet connectivity. 100% of
our current new developments are on
track to achieve BREEAM Excellent
rating and all future developments will
be net zero carbon.
54
British Land Annual Report and Accounts 2020
Focus on sustainability
Social inclusion
Role of technology
Indicative relationship between
operational and embodied carbon
emissions for offices
Whole life operational
carbon emissions
Whole life embodied
carbon emissions
Embodied emissions to practical completion
Embodied emissions from fit out,
refurbishment and deconstruction
Operational emissions from energy use
What makes a successful place
Why companies invest in PropTech %
Sociabilit y
Users & a
c
t
i
v
i
t
i
e
s
Place
A
c
c
e
s
s
& linkage
e
g
C o m f o rt & ima
70
60
50
40
30
20
10
0
e
v
o
r
p
m
I
i
s
e
c
n
e
c
i
f
f
e
i
t
s
o
C
n
o
i
t
c
u
d
e
r
e
v
o
r
p
m
i
i
g
n
k
a
m
n
o
s
c
e
d
i
I
e
v
o
r
p
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I
r
e
m
o
t
s
u
c
t
n
e
m
e
g
a
g
n
e
w
e
n
s
n
o
i
t
u
l
o
s
e
t
a
e
r
c
-
o
C
e
u
n
e
v
e
r
i
e
s
m
i
x
a
M
t
e
s
s
a
e
v
o
r
p
m
I
e
c
n
a
m
r
o
f
r
e
p
Source: RIBA, British Land
Source: Project for Public Spaces
Source: KPMG
This year, the urgent need to address
climate change attracted media and
public attention on an unprecedented
scale. With buildings and construction
together accounting for nearly 40% of
global CO2 emissions, our industry has a
real responsibility to act quickly. Not only
is this the right thing to do, it is
increasingly what our shareholders and
our customers expect, and we believe
will drive commercial advantage.
By reusing existing materials, which is
everything from the building’s structure
to its furniture, and by sourcing any new
materials responsibly, we can minimise
the carbon impact of development. With
more thoughtful construction, leveraging
technology to deliver operational
efficiencies, we can further reduce
emissions over a building’s lifetime.
As an industry, we have come together to
tackle climate change, pledging to deliver
net zero carbon portfolios through a
Climate Change Commitment launched
by the Better Buildings Partnership.
Our response
Our 2030 sustainability strategy, includes
a commitment to achieving a net zero
carbon portfolio by 2030. This supports
our business with research by JLL
demonstrating that sustainability can
drive value through higher rents and
faster leasing.
There is a growing expectation that
operators of public space have a
responsibility to the wider community to
create places that have a positive impact.
This is particularly evident during the
Covid-19 crisis when many property
companies responded proactively,
providing financial and practical support
to businesses and communities in need.
Longer term, there is an expectation that
places are inclusive. This may include
the provision of social housing, alongside
green and open spaces, places for
communities to come together and
opportunities for learning, development
and employment.
Operators of public space also have a
responsibility to ensure fair and ethical
practices throughout their supply chain,
including fair pay for those working
across their spaces.
Our response
Our 2030 sustainability strategy sets out
a clear plan to grow social value and
wellbeing and includes clear metrics
against which we will measure our
performance. We promote ethical
working practices through our Supplier
Code of Conduct.
Today, real estate is a more customer
focused business with technology
playing an increasingly important role
in improving the user experience.
Data collection and analysis is at the
heart of this. Data can demonstrate how
space is used, helping us refine our offer
to meet more of our customers’ needs.
For example, data-driven insights can
help to identify the right mix of uses and
the right operators for our schemes.
Technology can also help us personalise
space, potentially generating improved
efficiencies for us and our customers.
Importantly, technology has a role to
play in delivering buildings which are
more sustainable, for example by
monitoring carbon emissions and energy
usage and innovating to find ways to
reduce that impact.
Our response
Our dedicated Smart Places team is
focused on delivering digital placemaking
in our developments and evaluating
opportunities to enhance the digital
capabilities of our standing portfolio.
Our investment into Fifth Wall, a PropTech
fund, keeps us alert to the wider
possibilities in this space.
British Land Annual Report and Accounts 2020
55
PERFORMANCE REVIEW
Market backdrop
Our operations are entirely located in the UK, so were unaffected by
Covid-19 for the first 11 months of the financial year. This review provides
context for our performance across the year ended March.
However, a number of these deals
have since fallen away and activity was
effectively halted as a result of Covid-19
with increased uncertainty around values.
Demand for superstores was good
throughout the year and there remains
investor appetite for assets with alternative
use, including standalone assets.
The occupational market remained
tough throughout the year and deteriorated
with Covid-19. Many of those with good
underlying business models have suffered
and despite significant support from
many landlords and the Government,
the outlook is uncertain and several
operators have since entered CVA or
administration. Retail deemed essential,
including supermarkets and pharmacies,
have performed better and across the
market there is a renewed focus on
supply chain and distribution networks.
A preference is also emerging for space
which is sustainable with the rental
premium for buildings which are rated
BREEAM Outstanding or Excellent
estimated by JLL to be c. 10% in central
London. Flexible workspace continues to
be important, and accounts for 12% of
take up, although certain business
models particularly those who do not own
their own space, were struggling even
prior to Covid-19, and for these operators,
the current environment is proving
particularly challenging. Activity slowed in
March and looking forward, polarisation
towards high quality, well located space is
likely to accelerate. Supply is relatively
constrained in these markets and
pre-letting levels have remained healthy,
with 61% of development under
construction already taken.
Retail market
Retail markets remained challenging.
Investment volumes were low with
investors very cautious on value given the
challenges faced by occupiers while certain
sellers are known to be under pressure,
driving down pricing. Liquidity slowly
returned to the retail park market, with
several transactions announced in early
2020, albeit at relatively wide yields.
Macro-economic context
The backdrop remained volatile
throughout the year, reflecting continued
Brexit uncertainty and a fast-changing
political environment including December’s
General Election. The decisive election
result and subsequent greater clarity on
Brexit improved confidence, but this
dropped markedly as the Covid-19 situation
developed through February and March.
Most shops selling non-essential goods
and services, including entertainment,
dining and leisure remain closed.
The longer term economic impact of
these restrictions is expected to be
significant, albeit hard to quantify and
despite Government support, the Office
for Budgetary Responsibility’s illustrative
projections are for GDP to decline 13%
in 2020, with an improvement in 2021
(based on 14 April 2020 report).
London market
The London investment market was
subdued in the first half of the year with
investors cautious pending greater clarity
on Brexit, but there was a notable uptick
in activity after the election with £4.4bn
of Central London deals in the quarter to
December 2019, and yields were widely
expected to contract. However, in the wake
of Covid-19, a number of transactions
were cancelled or postponed, leading to
a drop in volumes for the quarter to
March 2020. While confidence may be
impacted in the short term, longer term
the market is underpinned by sound
fundamentals and in the context of
global uncertainty, London real estate
is considered a relative safe haven.
These factors should support the
investment market longer term.
Occupier demand for high quality, well
located space remained strong throughout
the year. Take up in our markets was up
2% in the year, ahead of the long term
average and prime rents increased
moderately in both the City and the West
End to £73 psf and £110 psf, respectively.
Glasgow Fort
56
British Land Annual Report and Accounts 2020
Our Strategy
Our long term strategic focus remains unchanged, but we will evolve or
adapt our strategy as appropriate.
A Mixed Use Specialist
We have a clear long term strategy to build an increasingly mixed use business.
We expect many of the macro trends we
have built our strategy around to
accelerate as a result of the current
crisis, so our long term strategic focus
remains unchanged. However, it
remains early days and we do not yet
have clarity around what long term
trends will emerge so we will remain
alert as things develop and flexible in our
approach, including evolving or adapting
our strategy as appropriate.
Why mixed use?
We recognise that the way people use
real estate is changing and that the most
effective way to drive enduring demand
for our space is to evolve our offer in line
with those trends. In the wake of Covid-19,
there is likely to be an increasing
emphasis on workspace which is high
quality, modern and supports more
flexible working; places which benefit
from green and open spaces are also
more likely to be preferred. The ability to
shop quickly and efficiently near to the
place of work is a key advantage in the
short term, and long term, people will
again want opportunities to socialise or
be entertained nearby. There is also a
growing expectation that businesses and
Progress on our strategy
Key focus areas and indicative business mix
Progress
places of work minimise their impact on
the environment and make a positive
contribution to local communities.
Workspaces which meet these expectations
help businesses attract and retain talent
and support productivity and effectiveness.
Our scale and unique network also mean
we have the flexibility to re-allocate uses
within our places over time to better
reflect the needs of our customers as
they change and ensure that we always
make the best use of our space.
How does it deliver value?
A successful mixed use strategy,
with strong environmental and social
credentials is fully aligned to the evolving
needs of our customers and how people
use our places. By helping drive enduring
demand for our space, it supports the
delivery of long term sustainable value
through rental growth and high occupancy.
At our campuses and multi-let spaces
we control not just the buildings, but the
spaces between them. As such,
investment we make into the broader
environment has a positive impact on the
value of our individual assets. As long
term owners and managers of space,
we are also fully incentivised to develop
buildings which are sustainable and
to invest in local areas to support the
local communities around which we
operate; we believe that by playing a
role within a thriving local community,
our places are better able to succeed.
How are we delivering it?
We have a clear and consistent plan to
reshape our business to comprise three
core, complementary elements as part
of an increasingly mixed use business:
– Campus focused London offices: with
a blend of core and flexible space,
including the further build out of Storey,
integrated alongside a world class
retail and leisure offering
– A smaller, more focused Retail
portfolio: high quality, accessible
and well located assets which are
affordable to retailers and can play a
role facilitating online fulfilment such
as click and collect. In London, assets
focused on transport hubs, especially
assets with mixed use potential
– Canada Water and Residential: plans
for 3,000 homes at Canada Water
with further opportunities within
our portfolio
Campus focused London Offices
60-65%
Including Storey c.5%
– Progressing development on our campuses and de-risking through pre-lets with 88% of our
recently completed and committed developments now let to a broad range of occupiers
– Creating options with 760,000 sq ft of planning applications submitted
– Storey operational across 297,000 sq ft on all three campuses with further 90,000 sq ft identified
– Smart-specific guidance documents produced for internal teams and supply chain; smart-enabled
our head office bringing building systems and sensors into a single cloud environment, which will
enable us to control and manage space remotely; selected partner to deliver our Campus app
Refocused Retail
25-30%
– £296m assets (our share) sold since April 2019, 5% above book value
– Outperformance on footfall and sales
– Focusing on assets which support instore fulfilment and click and collect
Canada Water & Residential
c.10%
– Completed on eight units in the period at Clarges with one unit remaining at a book value of £3m
– Achieved resolution to grant planning at Canada Water and confirmation that the Mayor will not
call in the scheme, positioning us to progress our masterplan which includes 3,000 new homes
– Aldgate Phase 2, a BTR scheme delivering 159 units added to our near term pipeline with planning
on the building now agreed
Business mix percentages have been revised downwards to reflect retail valuation declines.
British Land Annual Report and Accounts 2020
57
A smaller, more focused
Retail portfolio
In the context of rapid and fundamental
structural change in retail, which could
be accelerated as a result of Covid-19,
we plan to reduce this part of our
business to 25-30% of the total portfolio
over the medium term. Retail will
remain a significant part of British Land
reflecting our longer term view that as
part of an increasingly mixed use
business, the right assets in the right
locations will succeed. These include
high quality, accessible and well located
assets which are affordable to retailers
and can play a role facilitating online
fulfilment such as click and collect; in
particular, retail parks which are more
conducive to mission-based shopping
and are open air, so people may feel
more comfortable visiting. In London, we
will focus on transport hubs, especially
those assets with mixed use potential.
We have made £296m of retail disposals
(our share) in the year, bringing total
retail sales since we set out our plan in
November 2018 to £610m but with more
to do. Future sales will be selective and
primarily comprise solus assets, with
limited asset management potential,
and some multi-let centres, particularly
those outside London which do not fit
our longer term strategy. In the context
of today’s valuations, our focus is on
intensive asset management, keeping
our assets full and exploiting demand for
assets which support instore fulfilment
and click and collect, so we expect
progress on sales to be slower near term.
Residential
Residential is complementary to our
existing expertise and longer term will be
additive to our mixed use strategy. We see
most potential to build exposure in this
market at Canada Water where we have
potential to deliver 3,000 homes; other
opportunities in our portfolio, include
Aldgate Phase 2, in our near term pipeline.
Building this business organically is the
most effective way of ensuring that our
product is high quality, reflects our
strategy, adheres to the highest standards
of safety and sustainability but inevitably
means that it will be delivered over a
longer time frame.
PERFORMANCE REVIEW CONTINUED
Campus focused London offices
At our London campuses, we create and
manage some of the best connected, most
accessible space in London. Located in
vibrant and exciting neighbourhoods,
they provide world class, modern and
sustainable offices alongside public
spaces, with a range of places to spend
time outside of work. These unique
campus benefits are the result of
specific investment over many years
and represent a clear attraction to
businesses seeking to hire and retain
the best people.
Increasingly what differentiates our
space is the range of product and depth
of services we provide. We have evolved
our offer to attract a much broader
range of industries and occupiers and to
cater to their changing needs over time.
Our menu of products spans more
traditional core space, typically on long
term leases, with a range of services
priced on a bespoke basis; to fully fitted
and furnished, generally on a short
to medium term lease, with a basic
package of services; to Storey, our fully
serviced, flexible workspace offer.
Storey is deliberately differentiated from
other flexible offerings in allowing
occupiers to personalise their space
through their own branding while
benefitting from the shared amenities in
the building and on our campuses. It has
helped attract new types of occupier to
our campuses, particularly tech and
creative businesses who benefit from
being located around some of the
world’s leading financial, legal and
professional companies. Storey has also
become a valued service for existing
occupiers on our campuses, providing
overflow or project space, and through
Storey Club at Paddington, we offer ad
hoc meeting and events space to all our
Paddington occupiers.
Paddington Central
58
British Land Annual Report and Accounts 2020
Sustainability – launch of 2030 strategy
Completion of 2020 strategy
At the end of FY20, we concluded our
five-year sustainability programme,
which drove progress across multiple
environmental and social factors. We were
particularly pleased to achieve a 73%
reduction in carbon intensity, exceeding
our target of 55% against our 2009
baseline, and a 55% reduction in energy
intensity in line with our target of 55%.
The programme helped us make
sustainable new buildings our standard,
with 100% of British Land’s current new
developments on track for BREEAM
Excellent or above ratings, and in the
last year we achieved a further step
change by prioritising retro-fit above
demolition. At 1 Triton Square, Regent’s
Place, we have saved 36,000 tonnes of
embodied carbon compared to a typical
new build and will achieve a 40% reduction
in operational emissions, which we expect
to result in an Outstanding BREEAM
rating. At Broadgate’s 100 Liverpool
Street we expect an Excellent BREEAM
rating due to the retro-fit, alongside
WELL Gold certification and a WiredScore
platinum rating for internet connectivity.
Our ability to support the communities
where we operate has increased
through the programme. We have
supported 1,745 individuals into
employment, exceeding our target of
1,700 and 96% of strategic suppliers
have now adopted our Code of Conduct,
mandating responsible business practices
throughout operations associated
with British Land. Our long-standing
partnership with the National Literacy
Trust has now helped 42,700 children
improve their reading ability.
Looking forward
As we conclude our 2020 programme,
we are pleased to launch our new
targets for 2030. Building on the
momentum we have established over
the last five years, these targets will be
similarly stretching and will focus on two
areas where action is most urgent:
1
Creation of a Net Zero Carbon
Portfolio by 2030
The main drivers of this will be:
– All developments delivered after April
2020 to be net zero embodied carbon
– A 50% reduction in embodied carbon
emissions at our developments, to
below 500kg CO2e / m2 by 2030
– A 75% reduction in operational carbon
emissions across our portfolio by 2030
– Creation of a Transition Fund,
resourced by an internal carbon
fee at £60/tonne levied on new
developments, to finance retrofitting
of our standing portfolio, including
research and development.
To bring focus to operational
performance, we undertook a pilot
certification of seven assets under
BREEAM In Use. We will certify a further
30 assets over the next 24 months and
have underpinned this goal with the
announcement in March of a £450m
ESG linked Revolving Credit Facility that
requires a continual increase in green
building certifications.
With a growing number of London
businesses making firm commitments
to reduce their carbon footprint, strong
sustainability credentials are an
increasingly relevant and important part
of our overall leasing offer. Research
from JLL demonstrates that buildings
rated BREEAM Outstanding or Excellent
generally achieve a premium of c. 10%
compared to prime rents, and 24 months
post completion achieve a lower vacancy
rate of c.7% compared to c.20% for a
building rated Very Good.
2
A place-based approach to
social contribution
As a long term investor in places,
we help build relationships with local
people and organisations that generate
mutual benefit. Examples include our
Recruitment & Skills centre at Fort
Kinnaird and our Community Fund at
Regent’s Place. We will now adopt this
place-based approach across our entire
managed portfolio, deepening connections
between stakeholders – ourselves, our
communities, customers and supply
chain partners – in pursuit of a shared
local goal. Using the framework of our
Local Charter, our ambition is to increase
the resilience and community experienced
by everyone in and around our places,
so the benefit is shared widely.
Our reporting will also shift over time
from focusing on British Land’s input
to the social outcomes that result from
our approach.
We will run three pilots building on our
work at Regent’s Place and Fort Kinnaird.
Through these we will define common
parameters and support for our place
teams, enabling decisions to be devolved
to a local level.
Supporting communities
through Covid-19
Supporting local communities has been
at the heart of our response to Covid-19.
In 2008 we established a community
investment fund, which now commits over
£1.3m of funding annually through which
we have provided support to those most in
need. We were able to swiftly deploy part
of the fund to support our communities
through the crisis. We funded expert
strategic advice for the leadership teams
of our partners from the CASS Centre for
Charity Effectiveness to help them deal
with the crisis, as well as funding bespoke
employment support programmes
through organisations such as the East
London Business Alliance for those whose
livelihoods were affected. Elsewhere we
helped individuals to develop new skills
and donated equipment to support
non-profit organisations to work
effectively from home. In 20 of our places,
we also worked with the National Literacy
Trust to support vulnerable families with
home schooling to maintain their
children’s progress.
Commitment to leadership
Our continued strong sustainability
performance is reflected in our rankings
in ESG indices, including a green star
rating for the tenth consecutive year in the
Global Real Estate Sustainability
Benchmark (GRESB), AAA rating in MSCI,
96th percentile in Sustainalytics for our
sector, and inclusion in FTSE4Good and
Dow Jones Sustainability Indices (DJSI)
2019. We have been a signatory to the UN
Global Compact since 2009 and will
continue to support human rights, fair
labour practices, good environmental
performance and oppose corruption
through our strategy, governance and
business operations.
See page 40 for more details on our 2030 strategy
British Land Annual Report and Accounts 2020
59
PERFORMANCE REVIEW CONTINUED
Business Review
Portfolio valuation
£11.2bn
Occupancy
96.6%
Portfolio performance
At 31 March 2020
Offices
Retail
Canada Water
Residential
Total
Valuation
£m
6,773
3,873
364
147
11,157
Valuation
movement
%
ERV movement
%
Yield shift
bps
Total property
return
%
2.3
(26.1)
9.8
(2.7)
(10.1)
3.2
(11.7)
na
na
(4.7)
-4
+101
na
na
+38
5.7
(22.6)
14.3
(0.1)
(6.4)
Weighted average lease length to
first break
5.8 years
Total property return
(6.4)%
ERV movement
(4.7)%
Valuation movement
(10.1)%
In addition, throughout the year there
has been little transactional evidence,
particularly for larger lot sizes. As a
result, we have seen significant outward
yield shift for prime assets. There were
signs towards the end of the financial
year that limited activity was returning to
the retail park market, with a number of
transactions announced, but this was
superseded by the impact of Covid-19.
Canada Water valuation increased 9.8%
reflecting good progress on planning,
albeit the value declined slightly in the
second half as a result of the impact of
Covid-19 on the retail existing use element
of the valuation. This effect should
unwind on drawdown of the headlease
and the adoption of a development
valuation for the masterplan.
Offices outperformed the Central
London Office benchmark and the
All Offices benchmark. However, Retail
underperformed the benchmark which
saw the strongest performances from
superstores and high street shops.
As a result and reflecting the continued
strength of industrials where we have no
exposure, the portfolio underperformed
the IPD All Property total return index by
600bps over the year.
Overall, the portfolio was down 10.1% in
value. All of our valuation reports include
a “material valuation uncertainty”
disclosure. This states that valuers can
attach less weight to previous market
evidence for comparison purposes, and
thus less certainty – and a higher degree
of caution – should be attached to their
valuations than would normally be the
case. The valuers clarify that this does
not mean that the valuations cannot be
relied upon.
We delivered a value increase of 2.3% in
Offices, led by developments (+7.5%),
and supported by good ERV growth,
which reflected a lack of quality supply in
all submarkets, with ERVs in the City up
4.5% and up 2.4% in the West End. While
we have seen some variation between
the campuses, with the value of
Broadgate +4.7% and Paddington
Central +1.9%, these were driven by
campus-specific lease events.
Retail values declined 26.1% reflecting
ongoing structural challenges
compounded by the impact of Covid-19.
Our third party valuers made Covid-19
adjustments in respect of their FY20
valuations which included the following
and together these adjustments
accounted for a c.6% valuation decline:
– deducted three months rent roll on all
non-essential retail as a capital sum
– non-contractual income such as
commercialisation deducted as a
capital sum for a period of six months
– increasing yields by between 25-100bps
based on the quality of the scheme
and current yield profile
– increasing void periods to reflect
additional leasing time
– increasing structural vacancy
60
British Land Annual Report and Accounts 2020
Capital activity
From 1 April 2019
Purchases
Sales1
Development Spend
Capital Spend
Net Investment
Gross Investment
Offices
£m
86
–
243
69
398
398
Retail
£m
13
(296)
9
34
(240)
352
Residential
£m
Canada Water
£m
19
(86)
5
–
(62)
110
–
–
25
–
25
25
Total
£m
118
(382)
282
103
121
885
On a proportionally consolidated basis including the Group’s share of joint ventures and funds.
1. Includes Clarges residential sales of £86m, of which £6m exchanged prior to FY20.
At Aldgate, we have acquired Barratt’s
50% share in our Phase 2 build-to-rent
residential-led scheme which has now
been added to our near term pipeline.
We also completed the purchase of
6 Orsman Road, Haggerston for Storey
for £32m.
Data and insights
The insights we generate from data and
research help us to understand the
needs of our customers. This information
can play a real and fundamental role in
decision making around leasing, asset
management and capital allocation
helping to generate incremental value
for shareholders and our customers.
This year, we completed our largest ever
B2B customer satisfaction survey,
spanning retail, office and Storey
customers, including 141 senior decision
makers, 65 facilities managers and 737
store managers. The research gauged
satisfaction with us as a landlord and
collected feedback on how service had
changed over time, how we compare to
competition and what we could do to
better support our customers, and
changes were implemented as a result.
We completed the roll out of footfall
counters to our campuses, enabling us
to better understand how many people
visit and the flow around the campus,
helping us to tailor our offer, and we are
trialling machine learning to estimate
the performance of our retailers at
our campuses.
Smart Places
Our Smart Places team deliver digital
placemaking across our London
campuses, using technology to enhance
the experience and operation of our
places. We have a clear vision of the
functionality and experience that smart
should deliver for our customers.
Through the course of this year we have
engaged with our supply chain to provide
clear guidance on how to design and
specify smart technology in line with our
expectations during development and
fit out. We smart-enabled our head office
in York House, bringing building systems
and sensors into a single cloud
environment, which will enable us to
control and manage space remotely,
giving us much greater understanding
and control over how our building
operates, allowing us to find efficiencies
with both energy usage and space
utilisation. We have selected Equiem
as a partner to deliver a campus app,
initially at Broadgate, with the aim to roll
out across our other London campuses
in 2021. This builds on the experience
we had during FY20 developing and
publishing the StoreyPortal app across
Storey and Storey Club which gave users
a seamless interface to book meeting
rooms, arrange catering, book in guests
and access space. Reflecting this
good progress, we were thrilled to win
“Best Adoption of Tech” at the 2019 UK
Proptech awards.
The total gross value of our investment
activity since 1 April 2019 was £885m
with retail disposals accounting for
£296m (our share). Our sale of 12
Sainsbury’s superstores to Realty
Income Corporation in April 2019 for
£429m (our share £194m) was the
largest single component of this and was
achieved at a modest premium to book.
In line with strategy, we have continued
to make sales from our standalone
(solus) portfolio, including a leisure
asset and a Homebase both of which
sold significantly ahead of book but have
been more pragmatic on other assets
with a standalone Debenhams and a
Sainsbury’s superstore sold below book.
Post year end, we agreed the sale of a
standalone Tesco in Brislington on an
unconditional basis at book value
(£42m), with completion expected later
this month. We also exchanged and
completed on the sale of our share of a
portfolio of reversionary interests in
Sainsbury’s superstores for £102m.
The most notable purchase in the
year was a 25% interest in West One,
a shopping centre and offices building,
above Bond Street station. This 92,000 sq
ft scheme provides attractive long term
potential and is in line with our plan to
become an increasingly mixed use
business. Working with Norges who
retain ownership of 75% we will assume
responsibility for the asset management
and any future development, generating
a fee income.
At Clarges, we completed on the sale of
eight units, bringing total completed
units to 33 with receipts totalling £446m.
This leaves one unit remaining, valued at
£3m. This has been a highly successful
scheme, delivering profits of c.£200m
to date.
British Land Annual Report and Accounts 2020
61
PERFORMANCE REVIEW CONTINUED
Campus focused London offices
Campus operational and
financial highlights
– Portfolio value up 2.3%, with the
City up 3.7% and the West End
up 1.4%
– ERV growth of 3.2% across the
portfolio, with the City strong,
+4.5% and the West End +2.4%
– Yields saw 14bps contraction in
the City and no change in the
West End
– Activity generating like for like
income growth of 0.8%
– Leasing activity covering 946,000
sq ft representing £40m of rents
– New lettings and renewals on
investment portfolio signed 9.1%
ahead of ERV
– 360,000 sq ft rent reviews agreed
6.5% ahead of passing rent
adding £1.1m to rents
– Occupancy of 97.3%
Campus operational review
81% of our Offices are located on our
three central London campuses, each
benefitting from excellent transport
connectivity and vibrant local
neighbourhoods which are an important
part of their appeal. Building on this, our
strategy is focused on expanding the mix
of uses, to enhance the retail, dining and
entertainment offer, embedding our
places more firmly within the local
community and appealing to a broader
mix of occupier.
We agreed 946,000 sq ft of new lettings
and renewals in the period, overall 9.1%
ahead of ERV as our high quality, well
located space continued to drive a
premium. Leasing activity inevitably
slowed in the final month of the year, but
we are under offer on 220,000 sq ft and
in negotiations on another 160,000 sq ft.
We are continuing to conduct virtual
viewings and have responded to 375,000
sq ft of new RFPs since the crisis began.
Each of our campuses has remained
open and fully operational throughout
the Covid-19 outbreak although physical
occupancy was significantly reduced
with the majority of people working
from home.
Broadgate: Continued strong leasing
Our 1m sq ft development programme at
Broadgate is nearing completion and is
now 83% let. We have also let well on
our standing portfolio, with 51,000 sq ft
of leasing at Broadgate Tower, and
challenger bank Monzo taking 124,000
sq ft at Broadwalk House.
At 100 Liverpool Street (524,000 sq ft),
Bank of Montreal committed to 60,000
sq ft and Japanese Bank SMBCE
increased their commitment by 22,000
sq ft taking their total occupation to
184,000 sq ft. As a result, the office
space is now 84% pre-let. In retail, we
also made good progress this year, we
signed L’Occitane, John Reed Gyms,
Tommy Hilfiger, Monica Vinader and
Space NK in the second half and are
under offer on three restaurants. Sitting
at the entrance to Liverpool Street and
the new Crossrail station, these are
prime retail locations.
At 1 Finsbury Avenue (287,000 sq ft),
which completed at the end of FY19, we
are under offer on a third restaurant and
a leisure operator, which will join two
existing restaurants. Technology firm
Workday also signed for 29,000 sq ft in
the second half; and 73,000 sq ft is
allocated to Storey.
At 135 Bishopsgate, which reached
practical completion in the second half,
we let 9,700 sq ft to FinTech operator
FNZ and are under offer on a further
20,000 sq ft, leaving only 7,000 sq ft
(representing 10% of space) available to
let. Post completion works are well
underway, albeit progressing more
slowly due to Covid-19 restrictions.
Rent reviews with existing occupiers
were agreed on 57,000 sq ft, 10% ahead
of passing rent and the campus is
virtually full, with occupancy of 97%.
Overall, we delivered a valuation uplift of
4.7% reflecting ERV growth of 5.0% and
yield contraction of 14bps.
Broadgate
62
British Land Annual Report and Accounts 2020
Paddington Central: Recommitment
of largest occupier
At Paddington Central, the key leasing
event was Visa’s recommitment to
1 Sheldon Square with the term
extended by six years, demonstrating
that the work we have done here is
delivering results. We are improving the
variety of our F&B offer. The Grand
Duchess floating restaurant and a fifth
barge, The Cheese Bar, will launch when
conditions allow, further enhancing the
waterfront and helping to create a dining
destination along the Grand Union Canal.
We delivered a valuation uplift of 1.9%,
with yield contraction of 1bp. ERV growth
at 0.9%, was reduced by the valuer’s
treatment of Visa’s lease extension
which changed from a headline to a net
effective basis, although the Visa rent
was increased. Occupancy is 98%.
Regent’s Place: Repurposing
existing space
Consistent with trends at Broadgate and
Paddington Central, existing space is
also letting well at Regent’s Place with
45,000 sq ft let to Skyscanner at 338
Euston Road and Mind Gym, a learning
and development specialist taking space
at 350 Euston Road. We have continued
to strengthen our retail offer with space
let to Acai Berry, the Amazon Boost
Superfood Bar and renewed leases to
Starbucks and Daisy Green. We opened a
new café at 17-19 Triton Square entirely
built from recycled materials with a
more sustainable approach to food, and
we are on site with a programme of
public realm improvements, including a
new community park.
The value of Regent’s Place was up
2.6%, with yield contraction of 1 bp
and ERV growth of 3.6%. Occupancy
is at 97%.
Storey: our flexible workspace brand
Storey, our flexible workspace solution,
launched three new buildings over the
year, bringing the total space operated to
297,000 sq ft. It is a deliberately
differentiated concept providing high
quality private workspaces in great
locations across London, which
customers can brand and personalise
themselves. With nearly 70% of
customers being UK/European HQs for
scale up or large multinational
companies, Storey appeals to businesses
with 50+ people on average, who want
larger floor plates, lower density and
private meeting spaces. Now in its third
year, Storey provides an additional level
of flexibility and service for British Land
customers, becoming an integral part of
London campuses, supporting our
“core-flex” strategy.
Occupancy across stabilised buildings
was 92% at year end and remains
unchanged. Progress at new buildings
has been encouraging, including 1FA
where we have let space to 11:FS,
a digital financial services firm for banks.
At Wells Street, our first standalone
building, we are fully let with a recent
letting to data management firm
Datastax. Average lease lengths are
now 26 months to term certain and
retention rate is 68% based on lease
events, with a further 19% of customers
having expanded within Storey.
Storey Club, which offers ad hoc
workspace, meeting and dining rooms,
launched at Paddington Central in the
year. This has proved a popular resource
with 80% of Paddington occupiers having
made chargeable bookings as well
as hosting events and workshops
aimed at campus occupiers and the
local community.
Looking forward, we are committed to a
further 90,000 sq ft across 2 Kingdom
Street, 6 Orsman Road and 100 Liverpool
Street, which is nearing completion and
will include Storey Club space.
Paddington Central
British Land Annual Report and Accounts 2020
63
PERFORMANCE REVIEW CONTINUED
Smaller, more focused Retail
Retail operational and
financial highlights
– Total Retail portfolio value down
26.1% reflecting ongoing
structural challenges and the
early impact of Covid-19
– Yield expansion of 101bps; ERVs
down 11.7%
– Leasing activity 1,361,000 sq ft
– Deals of more than one year
were 4% below previous passing
rent; retention rate of 72%
– Further 1.2m sq ft of rent reviews
agreed with existing occupiers,
3.6% ahead of passing rent
– High occupancy maintained
at 95.7%
– Like for like income down 5.1%
primarily due to the impact of
CVAs and administrations
– CVAs and administrations
reducing annualised contracted
rent by £11.3m
– Footfall down 2.3% for the year,
460bps ahead of benchmark;
like for like sales down 2.1%,
390bps ahead of benchmark
– £296m (British Land share)
non-core assets sold since
April 2019
Performance review
Operational performance
With markets challenging, even prior to
the impact of Covid-19, our focus has
been on driving operational performance
and keeping centres full. This has
required a more pragmatic approach at
some locations but we have maintained
occupancy at 96%, leasing 1,361,000 sq
ft, with leases greater than one year on
average 4% below previous passing rent,
with an average lease term of 6.7 years
and average incentives of 10 months.
We have seen an increased proportion of
temporary deals (less than one year),
particularly where units have become
vacant at short notice as a result of CVAs
or administrations – these now account
for 28% based on headline rents.
At Meadowhall, we signed 15 long term
deals, overall 7% below previous passing
rent. New additions included Rituals,
Frasers, Lovisa and Deichmann.
Elsewhere on the portfolio, we agreed
four new leases with Wren Kitchens, two
with Superdrug as well as new deals
with Marks and Spencer at Giltbrook,
Nottingham, Lidl at Orbital, Swindon and
Boots at Nugent, Orpington.
We have continued to outperform
on footfall and like for like sales,
which were down 2.3% and 2.1%
respectively reflecting the market,
but were 460bps and 390bps ahead
of benchmark. In the period since the
lockdown, from 23 March until 10 May,
footfall was down 78%, 700 bps ahead
of benchmark and like for like sales
were down 82%. Grocery anchored sites
performed better, with footfall down 70%
and sales down 42%.
CVAs and administrations
CVAs and administrations impacted
118 units in the year of which 29% were
unaffected; rent reductions resulted in a
loss of £5.5m in contracted rent, with
store closures accounting for a further
£5.8m, together totalling £11.3m on
an annualised basis. Several of our
customers entered administration
post year end, including Debenhams,
accounting for a further £5.1m of lost
contracted rent.
Capital activity
In November 2018 we set out a clear
plan to refine our Retail portfolio to
deliver a smaller, more focused
business representing 30-35% of total
assets, we have revised this to 25-30%
given the subsequent reduction in
values. Since November 2018, we have
made £610m (our share) of retail sales
with £296m (our share) achieved this
year. The sale of 12 Sainsbury’s
superstores to Realty Income
Corporation accounted for the majority
(£194m British Land share) but we also
sold a leisure asset in the first half and
four solus retail assets towards the end
of the second half.
“The main reason we have heavily
committed to the centre is that
we believe it’s the best shopping
centre in the country, not only
because it offers our customers
a fantastic shopping experience
but because the centre is managed
by amazing people that are
approachable, supportive and
professional. As you rightly say these
are unprecedented times
and we would like to thank everyone
in the Broadgate and British Land
teams for the invaluable support.”
Independent retailer,
Meadowhall
Meadowhall
64
British Land Annual Report and Accounts 2020
Development
At 31 March 2020
Recently completed
Committed
Near term
Medium term
Sq ft
‘000
Current Value
£m
Cost to complete
£m
730
890
1,007
6,861
411
763
228
2
76
605
ERV
£m
20
42
49
ERV
let
£m
17
37
–
On a proportionally consolidated basis including the Group’s share of JVs and funds (except area which is shown at 100%).
Portfolio
Developments are a key element of our
investment case as a fundamental driver
of sustainable value and growth for the
long term. Recently completed and
committed developments total 1.6m sq ft
and are now 88% let, securing £54m of
future rent. This means that speculative
exposure is low at 0.6% of portfolio value
and costs to come on our committed
pipeline are £76m.
Our approach has been to create
opportunities for development across
our portfolio and in London, where long
term fundamentals are strong and there
are limited opportunities to acquire
assets with development potential,
this is a key competitive advantage.
In addition, the majority of space in our
development pipeline is either income
producing or held at low cost, enhancing
our flexibility, so we have attractive
options we can progress as and when
appropriate. If we were to commit to
our near term pipeline, our speculative
exposure would increase to 7.7%,
below our internal risk threshold for
speculative development of 8%. Although
we will not make further commitments
until we have more clarity on outlook.
Construction cost forecasts pre Covid-19
suggested that the rate of growth was
likely to be moderate compared with
long term historical trends, owing to
the continued market uncertainty
surrounding Brexit and weaker global
growth. However, since Covid-19, there
is increased market uncertainty; raw
material costs have decreased, wages
are static, low productivity is prevalent
and market consolidation is expected.
This suggests that short term tender
price inflation is likely to be very low.
This is still set against the risk that a
prolonged delay to Brexit terms being
agreed increases material costs and
reduces labour supply in 2020/21.
Therefore, the anticipated range of
cost inflation is expected to be between
2%-4% per annum. To mitigate this risk,
97% of the costs on our major committed
development programme have been fixed.
Campus developments
Our long term strategy focuses on our
London campuses. Development is an
important part of how we will deliver
that, enabling us to provide new and
refurbished space to meet the future
needs of occupiers. This has a positive
impact beyond the individual building,
which supports our overall offer and is
reflected in our leasing performance on
existing space as well as developments.
Completed developments
We reached practical completion at
1 Finsbury Avenue (287,000 sq ft) in
FY19 and 135 Bishopsgate (335,000 sq ft)
this year. At 1 Finsbury Avenue, we are
now 85% let by ERV (including let Storey
space) rising to 97% including all space
allocated to Storey. We have four retail
units left to let and all office occupiers have
now taken occupation. At 135 Bishopsgate,
we are now 90% let by ERV, with just
7,000 sq ft remaining.
Committed developments
Our committed office development
pipeline is now focused on two buildings,
100 Liverpool Street at Broadgate
and 1 Triton Square at Regent’s
Place together covering 890,000 sq ft.
We initially suspended works at both,
as a result of Covid-19 restrictions,
which has pushed out completion dates
(see Covid-19 operational update on
page 73), but work has now recommenced
albeit on a restricted basis.
100 Liverpool Street (524,000 sq ft) is 84%
let on the office space and with 45,000 sq ft
allocated to Storey, we have only 20,000
sq ft left to let. The building is on track
to achieve a BREEAM excellent rating,
a WELL Gold Certification for Wellbeing
and a WiredScore platinum rating for
internet connectivity. Sustainability has
been integral to the design and delivery
of this building; by retaining half of the
existing structure we have saved 7,200
tonnes of embodied carbon and are on
track to save a further 4,100 tonnes
through carbon-efficient design and use
of low carbon materials. More than half
of the construction spend has been with
businesses in the City and neighbouring
boroughs, ensuring local people benefit
from our development.
At 1 Triton Square, Regent’s Place,
we are fully pre-let on the office space
to Dentsu Aegis Network on a 20-year
lease. The building topped out in the
year and subject to social distancing
requirements, we are now targeting
practical completion in calendar Q2 2021.
Near term pipeline
Our near term pipeline covers more than
1m sq ft. At Norton Folgate we have
consent for a 336,000 sq ft scheme
comprising 257,000 sq ft of office space
alongside retail and residential space,
to create a mixed use development
which is in keeping with the historic
fabric of the area. Our plans envisage
a mix of floorplates, to appeal to small
and growing businesses as well as more
established organisations, particularly
in the technology and creative sectors.
We have commenced enabling works
meaning we are able to begin
construction when appropriate.
At 1 Broadgate, we have consent for a
538,000 sq ft office-led scheme, including
137,000 sq ft of retail, leisure and dining
space, connecting Finsbury Avenue
Square with retail at 100 Liverpool Street
and the Broadgate Circle.
British Land Annual Report and Accounts 2020
65
PERFORMANCE REVIEW CONTINUED
At Aldgate Place, Phase 2 is a build-to-
residential scheme delivering 159 homes
with 19,000 sq ft of office space. We have
achieved planning consent for our revised
building layout and will be submitting a
second application on the landscaping in
the coming months. We would not
expect to start on site until we have
greater clarity on the market outlook.
Medium term pipeline
We have three campus developments
in the medium term pipeline, together
covering more than 1m sq ft. These
buildings progress our mixed use
campus vision and support future
income growth.
The most significant scheme is 2-3
Finsbury Avenue at Broadgate where
our plans add 313,000 sq ft to the
existing space to deliver a 563,000 sq ft
office-led scheme. The building is
currently generating an income through
short term, more flexible lettings,
including 51,000 sq ft allocated to Storey.
At 5 Kingdom Street, Paddington Central,
our planning application to increase our
consented scheme from 240,000 sq ft to
429,000 sq ft was rejected by Westminster
City Council but has since been called in
by the Mayor and we are awaiting a
decision. The scheme includes the
opportunity to develop a former
Crossrail works site which reverts to
British Land on completion of Crossrail,
providing 80,000 sq ft of community,
retail, leisure and cultural facilities,
reflecting feedback from focus groups
and residents who we consulted on how
this space could best be used. At the
Gateway Building, Paddington, we have
consent for a 105,000 sq ft premium hotel.
Retail development:
enhancing and repositioning
our portfolio for the future
In line with our disciplined approach to
capital allocation and reflecting our
longer term view on the role of retail
within our portfolio, we do not expect to
undertake significant retail development
in the near term. We do however
maintain a range of opportunities
across our portfolio which preserve our
optionality but we would only commit
to projects which are aligned with our
strategy, most likely comprising a
mixed use element, and when market
conditions are supportive.
Completed developments
We completed our 108,000 sq ft leisure
extension at Drake Circus, Plymouth
comprising a 12-screen cinema and
14 restaurants which is 67% let.
We have no committed retail
developments.
Medium term pipeline
Our medium term pipeline is focused
on mixed use opportunities. At Ealing
Broadway, we are working up plans for
an exciting new 303,000 sq ft office-led
mixed use scheme that will sit adjacent
to our Ealing Broadway shopping centre,
outside the new Crossrail entrance.
The first step is a refurbishment of
54 The Broadway where we are on site
delivering 20,000 sq ft of offices. At Eden
Walk, Kingston (jointly owned with USS)
our consented mixed use development
plans include 380 new homes, alongside
shops, restaurants and 35,000 sq ft of
flexible office space. At Meadowhall, we
have consent for a 333,000 sq ft leisure
extension but are unlikely to progress
this in the current environment.
100 Liverpool Street
66
British Land Annual Report and Accounts 2020
Canada Water: 53 acre masterplan
for a new urban centre in Central London
Highlights
– Secured resolution to grant
planning permission for the
Canada Water Masterplan,
a 5m sq ft mixed use scheme,
unanimously supported by
Southwark Council
– Received Stage 2 confirmation
from The Mayor of London that he
will not be calling in the application
for further consideration
– Drawdown of the headlease
may be delayed due to impact of
Covid-19 on finalising the S106
Agreement; anticipated earliest
summer 2020
– Net valuation movement up
9.8% to £364m reflecting
progress on planning
“British Land’s support makes
it possible for local kids to take
football seriously. That goes
beyond the game – our players are
learning what it means to work
hard and be part of a team so
they’re developing a real sense of
community and responsibility.
British Land gave their time,
provided practical help with
our business plan and
they’re amongst our most
enthusiastic fans!”
Jamie Mehmet,
Ballers Football Acadamy
At Canada Water, we are working with the
London Borough of Southwark to deliver
a 5m sq ft mixed use scheme, including
3,000 new homes alongside a mix of
commercial, retail and community space.
The site is located on the Jubilee line and
the London Overground, making it easily
accessible from London Bridge, the West
End, Canary Wharf, Shoreditch and South
West London. It will also be an indirect
beneficiary of Crossrail, which will reduce
pressure on the Jubilee Line between
Canary Wharf and Bond Street. It covers
53 acres including the dock area,
providing 48 acres of developable land.
In September we received a resolution to
grant outline planning on the entire 5m
sq ft masterplan from Southwark
Council, including detailed consent on
the first three buildings, covering
580,000 sq ft. In February 2020, we
received confirmation from the Mayor of
London that he would not be calling in
the scheme for further consideration.
Following the completion of the S106
Agreement and issue of planning
permission, which may be delayed due to
the impact of Covid-19 on finalising the
S106 Agreement, we will be in a position
to draw down the headlease under the
terms of the Master Development
Agreement signed with Southwark
Council in May 2018, which we anticipate
being earliest summer 2020. This will
combine the ownership of our assets at
Canada Water into a single 500-year
headlease, with Southwark Council as
the lessor. At that point, British Land will
own 80% of the scheme with Southwark
Council owning the remaining 20% and
going forward, they will be able to
participate in the development, up to
a maximum of 20% with returns
pro-rated accordingly.
The resolution to grant planning decision,
which was unanimously agreed by
Southwark Council is a positive
endorsement of our programme of
engagement with the local community,
which has included over 120 public
consultations and local outreach events,
attracting over 5,000 individuals. As part
of this, we worked with Southwark
Council to develop a Social Regeneration
Charter which captures local residents’
priorities for the benefits of the
development, and proposals for how
these will be delivered.
Sustainability has been integral to our
approach from the start, and we are
committed to a strategy that ensures
the masterplan will support low carbon
living. In total, a minimum of 35% of the
53 acres will be public open space and
we will be planting more than 1,200
additional trees, both on and offsite.
Our plans will also benefit the existing
and growing local community, with
investment into education, health and
community facilities in the local area.
The first three buildings will deliver 265
homes, of which 35% will be affordable
(split 70:30 between social rent and
intermediate housing), as well as a new
leisure centre, new public spaces and
improved pedestrian connections.
Building K1 will be solely residential
while building A1 will provide a mix of
residential and workspace and building
A2 will provide workspace and the new
leisure centre. Both A1 and A2 will
include retail at ground floor.
Potential funding structures will be
explored on formal receipt of planning,
ahead of which, we are seeing interest in
the space from a range of sectors and
discussions are underway on several
buildings. This year, we announced our
partnership with TEDI-London, a higher
education establishment led by Arizona
State University, Kings College London
and UNSW Sydney to deliver an
engineering curriculum at Canada Water.
The net valuation movement for
Canada Water over the year showed
an uplift of 9.8% reflecting the progress
made on planning.
British Land Annual Report and Accounts 2020
67
Resilient performance
in a challenging market
F
i
n
a
n
c
i
a
l
r
e
v
i
e
w
Year end 31 March
Underlying earnings per share1,2
Underlying Profit1,2
IFRS (loss) after tax
Dividend per share
Total accounting return1,3
EPRA net asset value per share1,2
IFRS net assets
LTV 1,4,5
Weighted average interest rate5
1. See Glossary on website for definitions.
2. See Table B within supplementary disclosure for reconciliations to IFRS metrics.
3. See Note 2 within financial statements for calculation.
4. See Note 17 within financial statements for calculation and reconciliation to IFRS metrics.
5. On a proportionally consolidated basis including the Group’s share of joint ventures and funds.
2019
34.9p
£340m
£(320)m
31.00p
(3.3)%
905p
£8,689m
28.1%
2.9%
2020
32.7p
£306m
£(1,114)m
15.97p
(11.0)%
774p
£7,147m
34.0%
2.5%
68
British Land Annual Report and Accounts 2020
Overview
Financial performance for the year was resilient in the context
of significant sales over the last two years, an especially
challenging retail environment and the impact of Covid-19
which arose in the fourth quarter and so primarily impacted the
balance sheet valuations. Underlying earnings per share (EPS)
were down 6.3% at 32.7p, while Underlying Profit was down
10.0% at £306m. The impact of lower profits on EPS has been
partially mitigated by the effect of share buybacks which added
1.1p in the year.
Capital activity (sales net of acquisitions and share buybacks)
decreased EPS by 1.4p in the year. Proceeds from sales have
been deployed into our value-accretive development
programme. The recently completed and committed schemes
are expected to generate EPS accretion of 4.2p once fully let
based on expected rental income of £62m, of which 88% is
pre-let. Setting aside capital activity, earnings decreased by
0.8p, primarily due to increased provisioning for tenant
incentives in light of Covid-19. Cost savings through
administrative and financing activities offset the impact of
retailer CVAs and administrations throughout the year.
Since April 2019, we have completed £0.9bn of gross capital
activity. This includes £296m sales (our share) of income
producing assets, primarily the sale of 12 Sainsbury’s
superstores to Realty Income Corporation in April 2019 for
£429m (our share £194m). In addition, we completed on
£86m of residential sales at Clarges, Mayfair, £6m of which
exchanged prior to this financial year. We also acquired a 25%
interest (£54m) in West One, a shopping centre and offices
building, above Bond Street station.
Valuations reduced by 10.1% on a proportionally consolidated
basis resulting in an overall EPRA net asset value (NAV) per
share decline of 14.5%.
Reflecting the strength of our balance sheet coming into this
period our financial position remains resilient. LTV has
increased by 590bps during the year to 34.0% with the key
drivers being valuation declines contributing 340bps and capital
spend contributing 210bps. We had £1.3bn of undrawn facilities
and cash at year end and our weighted average interest rate
reduced to a new low of 2.5%.
Presentation of financial information
The Group financial statements are prepared under IFRS where
the Group’s interests in joint ventures and funds are shown as a
single line item on the income statement and balance sheet
and all subsidiaries are consolidated at 100%.
Management considers the business principally on a
proportionally consolidated basis when setting the strategy,
determining annual priorities, making investment and financing
decisions and reviewing performance. This includes the
Group’s share of joint ventures and funds on a line-by-line
basis and excludes non-controlling interests in the Group’s
subsidiaries. The financial key performance indicators are also
presented on this basis.
A summary income statement and summary balance sheet
which reconcile the Group income statement and balance
sheet to British Land’s interests on a proportionally
consolidated basis are included in Table A within the
supplementary disclosures.
Management monitors Underlying Profit as this more
accurately reflects the underlying recurring performance of our
core property rental activity, as opposed to IFRS metrics which
include the non-cash valuation movement on the property
portfolio. It is based on the Best Practices Recommendations of
the European Public Real Estate Association (EPRA) which are
widely used alternate metrics to their IFRS equivalents.
Management also monitors EPRA NAV as this provides a
transparent and consistent basis to enable comparison
between European property companies. Linked to this, the use
of Total Accounting Return allows management to monitor
return to shareholders based on movements in a consistently
applied metric, being EPRA NAV, and dividends paid.
Loan to value (proportionally consolidated) is also monitored
by management as a key measure of the level of debt employed
by the Group to meet its strategic objectives, along with a
measurement of risk. It also allows comparison to other
property companies who similarly monitor and report
this measure.
British Land Annual Report and Accounts 2020
69
FINANCIAL REVIEW CONTINUED
Income statement
1. Underlying Profit
Underlying Profit is the measure that is used internally to
assess income performance. This is presented below on a
proportionally consolidated basis. No company adjustments
have been made in the current or prior year and therefore this
is the same as the pre-tax EPRA earnings measure which
includes a number of adjustments to the IFRS reported profit
before tax.
Gross rental income
Property operating expenses
Net rental income
Net fees and other income
Administrative expenses
Net financing costs
Underlying Profit
Non-controlling interests in
Underlying Profit
EPRA adjustments1
IFRS profit/(loss) after tax
Underlying EPS
IFRS basic EPS
Dividend per share
Section
1.2
1.3
1.4
2
1.1
2
3
2019
£m
576
(44)
532
10
(81)
(121)
340
2020
£m
560
(82)
478
13
(74)
(111)
306
12
(672)
(320)
34.9p
(30.0)p
31.00p
12
(1,432)
(1,114)
32.7p
(110.0)p
15.97p
1. EPRA adjustments consist of investment and development property
revaluations, gains/losses on investment and trading property disposals,
changes in the fair value of financial instruments and associated close out
costs. These items are presented in the ‘capital and other’ column of the
consolidated income statement.
1.1 Underlying EPS
Underlying EPS is 32.7p, a decline of 6.3% on the prior year.
This reflects Underlying Profit decline of 10.0%, partially offset
by the impact of share buybacks which added 1.1p in the year.
Retail like for like net rental decline is 5.1% in the year, primarily
reflecting the impact of CVAs and administrations. The offices
portfolio saw like for like growth of 0.8% which is lower than the
historic run-rate due to lease expiries. Office expiries contributed
a 3.0% decrease to net rents, however the space has either been
re-let or is to be refurbished. Expiries have been more than
offset by the impact of leasing activity in the year.
In light of Covid-19, an impairment of £7m was made against
tenant incentive balances primarily within the retail portfolio.
These non-cash provisions primarily relate to the spreading of
historic rent frees and fixed uplifts. A further £6m was provided
against tenant debtors that were deemed high risk. The March
quarter rent we offered to defer for our retail and leisure
customers facing challenges due to Covid-19 were not
receivable at year end and therefore not a trade debtor.
Accounting changes upon adoption of IFRS 16 results in a £3m
increase to net rents, due to recognising head lease assets
under the fair value model.
1.3 Administrative expenses
Administrative expenses decreased by 8.6% in the year.
The Group’s operating cost ratio increased by 480bps to
23.5% (2018/19: 18.7%) as a result of lower rental income
following sales activity and an increase in property outgoing
expenses due to write-offs and provisions made in respect of
tenant incentive. Excluding write-offs and provisions made in
respect of tenant incentives and guaranteed rent increases,
the Group’s cost ratio is 19.8%.
1.4 Net financing costs
£m
(121)
6
6
1
(111)
(3)
1.2 Net rental income
£m
532
3
(36)
(14)
(7)
(6)
3
3
478
2019
Financing
activity
Net
divestment
Develop-
ments
Share
buybacks
2020
2019
Sales
Acqui-
sitions
Like for like
rent (incl.
CVA and
adminis-
trations)
Tenant
incentive
provisions
Rental
debtor
provisions
IFRS 16
adoption
Devel-
opment
and other
2020
Net sales of income producing assets over the last 2 years was
£0.9bn. This reduced rents by £33m in the year, including £12m
from superstore sales, £4m from the sale of 5 Broadgate in
June 2018 and £11m from the sale of the Spirit Pubs portfolio in
March 2019. Proceeds from these sales are being reinvested in
the development pipeline which is expected to deliver £62m in
rents in future years and is already 88% pre-let (£54m).
70
British Land Annual Report and Accounts 2020
Lower interest rates and our financing activity undertaken over
the last 24 months reduced costs by £6m. Financing during the
year included the issuance of a new £100m 2034 USPP note
following prepayment of a £98m 2027 note, and repayment of
£30m of secured Broadgate bonds (BL share, in addition to the
£111m repaid in October 2018).
The reduction in finance costs as a result of proceeds from
net divestment includes the repayment of £86m (BL share)
of secured Sainsbury’s JV bonds on the sale of a portfolio of
superstores, partially offset by share buybacks.
We have a risk managed approach to interest rates on debt.
At 31 March 2020, on average over the next 5 years the interest
rate on 75% of our debt is hedged, based on current commitments.
On a spot basis we are 81% hedged. Our use of interest rate
caps as part of our hedging (alongside swaps) means that
around half of our debt benefits if market rates remain low.
2. IFRS profit before tax
The main difference between IFRS profit before tax and
Underlying Profit is that IFRS includes the valuation movement
on investment and trading properties, fair value movements on
financial instruments and capital financing costs. In addition,
the Group’s investments in joint ventures and funds are equity
accounted in the IFRS income statement but are included on a
proportionally consolidated basis within Underlying Profit.
The IFRS loss after tax for the year was £1,114m, compared
with a loss after tax for the prior year of £320m. As a result,
IFRS basic EPS was (110.0)p per share, compared to (30.0)p per
share in the prior year. This primarily reflects the downward
valuation movement on the Group’s properties of £1,105m,
and an increase in the capital and other income loss from
joint ventures and funds of £306m, both driven principally by
outward yield shift of 101bps and ERV decline of 11.7% in the
Retail portfolio.
The basic weighted average number of shares in issue during
the year was 934m (2018/19: 971m).
3. Dividends
In March, the Company announced the Board’s decision to
temporarily suspend future dividend payments. This was
considered prudent to best ensure we can effectively support
our retail and leisure customers who are hardest hit, protect
the long term value of the business, and further strengthen our
financial position. Accordingly, the third interim dividend due for
payment in May was suspended. We will seek to resume
dividends at an appropriate level as soon as there is sufficient
clarity of outlook. For this we will need to see a significant
improvement in rent collection and have more visibility on the
post lockdown productivity of our assets, principally how quickly
retail customers and office workers return. The dividend for the
year ended 31 March 2020 was 15.97p.
Balance sheet
As at
Section
Properties assets
Other non-current assets
Other net current liabilities
Adjusted net debt
Other non-current liabilities
EPRA net assets
EPRA NAV per share
Non-controlling interests
Other EPRA adjustments1
IFRS net assets
Proportionally consolidated basis.
6
4
5
2019
£m
12,316
151
12,467
(297)
(3,521)
–
8,649
905p
211
(171)
8,689
2020
£m
11,177
131
11,308
(241)
(3,854)
–
7,213
774p
112
(178)
7,147
1. EPRA net assets exclude the mark-to-market on derivatives and related debt
adjustments, the mark-to-market on the convertible bond as well as deferred
taxation on property and derivative revaluations. They include the trading
properties at valuation (rather than lower of cost and net realisable value) and
are adjusted for the dilutive impact of share options. No dilution adjustment
is made for the £350m zero coupon convertible bond maturing in 2020.
Details of the EPRA adjustments are included in Table B within the
supplementary disclosures.
4. EPRA net asset value per share
pence
905
33
6
774
(137)
(31)
(2)
2019
Valuation
perfor-
mance
Under-
lying
Profit
Dividends
Financing
activity
Share
buyback
2020
The 14.5% decrease in EPRA NAV per share primarily reflects a
valuation decrease of 10.1% across the portfolio. Valuation
gains in the Office portfolio and Canada Water were more than
offset by a fall in Retail values.
Office valuations were up 2.3% driven by strong leasing at our
developments which were up 7.5%, including 100 Liverpool
Street where values were up 19%. ERV growth was 3.2% across
the standing investments and yields moved in 4bps.
Valuations in Retail were down 26.1%, with outward yield shift
of 101bps and ERV decline of 11.7%. These values reflect
ongoing structural challenges faced by occupiers, the lack
of transactional evidence and the initial impact of Covid-19.
Across our largest assets, yields have moved between
100-160bps. For smaller retail parks, a number of assets
were transacted earlier in the year which have provided some
valuation evidence.
While financing activity initially decreased NAV by 2p, it delivers
future interest cost savings. Completion of the £125m share
buyback programme during the year has contributed 6p to
EPRA NAV.
EPRA published its latest Best Practices Recommendations in
October 2019 which included three replacement Net Asset
Valuation metrics, namely EPRA Net Reinstatement Value (NRV),
EPRA Net Tangible Assets (NTA) and EPRA Net Disposal Value
(NDV). We will report all three metrics going forwards, adopting
EPRA NTA as our primary metric as it is the closest to our
current primary metric, EPRA NAV. The three metrics have been
presented below as at 31 March 2020 to provide a comparison
to the current measures, EPRA NAV and EPRA NNNAV.
EPRA Net Reinstatement Value (NRV)
EPRA Net Tangible Assets (NTA)
EPRA Net Disposal Value (NDV)
5. IFRS net assets
£m
7,872
7,202
6,762
pence
845
773
726
IFRS net assets at 31 March 2020 were £7,147m, a decrease of
£1,542m from 31 March 2019. This was primarily due to the IFRS
loss after tax of £1,114m, along with £295m of dividends paid and
£125m of share purchases under the share buyback programme.
British Land Annual Report and Accounts 2020
71
At 31 March 2020, our proportionally consolidated LTV was
34.0%, up 590bps from 28.1% at 31 March 2019. Valuation
declines contributed 340bps of this increase, and capital
spend contributed 210bps. Note 17 of the financial statements
sets out the calculation of the Group and proportionally
consolidated LTV.
During the year, we issued a new £100m 2034 USPP note
following prepayment of a £98m 2027 note, extending debt
maturity and delivering future interest cost savings.
In March, we completed our first ESG linked Revolving Credit
Facility at £450m with a group of eight banks, by extending and
amending one of our existing unsecured RCFs. The extended
RCF has a headline margin of 90 basis points over LIBOR
(unchanged) and an initial five-year term which may be
extended to a maximum of seven years at British Land’s
request, subject to banks’ consent. The facility may continue to
be used for our general corporate purposes. Aligning with our
sustainability strategy, the facility includes two ESG-related
KPIs focused on the BREEAM ratings of our developments and
assets under management.
We also extended a total of £925m under other committed bank
facilities by a further 1 year.
After the year end, one of the bank facilities in HUT which was
due to mature in September 2020 was refinanced with an
extended facility to December 2023.
Our liability and debt management activity has enabled us to
reduce our weighted average interest rate to a new low of 2.5%.
Our weighted average debt maturity is 7.5 years.
At 31 March 2020, British Land had £1.8bn of committed
unsecured revolving bank facilities; undrawn facilities and
cash amounted to £1.3bn. Based on our current commitments,
these facilities and debt maturities, we have no requirement to
refinance until 2024.
Simon Carter
Chief Financial Officer
FINANCIAL REVIEW CONTINUED
Cash flow, net debt and financing
6. Adjusted net debt1
£m
(3,521)
382
375
(118)
(388)
(295)
(3,854)
(125)
(164)
2019
Disposals
Acqui-
sitions
Develop-
ment and
capex
Net cash
from
operations
Dividends
Share
buyback
Other
2020
1. Adjusted net debt is a proportionally consolidated measure. It represents the
Group net debt as disclosed in Note 17 to the financial statements and the
Group’s share of joint venture and funds’ net debt excluding the mark-to-market
on derivatives, related debt adjustments and non-controlling interests.
A reconciliation between the Group net debt and adjusted net debt is
included in Table A within the supplementary disclosures.
Net sales reduced debt by £264m whilst development spend
totalled £291m with a further £97m on capital expenditure
related to Storey fit-out and asset management on the standing
portfolio. The value of recently completed and committed
developments is £1,174m, with £78m costs to come.
Speculative development exposure is 0.6% of the portfolio.
There are 1m sq ft of developments in our near term pipeline
with anticipated cost of £605m.
Group
Proportionally consolidated
2019
2020
2019
2020
£2,765m £3,247m
£3,521m £3,854m
2.2%
6.3x
1.9%
5.8x
2.9%
3.8x
2.5%
3.8x
7.3 years 6.8 years 8.1 years 7.5 years
1. Group data as presented in Note 17 of the financial statements. The proportionally
consolidated figures include the Group’s share of joint venture and funds’ net
debt and exclude the mark-to-market on derivatives and related debt
adjustments and non-controlling interests.
72
British Land Annual Report and Accounts 2020
7. Financing
Net debt /
adjusted net debt1
Principal amount
of gross debt
Loan to value
Weighted average
interest rate
Interest cover
Weighted average
maturity of
drawn debt
£2,881m £3,294m
28.9%
22.2%
£3,895m £4,158m
34.0%
28.1%
The current uncertain environment reinforces the importance
of a strong balance sheet.
Covid-19 operational update
Rent due 2 March to 30 April
Received3
Rent deferrals
Rent forgiven
Moved to monthly
Outstanding
Collection of adjusted billing2
1. Includes non-office customers located within our London campuses.
2. Total billed rents exclusive of rent deferrals, rent forgiven and tenants moved to monthly payments.
3. As at 15 May.
Offices
97%
1%
1%
–
1%
99%
Retail1
43%
40%
4%
1%
12%
78%
Total
68%
22%
3%
–
7%
91%
Retail
Following the measures announced by the Government on
23 March, two of our retail centres are temporarily closed.
All others remain open to provide important access to essential
stores such as supermarkets and pharmacies. Overall, as of
25 May, in line with Government measures, c.270 individual
units (c.15% of the total) are open.
On 26 March, we announced that at sites we control, we would be
releasing smaller retail, food & beverage and leisure customers
from their rental obligations for three months (April to June).
The financial impact in terms of lost rent is c.£2m.
For other retail, food & beverage and leisure customers
experiencing financial challenges because of Covid-19, we
agreed to defer c.£35m of rents relating to the March quarter.
As a result, we have now collected 43% of rent due between
2 March and 30 April. Of the remainder, 40% is deferred, 4% is
forgiven, 12% is outstanding (primarily owed by strong retailers)
and 1% has moved to monthly payments.
