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Annual Report and Accounts 2021
CONTENTS
Strategic Report
Places People Prefer
1
2021 Key figures
2
Investment case
3
Our portfolio
4
Chairman’s Statement
6
Chief Executive’s Review
8
How we deliver value
12
Vision
14
The priorities for our business
15
Our development pipeline
20
Market drivers
28
Our key performance indicators
30
Stakeholder engagement
32
People and culture
36
Sustainability
40
Task Force on Climate-Related
48
Financial Disclosures (TCFD)
Streamlined Energy and Carbon
Reporting (SECR)
Non-financial reporting disclosure
Performance Review
Financial Review
Financial policies and principles
Managing risk in delivering
our strategy
Principal risks
Viability statement
54
56
70
75
78
82
88
52
Financial Statements
Report of the auditors
149
Primary statements and notes
160
Company balance sheet
211
Supplementary disclosures
223
Other Information
229
235
Other information (unaudited)
Sustainability performance
measures
Ten year record
Shareholder information
237
238
Corporate Governance
90
93
94
96
101
Board of Directors
Governance at a glance
Chairman’s introduction
Governance Review
Key investor relations activities
during the year
Key themes for the year
Board activity
Stakeholder engagement statement
102
103
104
108 Workforce engagement statement
110
Report of the Corporate Social
Responsibility Committee
Report of the Nomination Committee
Report of the Audit Committee
Directors’ Remuneration Report
Directors’ Report and
additional disclosures
Directors’ responsibilities statement
112
116
122
144
147
Presentation of financial information
The financial statements for the year ended
31 March 2021 have been prepared on the historical
cost basis, except for the revaluation of properties,
investments classified as fair value through profit
or loss and derivatives. ‘The financial statements
are prepared in accordance with the International
Financial Reporting Standards (‘IFRS’) and the
relevant legal provisions as required by the
Companies Act 2006. In addition to complying
with IFRS, the consolidated financial statements
also comply with international financial reporting
standards adopted pursuant to Regulation (EC)
No 1606/2002 as it applies in the European Union.
In the current financial year the Group has adopted
a number of minor amendments to standards
effective in the year issued by the IASB, 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 2020. 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 223 for reconciliations, and the glossary
found at 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 incorporated 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.
This Report was signed off by the Board on
25 May 2021.
5
British Land Annual Report and Accounts 2021
Places People Prefer
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 the organisations
who use our places and the communities
who live around them.
This year has demonstrated the importance
of our purpose like never before. The deep
connections we have created between our
customers, communities, partners and
people have endured, helping us navigate
a unique year.
Visit britishland.com for more information
100 Liverpool Street
British Land Annual Report and Accounts 2021
1
2021 KEY FIGURES
Underlying EPS
18.8p
2020: 32.7p
Dividend per share
15.04p
2020: 15.97p
Total accounting return
(15.1)%
2020: (11.0)%
IFRS EPS
(111.2)p
2020: (110.0)p
EPRA NTA per share
GRESB rating
648p
2020: 773p
5*
Underlying Profit
£201m
2020: £306m
IFRS net assets
£5,983m
2020: £7,147m
Average embodied carbon in developments
640kg CO2e per sqm
IFRS loss after tax
Senior unsecured credit rating
£(1,083)m
2020: £(1,114)m
A
2020: A
Beneficiaries from our
community programmes
23,024
100 Liverpool Street
2
British Land Annual Report and Accounts 2021
INVESTMENT CASE
1.
2.
3.
4.
The scale and quality
of our portfolio
Our Campuses provide modern, sustainable
space in great buildings with an engaging
public realm. Retail & Fulfilment focuses
on our retail parks and urban logistics which
are aligned to the growth of convenience
and online shopping.
Read about our places on pages 4-5
Our operational
expertise
Our expertise across investment,
development, asset management, financing
and sustainability enabled us to navigate a
challenging year and pursue growth and
value opportunities.
Read about our people on pages 26-27 and 36-39
Aligned to growth and
value opportunities
Our strategy is aligned to growth areas and
value opportunities. We are leveraging our
competitive strengths to invest behind
two strategic themes, our Campuses
and Retail & Fulfilment.
Read more about our strategy on pages 14-27
Attractive
development pipeline
and financial strength
Our development pipeline includes
opportunities on our portfolio which we
supplement through acquisition. We have a
strong balance sheet and work with partners
to mitigate risk and accelerate returns.
Read about our pipeline of developments on pages 20-21
Assets under management
Total floor space
£12.7bn
21.5m sq ft
Net zero carbon by
2030
Expertise in our team
613 people
Retail & Fulfilment portfolio
London campuses
53%
retail parks
100+
acres
Development pipeline
9.3m sq ft
Loan to value
32.0%
British Land Annual Report and Accounts 2021
3
Our three London campuses are located in some
of London’s most exciting neighbourhoods. They
are well-connected, high quality environments
fostering innovation, collaboration and creativity.
We are delivering a fourth at Canada Water.
OUR PORTFOLIO
Campuses
Regent’s Place
13 acre office-led campus in
London’s Knowledge Quarter
Paddington Central
11 acre office-led campus
close to Paddington Station
4
British Land Annual Report and Accounts 2021
Canada Water
Masterplan
53 acre redevelopment
scheme in zone 2
OvergroundPaddington StationCross railKing’s CrossStationSt PancrasStationEustonStationKnowledge QuarterHoxton & ShoreditchTech beltLiverpool Street StationThe CityThe West EndSiliconRoundaboutTottenhamCourt RoadOxfordCircusCreative hubSohoMayfairOlympic ParkBondStreetPiccadillyCircusFarringdonOld StreetWarrenStreetRegent’sParkEdgwareRoadAngelHoxtonShoreditch High StreetBlackfriarsMoorgateSouthbankTower Bridge Broadgate
32 acre office-led campus
adjacent to Liverpool Street
Station
Retail &
Fulfilment
Our retail portfolio is focused on out of
town retail parks aligned to the growth of
convenience, online retail and last mile
delivery which we are complementing
with an emerging business in urban
logistics. Our shopping centres include
well located open air and traditional
covered centres.
Portfolio highlights
owned assets
managed assets
£12.7bn
£9.1bn
21.5m
£425m
5.3 yrs
sq ft of floor space
annualised rent
average lease length
Retail & Fulfilment
A modern, well located
UK network
Traditional covered schemes
Open air schemes primarily retail parks
British Land Annual Report and Accounts 2021
5
OvergroundPaddington StationCross railKing’s CrossStationSt PancrasStationEustonStationKnowledge QuarterHoxton & ShoreditchTech beltLiverpool Street StationThe CityThe West EndSiliconRoundaboutTottenhamCourt RoadOxfordCircusCreative hubSohoMayfairOlympic ParkBondStreetPiccadillyCircusFarringdonOld StreetWarrenStreetRegent’sParkEdgwareRoadAngelHoxtonShoreditch High StreetBlackfriarsMoorgateSouthbankTower Bridge CHAIRMAN’S STATEMENT
A clear focus for
the year ahead
“ In this extraordinary year, I have
been immensely proud of the way
our people have pulled together.”
Tim Score
Chairman
Covid-19 has created challenges for our business
– like almost every other – that none of us could
have foreseen. In this extraordinary year, I have
been immensely proud of the way our people have
pulled together to support our customers, our
communities and each other. They enabled us to navigate
this crisis successfully and will be a key asset going forward.
The pandemic has acted as a catalyst for existing trends
like the growth of online shopping and more flexible working,
so this year we have set out a new strategy, adopting a more
active approach to value creation, investing behind two strategic
themes, our Campuses and Retail & Fulfilment. In doing so, we
benefit from a sound financial position and a strong leadership
team with a clear vision for the future.
Resilient performance
This was a highly challenging year in many respects but also
one of great progress. Earnings and net asset value per share
were lower, and at the height of the uncertainty we paused
dividend payments, which were resumed a few months later.
We sold £1.2bn of assets and are actively reinvesting the
proceeds in our portfolio through development. We achieved
planning consent for our Canada Water Masterplan and made
6
British Land Annual Report and Accounts 2021
our first logistics acquisition, which also offers attractive
development potential. Our leasing activity in retail was ahead
of last year and while activity in offices was subdued, we were
pleased to pre-let space at our 1 Broadgate development to
JLL. As we emerge from lockdown, we are encouraged by the
conversations we are having across our pipeline. (Read more
on pages 56-74)
Supporting our stakeholders
Our financial year saw three national lockdowns when only
essential stores could operate and people were required to
stay at home. These restrictions placed enormous pressure
on many of our retail and leisure customers who were simply
unable to operate and therefore to manage their rental
obligations. To help them through this crisis, we waived rents
for many of our smaller, independent customers for a period
of time and engaged on a case by case basis to help larger
operators with strong businesses to agree payment plans.
We have also supported our customers with re-opening by
making our places Covid-safe and helping them to manage
social distancing.
The important role that British Land can play in local
communities was brought sharply into focus by the pandemic.
It is a testament to the excellent work we have done over many
years to develop strong relationships with local partners that
we were able to act quickly and effectively to deliver support
where it was most needed. From providing immediate relief
through foodbanks and education materials, to long term
employment and training support, we have been active
across our places and we stand ready to do more because we
recognise that, for many, the impact on health, education and
livelihoods will play out over time. (Read more on pages 32-35).
Throughout, our priority has been the wellbeing of our people.
We have worked hard to foster employee engagement through
online resources to create a culture of support and understanding
where everyone has access to the assistance they need. Our
employee-led staff networks were a valuable source of advice,
practical support and entertainment and played an important
role in preserving the culture of our business while we worked
from home. Nevertheless, the Board recognises just how tough
delivering on the day job has been this year and we are hugely
grateful to everyone for their hard work and commitment
throughout this time. (Read more on pages 36-39)
A focus on ESG
In May 2020 we launched our 2030 Sustainability Strategy,
setting out ambitious targets to be net zero carbon by 2030
and to support local communities on the key issues they face.