Several occupiers entered administration in the wake of the
Covid-19 crisis, representing £5.1m of lost contracted rent.
The value of the retail portfolio declined 26.1% as ongoing
structural challenges were exacerbated at the year end
valuation date by the early effects of Covid-19. The valuers made
several Covid-19 adjustments in arriving at their valuation which
are set out in the FY20 Business Review; these adjustments
accounted for a c.6% valuation decline.
In the period since the lockdown, from 23 March until 10 May,
footfall was down 78%, 700bps ahead of benchmark and like for
like sales were down 82%. Grocery anchored sites performed
better, with footfall down 70% and sales down 42%.
London Offices
Our London campuses remain open and all offices are
operational, although physical occupancy is significantly
reduced with the majority of people now working from home.
While the crisis has inevitably created uncertainty for our office
occupiers, it has not materially affected our rent collection to
date and we benefit from a high quality, diverse customer base.
As a result, we have now collected 97% of rent due between
2 March and 30 April, including Storey. Of the remainder 2%
is deferred or forgiven and 1% is outstanding.
At Storey, we identified savings from reduced operations
and offered all our customers discounted rent for 3 months.
This proactive measure has been well received by our customers,
in particular smaller local businesses. Some customers have
asked for additional flexibility in meeting their rental obligations,
and consistent with our approach across the portfolio, we are
supporting those companies who have been adversely impacted,
but with otherwise strong business models. In these cases,
we are providing up to three-month rent deferrals representing
c.20% (by number) of Storey customers and £0.4m per month.
Occupancy across stabilised buildings was 92% at year end, and
remains unchanged with assets in ramp up at 42% occupancy.
Across the Offices portfolio, we have 220,000 sq ft under offer
and 160,000 sq ft in negotiations. We are continuing to make
progress, particularly on larger deals which are generally on a
longer time frame. On smaller deals, where occupiers are
looking to take space soon, progress has been delayed due to
uncertainty around fit out and timing of occupation. We are
conducting virtual viewings and have responded to 375,000 sq ft
of RFPs since the crisis began.
Developments
Having initially closed our major sites as a result of Covid-19,
whilst we reviewed how Public Health England guidelines could
be adhered to, all our major sites are now open, including both
100 Liverpool Street and 1 Triton Square. However, we are
currently operating at much lower levels of productivity due to
reduced number of operatives on site and amended working
practices. At this stage it remains difficult to accurately assess
the impact of these delays. We currently expect that the office
element of 100 Liverpool Street will be practically completed
in early summer, with full practical completion in calendar
Q3 2020. At 1 Triton Square, we are targeting calendar Q2 2021
for practical completion.
We have reached practical completion on 135 Bishopsgate and
the space is now being fitted out, albeit progress will inevitably
be slower with fewer operatives on site.
British Land Annual Report and Accounts 2020
73
FINANCIAL REVIEW CONTINUED
Our assessment of Covid-19
on our offices and retail customers
51%
49%
Lower Impact
Typical sectors:
– Global Technology
– Financial Institutions
– Professional and Corporate
– Grocery and Convenience
– Government
93%
Rent collected due between
2 March-30 April
Higher Impact
Typical sectors:
– Food & Beverage, Leisure
– Fashion and Beauty
– General Retail
– Travel and Media
– Home and DIY
39%
Rent collected due between
2 March-30 April
Over a third of higher impact
businesses are listed with a
market cap of over £1bn1
Based on contracted rents on a
proportionally consolidated basis.
1. Market capitalisation as at 18 May.
Secured debt with recourse to the Group is provided by
debentures with long maturities and limited amortisation.
These are secured against a combined pool of assets with
common covenants; the value of the assets is required to cover
the amount of the debentures by a minimum of 1.5 times and
net rental income must cover the interest at least once. We use
our rights under the debentures to actively manage the assets
in the security pool, in line with these cover ratios.
The secured debt in joint ventures and funds is all non-recourse
and the Broadgate and Meadowhall securitisations have no
loan to value default covenants.
Given our covenant structure across the Group, we could
withstand a further fall in asset values across the portfolio of
45% prior to any mitigating actions.
We have access to £1.3bn of undrawn facilities and cash, with no
requirement to refinance until 2024.
Our assessment of Covid-19 on our customers
We have undertaken a bottom up analysis to understand the
potential impact of Covid-19 on our customers and therefore
the risk associated with our rental cashflows. Based on this
analysis, we estimate that those customers likely to suffer a
relatively lower impact account for 49% of our contracted rent;
this includes sectors such as international technology
businesses, financial institutions, professional services and
government. Customers we believe are likely to experience a
higher impact account for 51% of contracted rent, including
sectors such as F&B, leisure, fashion & beauty retail and other
general retail. Of this group, over a third are public companies
with market capitalisations of over £1bn (as at 18 May 2020).
Furthermore, income from lower impact customers fully
covered property, administrative and finance costs in FY20.
Covenant headroom
We continue to have significant headroom to our debt covenants.
There are two financial covenants which apply across all of the
Group’s unsecured debt:
– Net Borrowings not to exceed 175% of Adjusted Capital and
Reserves (as at March 2020: 40%)
– Net Unsecured Borrowings not to exceed 70% of
Unencumbered Assets (as at March 2020: 30%)
There are no income or interest cover covenants on the Group’s
unsecured debt.
74
British Land Annual Report and Accounts 2020
FINANCIAL POLICIES AND PRINCIPLES
Financial strength
and balanced approach
We have worked consistently over recent years to deliver a robust financial
footing, positioning us well to meet the market challenges of Covid-19.
Managing interest rate exposure
We manage our interest rate profile separately from our debt,
considering the sensitivity of underlying earnings to movements
in market rates of interest over a five-year period. The Board
sets appropriate ranges of hedged debt over that period and the
longer term. Our debt finance is raised at both fixed and
variable rates. Derivatives (primarily interest rate swaps and
caps) are used to achieve the desired interest rate profile
across proportionally consolidated net debt. At 31 March we
had interest rate hedging on 81% of our debt (spot), and on 75%
of our projected debt on average over the next five years, with a
decreasing profile over that period. Our use of interest rate
caps as part of our hedging (alongside swaps) means that we
also benefit if market rates remain low. Accordingly we have a
higher degree of protection on interest costs in the short term
and achieve market rate finance in the medium to longer term.
The use of derivatives is managed by a Derivatives Committee.
The interest rate management of joint ventures and funds is
considered separately by each entity’s board, taking into
account appropriate factors for its business.
Counterparties
We monitor the credit standing of our counterparties to
minimise risk exposure in placing cash deposits and arranging
derivatives. Regular reviews are made of the external credit
ratings of the counterparties.
Foreign currency
Our policy is to have no material unhedged net assets or
liabilities denominated in foreign currencies. When attractive
terms are available, the Group may choose to borrow in
currencies other than Sterling, and will fully hedge the foreign
currency exposure.
Leverage
We manage our use of debt and equity finance to balance the
benefits of leverage against the risks, including magnification
of property returns. A loan to value ratio (‘LTV’) measures our
leverage, primarily on a proportionally consolidated basis
including our share of joint ventures and funds and excluding
non-controlling interests. At 31 March 2020, our proportionally
consolidated LTV was 34.0% and the Group measure was 28.9%.
Our LTV is monitored in the context of wider decisions made by
the business. We manage our LTV through the property cycle
such that our financial position would remain robust in the
event of a significant fall in property values. This means we do
not adjust our approach to leverage based only on changes in
property market yields. Consequently, our LTV may be higher in
the low point in the cycle and will trend downwards as market
yields tighten.
Debt finance
The scale of our business combined with the quality of our
assets and rental income means that we are able to approach a
diverse range of debt providers to arrange finance on attractive
terms. Good access to the capital and debt markets allows us
to take advantage of opportunities when they arise. The Group’s
approach to debt financing for British Land is to raise funds
predominantly on an unsecured basis with our standard
financial covenants (set out on page 77). This provides flexibility
and low operational cost. Our joint ventures and funds which
choose to have external debt are each financed in ‘ring-fenced’
structures without recourse to British Land for repayment and
are secured on their relevant assets. Presented on the
following page are the five guiding principles that govern the
way we structure and manage debt.
Monitoring and controlling our debt
We monitor our debt requirement by focusing principally on
current and projected borrowing levels, available facilities,
debt maturity and interest rate exposure. We undertake
sensitivity analysis to assess the impact of proposed
transactions, movements in interest rates and changes in
property values on key balance sheet, liquidity and profitability
ratios. We also consider the risks of a reduction in the
availability of finance, including a temporary disruption
of the debt markets. Based on our current commitments
and available facilities, the Group has no requirement to
refinance until 2024. British Land’s committed bank facilities
total £1.8bn; undrawn facilities and cash amounted to £1.3bn
at 31 March 2020.
British Land Annual Report and Accounts 2020
75
FINANCIAL POLICIES AND PRINCIPLES CONTINUED
Our five guiding principles
1
2
3
4
5
Diversify our sources of finance
We monitor finance markets and seek to access different sources of finance when the relevant
market conditions are favourable to meet the needs of our business and, where appropriate,
those of our joint ventures and funds. The scale and quality of our business enable us to access a
broad range of unsecured and secured, recourse and non-recourse debt. We develop and
maintain long term relationships with banks and debt investors. We aim to avoid reliance on
particular sources of funds and borrow from a large number of lenders from different sectors in
the market across a range of geographical areas, with around 30 debt providers in bank facilities
and private placements alone. We work to ensure that debt providers understand our business,
adopting a transparent approach to provide sufficient disclosures to enable them to evaluate their
exposure within the overall context of the Group. These factors increase our attractiveness to
debt providers, and in the last five years we have arranged £3.3bn (British Land share £3.1bn) of
new finance in unsecured and secured bank loan facilities, Sterling bonds, US Private
Placements and convertible bonds. In addition, we have existing long dated debentures and
securitisation bonds. A European Medium Term Note programme is maintained to enable us to
access Sterling/Euro unsecured bond markets when it is appropriate for our business.
£4.2bn
total drawn debt
(proportionally
consolidated)
Phase maturity of debt portfolio
The maturity profile of our debt is managed with a spread of repayment dates, currently between
one and 18 years, reducing our refinancing risk in respect of timing and market conditions. As a
result of our financing activity, we are ahead of our preferred refinancing date horizon of not less
than two years. In accordance with our usual practice, we expect to refinance facilities ahead of
their maturities, and have recently successfully extended and amended one of our unsecured
Revolving Credit Facilities (RCF) at £450m for a new five-year term.
7.5 years
average drawn
debt maturity
(proportionally
consolidated)
Maintain liquidity
In addition to our drawn debt, we aim always to have a good level of undrawn, committed,
unsecured revolving bank facilities. These facilities provide financial liquidity, reduce the need
to hold resources in cash and deposits, and minimise costs arising from the difference between
borrowing and deposit rates, while reducing credit exposure. We arrange these revolving credit
facilities in excess of our committed and expected requirements to ensure we have adequate
financing availability to support business requirements and new opportunities.
£1.3bn
undrawn revolving
credit facilities and
cash
Maintain flexibility
Our facilities are structured to provide valuable flexibility for investment activity execution,
whether sales, purchases, developments or asset management initiatives. Our unsecured
revolving credit facilities provide full operational flexibility of drawing and repayment (and
cancellation if we require) at short notice without additional cost. These are arranged with
standard terms and financial covenants and generally have maturities of five years. Alongside
this, our secured term debt in debentures has good asset security substitution rights, where
we have the ability to move assets in and out of the security pool.
Maintain strong metrics
We use both debt and equity financing. We manage LTV through the property cycle such that
our financial position would remain robust in the event of a significant fall in property values
and we do not adjust our approach to leverage based on changes in property market yields.
We manage our interest rate profile separately from our debt, setting appropriate ranges of
hedged debt over a five-year period and the longer term.
We maintained our strong senior unsecured credit rating (‘A’) and long term IDR credit rating
(‘A-’), while our short term IDR credit rating was upgraded to F1 during the year.
£1.8bn
total revolving credit
facilities
34%
LTV (proportionally
consolidated)
A
senior unsecured
credit rating
3.8x
interest cover
(proportionally
consolidated)
76
British Land Annual Report and Accounts 2020
Group borrowings
Unsecured financing for the Group includes bilateral and
syndicated revolving bank facilities (with initial terms usually
of five years, often extendable); US Private Placements with
maturities up to 2034; the Sterling unsecured bond maturing
in 2029; and the convertible bond maturing in 2020.
Secured debt for the Group (excluding debt in Hercules
Unit Trust which is covered under ‘Borrowings in our joint
ventures and funds’) is provided by debentures with
maturities up to 2035.
Unsecured Borrowings and covenants
There are two financial covenants which apply across all of the
Group’s unsecured debt. These covenants, which have been
consistently agreed with all unsecured lenders since 2003, are:
– Net Borrowings not to exceed 175% of Adjusted Capital
and Reserves
– Net Unsecured Borrowings not to exceed 70% of
Unencumbered Assets
There are no income or interest cover covenants on any of the
unsecured debt of the Group.
The Unencumbered Assets of the Group, not subject to any
security, stood at £6.5bn as at 31 March 2020.
Although secured assets are excluded from Unencumbered
Assets for the covenant calculations, unsecured lenders benefit
from the surplus value of these assets above the related debt
and the free cash flow from them. During the year ended
31 March 2020, these assets generated £14m of surplus cash
after payment of interest. In addition, while investments in joint
ventures do not form part of Unencumbered Assets, our share
of free cash flows generated by these ventures is regularly
passed up to the Group.
Secured borrowings
Secured debt with recourse to British Land is provided by
debentures with long maturities and limited amortisation.
These are secured against a combined pool of assets with
common covenants; the value of the assets is required to cover
the amount of the debentures by a minimum of 1.5 times and
net rental income must cover the interest at least once. We use
our rights under the debentures to actively manage the assets
in the security pool, in line with these cover ratios. We continue
to focus on unsecured finance at a Group level.
Borrowings in our joint ventures and funds
External debt for our joint ventures and funds has been
arranged through long dated securitisations or secured
bank debt, according to the requirements of the business
of each venture.
Hercules Unit Trust has two term bank loan facilities maturing in
2022 and 2023 arranged for its business and secured on property
portfolios, without recourse to British Land. These loans include
LTV ratios of 65% and 60%, and income based covenants.
The securitisations of Broadgate £1,225m and Meadowhall
£585m have weighted average maturities of 10.4 years and
8.0 years. The key financial covenant applicable is to meet interest
and scheduled amortisation (equivalent to one times cover);
there are no LTV default covenants. These securitisations have
quarterly amortisation with the balance outstanding reducing to
approximately 20% to 30% of the original amount raised by
expected final maturity, thus mitigating refinancing risk.
There is no obligation on British Land to remedy any
breach of these covenants in the debt arrangement of joint
ventures and funds.
Unsecured financial covenants
At 31 March
Net borrowings to adjusted capital and reserves
Net unsecured borrowings to unencumbered assets
2016
%
34
29
2017
%
29
26
2018
%
29
23
2019
%
29
21
2020
%
40
30
British Land Annual Report and Accounts 2020
77
MANAGING RISK IN DELIVERING OUR STRATEGY
Effective risk management
Effective risk management is integral to our objective
of delivering sustainable long term value.
Our risk management framework
For British Land, effective risk management is a cornerstone
of our strategy and integral to the achievement of our objective
of delivering sustainable long term value. We maintain a
comprehensive risk management process which serves to
identify, assess and respond to the range of financial and
non-financial risks facing our business, including those risks
that could threaten solvency and liquidity, as well as to identify
emerging risks. Our approach is not intended to eliminate risk
entirely, but instead to manage our risk exposures across the
business, whilst at the same time making the most of
our opportunities.
Our integrated approach combines a top down strategic view
with a complementary bottom up operational process outlined
in the diagram below. The Board has overall responsibility for
risk management with a focus on determining the nature and
extent of exposure to the principal risks the business is willing
to take in achieving its strategic objectives. The amount of risk
is assessed in the context of our business model and the
external environment in which we operate – this is our risk
appetite. It is integral both to our consideration of strategy and
to our medium term planning process.
The Audit Committee takes responsibility for overseeing the
effectiveness of risk management and internal control systems
on behalf of the Board and advises the Board on the principal
risks facing the business including those that would threaten
its solvency or liquidity.
The Executive Directors are responsible for delivering the
Company’s strategy, as set by the Board, and managing risk.
Our risk management framework categorises our risks into
external, strategic and operational risks. The Risk Committee
(comprising the Executive Committee and senior management
across the business and chaired by the Chief Financial Officer)
is responsible for managing the principal risks in each category
in order to achieve our performance goals.
Whilst ultimate responsibility for oversight of risk management
rests with the Board, the effective day-to-day management of
risk is embedded within our operational business units and
forms an integral part of how we work. This bottom up
approach allows potential risks to be identified at an early stage
and escalated as appropriate, with mitigations put in place to
manage such risks. Each business unit maintains a
comprehensive risk register. Changes to the register are
reviewed quarterly by the Risk Committee, with significant and
emerging risks escalated to the Audit Committee.
To read more about the Board and Audit Committee’s risk oversight,
see pages 101, 112 and 113
Our integrated risk management approach
TOP DOWN
Strategic risk management
Review external environment
Robust assessment of principal risks
Set risk appetite and parameters
Determine strategic action points
BOARD / AUDIT COMMITTEE
BOTTOM UP
Operational risk management
Assess effectiveness of risk management systems
Report on principal risks and uncertainties
RISK COMMITTEE/ EXECUTIVE DIRECTORS
Identify principal risks
Direct delivery of strategic actions in line with
risk appetite
Monitor key risk indicators
Consider completeness of identified risks and
adequacy of mitigating actions
Consider aggregation of risk exposures across
the business
BUSINESS UNITS
Execute strategic actions
Report on key risk indicators
Report current and emerging risks
Identify, evaluate and mitigate operational risks recorded in risk register
78
British Land Annual Report and Accounts 2020
Change in risk
appetite in the
year
Our risk appetite
Principal internal risks
Key risk indicators (including current thresholds)
Investment strategy
– Execution of targeted acquisitions and disposals in line with capital allocation plan
(overseen by Investment Committee)
– Annual IRR process which forecasts prospective returns of each asset
– Percentage of portfolio in non-core sectors
Development strategy
– Total development exposure <15% of investment portfolio by value
– Speculative development exposure <8% of investment portfolio by value
– Progress on execution of key development projects against plan
Capital structure
– Manage our leverage such that LTV should not exceed a maximum level if market yields
Finance strategy
People
were to rise to previous peaks
– Financial covenant headroom
– Period until refinancing is required of not less than two years
– Percentage of debt with interest rate hedging (spot and average over next five years)
– Voluntary staff turnover
– Employee engagement
Income sustainability
– Market letting risk including vacancies, upcoming expiries and breaks, and speculative
development
– Weighted average unexpired lease term
– Concentration of exposure to individual customers or sectors
Key: Change in risk appetite from last year
Increase
No change
Decrease
Our risk appetite is reviewed annually as part of the strategy
review process and approved by the Board. This evaluation
guides the actions we take in executing our strategy. We have
identified a suite of Key Risk Indicators (KRIs) and defined
specific tolerances for each (summarised above). These are
reviewed quarterly by the Risk Committee, to ensure that the
activities of the business remain within our risk appetite and
that our risk exposure is well matched to changes in our
business and our markets. These include the most significant
judgements affecting our risk exposure, including our
investment and development strategy; the level of occupational
and development exposure; and our financial leverage.
Whilst our appetite for risk will vary over time and during the
course of the property cycle, in general we maintain a balanced
approach to risk. The Board considers our overall risk appetite
in the year is broadly unchanged from last year. Over the last
few years we lowered our financial risk whilst accepting an
increase in our risk relating to the more operational nature of
property, reflecting market trends and our strategy.
Given the backdrop of economic and political challenges,
we have continued to actively manage our incremental risk
exposure by maintaining:
– high occupancy of 97% across our assets and proactively
managing our exposure to individual occupiers and sectors.
– a disciplined approach to development including using a
broad range of contractors and closely monitoring them,
coupled with our successful pre-letting strategy.
– an efficient capital structure and liquidity position. Based on
our current commitments, available bank facilities and debt
maturities, we have no requirement to refinance until 2024.
British Land Annual Report and Accounts 2020
79
MANAGING RISK IN DELIVERING OUR STRATEGY CONTINUED
Our risk focus
The general risk environment in which the Group operates has
increased over the course of the year, which is largely due to
the continued level of uncertainty associated with the Brexit
process, the challenging UK retail market and weaker
investment markets. This has been compounded more
recently by the Covid-19 outbreak.
Covid-19 presents a new and major risk to the business. As yet,
it is impossible to fully predict the impact on the global and UK
economy and thus the consequential impact on our business
and our key markets. The Board will continue to closely
monitor and adapt to the developing situation and its effect on
the Company, although the Board is reassured by the strength
of our balance sheet, our high quality diverse portfolio of assets
and operational expertise; which means we are positioned to
protect our business through the near term period of
uncertainty. We have considered the potential impact of
Covid-19 on each of our principal risks, which are set out on
pages 82 to 87. We have robust crisis management and
business continuity plans in place and have acted swiftly in
dealing with the exceptional challenges posed by Covid-19;
our focus is to ensure the safety of our people, our assets
are securely maintained and to support our customers
and suppliers.
Brexit continues to be an area of specific focus, which is
monitored and actively managed, supported by a dedicated risk
checklist. Whilst the UK General Election in December 2019
has enabled the Government to move forward and the UK
to formally leave the EU on 31 January 2020, any significant
impact will only be felt when the transition period ends on
31 December 2020 (or such other date that is agreed). Until new
trade and international agreements and arrangements have
been finalised, the risk will remain elevated due to the
continuing uncertainty around the economic, political and
regulatory outlook.
We are continuing to monitor external events and our primary
areas of focus have been to mitigate risks, where practical,
in our construction supply chain, in our operational day-to-day
property management and our crisis management plans; and
we remain alert to potential uncertainties caused by Covid-19
and Brexit which could adversely impact investment, capital,
financial, occupier and labour markets.
During the year, the Risk Committee has also focused on some
key operational risk areas across the business including:
– retailer tenant risk and managing our exposure to customers
or sectors in a more challenging market backdrop
– covenant strength of potential construction contractors to
mitigate our future exposure
– health, safety and environmental risk management. Our
Health and Safety management system was re-certified
under BS OHSAS 18001
– climate change which is increasingly important for risk
management. The Risk Committee is overseeing the
Steering Committee’s progress towards TCFD compliance
– ongoing data privacy programme and implementation
– payment operations and key financial controls
– procurement and new supplier onboarding process
– internal audit and implementing control findings, including a
review of Information Security policies and key controls
– on site compliance audits across our assets
Our principal risks and assessment
Our risk management framework is structured around the
principal risks facing British Land. The Board confirms that a
robust assessment of the principal risks facing the Company,
including those that would threaten its business model, future
performance, solvency or liquidity, was carried out during the
year and more recently taking into account the current
Covid-19 risk and economic and political environment.
The current principal risks facing the Group are summarised in
the diagram opposite and described across the following pages.
Whilst we consider there has been no material change to the
nature of the Group’s principal risks, not surprisingly several
risks have increased as a result of the challenging external
environment and significant ongoing uncertainty. At last year
end, we flagged the economic outlook, political outlook,
investment and occupier demand, our investment strategy and
income sustainability risks as elevated. Our current
assessment is that these risks remain heightened, but also:
– The emerging threat from Covid-19 is incorporated within
our catastrophic business event principal risk (but will also
impact other principal risks). Whilst it is not possible to fully
predict its impact, we expect Covid-19 to adversely impact
the economic outlook and present an increased risk to the
investment and occupier markets as well as to our people,
our investment strategy and income sustainability
principal risks.
– The dynamics in the office and retail markets are very
different and thus the risks of investment and occupier
demand should be assessed separately; with retail already
showing a much increased risk profile. The risk outlook for
offices is also elevated but to a lesser extent than retail.
80
British Land Annual Report and Accounts 2020
The principal risks are summarised below (and detailed on pages 82 to 87), including an assessment of the potential impact and
likelihood and how the risks have changed in the year, together with how they relate to our strategic priorities.
Our risk assessment
Related
strategic priority
Change
Risk heat map
Principal risk
External risks
1 Economic outlook
2
3a
3b
Political and regulatory
outlook
Office investment
market
Retail investment
market
4a
Office occupier market
4b
Retail occupier market
5
6
Availability and cost
of finance
Catastrophic
business event
Internal risks – strategic
7
8
9
Investment strategy
Development strategy
Capital structure
10
Finance strategy
Internal risks – operational
11
People
12
Income sustainability
3b
4b
1
6
3a
2
12
4a
7
5
d
o
o
h
i
l
e
k
L
i
11
10
9
8
Impact
Other Group risks
In addition to our principal risks, there are also a number of other risks that are largely operational in nature and are
managed centrally with appropriate processes and mitigation plans in place.
These risks comprise:
A. Operating model including reliance on third parties
B. Culture
C. Information systems and cyber security
D. Effective control environment
E. Fraud and corruption
F. Compliance and legal framework
G. Supply chain management
Key
Strategic priorities
Customer Orientation
Change year on year
No change
Right Places
Capital Efficiency
Expert People
Increase
Decrease
Note: The above illustrates principal risks which by their nature are those which have the potential to significantly impact the Group’s strategic
objectives, financial position or reputation. The heat map highlights net risk, after taking account of principal mitigations. The arrow shows the
movement from the 2019 point.
British Land Annual Report and Accounts 2020
81
How we monitor and manage the risk
Change in risk assessment in year
– The Risk Committee reviews the economic
– Economic growth remained volatile throughout the
Principal risks
External risks
Risks and impacts
1
Economic outlook
The UK economic climate and future
movements in interest rates present
risks and opportunities in property and
financing markets and the businesses
of our customers which can impact both
the delivery of our strategy and our
financial performance.
environment in which we operate quarterly to assess
whether any changes to the economic outlook justify
a reassessment of the risk appetite of the business.
– Key indicators including forecast GDP growth,
employment rates, business and consumer
confidence, interest rates and inflation/deflation are
considered, as well as central bank guidance and
government policy updates.
– We stress test our business plan against a downturn
in economic outlook to ensure our financial position
is sufficiently flexible and resilient.
– Our resilient business model focuses on a high
quality portfolio underpinned by our balance sheet
and financial strength.
year. The outcome of the General Election and Brexit
withdrawal deal had initially been positive for the UK
economy; however, the recent Covid-19 outbreak has
derailed any revival in the UK economic outlook.
– GDP forecasts for 2020 have continued to reduce with
many commentators predicting the impact on the
economy will be deeper than the post Global Financial
Crisis downturn, with the trajectory of recovery
difficult to forecast.
– Also, failure to achieve a UK-EU arrangement
conducive to trade is also a key risk to the outlook for
the UK economy.
– Strong levels of government spending and measures
announced by the Bank of England to lower interest
rates will initially help mitigate some of the impact of
Covid-19.
– Covid-19: Looking ahead, whilst the long term
economic impact of Covid-19 is hard to predict, the
economy faces a challenging short term outlook, with
an increased risk posed by a global recession. Whilst it
is inevitable that our business, like many others, will
be negatively impacted; our business has a strong
balance sheet and clear long term strategy.
– The political risk outlook remains high dictated by the
national and global response to Covid-19 and there
remains significant uncertainty until our future
relationship with the EU has been determined.
– Furthermore, the global geopolitical and trade
environments remain uncertain.
– Covid-19: It is not possible to predict fully the impact
Covid-19 and Brexit will have on our
business and our markets, but we are well placed to
respond proactively to the key risks and have modelled
various scenarios as part of our five-year forecasts.
2
Political and regulatory outlook
Significant political events and regulatory
changes, including the decision to leave the
EU, bring risks principally in three areas:
– reluctance of investors and businesses
to make investment and occupational
decisions whilst the outcome
remains uncertain
– on determination of the outcome,
the impact on the case for investment
in the UK, and on specific policies and
regulation introduced, particularly those
which directly impact real estate or
our customers
– the potential for a change of leadership
or political direction
– Whilst we are not able to influence the outcome of
significant political events, we do take the
uncertainty related to such events and the range of
possible outcomes into account when making
strategic investment and financing decisions.
– Internally we review and monitor proposals and
emerging policy and legislation to ensure that we
take the necessary steps to ensure compliance if
applicable. Additionally, we engage public affairs
consultants to ensure that we are properly briefed
on the potential policy and regulatory implications
of political events. We also monitor public trust
in business.
– Where appropriate, we act with other industry
participants and representative bodies to contribute
to policy and regulatory debate. We monitor and
respond to social and political reputational
challenges relevant to the industry and apply our
own evidence-based research to engage in thought
leadership discussions, such as with Design for Life.
Key
Change in risk assessment from last year
Increase
No change
Decrease
82
British Land Annual Report and Accounts 2020
Risks and impacts
How we monitor and manage the risk
Change in risk assessment in year
3
Commercial property investor demand
Reduction in investor demand for
UK real estate may result in falls in
asset valuations and could arise from
variations in:
– the health of the UK economy
– the attractiveness of investment in
the UK
– availability of finance
– relative attractiveness of other
asset classes
– The Risk Committee reviews the property market
quarterly to assess whether any changes to the
market outlook present risks and opportunities
which should be reflected in the execution of
our strategy and our capital allocation plan.
The Committee considers indicators such as the
margin between property yields and borrowing
costs and property capital growth forecasts, which
are considered alongside the Committee members’
knowledge and experience of market activity
and trends.
– We focus on prime assets and sectors which we
believe will be less susceptible over the medium
term to a reduction in occupier and investor demand.
London Offices
– Investment volumes were low but picked up in the
final quarter of 2019 following the UK election and
Brexit outcome. However, in the wake of Covid-19,
a number of transactions have been cancelled
or postponed.
– Covid-19: We expect investor confidence and volumes
will be impacted in the short term. However, in the
longer term we expect market fundamentals to
continue to favour London Offices as yields remain
attractive compared to many other European markets,
and London is considered a relatively safe haven.
Retail
– We maintain strong relationships with agents and
– Investment markets were significantly weaker,
direct investors active in the market.
– We stress test our business plan for the effect of a
change in property yields.
4
Occupier demand and tenant default
Underlying income, rental growth and
capital performance could be adversely
affected by weakening occupier demand
and occupier failures resulting from
variations in the health of the UK economy
and corresponding weakening of
consumer confidence, business activity
and investment.
Changing consumer and business practices
including the growth of internet retailing,
flexible working practices and demand for
energy efficient buildings, new technologies,
new legislation and alternative locations
may result in earlier than anticipated
obsolescence of our buildings if evolving
occupier and regulatory requirements are
not met.
– The Risk Committee reviews indicators of occupier
demand quarterly including consumer confidence
surveys and employment and ERV growth forecasts,
alongside the Committee members’ knowledge
and experience of occupier plans, trading
performance and leasing activity in guiding
execution of our strategy.
– We have a high quality, diversified occupier base
and monitor concentration of exposure to individual
occupiers or sectors. We perform rigorous occupier
covenant checks ahead of approving deals and
on an ongoing basis so that we can be proactive
in managing exposure to weaker occupiers.
– Through our Key Occupier Account programme,
we work together with our customers to find ways
to best meet their evolving requirements.
– Our sustainability strategy links action on customer
health and wellbeing, energy efficiency, community
and sustainable design to our business strategy.
Our social and environmental targets help us comply
with new legislation and respond to customer
demands; for example, we expect all our current
new developments to achieve a BREEAM Excellent
or above rating.
reflecting challenges in the occupational market.
Liquidity did return to certain parts of the market,
with a pick-up in transactional activity, particularly in
retail parks, but this has not continued as a result of
Covid-19.
– There has been limited liquidity and a lack of
transactional evidence, particularly for larger lot sizes,
and as a result we have seen significant outward yield
shift for prime assets.
– Covid-19: We expect the retail investment market will
remain challenging and materially weaker as a result
of Covid-19. We remain committed to our plan to
refine our Retail portfolio; however, we recognise that
making progress with sales in the coming period will
be more difficult.
London Offices
– Over the year, occupier demand for high quality,
well located London offices has remained strong
with take up in our markets, ahead of the long term
average. However, activity has slowed since March 2020
and Covid-19 is likely to impact some office occupiers.
– Covid-19: Whilst it is too early to predict the full impact
of Covid-19 and its effect on how office occupiers will
want to utilise their space, it is likely to accelerate the
ongoing trend for flexible working, and trends for hot
desking and increased densification may slow. Also a
reduction in rental growth is possible as decision
making goes on hold. However, office supply for large
occupiers remains limited and interest levels remain
robust for the best quality space. Our London
campuses continue to appeal to a broader range of
businesses and are effectively full.
Retail
– The retail occupational market has remained tough
and the challenges facing UK retail have been
compounded by the Covid-19 lockdown. In the short
term, this is playing out in several ways, including rent
reductions, rent deferments and non-payment,
but also an increase in retailers entering CVAs
or administrations.
– Covid-19: The outlook will remain challenging as the
structural changes facing retail accelerate and we
expect further retailers will fail. Our focus is on
helping the customers who are hardest hit but with
otherwise sound business models. We have a
pragmatic approach to leasing to maintain occupancy.
British Land Annual Report and Accounts 2020
83
PRINCIPAL RISKS CONTINUED
External risks
Risks and impacts
How we monitor and manage the risk
Change in risk assessment in year
5
Availability and cost of finance
Reduced availability of finance may
adversely impact ability to refinance debt
and/or drive up cost.
Regulation and capital costs of lenders may
increase cost of finance.
6
Catastrophic business event
An external event such as a civil emergency,
including a large-scale terrorist attack,
cybercrime, pandemic disease, extreme
weather occurrence, environmental
disaster or power shortage could severely
disrupt global markets (including property
and finance) and cause significant damage
and disruption to British Land’s portfolio,
operations and people.
– Market borrowing rates and real estate debt
availability are monitored by the Risk Committee
quarterly and reviewed regularly in order to guide
our financing actions in executing our strategy.
– We monitor our projected LTV and our debt
requirements using several internally generated
reports focused on borrowing levels, debt maturity,
available facilities and interest rate exposure.
– We maintain good long term relationships with
our key financing partners.
– The scale and quality of our business enables us to
access a diverse range of sources of finance with a
spread of repayment dates. We aim always to have
a good level of undrawn, committed, unsecured
revolving facilities to ensure we have adequate
financing availability to support business
requirements and opportunities.
– We work with industry bodies and other relevant
organisations to participate in debate on emerging
finance regulations where our interests and those of
our industry are affected.
– We maintain a comprehensive crisis response plan
across all business units as well as a head office
business continuity plan.
– The Risk Committee monitors the Home Office
terrorism threat level and we have access to security
threat information services.
– Asset emergency procedures are regularly reviewed,
and scenario tested. Physical security measures are
in place at properties and development sites.
– Our Sustainability Committee continues to monitor
environmental risks and we have established a
TCFD Steering Committee to review our
management processes for climate-related risks
and opportunities. Asset risk assessments are
carried out to assess a range of risks including
security, flood, environmental and health and safety.
– We have implemented corporate cyber security
systems which are supplemented by incident
management, disaster recovery and business
continuity plans, all of which are regularly reviewed
to be able to respond to changes in the threat
landscape and organisational requirements.
– We also have appropriate insurance in place across
the portfolio for physical damage.
– Markets have been adversely affected globally by
Covid-19. Governments and central banks have
cut interest rates and increased economic stimulus
in response.
– In the UK, lenders’ appetite and support varies in
different debt markets. For real estate, strength of
sponsor and quality of property remain key. Availability
of finance for retail assets has significantly reduced.
– Covid-19: British Land has maintained good access to
sources of funds in the unsecured markets. We achieved
good support from our banking group with our new
ESG linked RCF of £450m and the extension of £925m
of other committed bank facilities for a further year.
– While the Home Office threat level from international
terrorism has been reduced to ‘Substantial’, the
emerging threat from Covid-19 is incorporated within
our catastrophic business event principal risk and
means our residual risk assessment has increased
since the prior year. Under the new Covid Alert
System, the threat level of Covid-19 on a scale of one
to five is currently rated four (‘Severe’), but moving
towards level three (‘Substantial’) meaning some
lockdown and social distancing measures need to
remain in place.
– The wider use and enhancement of digital technology
across the Group increases the risks associated with
information and cyber security.
– The awareness of climate-related risks has been
elevated in the year, although we have already
been focused on this for some time. We have a long
track record of focusing on sustainability matters and
have a comprehensive strategy to address climate
change risks.
– Covid-19: We have robust crisis management and
business continuity plans in place and have acted
swiftly in responding to the exceptional challenges
posed by Covid-19; our focus is to ensure the safety of
our people, our assets are securely maintained and to
support our customers and suppliers. We protected
the interests of our employees by moving to working
from home even before the lockdown.
Key
Change in risk assessment from last year
Increase
No change
Decrease
84
British Land Annual Report and Accounts 2020
Internal risks
Risks and impacts
7
Investment strategy
In order to meet our strategic objectives,
we aim to invest in and exit from the right
properties at the right time.
Underperformance could result from
changes in market sentiment as well
as inappropriate determination and
execution of our property investment
strategy, including:
– sector selection and weighting
– timing of investment and divestment
decisions
– exposure to developments
– asset, occupier, region concentration
– co-investment arrangements
8
Development strategy
Development provides an opportunity for
outperformance but usually brings with it
elevated risk.
This is reflected in our decision making
process around which schemes to develop,
the timing of the development, as well as
the execution of these projects.
Development strategy addresses several
development risks that could adversely
impact underlying income and capital
performance including:
– development letting exposure
– construction timing and costs (including
construction cost inflation)
– major contractor failure
– adverse planning judgements
How we monitor and manage the risk
Change in risk assessment in year
– Our investment strategy is determined to be
consistent with our target risk appetite and is based
on the evaluation of the external environment.
– Progress against the strategy and continuing
alignment with our risk appetite is discussed at
each Risk Committee with reference to the property
markets and the external economic environment.
– The Board carries out an annual review of the
overall corporate strategy including the current
and prospective asset portfolio allocation.
– Individual investment decisions are subject to
robust risk evaluation overseen by our Investment
Committee including consideration of returns
relative to risk adjusted hurdle rates.
– Review of prospective performance of individual
assets and their business plans.
– We foster collaborative relationships with our
co-investors and enter into ownership agreements
which balance the interests of the parties.
– We manage our levels of total and speculative
development exposure as a proportion of the
investment portfolio value within a target range
considering associated risks and the impact on key
financial metrics. This is monitored quarterly by the
Risk Committee along with progress of
developments against plan.
– Prior to committing to a development, a detailed
appraisal is undertaken. This includes consideration
of returns relative to risk adjusted hurdle rates and
is overseen by our Investment Committee.
– Pre-lets are used to reduce development letting risk
where considered appropriate.
– Competitive tendering of construction contracts and,
where appropriate, fixed price contracts entered into.
– Detailed selection and close monitoring of
contractors including covenant reviews.
– Experienced development management team
closely monitors design, construction and overall
delivery process.
– Early engagement and strong relationships with
planning authorities.
– We actively engage with the communities in which
we operate, as detailed in our Local Charter, to
ensure that our development activities consider the
interests of all stakeholders.
– We manage environmental and social risks across
our development supply chain by engaging with our
suppliers, including through our Supplier Code of
Conduct, Sustainability Brief for Developments and
Health and Safety Policy.
– We have a clear and consistent strategy to build an
increasingly mixed use business, focused on three
core areas; campus focused London Offices;
refocused Retail and residential.
– We have a plan to reduce Retail to 25-30% of our
portfolio over the medium term; based on today’s
values. We have made progress on this with £296m of
retail sales, bringing the total since we set out our
plan in November 2018 to c.£610m.
– Covid-19: Making value-accretive sales will be more
challenging in the current market so we will only
progress on an opportunistic basis and will continue to
allocate capital thoughtfully in light of the current
market conditions.
– Development is a key element of our investment case
as a fundamental driver of value, but is inherently
higher risk, particularly when pursued on a
speculative basis. We limit our development exposure
to 15% of the total investment portfolio by value, with a
maximum of 8% to be developed speculatively.
– We actively manage our development risk and
pre-letting our space is an important part of that
approach. Reflecting our continued successful leasing
activity, 88% of our recently completed and committed
developments are pre-let.
– Covid-19: We chose to halt construction on our
committed pipeline; however, work has safely
recommenced at all our major developments, albeit
currently operating at much lower levels of
productivity due to reduced numbers of people on site
and amended working practices. Delays in
construction may lead to increased cost and there is a
risk of disputes with development partners as to who
bears the cost of delays. However, our committed
developments are close to completion and 88%
pre-let. Our speculative exposure is low at 0.6% of the
total investment portfolio, and we are unlikely to make
further commitments until we have further clarity on
the macro outlook.
British Land Annual Report and Accounts 2020
85
PRINCIPAL RISKS CONTINUED
Internal risks
Risks and impacts
9
Capital structure – leverage
Our capital structure recognises the need
for balance between performance, risk
and flexibility:
– leverage magnifies property returns,
both positive and negative
– an increase in leverage increases the
risk of a breach of covenants on
borrowing facilities and may increase
finance costs
10
Finance strategy
Finance strategy addresses risks both to
continuing solvency and profits generated.
Failure to manage refinancing requirements
may result in a shortage of funds to sustain
the operations of the business or repay
facilities as they fall due.
How we monitor and manage the risk
Change in risk assessment in year
– We manage our use of debt and equity finance
to balance the benefits of leverage against
the risks, including magnification of property
valuation movements.
– We aim to manage our loan to value (LTV) through
the property cycle such that our financial position
would remain robust in the event of a significant fall
in property values. This means we do not adjust our
approach to leverage based on changes in property
market yields.
– We manage our investment activity, the size and
timing of which can be uneven, as well as our
development commitments to ensure that our
LTV level remains appropriate.
– We leverage our equity and achieve benefits of scale
while spreading risk through joint ventures and
funds which are typically partly financed by debt
without recourse to British Land.
– Five key principles guide our financing, employed
together to manage the risks in this area: diversify
our sources of finance, phase maturity of debt
portfolio, maintain liquidity, maintain flexibility,
and maintain strong metrics.
– We monitor the period until financing is required,
which is a key determinant of financing activity.
Debt and capital market conditions are reviewed
regularly to identify financing opportunities that
meet our business requirements.
– Financial covenant headroom is evaluated regularly
and in conjunction with transactions.
– We are committed to maintaining and enhancing
relationships with our key financing partners.
– We are mindful of relevant emerging regulation
which has the potential to impact the way that we
finance the business.
– Over the last few years we have lowered our
leverage and benefit from a sound financial position,
with a proportionally consolidated LTV of 34%.
This financial strength provides us with the capacity
to progress opportunities.
– Covid-19: Given our debt covenant structure across
the Group, we could withstand a further fall in asset
values of c.45% before any mitigating actions.
– The scale of our business and quality of our assets
have enabled us to access a broad range of debt
finance on attractive terms. During the year, we have
completed £550m of refinancing and extended £925m
of facilities.
– Our senior unsecured rating was affirmed at
‘A’ and our short term IDR was upgraded to
‘F1’ during the year.
– Covid-19: We have £1.3bn of undrawn facilities and
cash and no requirement to refinance until 2024.
Key
Change in risk assessment from last year
Increase
No change
Decrease
86
British Land Annual Report and Accounts 2020
Risks and impacts
How we monitor and manage the risk
Change in risk assessment in year
11
People
A number of critical business processes and
decisions lie in the hands of a few people.
Failure to recruit, develop and retain
staff and Directors with the right
skills and experience may result in
significant underperformance or impact
the effectiveness of operations and
decision making, in turn impacting
business performance.
12
Income sustainability
We are mindful of maintaining sustainable
income streams which underpin a stable
and growing dividend and provide the
platform from which to grow the business.
We consider sustainability of our income
streams in:
– execution of investment strategy and
capital recycling, notably timing of
reinvestment of sale proceeds
– nature and structure of leasing activity
– nature and timing of asset management
and development activity
Our HR strategy is designed to minimise risk through:
– informed and skilled recruitment processes
– talent performance management and succession
planning for key roles
– highly competitive compensation and benefits
– people development and training
The risk is measured through employee engagement
surveys, employee turnover and retention metrics. We
monitor this through voluntary staff turnover in addition
to conducting exit interviews.
We engage with our employees and suppliers to make
clear our requirements in managing key risks including
health and safety, fraud and bribery and other social
and environmental risks, as detailed in our policies and
codes of conduct.
– Our people strategy is focused on creating a diverse
team with a range of skills and experiences who can
deliver Places People Prefer.
– Over the year, we have continued to make significant
advances in ensuring that British Land remains a
great place to work, so that our employees remain
motivated and engaged to deliver our strategy.
– Covid-19: The Covid-19 crisis presents a health and
safety risk to our people and has made day-to-day
operations more difficult and complex; and in the
medium term our operating model may need to
change. The health and wellbeing of our people has
always been our priority and we were quick to
encourage all our office-based staff to work from
home. We are providing the resources our people
need to work effectively from home, as well as actively
monitoring our staff wellbeing during this prolonged
period of lockdown.
– We undertake comprehensive profit and cash flow
– Our income streams are underpinned by high quality
forecasting incorporating scenario analysis to model
the impact of proposed transactions.
– We take a proactive asset management approach to
maintain a strong occupier line-up. We monitor our
market letting exposure including vacancies,
upcoming expiries and breaks and speculative
development as well as our weighted average
unexpired lease term.
– We have a high quality and diversified occupier base
and monitor concentration of exposure to individual
occupiers or sectors.
– We are proactive in addressing key lease breaks
and expiries to minimise periods of vacancy.
– We actively engage with the communities in which
we operate, as detailed in our Local Charter,
to ensure we provide places that meet the needs
of all relevant stakeholders.
assets and a diverse occupier base with high
occupancy. However, our income will be negatively
impacted by the challenges facing the retail market
compounded by Covid-19.
– We continue to actively monitor our exposure to
occupiers at risk of default and administration and are
selective about the sectors and occupiers we target.
– Covid-19: We are mindful of the challenges facing
the retail market which has seen more retailers fail.
To support our smaller retail, food & beverage and
leisure customers facing financial challenges we have
been offering rental reductions and for larger
occupiers rent deferrals. Given the likely impact of the
current crisis on occupiers, there is a risk of higher
levels of non-payment of rent. There is also a risk that
UK Government initiatives temporarily structurally
alter the ongoing legal obligations of occupiers to
meet their contractual commitments to landlords.
To preserve flexibility the Board has temporarily
suspended dividends until there is sufficient clarity
of outlook.
British Land Annual Report and Accounts 2020
87
Viability statement
Assessment of prospects
In the current situation it is much more difficult to forecast
given the lack of clarity on the extent and implications
of the Covid-19 pandemic. Consequently, the Board’s
focus is on stress testing a five-year forecast based on
committed transactions.
We have worked consistently over several years to ensure that
British Land has a strong and robust financial footing and we
are now benefitting from that:
– We have £1.3bn of undrawn facilities and cash
– Our leverage remains low, with LTV of 34% at 31 March 2020
– We have a diverse customer base, with our largest occupiers
across Retail and Offices being Tesco (7.8% of Retail rents)
and Facebook (7.8% of Office rents)
– We have strong relationships with our debt providers,
and have agreed extensions to financing of £925m during
the year.
A five-year forecast is considered to be the optimum balance
between the Group’s long term business, underpinned by lease
lengths of 5.8 years and average debt maturity of 7.5 years,
offset by the progressively unreliable nature of forecasting in
later years particularly given uncertainty on the extent and
duration of the Covid-19 pandemic.
Assessment of viability
For the reasons outlined above, the period over which the
Directors consider it feasible and appropriate to report on the
Group’s viability remains five years, to 31 March 2025.
The assumptions underpinning the forecast cash flows and
covenant compliance forecasts were sensitised to explore the
resilience of the Group to the potential impact of the Group’s
significant risks and Covid-19.
The principal risks table on pages 82 to 87 summarises those
matters that could prevent the Group from delivering on its
strategy. A number of these principal risks, because of their
nature or potential impact, could also threaten the Group’s
ability to continue in business in its current form if they were
to occur.
The Directors paid particular attention to the risk of a
deterioration in economic outlook which would adversely
impact property fundamentals, including investor and occupier
demand which would have a negative impact on valuations,
cash flows and a reduction in the availability of finance. In
addition, we have sensitised for the potential implications of a
catastrophic business event. The remaining principal risks,
whilst having an impact on the Group’s business model, are not
considered by the Directors to have a reasonable likelihood of
impacting the Group’s viability over the five-year period to
31 March 2025.
The most severe but plausible ‘downturn scenario’, reflecting a
severe economic downturn and extended Covid-19 pandemic,
incorporated the following assumptions:
– A reduction in occupier demand and impact on income
sustainability; reflected by an ERV decline, occupancy
decline, increased void periods, development delays, no new
lettings during FY21, the impact of 100% of our high risk and
50% of our medium risk tenants entering administration,
and the inability of our remaining Retail tenants (excluding
essential stores) and c.20% of our Office tenants by value to
pay rents for an extended period.
– A reduction in investment property demand to the level seen
in the last severe downturn in 2008/2009, with outward yield
shift to 8% net initial yield.
The outcome of the ‘downturn scenario’ was that the Group’s
covenant headroom on existing debt (i.e. the level at which
investment property values would have to fall before a financial
breach occurs) reduces from 45% to, at its lowest level, 5%,
prior to any mitigating actions such as asset sales, indicating
covenants on existing facilities would not be breached.
Based on the Group’s current commitments and available
facilities there is no requirement to refinance until 2024. In the
normal course of business, financing is arranged in advance of
expected requirements and the Directors have reasonable
confidence that additional or replacement debt facilities will be
put in place prior to this date.
In the downturn scenario the refinancing date reduces to
mid 2022. However, in the event new finance could not be
raised mitigating actions are available to enable the Group to
meet its future liabilities at the refinancing date, principally
asset sales, which would allow the Group to continue to meets
its liabilities over the assessment period.
Viability statement
Having considered the forecast cash flows and covenant
compliance and the impact of the sensitivities in combination in
the ‘downturn scenario’, the Directors confirm that they have a
reasonable expectation that the Group will be able to continue
in operation and meet its liabilities as they fall due over the
period ending 31 March 2025.
Going concern
The Directors also considered it appropriate to prepare the
financial statements on the going concern basis, as explained
in the Governance Review.
To read more information on going concern, go to page 102
88
British Land Annual Report and Accounts 2020
The Strategic Report was approved
by the Board on 26 May 2020 and
signed on its behalf by:
Chris Grigg
Chief Executive
British Land Annual Report and Accounts 2020
89
I am pleased to present
the 2020 Corporate
Governance Report
C
h
a
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m
a
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The Board’s responsibility for leading the Company
and overseeing the governance of the Group continues to be
supported by a robust structure which allows for constructive
debate and challenge by all Board members. This approach
enables the Directors to make effective decisions, at the right
time and based on the right information.
I am pleased to present the Corporate Governance
Report for the year ended 31 March 2020.
Governance underpins the way in which the business
of the Group is managed, our behaviour and our
corporate culture. This year, we are reporting
against the 2018 UK Corporate Governance Code
(the ‘Code’) available at www.frc.org.uk. I am pleased
with the standards of governance the Board
continues to uphold and the Board considers
that the Company has complied with the Code
throughout the year.
An additional requirement this year is to include a
statement on how the Board has had regard to the
matters set out in s172(1)(a) to (f) of the Companies
Act 2006. This statement can be found on page 33
and highlights that we continue to ensure that
Directors have the right information on which to
make decisions. This is supported by our strong
engagement with the key stakeholders in our
business, including employees, suppliers,
customers, local authorities, partners, communities
and shareholders further details of which can be
found on pages 96, 97 and 116, 117.
As I stated in my introduction to this Annual Report
and Accounts, our purpose is to create and manage
outstanding places which deliver positive outcomes
for all our stakeholders on a long term, sustainable
basis. We call this Places People Prefer; we have
articulated it that way for more than six years, but it
has underpinned the way we do business for much
longer. From providing the best space and the right
services to delivering great buildings, it is the input
we get from all our stakeholders that enables us to
do this well. Engaging with them and having regard
to our broader impact on the environment is
therefore always factored into our decision making.
90
British Land Annual Report and Accounts 2020
The Board formally satisfies itself that the matters in s172 have
been taken into account by consulting a checklist included with
decision papers, setting out which of the factors are relevant to
the decision and where in the paper they are discussed.
Covid-19
The way in which we have responded to the Covid-19 crisis
demonstrates that the interests of our stakeholders are fully
integrated into our decision making. Key considerations included:
– interests of employees in moving to working from home
before the lockdown;
– relationships with customers in forgiving or deferring rent;
– safety and needs of our suppliers in closing down and safely
reopening construction sites;
– impact on the communities by providing further contributions
to the Community Investment Fund;
– consequences of supporting our customers to preserve long
term value for shareholders; and
– balancing all of the above with the interests of shareholders
and the decision to suspend the dividend.
CSR Committee
We have this year introduced a new committee, the Corporate
Social Responsibility (CSR) Committee. The CSR Committee,
chaired by Alastair Hughes, is our prescribed mechanism for
workforce engagement in accordance with Provision 5 of the
Code. Further details can be found in the CSR Committee report
on page 114. We believe that having a committee responsible for
engagement with the workforce provides greater resource at
Board level dedicated to engagement than designating a single
non-executive director.
Board changes
In April 2020, William Jackson had served nine years on the
Board and although we had announced he would step down at
the end of the AGM in July 2020, we have asked William, and he
has agreed, given the current uncertainty brought about by
Covid-19, to stay on the Board for up to a further 12 months.
Preben Prebensen has been appointed as William’s successor
as the Senior Independent Director and Alastair Hughes will
replace William on the Nomination Committee, with both
changes becoming effective at the end of the 2020 AGM.
The Board has appointed Irvinder Goodhew as an independent
Non-Executive Director with effect from 1 October 2020.
Further details on her appointment and experience can be
found on page 105.
All Directors in role at 31 March 2020 will stand for re-election
at the 2020 AGM.
This year we carried out an internal evaluation of the Board.
Details of the process undertaken and a summary of the
outcomes are set out on pages 100 to 101.
Directors’ Report
Chairman’s introduction
Board of Directors
Stakeholder engagement statement
Corporate Governance Report
Report of the Nomination Committee
Report of the Audit Committee
Report of the Corporate Social
Responsibility Committee
Workforce engagement statement
Directors’ Remuneration Report
Directors’ Report and additional disclosures
Directors’ responsibilities statement
90
92
96
98
104
108
114
116
118
134
137
Compliance with the UK Corporate
Governance Code
In addition to the reports listed above,
the following sections of this Governance
Report outline how the principles of the
Code have been followed:
Board Leadership
& Company Purpose
More on page 98
Division of
Responsibilities
More on page 99
Composition, Succession
& Evaluation
More on page 100
Audit, Risk Management
& Internal Control
More on page 101
Remuneration
More on page 102
This year’s AGM will unfortunately not allow the usual level of
engagement between the Board and shareholders at an open
meeting because of the restrictions in place as a result of
Covid-19, but we would urge you still to cast your vote by
appointing the Chairman of the meeting as your proxy.
Tim Score
Non-Executive Chairman
British Land Annual Report and Accounts 2020
91
BOARD OF DIRECTORS
Driving success
Our Board develops strategy and leads British Land
to achieve long term success.
Tim Score
N
Chris Grigg
Simon Carter
Non-Executive Chairman
Chief Executive
Chief Financial Officer
Appointed as a Non-Executive Director
in March 2014 and as Chairman in July 2019.
Skills and experience
Tim has significant experience in the rapidly
evolving global technology landscape and brings
years of engagement both with mature economies
and emerging markets to the Board.
He is a non-executive director of Pearson plc and
HM Treasury and sits on the board of trustees of
the Royal National Theatre. Tim was formerly
chief financial officer of ARM Holdings PLC and
held senior financial positions at Rebus Group
Limited, William Baird plc, LucasVarity plc
and BTR plc. From 2005 to 2014, he was a
non-executive director of National Express Group
PLC, including time as interim chairman and
six years as senior independent director.
Appointed to the Board in January 2009.
Appointed to the Board in May 2018.
Skills and experience
Skills and experience
Chris Grigg has been Chief Executive of British Land
since 2009. Throughout this last decade, he has put
placemaking, wellbeing, sustainability and design
excellence at the heart of British Land’s approach
to real estate. This is summed up in the company’s
strategic focus on creating “Places People Prefer”.
Chris has also focused on balancing diversity at all
levels within British Land and actively championed
diversity across the property sector.
Until November 2008, Chris was Chief Executive of
Barclays Commercial Bank, having joined Barclays
in 2005. Prior to that, Chris spent over 20 years at
Goldman Sachs. Chris is a Non-Executive Director
of BAE Systems plc where he also sits on the
Corporate Responsibility Committee, and is on the
Executive Board of the European Public Real Estate
Association (EPRA).
Simon has extensive experience of finance and
the real estate sector. He joined British Land from
Logicor, the owner and operator of European
logistics real estate, where he had served as
chief financial officer since January 2017.
Prior to joining Logicor, from 2015 to 2017
Simon was finance director at Quintain Estates
& Development Plc. Simon previously spent over
10 years with British Land, working in a variety of
financial and strategic roles and was a member
of our Executive Committee from 2012 until his
departure in January 2015. Simon also previously
worked for UBS in fixed income and qualified as a
chartered accountant with Arthur Andersen.
William Jackson
N
Preben Prebensen
N
R
Laura Wade-Gery
R
Non-Executive Director
Senior Independent Non-Executive Director
Non-Executive Director
Appointed as a Non-Executive Director
in April 2011 and Senior Independent Director
in July 2017.
Skills and experience
William’s experience spans business operations
and financial planning. He is Managing Partner of
Bridgepoint, one of Europe’s leading private equity
groups, which he has led since 2001. William has
served on a wide range of UK and international
boards during his career and has extensive
property experience.
William will be stepping down from the Nomination
Committee and as Senior Independent Director
at the end of the 2020 AGM. He will be succeeded
by Alastair Hughes and Preben Prebensen
respectively. He will seek re-election for a period
of not more than 12 months.
Appointed as a Non-Executive Director
in September 2017.
Appointed as a Non-Executive Director
in May 2015.
Skills and experience
Skills and experience
Preben has 30 years’ experience in driving long
term growth for British banking businesses.
He has held the position of chief executive of Close
Brothers Group plc since 2009 but is expected to
step down in 2020. Preben was formerly the chief
investment officer of Catlin Group Limited and
chief executive of Wellington Underwriting plc.
Prior to that he held a number of senior positions
at JP Morgan.
Preben will succeed William Jackson in the role
of Senior Independent Director at the end of the
2020 AGM.
Laura has deep knowledge of digital
transformation and customer experience and
brings her experience leading business change
management to the Board.
She is a non-executive director of John Lewis
Partnership plc and Deputy Chair of NHS
Improvement. Previously, Laura was executive
director Multi Channel at Marks and Spencer
Group plc, served in a number of senior positions
at Tesco PLC including chief executive officer of
Tesco.com and was a non-executive director of
Reach PLC (formerly known as Trinity Mirror plc).
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British Land Annual Report and Accounts 2020
Lynn Gladden
C
R
Alastair Hughes
C
A
Nicholas Macpherson
A
Non-Executive Director
Non-Executive Director
Non-Executive Director
Appointed as a Non-Executive Director
in March 2015.
Appointed as a Non-Executive Director
in January 2018.
Appointed as a Non-Executive Director
in December 2016.
Skills and experience
Skills and experience
Skills and experience
Lynn is recognised as an authority in working at
the interface of advanced technology and industry.
Her critical thinking and analytical skills bring a
unique dimension to the Board.
She is Shell Professor of Chemical Engineering at
the University of Cambridge and was appointed as
Executive Chair of the Engineering and Physical
Sciences Research Council in 2018. She is also a
fellow of the Royal Society and Royal Academy
of Engineering.
Alastair has proven experience of growing real
estate companies and is a fellow of the Royal
Institution of Chartered Surveyors.
Alastair is a non-executive director of Schroders
Real Estate Investment Trust Limited, Tritax Big
Box REIT and QuadReal Property Group, with over
25 years of experience in real estate markets.
He is a former director of Jones Lang LaSalle Inc.
(JLL) having served as managing director of JLL
in the UK, as CEO for Europe, Middle East and
Africa and then as CEO for Asia Pacific.
Alastair will join the Nomination Committee at the
end of the 2020 AGM.
Nicholas has directed organisations through both
fiscal and strategic change management and
brings this vital expertise to the Board.
He is chairman of C. Hoare & Co and a director of
The Scottish American Investment Company PLC.
Nicholas was the Permanent Secretary to the
Treasury for over 10 years from 2005 to March 2016,
leading the department through the financial
crisis and subsequent period of banking reform.
Board Committee membership key
A
C
N
R
Audit Committee
Corporate Social Responsibility Committee
Nomination Committee
Remuneration Committee
Chair of a Board Committee
Rebecca Worthington
A
Brona McKeown
Non-Executive Director
Appointed as a Non-Executive Director
in January 2018.
General Counsel and Company Secretary
Appointed as General Counsel and Company
Secretary in January 2018.
Skills and experience
Skills and experience
Rebecca has extensive listed property sector
experience and brings key commercial acumen
to the Board.
She is chief financial officer of IQSA Services
Limited and was formerly group chief operating
officer, having previously been group chief finance
officer, of Countryside Properties PLC. Rebecca
also spent 15 years at Quintain Estates and
Development PLC as finance director before
becoming deputy chief executive.
She was also a non-executive director and chair of
the audit committee at Hansteen Holdings plc until
March 2018, and a non-executive director of Aga
Rangemaster Group plc until September 2015.
She qualified as a chartered accountant with
Pricewaterhouse Coopers LLP.
Before joining British Land, Brona was
General Counsel and Company Secretary of
The Co-operative Bank plc for four years as part
of the restructuring executive team. Immediately
prior to that she was Interim General Counsel
and Secretary at the Coventry Building Society.
Until October 2011, Brona was Global General
Counsel of the Corporate division of Barclays
Bank plc, having joined Barclays in 1998.
Brona trained and spent a number of years
at a large City law firm.
British Land Annual Report and Accounts 2020
93
BOARD ACTIVITY
Our core focus areas
The Board meets regularly with people from across the British Land
business and interacts with a range of advisers including corporate brokers
and valuers. During Covid-19 they have met every two weeks to consider
the impact on stakeholders and the business. Board discussions have
covered a wide range of topics with a significant amount of time spent on
the following strategic topics:
Strategic topic
Areas on which the Board has focused during the year
Customer Orientation
– Strategic occupier relocation and associated capital expenditure at Canada Water
– Residential strategy
– Retail landscape and occupier insolvency
– Financial support to occupiers and service partners during the Covid-19 pandemic
Right Places
– Strategic occupier relocation and associated capital expenditure at Canada Water
– The development of 1 Broadgate
– Overseeing our Retail disposal strategy
– Capital plan and long term development pipeline
Expert People
– The safety and wellbeing of our workforce following the outbreak of Covid-19 and the
nationwide shutdown
– Decisions on remuneration in the context of Covid-19
– The delivery of a P2P system and further approval for central system infrastructure improvements
– The 2019 employee engagement survey
– Challenging management to improve collaboration and communication which led to the creation
of the British Land Leadership Team
Capital Efficiency
– Portfolio structure and shareholder value
– Suspension of dividend in March 2020 in light of the Covid-19 pandemic
– Refinancing and capital allocation to ensure liquidity and covenant headroom
– Investor engagement and share price performance
Sustainability
– 2030 sustainability strategy
– Oversight of the work of the newly established CSR Committee
– Diversity and inclusion across our business
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British Land Annual Report and Accounts 2020
GOVERNANCE AT A GLANCE
A strategic enabler
Our governance structure ensures that the right people
have access to the right information. Delegated authorities
throughout our organisation enable effective decision
making at appropriate levels.