In this first year, we have achieved some important milestones
including our first net zero carbon development at 100 Liverpool
Street, publishing our Pathway to Net Zero Carbon and
launching our Transition Vehicle, to finance energy efficient
improvements across the portfolio. The Science Based Targets
initiative also validated our Scope 1, 2 and 3 targets as being
aligned to a 1.5°C global warming trajectory. To achieve these,
we will need to work in partnership with our customers,
partners and suppliers and, more generally, this is one
area where co-operation across the sector is essential to
delivering meaningful change. (Read more on pages 40-53)
The Board is committed to improving our focus on Diversity &
Inclusion and I am pleased that this year we ranked fourth in the
Hampton-Alexander Review of FTSE 100 companies for women
in leadership positions. We have met the recommendations of
the Parker Review, with at least one of our Board Directors
from a minority ethnic background, and this year disclosed
our ethnicity pay gap for the first time. We have signalled our
commitment to disability inclusion by joining The Valuable 500
and I am proud of the work we have done across our portfolio
to make our spaces more accessible for everyone.
Strong financial position
Throughout this time, we have benefitted from the steps
we have taken over several years to strengthen our financial
position. We ended the year with a loan to value of 32.0%,
access to £1.8bn of undrawn facilities and cash and significant
headroom against Group debt covenants. Our quarterly rent
collection performance and productivity of our assets when
restrictions were relaxed gave us the confidence to resume
the dividend, which is now set at 80% of underlying EPS. This
approach ensures that dividends reflect trading conditions as
they change over time and maximises future strategic and
financial flexibility.
A new leadership team
Chris Grigg stood down from the Board in December and, on
its behalf, I would like to thank him for steering the Company
so successfully over 11 years and for creating many of
the opportunities we have in our business today. Rebecca
Worthington and William Jackson also stood down from the
Board during the year and we would like to thank them for
their valuable contributions.
The Board was delighted to appoint Simon Carter, our previous
Chief Financial Officer, as Chief Executive. We ran a rigorous
search process, including both internal and external candidates,
and Simon was the standout candidate given the breadth of
his experience in real estate, his proven ability to create value
demonstrated in each of his previous roles and his clear vision
for our business. We were also delighted to appoint Bhavesh
Mistry as Chief Financial Officer. Bhavesh has a wealth of
finance experience, most recently at Tesco, where he was
deputy Chief Financial Officer, as well as Whitbread and Virgin
Media. He joins us later in the summer; until then David Walker
will act as Chief Financial Officer as he has done since November.
We were also pleased to welcome Irvinder Goodhew and
Loraine Woodhouse who joined the Board in the year.
Looking forward
Looking forward our focus will be on aligning our business to
growth and value opportunities which leverage our competitive
strengths. This includes areas where we are market leaders,
such as retail parks, as well as those which are new to British
Land, such as urban logistics, where we are pursuing a
development led strategy, and life sciences, a key growth area
in our markets. We were pleased to acquire our first logistics
asset this year and will look to make similar acquisitions in the
year ahead while maintaining our usual discipline. At Regent’s
Place, our proximity to the Knowledge Quarter with its high
concentration of academic and scientific institutions offers a
clear opportunity to reposition this campus in a new direction.
At Canada Water, which will become our fourth campus, we
have the flexibility for a much broader range of uses.
In this report, we set out a clear vision for our business,
focused on Campuses and Retail & Fulfilment and our pathway
for achieving that. We have deliberately built up our financial
strength and flexibility over several years so we are well
placed to deliver on this strategy and have already made
good progress. Our management team is strong, enthusiastic
and committed to delivering for all our stakeholders. We have
excellent people across our business, who have got us through
this crisis and will stand us in good stead for the future. Again,
I would like to thank the whole British Land team for their
contribution this year.
Tim Score
Non-Executive Chairman
Read our Chairman’s introduction to corporate governance on page 94
British Land Annual Report and Accounts 2021
7
CHIEF EXECUTIVE’S REVIEW
Positioning British Land for growth
“ Our new strategy
exploits our competitive
strengths in development,
active management and
repositioning assets and
sees us invest behind two
key themes, Campuses
and Retail & Fulfilment.”
Simon Carter
Chief Executive
8
British Land Annual Report and Accounts 2021
Introduction
This has been an extraordinary year so I am enormously
proud of the resilient performance the team delivered, and
the strong progress we have made across the priority areas
I set out in November. Building on this, we are setting out our
new strategy, exploiting our strengths in development, active
management and repositioning assets and investing behind
two strategic themes, Campuses and Retail & Fulfilment. Our
performance this year clearly reflects the impact of Covid-19
but we have further strengthened our finances through timely
asset sales and are well positioned for the opportunities that
lie ahead.
Covid Impact & Response
The pandemic has spanned our entire financial year.
Throughout that time, we have worked closely with our
customers to adjust through three national lockdowns
and subsequent re-openings. In Offices, we have effectively
collected all our rents. In Retail, we have made good progress
on rent collection as a result of continuous engagement with
our customers across the year. For those customers most
affected, primarily smaller independent businesses, we have
agreed pragmatic and equitable solutions for the periods of
closure which include monthly payments and concessions.
We have also engaged on a case by case basis with larger
customers facing cash flow difficulties, often combining our
discussions on the payment of legacy rents with those on lease
extensions and new space. As a result, retail rent collection
was 71% for the year. Due to ongoing uncertainty, we have
made further provisions totalling £59m against outstanding
rents and service charge, which has contributed to the
reduction in underlying profit of 34.3%. The value of
the portfolio was down 10.8% contributing to a fall in
EPRA NTA of 16.3% to 648p.