Governance framework
Board
Board of Directors
Audit Committee
Corporate Social
Responsibility
Committee
Nomination Committee
Remuneration
Committee
Executive
Chief Executive
Executive Committee
Investment Committee
Risk Committee
Management
Community Investment Committee
Health and Safety Committee
Sustainability Committee
Board attendance
Director
Tim Score
Alastair Hughes1
Chris Grigg
Laura Wade-Gery
Lynn Gladden1
Nicholas Macpherson
Preben Prebensen
Rebecca Worthington
Simon Carter
William Jackson 2
Additional Board meetings in response to Covid-19
Scheduled
meetings
6/6
6/6
6/6
6/6
6/6
6/6
6/6
6/6
6/6
5/6
Ad hoc
meetings
Total
Director
4/4
2/4
4/4
4/4
3/4
4/4
4/4
4/4
4/4
4/4
10/10
8/10
10/10
10/10
9/10
10/10
10/10
10/10
10/10
9/10
Tim Score
Alastair Hughes
Chris Grigg
Laura Wade-Gery
Lynn Gladden
Nicholas Macpherson
Preben Prebensen
Rebecca Worthington
Simon Carter
William Jackson
Total
5/5
5/5
5/5
5/5
5/5
5/5
5/5
5/5
5/5
5/5
Former Directors who served during the year
John Gildersleeve
2/2
–
2/2
1. Alastair Hughes missed two ad hoc meetings and Lynn Gladden missed one ad
hoc meeting that were called at short notice. In each case, the Directors who
were unable to attend had been separately briefed on the business of the
meeting and had provided their views beforehand.
2. William Jackson was unable to attend one meeting in July 2019 which conflicted
with his daughter’s graduation.
The Board of Directors has made itself available for a total of
five meetings at short notice from 22 March to 1 May 2020 in
order to receive important updates and make critical decisions
in response to Covid-19. This highlights the Board’s individual
and collective commitment to British Land and demonstrates
that each Director has sufficient time to commit to critical needs
in addition to meetings in the ordinary course of business.
British Land Annual Report and Accounts 2020
95
STAKEHOLDER ENGAGEMENT STATEMENT
Engaging with and
considering the needs of
our key stakeholders
Effective stakeholder engagement is at the heart of Places People Prefer
and embedded throughout every level of British Land.
The nature of our business, from investing and developing properties to managing and curating our spaces,
means we have a continuous dialogue with a wide group of stakeholders including customers, local authorities,
local communities, suppliers, partners and shareholders. This continuous engagement means the views of
our stakeholders are taken into account before proposals are put to the Board for a decision.
How do we engage with our stakeholder groups?
Our customers
We develop our buildings in collaboration with future occupiers so that from the ground up, the end
product is designed to fit the needs of our customers. This dialogue continues long after the
development is complete as we look to support our customers over a long term relationship.
We utilise our flexible office brand Storey to help our customers grow.
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British Land Annual Report and Accounts 2020
Our communities, partners and suppliers
Communities
We embed ourselves into the communities we operate in. For example,
through the Literacy Trust we have helped 42,700 children to read over the
past 10 years. See the People section of our strategic report from page 28 for
more information about our community projects.
Suppliers
We maintain a continuous dialogue with our suppliers through our
procurement management process. In September 2019, we hosted a round
table event which was attended by 40 of our key suppliers all of whom
exchanged pledges to raise the diversity and inclusion agenda across our
supply chain. By working together we hold each other accountable for the
delivery of the pledges.
Local authorities
At Canada Water, working closely with Southwark Council, we conducted over
120 public consultations and local outreach events, attracting over 5,000
individuals over a period of five years, giving us a real insight into what key
stakeholder groups wanted from this development. This resulted in some
significant changes to our masterplan.
Our people
The workforce engagement statement on pages 116 to 117 outlines the work
we do to ensure the views of our workforce are known and taken into account
in decision making.
How stakeholder interests
and the matters set out within s172
of the Companies Act 2006 are
considered in Board discussions
and decision making:
Material business decisions are reserved
for the Board, however our Investment
Committee has a delegated authority to
take investment decisions of up to
£100m. Proposals that are brought to
either the Board or Investment
Committee for decision are accompanied
by a checklist that outlines the matters
included in s172(1) (a)-(f) of the
Companies Act 2006 and specifically
lists the relevance of each to the
decision. This ensures that the forum
taking the decision understands the
impact on our stakeholders.
Our s172 Statement is within the
Strategic Report on page 33.
Canada Water
As described on page 53 of the Strategic
Report, the work undertaken to date
to receive a resolution to grant planning
for our 53 acre masterplan at Canada
Water has been informed by in-depth
stakeholder engagement over many
years. Our vision for Canada Water has
evolved over time and has been shaped
around the local community and
businesses that it is home to, from
revisions made to our masterplan in
response to residents’ opinions, to
retaining the Printworks within our
plans to respond to the successful
venue it has become.
In September 2019, the Board considered
the residential strategy of the Group, of
which our plans at Canada Water are a
key component. The Board considered
that the successful delivery of the
residential strategy at Canada Water
involved positive long term relationships
with our supply chain. The Board
recognised that the flexibility within
the planning consent would enable a
variety of tenure and quantum of homes
to be delivered to ensure a mixed and
balanced community.
Considering our
stakeholders during
the Covid-19
pandemic
The Board took the decision
on 25 March to temporarily
suspend dividends in light of the
financial uncertainty arising
from the Covid-19 pandemic.
In reaching this decision, the
Board specifically considered
stakeholder interests and the
matters set out in s172.
A key driver of the decision
was to provide greater flexibility
in the short to near term that
would enable us to support the
hardest hit retail and leisure
customers, protect the long
term value of the business
and further strengthen our
financial resilience.
The Board took the decision to
release smaller retail, food and
beverage and leisure customers
from their rental obligations
for three months at a cost of
£2m and we have agreed to
defer a further c.£35m of rental
payments for the quarter
ended March 2020. The Board
specifically considered the
impact to the local communities
we operate in when making
their decision.
Although we initially closed our
construction sites, we were able
to support some of our suppliers
where it was safe for them to
return to the site, as well as our
suppliers’ sub-contractors.
We were able to respond quickly
and effectively providing help
where it was most needed due
to the strong relationships we
have built with the communities
we operate in over many years.
The Board held five additional
meetings over the period from
22 March to 1 May 2020 to
consider the fast changing
environment.
British Land Annual Report and Accounts 2020
97
GOVERNANCE REVIEW
Corporate Governance Report
Board Leadership & Company Purpose
The Board has determined that the Company’s purpose
is to create and manage outstanding places to deliver
positive outcomes for all our stakeholders on a sustainable
basis. We call this Places People Prefer. We do this by
understanding the evolving needs of the people and
organisations who use our places every day and the
communities who live in and around them. The changing
way people choose to work, shop and live is what shapes
our strategy, enabling us to drive enduring demand for our
space and value over the long term.
The Board, supported by an expert management team,
continue to maximise the competitive advantage of the
Company by utilising a deep history of stakeholder
engagement to produce Places People Prefer and
maximise sustainable value for shareholders. The Company
is led by the Board in its entrepreneurial approach to
placemaking and continues to innovate and produce world
class destinations.
As at 31 March 2020, the Board comprised the Chairman,
seven independent Non-Executive Directors and two
Executive Directors. We continue to have a strong mix of
experienced individuals on the Board. The majority are
independent Non-Executive Directors who are not only
able to offer an external perspective on the business,
but also constructively challenge the Executive Directors,
particularly when developing the Company’s strategy
and in their performance.
Our governance structure is designed to ensure that
decisions are taken at the appropriate level with the proper
level of oversight and challenge. Elements of our business
require quick decision making and this is enabled by an
agile Board and management team that collaborate
effectively on complex issues.
Strategy days
The Board held its annual offsite strategy event during
February 2020. The strategy days are structured to provide
the Directors, and the Non-Executive Directors in particular,
with an opportunity to focus on the development of,
and challenge to, the Company’s corporate strategy.
The Executive Directors, senior executives and external
guests delivered a number of presentations to attendees
providing in-depth analysis on aspects of the business and
the external environment. The days were carefully structured
to achieve a balance between presentations, debate and
discussion. Areas focused on at the 2020 strategy days
included: portfolio structure and shareholder value;
customer focus (with a presentation from Jones Lang
Lasalle); sustainability (both environmental and social);
and Canada Water.
Culture and stakeholder engagement
The Company’s purpose is core to every decision taken by
the Board. As detailed on pages 6 and 7 the Company has a
framework of values and strategic measures that underpin our
purpose to ensure that the strategy and culture of the Company
are aligned. Led by the CSR Committee, we have a broad range
of workforce engagement mechanisms to ensure the Board is
able to assess the culture of the organisation. Our workforce
engagement mechanisms are described on pages 116 and 117.
The Board receives regular updates on workforce engagement
from the CSR Committee and management team through,
amongst other methods, detailed workforce surveys. The Board
has delegated oversight of the Company’s whistleblowing
arrangements to the Audit Committee but retains overall
responsibility and receives updates on cases as appropriate.
In the year under review, the Board challenged management to
enhance collaboration, one of the Company’s core behaviours,
which resulted in the creation of the British Land Leadership
Team. The team consists of the Executive Committee and its
direct reports in management roles who meet regularly both
formally and informally to ensure there is a direct and visible
link across the business and a channel for workforce views to
reach the Board.
As well as workforce engagement, the CSR Committee has
formal responsibility for engagement with the Company’s wider
stakeholders. Stakeholder engagement is integral to creating
Places People Prefer and the decisions taken by the Board to
maximise shareholder value are enhanced by the views of the
diverse range of stakeholders and wider communities that we
serve. The mechanisms that ensure effective stakeholder
engagement as well as two examples of how decisions in
the boardroom have been shaped by the impacts on our
stakeholders are described in the stakeholder engagement
statement on page 96. Further information on British Land’s
contribution to wider society can be found on pages 30 to 37.
Engagement with major shareholders
Institutional investors and analysts receive regular
communications from the Company, including investor
relations events, one-to-one and group meetings with
the Chairman and Executive Directors, and tours of our
major assets.
In September 2019, the Company hosted an investor day for
institutional investors and analysts in Storey Club at our
Paddington campus. The Group Chairman, Executive Directors
and senior management gave presentations and held breakout
sessions on strategic initiatives, sustainability and our long term
view. The presentations were recorded and are available to view on
our website www.britishland.com/investors/investor-day-2019.
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British Land Annual Report and Accounts 2020
The Chairman is committed to ensuring that shareholder
views, both positive and negative, are relayed back to the
Board and is assisted by the executive team in doing so.
The Chairman has met personally with 10 investors during
the course of the year and is committed to understanding
and sharing the views of major shareholders within
the boardroom.
In addition to the Chairman’s efforts, the Chief Executive
provides a written report at each scheduled Board meeting
which includes direct market feedback on activity during
the period and commentary on any meetings with
major shareholders.
Conflicts of interest
The Directors are required to avoid a situation in which they
have, or could have, a direct or indirect conflict with the
interests of the Company. The Board has established a
procedure whereby the Directors are required to notify
the Chairman and the General Counsel and Company
Secretary of all potential new outside interests and actual
or perceived conflicts of interest that may affect them in
their roles as Directors of British Land. All potential
conflicts of interest are authorised by the Board and the
register of Directors’ interests is reviewed by the Board
twice a year. The Board also reviews the Directors’ Interests
Policy on an annual basis. Following the last review in
November 2019, the Board concluded that the policy
continued to operate effectively.
External appointments
Any additional significant appointments must be approved by
the Board before they are accepted by Directors. The Board
will consider the Directors’ existing commitments in making
its decision. Non-Executive Directors’ letters of appointment
set out the time commitments expected from them.
Following consideration, the Nomination Committee has
concluded that all the Non-Executive Directors continue to
devote sufficient time to discharging their duties to the
required high standard.
British Land’s policy is to allow Executive Directors to take
one non-executive directorship at another FTSE company,
subject to Board approval. External appointments of the
Executive Directors are disclosed in their biographies.
Any fees earned by the Executive Directors from such
appointments are disclosed on page 130 within the
Remuneration Report.
The Board considered and approved the appointment of
Alastair Hughes to the Board of QuadReal Property Group,
which the Board deemed a significant appointment.
Division of Responsibilities
There is a clear written division of responsibilities between
the Chairman (who is responsible for the leadership
and effectiveness of the Board) and the Chief Executive
(who is responsible for managing the Company’s business).
The responsibilities of the Chairman, Chief Executive
and Senior Independent Director have been agreed by
the Board and are available to view on our website
www.britishland.com/committees.
When running Board meetings, the Chairman maintains a
collaborative atmosphere and ensures that all Directors have
the opportunity to contribute to the debate. The Directors
are able to voice their opinions in a calm and respectful
environment, allowing coherent discussion.
The Chairman also arranges informal meetings and events
throughout the year to help build constructive relationships
between Board members and the senior management team.
The Chairman meets with individual Directors outside formal
Board meetings to allow for open, two-way discussion
about the effectiveness of the Board, its Committees and
its members. The Chairman is therefore able to remain
mindful of the views of the individual Directors.
Operation of the Board
Our governance structure set out on page 95, ensures that
the Board is able to focus on strategic proposals, major
transactions and governance matters which affect the
long term success of the business.
Regular Board and Committee meetings are scheduled
throughout the year. In response to feedback received
through the Board evaluation process, an additional Board
meeting has been added to the annual calendar to ensure
continuity across the full year. Ad hoc meetings may be held
at short notice when Board-level decisions of a time-critical
nature need to be made or for exceptional business.
Fortnightly Board calls were held during the Covid-19 crisis.
Care is taken to ensure that information is circulated in good
time before Board and Committee meetings and that papers
are presented clearly and with the appropriate level of detail
to assist the Board in discharging its duties. The Head of
Secretariat assists the Board and Committee Chairs in
agreeing the agenda in sufficient time before the meeting to
allow input from key stakeholders and senior executives.
Papers for scheduled meetings are circulated one week prior
to meetings and clearly marked as being ‘For Decision’,
‘For Information’ or ‘For Discussion’. To enhance the delivery
of Board and Committee papers, the Board uses a Board
portal and tablets which provide a secure and efficient
process for meeting pack distribution.
British Land Annual Report and Accounts 2020
99
GOVERNANCE REVIEW CONTINUED
Division of Responsibilities
Under the direction of the Chairman, the General Counsel
and Company Secretary facilitates effective information
flows between the Board and its Committees, and between
senior management and Non-Executive Directors.
Board Committees
Four standing Committees have been operating throughout
the year: Audit, Nomination, Remuneration and Corporate
Social Responsibility, to which certain powers have been
delegated. Membership of each of these Committees is
comprised solely of independent Non-Executive Directors.
The reports of these four standing Committees are set out
in the following pages. The terms of reference of each
Committee and the matters reserved for the Board are
available at our website www.britishland.com/committees.
The Board has delegated authority for the day-to-day
management of the business to the Chief Executive.
Executive Directors and senior management have been
given delegated authority by the Board to make decisions
within specified parameters. Decisions outside of these
parameters are reserved for the Board although
management will often bring decisions within their
delegated authority to the Board for scrutiny and challenge.
Management are supported by three standing Executive
Committees:
Investment Committee
Principal investment decisions are reserved for the Board,
however it has delegated authority to the Investment
Committee to make decisions within specified financial
parameters. The Investment Committee membership
comprises the Chief Executive, Chief Financial Officer, Head
of Strategy and Investments, Head of Real Estate and Head
of Developments. The Investment Committee also reviews
investment proposals that fall outside of its delegated
authority and provides recommendations to the Board for
its consideration.
Executive Committee
The Chief Executive is supported by the Executive
Committee in discharging his duties which have been
delegated by the Board. Comprised of the senior
management team, the Committee’s main areas of focus
are the formulation and implementation of strategic
initiatives, business performance monitoring and evaluation
and overseeing culture and stakeholder engagement.
Risk Committee
The Chief Financial Officer chairs the Risk Committee which
comprises all members of the Executive Committee. The
Committee manages external, strategic and operational
risks in achieving the Company’s performance goals.
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British Land Annual Report and Accounts 2020
Composition, Succession
& Evaluation
Our rigorous and transparent procedures for appointing
new Directors are led by the Nomination Committee.
Non-Executive Directors are appointed for specified terms
and all continuing Directors offer themselves for election
or re-election by shareholders at the AGM each year
provided the Board, on the recommendation of the
Nomination Committee, deems it appropriate that they
do so. The procedure for appointing new Directors is
detailed in the Nomination Committee report on page 106.
The Nomination Committee is responsible for reviewing the
composition of the Board and its Committees and assessing
whether the balance of skills, experience, knowledge and
diversity is appropriate to enable them to operate effectively.
More detail can be found in the Nomination Committee report
on page 105.
The Notice of Meeting for the 2020 Annual General Meeting
details the specific reasons why the contribution of each
Director seeking re-election is and continues to be
important to the Company’s long term sustainable success.
The biographies of each Director on pages 92 to 93 set
out the skills and expertise that each Director brings to
the Board.
Following a recommendation from the Nomination
Committee, the Board considers that each Non-Executive
Director remains independent in accordance with provisions
of the Code.
As well as leading the procedures for appointments to the
Board and its Committees, the Nomination Committee
oversees succession planning for the Board and senior
management with reference to the Board Diversity and
Inclusion Policy. Further details on the work of the
Nomination Committee and the Diversity and Inclusion
Policy are within its report on page 107.
Board evaluation
The effectiveness of the Board and its Committees is
reviewed annually, with an independent, externally
facilitated review being conducted at least once every three
years. The next external review will be in 2021.
In 2020, an internal evaluation of the Board and its
Committees was conducted by the General Counsel and
Company Secretary by circulating questionnaires, seeking
quantitative and qualitative feedback and reporting the
outcomes to the Board.
In addition to the formal evaluation, the Chairman met each
Non-Executive Director individually during the year to discuss
their contribution to the Board. The Senior Independent
Director led the appraisal of the Chairman’s performance
by the Non-Executive Directors, with the views of the
Executive Directors also being taken into consideration.
The Chairman and Chief Executive presented their
appraisals of the performance of the Chief Executive and
the Chief Financial Officer respectively. These appraisals
were taken into account when considering the performance
of the Board as a whole as well as in relation to annual and
long term incentive awards.
The review concluded that the Board, its Committees and
its individual members all continue to operate effectively
and with due diligence. It also confirmed that good progress
has been made on the recommendations of last
year’s evaluation:
– the Board has continued to develop its understanding of
culture and values with a review of the engagement
survey results;
– there have been more discussions on succession plans
this year, with the whole Board spending more time
considering the issue; and
– the time scheduled for Board meetings has been
extended, with strategy being a greater focus throughout
the year.
The focus for the coming year will be:
– continuing the work on progressing succession planning
throughout the organisation;
– testing and refining the strategy in light of changes in
the sector;
– reviewing the scope of the CSR Committee; and
– improving the understanding and monitoring of culture
and values.
We will report on the progress of these focus areas in the
2021 Annual Report.
Audit, Risk Management
& Internal Control
Financial and business reporting
The Board is responsible for preparing the Annual Report
and confirms in the Directors’ Responsibilities Statement
set out on page 137 that it believes that the Annual Report,
taken as a whole, is fair, balanced and understandable. The
process for reaching this decision is outlined in the report of
the Audit Committee. The basis on which the Company
creates and preserves value over the long term is described
in the Strategic Report.
Audit Committee
The Audit Committee is responsible for monitoring the
integrity of the financial statements and results
announcements of the Company as well as the
appointment, remuneration and effectiveness of the
external and internal auditors. The detailed report of the
Audit Committee is on pages 108 to 113.
Risk management
The Board determines the extent and nature of the risks it
is prepared to take in order to achieve the Company’s
strategic objectives. The Board is assisted in this
responsibility by the Audit Committee which makes
recommendations in respect of the Group’s principal and
emerging risks, risk appetite and key risk indicators.
Further information on the Group’s risk management
processes and role of the Board and the Audit Committee
can be found on page 78.
The Board has responsibility for the Company’s
overall approach to risk management and internal control
which includes ensuring the design and implementation of
appropriate risk management and internal control systems.
Oversight of the effectiveness of these systems is delegated
to the Audit Committee which undertakes regular reviews
to ensure that the Group is identifying, considering and as
far as practicable mitigating the risks for the business.
During the course of its review for the year ended 31 March
2020, and to the date of this Report, the Audit Committee
has not identified, nor been advised of, a failing or weakness
which it has determined to be significant.
Pages 112 to 113 set out the confirmations that the Audit
Committee made to the Board as part of the risk
management and internal control assurance process for
the full year.
Internal control over financial reporting
As well as complying with the Code, the Group has adopted
the best practice recommendations in the FRC ‘Guidance
on risk management, internal control and related financial
and business reporting’ and the Company’s internal control
framework operates in line with the recommendations set
out in the internationally recognised COSO Internal Control
Integrated Framework.
British Land Annual Report and Accounts 2020
101
GOVERNANCE REVIEW CONTINUED
Audit, Risk Management
& Internal Control
Remuneration
The Company’s remuneration policies and practices
are designed to support strategy and promote the long
term sustainable success of the business. We have a
clear strategy to “build an increasingly mixed use
business”. To deliver on this strategy, we focus on four
objectives: Customer Orientation, Capital Efficiency,
Right Places and Expert People. Delivering against
these objectives creates the inputs to future value
creation for all of our stakeholders. In our Directors’
Remuneration Report we explain our approach to
incentivise and reward employees to deliver these
inputs whilst also managing the business on a day-to-
day basis. We also explain how we create alignment
with shareholders and measure our performance over
the longer term.
Our current Remuneration Policy was approved by
shareholders at the 2019 AGM. The Committee is also
responsible for establishing remuneration of the
members of the Executive Committee.
The Remuneration Committee is authorised to use
discretion in determining remuneration outcomes for
Executive Directors and the wider workforce. Further
details on the Committee’s use of discretion this year
can be found in the Directors’ Remuneration Report
starting on page 118.
The key risk management and internal control procedures
over financial reporting include the following:
– Operational risk management framework: operational
reporting processes are in place to mitigate the risk of
financial misstatement. Key controls are owned by
senior managers who report on compliance on a
six-monthly basis to the Risk Committee. All key internal
financial controls are reviewed on a two-yearly cycle by
internal audit;
– Financial reporting: our financial reporting process is
managed using documented accounting policies and
reporting formats supported by detailed instructions and
guidance on reporting requirements. This process is
subject to oversight and review by both external auditors
and the Audit Committee;
– Disclosure Committee: membership comprises the
Chief Executive Officer, Chief Financial Officer, Head of
Investor Relations, General Counsel and Company Secretary
and Head of Secretariat. The Committee regularly
reviews draft financial reports and valuation information
during the interim and full year reporting process and
determines, with external advice from the Company’s
legal and financial advisers, whether inside information
exists and the appropriate disclosure requirements.
Going concern and viability statements
During the year the Board assessed the appropriateness
of using the ‘going concern’ basis of accounting in the
financial statements. The assessment considered future
cash flows and debt facilities (to assess the liquidity risk of
the Company) and the availability of finance (to assess
solvency risk). The assessment covered the 12-month
period required by the ‘going concern’ basis of accounting.
Following these assessments the Directors believe that
the Group is well placed to manage its financing and
other business risks satisfactorily and have reasonable
expectation that the Company and the Group have adequate
resources to continue in operation for at least 12 months
from the date of the Annual Report. They therefore consider
it appropriate to adopt the going concern basis of
accounting in preparing the financial statements.
A detailed description of the viability assessment for the year
ended 31 March 2020 is included on page 88 alongside the
viability and going concern statements made by the Board.
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British Land Annual Report and Accounts 2020
Key investor relations
activities during the year
May
June
– Full Year Results Presentation
– Full Year Results Roadshow, London
– Investor Property Conference, Netherlands
– Investor Roadshow, US (New York, Boston,
Philadelphia)
– Two Investor Property Conferences, London
July
September
– Private Client Investor Roadshow, London
– AGM
– Analyst & Investor Event, Paddington
November
December
– Industry Dinner
– Half Year Results Presentation
– Half Year Results Roadshow, London
– Investor Property Conference, London
– Investor Roadshow, US (New York, Boston)
& Canada (Toronto)
– Investor Property Conference, London
January
March
– Private Client Investor Breakfast, London
– Private Client Investor Roadshow, London
– Investor Property Conference, Miami
British Land Annual Report and Accounts 2020
103
REPORT OF THE NOMINATION COMMITTEE
Ensuring a balanced
and diverse Board
The Nomination Committee supports the Board on composition,
succession and diversity matters.
As I noted in my introduction to the Governance section,
in March we announced that William Jackson, Senior Independent
Director (SID), would step down as a Director from the
conclusion of the Company’s AGM in July 2020. The Committee
recommended that he be succeeded as SID by Preben
Prebensen and that Alastair Hughes be appointed to the
Committee. These appointments will still take place at that
time even though William will now stay on the Board for an
extended period of up to 12 months.
All of the Committee activities set out in this Report were
conducted within the context of our unwavering commitment to
improving inclusion and diversity across British Land. We are
proud of the tangible impact British Land’s diversity policies
and initiatives are having both at Board level and in the wider
business, and we report on this progress in both this Report
and in the Expert People section of the Strategic Report.
Looking ahead, long term succession planning at Board and
executive level will remain a key priority of the Committee.
I hope you find the following report interesting and illustrative
of our focus on ensuring that the Board and its Committees
remain well equipped with the skills and capabilities needed
to drive the future success of British Land.
Tim Score
Chairman of the Nomination Committee
I am pleased to present the report of the Nomination Committee
for the year ended 31 March 2020. I became Chair of the
Committee in July 2019, at which time Preben Prebensen also
became a member of the Committee.
The Nomination Committee continues to play a key role in
supporting British Land’s long term sustainable success. The
development and execution of our long term strategic objectives,
embedding of our culture and values and promotion of the
interests of our stakeholders are all dependent upon effective
leadership at both Board and executive level. It is the Committee’s
responsibility to maintain an appropriate combination of skills
and capabilities amongst the Directors. Long term succession
planning at Board and executive level remains a key priority of
the Committee.
As a Committee our core responsibilities include reviewing
the structure of the Board and Committees, recommending
new Board appointments and ensuring adherence to formal,
rigorous selection, appointment and induction processes for
new Directors. As part of our ongoing reviews of the composition
of the Board and its Committees we recommended a number
of changes to Committee memberships which are outlined
on page 105. The search process for Non-Executive
appointments was refreshed during the year and we
commenced a successful search for a new Non-Executive
Director. Irvinder Goodhew will join the Board on 1 October.
More information about the search process can be found on
page 106.
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British Land Annual Report and Accounts 2020
Committee composition and governance
The Committee has three members. At the 2019 AGM,
John Gildersleeve stepped down from the Committee, and
was replaced by Tim Score as Chairman. Therefore, as at the
31 March 2020 year end the Committee comprised: Tim Score,
William Jackson, and Preben Prebensen, all of whom are
considered by the Board to be independent.
Details of the Committee’s membership and attendance at
meetings during the year are set out in the table below. Planned
changes to the Committee membership during the year to come
are outlined in the following section.
Director
Position
Date of Committee
appointment
Tim Score
William Jackson
Preben Prebensen1
Former Directors who served during the year
John Gildersleeve2
Chairman
Member
Member
Chairman
1 Apr 2017
11 Apr 2011
19 Jul 2019
1 Jan 2013
Attendance
4/4
4/4
3/3
1/1
1. Preben Prebensen joined the Committee on 19 July 2019.
2. John Gildersleeve stepped down from the Board and Committee on 19 July
2019, at which point Tim Score became Chairman of the Committee.
Key areas of focus during the year
Non-Executive Director search and selection
In late 2019, following further review of the longer term needs
of the Board, we began the search for a new Non-Executive
Director to supplement the Board’s skillset.
The search process was conducted in accordance with the
Board Diversity and Inclusion Policy and the Selection and
Appointment Process, which are both explained later in this
Report. Russell Reynolds Associates, the executive search
firm appointed, has no other relationship to the Company or
individual Directors. The firm has adopted the Voluntary Code
of Conduct for Executive Search Firms on gender diversity and
best practice.
The search resulted in the appointment of Irvinder Goodhew
as a Non-Executive Director, as announced on 21 May 2020.
Irvinder brings over 25 years of experience in various operational
and strategic roles, in a broad range of sectors including retail,
consulting and financial services and will join the Board on
1 October 2020.
Board and Committee composition reviews and appointments
During the year the Committee reviewed the broader
composition and balance of the Board and its Committees,
their alignment with the Company’s strategic objectives,
and the need for progressive refreshing of the Board.
In March 2019 we announced that John Gildersleeve would
retire as a Non-Executive Director and step down as Chairman
of the Company at the conclusion of the 2019 AGM, to be
succeeded by Tim Score. As a result, the following Committee
changes took effect in July 2019:
– Tim Score stepped down from the Audit Committee, and was
succeeded as Chair by Rebecca Worthington;
– William Jackson stepped down from the Remuneration
Committee and was succeeded as Chair by Laura Wade-Gery;
– John Gildersleeve was succeeded as Chair of the Nomination
Committee by Tim Score; and
– Preben Prebensen was appointed to the Nomination Committee.
In addition, in May 2019 Alastair Hughes and Lynn Gladden
became members of the CSR Committee on its formation,
with Alastair taking the Chair.
Nick MacPherson completed his first three-year term in
December 2019 and William Jackson completed his third
three-year term in April 2020. In making recommendations for
reappointment, the Committee considered their performance
and ability to contribute effectively to Board discussion and to
challenge the performance of management.
In March 2020 we announced that William Jackson would retire
as a Non-Executive Director at the conclusion of this year’s AGM
in July, but as stated earlier he will now remain on the Board for
an extended period of up to 12 months. The Committee
considered a successor for William as SID and, having
confirmed that he possessed an appropriate skillset, and the
right personal qualities and experience for the role, made a
recommendation to the Board for the appointment of Preben
Prebensen to the role of SID. The Committee also
recommended that Alastair Hughes be appointed to the
Committee. As a result the Committee recommended the
following changes to take effect at the end of the 2020 AGM:
– Preben Prebensen to succeed William Jackson as Senior
Independent Director; and
– Alastair Hughes be appointed to the Nomination Committee.
The Committee is satisfied that, following the Committee
composition changes described above, the Board and its
Committees will continue to have the appropriate balance of
skills and experience required to fulfil their roles effectively.
British Land Annual Report and Accounts 2020
105
REPORT OF THE NOMINATION COMMITTEE CONTINUED
Independence and re-election
The independence of all Non-Executive Directors is reviewed by
the Committee annually, with reference to their independence of
character and judgement and whether any circumstances or
relationships exist which could affect their judgement. The most
recent assessment included a fuller review of the independence
of William Jackson, who has now served in excess of nine years
on the Board. Having regard to all such considerations, the
Board is of the view that the Non-Executive Directors each
remain independent, notwithstanding their periods of tenure.
Prior to recommending the reappointment of serving Directors
to the Board, the Committee also considers the time commitment
required and whether each reappointment would be in the best
interests of the Company. Detailed consideration is given to
each Director’s contribution to the Board and its Committees,
together with the overall balance of knowledge, skills,
experience and diversity.
Following its review, the Committee is of the opinion that each
Non-Executive Director continues to demonstrate commitment
to his or her role as a member of the Board and its Committees,
discharges his or her duties effectively and that each makes a
valuable contribution to the leadership of the Company for the
benefit of all stakeholders.
Accordingly, the Committee recommended to the Board that all
serving Directors be put forward for election or re-election at
the 2020 AGM.
Biographies for each Director can be found on pages 92 to 93.
Succession planning
The Committee is responsible for reviewing the succession
plans for the Board, including the Chief Executive. We recognise
that successful succession planning includes nurturing our own
talent pool and giving opportunities to those who are capable of
growing into more senior roles.
The succession plans for the Executive Directors are prepared
on both shorter and longer term bases while those for Non-
Executive Directors reflect the need to refresh the Board
regularly. Such plans take account of the tenure of individual
members. The Committee’s review of Executive Director
succession plans includes consideration of the process for
talent development within the organisation to create a pipeline
to the Board.
The Chief Executive, with the support of the HR Director,
prepares succession plans for senior management for
consideration by the Committee with the rest of the Board
invited to be involved as appropriate. The Committee notes that
the remit of the Corporate Social Responsibility Committee
includes consideration of the extent to which the business is
developing a diverse pipeline for succession to senior
management roles.
A number of issues that would normally be dealt with by the
Committee were discussed with the full Board.
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British Land Annual Report and Accounts 2020
Selection and appointment process
The Committee oversees the selection and appointment process
for Board appointment, which was updated during the year, and
is summarised in the figure below.
Board composition review
The Committee annually reviews the structure, size
and composition of the Board. This review considers
the skills and qualities required by the Board and its
Committees as a whole in light of the Group’s long
term strategy, external environment and the need to
allow for progressive refreshing of the Board. The
review identifies the specific skills required by new
appointees and guides the Committee’s long term
approach to appointments and succession planning.
Role brief
The Committee works only with external search
agencies which have adopted the Voluntary Code of
Conduct for Executive Search Firms on gender
diversity and best practice. The Committee and
agency work together to develop a comprehensive
role brief and person specification, aligned to the
Group’s values and culture. This brief contains clear
criteria against which prospective candidates can be
objectively assessed.
Longlist review
The external search agency is challenged to use the
objective criteria for the role to produce a longlist of
high quality candidates from a broad range of
potential sources of talent. This process supports
creation of a diverse longlist. The Nomination
Committee selects candidates from this list to be
invited for interview.
Interview
A formal, multi-stage interview process is used to
assess the candidates. For each appointment the
choice of interviewers is customised to the specific
requirements of the role. All interview candidates
are subject to a rigorous referencing process.
Review and recommendation
The Committee ensures that, prior to making
any recommendation to the Board, any potential
conflicts and the significant time commitments
of prospective Directors have been
satisfactorily reviewed.
Diversity and inclusion
The Board’s Diversity and Inclusion Policy has been updated
during the year, expanding the Board’s commitments in this
area. It recognises the benefits of diversity in its broadest sense
and sets out the Board’s ambitions and objectives regarding
diversity at Board and senior management level. The Policy
notes that appointments will continue to be made on merit
against a set of objective criteria, which are developed in
consideration of the skills, experience, independence and
knowledge which the Board as a whole requires to be effective.
The Policy also describes the Board’s firm belief that in order to
be effective a board must properly reflect the environment in
which it operates and that diversity in the boardroom can have a
positive effect on the quality of decision making. Aligned to this,
the Policy has a number of specific quantitative and qualitative
policy objectives in support of Board-level diversity and
inclusion, including the following commitments:
– the intention to maintain a balance such that at least 30%
Induction, Board training and development
Each new Director is invited to meet the General Counsel and
Company Secretary or Head of Secretariat to discuss their
induction in detail, following which the programme is tailored
specifically to their requirements and adapted to reflect their
existing knowledge and experience.
Each induction programme would ordinarily include:
1. meetings with the Chairman, Executive Directors, Committee
Chairmen, external auditor or remuneration consultants
(as appropriate);
2. information on the corporate strategy, the investment
strategy, the financial position and tax matters (including
details of the Company’s REIT status);
3. an overview of the property portfolio provided by members of
the senior management team;
4. visits to key assets;
5. details of Board and Committee procedures and Directors’
of the Board are women;
responsibilities;
– the intention to have at least one Director from an ethnic
minority background on the Board by the end of 2020;
– to maintain the improved gender balance of its leadership
teams and senior management; and
– to ensure that there is clear Board-level accountability for
diversity and inclusion for the wider workforce
The Committee is pleased to confirm that these objectives have
been fully met. As at 31 March the Board comprised 30%
women, while the Executive Committee composition has
increased from 33% to 36% women. Clear accountability for
diversity and inclusion is delivered through Alastair Hughes
and Lynn Gladden’s membership of the Corporate Social
Responsibility Committee, which monitors progress on
diversity and inclusion objectives and relevant initiatives
within British Land.
Average Board member age over a four-year period1
2020
2019
2018
2017
56 years old
55 years old
55 years old
57 years old
Composition2
Tenure2
6. details on the investor relations programme; and
7. information on the Company’s approach to sustainability.
The Committee also has responsibility for the Board’s training
and professional development needs. Directors receive training
and presentations during the course of the year to keep their
knowledge current and enhance their experience.
Key areas of focus for the coming year
As well as the regular cycle of matters that the Committee
schedules for consideration each year, we are planning over the
next 12 months to continue to focus on succession planning
both for the Board and at senior management level, and will
continue to develop a strong talent pipeline and associated
leadership programmes.
Board and Committee effectiveness
The process followed for the internally-led Board effectiveness
evaluation conducted during the year is described in the main
Board governance section on page 100.
The Committee’s effectiveness during the year was evaluated as
part of the wider Board evaluation and concluded that the
Committee operated effectively.
Chairman
Executive Directors
Non-Executive
Directors
1
2
7
0-3 years
3-6 years
6-9 years
1. As at intended AGM date of 29 July 2020.
2. As at 31 March 2020 .
3
3
2
The Committee also reviewed its terms of reference;
no changes were recommended during the year.
The terms are available on our website
www.britishland.com/committees.
British Land Annual Report and Accounts 2020
107
REPORT OF THE AUDIT COMMITTEE
Monitoring quality
and integrity
The Audit Committee monitors the quality and integrity
of the financial reporting and valuation process.
Key areas of focus
Ultimately, the Committee continues to play a key role in
overseeing the integrity of the Group’s financial statements,
including assessing whether the Annual Report is fair, balanced
and understandable, as well as ensuring that a sound system
of risk management and internal control is in place.
During the year, the Committee has reviewed the process
for identification and mitigation of key business and emerging
risks, challenging management actions where appropriate.
The Committee has also reviewed the appropriateness of the
accounting treatment of significant transactions, including asset
acquisitions and disposals, along with scrutinising the valuation
of the Group’s property assets as well as the effectiveness of
the valuers.
The Committee continued to monitor the implementation of the
new valuer policy which was approved in 2017. The third and
final phase of the implementation of the policy was successfully
completed during the year. As at 31 March 2020 84% of the
portfolio was under new instruction since the transition process
began in the year ended 31 March 2018. The Committee thanks
all of its valuers for their professionalism throughout the
implementation of the policy.
Committee composition and governance
I became Chair of the Committee at the conclusion of the 2019
AGM following Tim Score’s appointment as Group Chairman.
Following his appointment Tim stepped down as Chair and as a
member of the Committee in accordance with the Code. The
Committee continues to be composed solely of independent
Non-Executive Directors with sufficient financial experience,
commercial acumen and sector knowledge to fulfil their
responsibilities. Members’ attendance at Committee meetings
is set out in the following table:
Director
Rebecca Worthington
Alastair Hughes
Nicholas Macpherson
Tim Score1
Position
Chairman
Member
Member
Chairman
Date of joining the
Committee
1 Jan 2018
1 Jan 2018
1 Apr 2017
20 Mar 2014
Attendance
3/3
3/3
3/3
1/1
1. Tim Score stepped down from the Audit Committee on 19 July 2019, at which
point Rebecca Worthington became Chair of the Committee.
I am pleased to present the report of the Audit Committee for
the year ended 31 March 2020.
This is my first report as Chair of the Committee following my
appointment at the conclusion of the 2019 AGM. In line with
the focus on improved governance and clear, relevant and
concise reporting, this report of the Audit Committee highlights
the main issues which arose during the year and how they
were addressed.
Role and responsibilities
The principal responsibilities of the Committee are:
Financial reporting – Monitoring the integrity of the Company’s
financial statements and any formal announcements relating to
financial performance, and considering significant financial
reporting issues, judgements and estimates
External Audit – Oversight and remuneration of the external
auditor, assessing effectiveness and making recommendations
to the Board on the appointment of, and the policy for non-audit
services provided by, the external auditor
Internal Audit – Monitoring and reviewing reports on the work
performed by the internal auditor and reviewing effectiveness,
including its plans and resourcing
Risk management and internal controls – Reviewing the
system of internal control and risk management
Investment and development property valuations
– Considering the valuation process and outcome and the
effectiveness of the Company’s valuers
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British Land Annual Report and Accounts 2020
Financial reporting
The Committee continues to review the content and tone of the
preliminary results press release, Annual Report and half year
results at the request of the Board. Drafts of the Annual Report
are reviewed by the Committee Chair and the Committee as
a whole prior to formal consideration by the Board, with
sufficient time provided for feedback.
The Committee reviewed the key messaging included in the
Annual Report and half year results, paying particular attention
to those matters considered to be important to the Group by
virtue of their size, complexity, level of judgement required and
potential impact on the financial statements and wider business
model. Any issues which were deemed to be significant were
debated openly by the Committee members and other attendees,
including management, external and internal auditors.
The Committee has satisfied itself that the controls over the
accuracy and consistency of the information presented in the
Annual Report are robust. The Committee reviewed the
procedure undertaken to enable the Board to provide the fair,
balanced and understandable confirmation to shareholders.
Meetings were held between the Group Financial Controller,
Head of Investor Relations and other senior employees to review
and document the key considerations and a detailed report was
then provided to the Committee. The Committee therefore
recommended to the Board that the Annual Report presented a
fair, balanced and understandable overview of the business of
the Group and that it provided stakeholders with the necessary
information to assess the Group’s position, performance,
business model and strategy.
The Board is satisfied that the Committee as a whole has
competence relevant to the real estate sector. For the purposes
of the Code, I am deemed to meet the specific requirement of
having significant, recent and relevant financial experience.
Members of the senior management team, including the Chief
Financial Officer, General Counsel and Company Secretary,
Group Financial Controller, Head of Financial Reporting and
representatives of both external and internal auditors, are
invited to attend each Committee meeting. In addition, the
Chairman of the Board, Chief Executive Officer, Head of Investor
Relations, Head of Planning and Analysis and other key
employees are invited to attend part, or all, of specific
Committee meetings.
The Committee meets privately with both external and internal
auditors after each scheduled meeting and continues to be
satisfied that neither is being unduly influenced by management.
As Committee Chair, I additionally hold regular meetings
with the Chief Executive Officer, Chief Financial Officer and
other members of management to obtain a good understanding
of key issues affecting the Group and am thereby able to identify
those matters which require meaningful discussion at
Committee meetings. I also meet the external audit partner,
internal audit partner and representatives from each of the
valuers privately to discuss any matters they wish to raise or
concerns they may have.
Committee effectiveness
The Committee assessed its own effectiveness during the year
through an internal questionnaire. The Committee reviews its
terms of reference on an annual basis. Following an extensive
update during the year ended 31 March 2019 to reflect the
adoption of the Code, the Committee was satisfied that the
terms of reference continued to be appropriate. The current
terms of reference were effective from 1 April 2019 and are
available on our website at www.britishland.com/committees.
The information below sets out in detail the activity undertaken
by the Committee during the year ended 31 March 2020. I hope
that you find it useful in understanding our work.
Rebecca Worthington
Chair of the Audit Committee
British Land Annual Report and Accounts 2020
109
REPORT OF THE AUDIT COMMITTEE CONTINUED
The significant issues considered by the Committee in relation to the financial statements during the year ended 31 March 2020, and
the actions taken to address these issues, are set out in the following table:
Significant issues considered
How these issues were addressed
Going concern statement
The appropriateness of preparing the Group
financial statements on a going concern basis.
Viability statement
Whether the assessment undertaken by
management regarding the Group’s long
term viability appropriately reflects the
prospects of the Group and covers an
appropriate period of time.
Covid-19
The impact of Covid-19 on the assessment of
the Group’s principal risks and uncertainties,
risk appetite and viability statement.
The Committee reviewed management’s analysis supporting the going concern
basis of preparation. This included consideration of forecast cash flows, availability
of committed debt facilities and expected covenant headroom. The Committee also
received a report from the external auditor on the results of the testing undertaken
on management’s analysis.
As a result of the assessment undertaken, the Committee satisfied itself that the
going concern basis of preparation remained appropriate.
The going concern statement is set out on page 88.
The Committee considered whether management’s assessment adequately reflected
the Group’s risk appetite and principal risks as disclosed on pages 78 to 87; whether
the period covered by the statement was reasonable given the strategy of the Group
and the environment in which it operates; and whether the assumptions and sensitivities
identified, and stress tested, represented severe but plausible scenarios in the
context of solvency or liquidity. The Committee also considered a report from the
external auditor.
The Committee concurred with management’s assessment and recommended the
viability statement to the Board.
The viability statement, together with further details on the assessment undertaken,
is set out on page 88.
A detailed analysis of the impacts of Covid-19 on the Group’s risk framework is
included within the Risk Review on pages 78 to 88.
Accounting for significant transactions
The accounting treatment of significant property
acquisitions, disposals, financing and leasing
transactions is a recurring risk for the Group with
non-standard accounting entries required, and in
some cases management judgement applied.
The Committee reviewed management papers on key judgements, including those for
significant transactions, as well as the external auditor’s findings on these matters.
In particular, the Committee considered the accounting treatment of the acquisition
of West One, and the treatment of bespoke leasing arrangements in relation to a key
development. The external auditor separately reviewed management’s judgements in
relation to these transactions.
REIT status
Maintenance of the Group’s REIT status
through compliance with certain conditions
has a significant impact on the Group’s results.
Valuation of property portfolio
The valuation of investment and development
properties conducted by external valuers is
inherently subjective as it is undertaken on the
basis of assumptions made by the valuers
which may not prove to be accurate.
The outcome of the valuation is significant to
the Group in terms of investment decisions,
results and remuneration.
The Committee reviewed the REIT tests performed by management and concluded
that the Company’s REIT status had been maintained in the year. The Committee
separately considered the external auditor’s review of management’s assessment.
The external valuers presented their reports to the Committee prior to the half year
and full year results, providing an overview of the UK property market and summarising
the performance of the Group’s assets. Significant judgements were also highlighted.
The Committee analysed the reports and reviewed the valuation outcomes,
challenging assumptions made where thought fit. In particular, with the third and
final phase of the implementation of the valuer appointment policy, the Committee
paid specific attention to those assets which were subject to a new valuation
instruction during the year including Broadgate.
The Committee closely analysed the valuation of Canada Water following the
resolution to grant planning for our 53 acre masterplan and robustly challenged the
methodology used.
The Committee was satisfied with the valuation process and the effectiveness of the
Company’s valuers. The Committee also approved the relevant valuation disclosures
to be included in the Annual Report.
Taxation provisions
The appropriateness of taxation provisions
made and released in the period.
The Committee reviewed taxation provisions made and released by the Group.
They considered papers prepared by management and discussed the views of the
external auditors to obtain assurance that amounts held were commensurate with
the associated risks.
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British Land Annual Report and Accounts 2020
Total fees for non-audit services amounted to £0.04m, which
represents 6% of the total Group audit fees payable for the year
ended 31 March 2020. Details of all fees charged by the external
auditor during the year are set out on page 158.
The Committee is satisfied that the Company has complied
with the provisions of the Statutory Audit Services for Large
Companies Market Investigation (Mandatory Use of Competitive
Processes and Audit Committee Responsibilities) Order 2014,
published by the Competition and Markets Authority on
26 September 2014.
Effectiveness
Assessment of the annual evaluation of the external auditor‘s
performance was undertaken by way of a questionnaire
completed by key stakeholders across the Group, including
senior members of the Finance team. The review took into
account the quality of planning, delivery and execution of the
audit (including the audit of subsidiary companies), the technical
competence and strategic knowledge of the audit team and the
effectiveness of reporting and communication between the audit
team and management.
PwC also provide the Committee with an annual report on its
independence, objectivity and compliance with statutory,
regulatory and ethical standards. For the year ended 31 March
2020, as for the prior year, the external auditor confirmed that it
continued to maintain appropriate internal safeguards to ensure
its independence and objectivity.
The Committee concluded that the quality of the external
auditor’s work, and the knowledge and competence of the audit
team, had been maintained at an appropriate standard during
the year.
In addition, the Committee reviewed the Financial Reporting
Council’s (FRC)’s review of PwC’s audit of the Group for the year
ended 31 March 2019. The FRC’s review identified some limited
improvements in relation to the audit of property valuations and
revenue recognition, but otherwise noted the audit was of a
‘good standard’, PwC’s responses were discussed with
management and with the Committee to ensure the FRC’s
points are addressed in future audits.
The Committee therefore recommended to the Board that a
resolution to reappoint PwC as external auditor of the Company
be put to shareholders at the 2020 AGM.
External Audit
PricewaterhouseCoopers LLP (PwC) was appointed as the
Group’s external auditor for the 2015 Annual Report following a
formal competitive tender process. The Committee considered
the need for a competitive tender for the role of external auditor
during the year under review and confirmed that a tender was
not appropriate due to PwC’s strong performance to date.
The Committee confirmed that a competitive tender will be
completed no later than for the 2025 year end audit. Given the
continuing effectiveness of PwC in their role as external auditor,
the Committee believe it is in the best interests of shareholders
for PwC to remain as external auditor for the following financial
year. It is currently proposed that a tender process be
completed during 2024.
The year under review is Sandra Dowling’s first year as
engagement partner following John Waters’ mandatory rotation
at the conclusion of the 2019 audit. The Committee will ensure
that future rotations are undertaken as required by legislation to
the extent that this is not undertaken earlier by PwC.
The Committee is responsible for overseeing the relationship
with the external auditor and for considering their terms of
engagement, remuneration, effectiveness, independence and
continued objectivity. The Committee annually reviews the audit
requirements of the Group, for the business and in the context
of the external environment, placing great importance on
ensuring a high quality, effective external audit process.
Fees and non-audit services
The Committee discussed the audit fee for the 2020 Annual
Report with the external auditor and approved the proposed
fee on behalf of the Board.
In addition, the Group has adopted a policy for the provision of
non-audit services by the external auditor. The policy helps to
safeguard the external auditor’s independence and objectivity.
The policy allows the external auditor to provide the following
non-audit services to British Land where they are considered to
be the most appropriate provider:
– audit related services: including formal reporting relating
to borrowings, shareholder and other circulars and work in
respect of acquisitions and disposals. In some circumstances,
the external auditor is required to carry out the work because
of their office. In other circumstances, selection would depend
on which firm was best suited to provide the services required
In addition, the following protocols apply to non-audit fees:
– total non-audit fees are limited to 70% of the audit fees in any
one year. Additionally, the ratio of audit to non-audit fees is
calculated in line with the methodology set out in the 2014
EU Regulations;
– Committee approval is required where there might be
questions as to whether the external auditor has a conflict
of interest; and
– the Audit Committee Chair is required to approve in advance
each additional project or incremental fee between £25,000
and £100,000, and Committee approval is required for any
additional projects over £100,000.
British Land Annual Report and Accounts 2020
111
REPORT OF THE AUDIT COMMITTEE CONTINUED
Internal Audit
The role of Internal Audit is to act as an independent and objective
assurance function, designed to improve the effectiveness of the
governance, risk management and internal controls framework
in mitigating the key risks of British Land. Ernst & Young LLP
(EY) continue to provide Internal Audit services to British Land
and attended all Committee meetings to present their audit
findings and the status of management actions.
During the year, the Committee reviewed and approved the
annual Internal Audit plan, including consideration of the plan’s
alignment to the principal risks of the Group and its joint
ventures. Internal audits completed during the year included
those in relation to supplier risk management, key operational
control testing, crisis management and Storey. Overall, no
significant control issues were identified although several
process and control improvements were proposed, with follow
up audits scheduled where necessary.
Effectiveness
The annual effectiveness review of the internal auditor included
consideration of the Internal Audit charter which defines EY’s
role and responsibilities, review of the quality of the audit work
undertaken and the skills and competence of the audit teams.
Key stakeholders across the Group, including Committee
members, Head of Secretariat, Head of Financial Reporting and
other senior employees, completed a questionnaire to assess
the effectiveness of the internal auditor. The results of the
questionnaire were improved from a good base, following
the completion of actions identified from the prior year.
The Committee concluded that EY continued to discharge
its duties as internal auditor effectively and should continue
in the role for the year commencing 1 April 2020.
Risk management and internal controls
The Board has delegated responsibility for overseeing the
effectiveness of the Group’s risk management and internal
control systems to the Committee. The Committee has oversight
of the activities of the executive Risk Committee, receiving
minutes of all Risk Committee meetings and discussing any
significant matters raised.
At the full and half year, the Committee reviewed the Group’s
principal risks including consideration of how risk exposures
have changed during the period. Both external and internal risks
are reviewed and their effect on the Company’s strategic aims
considered. At full year, the Committee reviewed the Group’s
emerging risks, following a bottom up assessment throughout
business units and deep dive by the Risk Committee. The Audit
Committee made a recommendation to the Board regarding the
identification and assessment of principal and emerging risks.
The Board accepted the Committee’s recommendation.
The Committee considered the Group’s risk appetite and
recommended an update to the measurement of our people
risk in order that the Group risk appetite remains set at an
appropriate level to achieve the Group’s strategic goals without
taking undue risk. The Board accepted the Committee’s
recommendation for the Group’s risk appetite.
The Committee also reviewed the status of key risk indicators
throughout the year against risk appetite, focusing on any which
were outside optimal ranges. The Committee gave particular
attention to the risks relating to Covid-19, occupier credit risk
exposure, the UK’s political and economic outlook following the
UK’s departure from the European Union and the UK’s internal
political turmoil and development contractor exposure.
Half yearly, in conjunction with the internal auditor, management
reports to the Committee on the effectiveness of internal controls,
highlighting control issues identified through the exceptions
reporting process. Risk areas identified are considered for
incorporation in the Internal Audit plan and the findings of
internal audits are taken into account when identifying and
evaluating risks within the business. Key observations and
management actions are reported to, and debated by, the
Committee. For the year ended 31 March 2020, the Committee
has not identified, nor been advised of, a failing or weakness
which it has deemed to be significant.
At the request of the Remuneration Committee, the Committee
considers annually the level of risk taken by management
and whether this affects the performance of the Company.
The Remuneration Committee takes this confirmation into
account when determining incentive awards granted to the
Executive Directors and senior management. Taking into
account reports received on internal key controls and risk
management, and the results of the internal audit reviews, the
Committee concluded that for the year ended 31 March 2020
there was no evidence of excessive risk taking by management
which ought to be taken into account by the Remuneration
Committee when determining incentive awards.
The Group’s whistleblowing arrangements enable all staff,
including temporary and agency staff, suppliers and occupiers
to report any suspected wrongdoing. These arrangements,
which are monitored by the General Counsel and Company
Secretary and reviewed by the Committee annually, include an
independent and confidential whistleblowing service provided
by a third party. In March 2020, a new third party supplier was
appointed that presents greater value and a more user-friendly
platform. The Committee received a summary of all whistleblowing
reports received during the year and concluded that the
response to each report by management was appropriate.
The whistleblowing reports were also relayed to the Board by
the Committee Chair.
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British Land has fixed fee arrangements in place with the
valuers in relation to the valuation of wholly-owned assets,
in line with the recommendations of the Carsberg Committee
Report. Copies of the valuation certificates of CBRE, Knight
Frank, JLL and Cushman & Wakefield can be found on our
website at www.britishland.com/reports.
Focus for the coming year
During the year ending 31 March 2021 the Committee will
continue to focus on the processes by which the Board
identifies, assesses, monitors, manages and mitigates risk,
particularly in light of the challenging conditions within the
retail sector and Covid-19. The Committee will also continue
to monitor key risk areas for the business, particularly those
scheduled for review by Internal Audit including, but not limited
to, key financial and operational controls, Canada Water,
cyber security strategy and the procure to pay system operation.
The Committee also reviewed the Group’s tax strategy which
sets out the Group’s approach to risk management and
governance in relation to UK taxation, its attitude towards tax
planning, the level of risk the Group is prepared to accept in
relation to tax and its relationship with HM Revenue & Customs.
The resulting document (‘Our Approach to Tax’) was approved
by the Board and is available on the Company’s website at
www.britishland.com/governance.
Additional information on the Company’s internal controls
systems is set out in the ‘Managing risk in delivering our
strategy’ section on pages 78 to 81.
Investment and development property valuations
The external valuation of British Land’s property portfolio is a
key determinant of the Group’s balance sheet, its performance
and the remuneration of the Executive Directors and senior
management. The Committee is committed to the rigorous
monitoring and review of the effectiveness of its valuers as well
as the valuation process itself. The Group’s valuers are now
CBRE, Knight Frank, Jones Lang LaSalle (JLL) and Cushman
& Wakefield.
The Committee reviews the effectiveness of the external valuers
bi-annually, focusing on a quantitative analysis of capital values,
yield benchmarking, availability of comparable market evidence
and major outliers to subsector movements, with an annual
qualitative review of the level of service received from each valuer.
The valuers attend Committee meetings at which the full and
half year valuations are discussed, presenting their reports
which include details of the valuation process, market conditions
and any significant judgements made. The external auditor
reviews the valuations and valuation process, having had full
access to the valuers to determine that due process had been
followed and appropriate information used, before separately
reporting its findings to the Committee. The valuation process is
also subject to regular review by Internal Audit.
British Land Annual Report and Accounts 2020
113
REPORT OF THE CORPORATE SOCIAL RESPONSIBILITY COMMITTEE
Helping people thrive
We seek to ensure the Company is a first-class employer,
builds and manages first-class buildings for its communities
and occupiers and delivers this in a sustainable way.
Employee engagement and culture
We have been encouraged by the number and quality of
mechanisms in place for employee engagement and the results
of the engagement survey undertaken this year. The Committee
reviewed the output of the employee engagement survey, which
showed an overall engagement score of 75%, which is 6% ahead
of the national benchmark. This is a good result and was based
on a high response rate of 89%. Particularly encouraging for the
Committee were the scores of 91% saying they were proud to
work at British Land and 90% supporting the statement that
British Land’s commitment to social responsibility (e.g.
community support, sustainability, etc) is genuine.
Over half of the mechanisms suggested by the FRC Guidance
on Board Effectiveness were already in use to engage with
employees. As Directors we have a number of ways in which
we interact with employees and following our last externally
facilitated Board evaluation, almost all Board meetings have
either a breakfast or lunch with an equal number of employees.
The initial round of these events enabled us to get to know
senior management better but in the last year we have had
the opportunity to meet other employees without senior
management present. Laura Wade-Gery has been the subject
of an “in conversation” session with employees which explored
a wide range of subjects.
The Company has a strong set of networks and committees
with different focus areas. These are not standalone focus areas
but are integrated into how we engage with our stakeholders
and run our business. As an example, the Parents & Carers
Committee and BL Pride Alliance arranged a presentation from
the LGBTQ+ charity Just Like Us, who are now also an occupier
at Broadgate and have hosted workshops and training at the
Paddington Campus for students and teachers taking part in the
Just Like Us programme (further information on this can be
found on page 37). Similarly, the Wellbeing Committee has set
up a network including occupiers and the local community to
consider wellbeing at our Paddington campus. Further details
on these and our other committees can be found in our Expert
People section from page 28.
Construction and health and safety
The Committee took time to understand management’s
approach to health and safety and was impressed with
the rigour and detail of the systems in place to ensure our
buildings and practices are safe, with Accident Frequency
Rates substantially below the national average. We also
covered how we procure and design our buildings, including
having a design framework which ensures that we and our
suppliers adhere to high environmental and ethical standards.
I am pleased to present the report of the CSR Committee for the
year ended 31 March 2020.
The Committee was set up at the beginning of the year to assist
the Board in overseeing its engagement with employees and
other stakeholders and to assess the Company’s wider
contribution to society. The Committee is also the Board’s
designated mechanism for workforce engagement in
accordance with provision 5 of the Code.
Our terms of reference set out the primary role of the Committee
and are available on our website www.britishland.com/committees.
We summarise this as seeking to ensure that the Company:
– Is a first-class employer;
– Builds and manages first-class buildings; and
– Delivers this in a sustainable way for both our communities
and the environment.
The information below sets out in detail the activity undertaken
by the Committee during the year ended 31 March 2020. I hope
that you find it useful in understanding our work.
Key areas of focus during the year
In its first year the Committee has sought to understand further
the Company’s engagement with employees and how it constructs
its buildings to ensure they are high quality, safe and built in an
environmentally friendly way.
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Committee composition and governance
The Committee is composed solely of independent Non-
Executive Directors. Attendance at Committee meetings during
the year is set out in the following table:
Director
Alastair Hughes
Lynn Gladden
Position
Chairman
Member
Date of Committee
appointment
1 Apr 2019
1 Apr 2019
Attendance
3/3
3/3
Members of the senior management team, including the Chief
Executive Officer, Chief Financial Officer, General Counsel and
Company Secretary, Head of Secretariat, HR Director, Head of
Developments, Head of Corporate Affairs and Sustainability and
Head of Sustainable Developments, are invited to attend each
Committee meeting.
Committee effectiveness
The Committee’s effectiveness was reviewed as part of the
wider Board evaluation and concluded that the Committee
had operated effectively. The Committee reviewed and updated
its terms of reference, which are available on our website
www.britishland.com/committees.
Alastair Hughes
Chairman of the CSR Committee
Engaging with our occupiers, both current and future, has
demonstrated that strong environmental credentials are an
increasingly key requirement for them and this is driving our
focus on more sustainable buildings which in turn supports our
leasing aim, to let space more quickly and achieve higher rents.
This is a great example of how engagement with our
stakeholders is driving change in how we run our business.
Sustainability
We have helped the Sustainability Committee to review
performance against the Sustainability 2020 targets that were
set six years ago. With our current sustainability programme
ending in March 2020, we have also guided the development of a
new sustainability strategy. This will focus on two key issues
around net zero carbon on the environmental side and a
place-based approach to building connections in our communities,
underpinned by a commitment to upper quintile performance on
wider environmental matters and key principles of responsible
business, such as prompt payment to suppliers. We continue to
make good progress on reducing our environmental impact,
taking an innovative approach to projects such as 1 Triton Square
where we have saved 57,000 tonnes of embodied carbon in the
design and construction phase. Further details of how 1 Triton
Square has delivered environmental improvements and the
benefits of collaboration with our stakeholders can be found
on pages 8 and 9. Further information on our approach to
sustainability can be found on page 38.
Key areas of focus for the coming year
This first year of the Committee has been spent developing our
understanding of some of the basic practices of the Company
and we can now begin to look at some areas in more detail.
We plan to review diversity in the workforce, including drivers
affecting diversity and what policies are in place or needed
to ensure we have a diverse workforce and pipeline for
future success.
We will review British Land’s engagement with its communities,
how the Company contributes to the wider society and the
impact this has on the Company’s performance. We will also be
considering the charitable activities of the Company.
We will look at how we embed sustainability within all that we
do. Part of this will be a cultural shift to have sustainability as
part of every employee’s role and objectives and avoiding having
sustainability as a separate team who have to make designs and
practices more sustainable in an incremental way. This will
clearly be an integral part of the progress of our Developments
team. One of our measures of success will be not to have a
sustainability team in 10 years!
British Land Annual Report and Accounts 2020
115
WORKFORCE ENGAGEMENT STATEMENT
Engaging with our workforce
Workforce engagement is central to the Expert People pillar
of our strategic framework.
The Corporate Social Responsibility Committee,
chaired by Alastair Hughes, has formal responsibility
for overseeing the operation and effectiveness of
our workforce engagement mechanisms for the
purposes of provision 5 of the UK Corporate
Governance Code.
The CSR Committee report on the previous pages
details the activities of the Committee in its first year
of operation, which have largely been focused on
exploring and understanding the mechanisms we
already have in place.
Workforce engagement initiatives:
Communication
Internal communication
A member of our Executive Committee holds a
Company-wide meeting each month to report on
important Company developments, introduce
initiatives to colleagues and field questions.
These sessions are often opportunities for senior
management to discuss market conditions and key
operational initiatives with our workforce and take
questions from them.
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British Land Annual Report and Accounts 2020
Our internal communications team send
out a Company-wide weekly email with
updates and details of key events and a
member of our Executive Committee hosts
a social hour each month where our people
network in a less formal environment.
Company Conference
Once a year our people are brought
together from across our business
to attend our Company Conference.
In 2019, the conference was held at the
Printworks at Canada Water. The day
consisted of presentations by the Group
Chairman, Chief Executive Officer,
Chief Financial Officer and other
members of our senior management
team as well as interactive team building
and social events.
BL Leadership Team (BLLT)
The BLLT was created to enhance
collaboration and communication
within the Group and was a response
to recommendations by the Board.
The BLLT comprises our top managers
and includes our Executive Committee
and its direct reports and meets monthly
to discuss key issues. BLLT members
are a key point of contact for our people
and facilitate a two-way dialogue
between the leadership team and the
rest of the workforce.
Financial awareness
At the half and full year, our Chief
Executive Officer and Chief Financial
Officer present the financial results to
the Group and answer questions.
Ownership
Our employees are invited to join our
Company-wide Share Incentive Plan and
Save As You Earn Plan. Employee share
ownership encourages employees to focus
on long term Company performance and
aligns their interests with shareholders.