This year our Place Based community activities have
focused on helping those most impacted by Covid-19. That has
included funding expert strategic advice from The Business
School helping 25 of our community partners to navigate the
crisis, providing educational materials for more than 3,600
disadvantaged families and supporting local foodbanks. We
supported a retail recovery plan in Edinburgh and in London
our initiatives included four virtual work experience projects
for 200 young people. Overall, this year we have supported 364
people into employment which is a significant achievement in
the context of the pandemic and reflects how quickly we were
able to mobilise support to where it was most needed.
New business model & strategy
Our strategy is to more actively focus our capital on our
competitive strengths in development, active management
and repositioning assets. We are investing behind two
strategic themes:
– Campuses – Dynamic neighbourhoods focused on growth
customers and sectors; and
– Retail & Fulfilment – Retail Parks and urban logistics
aligned to the growth of convenience, online and last
mile fulfilment
Starting in FY22, reflecting this approach, we will update
our reporting segments to be Campuses (which will include
Canada Water) and Retail & Fulfilment (which will include
urban logistics).
Campuses
At Broadgate, Regent’s Place and Paddington Central, we
provide modern, high quality and sustainable space in some
of the most exciting parts of London. The buildings and the
spaces between them support wellbeing and are aligned to
the changing ways people work. They have excellent transport
connections, an engaging public realm and offer an authentic
sense of community. We are delivering an exciting, 53 acre,
fourth campus at Canada Water.
Our campus proposition is a key differentiator and an important
advantage post Covid as occupiers focus on the best space for
their businesses where supply is most constrained. That means
space which supports recruitment, training, collaboration,
culture and wellbeing. Our development pipeline includes
opportunities on all our campuses, enabling us to increase
investment in these unique assets, deliver attractive returns
and refresh our offer with high quality, modern and sustainable
space so we are well placed as demand polarises. All our
developments will be net zero carbon and with sustainability
now seen as a differentiator between the best space and the
rest, our ability to deliver buildings which help occupiers
reduce their own carbon footprint, is a key advantage.
The proximity of our campuses to hubs of growth and innovation
is a further advantage which we will more actively pursue.
Already, we have successfully repositioned Broadgate to appeal
to a wider range of growing businesses, including creative and
technology companies, benefitting from its proximity to areas
like Shoreditch as well as its links to the City. Building on this,
we are evaluating other opportunities to align our campuses to
innovation sectors and see a similar opportunity in life sciences
at Regent’s Place, given its proximity to the academic and
scientific institutions in the Knowledge Quarter. Our ability to
deliver bespoke space for our customers and our track record
of providing environments in which fast growing businesses
can expand, for example through Storey, position us well in
this market.
At Canada Water, our permission is deliberately flexible.
We can deliver between 2,000 and c.4,000 residential units
and from 500,000 sq ft to 2.5m sq ft of workspace enabling us
to evolve our offer in line with demand. Already we have signed
an engineering, higher education provider and are exploring
other opportunities in this sector.
Retail & Fulfilment
In Retail, we are expanding our approach to include fulfilment,
building on our market leading position in high quality, out
of town retail parks which already play a key role in retailers’
fulfilment models, and complementing this with development
led investment in urban logistics, primarily in London. Retail
parks account for 53% of our retail portfolio. These are
increasingly preferred by retailers, because they are affordable
and support an online offer by facilitating click & collect,
returns and ship from store. They are also preferred by
business which are more online resilient, including discount
food and homeware retailers. We see a clear value opportunity
in this space to leverage our asset management expertise to
deliver attractive returns as rents and values stabilise. This
rationale underpins our acquisition of the A1 Retail Park in
Biggleswade and commitment to acquire the remaining 22%
interest in HUT, which comprises ten prime retail parks,
together totalling £197m.
British Land Annual Report and Accounts 2021
9
CHIEF EXECUTIVE’S REVIEW continued
We are complementing our retail parks with development
led investment into urban logistics warehouses, primarily in
London. These are in town or edge of town warehouses with
good infrastructure connections and access to residential areas
to support effective last mile delivery. This particular part of
the market, where customer requirements are evolving rapidly
and demand is strong but supply of the right kind of space is
highly constrained, will require innovative solutions, such as
multistorey and underground warehouses as well as potentially
incorporating into mixed use schemes. This plays very well to
our skill set in site assembly, planning and delivering complex
development in Central London.
This is the rationale for our acquisition of a 216,000 sq ft
logistics warehouse in Enfield. It is an 11-acre site within the
M25, with low coverage for an urban scheme of 40% providing
the opportunity to build up as well as out. We benefit from
a supportive planning environment in Enfield and in the
meantime the scheme is fully let and highly reversionary.
The Priorities for our business
To deliver our strategy, we identified four key priorities for our business in November. We have already made strong progress
against these and have a clear plan in each area for the coming year.
Priority
Progress since November
Realising the potential
of our Campuses
Progressing value
accretive development
Targeting the
opportunities in Retail
& Fulfilment
Active capital recycling
– Pre-let 134,000 sq ft at 1 Broadgate to JLL
– Completed the drawdown of the headlease at Canada Water and signed TEDI-London, a higher
education provider
– Launched Storey at 100 Liverpool Street, 37% let or under offer
– Delivered 100 Liverpool Street, our first net zero development
– Commitments to develop 1 Broadgate and Norton Folgate, together covering 882,000 sq ft
– Commenced enabling works at the first phase of Canada Water with main build contracts to be placed in
the coming months
– Acquisition of A1 Retail Park, Biggleswade for £49m, NIY 8.5%; opportunity to drive value through
asset management
– Commitment to acquire the remaining 22% interest in HUT based on a GAV of £148m, taking our
ownership to 100%, NIY over 8% (post year end)
– Acquisition of 216,000 sq ft urban logistics warehouse in Enfield with development potential for £87m
(post year end)
– £1.2bn of asset sales since April 2020, overall 6.2% ahead of book value
– 882,000 sq ft of development commitments
– £284m of Retail & Fulfilment acquisitions
– £1.6bn of financing activity in the year
Realising the potential of our Campuses
We will realise the potential of our Campuses through
development, active asset management and by aligning them
to innovation and growth sectors. At Regent’s Place, we are
actively targeting life sciences occupiers and at Broadgate,
we will continue to focus on creative and technology
sectors including FinTech as well as traditional finance.
The improvements we have made at Broadgate to the leisure
and retail element, including the UK’s first Eataly are part of
that approach. We are enhancing our space through new
developments including 1 Broadgate and the delivery of
Exchange Park, a 1.5 acre park in the middle of Broadgate
and we have further opportunities at each of our campuses.
At Canada Water, we are exploring a range of uses leveraging
the flexible nature of our planning consent.
Progressing value accretive development
We committed to 882,000 sq ft of development in the year.
Development is an important driver of value for British Land,
generating £2bn of profit in offices in the last ten years. In
addition, our campus developments have a positive impact
on our places beyond the individual development, supporting
rental growth across the campuses.
We have created further opportunities for development across
our campuses and achieved planning consent for two new
buildings in the year, 2-3 Finsbury Avenue (704,000 sq ft) at
Broadgate and 5 Kingdom Street (438,000 sq ft) at Paddington
Central. Having completed the drawdown of our 500-year
headlease at Canada Water, we are delighted that we are now
able to progress development of our fourth London campus.
All of these developments will be net zero carbon and we are
focused on delivering the most energy efficient space we can,
supporting our ability to let space quicker and at higher rents.
Targeting the opportunities in Retail & Fulfilment
While the broader retail market remains challenging, we have
adapted our priority to reflect the compelling opportunities we
are now seeing in parts of the retail market, notably retail
parks. Rather than “addressing the challenges in retail” as
we set out in November, our focus now is on “targeting the
opportunities in Retail & Fulfilment.”
We have made £197m of retail park acquisitions (including
our commitment to acquire the outstanding interest in HUT)
and will look to make further value-led acquisitions in this
space but will remain disciplined on returns. Similarly, we
will look to acquire assets, primarily in London with urban
logistics development potential and in addition have identified
opportunities on our own portfolio, including Meadowhall and
Teesside as well as on our campuses, which we will progress
this year.
Shopping centres account for 34% of our retail portfolio, with open
air covered schemes, including Bath and Ealing comprising 12%
and traditional covered centres 22%. We are actively managing
this space to drive occupancy and deliver more sustainable cash
flows and once stabilised, will decide whether to continue to hold
or exit these centres based on expected returns.
10
British Land Annual Report and Accounts 2021
Active capital recycling
We will more actively crystallise value from mature and off strategy
assets to invest into Campuses and Retail & Fulfilment, focusing
on areas where we have a distinct competitive advantage, like
development or asset management. We have sold £1.2bn of
assets since April 2020, 6.2% ahead of book value. This included
the sale of a 75% interest in three West End buildings to Allianz
Real Estate for £401m representing a blended NIY of 4.3% and
the offices element of Clarges, Mayfair for £177m. We expect
to make further disposals this year.
We maintain good long term relationships with debt providers
across the markets and have completed £1.6bn of financing
in the year. This included extensions of RCFs of £1.1bn and
arrangement of new loans in total of £460m involving 14
different lenders.
Full Year 2021 Operational performance
Offices leasing activity was understandably subdued with
total lettings and renewals of 395,000 sq ft for the year,
including 168,000 sq ft of deals over one year. In addition, we let
161,000 sq ft of space post period end, including 134,000 sq ft
pre-let to JLL at 1 Broadgate, bringing total leasing since
1 April 2020 to 556,000 sq ft. Office values were down 3.8%, but
the movement was heavily weighted towards the first half and
with a small uplift in developments. Occupancy remains high
at 94%. With the roadmap out of lockdown, we are seeing more
businesses from a range of sectors looking beyond Covid-19
to secure space which enables them to perform at their best.
The pre-let of 1 Broadgate to JLL is an excellent example of
that and we are under offer and in negotiations on a further
474,000 sq ft of space.
In Retail, we maintained our focus on maximising occupancy,
driving rent collection and delivering more sustainable cash
flows. We proactively engaged with our customers across
the portfolio, generating strong leasing volumes covering
1.7m sq ft, our highest ever, although pricing was lower at 19%
vs previous passing rent. Encouragingly, our pipeline covers
583,000 sq ft of deals under offer. Valuations were down 24.7%
but for Retail Parks, which account for more than half of the
Retail portfolio, the pace of decline slowed in the second half,
reflecting an increasing amount of capital targeting this sector.