Engagement with Directors
Engagement survey
The Board reviews the results of the
annual employee engagement survey
as well as interim ‘pulse’ surveys.
The Board discusses the results and
challenges management on areas of
improvement. The response from the
2019 engagement survey returned results
significantly above the national benchmark
on questions relating to leadership.
More details on our engagement survey
can be found on page 34.
BL employee networks
As discussed on pages 36 and 37 there
are a wide range of employee-led
networks at British Land. The work of
our networks has promoted social issues
that are important to our people and
driven internal policy changes such as
our adoption of enhanced shared
parental leave.
The CSR Committee receives
presentations by the Chairs of our
networks to engage with key issues
at Board level.
Covid-19
Consideration of the
Company’s workforce
was at the centre of decision
making both by executive
management and the
Board during the immediate
outbreak of the virus.
The safety of our people and
their families, together with
the interests of our other
stakeholders, shaped the
decisions that we took as a
business. This was only
possible due to the strong
mechanisms of employee
engagement that were
already in place.
BL networks
We were able to leverage
our employee networks to
provide support with useful
information and tips to
our workforce.
Leadership
Executive Committee members
ensured there were clear
lines of communication
with their teams which
was aided by the BLLT and
cross-Company collaboration.
The Executive Committee and a
BLLT working group both met
every day during the outbreak
of the crisis to manage the
effects on the Group and
our response in real time.
Chris Grigg also gave regular
Company-wide updates.
The Company’s response to
Covid-19 is described throughout
the Strategic Report and in the
context of broader stakeholder
engagement on pages 96 to 97
British Land Annual Report and Accounts 2020
117
DIRECTORS’ REMUNERATION REPORT
Aligning incentive
with strategy
Our Remuneration Policy aligns management incentives with our strategy.
Board changes
Charles Maudsley and Tim Roberts stood down from the Board
on 31 March 2019. Both were considered good leavers, and their
share plan awards have been pro-rated and treated in line with
the good leaver provisions in the respective plan rules. Charles
took a consultancy role with Bridgepoint Advisers and as a
result mitigated some of his monthly salary during his notice
period; Tim became CEO of Henry Boot plc with a similar
mitigation impact. Details are provided on page 129.
Your support for our new Remuneration Policy
Thank you for your 98.3% support of our new Remuneration
Policy adopted at the 2019 AGM. Our remuneration philosophy is
simple – we want to ensure that our management is aligned to
shareholders’ and other key stakeholders’ interests, and that
our policy supports our long term business strategy, values and
corporate culture. We conducted an extensive review of our
previous policy during 2018, concluding that, while the policy
was broadly working well, there was an opportunity both to
simplify it and to ensure that it was in line with the Company’s
current strategic objectives and with evolving best practice.
After consultation and discussion, it was good to receive the
support of so many of our shareholders and their representative
bodies in July 2019. The new policy is summarised on pages 120
to 121 of this Annual Report.
Remuneration in respect of the year ended 31 March 2020
We believe that the manner in which the Committee sets and
operates this Remuneration Policy is clear to executives and is
aligned to our corporate culture. We operated it with regard to
risks inherent in the business and market place, providing the
opportunity for executives to earn rewards in a manner which is
proportionate to the value delivered against clear targets.
The Committee reflected at length on the impact of the current
circumstances on the Company’s stakeholders. In particular, it
took account of the Board’s decision temporarily to suspend the
dividend and that (other than for promotions) our employees will
not be receiving salary reviews this year. We have not furloughed
any of our own employees but are well aware of the impact of
Covid-19 on our communities, suppliers and customers.
Shareholders have received two quarterly dividends with the
remaining dividends currently being retained in the business,
adding to our cash balances and therefore our net asset value
per share.
The result of these deliberations was that despite Covid-19
affecting only six weeks of the performance year in question,
the estimated level of bonus for the whole business against
criteria we had previously set for the year ended 31 March 2020
was reduced by 41%. Specifically this has reduced the estimated
Dear Shareholders
I am delighted to introduce the Directors’ Remuneration Report
for the year. This is my first report to you as Chair of the Committee
having taken over from William Jackson at the AGM on Friday 19
July 2019.
On behalf of the Board and the Committee, I would like to
thank William for his excellent and thorough chairing of this
Committee for three years. We have all benefitted from his
wisdom and his challenge throughout this time, culminating
in his piloting through of our new Remuneration Policy
approved at the 2019 AGM.
Following William stepping down, the Committee had three
members during 2019/20 – Lynn Gladden, Preben Prebensen
and myself. We continue to be supported by Andrew Udale of
Korn Ferry who we appointed to advise the Committee in 2017.
As you will be only too aware, an awful lot has happened in the
last few months as a result of Covid-19. As a Committee and a
Board we have discussed at length what decisions we should be
taking on remuneration matters. In the remainder of this
statement, I seek to explain what actions we have taken, what
actions we have deferred taking for the moment and in each
case why. In making these decisions we have been in close
dialogue with the executive members of the Board and our
fellow non-executives. We have considered carefully the
interests of the wider stakeholders of the Company and their
longer term interests in particular.
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British Land Annual Report and Accounts 2020
bonuses for executive directors to c.40% of their salary levels as
opposed to c.70% and represents approximately a quarter of the
maximum available opportunity. However, we have decided that
while these are estimates of what would have been paid after
scaling back, the decision on whether some, all or none of the
scaled back amounts should actually be paid to Executive
Directors is being deferred. The same approach has been taken
to the entirety of bonus awards for members of the Executive
Committee and for the decision on a portion of the bonus award
for over 100 further managers. The decision on these bonuses
will be reached later in 2020 when more information on the
impact on our stakeholders in relation to the year ended
31 March 2020 is available. The Committee and management
believe that this deferral of any decision on how much of the
estimated bonus to award is the right and fair approach in
these unprecedented circumstances.
Remuneration in respect of the year commencing
1 April 2020
Salaries
We took a decision not to review salaries for the Executive
Directors so they remain unchanged. The Non-Executive
Directors’ and the Chairman’s fee levels also remain
unchanged. In addition, the Executive Directors volunteered to
waive an amount equal to 20% of their salaries for the first three
months of the year. The Chairman and the Non-Executive
Directors also volunteered to do the same in relation to 20% of
fees for the same three-month period.
Annual Incentives
For the coming year, we will continue to measure 70% of the
Annual Incentive against quantitative measures, and the
remaining 30% based on strategic measures. We have made
some changes for this year to reflect the current environment
and will be assessing the level of bonus derived from the targets
set in the context of the wider stakeholder experience during the
year. Further information is set out on page 122.
Long term incentives
The Committee intends to grant long term incentive awards
during the coming year to the two Executive Directors and other
senior executives. The performance measures and targets will
remain unchanged, but the intended level of award had not been
determined by the Committee by the time of signing the Annual
Report. The Committee intends to make this decision closer to
the date of grant so that it can factor in the share price to the
size of the award. We will set out and explain the grant levels in
next year’s Report, which will not exceed the levels awarded
last year.
Executive pensions
We are committed to ensuring that pension contributions across
our workforce are equitable. Simon Carter joined the Company
in May 2018 with the same pension benefit as the wider
workforce at 15% of his salary. As noted last year, Chris Grigg
has agreed to reduce his pension allowance by 5% of salary
annually (now 25% for financial year 2021) to bring it in line with
the employee contribution rate by 2022. We would like to thank
Chris for his sensitivity to wider shareholder concerns about
executive pension contributions.
Below Board-level incentives
Following the approval of our new Remuneration Policy in July
2019, we have revisited the Annual Incentive arrangements for
our Executive Committee. This is in line with the requirements
of the 2018 UK Corporate Governance Code. Previously, this
team‘s Annual Incentive structure was the same as our wider
employee base; we have decided to create an even stronger link
between their Annual Incentive and the financial performance of
the Company in the way we assess the amount of their bonus at
the end of the financial year.
Gender pay gap
The latest gender pay gap for the 5 April 2020 snapshots shows
a further reduction in the median pay gap of 7% to 27.9% from
34.9% for British Land. Broadgate Estates, a subsidiary
company, shows a decrease in the median pay gap from 37.7%
to 35.5%. More information can be found at www.britishland.
com/gender-pay-gap.
Recommendation
British Land is committed to listening carefully to shareholder
feedback and to applying best practice to its remuneration
policies and approach. We hope that you will continue to support
our approach to remuneration and will vote in favour of this
report at the 2020 AGM.
Yours sincerely
Laura Wade-Gery
Chair of the Remuneration Committee
British Land Annual Report and Accounts 2020
119
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How we align rewards
to delivering our strategy
As set out on pages 22 to 23, we have a clear strategy to build an
increasingly mixed use business.
It will comprise three core elements: our London campuses, a smaller Retail portfolio and a residential business.
To deliver on this strategy, we focus on four objectives:
Customer Orientation:
Responding to changing lifestyles
Right Places:
Creating great environments
Expert People:
Changing the way we work
Capital Efficiency:
Thoughtful use of capital
Delivering against these objectives creates the inputs
to future value creation for all of our stakeholders.
We run a very long term business and actions taken in
any one year can take many years to show up as
enhancing value.
Our remuneration philosophy is to incentivise and
reward employees across the Group, cascading from
the Executive Directors, to deliver these inputs whilst
also managing the business on a day-to-day basis.
Successful delivery of some of these objectives may
not necessarily be reflected in the financial results of
the business in a single year but should flow through
to the longer term performance of the business.
In determining what the best measures of
performance are for incentivising our employees, the
Committee strikes a balance between the short term
and longer term goals that it sets. The short term
goals are a mixture of these inputs and annual
financial performance.
This creates an alignment with shareholders ensuring
that the level of annual bonus is not out of line with the
performance of the business in the financial year.
Over the longer term, we measure our performance
against selected market benchmarks. We only deliver
rewards where the business at least matches those
benchmarks and we share a small percentage of any
outperformance. We tailor these benchmarks to be as
relevant as possible but we recognise that there may
inevitably be a degree of mismatch.
The chart below illustrates the alignment
between (i) what we are focusing on doing
(our strategic objectives), (ii) what we measure
and report on (dark blue) and (iii) what we reward
Executive Directors for delivering (light blue).
1 year performance
3 year performance
Cost and revenue targets
Refinancing date and liquidity targets
Total Property Return outperformance target
Total Property Return outperformance
Total Accounting Return outperformance
Total Shareholder Return outperformance
Strategic targets for these 4 inputs
Annual
profitability
Balance sheet
resilience
Property valuation
changes
Net Asset
Value changes
Dividends and share
price movements
Customer
Orientation
Right
Places
Expert
People
Capital
Efficiency
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British Land Annual Report and Accounts 2020
Summary of the Remuneration Policy and how we apply it
The Remuneration Policy was approved by shareholders on 19 July 2019. The Policy will apply until the AGM in July 2022. The Remuneration
Policy is set out in full in the 2019 Annual Report and is available on our website www.britishland.com/committees.
Element of
remuneration
Fixed
Link to strategy
Framework
Basic salary Attracts and retains Expert People with
the appropriate degree of expertise and
experience to deliver agreed strategy.
Reviewed annually and increases typically in line with
the market and general salary increases throughout
the Group.
Benefits
Pension
contribution
Variable
Annual
Incentive
Performance measures related to British
Land’s strategic focus and the Executive
Director’s individual area of responsibility
are set by the Committee at the beginning
of the financial year.
Long term
incentive
Total Property Return (TPR) links reward
to gross property performance.
Total Accounting Return (TAR) links reward
to net property performance and
shareholder distributions.
Total Shareholder Return (TSR) directly
correlates reward with shareholder returns.
Benefits are restricted to a maximum of £20,000 per
annum for car allowance and the amount required to
continue providing agreed benefits at a similar level
year on year.
Defined contribution arrangements – cash allowances
in lieu of pension are made to the CFO at 15% of salary.
The CEO’s pension allowance has been reducing by 5%
of salary per annum (currently 25% for the year
commencing 1 April 2020) and will do so until it is in
line with the majority of the workforce at 15% of salary.
The workforce rate will apply to all future Executive
Director appointments.
Maximum opportunity is 150% of basic salary. 2/3rd is
paid in cash with the remaining 1/3rd (net of tax) used
to purchase shares on behalf of the Executive Director
(Annual Incentive Shares) which must be held for a
further three years whether or not the Executive
Director remains an employee of British Land.
Recent LTIP grants have been at the level of 250% of
salary in the form of performance shares, within the
maximum value of an LTIP award of 300% of salary.
Executive Directors’ remuneration
The tables below show the 2020 actual remuneration against potential opportunity for the year ended 31 March 2020 and 2019 actual
remuneration for each Executive Director. Full disclosure of the single total figure of remuneration for each of the Directors is set out
in the table on page 124.
Chris Grigg
Chief Executive
2020 actual
2020 potential1
2019 actual
£’000
Simon Carter
Chief Financial Officer
£1,534
2020 actual
£4,507
2020 potential2
£1,653
2019 actual3
£’000
£819
£1,358
£735
0
1,000
2,000
3,000
4,000
5,000
0
500
1,000
1,500
2,000
Salary
Benefits
Pension
Annual Incentive
Long term incentives
Salary
Benefits
Pension
Annual Incentive
Long term incentives
1. 2020 potential assumes that both annual and long-term incentives pay out in full.
2. 2020 potential assumes that Annual Incentives pay out in full. There are no LTIP values for Simon Carter as the first grant following appointment was made in June 2018
which will be included in the 2021 pay figure.
3. 2019 actual is based on pay since appointment in May 2018 and excludes buyout award made on recruitment.
British Land Annual Report and Accounts 2020
121
DIRECTORS’ REMUNERATION REPORT CONTINUED
How we intend to apply our Remuneration Policy
during the year commencing 1 April 2020
The following pages set out how the Committee intends to apply the
Remuneration Policy during the coming year.
Executive Directors’ remuneration
Basic salaries
Basic salaries for our current Directors remain unchanged at
the following levels for the year commencing 1 April 2020.
However, as explained on page 119, Chris and Simon have
elected to forgo an amount equal to 20% of their salaries for an
initial period of three months effective 1 April 2020.
Director
Chris Grigg
Simon Carter
Basic salary
£000
874
500
Pension and benefits
Chris Grigg has volunteered to reduce the pension contribution
he receives from the Company over the coming years. As such,
for the year commencing 1 April 2020 his contribution has been
reduced to 25% of salary and this will continue to be reduced by
5% of salary per annum until it is at 15% of salary (in line with
the current workforce level). Simon Carter will continue to
receive a 15% of salary pension contribution. Benefits will
continue to be provided in line with the policy and include a car
allowance and private medical insurance.
Annual Incentive awards
The maximum bonus opportunity for Executive Directors
remains at 150% of salary. The performance measures for the
Annual Incentive awards have been selected to reflect a range of
quantitative and strategic goals that support the Company’s key
strategic objectives. The performance measures and weightings
for the year commencing 1 April 2020 are set out in the table
below. The Committee has made several changes this year to
the operation of the Annual Incentive plan. These reflect the
changed circumstances we find ourselves in for the year ahead.
First, as we finalise this report, development activity has been
delayed. Second, there is an increased focus within the market
place on balance sheet resilience for property companies.
Finally, there is less certainty in relation to the precision of
independent property valuations. Reflecting these changed
circumstances this year, the Committee has altered the way it
will operate the plan for the year commencing 1 April 2020
as follows:
– The weighting on TPR will be reduced from 30% to 20%;
– Two balance sheet resilience measures will be introduced to
replace the 10% on development profit and the 10% from the
TPR measure; and
– The profitability measure that incentivises outperformance of
the annual budget will be a combination of cost and revenue
with a wider range than in previous years reflecting the
greater uncertainty currently prevailing.
Proportion of Annual
Incentive as a percentage
of maximum opportunity
Measure
Net Asset
Value changes
Annual
profitability
Balance sheet
resilience measures:
Customer
Orientation
Right
Places
Expert
People
Capital
Efficiency
Quantitative measures
70% reward weighting
Strategic measures
30% reward weighting
122
British Land Annual Report and Accounts 2020
Total Property Return outperformance target
17% payout for matching the MSCI benchmark index rising to
100% payout for outperforming by 1.25%
Financial budget targets for cost and revenue
0% payout for meeting a threshold level rising to 100% payout
for at least matching a stretch level
Refinancing
0% payout for meeting a threshold level rising to 100% payout
for at least matching a stretch level
Liquidity
0% payout for meeting a threshold level rising to 100% payout
for at least matching a stretch level
These targets will be fully disclosed and explained in next
year’s report
20%
30%
10%
10%
7.5%
The detailed targets that the Committee sets are considered to be commercially sensitive and as such the specific targets for the
quantitative measures for the coming year will be disclosed in the 2021 Remuneration Report. In assessing how the Executive Directors
performed during the year commencing 1 April 2020, the Committee will take into account their performance against all of the
measures and make an assessment in the round to ensure that performance warrants the level of award determined by the table above.
This year in particular, the Committee will assess performance in the context of the wider stakeholder experience and overall corporate
outcome. Discretion may be exercised by the Committee and, if this is the case, a full explanation will be set out in next year’s report.
As disclosed previously, the Committee agreed that for Annual Incentive awards, the sector weighted IPD March Annual Universe
benchmark (which includes sales, acquisitions and developments and so takes into account active asset management as well as a more
representative peer group) would be most suitable.
In line with current practice, two-thirds of any amount earned will be paid in cash with the remaining one-third (net of tax) used to
purchase shares which must be held for a further three years.
Long term incentive awards (audited)
An LTIP award will be granted to Executive Directors during the year commencing 1 April 2020. The size and timing of the award will be
determined by the Committee at a later date and explained in the next year’s report, having been disclosed at the time of grant.
The performance measures that apply to this LTIP award will be as below. These measures were also applied to the LTIP award granted
in July 2019, as shown on page 127.
Measure
Link to strategy
Measured relative to
Total Property Return (TPR)
The change in capital value, less any capital
expenditure incurred, plus net income.
TPR is expressed as a percentage of
capital employed over the LTIP performance
period and is calculated by IPD.
Total Accounting Return (TAR)
The growth in British Land’s EPRA Net
Tangible Asset Value (NAV) per share
plus dividends per share paid over the
LTIP performance period.
Total Shareholder Return (TSR)
The growth in value of a British Land
shareholding over the LTIP performance
period, assuming dividends are reinvested
to purchase additional shares.
The TPR measure is designed
to link reward to strong
performance at the gross
property level.
TPR performance will be assessed against
the performance of an IPD sector
weighted benchmark.
The TAR measure is designed to
link reward to performance at
the net property level that takes
account of gearing and our
distributions to shareholders.
The TSR measure is designed
to directly correlate reward
with the return delivered to
shareholders.
TAR will be measured relative to a market
capitalisation weighted index of the FTSE
350 property companies that use EPRA
accounting.
Half of the TSR measure will be measured
relative to the performance of the FTSE
100 and the other half will be measured
relative to a market capitalisation
weighted index of the FTSE 350 property
companies that use EPRA accounting.
Weighting
40%
20%
40%
Performance against the LTIP measures will be assessed over a period of three years. If performance against a measure is equal to
the index, 20% of the proportion attached to that measure will vest and if performance is below index the proportion attached to that
measure will lapse. 100% of the proportion of each element of award attached to each measure will vest if British Land’s performance
is at a stretch level. Those stretch levels are TPR 1.00% per annum, TAR 2.00% per annum, TSR (Real Estate) 3.00% per annum and TSR
(FTSE 100) 5.00% per annum There will be straight-line vesting between index and stretch performance for each measure. Following a
change in the EPRA definition of NAV, TAR is now being measured using EPRA Net Tangible Asset Value per share.
The Committee retains the discretion to override the formulaic outcomes of incentive schemes. The purpose of this discretion is to
ensure that the incentive scheme outcomes are consistent with overall Company performance and the experience of stakeholders.
Non-Executive Directors’ fees
Fees paid to the Chairman and Non-Executive Directors are positioned around the mid-market with the aim of attracting individuals
with the appropriate degree of expertise and experience. The fee structure set out below is unchanged from those applied in 2019.
However, as explained on page 119, the Chairman and Non-Executive Directors have elected to forgo an amount equal to 20% of their
fees for an initial period of three months effective 1 April 2020.
Chairman’s annual fee
Non-Executive Director’s annual fee
Senior Independent Director’s annual fee
Audit or Remuneration Committee Chairman’s annual fee
Audit or Remuneration Committee member’s annual fee
CSR Committee Chairman’s annual fee
Nomination or CSR Committee member’s annual fee
£375,000
£64,000
£10,000
£20,000
£8,000
£14,000
£5,000
British Land Annual Report and Accounts 2020
123
DIRECTORS’ REMUNERATION REPORT CONTINUED
How we applied our Remuneration Policy
during the year ended 31 March 2020
The following pages set out how we implemented the Directors’
Remuneration Policy during the year ended 31 March 2020 and the
remuneration received by each of the Directors.
Single total figure of remuneration (audited)
The following tables detail all elements of remuneration receivable by British Land’s Executive Directors in respect of the year ended
31 March 2020 and show comparative figures for the year ended 31 March 2019.
Executive Directors
Chris Grigg
Simon Carter
Salary Taxable benefits
Other items in
the nature of
remuneration
Pension or
pension
allowance
Annual
Incentives1
Long term
incentives2
2020
£000
874
500
2020
£000
20
20
2020
£000
16
13
2020
£000
262
75
2020
£000
362
211
2020
£000
0
0
1. Estimated outcomes. 2020 Annual Incentive outcomes are subject to the publication of final IPD results and an assessment by the Committee later in the year.
2. Forecast outcomes. 2020 Long Term Incentive outcomes are subject to confirmation of final vesting levels in June 2020.
Chris Grigg
Simon Carter (from May 2018)
2019
£000
857
421
2019
£000
21
18
2019
£000
15
599
2019
£000
300
53
20191
£000
460
238
20191
£000
0
0
Total
2020
£000
1,534
819
2019
£000
1,653
1,329
1. Confirmed outcomes. Actual Annual Incentive and Long Term Incentive outcomes are confirmed after publication of the Annual Report each year. Forecast estimated
figures were published in the 2019 Report; the actual outcomes are reflected in the table above.
Notes to the single total figure of remuneration table (audited)
Fixed pay
Taxable benefits: Taxable benefits include car allowance (Chris Grigg £16,800 and Simon Carter £16,700) and private medical
insurance.
Other items in the nature of remuneration: include life assurance, permanent health insurance, annual medical check-ups,
professional subscriptions, the value of shares awarded under the all-employee Share Incentive Plan and any notional gain on
exercise for Sharesave options that matured during the year, if any. As disclosed in 2018, to replace deferred payments forfeited on
joining British Land, Simon Carter was conditionally awarded €675,000 of shares (86,196 shares) which had to be held for at least a
year from 22 June 2018, with a value of £592,684.
Pensions: Chris Grigg does not participate in any British Land pension plan. Instead he receives cash allowances, in lieu of pension.
As stated in the 2019 Report it was agreed with Chris that his annual pension allowance would reduce by 5% per annum until it is in
alignment with the wider workforce. Simon Carter is a member of the Defined Contribution Scheme and utilises his Annual Pension
Allowance; the remaining amount of his pension is paid to him in cash, for him to make his own arrangements for retirement. Simon
Carter is also a deferred member of the British Land Defined Benefit Pension Scheme in respect of his employment with British Land
earlier in his career. The table below details the defined benefit pensions accrued at 31 March 2020.
Executive Director
Simon Carter
Defined benefit
pension accrued at
31 March 2020
£000
38
Normal
retirement
age
60
There are no additional benefits that will become receivable by a Director in the event that a Director retires early.
Annual Incentives FY20 (audited)
The level of Annual Incentive award is determined by the Committee based on British Land’s performance and Executive Directors’
performance against quantitative and strategic targets during the year. For the year ended 31 March 2020 the Committee’s
assessment and outcomes against these criteria (before exercising any discretion) are set out below. Quantitative measures are a
direct assessment of the Company’s financial performance and in the very long term business we operate are a reflection of many of
the decisions taken in prior years. The delivery of strategic objectives positions the future performance of the business so payouts
under this part of the Annual Incentive Plan will not necessarily correlate with payouts under the quantitative measures in any year.
The level of bonus calculated by applying the criteria below generated an outcome of c.70% of salary for the two Executive Directors.
124
British Land Annual Report and Accounts 2020
Having reflected at length on the impact of Covid-19 on the Company’s stakeholders (including our employees, shareholders and
customers) the Committee with the full support of the executive directors, scaled back the level of estimated bonus to 41.4% and
42.2% of salary for Chris and Simon respectively, just over a quarter of the maximum opportunity. The decision on these bonuses
will be taken later in 2020 when more information on the impact on our stakeholders is available and when performance against the
Total Property Return benchmark for the year ending 31 March 2020 is known.
Quantitative
measure
Weighting
Performance in
line with
expectations:
20% payout for
Profit and
Development
Profit, 17%
payout for TPR
0bps
0%
Payout
<0bps
Total
Property
Returns
vs IPD
30%
-460
bps
Profit
30%
Budget
-1%
On
Budget
£293m
£296m
Budget
-1%
On
Budget
Development
Profit
10%
£65.6m
£88.0m
£88.9m
Maximum
achievable:
100% payout
+125bps
£306m
Budget
+4%
£308m
Budget
+4%
£92.5m
Final
outcome
As a
% of salary Performance achieved against target range
Target range of matching sector
weighted index to outperforming
it by 125bps. Forecast TPR of
–7.4%, underperforming against
the estimated threshold of
weighted IPD index by -460bps.
Target range of 1% below the
budget target to outperforming
it by 4%.
0%
0%
26.27% 39.41%
Target range of 1% below
budgeted development profit to
outperforming it by 4%.
0%
0%
Sub-total
70%
Sub-total 26.27% 39.41%
Note: The above chart is a forecast of the 2020 TPR outcomes which will depend on performance against IPD figures that will only become available after the publication of
this Report and as such, represent an estimate of the final figures.
CHRIS GRIGG
Strategic objective
Measure
Weighting
Performance achieved
Final outcome
(% of max)
Final outcome
(% of salary)
Right
Places
Deliver Planned Development
projects
Customer
Orientation
Expert
People
Grow our urban mixed use
business
Deliver Campus Promise
Framework
Evolve our offer leveraging
technology
New management structure
established and operating
efficiently
Reduce Gender Pay gap
(April 2020 snapshot data)
Capital
Efficiency
Progress made on
Retail plan
Deliver Capital Plan
7.5%
7.5%
7.5%
7.5%
Achieved unanimous resolution to grant
planning permission for Canada Water
Development
Further diversification of tenant base at
Broadgate. Space committed to Storey
Completed neighbourhood/campus
promise framework
Commenced execution of digital
platform strategy (SMART, Vicinitee,
Storey Portal)
Integrated to form a single Property
business (including Broadgate Estates)
Gender Pay Gap median reduced by 7%
as at 5 April 2020; September Survey
engagement score of 75%
Retail sales impacted by Brexit and
retail decline. Completed £194m of
superstore sales £103m of other retail
Purchased £86m Office/Storey
3.75%
3.75%
3.75%
1.88%
3.75%
1.88%
0.94%
0.94%
20.64%
30.96%
British Land Annual Report and Accounts 2020
125
DIRECTORS’ REMUNERATION REPORT CONTINUED
SIMON CARTER
Strategic objective
Measure
Weighting
Performance achieved
Final outcome
(% of max)
Final outcome
(% of salary)
Right
Places
Customer
Orientation
Expert
People
Implement and execute
refreshed IR Programme
Evolve our offer leveraging
technology
Agree new CSR Strategy
Reduce Gender Pay gap
(April 2020 snapshot data)
Capital
Efficiency
Deliver Capital Plan
Refinance Requirements
Maintained
7.5%
7.5%
7.5%
7.5%
Investor Relations programme refreshed
and successful Investor day held
Proactis system live. Property
management prototype approved at Board
New CSR (including Sustainability)
Strategy agreed. 10 year energy reduction
target achieved (55% reduction)
Gender Pay Gap median reduced by 7%
as at 5 April 2020; September Survey
engagement score of 75%
Completed share buyback programme
Financing initiatives executed to maintain
>2yrs refinancing date
3.75%
7.5%
3.75%
1.88%
0.94%
3.75%
Total bonus calculation
Chris Grigg
Simon Carter
Chris Grigg
Simon Carter
21.57%
32.36%
Forecast final
outcome
(% of max)
Forecast final
outcome
(% of salary)
46.91%
47.84%
70.37%
71.77%
Scaled back
estimated bonus
(% of salary)1
41.39%
42.22%
1. As described on page 125 the Committee scaled back the level of estimated bonuses by 41% and has deferred a final decision on whether to pay some, all or part of this
scaled back bonus. The decision on these bonuses will be reached during 2020.
One third of the annual bonus (after tax has been paid) has to be applied to purchase shares which are then held for three years by
the Executive Director.
2019 comparative: In May 2019, the Committee confirmed that the underperformance of TPR compared to the IPD benchmark was
-220bps rather than the estimate of -190bps made for the purposes of the single total figure of remuneration table in the 2019 Annual
Report. This did not alter the amount of bonus earned.
Long term incentives (audited)
The information in the long term incentives column in the single total figure of remuneration table (see page 124) relates to vesting of
awards granted under the following schemes, including, where applicable, dividend equivalent payments on those awards. The below
note outlines forecasts of the 2020 long term incentive outcomes. The actual outcomes will only become available after the
publication of this Report.
Long-Term Incentive Plan
The awards granted to Executive Directors on 28 June 2017, and which will vest on 26 June 2020, were subject to three performance
conditions over the three-year period to 31 March 2020. The first condition (40% of the award) measured British Land’s Total Property
Returns (TPR) relative to the funds in the December IPD UK Annual Property Index (the Index); the second (40% of the award)
measured Total Accounting Return (TAR) relative to a comparator group of British Land and 15 other property companies; while the
third (20% of the award) measured Total Shareholder Return (TSR), half of which was measured against the FTSE 100 and the other
half measured against the comparator group of British Land and 15 other property companies.
The TPR element is expected to lapse, based on British Land’s adjusted TPR of 0.2% per annum when compared to the funds in
the Index of 4.0%. The TAR element is also expected to lapse based on British Land’s TAR of -2.1% per annum compared to 4.6% per
annum for the property company median. The actual vesting of the TPR and TAR elements can only be calculated once results have
been published by IPD and all the companies within the comparator group respectively. The actual percentage vesting will be
confirmed by the Committee in due course and details provided in the 2021 Remuneration Report. Korn Ferry has confirmed that the
TSR element of the award will lapse as British Land’s TSR performance over the period was -0.96% compared to a median of 5.62%
and 39.58% for the FTSE 100 and Property companies comparator groups respectively.
Executive Director
Chris Grigg
Performance
shares or options
Number of performance
shares awarded
Estimated value of
award on vesting
£000
Estimated dividend
equivalent and interest
£000
Increase in value as a result
of share price movement
between grant and vesting
£000
Shares
340,264
nil
nil
n/a
2019 comparative: As set out in the 2019 Annual Report, the 2016 LTIP awards lapsed in full on 22 June 2019 as expected.
126
British Land Annual Report and Accounts 2020
Matching Share Plan
The last award was made under the Matching Share Plan in 2016 and as such there was no award with a performance period ending
on 31 March 2020 to be disclosed in the 2020 single figure.
2019 comparative: In June 2019, the Committee confirmed that the 2016 MSP Matching awards lapsed in full, compared to the
forecast vesting at 50%. The long term incentive figures in the 2019 comparatives of the single total figure of remuneration table have
therefore been updated accordingly.
Share scheme interests awarded during the year (audited)
Long-Term Incentive Plan
The total face value of each Executive Director’s LTIP award for the year ended 31 March 2020 was equivalent to 250% of basic salary
at grant.
The share price used to determine the face value of performance shares, and thereby the number of performance shares awarded, is
the average over the three dealing days immediately prior to the day of award. The share price for determining the number of
performance shares awarded was 535.60p. The performance conditions attached to these awards are set out in the Remuneration
Policy approved by shareholders in July 2019 and summarised on page 123.
Performance shares
Executive Director
Chris Grigg
Simon Carter
Grant date
23/07/2019
23/07/2019
Number of
performance
shares granted
407,923
233,383
Face value
£000
2,185
1,250
End of
performance
period
31/03/22
31/03/22
Percentage vesting on
achievement of
minimum performance
threshold
%
20%
20%
Vesting date
23/07/22
23/07/22
Directors’ shareholdings and share interests (audited)
The table below shows the Directors’ shareholdings, including shares held by connected persons, as at year end or, if earlier, the date
of retirement from the Board.
Although there are no shareholding guidelines for Non-Executive Directors, they are each encouraged to hold shares in British Land.
The Company facilitates this by offering Non-Executive Directors the ability to purchase shares quarterly using their post-tax fees.
During the year ended 31 March 2020, William Jackson and Tim Score have each received shares in full or part satisfaction of
their fees.
Outstanding scheme interests as at 31 March 2020
Shares held
Unvested share
plan awards
(subject to
performance
measures)
Unvested share
plan awards
(not subject to
performance
measures)
1,062,171
411,116
9,468
5,769
Director
Chris Grigg
Simon Carter
Tim Score (Chair)
Lynn Gladden
Alastair Hughes
William Jackson
Nicholas Macpherson
Preben Prebensen
Laura Wade-Gery
Rebecca Worthington
Former Directors who served during the year
John Gildersleeve1
1. Holding is as at the date of departure of 19 July 2019.
Vested but
unexercised
share plan
awards
Total shares
subject to
outstanding
share plan
awards
1,439,146 2,510,785
416,885
0
As at 1 April
2019
1,343,549
133,975
43,899
18,339
7,274
135,115
5,600
20,000
9,585
3,000
As at 31 March
2020
1,459,709
142,085
54,319
18,339
7,371
143,728
5,600
20,000
9,585
3,000
Total of all share
plan awards and
shareholdings as
at 31 March 2020
3,970,494
558,970
54,319
18,339
7,371
143,728
5,600
20,000
9,585
3,000
5,220
5,220
5,220
In addition, on 6 April 2020, the following Non-Executive Directors were allotted shares at a price of 322.52 pence per share in full or
part satisfaction of their fees:
Non-Executive Director
William Jackson
Tim Score
Other than as set out above, there have been no further changes since 31 March 2020.
Shares allotted
3,247
7,751
British Land Annual Report and Accounts 2020
127
DIRECTORS’ REMUNERATION REPORT CONTINUED
Shareholding guidelines
The shareholding guidelines (as a percentage of salary) for Executive Directors are 200% for the Chief Financial Officer and 225% for
the Chief Executive. In addition, Executive Directors will normally be required to retain shares equal to the level of this guideline (or if
they have not reached the guideline, the shares that count at that time) for the two years following their departure. There is no set
timescale for Executive Directors to reach the prescribed guideline but they are expected to retain net shares received on the vesting
of long term incentive awards until the target is achieved. Shares that count towards the holding guideline are unfettered and
beneficially owned by the Executive Directors and their connected persons, locked-in SIP shares and all vested awards count towards
the requirement on a net of tax basis. All other awards that are still the subject of a performance assessment and any share options
do not count.
The guideline shareholdings for the year ending 31 March 2020 are shown below:
Executive Director
Chris Grigg
Simon Carter
1. Calculated on a share price of 336.2p on 31 March 2020.
Guideline as
percentage of
basic salary
225%
200%
Guideline
holding1
584,877
297,442
Holding counting toward
guidelines at
31 March 2020
% of Salary Held (Based
on 31 March 2020
Shareholding)
1,459,709
142,085
562%
96%
Using the average share price for the whole financial year of 551p, the total guideline holding as a percentage of basic salary for Chris
Grigg and Simon Carter would be 920% and 157% respectively.
Acquisitions of ordinary shares after the year end
The Executive Directors have purchased or been granted the following fully paid ordinary British Land shares under the terms of the
partnership, matching and dividend elements of the Share Incentive Plan:
Executive Director
Chris Grigg
Simon Carter
Date of purchase
or award
14/04/20
14/05/20
14/04/20
14/05/20
Purchase price
Partnership shares
Matching shares
Dividend shares
397.86p
324.00p
397.86p
324.00p
38
46
37
47
76
92
74
94
nil
nil
nil
nil
Other than as set out above, there have been no further changes since 31 March 2020.
Unvested share awards (subject to performance)
Executive Director
Chris Grigg
Simon Carter
LTIP performance shares
LTIP performance shares
LTIP performance shares
LTIP performance shares
LTIP performance shares
Date of grant
28/06/171
26/06/18
23/07/19
26/06/18
23/07/19
Number
outstanding at
31 March 2020
Subject to
performance
measures
End of
performance
period
340,264
313,984
407,923
177,733
233,383
Yes
Yes
Yes
Yes
Yes
31/03/20
31/03/21
31/03/22
31/03/21
31/03/22
Vesting date
28/06/20
26/06/21
23/07/22
26/06/21
23/07/22
1. The LTIP awards granted in June 2017 are also included within the ‘2020 Long term incentives’ column of the single total figure of remuneration table on page 124.
The degree to which performance measures have been or are expected to be achieved, and the resultant proportions of the awards expected to vest, are detailed on
pages 126 to 128.
128
British Land Annual Report and Accounts 2020
Unvested option awards (not available to be exercised)
Executive
Director
Chris Grigg
Simon Carter
Sharesave options
Sharesave options
Date of grant
18/06/19
18/06/19
Number
outstanding at
31 March 2020
4,137
4,137
Option price
pence
435.0
435.0
Subject to
performance
measures
End of
performance
period
Date becomes
exercisable Exercisable until
No
No
n/a
n/a
01/09/22
01/09/22
28/02/23
28/02/23
Vested option awards (available to be exercised)
Executive
Director
Chris Grigg
LTIP options
LTIP options
Date of grant
28/06/11
14/09/12
Number
outstanding at
31 March 2020
695,652
743,494
Option price
pence Exercisable until
575
538
28/06/21
14/09/22
Options exercised during the year ended 31 March 2020
Executive
Director
Date of grant
Number
exercised
Option price
pence
Date became
exercisable
Date exercised
Market price on
date of exercise
pence
Chris Grigg
LTIP options
11/06/10
1,073,825
447
11/06/13
11/07/19
543.73
Payments to past Directors and for loss of office (audited)
As disclosed in the 2019 Directors’ Remuneration Report, Charles Maudsley ceased to be a Director of the Company and left the
Company on 31 March 2019 and Tim Roberts ceased to be a Director of the Company on 31 March 2019 and remained an employee
until 31 July 2019. The treatment of their remuneration arrangements upon leaving the Company was in line with policy and disclosed
in full on pages 104 and 105 of the 2019 Annual Report. During the year ending 31 March 2020 British Land has therefore made the
following payments in line with the treatment disclosed:
(1) Charles Maudsley
– A payment in lieu of notice for the period from when he left the Company to the end of his notice period, reduced by the value of
remuneration secured with Bridgepoint Advisers Limited during the notice period, totalling £381k.
– The bonus in respect of the year ending 31 March 2019 which totalled £251k of which one-third was used to purchase shares
which must be held for three years.
– The MSP Award failed to vest so had nil value.
(2) Tim Roberts
– Payments comprising salary and car allowance for the period up to 31 July 2019 when Tim ceased to be an employee, totalling
£157,115.
– A payment in lieu of notice for the period from when he left the Company to the end of his notice period, reduced by the value of
paid employment secured with Henry Boot plc during the notice period, totalling £242k.
– A payment of £13k in lieu of untaken holiday.
– The bonus in respect of the year ending 31 March 2019 which totalled £251k of which one-third was used to purchase shares
which must be held for three years. Tim also received a bonus of £28k whilst he worked as a member of the Executive Committee
after leaving the Board.
– The MSP Award failed to vest so had nil value.
Other disclosures
Service contracts
All Executive Directors have rolling service contracts with the Company which have notice periods of 12 months on either side.
Director
Chris Grigg
Simon Carter
Date of service contract
19/12/08
18/01/18
Normal notice period
to be given by Company
12 months
12 months
Normal notice period
to be given by Director
12 months
12 months
In accordance with the Code, all continuing Directors stand for election or re-election by the Company’s shareholders on an annual
basis. The Directors’ service contracts are available for inspection during normal business hours at the Company’s registered office
and at the Annual General Meeting. The Company may terminate an Executive Director’s appointment with immediate effect without
notice or payment in lieu of notice under certain circumstances, prescribed within the Executive Director’s service contract.
British Land Annual Report and Accounts 2020
129
DIRECTORS’ REMUNERATION REPORT CONTINUED
Executive Directors’ external appointments
Executive Directors may take up one non-executive directorship at another FTSE company, subject to British Land Board approval.
Chris Grigg was appointed a non-executive director of BAE Systems plc on 1 July 2013. During the year to 31 March 2020, Chris received
a fee of £87,252 (including £7,252 of overseas travel allowances and benefits deemed to be taxable) from BAE Systems plc, which he
retained in full (2019: £92,640).
Relative importance of spend on pay
The graph below shows the amount spent on remuneration of all employees (including Executive Directors) relative to the amount
spent on distributions to shareholders for the years to 31 March 2020 and 31 March 2019. The remuneration of employees decreased
by 11% relative to the prior year. As a result of the 2019 share buyback programme, the total cost of distributions to shareholders
decreased by 16%. Distributions to shareholders include ordinary and, where offered, scrip dividends. No scrip alternative was offered
during the year ended 31 March 2020.
2019/20
2018/19
0
100
200
300
400
500
600
0
100
200
300
400
500
600
£66m
£420m
£74m
£502m
Remuneration of employees
including Directors:
Distribution
to shareholders:
Wages and salaries
Annual Incentives
Social security costs
Pension costs
PID cash dividends paid
to shareholders
PID tax withholding
Non-PID cash dividends paid
to shareholders
Equity-settled share-based
payments
Share buybacks
Total shareholder return and Chief Executive’s remuneration
The graph below shows British Land’s total shareholder return for the 10 years from 1 April 2010 to 31 March 2020 against that of the
FTSE All-Share Real Estate Investment Trusts (REIT) Total Return Index for the same period. The graph shows how the total return
on a £100 investment in the Company made on 1 April 2010 would have changed over the 10-year period, compared with the total
return on a £100 investment in the FTSE All-Share REIT Total Return Index. This index has been selected as a suitable comparator
because it is the index in which British Land’s shares are classified.
The table below sets out the total remuneration of Chris Grigg, Chief Executive, over the same period as the Total Shareholder Return
graph. The quantum of Annual Incentive awards granted each year and long term incentive vesting rates are given as a percentage of
the maximum opportunity available.
Chief Executive
2010/11
2011/12
2012/13
2013/14
2014/15
2015/16
2016/17
2017/18 2018/191 2019/202
Chief Executive’s single total figure of remuneration (£000)
Annual Incentive awards against maximum opportunity (%)
Long term incentive awards vesting rate against maximum
opportunity (%)
2,329
83
5,353
75
4,810
75
5,398 6,551
96
90
3,623
67
1,938
33
2,279
63
1,653
36
1,534
28
n/a
99
63
98
93
54
15
16
0
0
1. Confirmed outcome.
2. Forecast outcome.
Total shareholder return
The graph below shows British Land’s total shareholder return for the 10 years to 31 March 2020, which assumes that £100 was
invested on 1 April 2010. The Company chose the FTSE All-Share REIT’s Sector as an appropriate comparator for this graph because
British Land has been a constituent of that index throughout the period.
Value (£)
250
200
150
100
01 April
2010
31 March
2011
31 March
2012
31 March
2013
31 March
2014
31 March
2015
31 March
2016
31 March
2017
31 March
2018
31 March
2019
31 March
2020
The British Land Company PLC
FTSE All-Share REIT’s Sector
130
British Land Annual Report and Accounts 2020
CEO pay ratio
The CEO pay ratios are set out below in line with the new regulations. In calculating this information last year we used the gender pay
gap data calculated for each employee; to provide a more accurate calculation we moved to using employees as at 31 March 2020.
This analysis is very similar to Gender Pay analysis except that it excludes certain one off amounts that might have distorted the full
year figure. Pay data has been analysed on a full-time equivalent basis with pay for individuals working part-time increased pro-rata
to the hours worked. It also includes employees on maternity who would be excluded under the Gender Pay methodology. The table
below shows that the movement in the median ratio is broadly flat since 2018/19. This is due to similar reductions in the CEO single
figure and the total pay for the median employee. The median ratio is considered to be consistent with the pay and progression
policies within British Land as the remuneration policy for the CEO is set based on the same principles as the policy for the wider
employee population. As such salaries for all employees are set to reflect the scope and responsibilities of their role and take into
account pay levels in the external market. The majority of staff are also eligible to receive a bonus, and whilst variable pay represents
a larger proportion of the CEO’s package, in all cases, there is a strong link between payouts and the performance of both the
company and the individual. The Committee Chair has provided an explanation of the relationship between reward and performance
on page 120.
CEO pay ratio
Method
CEO single figure (£,000)
Upper quartile
Median
Lower quartile
2017/18
2018/19
2019/20
B
2,279
23:1
35:1
50:1
B
1,653
13:1
22:1
33:1
C
1,534
14:1
22:1
33:1
The salary and total pay for the individuals identified at the Lower quartile, Median and Upper quartile positions in 2019/20 are set out
below. Having reviewed the pay levels of these individuals it is felt that these are representative of the structure and quantum of pay
at these points in the distribution of employees’ pay.
2019/20 CEO pay ratio
Upper quartile
Median
Lower quartile
Salary
Total pay
£90,000
£55,042
£40,740
£106,240
£68,949
£46,830
Chief Executive’s remuneration compared to remuneration of British Land employees
The table below shows the percentage changes in different elements of the Chief Executive’s remuneration relative to the previous
financial year and the average percentage changes in those elements of remuneration for employees.
Remuneration element
Salary
Taxable benefits
Annual Incentive
Value of Chief Executive
remuneration 2020 £000
Value of Chief Executive
remuneration 2019 £000
Change in Chief Executive
remuneration %
Average change in remuneration
of British Land employees %
873.9
20.2
359.6
856.8
21.5
361.7
2.0
-6.21
-21.3
6.0
-2.61
-25.6
1. Change attributable to reduced premiums for private medical insurance, whilst retaining an equivalent level of cover.
The Committee reviews, takes advice and seeks information from both its independent adviser and the Human Resources department
on pay relatively within the wider market and the Company throughout the year. The CEO pay ratio and gender pay ratio help to inform
the Committee in its assessment of whether the level and structure of pay within the Company is appropriate. The Committee
reviewed and updated the Remuneration Policy last year and shareholders approved both the Policy and its application at the AGM
with votes in favour of 98% and 95% respectively. The Committee is satisfied with the current Policy and feels the opportunity and
alignment are appropriate at the current time.
British Land Annual Report and Accounts 2020
131
DIRECTORS’ REMUNERATION REPORT CONTINUED
Non-Executive Directors’ remuneration (audited)
The table below shows the fees paid to our Non-Executive Directors for the years ended 31 March 2020 and 2019:
Fees
Taxable benefits1
Total
Chairman and Non-Executive Directors
Tim Score (Chair)
Lynn Gladden
Alastair Hughes
William Jackson
Nicholas Macpherson
Preben Prebensen
Laura Wade-Gery
Rebecca Worthington
Former Directors who served during the year
John Gildersleeve
2020
£000
292
77
91
87
72
76
86
86
118
2019
£000
95
71
73
105
71
71
71
73
385
2020
£000
–
1
–
–
–
–
0
–
37
2019
£000
–
1
–
–
–
–
1
1
64
2020
£000
292
78
91
87
72
76
86
86
155
2019
£000
95
72
73
105
71
71
72
74
449
1. Taxable benefits include the former Chairman’s chauffeur cost and expenses incurred by other Non-Executive Directors. The Company provides the tax gross up on
these benefits and the figures shown above are the grossed up values.
Letters of appointment (audited)
All Non-Executive Directors have a letter of appointment with the Company. The effective dates of appointment are shown below:
Director
Tim Score (Chair)
Lynn Gladden
Alastair Hughes
William Jackson
Nicholas Macpherson
Preben Prebensen
Laura Wade-Gery
Rebecca Worthington
Effective date of appointment
19 July 2019
22 March 2018
1 January 2018
11 April 2020
19 December 2019
1 September 2017
13 May 2018
1 January 2018
All continuing Non-Executive Directors stand for election or re-election on an annual basis. The letters of appointment are available
for inspection during normal business hours at the Company’s registered office and at the AGM.
The appointment of the Chairman or any Non-Executive Directors may be terminated immediately without notice if they are not
reappointed by shareholders or if they are removed from the Board under the Company’s Articles of Association or if they resign and
do not offer themselves for re-election. In addition, appointments may be terminated by either the individual or the Company giving
three months’ written notice of termination or, for the current Chairman, six months’ written notice of termination.
Remuneration Committee membership
As at 31 March 2020, and throughout the year under review, the Committee was comprised wholly of independent Non-Executive
Directors. The members of the Committee, together with attendance at Committee meetings, are set out in the table below:
Director
William Jackson
Laura Wade-Gery
Lynn Gladden
Preben Prebensen
Position
Chairman1
Chair1
Member
Member
Date of appointment
(to the Committee)
14 January 2013
13 May 2015
20 March 2015
1 September 2017
Attendance
1/1
4/4
4/4
4/4
1. William Jackson stepped down from the Committee and Laura Wade-Gery was appointed Chair at the conclusion of the 2019 AGM.
During the year ended 31 March 2020, Committee meetings were also part attended by Tim Score and John Gildersleeve (Company
Chairmen), Chris Grigg (Chief Executive), Simon Carter (Chief Financial Officer), Bruce James (Head of Secretariat), Brona McKeown
(General Counsel and Company Secretary), Ann Henshaw (HR Director) and Kelly Barry (Head of Reward) other than for any item
relating to their own remuneration. A representative from Korn Ferry also routinely attends Committee meetings.
132
British Land Annual Report and Accounts 2020
The Committee Chair holds regular meetings with the Chairman, Chief Executive and HR Director to discuss all aspects of
remuneration within British Land. She also meets the Committee’s independent remuneration advisers, Korn Ferry, prior to each
substantive meeting to discuss matters of governance, Remuneration Policy and any concerns they may have.
How the Committee discharged its responsibilities during the year
The Committee’s role and responsibilities have remained unchanged during the year (having been amended in March 2019 to
incorporate changes to the Code) and are set out in full in its terms of reference which can be found on the Company’s website
www.britishland.com/committees. The Committee’s key areas of responsibility are:
– setting the Remuneration Policy for Executive Directors and the Company Chairman; reviewing the Remuneration Policy and
strategy for members of the Executive Committee and other members of executive management, whilst having regard to pay and
employment conditions across the Group;
– determining the total individual remuneration package of each Executive Director, Executive Committee member and other
members of management;
– monitoring performance against conditions attached to all annual and long term incentive awards to Executive Directors, Executive
Committee and other members of management and approving the vesting and payment outcomes of these arrangements; and
– selecting, appointing and setting the terms of reference of any independent remuneration consultants.
In addition to the Committee’s key areas of responsibility, during the year ended 31 March 2020, the Committee also considered the
following matters:
– reviewing and recommending to the Board the Remuneration Report to be presented for shareholder approval;
– remuneration of the Executive Directors and members of the Executive Committee including achievement of corporate and
individual performance; and pay and Annual Incentive awards below Board-level;
– the extent to which performance measures have been met and, where appropriate, approving the vesting of Annual Incentive and
long term incentive awards;
– granting discretionary share awards; reviewing and setting performance measures for Annual Incentive awards;
– reviewing the Committee’s terms of reference;
– the need for engagement with shareholders and their representative bodies on remuneration matters. This took place at the start
of the year in relation to the 2019 AGM, but has not been felt to be necessary since then;
– whilst formal consultation with the workforce did not take place in the year, the Committee was made aware of the results of
engagement surveys and any general themes that are impacting employees;
– considering gender pay gap reporting requirements; and
– receiving updates and training on corporate governance and remuneration matters from the independent remuneration consultant.
The Committee’s terms of reference have been reviewed by the Committee during the year. No changes were proposed.
Remuneration consultants
Korn Ferry was appointed as independent remuneration adviser by the Committee on 21 March 2017 following a competitive tender
process. Korn Ferry is a member of the Remuneration Consultants Group and adheres to that group’s Code of Conduct. The
Committee assesses the advice given by its advisers to satisfy itself that it is objective and independent. The advisers have private
discussions with the Committee Chair at least once a year in accordance with the Code of Conduct. Fees, which are charged on a
time and materials basis, were £124,805 (excluding VAT). Korn Ferry also provided general remuneration advice to the Company
during the year.
Voting at the Annual General Meeting
The table below shows the voting outcomes of the resolutions put to shareholders regarding the Directors’ Remuneration Report and
Remuneration Policy (at the AGM in July 2019).
Resolution
Votes for
% for
Votes against
% against
Total votes cast
Votes withheld
Directors’ Remuneration Report (2019)
Directors’ Remuneration Policy (2019)
672,923,921
699,935,009
94.54
98.30
38,861,785
12,073,236
5.46 711,785,706
1.70 712,008,245
1,062,975
840,435
This Remuneration Report was approved by the Board on 26 May 2020.
Laura Wade-Gery
Chair of the Remuneration Committee
British Land Annual Report and Accounts 2020
133
Board of Directors
The names and biographical details of the Directors and details
of the Board Committees of which they are members are set out
on pages 92 to 93 and incorporated into this Report by
reference. Changes to the Directors during the year and up to
the date of this Report are set out on page 105. The Company’s
current Articles require any new Director to stand for election at
the next AGM following their appointment. However, in
accordance with the Code and the Company’s current practice,
all continuing Directors offer themselves for election or
re-election, as required, at the AGM.
Details of the Directors’ interests in the shares of the Company
and any awards granted to the Executive Directors under any of
the Company’s all-employee or executive share schemes are
given in the Directors’ Remuneration Report on pages 126 to
128. The service agreements of the Executive Directors and the
letters of appointment of the Non-Executive Directors are also
summarised in the Directors’ Remuneration Report and are
available for inspection at the Company’s registered office.
The appointment and replacement of Directors is governed by
the Company’s Articles, the Code, the Companies Act 2006 and
any related legislation. The Board may appoint any person to be
a Director so long as the total number of Directors does not
exceed the limit prescribed in the Articles. In addition to any
power of removal conferred by the Companies Act 2006, the
Company may by ordinary resolution remove any Director before
the expiry of their period of office.
Directors’ interests in contracts and conflicts of interest
No contract existed during the year in relation to the Company’s
business in which any Director was materially interested.
The Company’s procedures for managing conflicts of interest by
the Directors are set out on page 99. Provisions are also
contained in the Company’s Articles which allow the Directors to
authorise potential conflicts of interest.
Directors’ liability insurance and indemnity
The Company maintains appropriate Directors’ and Officers’
liability insurance cover in respect of any potential legal action
brought against its Directors.
The Company has also indemnified each Director to the extent
permitted by law against any liability incurred in relation to
acts or omissions arising in the ordinary course of their duties.
The indemnity arrangements are qualifying indemnity provisions
under the Companies Act 2006 and were in force throughout
the year.
DIRECTORS’ REPORT AND ADDITIONAL DISCLOSURES
Directors’ Report and additional disclosures
The Directors present their Report on the affairs of the Group,
together with the audited financial statements and the report of
the auditor for the year ended 31 March 2020. The Directors’
Report also encompasses the entirety of our Corporate
Governance Report from pages 90 to 137 and Other Information
section from pages 225 to 227 for the purpose of the Act section
463. The Directors’ Report and Strategic Report together
constitute the Management Report for the year ended 31 March
2020 for the purpose of Disclosure and Transparency Rule
4.1.8R. Information that is relevant to this Report, and which is
incorporated by reference and including information required in
accordance with the UK Companies Act 2006 and or Listing Rule
9.8.4R, can be located in the following sections:
Information
Future developments of the
business of the Company
Risk factors and principal risks
Financial instruments –
risk management objectives
and policies
Dividends
Sustainability governance
Greenhouse gas emissions
Viability and going concern
statements
Governance arrangements
Employment policies and
employee involvement
Capitalised interest
Long term incentive schemes
Directors’ waivers of emoluments
Additional unaudited financial
information
Section in
Annual Report
Page
Strategic Report
22 to 27
Strategic Report
Strategic Report
78 to 87
75 to 77
Strategic Report
Strategic Report
Strategic Report
Strategic Report
71
43
46
88
Governance
Strategic Report
90 to 102
34 to 35
159 to 169
Financial
Statements
123
Governance
Governance 122 and 123
213 to 220
Other
Information
unaudited
Annual General Meeting (AGM)
The 2020 AGM will be held at 9.30am on 29 July 2020 at York
House, 45 Seymour Street, London, W1H 7LX.
A separate circular, comprising a letter from the Chairman
of the Board, Notice of Meeting and explanatory notes on the
resolutions being proposed, has been circulated to shareholders
and is available on our website www.britishland.com/agm.
Articles of Association
The Company’s Articles of Association (Articles) may only
be amended by special resolution at a general meeting of
shareholders. Subject to applicable law and the Company’s
Articles, the Directors may exercise all powers of the Company.
The Articles are available on the Company’s website
www.britishland.com/governance.
134
British Land Annual Report and Accounts 2020
Share capital
The Company has one class of shares, being ordinary shares of
25p each, all of which are fully paid. The rights and obligations
attached to the Company’s shares are set out in the Articles.
There are no restrictions on the transfer of shares except in
relation to Real Estate Investment Trust restrictions.
The Directors were granted authority at the 2019 AGM to allot
relevant securities up to a nominal amount of £78,897,782 as
well as an additional authority to allot shares to the same value
on a rights issue. This authority will apply until the conclusion of
the 2020 AGM or the close of business on 30 September 2020,
whichever is the sooner. At this year’s AGM, shareholders will
be asked to renew the authority to allot relevant securities.
At the 2019 AGM, the Directors were also given power by the
shareholders to make market purchases of ordinary shares
representing up to 10% of its issued capital at that time, being
94,677,339 ordinary shares. This authority will also expire at the
2020 AGM and it is proposed that the renewal of the authority
will be sought.
In May 2019, the Board decided that in light of the discount
implied by the Company’s share price, the best use of capital
would be to continue to reinvest sales proceeds into our
portfolio by extension of the share buyback programme. As a
result, during the year ended 31 March 2020, the Company
repurchased 23,795,110 ordinary shares of 25p each for an
aggregate consideration of £125m. This represents 2.54% of the
issued share capital (excluding shares held in Treasury) at that
date. All shares repurchased during the year were cancelled.
The Company continued to hold 11,266,245 ordinary shares in
treasury during the whole of the year ended 31 March 2020 and
to the date of this Report.
Further details relating to share capital, including movements
during the year, are set out in Note 20 to the financial
statements on pages 187 to 189.
Rights under an employee share scheme
Employee Benefit Trusts (EBTs) operate in connection with
some of the Company’s employee share plans. The trustees of
the EBTs may exercise all rights attached to the Company’s
ordinary shares in accordance with their fiduciary duties other
than as specifically restricted in the documents which govern
the relevant employee share plan.
Waiver of dividends
Blest Limited acts as trustee (Trustee) of the Company’s
discretionary Employee Share Trust (EST). The EST holds and,
from time to time, purchases British Land ordinary shares in the
market, for the benefit of employees, including to satisfy
outstanding awards under the Company’s various executive
employee share plans. A dividend waiver is in place from the
Trustee in respect of all dividends payable by the Company on
shares which it holds in trust.
Substantial interests
All notifications made to British Land under the Disclosure
and Transparency Rules (DTR 5) are published on a Regulatory
Information Service and made available on the Investors section
of our website.
As at 31 March 2020, the Company had been notified of the
following interests in its ordinary shares in accordance
with DTR 5. The information provided is correct at the date
of notification:
BlackRock, Inc.
Invesco Ltd.
Norges Bank
GIC Private Limited
APG Asset Management N.V.
Interests in
ordinary
shares
Percentage
holding
disclosed %
92,240,338
45,871,686
48,606,089
37,708,560
37,197,666
9.92
4.95
5.01
4.07
4.01
Since the year end, and up to 22 May 2020, the Company had
been notified of the following interests in its ordinary shares in
accordance with DTR 5. The information provided is correct at
the date of notification:
BlackRock, Inc.
APG Asset Management N.V.
Interests in
ordinary
shares
Percentage
holding
disclosed %
92,490,473
48,072,042
9.98
5.19
British Land Annual Report and Accounts 2020
135
DIRECTORS’ REPORT AND ADDITIONAL DISCLOSURES CONTINUED
Change of control
The Group’s unsecured borrowing arrangements include
provisions that may enable each of the lenders or bondholders
to request repayment or have a put at par within a certain period
following a change of control of the Company. In the case of the
Sterling bond this arises if the change of control also results in
a rating downgrade to below investment grade. In the case of
the convertible bond there may also be an adjustment to the
conversion price applicable for a limited period following a
change of control.
There are no agreements between the Company and its
Executive Directors or employees providing for compensation
for loss of office or employment that occurs specifically because
of a takeover, merger or amalgamation with the exception of
provisions in the Company’s share plans which could result in
options and awards vesting or becoming exercisable on a change
of control. All appointment letters for Non-Executive Directors
will, as they are renewed, contain a provision that allows
payment of their notice period in certain limited circumstances,
such as corporate transactions, where the Company has
terminated their appointment with immediate effect.
Payments policy
We recognise the importance of good supplier relationships to
the overall success of our business. We manage dealings with
suppliers in a fair, consistent and transparent manner. For more
information please visit the Suppliers section of our website at
www.britishland.com/about-us/suppliers.
Events after the balance sheet date
Details of subsequent events, if any, can be found in Note 26 on
page 192.
Political donations
The Company made no political donations during the year
(2019: nil).
Inclusive culture
British Land employees are committed to promoting an inclusive,
positive and collaborative culture. We treat everyone equally
irrespective of age, sex, sexual orientation, race, colour, nationality,
ethnic origin, religion, religious or other philosophical belief,
disability, gender identity, gender reassignment, marital or civil
partner status, or pregnancy or maternity. As stated in our Equal
Opportunities Policy, British Land treats ‘all colleagues and job
applicants with equality. We do not discriminate against job
applicants, employees, workers or contractors because of any
protected characteristic. This applies to all opportunities provided
by the Company including, but not limited to, job applications,
recruitment and interviews, training and development, role
enrichment, conditions of work, salary and performance review’.
The Company ensures that our policies are accessible to all
employees, making reasonable adjustment when required.
Through its policies and more specifically the Equal Opportunities,
Disabled Workers and Recruitment policies, the Company
ensures that entry into, and progression within, the Company is
based solely on personal ability and competence to meet set job
criteria. Should an employee, worker or contractor become
disabled in the course of their employment/engagement,
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the Company aims to ensure that reasonable steps are taken to
accommodate their disability by making reasonable adjustments
to their existing employment/engagement.
Community investment
Our financial donations to good causes during the year totalled
£1,620,000 (2019: £1,424,000). Our Community Investment
Committee approves all expenditure from our Community
Investment Fund.
In addition, the Company also supports fundraising and payroll
giving for causes that matter to staff. The support provided for
the year ended 31 March 2020 includes:
– 50% uplift of British Land staff payroll giving contributions
(capped at £5,000 per person and £50,000 per annum for the
whole organisation); and
– A staff matched funding pledge, matching money raised for
charity by British Land staff up to £500 per person per year.
Our community investment is guided by our Local Charter,
working with local partners to make a lasting positive difference:
– connecting with local communities
– supporting educational initiatives for local people
– supporting local training and jobs
– supporting local businesses
– contributing to local people’s wellbeing and enjoyment
Through our community investment and Local Charter activity,
we connect with communities where we operate, make positive
local contributions, help people fulfil their potential, help
businesses grow, and promote wellbeing and enjoyment. This
all supports our strategy to create Places People Prefer.
Auditor and disclosure of information
Each of the Directors at the date of approval of this Report
confirms that:
– so far as the Director is aware, there is no relevant audit
information that has not been brought to the attention of
the auditor
– the Director has taken all steps that he/she should have
taken to make himself/herself aware of any relevant audit
information and to establish that the Company’s auditor was
aware of that information
PwC has indicated its willingness to remain in office and, on the
recommendation of the Audit Committee, a resolution to
reappoint PwC as the Company’s auditor will be proposed at the
2020 AGM.
The Directors’ Report was approved by the Board on 26 May 2020
and signed on its behalf by:
Brona McKeown
General Counsel and Company Secretary
The British Land Company PLC
Company Number: 621920
DIRECTORS’ RESPONSIBILITIES STATEMENT
The Directors are responsible for preparing the Annual Report
and the financial statements in accordance with applicable law
and regulation.