Our people
This has been an exceptionally challenging year for our people.
They have supported our customers consistently, often with
additional caring responsibilities and without the ability to
resolve issues through a face to face conversation. They have
done a tremendous job with many remaining onsite to keep our
assets open throughout the pandemic; I am hugely grateful for
their commitment and delighted to see so many are returning
to our office. The culture we have developed at British Land,
and the depth and breadth of our people’s expertise, is a key
differentiator for us and positions us to deliver on the strategy
we have set out.
I am pleased that Bhavesh Mistry joins us as Chief Financial
Officer in July 2021 and to have welcomed Irvinder Goodhew
and Loraine Woodhouse who joined the Board as non executive
directors in the year. Rebecca Worthington and William Jackson
stood down from the Board during the year and we would like
to thank them for their valuable contributions. As announced
on 25 May 2021, Mark Aedy will be joining the Board as a non
executive director from 1 September 2021.
As a Board, we are committed to creating a diverse and
inclusive workplace and were pleased that this year we
ranked fourth in the Hampton-Alexander Review of FTSE 100
companies for women in leadership positions. We have met the
recommendations of the Parker Review on ethnic diversity and
disclose our ethnicity pay gap for the first time in this annual
report, alongside our gender pay gap which we have disclosed
since 2017.
Outlook & dividend
In October, we announced a new dividend policy, setting
the dividend at 80% of Underlying EPS. This policy ensures
dividends reflect the impact of development completions,
acquisitions, disposals and trading conditions as they change
over time and maximises future strategic and financial
flexibility. We are pleased to announce a full year dividend of
15.04p with the payment of our final dividend in August 2021.
With a roadmap out of lockdown, confidence has strengthened
and UK economic forecasts for calendar 2021 are being revised
upwards. In offices, we expect demand for modern, high quality
and sustainable space which helps businesses to perform at
their best, to be firm but across the market, our central case
is for rents to fall by up to 5% before recovering. With supply
of the best space tight, we would expect our Campuses to
outperform and are encouraged by the conversations we are
having on our space, particularly on our development pipeline,
as well as the pick up in activity we are seeing at Storey.
We anticipate downward pressure on prime office yields as
confidence improves and investors target the yield differential
with other European cities. Retail occupational markets remain
tough and we expect rents to decline further. However, we are
seeing signs of stabilisation on retail parks and our central
case is an additional rental decline of around 5%, with the
potential for some yield compression given the increased
capital targeting this space. Shopping centres, which have
been more impacted by Covid-19, are likely to take a little longer
to stabilise. We are encouraged by the strong rebound we are
seeing on footfall and sales particularly on our retail parks,
which are now in line with pre pandemic levels. Urban logistics in
London should continue to see strong rental growth of 4-5% per
annum benefitting from compelling underlying fundamentals.
Although it is early days, economic indicators are positive,
and we are hopeful that we are starting to emerge from the
pandemic. As we do so, British Land is well placed to benefit
given our clear strategy, the diversity and expertise of our
people across the business and our opportunities to drive
growth and value. However, we are very mindful that the
trajectory for this pandemic is highly uncertain with risk
from future variants, so we take comfort from the strength
of the balance sheet and our resilient performance over
the last 12 months.
Simon Carter
Chief Executive
British Land Annual Report and Accounts 2021
11
HOW WE DELIVER VALUE
Places
People
Prefer
Our purpose is to create and manage
outstanding places which deliver positive
outcomes for all our stakeholders on
a long term, sustainable basis.
Competitive strengths
Our portfolio
Best in class
platform
Innovation
Partner
of choice
Unique mixed
use campuses
Percentage of portfolio value
A diverse and high
quality portfolio
focused on London
and the South East
81%
London and the
South East
Attractive
development
pipeline
Long term
commitment
to ESG
London campuses
Retail & Fulfilment
Other
70%
25%
5%
Key inputs
Financial strength
– Strong balance sheet
– Flexible finances
– Successful partnerships
Strong relationships
– Customers
– Communities
– Partners and suppliers
Our people
– Broad skill set
– Diverse and inclusive
environment
– Culture of team work and
collaboration
Our values
– Bring your whole self
– Listen and understand
– Be smarter together
– Build for the future
12
British Land Annual Report and Accounts 2021
100 Liverpool Street
We are focusing our capital on situations which best
leverage our competitive strengths. We are investing
behind two strategic themes, our Campuses and
Retail & Fulfilment, to deliver higher returns.
Our business model
cle capita l
y
c
e
R
gro
S
o
w
t
h
u
r
c
e
o
p
v
p
a
o
l
u
r
t
e
&
u
n
i
t
i
e
s
A
c
tively manag e &
e v elop
d
Source value &
growth opportunities
We focus on opportunities where
we can add value and drive returns
through asset management and
development. We pursue value
accretive acquisitions in the
market and create development
opportunities in our portfolio. We
make timely decisions which aim
to deliver sustainable growth
and returns.
Actively manage
& develop
We manage our space ourselves,
ensuring our places meet the day
to day needs of all our customers.
We target innovative and successful
businesses and provide them with
the flexibility to expand with us. We
develop individual buildings to drive
returns across our campuses and
going forward all our developments
will be net zero carbon.
Recycle capital
We actively recycle capital out of
mature assets and into opportunities
which generate higher returns
through development and asset
management. We target growth
and value sectors and work with
partners to mitigate risk and
access the best opportunities.
Read about our pipeline of developments on
pages 20-21
Delivering for
our stakeholders
Customers
We deliver great places which help
our customers succeed. We develop
and manage high quality space,
provide flexible options and unique
insights and are a trusted partner
for the long term.
Communities
We look beyond our buildings to
deliver places which connect with
local people, create opportunities
and support wellbeing to make a
positive local contribution.
Partners and suppliers
We develop long term relationships
with investors, debt providers, local
authorities and suppliers to deliver
places which are successful
and inclusive.
Our people
Our diverse and inclusive
workforce helps people achieve
their potential. Our people have
different backgrounds, outlooks
and experiences, helping us to
make better decisions.
Shareholders
We are focused on delivering higher
returns for our shareholders. We
actively manage our finances to
ensure our business is resilient
and that we can adapt to key
market trends.
Read about our stakeholders on pages 32-33
British Land Annual Report and Accounts 2021
13
VISION
Our new strategy
Our new strategy exploits our competitive strengths
in development, active management and repositioning
assets and sees us invest behind two key themes,
Campuses and Retail & Fulfilment.
Campuses
Dynamic London neighbourhoods
focused on growth customers
and sectors.
Our Campuses are an important
differentiator for us. They provide high
quality, sustainable space and benefit from
excellent transport connections, an engaging
public realm and an authentic sense of
community. Their proximity to some of
the most exciting parts of London attracts
successful businesses, to foster centres
of innovation, collaboration and creativity.
This is increasingly important post Covid-19,
where occupiers are more focused on space
which enables them to perform at their best.
We will realise the potential of our Campuses
through the development of high quality and
sustainable buildings and by aligning our
offer to include innovation industries such
as life sciences. We are progressing the
development of our fourth campus at
Canada Water.
+
Retail & Fulfilment
Aligned to the growth of convenience,
online and last mile fulfilment.
more affordable, enabling retailers to
operate profitably.
We are the market leader in retail parks.
We have excellent relationships with
retailers and a clear insight into how
they manage their businesses.
Post Covid-19, more of our customers
are using their physical stores to support
an online offer through click & collect,
returns and ship from store. Retail parks
are ideally suited to this and the space is
Our asset management expertise means we
are well placed to identify value opportunities
in this sector and to deliver strong returns.
Leveraging our broader skills in site
assembly, planning and delivering complex
developments, we are also identifying urban
logistics opportunities where we can drive
value through development. We made our
first acquisition in this sector this year.
14
British Land Annual Report and Accounts 2021
THE PRIORITIES FOR OUR BUSINESS
The priorities for our business
To deliver on our strategy, we have set four clear priorities.
Realising the
potential of our
Campuses
• Delivering exceptional workspace,
homes, public realm and
amenities for our customers
and communities to thrive
• Targeting growth customers and
sectors, including life sciences
at Regent’s Place
• Delivering a fourth campus
at Canada Water
Targeting the
opportunities in
Retail & Fulfilment
• Driving occupancy and sustainable
cash flows
• Integrating urban fulfilment in our
retail parks
• Making value accretive acquisitions
• Progressing urban logistics
development opportunities,
primarily inside the M25
Progressing
value accretive
development
• Progressing pipeline opportunities
• Delivering space which meets the
evolving needs of our customers
• Net zero carbon developments
• Energy efficient new space
Active capital
recycling
• Crystallising value from
mature assets
• Reinvesting in higher return
opportunities in our portfolio
and in the market
• Maintaining balance sheet
strength and flexibility
Our people
Our strategy is delivered through
our people
British Land Annual Report and Accounts 2021
15
THE PRIORITIES FOR OUR BUSINESS continued
Realising the
potential of
our Campuses
Building on our success
Our Campuses capitalise on demand for
the best space by providing high quality,
sustainable buildings, complemented
by great public realm and amenities
and benefitting from excellent
transport infrastructure.
the UK. This is also an industry where
proximity to similar and complementary
organisations is important, so the
location of Regent’s Place in London’s
Knowledge Quarter, home to over 100
academic, scientific and cultural
organisations, is a key advantage.
At Broadgate, we have successfully
repositioned our offer to match the
evolution in demand. From a financial
fortress in the 1980s, today it is a centre
of innovation, creativity and culture.
FinTech, technology, media and
advertising sectors are well represented
on the campus and we have a strong
community of scale up businesses
through Storey, our flexible
workspace business.
We have enhanced Broadgate’s appeal by
softening the boundaries of the campus,
ensuring it is an integral part of its
neighbourhood, including Spitalfields and
Shoreditch. We have comprehensively
upgraded the dining and leisure offer
which now includes the UK’s first Eataly.
Our Paddington Central campus is virtually
fully let to high quality occupiers. It benefits
from excellent transport connections
being close to Paddington Station, a
future Crossrail station, and is a hub for
international, corporate headquarters.
Targeting innovation sectors
Regent’s Place is well placed to benefit
from the growth of life sciences. The
industry is forecast to see employment
growth of 5% pa to 2030 due to increased
Government and consumer spending, and
as more overseas companies take space
here, reflecting the depth of talent within
Already the campus is home to innovative
and successful businesses such as
Facebook and Dentsu Aegis Network.