Each of the Directors, whose names and functions are listed in
the Board of Directors on pages 92 to 93, confirm that, to the
best of their knowledge:
– the Company financial statements, which have been prepared
in accordance with United Kingdom Generally Accepted
Accounting Practice (United Kingdom Accounting Standards,
comprising FRS 101 “Reduced Disclosure Framework”, and
applicable law), give a true and fair view of the assets,
liabilities, financial position and profit or loss of the Company
– the Group financial statements, which have been prepared in
accordance with IFRSs as adopted by the European Union,
give a true and fair view of the assets, liabilities, financial
position and profit or loss of the Group
– the Strategic Report and the Directors’ Report include a fair
review of the development and performance of the business
and the position of the Group and Company, together with a
description of the principal risks and uncertainties they face.
By order of the Board.
Simon Carter
Chief Financial Officer
26 May 2020
Company law requires the Directors to prepare financial
statements for each financial year. Under that law the Directors
have prepared the Group financial statements in accordance
with International Financial Reporting Standards (IFRSs) as
adopted by the European Union and the parent Company
financial statements in accordance with United Kingdom
Generally Accepted Accounting Practice (United Kingdom
Accounting Standards, comprising FRS 101 “Reduced
Disclosure Framework”, and applicable law).
Under company law the Directors must not approve the financial
statements unless they are satisfied that they give a true and
fair view of the state of affairs of the Group and Company and
of the profit or loss of the Group and Company for that period.
In preparing the financial statements, the Directors are
required to:
– select suitable accounting policies and then apply
them consistently
– state whether applicable IFRSs as adopted by the European
Union have been followed for the Group financial statements
and United Kingdom Accounting Standards, comprising FRS
101, have been followed for the parent Company financial
statements, subject to any material departures disclosed
and explained in the financial statements
– make judgements and accounting estimates that are
reasonable and prudent
– prepare the financial statements on the going concern basis
unless it is inappropriate to presume that the Group and
Company will continue in business
The Directors are responsible for keeping adequate accounting
records that are sufficient to show and explain the Group and
Company’s transactions and disclose with reasonable accuracy
at any time the financial position of the Group and Company
and enable them to ensure that the financial statements and the
Directors’ Remuneration Report comply with the Companies Act
2006 and, as regards the Group financial statements, Article 4 of
the IAS Regulation.
The Directors are also responsible for safeguarding the assets of
the Group and Company and hence for taking reasonable steps
for the prevention and detection of fraud and other irregularities.
The Directors are responsible for the maintenance and integrity
of the Company’s website. Legislation in the United Kingdom
governing the preparation and dissemination of financial
statements may differ from legislation in other jurisdictions.
The Directors consider that the Annual Report and Accounts,
taken as a whole, is fair, balanced and understandable and
provides the information necessary for shareholders to assess
the Group and the Company’s position and performance,
business model and strategy.
British Land Annual Report and Accounts 2020
137
FINANCIAL STATEMENTS
Independent auditors’ report to the members
of The British Land Company PLC
Report on the audit of the financial statements
Opinion
In our opinion:
• The British Land Company PLC’s Group financial statements and Company financial statements (the “financial statements”) give
a true and fair view of the state of the Group’s and of the Company’s affairs as at 31 March 2020 and of the Group’s loss and cash
flows for the year then ended;
• the Group financial statements have been properly prepared in accordance with International Financial Reporting Standards
(IFRSs) as adopted by the European Union;
• the Company financial statements have been properly prepared in accordance with United Kingdom Generally Accepted
Accounting Practice (United Kingdom Accounting Standards, comprising FRS 101 “Reduced Disclosure Framework”, and
applicable law); and
• the financial statements have been prepared in accordance with the requirements of the Companies Act 2006 and, as regards the
Group financial statements, Article 4 of the IAS Regulation.
We have audited the financial statements, included within the Annual Report and Accounts 2020 (the “Annual Report”), which
comprise: the Consolidated and Company balance sheets as at 31 March 2020; the Consolidated income statement and the
Consolidated statement of comprehensive income, the Consolidated statement of cash flows, and the Consolidated and Company
statements of changes in equity for the year then ended; and the notes to the financial statements, which include a description of
the significant accounting policies.
Our opinion is consistent with our reporting to the Audit Committee.
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (UK) (“ISAs (UK)”) and applicable law. Our responsibilities
under ISAs (UK) are further described in the Auditors’ responsibilities for the audit of the financial statements section of our report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Independence
We remained independent of the Group in accordance with the ethical requirements that are relevant to our audit of the financial
statements in the UK, which includes the FRC’s Ethical Standard, as applicable to listed public interest entities, and we have fulfilled
our other ethical responsibilities in accordance with these requirements.
To the best of our knowledge and belief, we declare that non-audit services prohibited by the FRC’s Ethical Standard were not
provided to the Group or the Company.
Other than those disclosed in Note 5 to the financial statements, we have provided no non-audit services to the Group or the Company
in the period from 1 April 2019 to 31 March 2020.
Our audit approach
Overview
• Overall Group materiality: £113.0 million (2019: £122.6 million), based on 1% of total assets.
• Specific Group materiality: £15.9 million (2019: £16.9 million), which represents 5% of underlying
Materiality
• Overall Company materiality: £101.7 million (2019: £110.4 million), based on 1% of total assets.
pre-tax profits.
Audit scope
Key audit
Matters
• We tailored the scope of our audit to ensure that we performed enough work to be able to give an
opinion on the financial statements as a whole. The Group financial statements are prepared on a
consolidated basis, and the audit team carries out an audit over the consolidated Group balances in
support of the Group audit opinion. The following joint ventures are also audited to Group materiality:
Broadgate and Meadowhall.
• Valuation of investment and development properties, either held directly or within joint ventures (Group).
• Revenue recognition (Group).
• Taxation (Group).
• Covid-19 (Group).
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British Land Annual Report and Accounts 2020
The scope of our audit
As part of designing our audit, we determined materiality and assessed the risks of material misstatement in the financial
statements. In particular, we looked at where the directors made subjective judgements, for example in respect of significant
accounting estimates that involved making assumptions and considering future events that are inherently uncertain.
Capability of the audit in detecting irregularities, including fraud
Based on our understanding of the Group and industry, we identified that the principal risks of non-compliance with laws and
regulations related to compliance with the Real Estate Investment Trust (REIT) status section 1158 of the Corporation Tax Act 2010
and the UK and European regulatory principles, such as those governed by the Financial Conduct Authority, and we considered the
extent to which non-compliance might have a material effect on the financial statements of the Group and Company. We also
considered those laws and regulations that have a direct impact on the preparation of the financial statements such as the
Companies Act 2006 and the Listing Rules. We evaluated management’s incentives and opportunities for fraudulent manipulation of
the financial statements (including the risk of override of controls), and determined that the principal risks were related to posting
inappropriate journal entries to increase revenue or reduce expenditure, and management bias in accounting estimates and
judgemental areas of the financial statements such as the valuation of investment properties. Audit procedures performed by the
Group engagement team included:
• Discussions with management and internal audit, including consideration of known or suspected instances of non-compliance
with laws and regulations and fraud, and review of the reports made by management and internal audit;
• Understanding of management’s internal controls designed to prevent and detect irregularities, risk-based monitoring of
customer processes;
• Assessment of matters reported on the Group’s whistleblowing helpline and the results of management’s investigation of
such matters;
• Reviewing the Group’s litigation register in so far as it related to non-compliance with laws and regulations and fraud;
• Reviewing relevant meeting minutes, including those of the Risk Committee and the Audit Committee;
• Review of tax compliance with the involvement of our tax specialists in the audit;
• Designing audit procedures to incorporate unpredictability around the nature, timing or extent of our testing of expenses;
• Testing transactions entered into outside of the normal course of the Group’s and Company’s business;
• Procedures relating to the valuation of investment and development properties, either held directly or within joint ventures,
described in the related key audit matter below; and
• Identifying and testing journal entries, in particular any journal entries posted with unusual account combinations, posted by
unexpected users and posted on unexpected days.
There are inherent limitations in the audit procedures described above and the further removed non-compliance with laws and
regulations is from the events and transactions reflected in the financial statements, the less likely we would become aware of it.
Also, the risk of not detecting a material misstatement due to fraud is higher than the risk of not detecting one resulting from error,
as fraud may involve deliberate concealment by, for example, forgery or intentional misrepresentations, or through collusion.
Key audit matters
Key audit matters are those matters that, in the auditors’ professional judgement, were of most significance in the audit of the
financial statements of the current period and include the most significant assessed risks of material misstatement (whether or not
due to fraud) identified by the auditors, including those which had the greatest effect on: the overall audit strategy; the allocation of
resources in the audit; and directing the efforts of the engagement team. These matters, and any comments we make on the results
of our procedures thereon, were addressed in the context of our audit of the financial statements as a whole, and in forming our
opinion thereon, and we do not provide a separate opinion on these matters. This is not a complete list of all risks identified by
our audit.
British Land Annual Report and Accounts 2020
139
FINANCIAL STATEMENTS CONTINUED
Independent auditors’ report to the members
of The British Land Company PLC continued
Key audit matter
How our audit addressed the key audit matter
Valuation of investment and development properties,
either held directly or through joint ventures (Group)
Refer to page 108 (Report of the Audit Committee), pages 165
to 174 (Notes to the financial statements – Note 10 Property
and Note 11 Joint ventures and funds) and page 153 (Notes
to the financial statements – Note 1 Basis of preparation,
significant accounting policies and accounting judgements).
The Group owns either directly or through joint ventures and
funds a portfolio of property consisting of office and
residential real estate in Central London, retail and leisure
properties across the UK, and developments including the
Canada Water site in East London. The total property
portfolio valuation for the Group was £8,106 million and for
the Group’s share of joint ventures and funds was £3,272
million as at 31 March 2020.
The valuations were carried out by third party valuers CBRE,
Jones Lang LaSalle, Cushman & Wakefield and Knight
Frank (the “valuers”). The valuers were engaged by the
Directors and performed their work in accordance with the
Royal Institute of Chartered Surveyors (“RICS”) Valuation –
Professional Standards and the requirements of
International Accounting Standard 40 ‘Investment Property’.
The valuers have included a material valuation uncertainty
clause in their valuation reports as at 31 March 2020. This
clause highlights that less certainty, and consequently a
higher degree of caution, should be attached to the valuation
as a result of the COVID-19 pandemic. This represents a
significant estimation uncertainty in relation to the valuation
of investment properties.
In determining the valuation of a property, the valuers take
into account property-specific information such as the
current tenancy agreements and rental income. They apply
assumptions for yields and estimated market rent, which
are influenced by prevailing market yields and comparable
market transactions, to arrive at the final valuation. For
developments, the residual appraisal method is used, by
estimating the fair value of the completed project using a
capitalisation method less estimated costs to completion
and a risk premium.
The valuation of the Group’s property portfolio was identified
as a key audit matter given the valuation is inherently
subjective due to, among other factors, the individual nature
of each property, its location and the expected future rental
streams for that particular property. The wider challenges
currently facing the real estate occupier and investors markets
as a result of COVID-19 further contributed to the subjectivity
for the year ended 31 March 2020. The significance of the
estimates and judgements involved, coupled with the fact
that only a small percentage difference in individual
property valuations, when aggregated, could result in a
material misstatement, warranted specific audit focus in
this area.
Given the inherent subjectivity involved in the valuation of the property
portfolio, and therefore the need for deep market knowledge when
determining the most appropriate assumptions and the technicalities
of valuation methodology, we engaged our internal valuation experts
(qualified chartered surveyors) to assist us in our audit of this area.
Material valuation uncertainty due to COVID-19
We considered the adequacy of the disclosures made in Note 1
(Basis of preparation, significant accounting policies and accounting
judgements) and Note 10 (Property) to the financial statements.
These notes explain that the valuers reported on the basis of a
material valuation uncertainty and consequently that less certainty
and a higher degree of caution should be attached to the valuations
as at 31 March 2020. We discussed this clause with management and
obtained sufficient appropriate audit evidence to demonstrate that
management’s assessment of the suitability of the inclusion of the
valuation in the consolidated statement of financial position and
disclosures made in the financial statements are appropriate.
Assessing the valuers’ expertise and objectivity
We assessed the valuers’ qualifications and expertise and read their
terms of engagement with the Group to determine whether there
were any matters that might have affected their objectivity or may
have imposed scope limitations upon their work. We also considered
fees and other contractual arrangements that might exist between
the Group and the valuers. We found no evidence to suggest that the
objectivity of the valuers was compromised.
Assumptions and estimates used by the valuers
We read the valuation reports for all the properties and confirmed
that the valuation approach for each was in accordance with RICS
standards. We obtained details of each property held by the Group
and set an expected range for yield and capital value movement,
determined by reference to published benchmarks and using our
experience and knowledge of the market. We compared the
investment yields used by the valuers with the range of expected
yields and the year on year capital movement to our expected range.
We also considered the reasonableness of other assumptions that
were not so readily comparable with published benchmarks, such as
estimated rental value.
We spoke with each of the valuers to discuss and challenge their
approach to the valuations, particularly in light of COVID-19, the key
assumptions and their rationale behind the more significant valuation
movements during the year. Where assumptions were outside the
expected range or showed unexpected movements based on our
knowledge, we undertook further investigations, held further
discussions with the valuers and obtained evidence to support
explanations received. The valuation commentaries provided by the
valuers and supporting evidence, enabled us to consider the property
specific factors that may have had an impact on value, including
recent comparable transactions where appropriate. We observed that
alternative assumptions had been considered and evaluated by
management and the valuers, before determining the final valuation.
We concluded that the assumptions used in the valuations were
supportable in light of available and comparable market evidence.
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Key audit matter
How our audit addressed the key audit matter
Valuation of investment and development properties,
either held directly or through joint ventures (Group)
(continued)
Revenue recognition (Group)
Refer to page 108 (Report of the Audit Committee), page 157
(Notes to the financial statements – Note 3 Revenue and
costs) and page 154 (Notes to the financial statements –
Note 1 Basis of preparation, significant accounting policies
and accounting judgements).
Revenue for the Group consists primarily of rental income.
Rental income is based on tenancy agreements where there
is a standard process in place for recording revenue, which
is system generated.
There are certain transactions within revenue that warrant
additional audit focus because of an increased inherent risk
of error due to their non-standard nature.
These include spreading of tenant incentives, guaranteed
rent increases and rental concessions given to tenants as a
result of COVID-19. These balances require adjustments
made to rental income to ensure revenue is recorded on a
straight-line basis over the course of the lease.
Information and standing data
We performed testing on the standing data in the Group’s information
systems concerning the valuation process. We carried out procedures,
on a sample basis, to satisfy ourselves of the accuracy of the property
information supplied to the valuers by management. For developments,
we confirmed that the supporting information for construction
contracts and budgets, which was supplied to the valuers, was also
consistent with the Group’s records for example by inspecting
original construction contracts. For developments, capitalised
expenditure was tested on a sample basis to invoices, and budgeted
costs to complete compared with supporting evidence. We agreed the
amounts per the valuation reports to the accounting records which
we then agreed to the financial statements.
Overall findings
We concluded that the assumptions used in the valuations by the
valuers were supportable in light of the evidence obtained and the
disclosures in relation to the material valuation uncertainty within the
financial statements are sufficient and appropriate to highlight the
increased estimation uncertainty as a result of COVID-19.
We carried out tests of controls over the cash and accounts
receivable processes and the related information technology systems
to obtain evidence that postings to these accounts were reliable.
We performed substantive testing procedures to ensure the
recording of all revenue streams is accurate.
For rental income balances, we tested a sample of balances to
supporting lease agreements, recalculated amounts due and traced
receipts to bank or accounts receivables balances and ensured that
rental income has been appropriately recorded within the correct
period. We performed sample testing over the lease data recorded in
the property management system to supporting lease agreements, to
ensure revenue transactions were complete.
We tested a sample of lease agreements used to calculate lease
incentives back to supporting documentation and assessed that the
calculation of adjustments to be made to rental income to record
revenue on a straight-line basis over the course of the lease has been
calculated correctly.
We used substantive testing procedures to ensure that a sample of
rental concessions offered to tenants had been correctly accounted
for within the requirements of IFRS 16 – Leases.
We assessed the recoverability of trade and lease incentive
receivables by evaluating the financial viability of the major tenant
balances and ensured provisions made are accounted for within the
requirements of IFRS 9 – Financial Instruments.
For balances not included within rental income, such as service
charge income, we performed substantive testing on a sample basis
and assessed whether the revenue recognition policies adopted for
each revenue stream complied with IFRS 15 Revenue as adopted by
the European Union.
No issues were identified in our testing.
British Land Annual Report and Accounts 2020
141
FINANCIAL STATEMENTS CONTINUED
Independent auditors’ report to the members
of The British Land Company PLC continued
Key audit matter
Taxation (Group)
Refer to page 108 (Report of the Audit Committee), pages 160
and 191 (Notes to the financial statements – Note 7 Taxation
and Note 24 Contingent liabilities) and page 154 (Notes to
the financial statements – Note 1 Basis of preparation,
significant accounting policies and accounting judgements).
The Group’s status as a REIT underpins its business model
and shareholder returns. For this reason, it warrants
special audit focus.
The obligations of the REIT regime include requirements to
comply with balance of business, dividend and income cover
tests. The Broadgate joint venture is also structured as a
REIT and as such, REIT compliance is also of relevance for
this joint venture in addition to the overall Group.
Tax provisions are in place to account for the risk of
challenge of certain of the Group’s tax provisions. Given the
subjective nature of these provisions, additional audit focus
was placed on tax provisions.
COVID-19
Refer to pages 81-88 (Strategic Report – Principal risks and
the Viability statement), page 108 (Report of the Audit
Committee) and pages 152 to 153 (Notes to the financial
statements – Note 1 Basis of preparation, significant
accounting policies and accounting judgements).
The outbreak of the novel coronavirus (known as COVID 19)
in many countries is rapidly evolving and the socio-economic
impact is unprecedented. It has been declared as a global
pandemic and is having a major impact on economies and
financial markets. The efficacy of government measures will
materially influence the length of economic disruption, but it
is probable there will be a recession in the United Kingdom.
In order to assess the impact of COVID-19 on the business,
management have updated their risk assessment and
prepared an analysis of the potential impact on the
revenues, profits, cash flows, operations and liquidity
position of the Group for the next 12 months and over the
next five years.
The analysis and related assumptions have been used by
management in its assessment of the level of provisions
required against several balance sheet items, as well as
underpinning the Group’s going concern and viability analysis.
The most significant impact to the financial statements has
been in relation to the valuation of investment and
development properties. Impairment provisions have been
recorded in respect of trade and lease receivables. These
are described in the respective key audit matters above.
How our audit addressed the key audit matter
We confirmed our understanding of management’s approach to
ensuring compliance with the REIT regime rules and we involved our
internal taxation specialists to verify the accuracy of the application of
the rules.
We obtained management’s calculations and supporting
documentation, verified the inputs to their calculations and re-
performed the Group’s and Broadgate’s annual REIT compliance
tests. We considered the adequacy of the contingent tax liability
disclosure in the notes to the financial statements of the potential tax
impact of the temporary suspension of the Property Income Dividend
payment as a result of COVID-19.
We used our knowledge of tax circumstances and, by reading
relevant correspondence between the Group and Her Majesty’s
Revenue & Customs and the Group’s external tax advisors, we are
satisfied that the assumptions and judgements used by the Group in
determining the tax provisions are reasonable.
No material issues were identified as a result of our testing.
We evaluated the Group’s updated risk assessment and analysis
and considered whether it addresses the relevant threats posed by
COVID-19. We also evaluated management’s assessment and
corroborated evidence of the operational impacts, considering their
consistency with other available information and our understanding
of the business.
Our conclusions relating to going concern and other information are
set out in the ‘Going Concern’ and ‘Reporting on other information’
sections of our report, respectively, below.
Our procedures in respect of the valuation of investment and
development properties and provisions recorded in relation to
trade and lease receivables are set out in the respective key audit
matters above.
We assessed the disclosures presented in the Annual Report in
relation to COVID-19 by reading the other information, including the
Principal risks and Viability statement set out in the Strategic Report,
and assessing its consistency with the financial statements and the
evidence we obtained in our audit. We considered the
appropriateness of the disclosures around the increased uncertainty
on its accounting estimates and consider these to be adequate.
In respect of going concern, we assessed the Directors’ going
concern analysis in light of COVID-19 and obtained evidence to
support the key assumptions used in preparing the going concern
model, including assessing covenant headroom within the base
and downside case scenarios. We challenged the key assumptions
and the reasonableness of the mitigating actions used in preparing
the analysis.
We obtained evidence to support the loan refinanced post the year
end that was classified as a current liability at the balance sheet date.
In conjunction with the above, we have reviewed management’s
analysis of liquidity and recalculated loan covenant compliance to
satisfy ourselves that no breaches are anticipated over the going
concern period of assessment.
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How our audit addressed the key audit matter
We considered whether changes to working practices brought about
by Covid-19 had an adverse impact on the effectiveness of
management’s business process and IT controls. Our planned tests
of controls did not identify any evidence of material deterioration in
the control environment.
Key audit matter
COVID-19 (continued)
Management’s analysis includes base and downside case
scenarios and a robust analysis of planned mitigating
actions. At the balance sheet date, the Group has access to
cash and undrawn loan facilities of £1.3 billion and post the
year end, the Group has refinanced one of the two loans
presented in net current liabilities as at 31 March 2020.
In making their assessment management took into account
the covenant headroom on the Group’s drawn unsecured
loan facilities. After considering all of these factors,
management have concluded that preparing the financial
statements on a going concern basis remains appropriate.
No material uncertainty in relation to going concern exists.
Management have described its assessment of viability on
pages 88 of the Annual Report.
How we tailored the audit scope
We tailored the scope of our audit to ensure that we performed enough work to be able to give an opinion on the financial statements
as a whole, taking into account the structure of the Group and the Company, the accounting processes and controls, and the industry
in which they operate.
Materiality
The scope of our audit was influenced by our application of materiality. We set certain quantitative thresholds for materiality.
These, together with qualitative considerations, helped us to determine the scope of our audit and the nature, timing and extent of
our audit procedures on the individual financial statement line items and disclosures and in evaluating the effect of misstatements,
both individually and in aggregate on the financial statements as a whole.
Based on our professional judgement, we determined materiality for the financial statements as a whole as follows:
Overall materiality
£113.0 million (2019: £122.6 million).
£101.7 million (2019: £110.4 million).
How we determined it
1% of total assets.
1% of total assets.
Group financial statements
Company financial statements
Rationale for benchmark applied
A key determinant of the Group’s value is
property investments. Due to this, the key
area of focus in the audit is the valuation of
investment and development properties,
either held directly or through joint
ventures. On this basis, and consistent with
the prior year, we set an overall Group
materiality level based on total assets.
The Company’s main activity is the holding
of investments in subsidiaries. Given this,
and consistent with the prior year, we set
an overall Company materiality level
based on total assets. For purposes of the
Group audit, we capped the overall
materiality for the Company to be 90% of
the Group overall materiality.
In addition, we set a specific materiality level of £15.9 million (2019: £16.9 million) for items within underlying pre-tax profit.
This equates to 5% of profit before tax adjusted for capital and other items. In arriving at this judgment, we had regard to the fact
that the underlying pre-tax profit is a secondary financial indicator of the Group (Refer to Note 2 of the financial statements pages 156
to 157 where the term is defined in full).
For each component in the scope of our group audit, we allocated a materiality that is less than our overall group materiality.
Certain components were audited to a local statutory audit materiality that was also less than our overall group materiality.
We agreed with the Audit Committee that we would report to them misstatements identified during our audit above £5.6 million
(Group audit) (2019: £6.1 million) and £5.0 million (Company audit) (2019: £5.5 million) as well as misstatements below those amounts
that, in our view, warranted reporting for qualitative reasons.
In addition we agreed with the Audit Committee we would report to them misstatements identified during our Group audit above
£1.0 million (2019: £1.0 million) for misstatements related to underlying profit within the financial statements, as well as
misstatements below that amount that, in our view, warranted reporting for qualitative reasons.
British Land Annual Report and Accounts 2020
143
FINANCIAL STATEMENTS CONTINUED
Independent auditors’ report to the members
of The British Land Company PLC continued
Going concern
In accordance with ISAs (UK) we report as follows:
Reporting obligation
Outcome
We are required to report if we have anything material to add or
draw attention to in respect of the directors’ statement in the
financial statements about whether the directors considered it
appropriate to adopt the going concern basis of accounting in
preparing the financial statements and the directors’ identification
of any material uncertainties to the Group’s and the Company’s
ability to continue as a going concern over a period of at least
twelve months from the date of approval of the financial statements.
We are required to report if the directors’ statement relating to
Going Concern in accordance with Listing Rule 9.8.6R(3) is
materially inconsistent with our knowledge obtained in the audit.
We have nothing material to add or to draw attention to.
However, because not all future events or conditions can be
predicted, this statement is not a guarantee as to the Group’s and
Company’s ability to continue as a going concern.
We have nothing to report.
Reporting on other information
The other information comprises all of the information in the Annual Report other than the financial statements and our auditors’
report thereon. The directors are responsible for the other information. Our opinion on the financial statements does not cover the
other information and, accordingly, we do not express an audit opinion or, except to the extent otherwise explicitly stated in this
report, any form of assurance thereon.
In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so, consider
whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit, or
otherwise appears to be materially misstated. If we identify an apparent material inconsistency or material misstatement, we are
required to perform procedures to conclude whether there is a material misstatement of the financial statements or a material
misstatement of the other information. If, based on the work we have performed, we conclude that there is a material misstatement
of this other information, we are required to report that fact. We have nothing to report based on these responsibilities.
With respect to the Strategic Report, Directors’ Report and Additional Disclosures and Corporate Governance Statement, we also
considered whether the disclosures required by the UK Companies Act 2006 have been included.
Based on the responsibilities described above and our work undertaken in the course of the audit, the Companies Act 2006 (CA06),
ISAs (UK) and the Listing Rules of the Financial Conduct Authority (FCA) require us also to report certain opinions and matters as
described below (required by ISAs (UK) unless otherwise stated).
144
British Land Annual Report and Accounts 2020
Strategic Report and Directors’ Report and Additional Disclosures
In our opinion, based on the work undertaken in the course of the audit, the information given in the Strategic Report and
Directors’ Report and Additional Disclosures for the year ended 31 March 2020 is consistent with the financial statements and has
been prepared in accordance with applicable legal requirements. (CA06)
In light of the knowledge and understanding of the Group and Company and their environment obtained in the course of the audit,
we did not identify any material misstatements in the Strategic Report and Directors’ Report and Additional Disclosures. (CA06)
Corporate Governance Statement
In our opinion, based on the work undertaken in the course of the audit, the information given in the Corporate Governance
Statement (page 90) about internal controls and risk management systems in relation to financial reporting processes and about
share capital structures in compliance with rules 7.2.5 and 7.2.6 of the Disclosure Guidance and Transparency Rules sourcebook
of the FCA (“DTR”) is consistent with the financial statements and has been prepared in accordance with applicable legal
requirements. (CA06)
In light of the knowledge and understanding of the Group and Company and their environment obtained in the course of the audit,
we did not identify any material misstatements in this information. (CA06)
In our opinion, based on the work undertaken in the course of the audit, the information given in the Corporate Governance
Statement (90-91) with respect to the Company’s corporate governance code and practices and about its administrative,
management and supervisory bodies and their committees complies with rules 7.2.2, 7.2.3 and 7.2.7 of the DTR. (CA06)
We have nothing to report arising from our responsibility to report if a corporate governance statement has not been prepared by
the Company. (CA06)
The directors’ assessment of the prospects of the Group and of the principal risks that would threaten the solvency or
liquidity of the Group
We have nothing material to add or draw attention to regarding:
• The directors’ confirmation on pages 80-81 of the Annual Report that they have carried out a robust assessment of the principal
risks facing the Group, including those that would threaten its business model, future performance, solvency or liquidity.
• The disclosures in the Annual Report that describe those risks and explain how they are being managed or mitigated.
• The directors’ explanation on page 88 of the Annual Report as to how they have assessed the prospects of the Group, over what
period they have done so and why they consider that period to be appropriate, and their statement as to whether they have a
reasonable expectation that the Group will be able to continue in operation and meet its liabilities as they fall due over the
period of their assessment, including any related disclosures drawing attention to any necessary qualifications or assumptions.
We have nothing to report having performed a review of the directors’ statement that they have carried out a robust assessment of
the principal risks facing the Group and statement in relation to the longer-term viability of the Group. Our review was substantially
less in scope than an audit and only consisted of making inquiries and considering the directors’ process supporting their
statements; checking that the statements are in alignment with the relevant provisions of the UK Corporate Governance Code (the
“Code”); and considering whether the statements are consistent with the knowledge and understanding of the Group and
Company and their environment obtained in the course of the audit. (Listing Rules)
Other Code Provisions
We have nothing to report in respect of our responsibility to report when:
• The statement given by the directors, on page 137, that they consider the Annual Report taken as a whole to be fair, balanced
and understandable, and provides the information necessary for the members to assess the Group’s and Company’s position
and performance, business model and strategy is materially inconsistent with our knowledge of the Group and Company
obtained in the course of performing our audit.
• The section of the Annual Report on page 108 describing the work of the Audit Committee does not appropriately address
matters communicated by us to the Audit Committee.
• The directors’ statement relating to the Company’s compliance with the Code does not properly disclose a departure from a
relevant provision of the Code specified, under the Listing Rules, for review by the auditors.
Directors’ Remuneration
In our opinion, the part of the Directors’ Remuneration Report to be audited has been properly prepared in accordance with the
Companies Act 2006. (CA06)
British Land Annual Report and Accounts 2020
145
FINANCIAL STATEMENTS CONTINUED
Independent auditors’ report to the members
of The British Land Company PLC continued
Responsibilities for the financial statements and the audit
Responsibilities of the directors for the financial statements
As explained more fully in the Directors’ Responsibilities Statement set out on page 137, the directors are responsible for the
preparation of the financial statements in accordance with the applicable framework and for being satisfied that they give a true and
fair view. The directors are also responsible for such internal control as they determine is necessary to enable the preparation of
financial statements that are free from material misstatement, whether due to fraud or error.
In preparing the financial statements, the directors are responsible for assessing the Group’s and the Company’s ability to continue
as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting
unless the directors either intend to liquidate the Group or the Company or to cease operations, or have no realistic alternative but
to do so.
Auditors’ responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material
misstatement, whether due to fraud or error, and to issue an auditors’ report that includes our opinion. Reasonable assurance
is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a
material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually
or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these
financial statements.
A further description of our responsibilities for the audit of the financial statements is located on the FRC’s website at:
www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditors’ report.
Use of this report
This report, including the opinions, has been prepared for and only for the Company’s members as a body in accordance with
Chapter 3 of Part 16 of the Companies Act 2006 and for no other purpose. We do not, in giving these opinions, accept or assume
responsibility for any other purpose or to any other person to whom this report is shown or into whose hands it may come save
where expressly agreed by our prior consent in writing.
Other required reporting
Companies Act 2006 exception reporting
Under the Companies Act 2006 we are required to report to you if, in our opinion:
• we have not received all the information and explanations we require for our audit; or
• adequate accounting records have not been kept by the Company, or returns adequate for our audit have not been received from
branches not visited by us; or
• certain disclosures of directors’ remuneration specified by law are not made; or
• the Company financial statements and the part of the Directors’ Remuneration Report to be audited are not in agreement with
the accounting records and returns.
We have no exceptions to report arising from this responsibility.
Appointment
Following the recommendation of the audit committee, we were appointed by the members on 18 July 2014 to audit the financial
statements for the year ended 31 March 2015 and subsequent financial periods. The period of total uninterrupted engagement is
6 years, covering the years ended 31 March 2015 to 31 March 2020.
Sandra Dowling (Senior Statutory Auditor)
for and on behalf of PricewaterhouseCoopers LLP
Chartered Accountants and Statutory Auditors
London
26 May 2020
146
British Land Annual Report and Accounts 2020
Consolidated income statement
For the year ended 31 March 2020
Revenue
Costs
Joint ventures and funds (see also below)
Administrative expenses
Valuation movement
Profit (loss) on disposal of investment properties
and investments
Net financing costs
financing income
financing charges
Profit (loss) on ordinary activities before taxation
Taxation
Loss for the year after taxation
Attributable to non-controlling interests
Attributable to shareholders of the Company
Earnings per share:
basic
diluted
All results derive from continuing operations.
Results of joint ventures and funds accounted
for using the equity method
Underlying Profit
Valuation movement
Capital financing costs
Profit on disposal of investment properties,
trading properties and investments
Taxation
1. See definition in Note 2.
2020
Capital
and other
£m
87
(70)
17
(306)
–
(1,105)
Underlying1
£m
526
(148)
378
79
(73)
–
Total
£m
613
(218)
395
(227)
(73)
(1,105)
Underlying1
£m
554
(141)
413
86
(80)
–
2019
Capital
and other
£m
350
(258)
92
(79)
–
(620)
–
1
(67)
(66)
318
–
12
306
1
1
–
(18)
–
(41)
(41)
(1,434)
2
(99)
(1,333)
1
(108)
(107)
(1,116)
2
(1,114)
(87)
(1,027)
(110.0)p
(110.0)p
–
(67)
(67)
352
–
12
340
–
(46)
(46)
(671)
(1)
(41)
(631)
Note
3
3
3
11
4
6
6
7
2
2
Note
Underlying1
£m
2020
Capital
and other
£m
Total
£m
Underlying1
£m
2019
Capital
and other
£m
4
11
79
–
–
–
–
79
–
(284)
(22)
–
–
(306)
79
(284)
(22)
–
–
(227)
86
–
–
–
–
86
–
(63)
(21)
3
2
(79)
Total
£m
904
(399)
505
7
(80)
(620)
(18)
–
(113)
(113)
(319)
(1)
(320)
(29)
(291)
(30.0)p
(30.0)p
Total
£m
86
(63)
(21)
3
2
7
British Land | Annual Report and Accounts 2020
British Land Annual Report and Accounts 2020
147
147
FINANCIAL STATEMENTS CONTINUED
Consolidated statement of comprehensive income
For the year ended 31 March 2020
Loss for the year after taxation
Other comprehensive income:
Items that will not be reclassified subsequently to profit or loss:
Valuation movements on owner-occupied properties
Items that may be reclassified subsequently to profit or loss:
Gains (losses) on cash flow hedges
– Group
– Joint ventures and funds
Transferred to the income statement (cash flow hedges)
– Interest rate derivatives – Group
– Interest rate derivatives – joint ventures1
Deferred tax on items of other comprehensive income
Other comprehensive income for the year
Total comprehensive loss for the year
Attributable to non-controlling interests
Attributable to shareholders of the Company
2020
£m
(1,114)
2019
£m
(320)
1
1
2
(1)
1
–
–
–
2
(1,112)
(86)
(1,026)
3
3
1
–
1
–
18
(1)
21
(299)
(29)
(270)
1. Represents a reclassification of cumulative losses within the Group revaluation reserve to capital profit and loss, because the hedged item has affected profit or loss.
148
148
British Land | Annual Report and Accounts 2020
British Land Annual Report and Accounts 2020
Consolidated balance sheet
As at 31 March 2020
ASSETS
Non-current assets
Investment and development properties
Owner-occupied properties
Other non-current assets
Investments in joint ventures and funds
Other investments
Property, plant and equipment
Deferred tax assets
Interest rate and currency derivative assets
Current assets
Trading properties
Debtors
Cash and short term deposits
Total assets
LIABILITIES
Current liabilities
Short term borrowings and overdrafts
Creditors
Corporation tax
Non-current liabilities
Debentures and loans
Other non-current liabilities
Deferred tax liabilities
Interest rate and currency derivative liabilities
Total liabilities
Net assets
EQUITY
Share capital
Share premium
Merger reserve
Other reserves
Retained earnings
Equity attributable to shareholders of the Company
Non-controlling interests
Total equity
EPRA NAV per share1
1. As defined in Note 2.
Note
2020
£m
2019
£m
10
10
11
12
16
17
10
13
17
17
14
17
15
16
17
8,188
68
8,256
2,358
125
6
–
231
10,976
20
56
193
269
11,245
(637)
(253)
(17)
(907)
(2,865)
(156)
(1)
(169)
(3,191)
(4,098)
7,147
234
1,307
213
38
5,243
7,035
112
7,147
8,931
73
9,004
2,560
129
22
1
154
11,870
87
57
242
386
12,256
(99)
(289)
(25)
(413)
(2,932)
(92)
–
(130)
(3,154)
(3,567)
8,689
240
1,302
213
37
6,686
8,478
211
8,689
2
774p
905p
Tim Score
Chairman
Simon Carter
Chief Financial Officer
The financial statements on pages 147 to 194 were approved by the Board of Directors and signed on its behalf on 26 May 2020.
Company number 621920
British Land | Annual Report and Accounts 2020
British Land Annual Report and Accounts 2020
149
149
FINANCIAL STATEMENTS CONTINUED
Consolidated statement of cash flows
For the year ended 31 March 2020
Rental income received from tenants
Fees and other income received
Operating expenses paid to suppliers and employees
Indirect taxes received in respect of operating activities
Sale of trading properties
Cash generated from operations
Interest paid
Interest received
Corporation taxation (payments) repayments
Distributions and other receivables from joint ventures and funds
Net cash inflow from operating activities
Cash flows from investing activities
Development and other capital expenditure
Purchase of investment properties
Sale of investment properties
Acquisition of remaining share of Aldgate JV
Acquisition of investment in WOSC joint venture
Purchase of investments
Sale of investments
Indirect taxes received (paid) in respect of investing activities
Investment in and loans to joint ventures and funds
Loan repayments from joint ventures and funds
Capital distributions from joint ventures and funds
Net cash (outflow) inflow from investing activities
Cash flows from financing activities
Issue of ordinary shares
Purchase of own shares
Dividends paid
Dividends paid to non-controlling interests
Capital payments in respect of interest rate derivatives
Decrease in lease liabilities
Decrease in bank and other borrowings
Drawdowns on bank and other borrowings
Net cash outflow from financing activities
Net (decrease) increase in cash and cash equivalents
Cash and cash equivalents at 1 April
Cash and cash equivalents at 31 March
Cash and cash equivalents consists of:
Cash and short term deposits
150
150
British Land | Annual Report and Accounts 2020
British Land Annual Report and Accounts 2020
Note
11
19
2020
£m
415
42
(146)
11
82
404
(79)
5
(4)
49
375
(259)
(52)
77
(21)
(57)
(9)
19
1
(191)
–
131
(361)
5
(125)
(295)
(13)
(14)
(8)
(189)
576
(63)
(49)
242
193
2019
£m
449
62
(162)
–
268
617
(75)
7
5
59
613
(218)
(185)
380
–
–
(9)
13
(3)
(298)
247
260
187
2
(204)
(298)
(14)
(19)
–
(576)
446
(663)
137
105
242
17
193
242
Consolidated statement of changes in equity
For the year ended 31 March 2020
Balance at 1 April 2019
Loss for the year after taxation
Revaluation of owner-occupied property
Gains on cash flow hedges – Group
Losses on cash flow hedges – joint ventures
Deferred tax on items of other comprehensive income
Other comprehensive income
Total comprehensive income for the year
Share issues
Fair value of share and share option awards
Purchase of own shares
Dividends payable in year (31.47p per share)
Dividends payable by subsidiaries
Balance at 31 March 2020
Balance at 1 April 2018
Loss for the year after taxation
Revaluation of owner-occupied property
Gains on cash flow hedges – Group
Closeout of cash flow hedges – joint ventures
and funds
Reserves transfer – joint venture cash flow hedges
Deferred tax on items of other comprehensive income
Other comprehensive income
Total comprehensive income for the year
Share issues
Fair value of share and share option awards
Purchase of own shares
Dividends payable in year (30.54p per share)
Dividends payable by subsidiaries
Balance at 31 March 2019
Share
capital
£m
240
–
–
–
–
–
–
–
–
–
(6)
–
–
234
Share
premium
£m
1,302
–
–
–
–
–
–
–
5
–
–
–
–
1,307
Hedging
and
translation
reserve1
£m
11
–
–
1
–
–
1
1
–
–
–
–
–
12
Re-
valuation
reserve
£m
26
–
1
–
(1)
–
–
–
–
–
–
–
–
26
248
–
–
–
–
–
–
–
–
–
–
(8)
–
–
240
1,300
–
–
–
–
–
–
–
–
2
–
–
–
–
1,302
11
–
–
1
–
–
(1)
–
–
–
–
–
–
–
11
22
–
3
–
18
(17)
–
4
4
–
–
–
–
–
26
Merger
reserve
£m
213
–
–
–
–
–
–
–
–
–
–
–
–
213
213
–
–
–
–
–
–
–
–
–
–
–
–
–
213
Retained
earnings
£m
6,686
(1,027)
–
–
–
–
–
(1,027)
–
(2)
(119)
(295)
–
5,243
7,458
(291)
–
–
–
17
–
17
(274)
–
(4)
(196)
(298)
–
6,686
Non-
controlling
interests
£m
211
(87)
–
1
–
–
1
(86)
–
–
–
–
(13)
112
Total
£m
8,478
(1,027)
1
1
(1)
–
1
(1,026)
5
(2)
(125)
(295)
–
7,035
9,252
(291)
3
1
18
–
(1)
21
(270)
2
(4)
(204)
(298)
–
8,478
254
(29)
–
–
–
–
–
–
(29)
–
–
–
–
(14)
211
Total
equity
£m
8,689
(1,114)
1
2
(1)
–
2
(1,112)
5
(2)
(125)
(295)
(13)
7,147
9,506
(320)
3
1
18
–
(1)
21
(299)
2
(4)
(204)
(298)
(14)
8,689
1. The balance at the beginning of the current year includes £15m in relation to translation and (£4m) in relation to hedging (2018/19: £15m and (£4m)). Opening and closing
balances in relation to hedging relate to continuing hedges only.
British Land | Annual Report and Accounts 2020
British Land Annual Report and Accounts 2020
151
151
FINANCIAL STATEMENTS CONTINUED
Notes to the accounts
1 Basis of preparation, significant accounting policies
and accounting judgements
The financial statements for the year ended 31 March 2020 have
been prepared on the historical cost basis, except for the
revaluation of properties, investments held for trading and
derivatives. The financial statements have also been prepared in
accordance with International Financial Reporting Standards
(IFRSs) as adopted by the European Union and interpretations
issued by the IFRS Interpretations Committee (IFRS IC), and
therefore comply with article 4 of the EU IAS regulation, and in
accordance with the Companies Act 2006. In the current financial
year the Group has adopted a number of minor amendments to
standards effective in the year issued by the IASB and endorsed
by the EU, none of which have had a material impact on the
Group. The accounting policies used are otherwise consistent
with those contained in the Group’s previous Annual Report and
Accounts for the year ended 31 March 2019.
New standards effective for the current accounting period do not
have a material impact on the consolidated financial statements
of the Group. These are discussed in further detail below.
IFRS 16 – Leases
The new standard was adopted by the Group on 1 April 2019.
The Group adopted IFRS 16 in accordance with IFRS 16 C8. This
approach allows the recognition of the lease liability and asset as
at 1 April 2019 with no restatement of prior period financial
statements. The Group has applied the practical expedient on
transition to apply a single discount rate to a portfolio of leases
with reasonably similar characteristics. The Group has also
adopted the practical expedients relating to short term and low
value assets which allow these to be expensed through the
income statement.
The leases which have been brought onto the balance sheet
include management agreements between the Group and its
Broadgate JV partner, which are in substance lease agreements,
as well as a small number of leases the Group holds as lessee.
These leases were previously classified as operating leases
under IAS 17. IFRS 16 has not impacted the accounting treatment
of leases the Group holds as lessor, therefore the adoption of the
accounting standard has not had a material impact on the Group.
The impact on the balance sheet at 1 April 2019, on adoption of
IFRS 16, is a £56m increase in investment property, a £1m
reduction in current assets and a corresponding £55m increase
in liabilities. The impact relating to new leases which commenced
during the year is a £40m increase in investment property and a
£40m increase in liabilities. New leases which commenced in the
year relate to the management agreements described above.
On transition the lease liability was calculated as the present
value of the outstanding rental payments, discounted using the
Group’s incremental borrowing rate at the date of initial
application. The right-of-use asset was then set as being equal to
the liability, adjusted by a £1m increase in relation to prepaid rent
which is added to the right-of-use asset on adoption. Therefore
the impact on net assets on adoption is nil. The weighted average
incremental borrowing rate applied to the lease liabilities
recognised at the date of initial application was 1.5%.
The right-of-use assets meet the definition of investment
property and are subsequently measured under the fair value
model. The adoption of IFRS 16 has increased profit/(loss) before
tax by £19m, £20m of which results from the revaluation gain
recognised on the right-of-use assets and (£1m) of which results
from interest on lease liabilities.
The Group has considered amendments to standards endorsed
by the European Union effective for the current accounting period
and determined that these do not have a material impact on the
consolidated financial statements of the Group. These amendments
include, amendments to IFRS 9 (prepayments features), IAS 28
(long term interests), IAS 19 (plan amendments) and IFRIC 23.
A number of new standards and amendments to standards and
interpretations have been issued but are not yet effective for the
current accounting period.
Amendments to IFRS 3 (Business Combinations) are effective
for financial years commencing on or after 1 January 2020.
The amendments relate to changes in the criteria for determining
whether an acquisition is a business combination or an asset
acquisition. These amendments will be applied to any future
business combinations.
Amendments to IFRS 9 (Financial Instruments) are effective
for financial years commencing on or after 1 January 2020.
The amendments offer relief in meeting the criteria for hedge
accounting on the transition from LIBOR to IBOR. The adoption of
these amendments is not considered to have a material impact
on the financial statements of the Group.
Amendments to References to the Conceptual Framework are
effective for financial years commencing on or after 1 January
2020. The adoption of these amendments is not considered to
have a material impact on the consolidated financial statements
of the Group.
Amendments to IAS 8 (Accounting Policies, Changes in
Accounting Estimates and Errors) are also effective for financial
years commencing on or after 1 January 2020. The amendments
will be applied to any future changes in Accounting Policy,
Accounting Estimates or Errors.
Going concern
The financial statements are prepared on a going concern basis.
The balance sheet shows that the company has net current
liabilities, mainly as a result of the convertible bond and a credit
facility within the HUT fund reaching maturity within the next
twelve months. As the Group has access to £1.1bn of undrawn
facilities and the HUT facility was refinanced post period end,
the Directors believe the Group will be able to meet these
current liabilities as they fall due. In making this assessment
the Directors took into account the covenant headroom on
the Group’s unsecured facilities, equivalent to a 45% fall in
property values, the absence of interest cover covenants on
these facilities and the limited capital expenditure remaining
on the Group’s committed development programme. Before
factoring in any income receivable, the facilities should also
be sufficient to cover forecast property operating costs,
administrative expenses and interest over the next 12 months.
152
British Land Annual Report and Accounts 2020
British Land | Annual Report and Accounts 2020
152
1 Basis of preparation, significant accounting policies
and accounting judgements continued
As a consequence of this, the Directors feel that the Group is well
placed to manage its business risks successfully despite the
current economic climate. Accordingly, they believe the going
concern basis is an appropriate one. See the full assessment of
preparation on a going concern basis in the corporate
governance section on page 102.
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 is exposed,
or has the rights, to variable returns from its involvement with
investees and has the ability to affect those returns through its
power over those investees.
The results of subsidiaries, joint ventures or associates acquired or
disposed of during the year are included from the effective date of
acquisition or up to the effective date of disposal. Accounting
policies of subsidiaries, joint ventures or associates which differ
from Group accounting policies are adjusted on consolidation.
Business combinations are accounted for under the acquisition
method. Any excess of the purchase price of business
combinations over the fair value of the assets, liabilities and
contingent liabilities acquired and resulting deferred tax thereon
is recognised as goodwill. Any discount received is credited to
the income statement in the period of acquisition.
All intra-Group transactions, balances, income and expenses
are eliminated on consolidation. Joint ventures and associates,
including funds, are accounted for under the equity method,
whereby the consolidated balance sheet incorporates the
Group’s share (investor’s share) of the net assets of its joint
ventures and associates. The consolidated income statement
incorporates the Group’s share of joint venture and associate
profits after tax. Their profits include revaluation movements on
investment properties.
Distributions and other receivables from joint ventures and
associates (including funds) are classed as cash flows from
operating activities, except where they relate to a cash flow
arising from a capital transaction, such as a property or
investment disposal. In this case they are classed as cash flows
from investing activities.
Properties
Properties are externally valued at the balance sheet date.
Investment and owner-occupied properties are recorded at
valuation whereas trading properties are stated at the lower
of cost and net realisable value.
Any surplus or deficit arising on revaluing investment
properties is recognised in the capital and other column of
the income statement.
Any surplus arising on revaluing owner-occupied properties
above cost is recognised in other comprehensive income, and any
deficit arising in revaluation below cost for owner-occupied and
trading properties is recognised in the capital and other column
of the income statement.
The cost of properties in the course of development includes
attributable interest and other associated outgoings including
attributable development personnel costs. Interest is calculated
on the development expenditure by reference to specific
borrowings, where relevant, and otherwise on the weighted
average interest rate of British Land Company PLC borrowings.
Interest is not capitalised where no development activity is taking
place. A property ceases to be treated as a development property
on practical completion.
Investment property disposals are recognised on completion.
Profits and losses arising are recognised through the capital and
other column of the income statement. The profit on disposal is
determined as the difference between the net sales proceeds and
the carrying amount of the asset at the commencement of the
accounting period plus capital expenditure in the period.
Trading properties are initially recognised at cost less
impairment, and trading property disposals are recognised in line
with the revenue policies outlined on the following page.
Where investment properties are appropriated to trading properties,
they are transferred at market value. If properties held for trading
are appropriated to investment properties, they are transferred at
book value. Transfers to or from investment property occur when,
and only when, there is evidence of change in use.
Where a right-of-use asset meets the definition of investment
property under IFRS 16, the right-of-use asset will initially be
calculated as the present value of minimum lease payments
under the lease and subsequently measured under the fair value
model, based on discounted cash flows of net rental income
earned under the lease.
The Group leases out investment properties under operating leases
with rents generally payable monthly or quarterly. The Group is
exposed to changes in the residual value of properties at the end
of current lease agreements, and mitigates this risk by actively
managing its tenant mix in order to maximise the weighted average
lease term, minimise vacancies across the portfolio and maximise
exposure to tenants with strong financial characteristics. The
Group also grants lease incentives to encourage high quality
tenants to remain in properties for longer lease terms.
Financial assets and liabilities
Debtors and creditors are initially recognised at fair value and
subsequently measured at amortised cost and discounted as
appropriate. On initial recognition the Group calculates the
expected credit loss for debtors based on lifetime expected
credit losses under the IFRS 9 simplified approach.
Other investments include investments classified as amortised
cost and investments classified as fair value through profit or
loss. Loans and receivables classified as amortised cost are
measured using the effective interest method, less any impairment.
Interest is recognised by applying the effective interest rate.
Investments classified as fair value through profit or loss are
initially recorded at fair value and are subsequently externally
valued on the same basis at the balance sheet date. Any surplus
or deficit arising on revaluing investments held for trading is
recognised in the capital and other column of the income statement.
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FINANCIAL STATEMENTS CONTINUED
Notes to the accounts continued
Rental income, including fixed rental uplifts, from investment
property leased out under an operating lease is recognised
as revenue on a straight-line basis over the lease term. Lease
incentives, such as rent-free periods and cash contributions to
tenant fit-out, are recognised on the same straight-line basis
being an integral part of the net consideration for the use of the
investment property. Any rent adjustments based on open
market estimated rental values are recognised, based on
management estimates, from the rent review date in relation to
unsettled rent reviews. Contingent rents, being those lease
payments that are not fixed at the inception of the lease, including
for example turnover rents, are recognised in the period in which
they are earned.
Surrender premia for the early termination of a lease are
recognised as revenue when the amounts become contractually
due, net of dilapidations and non-recoverable outgoings relating
to the lease concerned.
The Group applies the five step-model as required by IFRS 15
in recognising its service charge income, management and
performance fees and proceeds from the sale of trading properties.
Service charge income is recognised as revenue in the period to
which it relates.
Management fees are recognised as revenue in the period to
which they relate and relate to property management.
Performance fees are recognised at the end of the performance
period when the performance obligations are met, the fee
amount can be estimated reliably and it is highly probable that
the fee will be received. Performance fees are based on property
valuations compared to external benchmarks at the end of the
reporting period. Proceeds from the sale of trading properties
are recognised when control has been transferred to the
purchaser. This generally occurs on completion. Proceeds from
the sale of trading properties are recognised as revenue in the
capital and other column of the income statement. All other
revenue described above is recognised in the underlying column
of the income statement.
Taxation
Current tax is based on taxable profit for the year and is
calculated using tax rates that have been enacted or
substantively enacted at the balance sheet date. Taxable profit
differs from net profit as reported in the income statement
because it excludes items of income or expense that are not
taxable (or tax deductible).
Deferred tax is provided on items that may become taxable in the
future, or which may be used to offset against taxable profits in
the future, on the temporary differences between the carrying
amounts of assets and liabilities for financial reporting purposes,
and the amounts used for taxation purposes on an undiscounted
basis. On business combinations, the deferred tax effect of
fair value adjustments is incorporated in the consolidated
balance sheet.
1 Basis of preparation, significant accounting policies
and accounting judgements continued
The lease liability associated with investment property which is
held under a lease, is initially calculated as the present value of
the minimum lease payments. The lease liability is subsequently
measured at amortised cost, unwinding as finance lease interest
accrues and lease payments are made.
Debt instruments are stated at their fair value on issue. Finance
charges including premia payable on settlement or redemption
and direct issue costs are spread over the period to redemption,
using the effective interest method. Exceptional finance charges
incurred due to early redemption (including premia) are
recognised in the income statement when they occur.
Convertible bonds are designated as fair value through profit or
loss and so are initially recognised at fair value with all subsequent
gains and losses, including the write-off of issue costs, recognised
in the capital and other column of the income statement as a
component of net financing costs. The interest charge in respect
of the coupon rate on the bonds is recognised within the underlying
component of net financing costs on an accruals basis.
As defined by IFRS 9, cash flow and fair value hedges are initially
recognised at fair value at the date the derivative contracts are
entered into, and subsequently remeasured at fair value.
Changes in the fair value of derivatives that are designated and
qualify as effective cash flow hedges are recognised directly
through other comprehensive income as a movement in the
hedging and translation reserve. Changes in the fair value of
derivatives that are designated and qualify as effective fair value
hedges are recorded in the capital and other column of the
income statement, along with any changes in the fair value of the
hedged item that is attributable to the hedged risk. Any ineffective
portion of all derivatives is recognised in the capital and other
column of the income statement. Changes in the fair value of
derivatives that are not in a designated hedging relationship
under IFRS 9 are recorded directly in the capital and other
column of the income statement. These derivatives are carried
at fair value on the balance sheet.
Cash equivalents are limited to instruments with a maturity of
less than three months.
Revenue
Revenue comprises rental income and surrender premia,
service charge income, management and performance fees
and proceeds from the sale of trading properties.
Rental income and surrender premia are recognised in
accordance with IFRS 16 Leases.
As a result of adopting IFRS 16, the Group now reports separately
service charge income for leases where a single payment is
received to cover both rent and service charge. The total payment
received was previously included within rental income, but the
service charge component is separated out in the current year
and reported as service charge income in the notes to the
financial statements. There has been no net impact on the
Group’s income statement or balance sheet.
154
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1 Basis of preparation, significant accounting policies
and accounting judgements continued
Deferred tax assets and liabilities are net off against each other
in the consolidated balance sheet when they relate to income
taxes levied by the same tax authority on different taxable entities
which intend to either settle current tax assets and liabilities on a
net basis.
Employee costs
The fair value of equity-settled share-based payments to
employees is determined at the date of grant and is expensed on
a straight-line basis over the vesting period, based on the Group’s
estimate of shares or options that will eventually vest. For all
schemes except the Group’s Long Term Incentive Plan and Save
As You Earn schemes, the fair value of awards are equal to the
market value at grant date. For options and performance shares
granted under the Long Term Incentive Plan, the fair values
are determined by Monte Carlo and Black-Scholes models.
A Black-Scholes model is used for the Save As You Earn schemes.
Defined benefit pension scheme assets are measured using fair
values. Pension scheme liabilities are measured using the
projected unit credit method and discounted at the rate of return
of a high quality corporate bond of equivalent term to the scheme
liabilities. The net surplus (where recoverable by the Group) or
deficit is recognised in full in the consolidated balance sheet.
Any asset resulting from the calculation is limited to the present
value of available refunds and reductions in future contributions
to the plan. The current service cost and gains and losses on
settlement and curtailments are charged to operating profit.
Actuarial gains and losses are recognised in full in the period in
which they occur and are presented in the consolidated
statement of comprehensive income.
Contributions to the Group’s defined contribution schemes are
expensed on the basis of the contracted annual contribution.
Accounting judgements and estimates
In applying the Group’s accounting policies, the Directors are
required to make judgements and estimates that affect the
financial statements.
Significant areas of estimation are:
Valuation of investment, trading and owner-occupied properties
and investments classified as fair value through profit or loss.
The Group uses external professional valuers to determine the
relevant amounts. The primary source of evidence for property
valuations should be recent, comparable market transactions on
an arms-length basis. However, the valuation of the Group’s
property portfolio and investments classified as fair value through
profit or loss are inherently subjective, as they are based upon
valuer assumptions which may prove to be inaccurate.
The third party valuers for properties recognised at 31 March 2020
include a material valuation uncertainty clause in their reports.
The clause highlights significant estimation uncertainty regarding
the valuation of investment property due to the Covid-19 pandemic.
The valuations as at the current balance sheet date should
therefore be treated with additional caution. Sensitivity tables are
included within Note 10.
Other less significant areas of estimation include the valuation
of fixed rate debt and interest rate derivatives, the determination
of share-based payment expense, the actuarial assumptions
used in calculating the Group’s retirement benefit obligations,
provisions for trade debtors and lease incentive receivables and
taxation provisions.
The following items are ongoing areas of accounting judgement,
however, significant judgment has not been required for any of
these items in the current financial year.
REIT status: British Land is a Real Estate Investment Trust (REIT)
and does not pay tax on its property income or gains on property
sales, provided that at least 90% of the Group’s property income
is distributed as a dividend to shareholders, which becomes
taxable in their hands. In addition, the Group has to meet certain
conditions such as ensuring the property rental business represents
more than 75% of total profits and assets. Any potential or
proposed changes to the REIT legislation are monitored and
discussed with HMRC. It is management’s intention that the
Group will continue as a REIT for the foreseeable future.
Accounting for joint ventures and funds: In accordance with
IFRS 10 ‘Consolidated financial statements’, IFRS 11 ‘Joint
arrangements’, and IFRS 12 ‘Disclosures of interests in other
entities’ an assessment is required to determine the degree of
control or influence the Group exercises and the form of any
control to ensure that the financial statement treatment is
appropriate. The assessment undertaken by management
includes consideration of the structure, legal form, contractual
terms and other facts and circumstances relating to the relevant
entity. This assessment is updated annually and there have been
no changes in the judgement reached in relation to the degree of
control the Group exercises within the current or prior year.
Group shares in joint ventures and funds resulting from this
process are disclosed in Note 11 to the financial statements.
Joint ventures are accounted for under the equity method,
whereby the consolidated balance sheet incorporates the Group’s
share of the net assets of its joint ventures and associates.
The consolidated income statement incorporates the Group’s
share of joint venture and associate profits after tax.
Accounting for transactions: Property transactions are complex
in nature and can be material to the financial statements.
Judgements made in relation to transactions include whether an
acquisition is a business combination or an asset; whether held
for sale criteria have been met for transactions not yet completed;
accounting for transaction costs and contingent consideration;
and application of the concept of linked accounting. Management
consider each transaction separately in order to determine the
most appropriate accounting treatment, and, when considered
necessary, seek independent advice.
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155
155
FINANCIAL STATEMENTS CONTINUED
Notes to the accounts continued
2 Performance measures
Earnings per share
The Group measures financial performance with reference to underlying earnings per share, the European Public Real Estate
Association (EPRA) earnings per share and IFRS earnings per share. The relevant earnings and weighted average number of shares
(including dilution adjustments) for each performance measure are shown below, and a reconciliation between these is shown within
the supplementary disclosures (Table B).
EPRA earnings per share is calculated using EPRA earnings, which is the IFRS loss after taxation attributable to shareholders of the
Company excluding investment and development property revaluations, gains/losses on investing and trading property disposals,
changes in the fair value of financial instruments and associated close-out costs and their related taxation. In the current year, diluted
EPRA earnings per share did not include the dilutive impact of the 2015 convertible bond, as the Group’s share price was below the
current exchange price of 975.09p. IFRS diluted earnings per share would include the dilutive impact as IAS 33 ignores this hurdle to
conversion, however due to the current year loss, this would be anti-dilutive and therefore no adjustment is made. In the prior year, both
EPRA and IFRS measures exclude the dilutive impact of the 2015 convertible bond as the Company’s share price had not exceeded the
level required for the convertible conditions attached to the bond to trigger conversion into shares.
Underlying earnings per share is calculated using Underlying Profit adjusted for underlying taxation (see Note 7). Underlying Profit is
the pre-tax EPRA earnings measure, with additional Company adjustments. No Company adjustments were made in either the current
or prior year.
Earnings per share
Underlying
Underlying basic
Underlying diluted
EPRA
EPRA basic
EPRA diluted
IFRS
Basic
Diluted
2020
Relevant
number
of shares
million
934
937
934
937
934
934
Relevant
earnings
£m
306
306
306
306
(1,027)
(1,027)
Earnings
per share
pence
Relevant
earnings
£m
2019
Relevant
number
of shares
million
Earnings
per share
pence
32.8
32.7
32.8
32.7
(110.0)
(110.0)
340
340
340
340
(291)
(291)
971
974
971
974
971
971
35.0
34.9
35.0
34.9
(30.0)
(30.0)
Net asset value
The Group measures financial position with reference to EPRA net asset value (NAV) per share and EPRA triple net asset value
(NNNAV) per share. The net asset value and number of shares for each performance measure are shown below. A reconciliation
between IFRS net assets and EPRA net assets, and the relevant number of shares for each performance measure, is shown within the
supplementary disclosures (Table B). EPRA net assets is a proportionally consolidated measure that is based on IFRS net assets
excluding the mark-to-market on derivatives and related debt adjustments, the mark-to-market on the convertible bonds and deferred
taxation on property and derivative valuations. They include the valuation surplus on trading properties and are adjusted for the dilutive
impact of share options.
As at 31 March 2020, EPRA NAV and EPRA NNNAV did not include the dilutive impact of the 2015 convertible bond, as the Group’s share
price was below the exchange price of 975.09p. IFRS net assets also does not include the convertible impact following the treatment of
IFRS earnings per share. In the prior year, both EPRA and IFRS measures exclude the dilutive impact of the 2015 convertible bond as
the Company’s share price had not exceeded the level required for the convertible conditions attached to the bond to trigger conversion
into shares.
Net asset value per share
EPRA
EPRA NAV
EPRA NNNAV
IFRS
Basic
Diluted
2020
Relevant
number
of shares
million
932
932
927
932
Relevant
net assets
£m
7,213
6,762
7,147
7,147
Net asset
value per
share
pence
Relevant
net assets
£m
2019
Relevant
number of
shares
million
Net asset
value per
share
pence
774
726
771
767
8,649
8,161
8,689
8,689
956
956
949
956
905
854
916
909
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2 Performance measures continued
Total accounting return
The Group also measures financial performance with reference to total accounting return. This is calculated as the movement in EPRA
net asset value per share and dividend paid in the year as a percentage of the EPRA net asset value per share at the start of the year.
Total accounting return
2020
2019
Decrease in
NAV per
share
pence
(131)
Dividend per
share paid
pence
31.47
Total
accounting
return
(11.0%)
Decrease in
NAV per share
pence
(62)
Dividend per
share paid
pence
30.54
Total
accounting
return
(3.3%)
EPRA published updated Best Practice Recommendations in October 2019 which introduced three new Net Asset valuations. These are
applicable for accounting periods starting on or after 1 January 2020 and the Group will adopt these Recommendations for the year
ended 31 March 2021. Total accounting return will be based upon one of these new asset valuations, EPRA Net Tangible Assets, which
the Board judges to be closely aligned with EPRA Net Asset Value. See Supplementary Disclosures, Table B for further details.
3 Revenue and costs
Rent receivable
Spreading of tenant incentives and guaranteed rent increases
Surrender premia
Gross rental income
Trading property sales proceeds
Service charge income
Management and performance fees (from joint ventures and funds)
Other fees and commissions
Revenue
Trading property cost of sales
Service charge expenses
Property operating expenses
Impairment of tenant incentives and guaranteed rent increases1
Other fees and commissions expenses
Costs
2020
Capital
and other
£m
–
–
–
–
87
–
–
–
87
(70)
–
–
–
–
(70)
17
Underlying
£m
431
(3)
5
433
–
64
8
21
526
–
(61)
(50)
(20)
(17)
(148)
378
Total
£m
431
(3)
5
433
87
64
8
21
613
(70)
(61)
(50)
(20)
(17)
(218)
395
Underlying
£m
444
(6)
1
439
–
76
7
32
554
–
(76)
(35)
–
(30)
(141)
413
2019
Capital
and other
£m
–
–
–
–
350
–
–
–
350
(258)
–
–
–
–
(258)
92
Total
£m
444
(6)
1
439
350
76
7
32
904
(258)
(76)
(35)
–
(30)
(399)
505
1. In the current year this balance includes £15m (2018/19: £nil) in relation to write-offs and provision against tenant incentive balances held by the Group and £5m (2018/19: £nil)
in relation to write-offs of guaranteed rent increases.
The cash element of net rental income (gross rental income less property operating expenses) recognised during the year ended
31 March 2020 from properties which were not subject to a security interest was £316m (2018/19: £356m). Property operating expenses
relating to investment properties that did not generate any rental income were £nil (2018/19: £1m). Contingent rents of £3m (2018/19:
£3m) were recognised in the year.
As a result of adopting IFRS 16, the Group now reports separately service charge income for leases where a single payment is received
to cover both rent and service charge. The total payment is included within rental income in the prior year. In the current year, the
service charge component has now been separated and reported as service charge income in the notes to the financial statements.
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157
157
FINANCIAL STATEMENTS CONTINUED
Notes to the accounts continued
4 Valuation movements on property
Consolidated income statement
Revaluation of properties
Revaluation of properties held by joint ventures and funds accounted for using the equity method
Consolidated statement of comprehensive income
Revaluation of owner-occupied properties
5 Auditors’ remuneration – PricewaterhouseCoopers LLP
Fees payable to the Company’s auditors for the audit of the Company’s annual accounts
Fees payable to the Company’s auditors for the audit of the Company’s subsidiaries, pursuant to legislation
Total audit fees
Audit-related assurance services
Total audit and audit-related assurance services
Other fees
Other services
Total
2020
£m
(1,105)
(284)
(1,389)
1
(1,388)
2020
£m
0.3
0.4
0.7
0.1
0.8
0.0
0.8
2019
£m
(620)
(63)
(683)
3
(680)
2019
£m
0.3
0.4
0.7
0.1
0.8
0.1
0.9
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British Land Annual Report and Accounts 2020
6 Net financing costs
Underlying
Financing charges
Bank loans and overdrafts
Derivatives
Other loans
Obligations under head leases
Development interest capitalised
Financing income
Deposits, securities and liquid investments
Net financing charges – underlying
Capital and other
Financing charges
Valuation movements on fair value hedge accounted derivatives2
Valuation movements on fair value hedge accounted debt2
Capital financing costs1
Fair value movement on convertible bonds
Valuation movement on non-hedge accounted derivatives
Net financing charges – capital
Net financing costs
Total financing income
Total financing charges
Net financing costs
2020
£m
2019
£m
(25)
30
(76)
(4)
(75)
8
(67)
1
1
(66)
62
(62)
3
(4)
(40)
(41)
(41)
(21)
29
(75)
(3)
(70)
3
(67)
–
–
(67)
41
(38)
(32)
(6)
(11)
(46)
(46)
1
(108)
(107)
–
(113)
(113)
Interest payable on unsecured bank loans and related interest rate derivatives was £9m (2018/19: £8m). Interest on development
expenditure is capitalised at the Group’s weighted average interest rate of 1.9% (2018/19: 2.2%). The weighted average interest rate
on a proportionately consolidated basis at 31 March 2020 was 2.5% (2018/19: 2.9%).
1. Primarily bond redemption costs.
2. The difference between valuation movements on designated fair value hedge accounted derivatives (hedging instruments) and the valuation movements on fair value hedge
accounted debt (hedged item) represents hedge ineffectiveness for the period of £nil (2018/19: £3m).
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159
159
FINANCIAL STATEMENTS CONTINUED
Notes to the accounts continued
7 Taxation
Taxation (expense) income
Current taxation:
UK corporation taxation: 19% (2018/19: 19%)
Adjustments in respect of prior years
Total current taxation income
Deferred taxation on revaluations and derivatives
Group total taxation
Attributable to joint ventures and funds
Total taxation income
Taxation reconciliation
Loss on ordinary activities before taxation
Less: loss (profit) attributable to joint ventures and funds1
Group loss on ordinary activities before taxation
Taxation on loss on ordinary activities at UK corporation taxation rate of 19% (2018/19: 19%)
Effects of:
– REIT exempt income and gains
– Taxation losses
– Deferred taxation on revaluations and derivatives
– Adjustments in respect of prior years
Group total taxation income (expense)
2020
£m
2019
£m
(1)
5
4
(2)
2
–
2
(1,116)
227
(889)
169
(165)
(5)
(2)
5
2
(10)
13
3
(4)
(1)
2
1
(319)
(5)
(324)
62
(73)
1
(4)
13
(1)
1. A current taxation income of £nil (2018/19: £2m) and a deferred taxation credit of £nil (2018/19: £nil) arose on profits attributable to joint ventures and funds. The low tax
charge reflects the Group’s REIT status.
Taxation expense attributable to Underlying Profit for the year ended 31 March 2020 was £nil (2018/19: £nil). Corporation taxation
payable at 31 March 2020 was £17m (2018/19: £25m) as shown on the balance sheet. During the year to 31 March 2020 tax provisions
in respect of historic taxation matters and current points of uncertainty in the UK have been released and provisions made.
A REIT is required to pay Property Income Distributions (PIDs) of at least 90% of the taxable profits from its UK property rental business
within twelve months of the end of each accounting period. Following the temporary suspension of future dividends to best ensure
we can effectively support our customers who are hardest hit and protect the long term value of the business as a result of Covid-19,
we are discussing an extension to this deadline with HMRC. To date £29m of the PID required in respect of the year to 31 March 2020
has been paid. Whilst we intend pay the required PID amount within the agreed deadline, the balance of the required PID not paid
by the extended due date would instead be subject to corporation tax and a charge of up to £37m would become due. The Group
is currently in discussions with HMRC over the timing of payments of Property Income Distributions required by the REIT regime
(see Note 24 Contingent liabilities).
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8 Staff costs
Staff costs (including Directors)
Wages and salaries
Social security costs
Pension costs
Equity-settled share-based payments
2020
£m
56
7
6
(3)
66
2019
£m
62
8
7
(3)
74
The average monthly number of employees of the Company during the year was 300 (2018/19: 293). The average monthly number of
Group employees, including those employed directly at the Group’s properties and their costs recharged to tenants, was 672 (2018/19:
783). The average monthly number of employees of the Company within each category of persons employed was as follows: Retail: 25;
Offices: 17; Canada Water: 16; Developments: 38; Storey: 11; Support Functions: 193.
The Executive Directors and Non-Executive Directors are the key management personnel. Their emoluments are summarised below
and further detail is disclosed in the Remuneration Report on pages 118 to 133.
Directors’ emoluments
Short term employee benefits
Service cost in relation to defined benefit pension schemes
Equity-settled share-based payments
Staff costs
The Group’s equity-settled share-based payments comprise the following:
2020
£m
2.8
–
(2.2)
0.6
2019
£m
5.6
0.1
(2.0)
3.7
Scheme
Long Term Incentive Plan (LTIP)
Matching Share Plan (MSP)
Restricted Share Plan (RSP)
Save As You Earn schemes (SAYE)
Fair value measure
Monte Carlo model simulation and Black-Scholes option valuation models
Market value at grant date
Market value at grant date
Black-Scholes option valuation model
The Group expenses an estimate of how many shares are likely to vest based on the market price at the date of grant, taking account
of expected performance against the relevant performance targets and service periods, which are discussed in further detail in the
Remuneration Report.
During the year the Group granted performance shares under its Long Term Incentive Plan scheme. In the prior year the Group granted
performance shares and options under its Long Term Incentive Plan scheme. Performance conditions are measured over a three-year
period and are a weighted blend of Total Shareholder Return (TSR), Total Property Return (TPR) and Total Accounting Return (TAR)
(see Directors Remuneration Report for details). For non-market-based performance conditions, the Group uses a Black-Scholes
option valuation method to obtain fair values. For market-based performance conditions, a Monte Carlo model is used as this provides a
more accurate fair value than the previous method used by the Group. The impact on the fair value of options resulting from the change
in model was immaterial. The key inputs used to obtain fair values for LTIP awards are shown below.
Share price
Exercise price
Expected volatility
Expected term (years)
Dividend yield
Risk free interest rate
Fair value – TSR Tranche FTSE 350
Fair value – TSR Tranche FTSE 100
Fair value – TPR and TAR Tranches
Movements in shares and options are given in Note 20.
24 July 2019
25 June 2018
Awards with
holding
period
£5.35
£0.00
17.1%
3
0.0%
0.47%
£1.41
£1.40
£4.89
Awards with
no holding
period
£5.35
£0.00
17.1%
3
0.0%
0.47%
£1.54
£1.53
£5.35
Awards with
holding period
£6.79
£0.00
24.8%
3
0.0%
0.79%
£2.33
£3.02
£5.93
Awards with
no holding
period
£6.79
£0.00
24.8%
3
0.0%
0.79%
£2.67
£3.46
£6.79
Market value
options
£6.79
£6.82
24.8%
5
4.43%
0.98%
£0.58
£0.68
£0.84
British Land | Annual Report and Accounts 2020
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161
161
FINANCIAL STATEMENTS CONTINUED
Notes to the accounts continued
9 Pensions
The British Land Group of Companies Pension Scheme (‘the scheme’) is the principal defined benefit pension scheme in the Group.
The assets of the scheme are held in a trustee-administered fund and kept separate from those of the Company. It is not contracted out
of SERPS (State Earnings-Related Pension Scheme) and it is not planned to admit new employees to the scheme. The Group has three
other small defined benefit pension schemes. There are also two Defined Contribution Pension Schemes. Contributions to these
schemes are at a flat rate of salary and are paid by the Company.
The total net pension cost charged for the year was £6m (2018/19: £7m), of which £5m (2018/19: £5m) relates to defined contribution
plans and £1m (2018/19: £2m) relates to the current service cost of the defined benefit schemes.
A full actuarial valuation of the scheme was carried out at 31 March 2018 by consulting actuaries, First Actuarial LLP. The employer’s
contributions will be paid in the future at the rate recommended by the actuary of 68.3% per annum of basic salaries. The best estimate
of employer contributions expected to be paid during the year to 31 March 2021 is £1m. The major assumptions used for the actuarial
valuation were:
Discount rate
Salary inflation
Pensions increase
Price inflation
2020
% pa
2.3
3.9
2.5
2.5
2019
% pa
2.4
4.8
3.3
3.4
2018
% pa
2.6
4.9
3.3
3.4
2017
% pa
2.4
4.9
3.3
3.4
2016
% pa
3.2
4.8
3.2
3.3
The assumptions are that a member currently aged 60 will live on average for a further 28.0 years if they are male and for a further 29.6
years if they are female. For a member who retires in 2040 at age 60, the assumptions are that they will live on average for a further
29.3 years after retirement if they are male and for a further 31.0 years after retirement if they are female.
Composition of scheme assets
Equities
Diversified growth funds
Other assets
Total scheme assets
2020
£m
60
50
51
161
2019
£m
60
88
12
160
94.3% of the scheme assets are quoted in an active market. All unquoted scheme assets sit within equities.
The amount included in the balance sheet arising from the Group’s obligations in respect of its defined benefit schemes is as follows:
Present value of defined scheme obligations
Fair value of scheme assets
Irrecoverable surplus
Liability recognised in the balance sheet
2020
£m
(131)
161
(30)
–
2019
£m
(147)
160
(13)
–
2018
£m
(147)
152
(5)
–
2017
£m
(167)
154
–
(13)
2016
£m
(143)
137
–
(6)
1. The net defined benefit asset must be measured at the lower of the surplus in the defined benefit schemes and the asset ceiling. The asset ceiling is the present value of any
economic benefits available in the form of refunds from the schemes or reductions to future contributions to the schemes. The asset ceiling of the Group’s defined benefit
schemes is £nil (2018/19: £nil), therefore the surplus in the defined benefit schemes of £30m (2018/19: £13m) is irrecoverable.
162
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9 Pensions continued
The sensitivities of the defined benefit obligation in relation to the major actuarial assumptions used to measure scheme liabilities are
as follows:
Assumption
Discount rate
Salary inflation
RPI inflation
Assumed life expectancy
History of experience gains and losses
Total actuarial gain (loss) recognised in the consolidated statement
of comprehensive income1, 2
Percentage of present value on scheme liabilities
1. Movements stated after adjusting for irrecoverability of any surplus.
2. Cumulative loss recognised in the statement of comprehensive income is £40m (2018/19: £40m).
Movements in the present value of defined benefit obligations were as follows:
At 1 April
Current service cost
Interest cost
Actuarial gain (loss)
Gain (loss) from change in financial assumptions
Gain on scheme liabilities arising from experience
Benefits paid
At 31 March
Change in
assumption
+0.5%
+0.5%
+0.5%
+1 year
2020
£m
–
(0.3%)
2019
£m
–
0.1%
2018
£m
9
6.1%
Increase/(decrease) in defined
scheme obligations
2020
£m
(11)
1
12
4
2017
£m
(12)
7.2%
2020
£m
(147)
(2)
(4)
17
–
5
(131)
2019
£m
(15)
2
12
5
2016
£m
(1)
0.7%
2019
£m
(147)
(2)
(3)
(2)
1
6
(147)
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163
163
FINANCIAL STATEMENTS CONTINUED
Notes to the accounts continued
9 Pensions continued
Movements in the fair value of the scheme assets were as follows:
At 1 April
Interest income on scheme assets
Contributions by employer
Actuarial gain
Benefits paid
At 31 March
2020
£m
160
4
1
1
(5)
161
2019
£m
152
4
2
8
(6)
160
Through its defined benefit plans, the Group is exposed to a number of risks, the most significant of which are detailed below:
Asset volatility
The liabilities are calculated using a discount rate set with reference to corporate bond yields; if assets underperform this yield,
this will create a deficit. The scheme holds a significant portion of growth assets (equities and diversified growth funds) which, although
expected to outperform corporate bonds in the long term, create volatility and risk in the short term. The allocation to growth assets is
monitored to ensure it remains appropriate given the scheme’s long term objectives.
Changes in bond yields
A decrease in corporate bond yields will increase the value placed on the scheme’s liabilities for accounting purposes, although this will
be partially offset by an increase in the value of the scheme’s bond holdings.
Inflation risk
The majority of the scheme’s benefit obligations are linked to inflation, and higher inflation will lead to higher liabilities (although, in
most cases, caps on the level of inflationary increases are in place to protect against extreme inflation). The majority of the assets are
either unaffected by or only loosely correlated with inflation, meaning that an increase in inflation will also increase the deficit.
Life expectancy
The majority of the scheme’s obligations are to provide benefits for the life of the member, so increases in life expectancy will result
in an increase in the liabilities.
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British Land Annual Report and Accounts 2020
10 Property
Property reconciliation for the year ended 31 March 2020
Retail
Level 3
£m
4,317
19
1
–
36
5
61
–
(58)
45
(1,158)
–
Offices and
Residential
Level 3
£m
3,776
Canada
Water
Level 3
£m
318
Developments
Level 3
£m
520
Investment
and
development
properties
Level 3
£m
8,931
Trading
Properties
£m
87
Owner-
Occupied
Level 3
£m
73
34
2
–
–
24
4
54
48
138
–
–
(14)
35
–
–
21
49
–
–
–
33
–
41
129
5
2
–
177
–
–
(26)
(15)
–
3
659
94
156
9
92
74
425
–
(58)
5
(1,105)
–
(10)
8,188
–
–
–
–
–
–
–
(67)
–
–
–
–
20
–
–
–
–
–
–
(1)
–
(5)
–
1
–
68
Carrying value at 1 April 2019
Additions
– property purchases
– development expenditure
– capitalised interest and staff costs
– capital expenditure on asset management
initiatives1
– right-of-use assets
Depreciation
Disposals
Reclassifications
Revaluations included in income statement
Revaluations included in OCI
Movement in tenant incentives and contracted
rent uplift balances
Carrying value at 31 March 2020
Lease liabilities (Notes 14 and 15)
Less valuation surplus on right-of-use assets2
Valuation surplus on trading properties
Group property portfolio valuation at 31 March 2020
Non-controlling interests
Group property portfolio valuation at 31 March 2020 attributable to shareholders
(19)
3,188
6
3,941
–
400
Total
£m
9,091
94
156
9
92
74
425
(1)
(125)
–
(1,105)
1
(10)
8,276
(163)
(20)
13
8,106
(185)
7,921
1. Offices capital expenditure includes £36m of flexible workspace fit-out in the current year which has been reclassified from property, plant and equipment to property additions.
2. Relates to properties held under leasing agreements. The fair value of right-of-use assets is determined by calculating the present value of net rental cashflows over the term
of the lease agreements. IFRS 16 right-of-use assets are not externally valued, their fair value is determined by management, and are therefore not included in the Group
property portfolio valuation of £8,106m above.
British Land | Annual Report and Accounts 2020
British Land Annual Report and Accounts 2020
165
165
FINANCIAL STATEMENTS CONTINUED
Notes to the accounts continued
10 Property continued
Property reconciliation for the year ended 31 March 2019
Retail
Level 3
£m
5,195
97
2
–
27
31
157
–
(409)
–
(621)
–
Offices and
Residential
Level 3
£m
3,659
Canada
Water
Level 3
£m
298
Developments
Level 3
£m
355
Investment
and
development
properties
Level 3
£m
9,507
Trading
Properties
£m
328
Owner-
Occupied
Level 3
£m
90
88
–
–
–
19
3
15
5
108
–
–
19
(12)
–
–
–
22
–
–
–
(2)
–
–
151
2
–
–
153
–
(3)
–
15
–
–
520
185
172
5
42
36
440
–
(412)
19
(620)
–
(3)
8,931
–
11
–
–
–
11
–
(252)
–
–
–
–
87
–
–
–
–
–
–
(1)
–
(19)
–
3
–
73
Carrying value at 1 April 2018
Additions
– property purchases
– development expenditure
– capitalised interest and staff costs
– capital expenditure on asset management
initiatives
– head lease assets
Depreciation
Disposals
Reclassifications
Revaluations included in income statement1
Revaluations included in OCI
Movement in tenant incentives and contracted
rent uplift balances
Carrying value at 31 March 2019
Head lease liabilities (Note 15)
Valuation surplus on trading properties
Group property portfolio valuation at 31 March 2019
Non-controlling interests
Group property portfolio valuation at 31 March 2019 attributable to shareholders
(5)
4,317
2
3,776
–
318
Total
£m
9,925
185
183
5
42
36
451
(1)
(664)
–
(620)
3
(3)
9,091
(92)
29
9,028
(267)
8,761
1. Included within the offices and residential property revaluation movement above is a £4m increase to the valuation of 10 Brock Street following the leasing transaction with
Facebook and Debenhams.
Property valuation
The different valuation method levels are defined below:
Level 1: Quoted prices (unadjusted) in active markets for identical assets or liabilities.
Level 2:
Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly
(i.e. as prices) or indirectly (i.e. derived from prices).
Level 3:
Inputs for the asset or liability that are not based on observable market data (unobservable inputs).
These levels are specified in accordance with IFRS 13 ‘Fair Value Measurement’. Property valuations are inherently subjective as
they are made on the basis of assumptions made by the valuer which may not prove to be accurate. For these reasons, and consistent
with EPRA’s guidance, we have classified the valuations of our property portfolio as Level 3 as defined by IFRS 13. The inputs to the
valuations are defined as ‘unobservable’ by IFRS 13 and these are analysed in a table on the following page. There were no transfers
between levels in the year.
During the current financial period, the Group adopted the new accounting standard IFRS 16, Leases. The right-of-use asset recognised
on adoption is included within the investment and development property line. The carrying amount of right-of-use assets included within
the line is £67m. An adjustment is made to reflect the fact that separate lease liabilities are recognised on balance sheet in relation to
right-of-use assets.
The general risk environment in which the Group operates has heightened during the period, which is largely due to the continued level of
uncertainty of the future impact of the UK’s exit from the EU, the outbreak of the Novel Coronavirus (Covid-19) and the significant deterioration
in the UK retail market and weaker investment markets. This environment could have a significant impact upon property valuations.
The Group’s total property portfolio was valued by external valuers on the basis of fair value, in accordance with the RICS Valuation –
Professional Standards 2014, ninth edition, published by The Royal Institution of Chartered Surveyors.
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10 Property continued
The outbreak of Covid-19, declared by the World Health Organization as a “Global Pandemic” on 11 March 2020, has impacted global
financial markets. Travel restrictions have been implemented by many countries. Market activity is being impacted in many sectors.
As at the valuation date, the external valuers consider that they can attach less weight to previous market evidence for comparison
purposes, to inform opinions of value. The current response to Covid-19 means that external valuers are faced with an unprecedented
set of circumstances on which to base a judgment. The valuations across all asset classes are therefore reported on the basis of
“material valuation uncertainty” as per VPS 3 and VPGA 10 of the RICS Red Book Global. Consequently, less certainty – and a higher
degree of caution – should be attached to the valuations provided than would normally be the case. The external valuers have
confirmed, the inclusion of the “material valuation uncertainty” declaration does not mean that valuations cannot be relied upon.
Rather, the phrase is used in order to be clear and transparent with all parties, in a professional manner that – in the current
extraordinary circumstances – less certainty can be attached to valuations than would otherwise be the case. In light of this material
valuation uncertainty we have reviewed the ranges used in assessing the impact of changes in unobservable inputs on the fair value of
the Group’s property portfolio. Whilst the property valuations reflect the external valuers’ assessment of the impact of Covid-19 at the
valuation date, we consider +/-10% for ERV, +/-50bps for NEY and +/-10% for development costs to capture the increased uncertainty in
these key valuation assumptions. The results of this analysis are detailed in the sensitivity tables on the following page.
There has been no change in the valuation methodology used for investment property as a result of Covid-19.
A provision of £17m (2018/19: £14m) has been made against tenant incentives and contracted rent uplift balances. The charge to the
income statement in relation to write-offs and provisions made against tenant lease incentives and guaranteed rents was £20m
(see Note 3).
The information provided to the valuers, and the assumptions and valuation models used by the valuers, are reviewed by the property
portfolio team, the Head of Real Estate and the Chief Financial Officer. The valuers meet with the external auditors and also present
directly to the Audit Committee at the interim and year end review of results. Further details of the Audit Committee’s responsibilities in
relation to valuations can be found in the Report of the Audit Committee on pages 108 to 113.
Investment properties, excluding properties held for development, are valued by adopting the ‘investment method’ of valuation.
This approach involves applying capitalisation yields to current and future rental streams net of income voids arising from vacancies or
rent-free periods and associated running costs. These capitalisation yields and future rental values are based on comparable property
and leasing transactions in the market using the valuers’ professional judgement and market observation. Other factors taken into
account in the valuations include the tenure of the property, tenancy details and ground and structural conditions.
In the case of ongoing developments, the approach applied is the ‘residual method’ of valuation, which is the investment method of
valuation as described above, with a deduction for all costs necessary to complete the development, including a notional finance cost,
together with a further allowance for remaining risk. Properties held for development are generally valued by adopting the higher of the
residual method of valuation, allowing for all associated risks, or the investment method of valuation for the existing asset.
Copies of the valuation certificates of Knight Frank LLP, CBRE, Jones Lang LaSalle and Cushman & Wakefield can be found at
www.britishland.com/reports.
A breakdown of valuations split between the Group and its share of joint ventures and funds is shown below:
Knight Frank LLP
CBRE
Jones Lang LaSalle
Cushman & Wakefield
Total property portfolio valuation
Non-controlling interests
Total property portfolio valuation attributable to shareholders
2020
Joint
ventures
and funds
£m
54
183
765
2,270
3,272
(36)
3,236
Group
£m
1,420
2,097
1,348
3,241
8,106
(185)
7,921
Total
£m
1,474
2,280
2,113
5,511
11,378
(221)
11,157
2019
Joint
ventures
and funds
£m
2,256
231
1,099
19
3,605
(50)
3,555
Group
£m
1,434
2,675
1,889
3,030
9,028
(267)
8,761
Total
£m
3,690
2,906
2,988
3,049
12,633
(317)
12,316
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British Land Annual Report and Accounts 2020
167
167
FINANCIAL STATEMENTS CONTINUED
Notes to the accounts continued
10 Property continued
Information about fair value measurements using unobservable inputs (Level 3) for the year ended 31 March 2020
ERV per sq ft
Equivalent yield
Costs to complete per sq ft
Min
£
2
9
15
38
48
Max
£
87
177
31
38
62
Average
£
21
60
20
38
55
Min
%
4
4
2
4
4
Max
%
11
Average
%
7
Min
£
–
Max
£
85
Average
£
15
5
6
4
5
4
4
4
4
–
–
–
–
421
62
–
–
–
–
367
220
Valuation
technique
Investment
methodology
Investment
methodology
Investment
methodology
Investment
methodology
Residual
methodology
Fair value at
31 March 2020
£m
3,128
3,851
364
70
660
8,073
33
8,106
Investment
Retail
Offices1
Canada Water
Residential
Developments
Total
Trading properties
at fair value
Group property
portfolio valuation
1. Includes owner-occupied.
Information about fair value measurements using unobservable inputs (Level 3) for the year ended 31 March 2019
ERV per sq ft
Equivalent yield
Costs to complete per sq ft
Min
£
2
8
15
38
47
Max
£
87
145
31
38
63
Average
£
24
58
22
38
55
Min
%
4
4
2
4
4
Max
%
10
Average
%
6
5
6
4
5
4
4
4
4
Min
£
–
–
–
–
–
Max
£
37
465
1
–
Average
£
6
53
–
–
334
228
Valuation
technique
Investment
methodology
Investment
methodology
Investment
methodology
Investment
methodology
Residual
methodology
Fair value at
31 March 2019
£m
4,278
3,769
302
43
520
8,912
116
9,028
Investment
Retail
Offices1
Canada Water
Residential
Developments
Total
Trading properties
at fair value
Group property
portfolio valuation
1. Includes owner-occupied.
Information about the impact of changes in unobservable inputs (Level 3) on the fair value of the Group’s property portfolio
including share of joint ventures and funds for the year ended 31 March 2020
Retail
Offices1
Canada Water
Residential
Developments
Group property portfolio valuation including share
of joint ventures and funds
1. Includes trading properties at fair value.
Fair value at
31 March 2020
£m
3,848
5,800
364
99
1,046
Impact on valuations
Impact on valuations
Impact on valuations
+10% ERV
£m
297
553
7
2
129
-10% ERV
£m
(287)
(530)
(7)
(2)
(128)
-50bps NEY
£m
322
878
8
4
198
+50bps NEY
£m
(276)
(678)
(6)
(3)
(155)
-10% costs
£m
4
26
136
–
19
+10% costs
£m
(4)
(27)
(133)
–
(19)
11,157
988
(954)
1,410
(1,118)
185
(183)
168
168
British Land | Annual Report and Accounts 2020
British Land Annual Report and Accounts 2020
10 Property continued
Information about the impact of changes in unobservable inputs (Level 3) on the fair value of the Group’s property portfolio
including share of joint ventures and funds for the year ended 31 March 2019
Retail
Offices1
Canada Water
Residential
Developments
Group property portfolio valuation including share
of joint ventures and funds
1. Includes trading properties at fair value.
All other factors being equal:
Fair value at
31 March 2019
£m
5,530
5,444
303
99
940
Impact on valuations
Impact on valuations
Impact on valuations
+5% ERV
£m
230
228
4
1
48
-5% ERV
£m
(220)
(207)
(4)
(1)
(52)
-25bps NEY
£m
272
361
5
2
64
+25bps NEY
£m
(251)
(313)
(4)
(2)
(60)
-5% costs
£m
–
–
31
–
26
+5% costs
£m
–
–
(30)
–
(30)
12,316
511
(484)
704
(630)
57
(60)
– a higher equivalent yield or discount rate would lead to a decrease in the valuation of an asset
– an increase in the current or estimated future rental stream would have the effect of increasing the capital value
– an increase in the costs to complete would lead to a decrease in the valuation of an asset
However, there are interrelationships between the unobservable inputs which are partially determined by market conditions, which
would impact on these changes.
Additional property disclosures – including covenant information
At 31 March 2020, the Group property portfolio valuation of £8,106m (2018/19: £9,028m) comprises freeholds of £4,139m (2018/19:
£4,929m); virtual freeholds of £1,050m (2018/19: £940m); long leaseholds of £2,822m (2018/19 £3,097m); and short leaseholds of £95m
(2018/19: £62m). The historical cost of properties was £5,981m (2018/19: £5,853m).
The property valuation does not include any investment properties held under leases (2018/19: £nil).
Cumulative interest capitalised against investment, development and trading properties amounts to £103m (2018/19: £99m).
Properties valued at £961m (2018/19: £1,019m) were subject to a security interest and other properties of non-recourse companies
amounted to £772m (2018/19: £1,115m), totalling £1,733m (2018/19: £2,134m).
Included within the property valuation is £12m (2018/19: £28m) in respect of accrued contracted rental uplift income. The balance arises
through the IFRS treatment of leases containing such arrangements, which requires the recognition of rental income on a straight-line
basis over the lease term, with the difference between this and the cash receipt changing the carrying value of the property against
which revaluations are measured.
11 Joint ventures and funds
Summary movement for the year of the investments in joint ventures and funds
At 1 April 2019
Additions
Disposals
Share of profit on ordinary activities after taxation
Distributions and dividends:
– Capital
– Revenue
Hedging and exchange movements
At 31 March 2020
Joint ventures
£m
2,330
256
(23)
(179)
(131)
(64)
(1)
2,188
Funds
£m
230
3
–
(48)
(2)
(13)
–
170
Total
£m
2,560
259
(23)
(227)
(133)
(77)
(1)
2,358
Equity
£m
2,112
7
(22)
(227)
(133)
(77)
(1)
1,659
Loans
£m
448
252
(1)
–
–
–
–
699
Total
£m
2,560
259
(23)
(227)
(133)
(77)
(1)
2,358
British Land | Annual Report and Accounts 2020
British Land Annual Report and Accounts 2020
169
169
FINANCIAL STATEMENTS CONTINUED
Notes to the accounts continued
11 Joint ventures and funds continued
The summarised income statements and balance sheets below and on the following page show 100% of the results, assets and
liabilities of joint ventures and funds. Where necessary, these have been restated to the Group’s accounting policies.
Joint ventures’ and funds’ summary financial statements for the year ended 31 March 2020
Partners
Property sector
Group share
Summarised income statements
Revenue4
Costs
Administrative expenses
Net interest payable
Underlying Profit
Net valuation movement
Capital financing costs5
Profit (loss) on disposal of investment properties and investments
Profit (loss) on ordinary activities before taxation
Taxation
Profit (loss) on ordinary activities after taxation
Other comprehensive income
Total comprehensive income (expense)
British Land share of total comprehensive income (expense)
British Land share of distributions payable
Summarised balance sheets
Investment and trading properties
Current assets
Cash and deposits
Gross assets
Current liabilities
Bank and securitised debt
Loans from joint venture partners
Other non-current liabilities
Gross liabilities
Net assets
British Land share of net assets less shareholder loans
Broadgate
REIT
Ltd
Euro Bluebell LLP
(GIC)
City Offices
Broadgate
50%
MSC Property
Intermediate
Holdings Ltd
Norges Bank
Investment
Management
Shopping Centres
Meadowhall
50%
WOSC Partners Limited
Partnership
Norges Bank
Investment
Management
Offices
25%
£m
203
(78)
125
(1)
(63)
61
204
(12)
–
253
–
253
–
253
127
17
4,539
28
209
4,776
(118)
(1,368)
(850)
–
(2,336)
2,440
1,220
£m
103
(27)
76
–
(30)
46
(542)
–
–
(496)
–
(496)
(2)
(498)
(249)
4
1,202
8
20
1,230
(30)
(583)
(409)
(21)
(1,043)
187
93
£m
4
(1)
3
–
–
3
(3)
–
–
–
–
–
–
–
–
–
218
3
4
225
(4)
–
(217)
(4)
(225)
–
–
1. USS joint ventures include the Eden Walk Shopping Centre Unit Trust and the Fareham Property Partnership.
2. Hercules Unit Trust joint ventures and sub-funds includes 50% of the results of Deepdale Co-Ownership Trust, Fort Kinnaird Limited Partnership and Valentine
Co-Ownership Trust and 41.25% of Birstall Co-Ownership Trust. The balance sheet shows 50% of the assets of these joint ventures and sub-funds.
3. Included in the column headed ‘Other joint ventures and funds’ are contributions from the following: BL Goodman Limited Partnership, Bluebutton Property Management UK
Limited, City of London Office Unit Trust and BL Sainsbury’s Superstores Limited and Pillar Retail Europark Fund (PREF). The Group’s ownership share of PREF is 65%,
however as the Group is not able to exercise control over significant decisions of the fund, the Group equity accounts for its interest in PREF.
4. Revenue includes gross rental income at 100% share of £284m (2018/19: £310m).
5. Capital financing costs of £32m in other joint ventures and funds relates to bond redemption costs in a joint venture with Sainsbury’s.
170
170
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British Land Annual Report and Accounts 2020
The SouthGate Limited
Partnership
Aviva
Investors
Shopping
Centres
50%
USS
joint
ventures1
Universities
Superannuation
Scheme Group PLC
Shopping
Centres
50%
£m
18
(5)
13
(1)
(1)
11
(45)
–
–
(34)
–
(34)
–
(34)
(17)
6
208
2
5
215
(4)
–
–
(28)
(32)
183
91
£m
14
(5)
9
–
–
9
(49)
–
–
(40)
–
(40)
–
(40)
(20)
4
188
1
6
195
(3)
–
(31)
–
(34)
161
80
Hercules Unit Trust
joint ventures
and sub-funds2
Other
joint ventures
and funds3
Total
2020
Total
Group share
2020
Retail
Parks
Various
£m
32
(8)
24
–
–
24
(129)
–
1
(104)
–
(104)
–
(104)
(52)
13
332
2
11
345
(9)
–
–
–
(9)
336
171
£m
9
–
9
(1)
(2)
6
(5)
(32)
(2)
(33)
–
(33)
–
(33)
(17)
136
–
–
10
10
(3)
–
(3)
–
(6)
4
2
£m
383
(124)
259
(3)
(96)
160
(569)
(44)
(1)
(454)
–
(454)
(2)
(456)
(228)
180
6,687
44
265
6,996
(171)
(1,951)
(1,510)
(53)
(3,685)
3,311
1,657
£m
191
(62)
129
(1)
(49)
79
(284)
(22)
–
(227)
–
(227)
(1)
(228)
3,288
24
131
3,443
(85)
(975)
(701)
(25)
(1,786)
1,657
The borrowings of joint ventures and funds and their subsidiaries are non-recourse to the Group. All joint ventures are incorporated in the United Kingdom, with the exception
of Broadgate REIT Limited and the Eden Walk Shopping Centre Unit Trust which are incorporated in Jersey. Of the funds, the Hercules Unit Trust (HUT) joint ventures and
sub-funds are incorporated in Jersey.
These financial statements include the results and financial position of the Group’s interest in the Fareham Property Partnership, the BL Goodman Limited Partnership and the
Gibraltar Limited Partnership. Accordingly, advantage has been taken of the exemptions provided by Regulation 7 of the Partnership (Accounts) Regulations 2008 not to attach
the partnership accounts to these financial statements.
British Land | Annual Report and Accounts 2020
British Land Annual Report and Accounts 2020
171
171
FINANCIAL STATEMENTS CONTINUED
Notes to the accounts continued
11 Joint ventures and funds continued
The summarised income statements and balance sheets below and on the following page show 100% of the results, assets and
liabilities of joint ventures and funds. Where necessary, these have been restated to the Group’s accounting policies.
Joint ventures’ and funds’ summary financial statements for the year ended 31 March 2019
Partners
Property sector
Group share
Summarised income statements
Revenue4
Costs
Administrative expenses
Net interest payable
Underlying Profit
Net valuation movement
Capital financing costs
Profit (loss) on disposal of investment properties and investments
Profit (loss) on ordinary activities before taxation
Taxation
Profit (loss) on ordinary activities after taxation
Other comprehensive income
Total comprehensive income (expense)
British Land share of total comprehensive income (expense)
British Land share of distributions payable
Summarised balance sheets
Investment and trading properties
Current assets
Cash and deposits
Gross assets
Current liabilities
Bank and securitised debt
Loans from joint venture partners
Other non-current liabilities
Gross liabilities
Net assets
British Land share of net assets less shareholder loans
Broadgate
REIT
Ltd
Euro Bluebell LLP
(GIC)
City Offices
Broadgate
50%
MSC Property
Intermediate
Holdings Ltd
Norges Bank
Investment
Management
Shopping Centres
Meadowhall
50%
BL Sainsbury
Superstores
Ltd
J Sainsbury plc
Superstores
50%
£m
194
(60)
134
(1)
(71)
62
117
(37)
10
152
4
156
36
192
96
275
£m
4,024
(1)
219
4,242
(83)
(1,442)
(479)
–
(2,004)
2,238
1,119
£m
102
(24)
78
–
(32)
46
(152)
–
–
(106)
–
(106)
–
(106)
(53)
4
£m
1,744
4
31
1,779
(37)
(612)
(385)
(20)
(1,054)
725
363
£m
32
–
32
–
(11)
21
1
(3)
(4)
15
–
15
–
15
8
20
£m
488
4
40
532
(22)
(196)
–
–
(218)
314
157
1. USS joint ventures include the Eden Walk Shopping Centre Unit Trust and the Fareham Property Partnership.
2. Hercules Unit Trust joint ventures and sub-funds includes 50% of the results of Deepdale Co-Ownership Trust, Fort Kinnaird Limited Partnership and Valentine
Co-Ownership Trust and 41.25% of Birstall Co-Ownership Trust. The balance sheet shows 50% of the assets of these joint ventures and sub-funds.
3. Included in the column headed ‘Other joint ventures and funds’ are contributions from the following: BL Goodman Limited Partnership, The Aldgate Place Limited
Partnership, Bluebutton Property Management UK Limited, City of London Office Unit Trust and Pillar Retail Europark Fund (PREF). The Group’s ownership share of PREF is
65%, however as the Group is not able to exercise control over significant decisions of the fund, the Group equity accounts for its interest in PREF.
4. Revenue includes gross rental income at 100% share of £310m (2017/18: £385m).
172
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British Land | Annual Report and Accounts 2020
British Land Annual Report and Accounts 2020
The SouthGate Limited
Partnership
Aviva
Investors
Shopping
Centres
50%
USS
joint
ventures1
Universities
Superannuation
Scheme Group PLC
Shopping
Centres
50%
£m
18
(4)
14
–
(1)
13
(25)
–
–
(12)
–
(12)
–
(12)
(6)
5
£m
252
1
9
262
(3)
–
–
(28)
(31)
231
116
£m
14
(5)
9
–
–
9
(15)
–
–
(6)
–
(6)
–
(6)
(3)
4
£m
238
1
6
245
(4)
–
(30)
–
(34)
211
105
Hercules Unit Trust
joint ventures
and sub-funds2
Other
joint ventures
and funds3
Total
2019
Total
Group share
2019
Retail
Parks
Various
£m
33
(8)
25
(1)
(1)
23
(52)
(2)
(7)
(38)
–
(38)
–
(38)
(19)
13
£m
456
6
13
475
(11)
–
–
–
(11)
464
232
£m
–
(1)
(1)
–
–
(1)
(1)
–
5
3
–
3
–
3
2
–
£m
–
40
5
45
(10)
–
(6)
8
(8)
37
18
£m
393
(102)
291
(2)
(116)
173
(127)
(42)
4
8
4
12
36
48
25
321
£m
7,202
55
323
7,580
(170)
(2,250)
(900)
(40)
(3,360)
4,220
2,110
£m
196
(51)
145
(1)
(58)
86
(63)
(21)
3
5
2
7
18
25
–
–
£m
3,601
27
162
3,790
(85)
(1,125)
(450)
(20)
(1,680)
2,110
The borrowings of joint ventures and funds and their subsidiaries are non-recourse to the Group. All joint ventures are incorporated in the United Kingdom, with the exception
of Broadgate REIT Limited and the Eden Walk Shopping Centre Unit Trust which are incorporated in Jersey. Of the funds, the Hercules Unit Trust (HUT) joint ventures and
sub-funds are incorporated in Jersey and PREF in Luxembourg.
These financial statements include the results and financial position of the Group’s interest in the Fareham Property Partnership, the Aldgate Place Limited Partnership, the BL
Goodman Limited Partnership and the Gibraltar Limited Partnership. Accordingly, advantage has been taken of the exemptions provided by Regulation 7 of the Partnership
(Accounts) Regulations 2008 not to attach the partnership accounts to these financial statements.
British Land | Annual Report and Accounts 2020
British Land Annual Report and Accounts 2020
173
173
FINANCIAL STATEMENTS CONTINUED
Notes to the accounts continued
11 Joint ventures and funds continued
Operating cash flows of joint ventures and funds (Group share)
Rental income received from tenants
Operating expenses paid to suppliers and employees
Cash generated from operations
Interest paid
Interest received
UK corporation tax paid
Cash inflow from operating activities
Cash inflow from operating activities deployed as:
(Deficit) surplus cash retained within joint ventures and funds
Revenue distributions per consolidated statement of cash flows
Revenue distributions split between controlling and non-controlling interests
Attributable to non-controlling interests
Attributable to shareholders of the Company
2020
£m
131
(27)
104
(56)
1
(2)
47
(2)
49
2
47
12 Other investments
At 1 April
Additions
Transfers / disposals
Revaluation
Depreciation / amortisation
At 31 March
Fair value
through
profit or loss
£m
114
4
–
(7)
–
111
2020
Amortised
cost
£m
5
2
(4)
–
–
3
Intangible
assets
£m
10
4
–
–
(3)
11
Fair value
through
profit or loss
£m
112
–
–
2
–
114
Total
£m
129
10
(4)
(7)
(3)
125
2019
Amortised
cost
£m
28
8
(27)
(4)
–
5
Intangible
assets
£m
10
4
–
–
(4)
10
2019
£m
160
(23)
137
(70)
1
(2)
66
7
59
3
56
Total
£m
150
12
(27)
(2)
(4)
129
Included within fair value through profit or loss is £93m (2018/19: £100m) comprising interests as a trust beneficiary. The trust’s assets
comprise freehold reversions in a pool of commercial properties, comprising Sainsbury’s superstores. The interest, categorised as
Level 3 in the fair value hierarchy, is subject to the same inputs as those disclosed in Note 10, and its fair value was determined by the
Directors, supported by an external valuation. The remaining amounts included in the fair value through profit or loss relate to private
equity/venture capital investments of £2m (2019/18: £nil) which are categorised as Level 3 in the fair value hierarchy and government
bonds of £16m (2018/19: £14m) which are classified as Level 1. The fair value of private equity/venture capital investments is determined
by the Directors.
174
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British Land Annual Report and Accounts 2020
13 Debtors
Trade and other debtors
Prepayments and accrued income
Rental deposits
2020
£m
29
10
17
56
2019
£m
34
9
14
57
Trade and other debtors are shown after deducting a provision for bad and doubtful debts of £14m (2018/19: £6m). The provision for
doubtful debts is calculated as an expected credit loss on trade and other debtors in accordance with IFRS 9 (see Note 1). The charge to the
income statement in relation to write-offs and provisions made against doubtful debts was £8m (2018/19: £1m).
The expected credit loss is recognised on initial recognition of a debtor and is reassessed at each reporting period. In order to calculate
the expected credit loss, the Group applies a forward-looking outlook to historic default rates. In the current reporting period, the
forward-looking outlook has considered the impacts of Covid-19. The historic default rates used are specific to how many days past due
a receivable is. Specific provisions are also made in excess of the expected credit loss where information is available to suggest that a
higher provision than the expected credit loss is required. In the current reporting period, an additional review of tenant debtors was
undertaken to assess recoverability in light of the Covid-19 pandemic.
The Directors consider that the carrying amount of trade and other debtors is approximate to their fair value. There is no concentration
of credit risk with respect to trade debtors as the Group has a large number of customers who are paying their rent in advance. Further
details about the Group’s credit risk management practices are disclosed in Note 17.
14 Creditors
Trade creditors
Other taxation and social security
Accruals
Deferred income
Lease liabilities
Rental deposits due to tenants
2020
£m
55
27
89
58
7
17
253
2019
£m
94
28
82
71
–
14
289
Trade creditors are interest-free and have settlement dates within one year. The Directors consider that the carrying amount of trade
and other creditors is approximate to their fair value.
15 Other non-current liabilities
Lease liabilities
2020
£m
156
156
2019
£m
92
92
During the current financial period, the Group adopted the new accounting standard IFRS 16, Leases. The lease liabilities recognised as
a result of IFRS 16 represent £40m of the total in the table above and £7m of lease liabilities disclosed in Note 14.
British Land | Annual Report and Accounts 2020
British Land Annual Report and Accounts 2020
175
175
FINANCIAL STATEMENTS CONTINUED
Notes to the accounts continued
16 Deferred tax
The movement on deferred tax is as shown below:
Deferred tax assets year ended 31 March 2020
Interest rate and currency derivative revaluations
Other timing differences
Deferred tax liabilities year ended 31 March 2020
Property and investment revaluations
Net deferred tax liabilities
1 April
2019
£m
1
6
7
Debited to
income1
£m
(1)
(1)
(2)
Credited
to equity2
£m
–
–
–
31 March
2020
£m
–
5
5
£m
(6)
(6)
1
£m
–
–
(2)
£m
–
–
–
£m
(6)
(6)
(1)
1. A £1m credit in respect of the deferred tax asset, credited to income, results from the change in the tax rate used to calculate the deferred tax to 19% (2018/19: 17%).
2. A £1m debit in respect of the deferred tax liability, debited to equity, results from the change in the tax rate used to calculate deferred tax to 19% (2018/19: 17%).
Deferred tax assets year ended 31 March 2019
Interest rate and currency derivative revaluations
Other timing differences
Deferred tax liabilities year ended 31 March 2019
Property and investment revaluations
Net deferred tax assets
1 April
2018
£m
4
7
11
Debited to
income
£m
(3)
(1)
(4)
Credited
to equity
£m
–
–
–
31 March
2019
£m
1
6
7
£m
(7)
(7)
4
£m
–
–
(4)
£m
1
1
1
£m
(6)
(6)
1
The following corporation tax rates have been substantively enacted: 19% effective from 1 April 2017. The deferred tax assets and
liabilities have been calculated at the tax rate effective in the period that the tax is expected to crystallise.
The Group has recognised a deferred tax asset calculated at 19% (2018/19: 17%) of £4m (2018/19: £6m) in respect of capital losses from
previous years available for offset against future capital profit. Further unrecognised deferred tax assets in respect of capital losses of
£135m (2018/19: £123m) exist at 31 March 2020.
The Group has recognised deferred tax assets on derivative revaluations to the extent that future matching taxable profits are expected
to arise. At 31 March 2020, the Group had an unrecognised deferred tax asset calculated at 19% (2018/19: 17%) of £52m (2018/19: £49m)
in respect of UK revenue tax losses from previous years.
Under the REIT regime, development properties which are sold within three years of completion do not benefit from tax exemption.
At 31 March 2020, the value of such properties is £254m (2018/19: £148m) and if these properties were to be sold and no tax exemption
was available, the tax arising would be £21m (2018/19: £11m).
176
176
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British Land Annual Report and Accounts 2020
Footnote
1
2
2
2
2
3
4,5
17 Net debt
Secured on the assets of the Group
5.264% First Mortgage Debenture Bonds 2035
5.0055% First Mortgage Amortising Debentures 2035
5.357% First Mortgage Debenture Bonds 2028
Bank loans
Loan notes
Unsecured
5.50% Senior Notes 2027
4.635% Senior US Dollar Notes 2021
4.766% Senior US Dollar Notes 2023
5.003% Senior US Dollar Notes 2026
3.81% Senior Notes 2026
3.97% Senior Notes 2026
0% Convertible Bond 2020
2.375% Sterling Unsecured Bond 2029
4.16% Senior US Dollar Notes 2025
2.67% Senior Notes 2025
2.75% Senior Notes 2026
Floating Rate Senior Notes 2028
Floating Rate Senior Notes 2034
Bank loans and overdrafts
Gross debt
Interest rate and currency derivative liabilities
Interest rate and currency derivative assets
Cash and short term deposits
Total net debt
Net debt attributable to non-controlling interests
Net debt attributable to shareholders of the Company
Amounts payable under leases (Notes 14 and 15)
Total net debt (including lease liabilities)
Net debt attributable to non-controlling interests (including
lease liabilities)
Net debt attributable to shareholders of the Company
(including lease liabilities)
1. These are non-recourse borrowings with no recourse for repayment to other companies or assets in the Group.
Hercules Unit Trust
2020
£m
375
91
249
515
–
1,230
–
180
117
80
113
115
347
298
89
37
37
80
102
677
2,272
3,502
169
(231)
(193)
3,247
(107)
3,140
163
3,410
2019
£m
368
94
252
512
2
1,228
99
168
106
69
111
113
343
298
78
37
37
80
–
264
1,803
3,031
130
(154)
(242)
2,765
(104)
2,661
92
2,857
(112)
(109)
3,298
2,748
2020
£m
515
515
2019
£m
512
512
2. Principal and interest on these borrowings were fully hedged into Sterling at a floating rate at the time of issue.
3. The principal amount of gross debt at 31 March 2020 was £3,294m (2018/19: £2,881m). Included in this is the principal amount of secured borrowings and other borrowings of
non-recourse companies of £1,156m of which the borrowings of the partly-owned subsidiary, Hercules Unit Trust, not beneficially owned by the Group are £113m.
4. Included within cash and short term deposits is the cash and short term deposits of Hercules Unit Trust, of which £6m is the proportion not beneficially owned by the Group.
5. Cash and deposits not subject to a security interest amount to £173m (2018/19: £228m).
British Land | Annual Report and Accounts 2020
British Land Annual Report and Accounts 2020
177
177
FINANCIAL STATEMENTS CONTINUED
Notes to the accounts continued
17 Net debt continued
Maturity analysis of net debt
Repayable: within one year and on demand
Between: one and two years
two and five years
five and ten years
ten and fifteen years
fifteen and twenty years
Gross debt
Interest rate and currency derivatives
Cash and short term deposits
Net debt
2020
£m
637
188
829
1,141
107
600
2,865
3,502
(62)
(193)
3,247
2019
£m
99
710
644
808
305
465
2,932
3,031
(24)
(242)
2,765
0% Convertible bond 2015 (maturity 2020)
On 9 June 2015, British Land (White) 2015 Limited (the 2015 Issuer), a wholly-owned subsidiary of the Group, issued £350 million zero
coupon guaranteed convertible bonds due 2020 (the 2015 bonds) at par. The 2015 Issuer is fully guaranteed by the Company in respect
of the 2015 bonds.
Subject to their terms, the 2015 bonds are convertible into preference shares of the 2015 Issuer which are automatically transferred to
the Company in exchange for ordinary shares in the Company or, at the Company’s election, any combination of ordinary shares and
cash. Bondholders may exercise their conversion right at any time up to but excluding the seventh dealing day before 9 June 2020 (the
maturity date), a bondholder may convert at any time.
The initial exchange price was 1103.32p per ordinary share. The exchange price is adjusted based on certain events (such as the
Company paying dividends in any quarter above 3.418p per ordinary share). As at 31 March 2020 the exchange price was 975.09p per
ordinary share.
From 30 June 2018, the Company has the option to redeem the 2015 bonds at par if the Company’s share price has traded above 130%
of the exchange price for a specified period, or at any time once 85% by nominal value of the 2015 bonds have been converted,
redeemed, or purchased and cancelled. The 2015 bonds will be redeemed at par on 9 June 2020 (the maturity date) if they have not
already been converted, redeemed or purchased and cancelled.
The Group has the ability to repay these bonds via existing committed undrawn credit facilities.
Fair value and book value of net debt
Debentures and unsecured bonds
Convertible bonds
Bank debt and other floating rate debt
Gross debt
Interest rate and currency derivative liabilities
Interest rate and currency derivative assets
Cash and short term deposits
Net debt
Net debt attributable to non-controlling interests
Net debt attributable to shareholders of the Company
Fair value
£m
2,022
347
1,197
3,566
169
(231)
(193)
3,311
(107)
3,204
2020
Book value
£m
1,964
347
1,191
3,502
169
(231)
(193)
3,247
(107)
3,140
Difference
£m
58
–
6
64
–
–
–
64
–
64
Fair value
£m
2,036
343
784
3,163
130
(154)
(242)
2,897
(105)
2,792
2019
Book value
£m
1,910
343
778
3,031
130
(154)
(242)
2,765
(104)
2,661
Difference
£m
126
–
6
132
–
–
–
132
(1)
131
The fair values of debentures, unsecured bonds and the convertible bond have been established by obtaining quoted market prices
from brokers. The bank debt and other floating rate debt has been valued assuming it could be renegotiated at contracted margins.
The derivatives have been valued by calculating the present value of expected future cash flows, using appropriate market discount rates,
by an independent treasury adviser.
Short term debtors and creditors and other investments have been excluded from the disclosures on the basis that the fair value is
equivalent to the book value. The fair value hierarchy level of debt held at amortised cost is level 2 (as defined in Note 10).
178
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British Land | Annual Report and Accounts 2020
British Land Annual Report and Accounts 2020
17 Net debt continued
Group loan to value (LTV)
Group loan to value (LTV)
Principal amount of gross debt
Less debt attributable to non-controlling interests
Less cash and short term deposits (balance sheet)
Plus cash attributable to non-controlling interests
Total net debt for LTV calculation
Group property portfolio valuation (Note 10)
Investments in joint ventures and funds (Note 11)
Other investments and property, plant and equipment (balance sheet)
Less property and investments attributable to non-controlling interests
Total assets for LTV calculation
Proportionally consolidated loan to value (LTV)
Proportionally consolidated loan to value (LTV)
Principal amount of gross debt
Less debt attributable to non-controlling interests
Less cash and short term deposits
Plus cash attributable to non-controlling interests
Total net debt for proportional LTV calculation
Group property portfolio valuation (Note 10)
Share of property of joint ventures and funds (Note 10)
Other investments and property, plant and equipment (balance sheet)
Less property attributable to non-controlling interests
Total assets for proportional LTV calculation
2020
£m
28.9%
3,294
(113)
(193)
6
2,994
8,106
2,358
131
(221)
10,374
2020
£m
34.0%
4,271
(113)
(322)
6
3,842
8,106
3,272
131
(221)
11,288
2019
£m
22.2%
2,881
(112)
(242)
9
2,536
9,028
2,560
151
(317)
11,422
2019
£m
28.1%
4,007
(112)
(402)
9
3,502
9,028
3,605
151
(317)
12,467
British Land | Annual Report and Accounts 2020
British Land Annual Report and Accounts 2020
179
179
FINANCIAL STATEMENTS CONTINUED
Notes to the accounts continued
17 Net debt continued
British Land Unsecured Financial Covenants
The two financial covenants applicable to the Group unsecured debt including convertible bonds are shown below:
Net Borrowings not to exceed 175% of Adjusted Capital and Reserves
Principal amount of gross debt
Less the relevant proportion of borrowings of the partly-owned subsidiary/non-controlling interests
Less cash and deposits (balance sheet)
Plus the relevant proportion of cash and deposits of the partly-owned subsidiary/non-controlling interests
Net Borrowings
Share capital and reserves (balance sheet)
EPRA deferred tax adjustment (EPRA Table A)
Trading property surpluses (EPRA Table A)
Exceptional refinancing charges (see below)
Fair value adjustments of financial instruments (EPRA Table A)
Less reserves attributable to non-controlling interests (balance sheet)
Adjusted Capital and Reserves
2020
£m
40%
3,294
(113)
(193)
6
2,994
7,147
6
13
199
141
(112)
7,394
2019
£m
29%
2,881
(112)
(242)
9
2,536
8,689
5
29
216
113
(211)
8,841
In calculating Adjusted Capital and Reserves for the purpose of the unsecured debt financial covenants, there is an adjustment of
£199m (2018/19: £216m) to reflect the cumulative net amortised exceptional items relating to the refinancings in the years ended
31 March 2005, 2006 and 2007.
Net Unsecured Borrowings not to exceed 70% of Unencumbered Assets
Principal amount of gross debt
Less cash and deposits not subject to a security interest (being £173m less the relevant proportion of cash and deposits
of the partly-owned subsidiary/non-controlling interests of £4m)
Less principal amount of secured and non-recourse borrowings
Net Unsecured Borrowings
Group property portfolio valuation (Note 10)
Investments in joint ventures and funds (Note 11)
Other investments and property, plant and equipment (balance sheet)
Less investments in joint ventures
Less encumbered assets (Note 10)
Unencumbered Assets
2020
£m
30%
2019
£m
21%
3,294
2,881
(169)
(1,156)
1,969
8,106
2,358
131
(2,358)
(1,733)
6,504
(221)
(1,158)
1,502
9,028
2,560
151
(2,560)
(2,134)
7,045
180
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British Land | Annual Report and Accounts 2020
British Land Annual Report and Accounts 2020
17 Net debt continued
Reconciliation of movement in Group net debt for the year ended 31 March 2020
Short term borrowings
Long term borrowings
Derivatives1
Total liabilities from financing activities4
Cash and cash equivalents
Net debt
2019
£m
99
2,932
(24)
3,007
(242)
2,765
Cash flows
£m
(121)
507
4
390
49
439
Transfers3
£m
637
(637)
–
–
–
–
Reconciliation of movement in Group net debt for the year ended 31 March 2019
Short term borrowings
Long term borrowings
Derivatives2
Total liabilities from financing activities5
Cash and cash equivalents
Net debt
2018
£m
27
3,101
23
3,151
(105)
3,046
Cash flows
£m
(25)
(105)
(2)
(132)
(137)
(269)
Transfers3
£m
99
(99)
–
–
–
–
Foreign
exchange
£m
–
21
(21)
–
–
–
Foreign
exchange
£m
(2)
(22)
24
–
–
–
Arrangement
costs
amortisation
£m
–
5
–
5
–
5
Fair value
£m
22
37
(21)
38
–
38
Arrangement
costs
amortisation
£m
–
4
–
4
–
4
Fair value
£m
–
53
(69)
(16)
–
(16)
2020
£m
637
2,865
(62)
3,440
(193)
3,247
2019
£m
99
2,932
(24)
3,007
(242)
2,765
1. Cash flows on derivatives include £17m of net receipts on derivative interest.
2. Cash flows on derivatives include £17m of net receipts on derivative interest.
3. Transfers comprises debt maturing from long term to short term borrowings.
4. Cash flows of £390m shown above represents net cash flows on capital payments in respect of interest rate derivative of £14m, decrease in bank and other borrowings of
£189m and drawdowns on bank and other borrowings of £576m shown in the consolidated statement of cash flows, along with £17m of net receipts on derivative interest.
5. Cash flows of £132m shown above represents net cash flows on interest rate derivative closeouts of £19m, decrease in bank and other borrowings of £576m and
drawdowns on bank and other borrowings of £446m shown in the consolidated statement of cash flows, along with £17m of net receipts on derivative interest.
Fair value hierarchy
The table below provides an analysis of financial instruments carried at fair value, by the valuation method. The fair value hierarchy
levels are defined in Note 10.
Interest rate and currency derivative assets
Other investments – fair value through profit
or loss (Note 12)
Assets
Interest rate and currency derivative liabilities
Convertible bonds
Liabilities
Total
Level 1
£m
–
(16)
(16)
–
347
347
331
2020
Level 2
£m
(231)
Level 3
£m
–
–
(231)
169
–
169
(62)
(95)
(95)
–
–
–
(95)
Total
£m
(231)
(111)
(342)
169
347
516
174
Level 1
£m
–
(14)
(14)
–
343
343
329
2019
Level 2
£m
(154)
–
(154)
130
–
130
(24)
Level 3
£m
–
(100)
(100)
–
–
–
(100)
Total
£m
(154)
(114)
(268)
130
343
473
205
British Land | Annual Report and Accounts 2020
British Land Annual Report and Accounts 2020
181
181
FINANCIAL STATEMENTS CONTINUED
Notes to the accounts continued
17 Net debt continued
Categories of financial instruments
Financial assets
Amortised cost
Cash and short term deposits
Trade and other debtors (Note 13)
Other investments (Note 12)
Fair value through profit or loss
Derivatives in designated fair value hedge accounting relationships1,2
Derivatives not in designated hedge accounting relationships
Other investments (Note 12)
Financial liabilities
Amortised cost
Creditors
Gross debt
Lease liabilities (Notes 14 and 15)
Fair value through profit or loss
Derivatives not in designated accounting relationships
Convertible bond
Fair value through other comprehensive income
Derivatives in designated cash flow hedge accounting relationships1,2
Total
2020
£m
193
46
3
209
22
111
584
(180)
(3,155)
(163)
(167)
(347)
(2)
(4,014)
(3,430)
2019
£m
242
48
5
148
6
114
563
(208)
(2,688)
(92)
(126)
(343)
(4)
(3,461)
(2,898)
1. Derivative assets and liabilities in designated hedge accounting relationships sit within the derivative assets and derivative liabilities balances of the consolidated
balance sheet.
2. The fair value of derivative assets in designated hedge accounting relationships represents the accumulated amount of fair value hedge adjustments on hedged items.
Gains and losses on financial instruments, as classed above, are disclosed in Note 6 (net financing costs), Note 13 (debtors),
the consolidated income statement and the consolidated statement of comprehensive income. The Directors consider that the
carrying amounts of other investments and head leases payable are approximate to their fair value, and that the carrying amounts
are recoverable.
Capital risk management
The capital structure of the Group consists of net debt and equity attributable to the equity holders of The British Land Company PLC,
comprising issued capital, reserves and retained earnings. Risks relating to capital structure are addressed within Managing risk in
delivering our strategy on pages 78 to 87. The Group’s objectives, policies and processes for managing debt are set out in the Financial
policies and principles on pages 75 to 77.
Interest rate risk management
The Group uses interest rate swaps and caps to hedge exposure to the variability in cash flows on floating rate debt, such as revolving
bank facilities, caused by movements in market rates of interest. The Group’s objectives and processes for managing interest rate risk
are set out in the Financial policies and principles on pages 75 to 77.
At 31 March 2020, the fair value of these derivatives is a net liability of £166m. Interest rate swaps with a fair value of (£2m) have been
designated as cash flow hedges under IFRS 9.
The ineffectiveness recognised in the income statement on cash flow hedges in the year ended 31 March 2020 was £nil (2018/19: £nil).
182
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British Land Annual Report and Accounts 2020
17 Net debt continued
The cash flows occur and are charged to profit and loss until the maturity of the hedged debt. The table below summarises variable rate
debt hedged at 31 March 2020.
Variable rate debt hedged
Outstanding: at one year
at two years
at five years
at ten years
2020
£m
855
1,005
250
250
2019
£m
1,155
1,005
250
250
Fair value hedged debt
The Group uses interest rate swaps to hedge exposure on fixed rate financial liabilities caused by movements in market rates
of interest.
At 31 March 2020, the fair value of these derivatives is a net asset of £228m. Interest rate swaps with a fair value of £209m have been
designated as fair value hedges under IFRS 9 (2018/19: asset of £148m).
The cross currency swaps of the 2021/2023/2025/2026 US Private Placements fully hedge the foreign exchange exposure at an average
floating rate of 142 basis points above LIBOR. These have been designated as fair value hedges of the US Private Placements.
Interest rate profile – including effect of derivatives
Fixed or capped rate
Variable rate (net of cash)
2020
£m
2,317
930
3,247
2019
£m
2,222
543
2,765
All the debt is effectively Sterling denominated except for £5m of USD debt of which £5m is at a variable rate (2018/19: £1m).
At 31 March 2020 the weighted average interest rate of the Sterling fixed rate debt is 3.2% (2018/19: 3.4%). The weighted average period
for which the rate is fixed is 8.0 years (2018/19: 8.9 years). The floating rate debt is set for periods of the Company’s choosing at the
relevant LIBOR (or similar) rate.
Proportionally consolidated net debt at fixed or capped rates of interest
Spot basis
Average over next five-year forecast period
Sensitivity table – market rate movements
Movement in interest rates (bps) 1
Impact on underlying annual profit (£m)
Movement in medium and long term swap rates (bps) 2
Impact on cash flow hedge and non-hedge accounted derivative
valuations (£m)
Impact on convertible bond valuations (£m) 3
2020
81%
75%
2019
87%
63%
2020
Increase
58
(12)
173
Decrease
(58)
15
(173)
2019
Increase
98
(9)
173
106
1
(81)
(1)
65
7
Decrease
(85)
9
(173)
(62)
(7)
1. The movement used for sensitivity analysis represents the largest annual change in the three-month Sterling LIBOR over the last ten years. This assumes LIBOR doesn’t fall
below 0%.
2. This movement used for sensitivity analysis represents the largest annual change in the seven-year Sterling swap rate over the last ten years.
3. The 0% 2015 Convertible Bond is designated as fair value through profit or loss. Principal components of the market value of this bond include British Land’s share price
volatility and market interest rates.
British Land | Annual Report and Accounts 2020
British Land Annual Report and Accounts 2020
183
183
FINANCIAL STATEMENTS CONTINUED
Notes to the accounts continued
17 Net debt continued
Foreign currency risk management
The Group’s policy is to have no material unhedged net assets or liabilities denominated in foreign currencies. The currency risk on
overseas investments is hedged via foreign currency denominated borrowings and derivatives. The Group has adopted net investment
hedging in accordance with IFRS 9 and therefore the portion of the gain or loss on the hedging instrument that is determined to be an
effective hedge is recognised directly in equity. The ineffective portion of the gain or loss on the hedging instrument is recognised
immediately in the income statement.
The table below shows the carrying amounts of the Group’s foreign currency denominated assets and liabilities. Provided contingent tax
on overseas investments is not expected to occur it will be ignored for hedging purposes. Based on the 31 March 2020 position a 27%
appreciation (largest annual change over the last ten years) in the USD relative to Sterling would result in a £nil change (2018/19: £nil) in
reported profits.
Euro denominated
USD denominated
Assets
Liabilities
2020
£m
–
4
2019
£m
3
–
2020
£m
–
5
2019
£m
3
1
Credit risk management
The Group’s approach to credit risk management of counterparties is referred to in Financial policies and principles on pages 75 to 77
and the risks addressed within Managing risk in delivering our strategy on pages 78 to 87. The carrying amount of financial assets
recorded in the financial statements represents the Group’s maximum exposure to credit risk without taking account of the value of any
collateral obtained.
Banks and financial institutions:
Cash and short term deposits at 31 March 2020 amounted to £193m (2018/19: £242m). Deposits and interest rate deposits were placed
with financial institutions with BBB+ or better credit ratings.
At 31 March 2020, the fair value of all interest rate derivative assets was £231m (2018/19: £154m).
At 31 March 2020, prior to taking into account any offset arrangements, the largest combined credit exposure to a single counterparty
arising from money market deposits, liquid investments and derivatives was £94m (2018/19: £68m). This represents 0.8% (2018/19:
0.6%) of gross assets.
The deposit exposures are with UK banks and UK branches of international banks.
Trade receivables:
Trade receivables are shown in the balance sheet net of expected credit losses made for irrecoverable debtors. Expected credit losses
are calculated on initial recognition of trade receivables in accordance with IFRS 9, taking into account historic and forward-looking
information. See Note 13 for further details.
Liquidity risk management
The Group’s approach to liquidity risk management is discussed in Financial policies and principles on pages 75 to 77, and the risks
addressed within Managing risk in delivering our strategy on pages 78 to 87.
The following table presents a maturity profile of the contracted undiscounted cash flows of financial liabilities based on the earliest
date on which the Group can be required to pay. The table includes both interest and principal flows. Where the interest payable is not
fixed, the amount disclosed has been determined by reference to the projected interest rates implied by yield curves at the reporting
date. For derivative financial instruments that settle on a net basis (e.g. interest rate swaps) the undiscounted net cash flows are shown
and for derivatives that require gross settlement (e.g. cross currency swaps) the undiscounted gross cash flows are presented. Where
payment obligations are in foreign currencies, the spot exchange rate ruling at the balance sheet date is used. Trade creditors and
amounts owed to joint ventures, which are repayable within one year, have been excluded from the analysis.
The Group expects to meet its financial liabilities through the various available liquidity sources, including a secure rental income
profile, asset sales, undrawn committed borrowing facilities and, in the longer term, debt refinancings.
The future aggregate minimum rentals receivable under non-cancellable operating leases are shown in the table on the following page.
Income from joint ventures and funds is not included on the following page. Additional liquidity will arise from letting space in properties
under construction as well as from distributions received from joint ventures and funds.
184
184
British Land | Annual Report and Accounts 2020
British Land Annual Report and Accounts 2020
17 Net debt continued
Liquidity risk management continued
Debt1
Interest on debt
Derivative payments
Lease liability payments
Total payments
Derivative receipts
Net payment
Operating leases with tenants
Liquidity (deficit) surplus
Cumulative liquidity deficit
Debt1
Interest on debt
Derivative payments
Head lease payments
Total payments
Derivative receipts
Net payment
Operating leases with tenants
Liquidity surplus (deficit)
Cumulative liquidity surplus (deficit)
Within
one year
£m
638
90
11
11
750
(31)
719
406
(313)
(313)
Within
one year
£m
100
89
11
3
203
(26)
177
413
236
236
Following
year
£m
179
81
156
10
426
(207)
219
342
123
(190)
Following
year
£m
703
84
13
3
803
(27)
776
387
(389)
(153)
2020
Three to
five years
£m
581
215
132
25
953
(179)
774
724
(50)
(240)
2019
Three to
five years
£m
635
212
267
9
1,123
(334)
789
876
87
(66)
Over five
years
£m
1,980
356
258
465
3,059
(193)
2,866
911
(1,955)
(2,195)
Over five
years
£m
1,505
386
243
382
2,516
(180)
2,336
1,307
(1,029)
(1,095)
Total
£m
3,378
742
557
511
5,188
(610)
4,578
2,383
(2,195)
Total
£m
2,943
771
534
397
4,645
(567)
4,078
2,983
(1,095)
1. Gross debt of £3,502m (2018/19: £3,031m) represents the total of £3,378m (2018/19: £2,943m), less unamortised issue costs of £10m (2018/19: £12m), plus fair value
adjustments to debt of £134m (2018/19: £100m).
Any short term liquidity gap between the net payments required and the rentals receivable can be met through other liquidity sources
available to the Group, such as committed undrawn borrowing facilities. The Group currently holds cash and short term deposits of
£193m of which £173m is not subject to a security interest (see footnote 5 to net debt table on page 177. Further liquidity can be
achieved through sales of property assets or investments and debt refinancings.
The Group’s property portfolio is valued externally at £8,106m and the share of joint ventures and funds’ property is valued at £3,288m.
The committed undrawn borrowing facilities available to the Group are a further source of liquidity. The maturity profile of committed
undrawn borrowing facilities is shown below.
Maturity of committed undrawn borrowing facilities
Maturity date: over five years
between four and five years
between three and four years
Total facilities available for more than three years
Between two and three years
Between one and two years
Within one year
Total
2020
£m
50
1,046
–
1,096
20
–
–
1,116
2019
£m
275
832
86
1,193
435
–
–
1,628
The above facilities are comprised of British Land undrawn facilities of £1,096m plus undrawn facilities of Hercules Unit Trust
totalling £20m.
British Land | Annual Report and Accounts 2020
British Land Annual Report and Accounts 2020
185
185
FINANCIAL STATEMENTS CONTINUED
Notes to the accounts continued
18 Leasing
Operating leases with tenants
The Group leases out all of its investment properties under operating leases with a weighted average lease length of six years (2018/19:
six years). The future aggregate minimum rentals receivable under non-cancellable operating leases are as follows:
Less than one year
Between one and two years
Between three and five years
Between six and ten years
Between eleven and fifteen years
Between sixteen and twenty years
After twenty years
Total
2020
£m
406
342
724
638
192
52
29
2,383
2019
£m
413
387
876
792
314
111
90
2,983
Lease commitments
The table below reconciles the difference between the presentation of operating leases under IAS 17 and IFRS 16 as at 31 March 2019.
Operating lease commitments as at 31 March 2019
Discounted using the incremental borrowing rate at the date of initial application
Add: finance lease liabilities recognised as at 31 March 2019
Lease liability recognised at 1 April 2019
58
55
92
147
The Group’s leasehold investment properties are typically under non-renewable leases without significant restrictions. Lease liabilities
are payable as follows; no contingent rents were payable in either period. The lease payments mainly relate to head leases where the
Group does not own the freehold of a property. The lease payments from the year ending 31 March 2020 also include short term leases
relating to management agreements between the Group and the Broadgate JV, which are in substance lease agreements, as well as
some immaterial property leases the Group holds as lessee.
British Land Group
Less than one year
Between one and two years
Between two and five years
More than five years
Total
Less future finance charges
Present value of lease obligations
2020
2019
Minimum
lease
payments
£m
11
10
25
465
511
(348)
163
Interest
£m
Principal
£m
4
4
12
328
348
7
6
13
137
163
Minimum
lease
payments
£m
3
3
9
382
397
(305)
92
Interest
£m
Principal
£m
3
3
9
290
305
–
–
–
92
92
186
186
British Land | Annual Report and Accounts 2020
British Land Annual Report and Accounts 2020
19 Dividends
As announced on 26 March 2020, the Board deems it prudent to temporarily suspend future dividend payments, including the third
interim and final dividend that were due for payment in May and August respectively.
A REIT is required to pay Property Income Distributions (PIDs) of at least 90% of the taxable profits from its UK property rental business
within twelve months of the end of each accounting period and we are discussing an extension to this deadline with HMRC. While we
intend to pay the required PID amount within the agreed extended deadline, we have agreed with HMRC that any underpayment of the
PID required would instead be subject to corporation tax at 19% provided that it arises as a consequence of Covid-19. The Group
comfortably passes all other REIT tests and intends to remain a REIT for the foreseeable future.
PID dividends are paid, as required by REIT legislation, after deduction of withholding tax at the basic rate (currently 20%), where appropriate.
Certain classes of shareholders may be able to elect to receive dividends gross. Please refer to our website www.britishland.com/dividends
for details.
Dividend
2020 2nd interim
2020 1st interim
2019 4th interim
2019 3rd interim
2019 2nd interim
2019 1st interim
2018 4th interim
2018 3rd interim
Payment date
Current year dividends
07.02.2020
08.11.2019
Prior year dividends
02.08.2019
03.05.2019
08.02.2019
09.11.2018
03.08.2018
04.05.2018
Dividends in consolidated statement
of changes in equity
Dividends settled in shares
Dividends settled in cash
Timing difference relating to payment
of withholding tax
Dividends in cash flow statement
1. Dividend split half PID, half non-PID
20 Share capital and reserves
Number of ordinary shares in issue at 1 April
Share issues
Repurchased and cancelled
At 31 March
Pence per
share
2020
£m
2019
£m
7.9825
7.9825
15.97
7.751
7.75
7.75
7.75
31.00
7.52
7.52
74
74
73
74
295
–
295
–
295
74
76
74
74
298
–
298
–
298
2020
960,589,072
1,144,135
(23,795,110)
937,938,097
2019
993,857,125
404,377
(33,672,430)
960,589,072
Of the issued 25p ordinary shares, 7,376 shares were held in the ESOP trust (2018/19: 7,376), 11,266,245 shares were held as treasury
shares (2018/19: 11,266,245) and 926,664,476 shares were in free issue (2018/19: 949,315,451). No treasury shares were acquired by the
ESOP trust during the year. All issued shares are fully paid. In the year ended 31 March 2020 the Company repurchased and cancelled
23,795,110 ordinary shares at a weighted average price of 525p.
Hedging and translation reserve
The hedging and translation reserve comprises the effective portion of the cumulative net change in the fair value of cash flow and
foreign currency hedging instruments, as well as all foreign exchange differences arising from the translation of the financial
statements of foreign operations. The foreign exchange differences also include the translation of the liabilities that hedge the
Company’s net investment in a foreign subsidiary.
Revaluation reserve
The revaluation reserve relates to owner-occupied properties and investments in joint ventures and funds.
British Land | Annual Report and Accounts 2020
British Land Annual Report and Accounts 2020
187
187
FINANCIAL STATEMENTS CONTINUED
Notes to the accounts continued
20 Share capital and reserves continued
Merger reserve
This comprises the premium on the share placing in March 2013. No share premium is recorded in the Company’s financial
statements, through the operation of the merger relief provisions of the Companies Act 2006.
At 31 March 2020, options over 3,949,662 ordinary shares were outstanding under employee share option plans. The options had a
weighted average life of 5.9 years. Details of outstanding share options and shares awarded to employees including Executive Directors
are set out below and on the following page:
At 1 April
2019
Granted
Vested but
not exercised
Exercised/
Vested
Lapsed
At 31 March
2020
Exercise
price (pence)
Exercise dates
From
To
574.00
697.00
697.00
608.00
608.00
508.00
508.00
549.00
549.00
435.00
435.00
387.00
446.00
447.00
510.00
575.00
451.00
538.00
563.00
601.00
600.00
617.17
01.09.19
01.09.18
01.09.20
01.09.19
01.09.21
01.09.20
01.09.22
01.09.21
01.09.23
01.09.22
01.09.24
29.06.12
21.12.12
11.06.13
14.12.13
28.06.14
19.12.14
14.09.15
20.12.15
05.08.16
05.12.16
28.06.20
01.03.20
01.03.19
01.03.21
01.03.20
01.03.22
01.03.21
01.03.23
01.03.22
01.03.24
01.03.23
01.03.25
26.09.19
21.12.19
11.06.20
14.12.20
28.06.21
19.12.21
14.09.22
20.12.22
05.08.23
05.12.23
28.06.27
730.50
617.17
681.40
22.06.19
28.06.20
26.06.21
22.06.26
28.06.27
26.06.28
Date of grant
Share options Sharesave Scheme
23.06.14
22.06.15
22.06.15
20.06.16
20.06.16
21.06.17
21.06.17
29.06.18
29.06.18
18.06.19
18.06.19
77,810
516
11,404
31,570
18,747
200,355
67,843
112,254
61,135
–
–
581,634
–
–
–
–
–
–
–
–
–
301,744
156,803
458,547
–
–
–
–
–
–
–
–
–
–
–
–
(11,461)
–
–
–
–
(2,854)
(4,133)
(536)
(691)
–
(689)
(20,364)
(66,349)
(516)
(6,025)
(28,610)
(7,399)
(85,002)
(42,513)
(54,786)
(26,516)
(17,042)
(11,034)
(345,792)
–
–
5,379
2,960
11,348
112,499
21,197
56,932
33,928
284,702
145,080
674,025
Long Term Incentive Plan – options vested, not exercised
29.06.09
21.12.09
11.06.10
14.12.10
28.06.11
19.12.11
14.09.12
20.12.12
05.08.13
05.12.13
28.06.17
2,582
56,938
1,112,008
40,576
799,302
53,848
809,583
46,763
194,410
155,210
26,540
3,297,760
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
(13,497)
– (1,077,750)
(676)
–
(1,912)
–
(2,438)
–
(1,152)
–
(4,340)
–
–
–
–
–
69,672
–
69,672 (1,101,765)
(2,582)
(43,441)
–
(7,047)
(2,191)
(2,793)
(9,628)
(3,410)
(14,160)
(21,632)
–
–
–
34,258
32,853
795,199
48,617
798,803
39,013
180,250
133,578
96,212
(106,884) 2,158,783
Long Term Incentive Plan – unvested options
22.06.16
28.06.17
26.06.18
Total
Weighted average exercise
price of options (pence)
1,214,693
1,130,121
83,942
2,428,756
6,308,150
–
–
–
–
458,547
–
–
–
–
– (1,214,693)
–
(27,537) 1,032,912
83,942
(69,672) (1,242,230) 1,116,854
69,672 (1,191,801) (1,694,906) 3,949,662
(69,672)
–
–
582
435
617
459
676
563
188
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British Land | Annual Report and Accounts 2020
British Land Annual Report and Accounts 2020
20 Share capital and reserves continued
Date of grant
Performance Shares Long Term Incentive Plan
22.06.16
28.06.17
26.06.18
23.07.19
Restricted Share Plan
26.06.18
19.06.19
Matching Share Plan
29.06.16
Total
Weighted average price of shares (pence)
At 1 April
2019
Granted
Exercised/
Vested
Lapsed
At 31 March
2020
Share price
at grant date
(pence)
Vesting date
1,071,555
1,716,702
1,053,360
–
3,841,617
–
–
–
1,079,539
1,079,539
–
– (1,071,555)
(58,993) 1,657,709
–
(16,990) 1,036,370
–
(38,951) 1,040,588
–
– (1,186,489) 3,734,667
730.50
617.17
681.40
535.60
22.06.19
28.06.20
26.06.21
23.07.29
627,982
–
627,982
–
823,762
823,762
–
–
–
590,171
(37,811)
762,293
(61,469)
(99,280) 1,352,464
681.40
26.06.21
293,732
293,732
4,763,331
665
–
–
1,903,301
537
(293,732)
(293,732)
–
–
–
–
– (1,579,501) 5,087,131
609
689
–
604.00
26.06.19
21 Segment information
The Group allocates resources to investment and asset management according to the sectors it expects to perform over the medium
term. Its three principal sectors are Offices, Retail and Canada Water. The Retail sector includes leisure, as this is often incorporated
into Retail schemes. The Other/unallocated sector includes residential properties.
The relevant gross rental income, net rental income, operating result and property assets, being the measures of segment revenue,
segment result and segment assets used by the management of the business, are set out on the following page. Management reviews
the performance of the business principally on a proportionally consolidated basis, which includes the Group’s share of joint ventures
and funds on a line-by-line basis and excludes non-controlling interests in the Group’s subsidiaries. The chief operating decision maker
for the purpose of segment information is the Executive Committee.
Gross rental income is derived from the rental of buildings. Operating result is the net of net rental income, fee income and
administrative expenses. No customer exceeded 10% of the Group’s revenues in either year.
British Land | Annual Report and Accounts 2020
British Land Annual Report and Accounts 2020
189
189
FINANCIAL STATEMENTS CONTINUED
Notes to the accounts continued
21 Segment information continued
Segment result
Offices
Retail
Canada Water
Other/unallocated
Total
2020
£m
166
71
237
145
63
208
146
57
203
2019
£m
150
70
220
139
66
205
132
61
193
2020
£m
236
71
307
189
66
255
193
60
253
2019
£m
260
83
343
238
76
314
235
71
306
2020
£m
2019
£m
2020
£m
2019
£m
9
–
9
8
–
8
3
–
3
9
–
9
9
–
9
4
–
4
4
–
4
4
–
4
4
–
4
4
–
4
(42)
(42)
–
(42)
–
(42)
Gross rental income
British Land Group
Share of joint ventures and
funds
Total
Net rental income
British Land Group
Share of joint ventures and
funds
Total
Operating result
British Land Group
Share of joint ventures and
funds
Total
Reconciliation to Underlying Profit
Operating result
Net financing costs
Underlying Profit
Reconciliation to loss on ordinary activities before taxation
Underlying Profit
Capital and other
Underlying Profit attributable to non-controlling interests
Loss on ordinary activities before taxation
Reconciliation to Group revenue
Gross rental income per operating segment result
Less share of gross rental income of joint ventures and funds
Plus share of gross rental income attributable to non-controlling interests
Gross rental income (Note 3)
Trading property sales proceeds
Service charge income
Management and performance fees (from joint ventures and funds)
Other fees and commissions
Revenue (consolidated income statement)
2020
£m
415
142
557
346
129
475
300
117
417
2020
£m
417
(111)
306
306
(1,434)
12
(1,116)
557
(142)
18
433
87
64
8
21
613
2019
£m
423
153
576
390
142
532
329
132
461
2019
£m
461
(121)
340
340
(671)
12
(319)
576
(153)
16
439
350
76
7
32
904
A reconciliation between net financing costs in the consolidated income statement and net financing costs of £111m (2018/19: £121m)
in the segmental disclosures above can be found within Table A in the supplementary disclosures. Of the total revenues above,
£nil (2018/19: £nil) was derived from outside the UK.
190
190
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British Land Annual Report and Accounts 2020
21 Segment information continued
Segment assets
Offices
2020
£m
2019
£m
Retail
2020
£m
2019
£m
4,470
4,296
2,960
4,053
2,323
6,793
2,012
6,308
913
3,873
1,524
5,577
Property assets
British Land Group
Share of joint ventures and
funds
Total
Reconciliation to net assets
British Land Group
Property assets
Other non-current assets
Non-current assets
Other net current liabilities
Adjusted net debt
Other non-current liabilities
EPRA net assets (diluted)
Non-controlling interests
EPRA adjustments
Net assets
Canada Water
Other/unallocated
2020
£m
364
–
364
2019
£m
303
–
303
2020
£m
147
–
147
2019
£m
Total
2020
£m
2019
£m
109
7,941
8,761
19
128
3,236
11,177
3,555
12,316
2020
£m
11,177
131
11,308
(241)
(3,854)
–
7,213
112
(178)
7,147
2019
£m
12,316
151
12,467
(297)
(3,521)
–
8,649
211
(171)
8,689
22 Capital commitments
The aggregate capital commitments to purchase, construct or develop investment property, for repairs, maintenance or enhancements,
or for the purchase of investments which are contracted for but not provided, are set out below:
British Land and subsidiaries
Share of joint ventures
Share of funds
2020
£m
72
56
–
128
2019
£m
177
111
1
289
23 Related party transactions
Details of transactions with joint ventures and funds are given in Notes 3, 6 and 11. During the year the Group recognised joint venture
management fees of £8m (2018/19: £6m). Details of Directors’ remuneration are given in the Remuneration Report on pages 118 to 133.
Details of transactions with key management personnel are provided in Note 8. Details of transactions with The British Land Group of
Companies Pension Scheme, and other smaller pension schemes, are given in Note 9.
24 Contingent liabilities
Group, joint ventures and funds
The Group, joint ventures and funds have contingent liabilities in respect of legal claims, guarantees and warranties arising in the
ordinary course of business. It is not anticipated that any material liabilities will arise from these contingent liabilities.
A REIT is required to pay Property Income Distributions (PIDs) of at least 90% of the taxable profits from its UK property rental business
within twelve months of the end of each accounting period. Following the temporary suspension of future dividends to best ensure we
can effectively support our customers who are hardest hit and protect the long term value of the business as a result of Covid-19, we
are discussing an extension to this deadline with HMRC. Whilst we intend to pay the required PID amount within the agreed extended
deadline, we have agreed with HMRC that any underpayment of the PID required would instead be subject to corporation tax at 19%
provided that it arises as a consequence of Covid-19. A total of £37m of corporation tax would be due by 31 March 2021 if no further PIDs
were paid by this date in respect of the year to 31 March 2020 and no extension is agreed.
British Land | Annual Report and Accounts 2020
British Land Annual Report and Accounts 2020
191
191
FINANCIAL STATEMENTS CONTINUED
Notes to the accounts continued
25 Subsidiaries with material non-controlling interests
Set out below is summarised financial information for each subsidiary that has non-controlling interests that are material to the Group.
The information below is the amount before intercompany eliminations and represents the consolidated results of the Hercules Unit
Trust group.
Summarised income statement for the year ended 31 March
Loss on ordinary activities after taxation
Attributable to non-controlling interests
Attributable to the shareholders of the Company
Summarised balance sheet as at 31 March
Total assets
Total liabilities
Net assets
Non-controlling interests
Equity attributable to shareholders of the Company
Summarised cash flows
Net decrease in cash and cash equivalents
Cash and cash equivalents at 1 April
Cash and cash equivalents at 31 March
Hercules Unit Trust
2020
£m
(366)
(87)
(279)
2019
£m
(122)
(29)
(93)
Hercules Unit Trust
2020
£m
1,002
(564)
438
(112)
326
2019
£m
1,415
(561)
854
(211)
643
Hercules Unit Trust
2020
£m
(11)
40
29
2019
£m
(3)
43
40
The Hercules Unit Trust is a closed-ended property Unit Trust. The unit price at 31 March 2020 is £280 (2018/19: £563). Non-controlling
interests collectively own 21.9% of units in issue. The British Land Company PLC owns 78.1% of units in issue, each of which confer
equal voting rights, and therefore is deemed to exercise control over the trust.
26 Subsequent events
After the year end, one of the bank facilities in HUT which was due to mature in September 2020 was refinanced with an extended
facility to December 2023. The Group exchanged and completed on the sale of our share of a portfolio of reversionary interests
in Sainsbury’s superstores for £102m.
192
192
British Land | Annual Report and Accounts 2020
British Land Annual Report and Accounts 2020
27 Audit exemptions taken for subsidiaries
The following subsidiaries are exempt from the requirements of the Companies Act 2006 relating to the audit of individual accounts by
virtue of Section 479A of that Act.
Name
17-19 Bedford Street Limited
18-20 Craven Hill Gardens Limited
20 Brock Street Limited
Adamant Investment Corporation Limited
Aldgate Place (GP) Limited
Bayeast Property Co Limited
BF Propco (No. 1) Limited
BF Propco (No. 3) Limited
BF Propco (No. 4) Limited
BF Propco (No. 5) Limited
BF Propco (No.13) Limited
BL CW Holdings No2 Company Limited
BL (SP) Cannon Street Limited
BL Aldgate Holdings Limited
BL Broadgate Fragment 1 Limited
BL Broadgate Fragment 2 Limited
BL Broadgate Fragment 3 Limited
BL Broadgate Fragment 4 Limited
BL Broadgate Fragment 5 Limited
BL Broadgate Fragment 6 Limited
BL CW Developments Limited
BL CW Developments Plot A1 Limited
BL CW Developments Plot A2 Limited
BL CW Developments Plot D1/2 Company Limited
BL CW Developments Plot K1 Company Limited
BL CW Developments Plots H1 H2 Company Limited
BL CW Developments Plots L1 L2 L3 Company
Limited
BL Eden Walk Limited
BL Goodman (LP) Limited
BL GP Chess No. 1 Limited
BL Guaranteeco Limited
BL HC (DSCLI) Limited
BL HC Health And Fitness Holdings Limited
BL HC Invic Leisure Limited
BL HC Property Holdings Limited
BL Health Clubs PH No 1 Limited
BL Health Clubs PH No 2 Limited
BL High Street and Shopping Centres
Holding Limited
BL Holdings 2010 Limited
BL Osnaburgh St Residential Limited
BL Paddington Holding Company 1 Limited
BL Paddington Holding Company 2 Limited
BL Paddington Property 1 Limited
BL Paddington Property 2 Limited
BL Paddington Property 3 Limited
BL Paddington Property 4 Limited
BL Piccadilly Residential Limited
BL Piccadilly Residential Retail Limited
BL Shoreditch Development Limited
BL West End Investments Limited
Blackglen Limited
Blaxmill (Twenty-nine) Limited
Companies House
reg number
07398971
07667839
07401697
00225149
07829315
00635800
05270158
05270196
05270137
05270219
05270274
07667834
02283030
05876405
09400407
09400541
09400411
09400409
09400413
09400414
10664198
10782150
10782335
10997879
10997465
12141281
12140906
10620935
05056902
08572585
05403335
04290601
04374665
02464159
06894046
05643248
05643261
06002148
07353966
06874523
11863703
11863746
11863429
11863540
11863747
11863835
08707494
09117243
05326670
07793483
05482088
05279010
Name
BLD (Ebury Gate) Limited
BLD (SJ) Investments Limited
BLD (SJ) Limited
BF Properties (No 4) Limited
BL Department Stores Holding Company Limited
BLD Property Holdings Limited
BLSSP (PHC 5) Limited
BLU Securities Limited
Boldswitch Limited
British Land City Offices Limited
British Land In Town Retail Limited
British Land Offices (Non-City) Limited
British Land Offices Limited
British Land Offices No.1 Limited
British Land Superstores (Non Securitised) Number
2 Limited
British Land Department Stores Limited
Broadgate Properties Limited
Cavendish Geared Limited
Cornish Residential Property Investments Limited
Elementvirtue Limited
Hempel Holdings Limited
Hempel Hotels Limited
Hyfleet Limited
Insistmetal 2 Limited
Linestair Limited
Longford Street Residential Limited
Moorage (Property Developments) Limited
Osnaburgh Street Limited
Parwick Holdings Limited
PC Canal Limited
Pillar (Cricklewood) Limited
Pillar Auchinlea Limited
Pillar Dartford No.1 Limited
Pillar Developments Limited
Pillar Estates No.2 Limited
Pillar Kinnaird Limited
Pillar Nugent Limited
Pillar Projects Limited
Plymouth Retail Limited
Regent’s Place Holding 1 Limited
Regent’s Place Holding 2 Limited
Regent’s Place Holding Company Limited
Regents Place Management Company Limited
Regents Place Residential Limited
Shopping Centres Limited
Shoreditch Support Limited
Surrey Quays Limited
TBL (Lisnagelvin) Limited
TBL (Maidstone) Limited
TBL Properties Limited
Teesside Leisure Park Limited
The Liverpool Exchange Company Limited
Topside Street Limited
Companies House
reg number
03863852
04484750
02924321
05270289
06002135
00823907
04104061
03323061
02307096
03946069
03325066
02740378
02725156
02338232
06514283
05312262
01982350
02779045
03523833
05423035
05341380
02728455
02835919
04181514
05656174
08700158
01185513
05886735
06049168
09712919
02567025
02661047
04385738
02850421
02783379
02931056
02567031
02444288
10368557
11864369
11864307
10068705
07136724
11241644
02230056
02360815
05294243
03853983
03854615
03863190
02672136
00490255
11253428
British Land | Annual Report and Accounts 2020
British Land Annual Report and Accounts 2020
193
193
FINANCIAL STATEMENTS CONTINUED
Notes to the accounts continued
27 Audit exemptions taken for subsidiaries continued
Name
TPP Investments Limited
United Kingdom Property Company Limited
Vicinitee Limited
Companies House
reg number
04843814
00266486
04106142
Name
Wardrobe Place Limited
Wates City of London Properties Limited
Companies House
reg number
00483257
01788526
The following partnerships are exempt from the requirements to prepare, publish and have audited individual accounts by virtue
of regulation 7 of The Partnerships (Accounts) Regulations 2008. The results of these partnerships are consolidated within these
Group accounts.
Name
BL Shoreditch Limited Partnership
BL CW Lower Limited Partnership
BL CW Upper Limited Partnership
BL Lancaster Limited Partnership
Hereford Shopping Centre Limited Partnership
Paddington Block A Limited Partnership
Paddington Block B Limited Partnership
Name
Paddington Central I Limited Partnership
Paddington Central II Limited Partnership
Paddington Kiosk Limited Partnership
Power Court Luton Limited Partnership
The Aldgate Place Limited Partnership
The Hercules Property Limited Partnership
194
194
British Land | Annual Report and Accounts 2020
British Land Annual Report and Accounts 2020
Company balance sheet
As at 31 March 2020
Fixed assets
Investments and loans to subsidiaries
Investments in joint ventures
Other investments
Interest rate derivative assets
Deferred tax assets
Current assets
Debtors
Cash and short term deposits
Current liabilities
Short term borrowings and overdrafts
Creditors
Amounts due to subsidiaries
Net current liabilities
Total assets less current liabilities
Non-current liabilities
Debentures and loans
Interest rate derivative liabilities
Net assets
Equity
Called up share capital
Share premium
Other reserves
Merger reserve
Retained earnings
Total equity
Note
2020
£m
2019
£m
D
D
D
E
G
E
E
H
E
E
I
34,800
404
31
231
5
35,471
13
142
155
27,821
397
29
153
7
28,407
5
182
187
(5)
(71)
(28,682)
(28,758)
(28,603)
(99)
(126)
(20,786)
(21,011)
(20,824)
6,868
7,583
(2,635)
(165)
(2,800)
(2,075)
(127)
(2,202)
4,068
5,381
234
1,307
(5)
213
2,319
4,068
240
1,302
(5)
213
3,631
5,381
The loss after taxation for the year ended 31 March 2020 for the Company was £896m (year ended 31 March 2019: £307m profit).
Tim Score
Chairman
Approved by the Board on 26 May 2020
Company number 621920
Simon Carter
Chief Financial Officer
British Land | Annual Report and Accounts 2020
British Land Annual Report and Accounts 2020
195
195
FINANCIAL STATEMENTS CONTINUED
Company statement of changes in equity
For the year ended 31 March 2020
Balance at 1 April 2019
Share issues
Purchase of own shares
Dividend paid
Fair value of share and share option awards
Loss for the year after taxation
Balance at 31 March 2020
Balance at 1 April 2018
Share issues
Purchase of own shares
Dividend paid
Fair value of share and share option awards
Profit for the year after taxation
Balance at 31 March 2019
Share
capital
£m
240
–
(6)
–
–
–
234
248
–
(8)
–
–
–
240
Share
premium
£m
1,302
5
–
–
–
–
1,307
1,300
2
–
–
–
–
1,302
Other
reserves
£m
(5)
–
–
–
–
–
(5)
(5)
–
–
–
–
–
(5)
Merger
reserve
£m
213
–
–
–
–
–
213
Profit and loss
account
£m
3,631
–
(119)
(295)
(2)
(896)
2,319
213
–
–
–
–
–
213
3,822
–
(196)
(298)
(4)
307
3,631
Total
equity
£m
5,381
5
(125)
(295)
(2)
(896)
4,068
5,578
2
(204)
(298)
(4)
307
5,381
The value of distributable reserves within the profit and loss account is £918m (2018/19: £1,846m).
196
196
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British Land Annual Report and Accounts 2020
Notes to the financial statements
(A) Accounting policies
The financial statements for the year ended 31 March 2020 have been prepared on the historical cost basis, except for the revaluation of
derivatives which are measured at fair value. These financial statements have also been prepared in accordance with Financial
Reporting Standard 101 Reduced Disclosure Framework (‘FRS 101’). The amendments to FRS 101 (2015/16 Cycle) issued in July 2016
and effective immediately have been applied.
In preparing these financial statements, the Company applies the recognition, measurement and disclosure requirements of
International Financial Reporting Standards as adopted by the EU (‘Adopted IFRSs’), but makes amendments where necessary in order
to comply with the Companies Act 2006 and has set out below where advantage of the FRS 101 disclosure exemptions has been taken.
The Company has taken advantage of the following disclosure exemptions under FRS 101:
(a) the requirements of IAS 1 to provide a balance sheet at the beginning of the period in the event of a prior period adjustment
(b) the requirements of IAS 1 to provide a statement of cash flows for the period
(c) the requirements of IAS 1 to provide a statement of compliance with IFRS
(d) the requirements of IAS 1 to disclose information on the management of capital
(e) the requirements of paragraphs 30 and 31 of IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors to disclose
new IFRSs that have been issued but are not yet effective
(f) the requirements in IAS 24 Related Party Disclosures to disclose related party transactions entered into between two or more
members of a group, provided that any subsidiary which is a party to the transaction is wholly-owned by such a member
(g) the requirements of paragraph 17 of IAS 24 Related Party Disclosures to disclose key management personnel compensation
(h) the requirements of IFRS 7 to disclose financial instruments
(i) the requirements of paragraphs 91-99 of IFRS 13 Fair Value Measurement to disclose information of fair value valuation techniques
and inputs
New standards effective for the current accounting period do not have a material impact on the financial statements of the Company.
These are discussed in further detail below.
British Land | Annual Report and Accounts 2020
British Land Annual Report and Accounts 2020
197
197
FINANCIAL STATEMENTS CONTINUED
Notes to the financial statements continued
IFRS 16 – Leases
The Company adopted IFRS 16, Leases, during the year ended 31 March 2020. IFRS 16 supersedes the existing accounting guidance in
IAS 17 Leases. The standard was adopted in accordance with IFRS 16 C8, comparative amounts are not restated and adjustments in
opening retained earnings have not been recognised.
The new standard results in almost all leases held as lessee being recognised on the balance sheet as the distinction between
operating and finance leases is removed. The Company does not hold any material leases as lessee, therefore the standard has not had
a material impact on the balance sheet or loss for the year.
Going concern
The financial statements are prepared on a going concern basis. The balance sheet shows that the Company has net current liabilities.
This results from loans due to subsidiaries of £28,682m which are repayable on demand and therefore classified as current liabilities.
These liabilities are not due to external counterparties and there is no expectation or intention that these loans will be repaid within the
next twelve months. As a consequence of this, the Directors feel that the Company is well placed to manage its business risks
successfully despite the current economic climate. Accordingly, they believe the going concern basis is an appropriate one. See the full
assessment of preparation on a going concern basis in the corporate governance section on page 102.
Investments and loans
Investments and loans in subsidiaries and joint ventures are stated at cost less an expected credit loss on the balance in accordance
with IFRS 9. The expected credit loss on the balance is immaterial.
Significant judgements and sources of estimation uncertainty
The key source of estimation uncertainty relates to the Company’s investments in subsidiaries and joint ventures. In estimating the
requirement for impairment of these investments, management make assumptions and judgements on the value of these investments
using inherently subjective underlying asset valuations, supported by independent valuers.
(B) Dividends
Details of dividends paid and proposed are included in Note 19 of the consolidated financial statements.
(C) Employee information
Employee costs include wages and salaries of £36m (2018/19: £38m), social security costs of £4m (2018/19: £5m) and pension costs of
£4m (2018/19: £4m). Details of the Executive Directors’ remuneration are disclosed in the Remuneration Report on pages 118 to 133.
Audit fees in relation to the parent Company only were £0.3m (2018/19: £0.3m).
(D) Investments in subsidiaries and joint ventures, loans to subsidiaries and other investments
On 1 April 2019
Additions
Disposals
Depreciation / amortisation
Provision for impairment
As at 31 March 2020
Shares in
subsidiaries
£m
19,702
–
(846)
–
–
18,856
Loans to
subsidiaries
£m
8,119
9,483
(723)
–
(935)
15,944
Investments in
joint ventures
£m
397
7
–
–
–
404
Other
investments
£m
29
6
–
(4)
–
31
Total
£m
28,247
9,496
(1,569)
(4)
(935)
35,235
The historical cost of shares in subsidiaries is £19,090m (2018/19: £20,025m). Investments in joint ventures of £404m (2018/19: £397m)
includes £204m (2018/19: £201m) of loans to joint ventures by the Company. Results of the joint ventures are set out in Note 11 of the
consolidated financial statements. The historical cost of other investments is £57m (2018/19: £51m).
198
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British Land Annual Report and Accounts 2020
(E) Net debt
Secured on the assets of the Company
5.264% First Mortgage Debenture Bonds 2035
5.0055% First Mortgage Amortising Debentures 2035
5.357% First Mortgage Debenture Bonds 2028
Unsecured
5.50% Senior Notes 2027
4.635% Senior US Dollar Notes 20211
4.766% Senior US Dollar Notes 20231
5.003% Senior US Dollar Notes 20261
3.81% Senior Notes 2026
3.97% Senior Notes 2026
2.375% Sterling Unsecured Bond 2029
4.16% Senior US Dollar Notes 20251
2.67% Senior Notes 2025
2.75% Senior Notes 2026
Floating Rate Senior Notes 2028
Floating Rate Senior Notes 2034
Bank loans and overdrafts
Gross debt
Interest rate and currency derivative liabilities
Interest rate and currency derivative assets
Cash and short term deposits
Net debt
1. Principal and interest on these borrowings were fully hedged into Sterling at a floating rate at the time of issue.
2020
£m
375
91
249
715
–
180
117
80
113
115
298
89
37
37
80
102
677
1,925
2,640
165
(231)
(142)
2,432
2019
£m
368
94
252
714
99
168
106
69
111
113
298
78
37
37
80
–
264
1,460
2,174
127
(153)
(182)
1,966
British Land | Annual Report and Accounts 2020
British Land Annual Report and Accounts 2020
199
199
FINANCIAL STATEMENTS CONTINUED
Notes to the financial statements continued
(E) Net debt continued
0% Convertible bond 2015 (maturity 2020)
On 9 June 2015, British Land (White) 2015 Limited (the 2015 Issuer), a wholly-owned subsidiary of the Company, issued £350 million
zero coupon guaranteed convertible bonds due 2020 (the 2015 bonds) at par. The 2015 Issuer is fully guaranteed by the Company in
respect of the 2015 bonds.
Subject to their terms, the 2015 bonds are convertible into preference shares of the 2015 Issuer which are automatically transferred to
the Company in exchange for ordinary shares in the Company or, at the Company’s election, any combination of ordinary shares and
cash. Bondholders may exercise their conversion right at any time up to but excluding the seventh dealing day before 9 June 2020
(the maturity date), a bondholder may convert at any time.
The initial exchange price was 1103.32p per ordinary share. The exchange price is adjusted based on certain events (such as the
Company paying dividends in any quarter above 3.418p per ordinary share). As at 31 March 2020 the exchange price was 975.09p per
ordinary share.
From 30 June 2018, the Company has the option to redeem the 2015 bonds at par if the Company’s share price has traded above
130% of the exchange price for a specified period, or at any time once 85% by nominal value of the 2015 bonds have been converted,
redeemed, or purchased and cancelled. The 2015 bonds will be redeemed at par on 9 June 2020 (the maturity date) if they have not
already been converted, redeemed or purchased and cancelled.
The intercompany loan between the Issuer and the Company arising from the transfer of the loan proceeds was initially recognised at
fair value, net of capitalised issue costs, and is accounted for using the amortised cost method. In addition to the intercompany loan,
the Company has entered into a derivative contract relating to its guarantee of the obligations of the Issuer in respect of the bonds and
the commitment to provide shares or a combination of shares and cash on conversion of the bonds. This derivative contract is included
within the balance sheet as a liability carried at fair value through profit and loss.
Maturity analysis of net debt
Repayable within one year and on demand
between: one and two years
two and five years
five and ten years
ten and fifteen years
fifteen and twenty years
Gross debt
Interest rate derivatives
Cash and short term deposits
Net debt
2020
£m
5
188
599
1,141
107
600
2,635
2,640
(66)
(142)
2,432
2019
£m
99
17
479
808
306
465
2,075
2,174
(26)
(182)
1,966
(F) Pension
The British Land Group of Companies Pension Scheme and the Defined Contribution Pension Scheme are the principal pension
schemes of the Company and details are set out in Note 9 of the consolidated financial statements.
200
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British Land | Annual Report and Accounts 2020
British Land Annual Report and Accounts 2020
(G) Debtors
Trade and other debtors
Prepayments and accrued income
(H) Creditors
Trade creditors
Corporation tax
Other taxation and social security
Accruals and deferred income
(I) Share capital
Issued, called and fully paid
At 1 April 2019
Share issues
Repurchased and cancelled
At 31 March 2020
Issued, called and fully paid
At 1 April 2018
Share issues
Repurchased and cancelled
At 31 March 2019
2020
£m
13
–
13
2020
£m
6
15
21
29
71
2019
£m
4
1
5
2019
£m
46
25
25
30
126
Ordinary shares
of 25p each
960,589,072
1,144,135
(23,795,110)
937,938,097
Ordinary shares
of 25p each
993,857,125
404,377
(33,672,430)
960,589,072
£m
240
–
(6)
234
£m
248
–
(8)
240
(J) Contingent liabilities, capital commitments and
related party transactions
The Company has contingent liabilities in respect of legal claims,
guarantees and warranties arising in the ordinary course of
business. It is not anticipated that any material liabilities will arise
from the contingent liabilities.
A REIT is required to pay Property Income Distributions (PIDs) of
at least 90% of the taxable profits from its UK property rental
business within twelve months of the end of each accounting
period. Following the temporary suspension of future dividends to
best ensure we can effectively support our customers who are
hardest hit and protect the long term value of the business as a
result of Covid-19, we are discussing an extension to this deadline
with HMRC. Whilst we intend to pay the required PID amount
within the agreed extended deadline, we have agreed with HMRC
that any underpayment of the PID required would instead be
subject to corporation tax at 19% provided that it arises as a
consequence of Covid-19. A total of £37m of corporation tax would
be due by 31 March 2021 if no further PIDs were paid by this date
in respect of the year to 31 March 2020 and no extension is
agreed. At 31 March 2020, the Company has £nil of capital
commitments (2018/19: £nil).
Related party transactions are the same for the Company as
for the Group. For details refer to Note 23 of the consolidated
financial statements.
(K) Disclosures relating to subsidiary undertakings
The Company’s subsidiaries and other related undertakings at
31 March 2020 are listed on the next page. Companies which are
in the process of being dissolved are marked with an asterisk (*).
All Group entities are included in the consolidated financial results.
Unless otherwise stated, the Company holds 100% of the voting
rights and beneficial interests in the shares of the following
subsidiaries, partnerships, associates and joint ventures. Unless
otherwise stated, the subsidiaries and related undertakings are
registered in the United Kingdom.
The share capital of each of the companies, where applicable,
comprises ordinary shares unless otherwise stated.
The Company holds the majority of its assets in UK companies,
although some are held in overseas companies. In recent years
we have reduced the number of overseas companies in the Group.
Unless noted otherwise as per the following key, the registered
address of each company is York House, 45 Seymour Street,
London W1H 7LX.
1. 47 Esplanade, St Helier, Jersey JE1 0BD.
2. 13-14 Esplanade, St Helier, Jersey JE1 1EE.
3. 14 Porte de France, 4360 Esch-sur-Alzette, Luxembourg.
4. 300 Meadowhall Way, Sheffield, South Yorkshire, England, S9 1EA.
British Land | Annual Report and Accounts 2020
British Land Annual Report and Accounts 2020
201
201
FINANCIAL STATEMENTS CONTINUED
Notes to the financial statements continued
Direct holdings
Indirect holdings
Company Name
BL Bluebutton 2014 Limited
BL Davidson Limited
BL European Fund Management LLP
BL Guaranteeco Limited
BL Intermediate Holding Company Limited
BL Intermediate Holding Company 2
Limited
BLSSP (Funding) Limited
Bluebutton Property Management UK
Limited (50% interest)
Boldswitch (No 1) Limited
Boldswitch Limited
British Land (White) 2015 Limited (Jersey)
(Founder Shares)1
British Land City
British Land City 2005 Limited
British Land Company Secretarial Limited
British Land Financing Limited*
British Land Properties Limited
British Land Real Estate Limited
British Land Securities Limited
Broadgate (Funding) PLC
Broadgate Estates Insurance Mediation
Services Limited
Hyfleet Limited
Kingsmere Productions Limited
London and Henley Holdings Limited
Meadowhall Pensions Scheme Trustee
Limited
MSC Property Intermediate Holdings
Limited (50% interest)
Regis Property Holdings Limited
The British Land Corporation Limited
UK/Overseas Tax
Resident Status
UK Tax Resident
UK Tax Resident
UK Tax Resident
UK Tax Resident
UK Tax Resident
UK Tax Resident
UK Tax Resident
UK Tax Resident
UK Tax Resident
UK Tax Resident
UK Tax Resident
UK Tax Resident
UK Tax Resident
UK Tax Resident
UK Tax Resident
UK Tax Resident
UK Tax Resident
UK Tax Resident
UK Tax Resident
UK Tax Resident
UK Tax Resident
UK Tax Resident
UK Tax Resident
UK Tax Resident
UK Tax Resident
UK Tax Resident
UK Tax Resident
202
202
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British Land Annual Report and Accounts 2020
Company Name
1 & 4 & 7 Triton Limited
10 Brock Street Limited
10 Portman Square Unit Trust (Jersey)
(Units)1
10 Triton Street Limited
17-19 Bedford Street Limited
18-20 Craven Hill Gardens Limited
20 Brock Street Limited
20 Triton Street Limited
338 Euston Road Limited
350 Euston Road Limited
39 Victoria Street Limited
Adamant Investment Corporation Limited
Adshilta Limited*
Aldgate Place (GP) Limited
Aldgate Land One Limited
Aldgate Land Two Limited
Apartpower Limited
Ashband Limited
B.L. Holdings Limited
B.L.C.T. (12697) Limited (Jersey)1
B.L.C.T. (21500) Limited (Jersey)1
Barnclass Limited
Barndrill Limited
Bayeast Property Co Limited
BF Propco (No 1) Limited
BF Propco (No 19) Limited
BF Propco (No 3) Limited
BF Propco (No 4) Limited
BF Propco (No 5) Limited
BF Properties (No 4) Limited
BF Properties (No 5) Limited
BF Propco (No 13) Limited
Birstall Co-Ownership Trust (Member
interest) (41.25% interest)
BL (SP) Cannon Street Limited
BL Aldgate Development Limited
BL Aldgate Investment Limited
BL Bradford Forster Limited
BL Brislington Limited
BL Broadgate Fragment 1 Limited
BL Broadgate Fragment 2 Limited
BL Broadgate Fragment 3 Limited
BL Broadgate Fragment 4 Limited
BL Broadgate Fragment 5 Limited
BL Broadgate Fragment 6 Limited
BL Broadway Investment Limited
BL Chess Limited
BL City Offices Holding Company Limited
BL CW Developments Infrastructure
Company Limited
BL CW Developments Limited
BL CW Developments Plot A1 Limited
BL CW Developments Plot A2 Limited
BL CW Developments Plot D1/2 Company
Limited
UK/Overseas Tax
Resident Status
UK Tax Resident
UK Tax Resident
Overseas Tax Resident
UK Tax Resident
UK Tax Resident
UK Tax Resident
UK Tax Resident
UK Tax Resident
UK Tax Resident
UK Tax Resident
UK Tax Resident
UK Tax Resident
UK Tax Resident
UK Tax Resident
UK Tax Resident
UK Tax Resident
UK Tax Resident
UK Tax Resident
UK Tax Resident
UK Tax Resident
UK Tax Resident
UK Tax Resident
UK Tax Resident
UK Tax Resident
UK Tax Resident
UK Tax Resident
UK Tax Resident
UK Tax Resident
UK Tax Resident
UK Tax Resident
UK Tax Resident
UK Tax Resident
UK Tax Resident
UK Tax Resident
UK Tax Resident
UK Tax Resident
UK Tax Resident
UK Tax Resident
UK Tax Resident
UK Tax Resident
UK Tax Resident
UK Tax Resident
UK Tax Resident
UK Tax Resident
UK Tax Resident
UK Tax Resident
UK Tax Resident
UK Tax Resident
UK Tax Resident
UK Tax Resident
UK Tax Resident
UK Tax Resident
Company Name
BL CW Developments Plot G1 Limited
BL CW Developments Plot K1 Company
Limited
BL CW Developments Plots F1, F2, F3
Company Limited
BL CW Developments Plots H1, H2
Company Limited
BL CW Developments Plots L1, L2, L3
Company Limited
BL CW Holdings Limited
BL CW Holdings No2 Company Limited
BL CW Holdings Plot A1 Company Limited
BL CW Holdings Plot A2 Company Limited
BL CW Holdings Plot D1/2 Company
Limited
BL CW Holdings Plot G1 Company Limited
BL CW Holdings Plot K1 Company Limited
BL CW Holdings Plots F1, F2, F3 Company
Limited
BL CW Holdings Plots H1, H2 Company
Limited
BL CW Holdings Plots L1, L2, L3 Company
Limited
BL CW Lower GP Company Limited
BL CW Lower Limited Partnership
(Partnership interest)
BL CW Lower LP Company Limited
BL CW Upper GP Company Limited
BL CW Upper Limited Partnership
(Partnership interest)
BL CW Upper LP Company Limited
BL Department Stores Holding Company
Limited
BL Doncaster Wheatley Limited
BL Drummond Properties Limited
BL Ealing Limited
BL Eden Walk Limited
BL European Holdings Limited
BL Fixed Uplift Fund Limited Partnership
(Partnership interest)
BL Fixed Uplift General Partner Limited
BL Fixed Uplift Nominee 1 Limited
BL Fixed Uplift Nominee 2 Limited
BL Goodman (General Partner) Limited
(50% interest)
BL Goodman Limited Partnership
(50% interest)
BL Goodman (LP) Limited
BL GP Chess No. 1 Limited*
BL HB Investments Limited
BL HC (DSCH) Limited
BL HC (DSCLI) Limited
BL HC Dollview Limited
BL HC Hampshire PH LLP (Member
interest)
BL HC Health And Fitness Holdings Limited
BL HC Invic Leisure Limited
BL HC PH CRG LLP (Member interest)
BL HC PH LLP (Member interest)
UK/Overseas Tax
Resident Status
UK Tax Resident
UK Tax Resident
UK Tax Resident
UK Tax Resident
UK Tax Resident
UK Tax Resident
UK Tax Resident
UK Tax Resident
UK Tax Resident
UK Tax Resident
UK Tax Resident
UK Tax Resident
UK Tax Resident
UK Tax Resident
UK Tax Resident
UK Tax Resident
UK Tax Resident
UK Tax Resident
UK Tax Resident
UK Tax Resident
UK Tax Resident
UK Tax Resident
UK Tax Resident
UK Tax Resident
UK Tax Resident
UK Tax Resident
UK Tax Resident
UK Tax Resident
UK Tax Resident
UK Tax Resident
UK Tax Resident
UK Tax Resident
UK Tax Resident
UK Tax Resident
UK Tax Resident
UK Tax Resident
UK Tax Resident
UK Tax Resident
UK Tax Resident
UK Tax Resident
UK Tax Resident
UK Tax Resident
UK Tax Resident
UK Tax Resident
Company Name
BL HC PH No 1 LLP (Member interest)
BL HC PH No 2 LLP (Member interest)
BL HC PH No 3 LLP (Member interest)
BL HC Property Holdings Limited
BL Health Clubs PH No 1 Limited
BL Health Clubs PH No 2 Limited
BL High Street and Shopping Centres
Holding Company Limited
BL Holdings 2010 Limited
BL Lancaster Investments Limited
BL Lancaster Limited Partnership
(Partnership interest)
BL Leadenhall (Jersey) Limited2*
BL Leisure and Industrial Holding Company
Limited
BL Marble Arch House Limited
BL Mayfair Offices Limited
BL Meadowhall Holdings Limited
BL Meadowhall Limited
BL Meadowhall No 4 Limited*
BL Newport Limited
BL Office (Non-City) Holding Company
Limited
BL Office Holding Company Limited
BL Osnaburgh St Residential Ltd
BL Paddington Holding Company 1 Limited
BL Paddington Holding Company 2 Limited
BL Paddington Property 1 Limited
BL Paddington Property 2 Limited
BL Paddington Property 3 Limited
BL Paddington Property 4 Limited
BL Piccadilly Residential Limited
BL Piccadilly Residential Management Co
Limited
BL Piccadilly Residential Retail Limited
BL Residential Investment Limited
BL Residential Management Limited
BL Residual Holding Company Limited
BL Retail Holding Company Limited
BL Retail Indirect Investments Limited
BL Retail Investment Holdings Limited
BL Retail Investments Limited
BL Retail Warehousing Holding Company
Limited
BL Sainsbury Superstores Limited (50%
interest)
BL Shoreditch Development Limited
BL Shoreditch General Partner Limited
BL Shoreditch Limited Partnership
(Partnership interest)
BL Shoreditch No. 1 Limited
BL Shoreditch No. 2 Limited
BL Superstores Holding Company Limited
BL Triton Building Residential Limited
BL Tunbridge Wells Limited
BL Unitholder No. 1 (J) Limited (Jersey)1
BL Unitholder No. 2 (J) Limited (Jersey)1
BL Universal Limited
UK/Overseas Tax
Resident Status
UK Tax Resident
UK Tax Resident
UK Tax Resident
UK Tax Resident
UK Tax Resident
UK Tax Resident
UK Tax Resident
UK Tax Resident
UK Tax Resident
UK Tax Resident
Overseas Tax Resident
UK Tax Resident
UK Tax Resident
UK Tax Resident
UK Tax Resident
UK Tax Resident
UK Tax Resident
UK Tax Resident
UK Tax Resident
UK Tax Resident
UK Tax Resident
UK Tax Resident
UK Tax Resident
UK Tax Resident
UK Tax Resident
UK Tax Resident
UK Tax Resident
UK Tax Resident
UK Tax Resident
UK Tax Resident
UK Tax Resident
UK Tax Resident
UK Tax Resident
UK Tax Resident
UK Tax Resident
UK Tax Resident
UK Tax Resident
UK Tax Resident
UK Tax Resident
UK Tax Resident
UK Tax Resident
UK Tax Resident
UK Tax Resident
UK Tax Resident
UK Tax Resident
UK Tax Resident
UK Tax Resident
Overseas Tax Resident
Overseas Tax Resident
UK Tax Resident
British Land | Annual Report and Accounts 2020
British Land Annual Report and Accounts 2020
203
203
FINANCIAL STATEMENTS CONTINUED
Notes to the financial statements continued
Company Name
BL Wardrobe Court Holdings Limited
BL West (Watling House) Limited
BL West End Investments Limited
BL Whiteley Limited
BL Whiteley Retail Limited
BL Woolwich Limited
BL Woolwich Nominee 1 Limited
BL Woolwich Nominee 2 Limited
Blackglen Limited
Blackwall (1)
Blaxmill (Twenty-nine) Limited
BLD (A) Limited
BLD (Ebury Gate) Limited
BLD (SJ) Investments Limited
BLD (SJ) Limited
BLD Land Limited
BLD Properties Limited
BLD Property Holdings Limited
BLU Estates Limited
BLU Property Management Limited
BLU Securities Limited
British Land (Joint Ventures) Limited
British Land Acquisitions Limited
British Land Aqua Partnership (2) Limited
British Land Aqua Partnership Limited
British Land City Offices Limited
British Land Construction Limited
British Land Department Stores Limited
British Land Developments Limited
British Land Fund Management Limited
British Land Hercules Limited
British Land In Town Retail Limited
British Land Industrial Limited
British Land Investment Management
Limited
British Land Offices (Non-City) Limited
British Land Offices (Non-City) No. 2
Limited
British Land Offices Limited
British Land Offices No.1 Limited
British Land Property Advisers Limited
British Land Property Management Limited
Broadgate (PHC 8) Limited
Broadgate Adjoining Properties Limited
Broadgate City Limited
Broadgate Court Investments Limited
Broadgate Estates Limited
Broadgate Estates People Management
Limited
Broadgate Investment Holdings Limited
Broadgate Properties Limited
Broadgate REIT Limited (50% interest) 2
Broadgate Square Limited
Broughton Retail Park Limited (Jersey)
(Units) (78.14% interest)1
Broughton Unit Trust (78.14% interest)1
Brunswick Park Limited
UK/Overseas Tax
Resident Status
UK Tax Resident
UK Tax Resident
UK Tax Resident
UK Tax Resident
UK Tax Resident
UK Tax Resident
UK Tax Resident
UK Tax Resident
UK Tax Resident
UK Tax Resident
UK Tax Resident
UK Tax Resident
UK Tax Resident
UK Tax Resident
UK Tax Resident
UK Tax Resident
UK Tax Resident
UK Tax Resident
UK Tax Resident
UK Tax Resident
UK Tax Resident
UK Tax Resident
UK Tax Resident
UK Tax Resident
UK Tax Resident
UK Tax Resident
UK Tax Resident
UK Tax Resident
UK Tax Resident
UK Tax Resident
UK Tax Resident
UK Tax Resident
UK Tax Resident
UK Tax Resident
UK Tax Resident
UK Tax Resident
UK Tax Resident
UK Tax Resident
UK Tax Resident
UK Tax Resident
UK Tax Resident
UK Tax Resident
UK Tax Resident
UK Tax Resident
UK Tax Resident
UK Tax Resident
UK Tax Resident
UK Tax Resident
UK Tax Resident
UK Tax Resident
Overseas Tax Resident
Overseas Tax Resident
UK Tax Resident
204
204
British Land | Annual Report and Accounts 2020
British Land Annual Report and Accounts 2020
Company Name
BVP Developments Limited
Canada Water Offices Limited
Casegood Enterprises
Caseplane Limited
Cavendish Geared II Limited
Cavendish Geared Limited
Caymall Limited
Cheshine Properties Limited
Chester Limited1
Chrisilu Nominees Limited
City of London Office Unit Trust (Jersey)
(Units) (35.94% interest)1
Clarges Estate Property Management
Co Limited
Comgenic Limited
Cornish Residential Properties Trading
Limited
Cornish Residential Property Investments
Limited
Crescent West Properties
Deepdale Co-Ownership Trust (39.07%
interest)
Derby Investment Holdings Limited
Drake Circus Centre Limited
Drake Circus Leisure Limited
Drake Property Holdings Limited
Drake Property Nominee (No. 1) Limited
Drake Property Nominee (No. 2) Limited
Eden Walk Shopping Centre General
Partner Limited (50% interest)
Eden Walk Shopping Centre Unit Trust2
(50% interest) (Jersey) (Units)
Elementvirtue Limited
Elk Mill Oldham Limited
Estate Management (Brick) Limited
Euston Tower Limited
Exchange House Holdings Limited
Exchange Square Management Limited
Fort Kinnaird GP Limited (39.07% interest)
Fort Kinnaird Limited Partnership (39.07%
interest)
Fort Kinnaird Nominee Limited (39.07%
interest)
Four Broadgate Limited
FRP Group Limited
Garamead Properties Limited
Gardenray Limited
Gibraltar General Partner Limited (39.07%
interest)
Gibraltar Nominees Limited (39.07%
interest)
Giltbrook Retail Park Nottingham Limited
Hempel Holdings Limited
Hempel Hotels Limited
Hercules Property UK Holdings Limited
Hercules Property UK Limited
Hercules Unit Trust (78.14% interest)
(Jersey) (Units)1
UK/Overseas Tax
Resident Status
UK Tax Resident
UK Tax Resident
UK Tax Resident
UK Tax Resident
UK Tax Resident
UK Tax Resident
UK Tax Resident
UK Tax Resident
UK Tax Resident
UK Tax Resident
Overseas Tax Resident
UK Tax Resident
UK Tax Resident
UK Tax Resident
UK Tax Resident
UK Tax Resident
UK Tax Resident
UK Tax Resident
UK Tax Resident
UK Tax Resident
UK Tax Resident
UK Tax Resident
UK Tax Resident
UK Tax Resident
Overseas Tax Resident
UK Tax Resident
UK Tax Resident
UK Tax Resident
UK Tax Resident
UK Tax Resident
UK Tax Resident
UK Tax Resident
UK Tax Resident
UK Tax Resident
UK Tax Resident
UK Tax Resident
UK Tax Resident
UK Tax Resident
UK Tax Resident
UK Tax Resident
UK Tax Resident
UK Tax Resident
UK Tax Resident
UK Tax Resident
UK Tax Resident
Overseas Tax Resident
Company Name
Hereford Old Market Limited
Hereford Shopping Centre GP Limited
Hereford Shopping Centre Limited
Partnership
Horndrift Limited
HUT Investments Limited (Jersey) (78.14%
interest)1
Industrial Real Estate Limited
Insistmetal 2 Limited
Ivorydell Limited
Ivorydell Subsidiary Limited
Jetbloom Limited
Lancaster General Partner Limited
Linestair Limited
London and Henley (UK) Limited
London and Henley Limited
Lonebridge UK Limited
Longford Street Residential Limited
Ludgate Investment Holdings Limited
Ludgate West Limited
Mayfair Properties
Mayflower Retail Park Basildon Limited
Meadowbank Retail Park Edinburgh
Limited
Meadowhall Centre (1999) Limited
Meadowhall Centre Limited
Meadowhall Centre Pension Scheme
Trustees Limited
Meadowhall Estates (UK) Limited
Meadowhall Group (MLP) Limited
Meadowhall Holdings Limited
Meadowhall (MLP) Limited
Meadowhall Opportunities Nominee 1
Limited
Meadowhall Opportunities Nominee 2
Limited
Meadowhall Shopping Centre Limited
Meadowhall Shopping Centre Property
Holdings Limited
Meadowhall SubCo Limited
Mercari
Mercari Holdings Limited
Minhill Investments Limited
Moorage (Property Developments) Limited
Nugent Shopping Park Limited
One Hundred Ludgate Hill
One Sheldon Square Limited (Jersey)1
Orbital Shopping Park Swindon Limited
Osnaburgh Street Limited
Paddington Block A (GP) Ltd
Paddington Block A LP (Partnership
interest)
Paddington Block B (GP) Ltd
Paddington Block B LP (Partnership
interest)
Paddington Central I (GP) Limited
Paddington Central I LP (Partnership
interest)
UK/Overseas Tax
Resident Status
UK Tax Resident
UK Tax Resident
UK Tax Resident
UK Tax Resident
Overseas Tax Resident
UK Tax Resident
UK Tax Resident
UK Tax Resident
UK Tax Resident
UK Tax Resident
UK Tax Resident
UK Tax Resident
UK Tax Resident
UK Tax Resident
UK Tax Resident
UK Tax Resident
UK Tax Resident
UK Tax Resident
UK Tax Resident
UK Tax Resident
UK Tax Resident
UK Tax Resident
UK Tax Resident
UK Tax Resident
UK Tax Resident
UK Tax Resident
UK Tax Resident
UK Tax Resident
UK Tax Resident
UK Tax Resident
UK Tax Resident
UK Tax Resident
UK Tax Resident
UK Tax Resident
UK Tax Resident
UK Tax Resident
UK Tax Resident
UK Tax Resident
UK Tax Resident
Overseas Tax Resident
UK Tax Resident
UK Tax Resident
UK Tax Resident
UK Tax Resident
UK Tax Resident
UK Tax Resident
UK Tax Resident
UK Tax Resident
Company Name
Paddington Central I Unit Trust (Jersey)
(Units)1
Paddington Central II (GP) Limited
Paddington Central II LP (Partnership
interest)
Paddington Central II Unit Trust (Jersey)
(Units)1
Paddington Central IV Unit Trust (Jersey)
(Units)1
Paddington Kiosk (GP) Ltd
Paddington Kiosk LP (Partnership interest)
PaddingtonCentral Management Company
Limited (87.5% interest)
Parwick Holdings Limited
Parwick Investments Limited
PC Canal Limited
PC Lease Nominee Ltd
PC Partnership Nominee Ltd
Piccadilly Residential Limited
Pillar (Cricklewood) Limited
Pillar (Dartford) Limited
Pillar (Fulham) Limited
Pillar Auchinlea Limited*
Pillar Broadway Limited
Pillar City Limited
Pillar Dartford No.1 Limited
Pillar Denton Limited
Pillar Developments Limited
Pillar Estates No.2 Limited*
Pillar Europe Management Limited
Pillar Fort Limited
Pillar Gallions Reach Limited
Pillar Glasgow 1 Limited
Pillar Hercules No.2 Limited
Pillar Kinnaird Limited*
Pillar Nugent Limited
Pillar Projects Limited
Pillar Property Group Limited
PillarStore Limited
Plymouth Retail Limited
Power Court GP Limited
Power Court Luton Limited Partnership
(Partnership interest)
Power Court Nominee Limited
PREF Management Company SA
(Luxembourg)3
Project Sunrise Investments Limited
Project Sunrise Limited
Project Sunrise Properties Limited
Reboline Limited
Regent’s Place Holding 1 Limited
Regent’s Place Holding 2 Limited
Regent’s Place Holding Company Limited
Regents Place Management Company
Limited
Regents Place Residential Limited
Rigphone Limited
Rohawk Properties Limited
UK/Overseas Tax
Resident Status
Overseas Tax Resident
UK Tax Resident
UK Tax Resident
Overseas Tax Resident
Overseas Tax Resident
UK Tax Resident
UK Tax Resident
UK Tax Resident
UK Tax Resident
UK Tax Resident
UK Tax Resident
UK Tax Resident
UK Tax Resident
UK Tax Resident
UK Tax Resident
UK Tax Resident
UK Tax Resident
UK Tax Resident
UK Tax Resident
UK Tax Resident
UK Tax Resident
UK Tax Resident
UK Tax Resident
UK Tax Resident
UK Tax Resident
UK Tax Resident
UK Tax Resident
UK Tax Resident
UK Tax Resident
UK Tax Resident
UK Tax Resident
UK Tax Resident
UK Tax Resident
UK Tax Resident
UK Tax Resident
UK Tax Resident
UK Tax Resident
UK Tax Resident
Overseas Tax Resident
UK Tax Resident
UK Tax Resident
UK Tax Resident
UK Tax Resident
UK Tax Resident
UK Tax Resident
UK Tax Resident
UK Tax Resident
UK Tax Resident
UK Tax Resident
UK Tax Resident
British Land | Annual Report and Accounts 2020
British Land Annual Report and Accounts 2020
205
205
FINANCIAL STATEMENTS CONTINUED
Notes to the financial statements continued
Company Name
Valentine Unit Trust (Jersey) (Units)
(39.07% interest)1
Vicinitee Limited
Vintners’ Place Limited
Wardrobe Court Limited
Wardrobe Holdings Limited
Wardrobe Place Limited
Wates City of London Properties Limited
Westbourne Terrace Partnership
(Partnership interest)
Whiteley Shopping Centre Unit Trust
(Jersey) (Units)1
WK Holdings Limited
WOSC 1 Nominee Limited (25% interest)
WOSC 2 Nominee Limited (25% interest)
WOSC GP Limited (25% interest)
WOSC Partners LP (Partnership interest)
(25% interest)
York House W1 Limited
UK/Overseas Tax
Resident Status
Overseas Tax Resident
UK Tax Resident
UK Tax Resident
UK Tax Resident
UK Tax Resident
UK Tax Resident
UK Tax Resident
UK Tax Resident
Overseas Tax Resident
UK Tax Resident
UK Tax Resident
UK Tax Resident
UK Tax Resident
UK Tax Resident
UK Tax Resident
Company Name
Salmax Properties
Seymour Street Homes Limited
Shopping Centres Limited
Shoreditch Support Limited
Six Broadgate Limited
Southgate General Partner Limited (50%
interest)
Southgate Property Unit Trust (Jersey)
(Units) (50% interest)1
Speke Unit Trust (67.34% interest) (Jersey)
(Units)2
Sprint 1118 Limited
St. Stephens Shopping Centre Limited
Stockton Retail Park Limited
Storey London Offices Limited
Storey Offices Limited
Storey Spaces Limited
Surrey Quays Limited
T (Partnership) Limited
Tailress Limited
TBL (Bromley) Limited
TBL (Bury) Limited
TBL (Lisnagelvin) Limited
TBL (Maidstone) Limited
TBL (Milton Keynes) Limited
TBL (Peterborough) Limited
TBL Holdings Limited
TBL Properties Limited
Teesside Leisure Park Limited
The Aldgate Place Limited Partnership
(Partnership interest)
The Dartford Partnership (Member interest)
(50% interest)
The Gibraltar Limited Partnership
(Partnership interest) (39.07% interest)
The Hercules Property Limited Partnership
(Partnership)
The Leadenhall Development Company
Limited (50% interest)
The Liverpool Exchange Company Limited
The Mary Street Estate Limited
The Meadowhall Education Centre (Limited
by guarantee) (50% interest)4
The Retail and Warehouse Company
Limited
The TBL Property Partnership (Partnership
interest)
The Whiteley Co-Ownership (Member
interest) (50% interest)
Tollgate Centre Colchester Limited
Topside Street Limited
TPP Investments Limited
Tweed Premier 4 Limited
Union Property Corporation Limited
Union Property Holdings (London) Limited
UK/Overseas Tax
Resident Status
UK Tax Resident
UK Tax Resident
UK Tax Resident
UK Tax Resident
UK Tax Resident
UK Tax Resident
Overseas Tax Resident
Overseas Tax Resident
UK Tax Resident
UK Tax Resident
UK Tax Resident
UK Tax Resident
UK Tax Resident
UK Tax Resident
UK Tax Resident
UK Tax Resident
UK Tax Resident
UK Tax Resident
UK Tax Resident
UK Tax Resident
UK Tax Resident
UK Tax Resident
UK Tax Resident
UK Tax Resident
UK Tax Resident
UK Tax Resident
UK Tax Resident
UK Tax Resident
UK Tax Resident
UK Tax Resident
UK Tax Resident
UK Tax Resident
UK Tax Resident
UK Tax Resident
UK Tax Resident
UK Tax Resident
UK Tax Resident
UK Tax Resident
UK Tax Resident
UK Tax Resident
UK Tax Resident
UK Tax Resident
UK Tax Resident
206
206
British Land | Annual Report and Accounts 2020
British Land Annual Report and Accounts 2020
Supplementary disclosures
Unaudited unless otherwise stated
Table A: Summary income statement and balance sheet (Unaudited)
Summary income statement based on proportional consolidation for the year ended 31 March 2020
The following pro forma information is unaudited and does not form part of the consolidated primary statements or the notes thereto.
It presents the results of the Group, with its share of the results of joint ventures and funds included on a line-by-line basis and
excluding non-controlling interests.
Gross rental income2
Property operating expenses
Net rental income
Administrative expenses
Net fees and other income
Ungeared income return
Net financing costs
Underlying Profit
Underlying taxation
Underlying Profit after taxation
Valuation movement
Other capital and taxation (net)1
Result attributable to shareholders of
the Company
Group
£m
436
(70)
366
(73)
12
305
(66)
239
–
239
Year ended 31 March 2020
Year ended 31 March 2019
Joint
ventures
and funds
£m
142
(13)
129
Less non-
controlling
interests
£m
(18)
1
(17)
Proportionally
consolidated
£m
560
(82)
478
Group
£m
439
(35)
404
Joint ventures
and funds
£m
155
(10)
145
Less non-
controlling
interests
£m
(18)
1
(17)
Proportionally
consolidated
£m
576
(44)
532
(1)
–
128
(49)
79
–
79
–
1
(16)
4
(12)
–
(12)
(74)
13
417
(111)
306
–
306
(1,389)
56
(1,027)
(80)
9
333
(67)
266
–
266
(1)
–
144
(58)
86
–
86
–
1
(16)
4
(12)
–
(12)
(81)
10
461
(121)
340
–
340
(683)
52
(291)
1. Includes other comprehensive income, movement in dilution of share options and the movement in items excluded for EPRA NAV.
2. Group gross rental income includes £3m of all inclusive rents relating to service charge income.
Summary balance sheet based on proportional consolidation as at 31 March 2020
The following pro forma information is unaudited and does not form part of the consolidated primary statements or the notes thereto.
It presents the composition of the EPRA net assets of the Group, with its share of the net assets of the joint venture and fund assets and
liabilities included on a line-by-line basis, and excluding non-controlling interests, and assuming full dilution.
Share
of joint
ventures
and funds
£m
964
2,324
–
–
3,288
Less non-
controlling
interests
£m
(221)
–
–
–
(221)
Group
£m
3,204
4,525
400
147
8,276
2,358
125
(365)
(3,247)
7,147
(2,358)
–
(77)
(853)
–
–
–
4
105
(112)
Mark-to-
market on
derivatives
and related
debt
adjustments
£m
–
–
–
–
–
Valuation
surplus on
trading
properties
£m
–
13
–
–
13
Lease
Liabilities
£m
(74)
(69)
(36)
–
(179)
–
–
–
141
141
–
–
179
–
–
–
–
–
–
13
Share
options
£m
–
–
–
–
–
–
–
18
–
18
Deferred
tax
£m
–
–
–
–
–
–
–
6
–
6
EPRA Net
assets
31 March
2020
£m
3,873
6,793
364
147
11,177
–
125
(235)
(3,854)
7,213
774p
EPRA Net
assets
31 March
2019
£m
5,577
6,308
303
128
12,316
–
129
(275)
(3,521)
8,649
905p
Retail properties
Office properties
Canada Water properties
Other properties
Total properties1
Investments in joint ventures and
funds
Other investments
Other net (liabilities) assets
Net debt
Net assets
EPRA NAV per share (Note 2)
1. Included within the total property value of £11,177m are right-of-use assets net of lease liabilities of £20m, which in substance, relate to properties held under leasing
agreements. The fair value of right-of-use assets are determined by calculating the present value of net rental cashflows over the term of the lease agreements.
207
British Land | Annual Report and Accounts 2020
British Land Annual Report and Accounts 2020
207
FINANCIAL STATEMENTS CONTINUED
Supplementary disclosures continued
Unaudited unless otherwise stated
Table A continued
EPRA Net assets movement
Opening EPRA NAV
Income return
Capital return
Dividend paid
Purchase of own shares
Closing EPRA NAV
Table B: EPRA Performance measures
EPRA Performance measures summary table
EPRA Earnings – basic
– diluted
EPRA Net Initial Yield
EPRA ‘topped-up’ Net Initial Yield
EPRA Vacancy Rate
EPRA NAV
EPRA NNNAV
Year ended
31 March 2020
Year ended
31 March 2019
£m
8,649
306
(1,322)
(295)
(125)
7,213
Pence
per share
905
33
(139)
(31)
6
774
£m
9,560
340
(749)
(298)
(204)
8,649
Pence
per share
967
35
(77)
(30)
10
905
2020
2019
£m
306
306
Pence
per share
32.8
32.7
4.6%
5.1%
6.3%
£m
340
340
2020
2019
Net assets
£m
7,213
6,762
Net asset
value per
share
(pence)
774
726
Net assets
£m
8,649
8,161
Pence
per share
35.0
34.9
4.5%
4.7%
4.1%
Net asset
value per
share
(pence)
905
854
Calculation and reconciliation of EPRA/IFRS earnings and EPRA/IFRS earnings per share
(Audited)
Loss attributable to the shareholders of the Company
Exclude:
Group – current taxation
Group – deferred taxation
Joint ventures and funds – taxation
Group – valuation movement
Group – (profit) loss on disposal of investment properties and investments
Group – profit on disposal of trading properties
Joint ventures and funds – net valuation movement (including result on disposals)
Joint ventures and funds – capital financing costs
Changes in fair value of financial instruments and associated close-out costs
Non-controlling interests in respect of the above
Underlying Profit
Group – underlying current taxation
EPRA earnings – basic and diluted
Loss attributable to the shareholders of the Company
Dilutive effect of 2015 convertible bond
IFRS earnings – diluted
2020
£m
(1,027)
(4)
2
–
1,105
(1)
(17)
284
22
41
(99)
306
–
306
(1,027)
–
(1,027)
2019
£m
(291)
(3)
4
(2)
620
18
(92)
60
21
46
(41)
340
–
340
(291)
–
(291)
208
208
British Land | Annual Report and Accounts 2020
British Land Annual Report and Accounts 2020
Table B continued
Weighted average number of shares
Adjustment for treasury shares
IFRS/EPRA Weighted average number of shares (basic)
Dilutive effect of share options
Dilutive effect of ESOP shares
EPRA Weighted average number of shares (diluted)
Strip out anti-dilutive
IFRS Weighted average number of shares (diluted)
Net assets per share (Audited)
Balance sheet net assets
Deferred tax arising on revaluation movements
Mark-to-market on derivatives and related debt adjustments
Dilution effect of share options
Surplus on trading properties
Less non-controlling interests
EPRA NAV
Deferred tax arising on revaluation movements
Mark-to-market on derivatives and related debt adjustments
Mark-to-market on debt
EPRA NNNAV
2020
Number
million
945
(11)
934
–
3
937
(3)
934
2020
2019
£m
7,147
6
141
18
13
(112)
7,213
(9)
(141)
(301)
6,762
Pence
per share
774
726
£m
8,689
5
113
24
29
(211)
8,649
(11)
(113)
(364)
8,161
2019
Number
million
982
(11)
971
1
2
974
(3)
971
Pence
per share
905
854
EPRA NNNAV is the EPRA NAV adjusted to reflect the fair value of the debt and derivatives and to include the deferred taxation on
revaluations and derivatives.
Number of shares at year end
Adjustment for treasury shares
IFRS/EPRA number of shares (basic)
Dilutive effect of share options
Dilutive effect of ESOP shares
IFRS/EPRA number of shares (diluted)
2020
Number
million
938
(11)
927
3
2
932
2019
Number
million
960
(11)
949
2
5
956
British Land | Annual Report and Accounts 2020
British Land Annual Report and Accounts 2020
209
209
FINANCIAL STATEMENTS CONTINUED
Supplementary disclosures continued
Unaudited unless otherwise stated
Table B continued
New EPRA Best Practice Recommendations
EPRA published its latest Best Practices Recommendations in October 2019 which included three new Net Asset Valuation metrics,
namely EPRA Net Reinstatement Value (NRV), EPRA Net Tangible Assets (NTA) and EPRA Net Disposal Value (NDV). These metrics are
effective from 1 January 2020 but have been presented below as at 31 March 2020 to provide a comparison to the current measures,
EPRA NAV and EPRA NNNAV.
At 31 March 2020
EPRA net asset value
Adjustment for:
Purchasers’ costs
Intangibles
Deferred tax adjustment1
Per share measure
EPRA
NRV
£m
EPRA
NTA
£m
7,213
7,213
659
–
–
7,872
845p
–
(11)
–
7,202
773p
1. The new EPRA guidance states that deferred taxes expected to crystallise should no longer be excluded. The Group will conduct a review of such items upon adoption of the
guidance but does not expect any resulting EPRA adjustment to be material.
As the Group’s EPRA NDV is the same as the EPRA NNNAV, there are no reconciling items.
EPRA
NDV
£m
6,762
726p
2019
£m
8,761
3,555
(1,098)
11,218
751
11,969
548
(14)
534
32
566
4.5%
4.7%
8
574
4.8%
566
22
30
618
5.2%
2020
£m
7,941
3,236
(1,140)
10,037
724
10,761
517
(21)
496
49
545
4.6%
5.1%
10
555
5.2%
545
38
13
596
5.5%
At 31 March 2020
EPRA net disposal value
Per share measure
EPRA Net Initial Yield and ‘topped-up’ Net Initial Yield (Unaudited)
Investment property – wholly-owned
Investment property – share of joint ventures and funds
Less developments, residential and land
Completed property portfolio
Allowance for estimated purchasers’ costs
Gross up completed property portfolio valuation (A)
Annualised cash passing rental income
Property outgoings
Annualised net rents (B)
Rent expiration of rent-free periods and fixed uplifts1
‘Topped-up’ net annualised rent (C)
EPRA Net Initial Yield (B/A)
EPRA ‘topped-up’ Net Initial Yield (C/A)
Including fixed/minimum uplifts received in lieu of rental growth
Total ‘topped-up’ net rents (D)
Overall ‘topped-up’ Net Initial Yield (D/A)
‘Topped-up’ net annualised rent
ERV vacant space
Reversions
Total ERV (E)
Net Reversionary Yield (E/A)
1. The weighted average period over which rent-free periods expire is one year (2018/19: one year).
210
210
British Land | Annual Report and Accounts 2020
British Land Annual Report and Accounts 2020
Table B continued
EPRA Net Initial Yield (NIY) basis of calculation
EPRA NIY is calculated as the annualised net rent (on a cash flow basis), divided by the gross value of the completed property portfolio.
The valuation of our completed property portfolio is determined by our external valuers as at 31 March 2020, plus an allowance for
estimated purchaser’s costs. Estimated purchaser’s costs are determined by the relevant stamp duty liability, plus an estimate by our
valuers of agent and legal fees on notional acquisition. The net rent deduction allowed for property outgoings is based on our valuers’
assumptions on future recurring non-recoverable revenue expenditure.
In calculating the EPRA ‘topped-up’ NIY, the annualised net rent is increased by the total contracted rent from expiry of rent-free
periods and future contracted rental uplifts where defined as not in lieu of growth. Overall ‘topped-up’ NIY is calculated by adding any
other contracted future uplift to the ‘topped-up’ net annualised rent.
The net reversionary yield is calculated by dividing the total estimated rental value (ERV) for the completed property portfolio,
as determined by our external valuers, by the gross completed property portfolio valuation.
The EPRA vacancy rate is calculated as the ERV of the unrented, lettable space as a proportion of the total rental value of the completed
property portfolio.
EPRA Vacancy Rate
Annualised potential rental value of vacant premises
Annualised potential rental value for the completed property portfolio
EPRA Vacancy Rate
2020
£m
38
603
6.3%
2019
£m
26
629
4.1%
The above is stated for the UK portfolio only. A discussion of significant factors affecting vacancy rates is included within the Strategic
Report (page 56).
EPRA Cost Ratios (Unaudited)
Property operating expenses1
Administrative expenses
Share of joint ventures and funds expenses
Less: Performance and management fees (from joint ventures and funds)
Net other fees and commissions
Ground rent costs and operating expenses de facto included in rents
EPRA Costs (including direct vacancy costs) (A)
Direct vacancy costs
EPRA Costs (excluding direct vacancy costs) (B)
Gross Rental Income less ground rent costs and operating expenses de facto included in rents
Share of joint ventures and funds (GRI less ground rent costs)
Total Gross Rental Income less ground rent costs (C)
EPRA Cost Ratio (including direct vacancy costs) (A/C)
EPRA Cost Ratio (excluding direct vacancy costs) (B/C)
Impairment of tenant incentives and guaranteed rent increases1 (D)
Adjusted EPRA Cost ratio (including direct vacancy costs and excluding impairment of tenant incentives and
guaranteed rent increases) (A-D)/C
Adjusted EPRA Cost ratio (excluding direct vacancy costs and excluding impairment of tenant incentives and
guaranteed rent increases) (B-D)/C
Overhead and operating expenses capitalised (including share of joint ventures and funds)
2020
£m
69
73
14
(8)
(5)
(16)
127
(30)
97
398
142
540
2019
£m
34
80
11
(8)
(2)
(9)
106
(13)
93
414
153
567
23.5%
18.0%
18.7%
16.4%
20
–
19.8%
18.7%
14.3%
16.4%
6
6
1. Included within property operating expenses in the current year is £15m (2018/19: £nil) in relation to write-offs and provision against tenant incentive balances held by the
group and £5m (2018/19: £nil) in relation to write-offs of guaranteed rent increases.
In the current year, employee costs in relation to staff time on development projects have been capitalised into the base cost of relevant
development assets. In addition to the standard EPRA Cost ratios (both including and excluding direct vacancy costs), adjusted versions
of these ratios have also been presented which remove the impact of the impairment of tenant incentives and guaranteed rent
increases which are exceptional items in the current year, to show the impact of these items on the ratios.
British Land | Annual Report and Accounts 2020
British Land Annual Report and Accounts 2020
211
211
FINANCIAL STATEMENTS CONTINUED
Supplementary disclosures continued
Unaudited unless otherwise stated
Table C: Gross rental income
Rent receivable1
Spreading of tenant incentives and guaranteed rent increases
Surrender premia
Gross rental income
2020
£m
558
(3)
5
560
1. Group gross rental income includes £3m of all inclusive rents relating to service charge income.
The current and prior year information is presented on a proportionally consolidated basis, excluding non-controlling interests.
Table D: Property related capital expenditure
Acquisitions
Development
Like for like portfolio1
Other
Total property related capex
2020
Joint
ventures
and funds
£m
54
126
20
11
211
Group
£m
94
156
83
18
351
Total
£m
148
282
103
29
562
2019
Joint
ventures
and funds
£m
15
91
19
8
133
Group
£m
221
183
35
12
451
1. Includes £36m of flexible workspace fit-out in the current year which has been reclassified from property, plant and equipment to property additions.
The above is presented on a proportionally consolidated basis, excluding non-controlling interests and business combinations.
The ‘Other’ category contains amounts owing to tenant incentives of £12m (2018/19: £7m), letting fees of £3m (2018/19: £5m),
capitalised staff costs of £6m (2018/19: £6m) and capitalised interest of £8m (2018/19: £3m).
2019
£m
587
(13)
2
576
Total
£m
236
274
54
20
584
212
212
British Land | Annual Report and Accounts 2020
British Land Annual Report and Accounts 2020
OTHER INFORMATION (UNAUDITED)
(Data includes Group’s share of Joint Ventures and Funds)
Sales
Since 1 April 2019
Completed
Portfolio of Sainsbury’s stores
David Lloyd, Croydon
Homebase, Walton on Thames
Debenhams, Bournemouth
Clarges2
Total
1. BL share of annualised rent topped up for rent frees.
2. £6m of which exchanged prior to FY20.
Purchases
Since 1 April 2019
Completed
West One
6 Orsman Road, Haggerston
Aldgate Place, Phase 2
Former ToysRus unit, Stockton-on-Tees
Sainsbury’s, Burton upon Trent
Total
1. BL share of annualised rent topped up for rent frees.
Sector
Retail
Retail
Retail
Retail
Residential
Sector
Offices
Offices
Residential
Retail
Retail
Price
(100%)
£m
Price
(BL Share)
£m
Annual
Passing Rent
£m1
522
22
20
8
86
246
22
20
8
86
658
382
15
1
1
1
–
18
Price
(100%)
£m
Price
(BL Share)
£m
Annual
Passing Rent
£m1
217
32
19
8
5
54
32
19
8
5
281
118
2
2
–
–
1
5
British Land Annual Report and Accounts 2020
213
OTHER INFORMATION (UNAUDITED) CONTINUED
Portfolio Valuation by Sector
At 31 March 2020
West End
City
Offices
Retail Parks
Shopping Centre
Superstores
Department Stores
High Street
Leisure
Retail
Residential2
Canada Water
Total
Standing Investments
Developments
Group
£m
4,151
300
4,451
1,115
753
89
33
133
249
2,372
147
364
7,334
6,593
741
JVs &
Funds
£m
53
2,269
2,322
724
757
–
–
1
19
1,501
–
–
3,823
3,432
391
Total
£m
4,204
2,569
6,773
1,839
1,510
89
33
134
268
3,873
147
364
11,157
10,025
1,132
Change%1
H2
1.5
2.5
1.9
(18.8)
(19.8)
(7.7)
(33.3)
(11.0)
(8.4)
(18.2)
(0.6)
(1.6)
(6.3)
(7.4)
2.3
H1
(0.1)
1.3
0.4
(12.4)
(11.8)
(1.5)
(10.5)
(9.7)
0.8
(10.7)
(2.1)
12.4
(4.3)
(5.2)
4.6
FY
1.4
3.7
2.3
(28.7)
(29.2)
(4.7)
(40.3)
(19.8)
(7.1)
(26.1)
(2.7)
9.8
(10.1)
(12.0)
6.5
1. Valuation movement during the year (after taking account of capital expenditure) of properties held at the balance sheet date, including developments (classified by end
use), purchases and sales.
2. Stand-alone residential.
Gross Rental Income1
Accounting Basis £m
West End
City
Offices
Retail Parks
Shopping Centre
Superstores
Department Stores
High Street
Leisure
Retail
Residential2
Canada Water
Total
12 months to 31 March 2020
Annualised as at 31 March 2020
Group
JVs &
Funds
155
15
170
94
64
5
7
6
15
191
4
9
374
1
69
70
58
52
5
–
–
1
116
–
–
186
Total
156
84
240
152
116
10
7
6
16
307
4
9
560
Group
JVs &
Funds
144
7
151
90
61
5
5
6
14
181
4
8
344
2
63
65
55
49
2
–
–
1
107
–
–
172
Total
146
70
216
145
110
7
5
6
15
288
4
8
516
1. Gross rental income will differ from annualised valuation rents due to accounting adjustments for fixed & minimum contracted rental uplifts and lease incentives.
2. Stand-alone residential.
214
British Land Annual Report and Accounts 2020
Portfolio Net Yields1,2
As at 31 March 2020
West End
City
Offices
Retail Parks
Shopping Centre
Superstore
Department Store
High Street
Leisure
Retail
Canada Water
Total
EPRA net
initial yield
%
EPRA topped
up net initial
yield
%3
Overall
topped up net
initial yield
%4
Net
equivalent
yield
%
Net
equivalent
yield
movement
bps
Net
reversionary
yield
%
3.5
3.2
3.4
7.0
6.1
6.9
15.6
3.8
5.3
6.5
3.4
4.6
4.1
4.0
4.1
7.2
6.2
6.9
15.6
4.0
5.4
6.6
3.4
5.1
4.1
4.0
4.1
7.3
6.3
6.9
22.9
4.0
6.0
6.9
3.4
5.2
4.3
4.5
4.4
7.0
6.4
5.7
9.2
5.5
5.8
6.6
4.0
5.2
–
(14)
(4)
117
99
38
185
57
22
101
25
38
4.8
5.3
5.0
6.8
6.4
5.6
10.4
5.9
5.1
6.5
4.0
5.5
ERV
Growth
%5
2.4
4.5
3.2
(13.6)
(10.2)
(9.8)
(19.8)
(9.8)
(1.2)
(11.7)
(5.8)
(4.7)
On a proportionally consolidated basis including the Group’s share of joint ventures and funds.
1. Including notional purchaser’s costs.
2. Excluding committed developments, assets held for development and residential assets.
3. Including rent contracted from expiry of rent-free periods and fixed uplifts not in lieu of rental growth.
4. Including fixed/minimum uplifts (excluded from EPRA definition).
5. As calculated by IPD.
Total Property Return (as calculated by IPD)
12 months to 31 March 2020
%
Capital Return
– ERV Growth
– Yield Movement1
Income Return
Total Property Return
Offices
Retail
Total
British Land
IPD
British Land
IPD
British Land
2.5
3.2
(4bps)
3.1
5.7
(0.5)
1.3
(2bps)
3.8
3.3
(27.3)
(11.7)
101bps
6.2
(22.6)
(14.5)
(5.8)
59bps
5.4
(9.8)
(10.3)
(4.7)
38bps
4.3
(6.4)
IPD
(4.8)
(1.0)
18bps
4.5
(0.4)
On a proportionally consolidated basis including the Group’s share of joint ventures and funds.
1. Net equivalent yield movement.
British Land Annual Report and Accounts 2020
215
OTHER INFORMATION (UNAUDITED) CONTINUED
Top 20 Tenants by Sector
As at 31 March 2020
Retail
Tesco plc1
Next plc
Kingfisher
Walgreens (Boots)
M&S Plc
J Sainsbury
Dixons Carphone
Debenhams
Frasers
JD Sports
TJX (TK Maxx)
Arcadia Group
New Look
Asda Group
Virgin
TGI Fridays
Steinhoff
H&M
Hutchison Whampoa Ltd
DFS Furniture
% of
retail rent
% of
office rent
Offices
Facebook
Government
Dentsu Aegis2
Visa
Herbert Smith Freehills
Gazprom
Microsoft Corp
Vodafone
Tullett Prebon
Deutsche Bank
Henderson
Reed Smith
The Interpublic Group (McCann)
Mayer Brown
Skyscanner
Mimecast Ltd
Credit Agricole
Aramco
Kingfisher
Monzo Bank
7.8
4.9
3.6
3.5
2.8
2.6
2.5
2.5
2.4
2.2
2.1
2.0
1.9
1.7
1.6
1.5
1.5
1.4
1.4
1.3
7.8
6.4
4.4
4.0
3.2
2.5
2.4
2.0
2.0
1.9
1.7
1.7
1.6
1.4
1.3
1.3
1.2
1.2
1.2
1.1
1. Includes £3.4m at Surrey Quays Shopping Centre.
2. Taking into account their pre-let of 310,000 sq ft at 1 Triton Square, % of contracted rent would rise to 13.0%. As part of this new letting, Dentsu Aegis have an option to
return their existing space at 10 Triton Street in 2021. If this option is exercised, there is an adjustment to the rent free period in respect of the letting at 1 Triton Square
to compensate British Land.
216
British Land Annual Report and Accounts 2020
Major Holdings
As at 31 March 2020
Broadgate
Regent’s Place
Paddington Central
Portman Square
Meadowhall, Sheffield
Drake’s Circus, Plymouth
Teesside, Stockton
Ealing Broadway
Glasgow Fort
New Mersey, Speke
1. Annualised EPRA contracted rent including 100% of Joint Ventures & Funds.
2. Includes accommodation under offer or subject to asset management.
3. Weighted average to first break.
4. Excludes committed and near term developments.
Lease Length & Occupancy
As at 31 March 2020
West End
City
Offices
Retail Parks
Shopping Centre
Superstores
Department Stores
High Street
Leisure
Retail
Canada Water
Total
BL Share
%
Sq ft
‘000
Rent (100%)
£m pa1,4
Occupancy
rate %2,4
Lease
length yrs3,4
50
100
100
100
50
100
100
100
78
68
4,468
1,740
958
134
1,500
1,190
569
540
510
502
162
80
46
10
82
20
16
15
20
14
96.9
97.1
97.6
100.0
96.1
90.1
96.5
92.1
96.1
94.4
6.3
5.3
5.8
5.4
4.9
6.3
3.8
3.8
5.7
5.7
Average lease length yrs
Occupancy rate %
To expiry
To break
Occupancy Occupancy1,2,3
EPRA
6.4
7.5
6.8
6.8
6.6
6.9
18.1
4.7
14.6
7.3
4.9
7.0
5.4
6.3
5.7
5.5
5.2
6.8
9.1
4.0
14.3
5.9
4.7
5.8
97.6
85.4
92.9
94.1
94.2
100.0
97.9
91.7
93.1
94.2
97.7
93.6
97.7
96.6
97.3
96.1
95.6
100.0
97.9
92.1
93.1
95.7
97.9
96.6
1. Space allocated to Storey is shown as occupied where there is a Storey tenant in place otherwise it is shown as vacant. Total occupancy would rise from 96.6% to 97.1% if
Storey space were assumed to be fully let.
2. Includes accommodation under offer or subject to asset management.
3. Where occupiers have entered administration or CVA but are still liable for rates, these are treated as occupied. Reflecting units currently occupied but expected to
become vacant, then the occupancy rate for Retail would reduce from 95.7% to 94.7%, and total occupancy would reduce from 96.6% to 96.0%.
British Land Annual Report and Accounts 2020
217
OTHER INFORMATION (UNAUDITED) CONTINUED
Portfolio Weighting
As at 31 March
West End
City
Offices
Retail Parks
Shopping Centre
Superstores
Department Stores
High Street
Leisure
Retail
Residential1
Canada Water
Total
London Weighting
1. Stand-alone residential.
2019
%
33.0
18.2
51.2
21.0
17.2
2.7
0.6
1.4
2.4
45.3
1.0
2.5
100.0
61%
2020
%
37.7
23.0
60.7
16.5
13.5
0.8
0.3
1.2
2.4
34.7
1.3
3.3
100.0
71%
2020
£m
4,204
2,569
6,773
1,839
1,510
89
33
134
268
3,873
147
364
11,157
7,878
Annualised Rent & Estimated Rental Value (ERV)
As at 31 March 2020
West End3
City3
Offices3
Retail Parks
Shopping Centre
Superstores
Department Stores
High Street
Leisure
Retail
Residential4
Canada Water5
Total
Annualised rent (valuation basis) £m1
ERV £m
Average rent £psf
Group
JVs & Funds
136
6
142
91
62
7
6
6
14
186
4
8
340
2
64
66
58
51
–
–
–
1
110
–
–
176
Total
138
70
208
149
113
7
6
6
15
296
4
8
516
Total
Contracted2
191
118
309
140
116
5
4
9
15
289
4
9
611
62.8
50.3
58.0
25.0
29.7
21.0
6.6
13.1
17.1
24.1
44.7
17.7
30.9
ERV
69.4
63.1
66.9
22.9
29.9
17.1
4.6
18.6
16.3
23.0
37.4
20.5
33.4
1. Gross rents plus, where rent reviews are outstanding, any increases to ERV (as determined by the Group’s external valuers), less any ground rents payable under head
leases, excludes contracted rent subject to rent free and future uplift.
2. Annualised rent, plus rent subject to rent free.
3. £psf metrics shown for office space only.
4. Standalone residential.
5. Reflects standing investment only.
218
British Land Annual Report and Accounts 2020
Rent Subject to Open Market Rent Review
For period to 31 March
As at 31 March 2020
2021
£m
2022
£m
2023
£m
2024
£m
2025
£m
2021-23
£m
2021-25
£m
West End
City
Offices
Retail Parks
Shopping Centre
Superstores
Department Stores
High Street
Leisure
Retail
Residential
Canada Water1
Total
17
11
28
17
12
–
–
–
–
29
–
–
57
9
–
9
11
7
–
–
–
–
18
1
–
28
On a proportionally consolidated basis including the Group’s share of joint ventures and funds.
1. Reflects standing investment only.
Rent Subject to Lease Break or Expiry
For period to 31 March
As at 31 March 2020
West End
City
Offices
Retail Parks
Shopping Centre
Superstores
Department Stores
High Street
Leisure
Retail
Residential
Canada Water1
Total
% of contracted rent
2021
£m
13
12
25
17
14
–
–
2
–
33
3
1
62
10.9
2022
£m
29
3
32
11
14
–
3
1
–
29
–
1
62
10.8
On a proportionally consolidated basis including the Group’s share of joint ventures and funds.
1. Reflects standing investment only.
23
–
23
14
12
–
1
1
–
28
–
–
51
2023
£m
17
4
21
16
14
2
–
1
–
33
–
1
55
9.6
7
15
22
6
7
1
2
–
–
16
–
–
38
2024
£m
14
12
26
25
14
–
–
1
–
40
–
2
68
11.8
16
11
27
6
4
3
–
–
1
14
–
–
41
49
11
60
42
31
–
1
1
–
75
1
–
136
72
37
109
54
42
4
3
1
1
105
1
–
215
2025
£m
2021-23
£m
2021-25
£m
16
6
22
12
7
–
–
1
–
20
–
–
42
7.4
59
19
78
44
42
2
3
4
–
95
3
3
179
31.3
89
37
126
81
63
2
3
6
–
155
3
5
289
50.5
British Land Annual Report and Accounts 2020
219
OTHER INFORMATION (UNAUDITED) CONTINUED
Recently Completed and Committed Developments
As at 31 March 2020
1 Finsbury Avenue
135 Bishopsgate
Plymouth (Leisure)
Total Recently Completed
100 Liverpool Street
1 Triton Square3
Total Committed
Other Capital Expenditure4
Sector
Office
Office
Retail
Office
Office
BL Share
%
100% sq ft
‘000
PC Calendar
Year
Current
Value
£m
Cost to come
£m1
50
50
100
50
100
Q1 2019
Q1 2020
Q4 2019
Q3 2020
Q2 2021
287
335
108
730
524
366
890
171
214
26
411
378
385
763
–
–
2
2
27
49
76
57
ERV
£m2
8.3
9.7
1.8
19.8
19.3
22.6
41.9
Let
£m
7.0
8.7
1.2
16.9
15.4
21.8
37.2
1. From 1 April 2020. Cost to come excludes notional interest as interest is capitalised individually on each development at our capitalisation rate.
2. Estimated headline rental value net of rent payable under head leases (excluding tenant incentives).
3. ERV let & under offer of £21.8m represents space taken by Dentsu Aegis. As part of this letting, Dentsu Aegis have an option to return their existing space at 10 Triton
Street in 2021. If this option is exercised, there is an adjustment to the rent free period in respect of the letting at 1 Triton Square to compensate British Land.
4. Capex committed and underway within our investment portfolio relating to leasing and asset management.
Near Term Development Pipeline
As at 31 March 2020
Norton Folgate
1 Broadgate
Aldgate Place, Phase 2
Total Near Term
Other Capital Expenditure3
Sector
Office
Office
Residential
BL Share
%
100% sq ft
‘000
Earliest Start
On Site
100
50
100
Q3 2020
Q2 2021
Q4 2020
336
538
133
1,007
Current
Value
£m
Cost to Come
£m1
95
96
37
228
280
230
95
605
22
ERV
£m2
22.0
20.0
7.0
49.0
Let & Under
Offer
£m Planning Status
– Consented
– Consented
Consented
–
1. From 1 April 2020. Cost to come excludes notional interest as interest is capitalised individually on each development at our capitalisation rate.
2. Estimated headline rental value net of rent payable under head leases (excluding tenant incentives).
3. Forecast capital commitments within our investment portfolio over the next 12 months relating to leasing and asset enhancement.
Medium Term Development Pipeline
As at 31 March 2020
5 Kingdom Street1
2-3 Finsbury Avenue
Eden Walk Retail & Residential
Ealing – 10-40 The Broadway
Gateway Building
Canada Water2
Total Medium Term
Sector
Office
Office
Mixed Use
Retail
Leisure
Mixed Use
BL Share
%
100
50
50
100
100
100
100% Sq ft
‘000 Planning Status
438 Submitted
563 Consented
452 Consented
303 Pre-submission
105 Consented
5,000 Resolution to grant planning
6,861
1. Planning consent for previous 240,000 sq ft scheme.
2. On drawdown of the Master Development Agreement, ownership reduces to 80% with LBS owning 20%. LBS ownership will adjust over time depending on level of
investment by Southwark.
220
British Land Annual Report and Accounts 2020
SUSTAINABILITY PERFORMANCE MEASURES
Sustainability performance measures
We report on all assets where we have day–to–day operational or management influence (our managed portfolio) and all
developments over £300,000 with planning permission, onsite or completed in the year. The exception is EPC and flood risk data,
where we report on all assets under management. As at 31 March 2020, our managed portfolio comprised 83% of our assets under
management. Please see the scope column for indicator–specific reporting coverage.
Selected data has been independently assured since 2007. Selected data in the Sustainability Accounts for 2020 has been
independently assured by DNV GL in accordance with ISAE 3000 (Revised).
2020 sustainability strategy performance
Aligned to the corporate strategy, our sustainability strategy is built around four focus areas, which address major social, economic
and environmental trends to create value for our stakeholders and the business. Here is an overview of our recent performance.
For our full methodology, more detailed data and the 2020 DNV GL assurance statement, please see our Sustainability Accounts 2020
at www.britishland.com/data.
Overall
Indicators1
Continued inclusion in three out of four sustainability indices: DJSI Europe,
DJSI World, FTSE4Good and GRESB
Major developments on track to implement Sustainability Brief
Performance
2020
4/4
2019
4/4
2020 scope
(assets or units)
–
100%
100%
22/22
Wellbeing (Customer Orientation)
Indicators1
2020 targets
2020
Performance
2019
2020 scope
(assets or units)
Deliver a WELL certified commercial office to shell and core, and set corporate
policy for future developments
Develop and pilot retail wellbeing specification
Increase the sense of wellbeing for shoppers, retailers and occupiers at our places
Define and trial a methodology for measuring productivity in offices
Research and publish on how development design impacts public health outcomes
Pilot interventions to improve local air quality
Injury Incidence Rate (RIDDOR)
Offices
Retail
Developments
Injury Frequency Rate (RIDDOR)
Community (Right Places)
Indicators
Implement our Local Charter at key assets and major developments
British Land employee skills-based volunteering
British Land employee volunteering
Community programme beneficiaries
Increase
On track
Deliver
Deliver Completed
85%
Deliver Completed
Deliver Completed
3
On track
In progress
84%
Completed
Completed
2 In progress
14.77
0.01
0.12
33.96
0.00
0.04
–
–
–
–
–
–
46/46
57/57
49/52
2020 targets
100%
20%
90%
Performance
2020
94%
19%
68%
40,076
2019
92%
17%
81%
36,358
2020 scope
(assets or units)
–
–
–
–
Futureproofing (Capital Efficiency)
Indicators
2020 targets
2020
Performance
2019
2020 scope
(assets or units)
Current new developments on track to achieve BREEAM Excellent for Offices and
Excellent or Very Good for Retail
Carbon (Scope 1 and 2) intensity reduction versus 2009 (index scored)
Landlord energy intensity reduction versus 2009 (index scored)
Electricity purchased from renewable sources
Average reduction in embodied carbon emissions versus concept design
on major developments
Waste diverted from landfill: managed properties and developments
Portfolio with green building ratings (% by floor area)
Energy Performance Certificates rated F or G (% by floor area)
Portfolio at high risk of flood (% by value)
High flood risk assets with flood management plans (% by value)
100%
55%
55%
100%
15%
100%
100%
73%
55%
96%
16%
99%
23%
5%
2%
100%
92%
64%
44%
96%
100%
73/73
73/73
102/106
10%
99.6%
18%
–
133/141
100%
5% 2587/3006
174/174
3%
7/7
100%
1. In this financial year we were listed in DJSI 2019 World and Europe, awarded a green star in GRESB 2019 and ranked in the top 98th percentile of FTSE4Good 2019.
British Land Annual Report and Accounts 2020
221
SUSTAINABILITY PERFORMANCE MEASURES CONTINUED
Skills and opportunity (Expert People)
Indicators
People supported into employment (cumulative)
Strategic suppliers agreed with terms of our Supplier Code of Conduct
Prioritised supplier workforce who are apprentices
Pilot a Living Wage Zone at a London campus
Workforce paid at least Living Wage
Foundation rate
Group employees
Supplier workforce at managed
properties
Developments supply chain spend within 25 miles
2020 targets
1,700
100%
3%
Deliver
100%
Performance
2020
1,745
96%
2.1%
1,232
53%
2.4%
Piloted In progress
100%
100%
2019
2020 scope
(assets or units)
–
–
147/278
–
–
78%
66%
66%
66%
101/101
9/10
EPRA best practice recommendations on sustainability reporting
We have received Gold Awards for sustainability reporting from the European Public Real Estate Association (EPRA), eight years
running. For our full EPRA sustainability reporting, methodology and the 2020 DNV GL assurance statement, please see our
Sustainability Accounts 2020 at www.britishland.com/data.
Selected data has been independently assured since 2007. Selected data in the Sustainability Accounts for 2020 has
been independently assured by DNV GL in accordance with the International Standard on Assurance Engagements (ISAE)
3000 revised – Assurance Engagements other than Audits and Reviews of Historical Financial Information’ (revised),
issued by the International Auditing and Assurance Standards Board.
Environmental1
Indicators
Total electricity consumption (MWh)
Total district heating and cooling consumption (MWh)
Total fuel consumption (MWh)
Building energy intensity (kWh)
Offices (per m2)
Retail – enclosed (per m2)
Retail – open air (per car parking space)
Location based
Total direct (Scope 1) greenhouse gas emissions (tonnes CO2e)
Total indirect (Scope 2)
greenhouse gas emissions
(tonnes CO2e)
Greenhouse gas intensity from
building energy consumption
(tonnes CO2e)
Market based
Offices (per m²)
Retail – enclosed (per m2)
Retail – open air (per car parking space)
Total water consumption (m³)
Building water intensity (m³)
Offices (per FTE)
Retail – enclosed (per 10,000 visitors)
Retail – open air (per 10,000 visitors)
Total non-hazardous waste by
disposal route (tonnes and %)
Re-used and recycled
Incinerated
Landfilled
Total hazardous waste
by disposal route (tonnes and %)
Re-used and recycled
Sustainably certified assets –
Energy Performance Certificates
(% by floor area)
Incinerated
Landfilled
A to B
C to E
F to G
2020
151,504
0
37,156
102.99
132.10
160.46
6,945
15,373
669
0.032
0.037
0.044
814,658
12.1
13.5
15.4
10,065
58%
7,368
42%
2
0%
8
84%
2
16%
0
0%
25%
70%
5%
Performance
2019
154,532
0
36,290
136.40
149.02
161.06
6,556
20,258
1,549
0.044
0.043
0.049
553,282
14.09
nr
nr
10,818
57%
8,182
43%
2
0%
5
44%
7
56%
0
0%
22%
73%
5%
2018
2020 scope
(assets or units)
162,833
0
37,500
145.71
156.48
168.13
6,967
27,301
1,875
0.055
0.056
0.062
616,221
15.56
Nr
Nr
11,207
56%
8,887
44%
6
0%
nr
nr
102/106
–
81/85
31/31
8/8
34/34
81/85
102/106
102/106
31/31
8/8
34/34
74/76
30/30
8/8
18/19
85/90
85/90
85/90
85/90
85/90
nr
85/90
23% 2587/3006
72% 2587/3006
5% 2587/3006
1. As per EPRA best practice recommendations, total energy and water data covers energy and water procured by British Land. Energy and carbon intensity data covers
common parts and shared services for Offices and common parts for Retail. Water intensity data covers whole buildings for Offices and common parts for Retail.
Per m2 comprises net internal areas for Offices and common parts for Retail.
222
British Land Annual Report and Accounts 2020
Social
Indicators
Employee diversity – gender
Employee gender pay ratio (median
remuneration, female to male)
Male
Female
Executive Directors
Senior management
Middle and non-management
Employee training – average hours
Employee annual performance review
Employee new hires rate
Employee turnover – departures rate
Employee health and safety
Asset health and safety
Progress implementing our
Local Charter at key assets and
major developments
Absentee rate
Injury frequency rate
Lost day rate
Work-related fatalities
Proportion subject to health
and safety review (%)
Incidents of non-compliance
Implement our Local Charter at key assets
and major developments (% progress)
Proportion of managed portfolio (floor area)
where Local Charter or other community
activity implemented
2020
49%
51%
–
89%
71%
23.6
100%
12%
12%
1%
0
0
0
100%
0
94%
80%
Performance
2019
48%
52%
–
87%
74%
13.4
100%
17%
19%
1%
0
3.68
0
100%
0
92%
83%
2018
51%
49%
–
89%
69%
14.2
100%
20%
15%
1%
0
0
0
100%
0
Charter
updated
–
2020 scope
(assets or units)
–
–
–
–
–
–
–
–
–
–
–
–
–
100%
100%
–
101/101
Governance
Indicators
Composition of the highest governance body
Nominating and selecting the highest governance body
Corporate-level performance
Process for managing conflicts of interest
Annual Report and Accounts
2020
Board’s Executive and Non-Executive Directors page 92.
Tenures of Non-Executive Directors page 107.
Appointment process for new directors page 106.
Board procedure for managing conflicts of
interest page 99.
British Land Annual Report and Accounts 2020
223
TEN YEAR RECORD
The table below summarises the last ten years’ results, cash flows and balance sheets.
Income1
Gross rental income
Net rental income
Net fees and other income
Interest expense (net)
Administrative expense
Underlying Profit
Exceptional costs
(not included in Underlying Profit)4
Dividends declared
Summarised balance sheets
Total properties at valuation1,3
Net debt
Other assets and liabilities
EPRA NAV/Fully diluted adjusted
net assets
Cash flow movement – Group only
Cash generated from operations
Other cash flows from operations
Net cash inflow from
operating activities
Cash (outflow) inflow from capital
expenditure, investments,
acquisitions and disposals
Equity dividends paid
Cash inflow (outflow) from
management of liquid resources
and financing
(Decrease) increase in cash5
Capital returns
(Reduction) growth in net assets2
Total return
Total return – pre-exceptional
Per share information
EPRA net asset value per share
Memorandum
Dividends declared in the year
Dividends paid in the year
Diluted earnings
Underlying EPRA earnings per share
IFRS (loss) earnings per share4
2020
£m
2019
£m
2018
£m
2017
£m
2016
£m
2015
£m
2014
£m
2013
£m
2012
£m
2011
£m
560
478
13
(111)
(74)
306
–
148
576
532
10
(121)
(81)
340
–
298
613
576
15
(128)
(83)
380
–
302
643
610
17
(151)
(86)
390
–
296
654
620
17
(180)
(94)
363
–
287
618
585
17
(201)
(88)
313
–
277
597
562
15
(202)
(78)
297
–
266
567
541
15
(206)
(76)
274
–
234
572
546
17
(218)
(76)
269
–
231
541
518
18
(212)
(68)
256
–
231
11,177
(3,854)
(110)
12,316
(3,521)
(146)
13,716
(3,973)
(183)
13,940
(4,223)
(219)
14,648
(4,765)
191
13,677
(4,918)
276
12,040
(4,890)
(123)
10,499
(4,266)
(266)
10,337
(4,690)
(266)
9,572
(4,173)
(298)
7,213
8,649
9,560
9,498
10,074
9,035
7,027
5,967
5,381
5,101
404
(29)
617
(4)
375
613
351
2
353
379
(16)
341
(47)
318
(33)
243
(24)
197
(7)
211
(5)
182
28
363
294
285
219
190
206
210
(361)
(295)
187
(298)
346
(304)
470
(295)
230
(235)
(111)
(228)
(660)
(159)
(202)
(203)
(547)
(212)
(240)
(139)
232
(49)
(365)
137
(404)
(9)
(538)
–
(283)
6
20
(34)
607
7
213
(2)
630
77
157
(12)
(16.6)%
(11.0)%
(11.0)%
(9.5)%
(3.3)%
(3.3)%
0.7%
8.9%
8.9%
(5.7)% 11.5%
14.2%
2.7%
14.2%
2.7%
28.6%
24.5%
24.5%
17.8%
20.0%
20.0%
10.9%
4.5%
4.5%
5.5%
9.5%
9.5%
15.7%
17.7%
17.7%
774p
905p
967p
915p
919p
829p
688p
596p
595p
567p
16.0p
31.5p
31.0p
30.5p
30.1p
29.6p
29.2p
28.8p
28.4p
28.0p
27.7p
27.3p
27.0p
26.7p
26.4p
26.3p
26.1p
26.0p
26.0p
26.0p
32.7p
(110.0)p
34.9p
(30.0)p
37.4p
48.5p
37.8p
14.7p
34.1p
119.7p
30.6p
167.3p
29.4p
110.2p
30.3p
31.5p
29.7p
53.8p
28.5p
95.2p
1. Including share of joint ventures and funds.
2. Represents movement in diluted EPRA NAV.
3. Including surplus over book value of trading and development properties.
4. Including restatement in 2016 and exceptional finance costs in 2009: £119m.
5. Represents movement in cash and cash equivalents under IFRS and movements in cash under UK GAAP.
224
British Land Annual Report and Accounts 2020
SHAREHOLDER INFORMATION
Analysis of shareholders – 31 March 2020
2020/21
1–1,000
1,001–5,000
5,001–20,000
20,001–50,000
50,001–Highest
Total
Holder type
Individuals
Nominee and
institutional
investors
Total
Number
of holdings
Balance as at
31 March 20201
%
4,955
2,636
637
232
618
9,078
2,100,543
54.58
5,804,849
29.04
6,317,738
7.02
7,439,394
2.56
6.81 916,275,573
100.00 937,938,097
%
0.22
0.62
0.67
0.79
97.69
100.00
5,580
61.50
10,116,522
1.08
3,498
9,078
38.50 927,821,575
100.00 937,938,097
98.92
100.00
1. Excluding 11,266,245 shares held in treasury.
Registrars
British Land has appointed Equiniti Limited (Equiniti) to
administer its shareholder register. Equiniti can be contacted at:
Aspect House
Spencer Road
Lancing, West Sussex BN99 6DA
Tel: 0371 384 2143 (UK callers)
Tel: +44 (0)121 415 7047 (Overseas callers)
Lines are open from 8.30am to 5.30pm Monday to Friday
excluding public holidays in England and Wales.
Website: www.shareview.co.uk
By registering with Shareview, shareholders can:
– view your British Land shareholding online
– update your details
– elect to receive shareholder mailings electronically
Equiniti is also the Registrar for the BLD Property Holdings
Limited Stock.
Share dealing facilities
By registering with Shareview, Equiniti also provides existing
and prospective UK shareholders with a share dealing facility for
buying and selling British Land shares online or by phone.
For more information, contact Equiniti at www.shareview.co.uk/
dealing or call 0845 603 7037 (Monday to Friday excluding public
holidays from 8.30am to 4.30pm). Existing British Land
shareholders will need the reference number given on your
share certificate to register. Similar share dealing facilities are
provided by other brokers, banks and financial services.
Website and shareholder communications
The British Land corporate website contains a wealth of
material for shareholders, including the current share price,
press releases and information on dividends. The website can be
accessed at www.britishland.com.
British Land encourages its shareholders to receive shareholder
communications electronically. This enables shareholders
to receive information quickly and securely as well as in a
more environmentally friendly and cost-effective manner.
Further information can be obtained from Shareview or the
Shareholder Helpline.
ShareGift
Shareholders with a small number of shares, the value of
which makes it uneconomic to sell them, may wish to consider
donating their shares to charity. ShareGift is a registered
charity (No. 1052686) which collects and sells unwanted shares
and uses the proceeds to support a wide range of UK charities.
A ShareGift donation form can be obtained from Equiniti.
Further information about ShareGift can be obtained from their
website: www.sharegift.org.
Honorary President
In recognition of his work building British Land into the industry
leading company it is today, Sir John Ritblat was appointed as
Honorary President on his retirement from the Board in
December 2006.
Registered office
The British Land Company PLC
York House
45 Seymour Street, London W1H 7LX
Telephone: +44 (0)20 7486 4466
Registered number: 621920
Website: www.britishland.com
British Land Annual Report and Accounts 2020
225
SHAREHOLDER INFORMATION CONTINUED
Dividends
As a REIT, British Land pays Property Income Distribution (PID)
and non-Property Income Distribution (non-PID) dividends. More
information on REITs and PIDs can be found in the Investors
section of our website at www.britishland.com/investors/dividends.
British Land dividends can be paid directly into your bank or
building society account instead of being despatched to you by
cheque. More information about the benefits of having dividends
paid directly into your bank or building society account, and the
mandate form to set this up, can be found in the Investors
section of our website at www.britishland.com/investors/
dividends/dividends-direct-to-your-bank.
Scrip Dividend Scheme
British Land may offer shareholders the opportunity to
participate in the Scrip Dividend Scheme by offering a
Scrip Alternative to a particular dividend from time to time.
The Scrip Dividend Scheme allows participating shareholders
to receive additional shares instead of a cash dividend.
For more information please visit the Investors section
of our website at www.britishland.com/investors/dividends/
scrip-dividend-scheme.
Unsolicited mail
British Land is required by law to make its share register
available on request to other organisations. This may result in
the receipt of unsolicited mail. To limit this, shareholders may
register with the Mailing Preference Service. For more
information, or to register, visit www.mpsonline.org.uk.
Shareholders are also advised to be vigilant of share fraud which
includes telephone calls offering free investment advice or
offers to buy and sell shares at discounted or highly inflated
prices. If it sounds too good to be true, it often is. Further
information can be found on the Financial Conduct Authority’s
website www.fca.org.uk/scams or by calling the FCA Consumer
Helpline on 0800 111 6768.
Tax
The Group elected for REIT status on 1 January 2007, paying
a £308m conversion charge to HMRC in the same year. As a
consequence of the Group’s REIT status, tax is not levied within
the corporate group on the qualifying property rental business
but is instead deducted from distributions of such income as
Property Income Distributions to shareholders. Any income
which does not fall within the REIT regime is subject to tax
within the Group in the usual way. This includes profits on
property trading activity, property related fee income and
interest income. We continue to pass all REIT tests ensuring
that our REIT status is maintained.
We work proactively and openly to maintain a constructive
relationship with HMRC. We discuss matters in real-time with
HMRC and disclose all relevant facts and circumstances,
particularly where there may be tax uncertainty or the law is
unclear. HMRC assigns risk ratings to all large companies.
We have a low appetite for tax risk and HMRC considers us to
be ‘Low Risk’ (a status we have held since 2007 when the
rating was first introduced by HMRC).
Further information on our Tax Strategy can be found in Our
Approach to Tax Strategy at www.britishland.com/governance.
226
British Land Annual Report and Accounts 2020
Forward-looking statements
This Annual Report contains certain (and we may make other
verbal or written) ‘forward-looking’ statements. These forward-
looking statements include all matters that are not historical
fact. Such statements reflect current views, intentions,
expectations, forecasts and beliefs of British Land concerning,
among other things, our markets, activities, projections,
strategy, plans, initiatives, objectives, performance, financial
condition, liquidity, growth and prospects, as well as
assumptions about future events. Such ‘forward-looking’
statements can sometimes, but not always, be identified by their
reference to a date or point in the future, the future tense, or the
use of ‘forward-looking’ terminology, including terms such as
‘believes’, ‘considers’, ‘estimates’, ‘anticipates’, ‘expects’,
‘forecasts’, ‘intends’, ‘continues’, ‘due’, ‘potential’, ‘possible’,
‘plans’, ‘seeks’, ‘projects’, ‘budget’, ‘goal’, ‘guidance’, ‘trends’,
‘future’, ‘outlook’, ‘schedule’, ‘target’, ‘aim’, ‘may’, ‘likely to’,
‘will’, ‘would’, ‘could’, ‘should’ or similar expressions or in each
case their negative or other variations or comparable
terminology. By their nature, forward-looking statements
involve inherent known and unknown risks, assumptions and
uncertainties because they relate to future events and
circumstances and depend on circumstances which may or may
not occur and may be beyond our ability to control, predict or
estimate. Forward-looking statements should be regarded with
caution as actual outcomes or results, or plans or objectives,
may differ materially from those expressed in or implied by such
statements. Recipients should not place reliance on, and are
cautioned about relying on, any forward-looking statements.
Important factors that could cause actual results (including the
payment of dividends), performance or achievements of British
Land to differ materially from any outcomes or results
expressed or implied by such forward-looking statements
include, among other things: (a) general business and political,
social and economic conditions globally, (b) the consequences of
the referendum on Britain leaving the EU, (c) industry and
market trends (including demand in the property investment
market and property price volatility), (d) competition, (e) the
behaviour of other market participants, (f) changes in
government and other regulation including in relation to the
environment, health and safety and taxation (in particular, in
respect of British Land’s status as a Real Estate Investment
Trust), (g) inflation and consumer confidence, (h) labour
relations and work stoppages, (i) natural disasters and adverse
weather conditions, (j) terrorism and acts of war, (k) British
Land’s overall business strategy, risk appetite and investment
choices in its portfolio management, (l) legal or other
proceedings against or affecting British Land, (m) reliable and
secure IT infrastructure, (n) changes in occupier demand and
tenant default, (o) changes in financial and equity markets
including interest and exchange rate fluctuations, (p) changes in
accounting practices and the interpretation of accounting standards,
(q) the availability and cost of finance and (r) the consequences
of the Covid-19 pandemic. The Company’s principal risks are
described in greater detail in the section of this Annual Report
headed “Effective Risk Management” on pages 78 to 81
(inclusive). Forward-looking statements in this Annual Report,
or the British Land website or made subsequently, which are
attributable to British Land or persons acting on its behalf,
should therefore be construed in light of all such factors.
Information contained in this Annual Report relating to British
Land or its share price or the yield on its shares are not
guarantees of, and should not be relied upon as an indicator of,
future performance, and nothing in this Annual Report should
be construed as a profit forecast or profit estimate, or
be taken as implying that the earnings of British Land for the
current year or future years will necessarily match or exceed
the historical or published earnings of British Land. Any
forward-looking statements made by or on behalf of British
Land speak only as of the date they are made. Such forward-
looking statements are expressly qualified in their entirety by
the factors referred to above and no representation, assurance,
guarantee or warranty is given in relation to them (whether by
British Land or any of its associates, Directors, officers,
employees or advisers), including as to their completeness,
accuracy, fairness, reliability, the basis on which they were
prepared, or their achievement or reasonableness.
Other than in accordance with our legal and regulatory
obligations (including under the UK Financial Conduct
Authority’s Listing Rules, Disclosure Guidance and
Transparency Rules, the EU Market Abuse Regulation, and the
requirements of the Financial Conduct Authority and the London
Stock Exchange), British Land does not intend or undertake any
obligation to update or revise publicly forward-looking
statements to reflect any changes in British Land’s expectations
with regard thereto or any changes in information, events,
conditions, circumstances or other information on which any
such statement is based (regardless of whether those forward-
looking statements are affected as a result). This document
shall not, under any circumstances, create any implication that
there has been no change in the business or affairs of British
Land since the date of this document or that the information
contained herein is correct as at any time subsequent to
this date.
Nothing in this document shall constitute, in any jurisdiction,
an offer or solicitation to sell or purchase any securities or other
financial instruments, nor shall it constitute a recommendation,
invitation or inducement, or advice, in respect of any securities
or other financial instruments or any other matter.
The Annual Report has been prepared for, and only for, the
members of British Land, as a body, and no other persons.
British Land, its Directors, officers, employees or advisers do
not accept or assume responsibility to any other person to who
this document is shown or into whose hands it may come, and
any such responsibility or liability is expressly disclaimed.
British Land Annual Report and Accounts 2020
227
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www.britishland.com
Head office and registered office
York House
45 Seymour Street
London
W1H 7LX