Appealing to a broad spectrum
At Canada Water, we have flexible planning
consent for a 5m sq ft mixed use scheme.
We currently expect that will include 2m
sq ft of commercial space, nearly 1m sq
ft of retail and leisure space and 3,000
homes, but we can flex our planning
permission in line with demand.
Already we have signed TEDI-London, a
universities partnership between Arizona
State University, King’s College London
and UNSW Sydney, for their modular
higher education campus.
To enhance our offer, we are putting
Wellbeing Principles at the heart of
our plans. We will improve connections
between people and places, so the
campus is more accessible; we will
use smart technology to improve the
individual experience and seek an
improvement in local air quality.
The Masterplan offers a huge opportunity
to increase biodiversity, by enhancing
existing green spaces and adding 12
acres of new open space, including
a 3.5 acre park, a new town square,
landscaped terraces and green roofs.
Net zero carbon
at Canada Water
We are minimising our carbon
emissions at Canada Water
through the use of low carbon
materials and new building
technologies. We are adopting
the industry-leading NABERS UK
Design for Performance modelling
to achieve the highest efficiency
and performance.
All buildings will target BREEAM
Certification (Commercial
Outstanding, Retail Excellent,
Residential Home Quality Mark)
and, reflecting our holistic
approach, the Canada Water
Masterplan will target BREEAM
Communities Certification.
16
British Land Annual Report and Accounts 2021
53
acre site at
Canada Water
British Land Annual Report and Accounts 2021
17
THE PRIORITIES FOR OUR BUSINESS continued
Progressing
value-accretive
development
Progressing pipeline opportunities
Development has been an important
driver of value for British Land, with
offices development delivering nearly
£2bn of profit since 2010.
Our development programme capitalises
on demand for the best quality space.
At Broadgate we delivered more than 1m
sq ft of high quality workspace in the last
two years and are on site with a further
882,000 sq ft across 1 Broadgate and
nearby Norton Folgate, with further
opportunities in our pipeline (see
pages 20-21).
Customer-led offer
Covid-19 has accelerated the trend
towards more flexible working. Going
forward, successful office space must
complement this with better technology
to connect those at home with those in
the office, a mix of collaborative and
private working areas and space which
supports wellbeing. Excellent transport
connections, an engaging public realm
and great amenities are highly valued by
employees, which matters as businesses
use their office space to attract and retain
key talent.
Norton Folgate
At Norton Folgate, we are delivering
high quality modern workspace in new
structures, interlinked with characterful
warehouse buildings across three
adjacent development plots, which
will complement the historic fabric
of the area.
They offer a range of office floorplates
which are well suited to small and
medium sized businesses, with
roof terraces, courtyards, retail and
restaurant space. The development
is well connected for Liverpool Street
Station and Shoreditch overground and
benefits from the vibrancy and energy
of nearby Shoreditch and Spitalfields.
Net zero at Norton Folgate
We always prioritise the re-use of existing
materials and, as a result, embodied
carbon at Norton Folgate is low at 444kg
CO2e per sqm, comparing well with our
2030 target for embodied carbon in new
office developments of 500kg CO2e per
sqm. We will offset any residual carbon,
making this a net zero carbon development.
It will be one of the most operationally
efficient buildings we have delivered.
The base build operational efficiency is
in line with the UKGBC’s 2020-25 interim
efficiency target and we are targeting a
BREEAM Excellent rating.
To improve biodiversity, we will add
log piles, bird and bat boxes to the roof,
connecting nature corridors in the City.
The development includes 1,600 sq ft of
outside space on landscaped terraces to
support wellbeing for employees and we
are targeting Wired Score platinum and
gold ratings.
444
kg CO2e per sqm
embodied
carbon
Norton Folgate
Office-led redevelopment
in Shoreditch, integrating 302,000
sq ft of office space alongside retail
to create a mixed use space that
draws on the historic fabric of
the area.
18
British Land Annual Report and Accounts 2021
British Land Annual Report and Accounts 2021
19
OUR DEVELOPMENT PIPELINE
A well positioned
development pipeline
We have created attractive
opportunities for development
across our Campuses.
Completed
Committed
1 Triton Square
Office-led development at Regent’s Place, fully
pre-let to Dentsu Aegis Network, an existing
occupier on the campus.
365,000 sq ft
100 Liverpool Street
Norton Folgate
Office-led development adjacent to Liverpool
Street Station. 100 Liverpool Street is our first
net zero carbon development; embodied carbon
was low at 389kg CO2e per sqm and we offset
residual carbon through accredited schemes.
Read more about our net zero commitments
on page 40.
520,000 sq ft
Office-led redevelopment in Shoreditch adjacent
to Broadgate, integrating 302,000 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
20
British Land Annual Report and Accounts 2021
1 Broadgate
Office-led development at Broadgate and will be
one of the most operationally efficient buildings
we have delivered. Its strong sustainability
credentials were a key factor for JLL who
have pre-let nearly 30% of the offices space.
546,000 sq ft
Near term
Medium term
2-3 Finsbury Avenue
Office-led development at Broadgate, including
ground floor retail, and a publicly accessible
restaurant, café and roof terrace.
704,000 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.
136,000 sq ft
Canada Water (future phases)
Working with the London Borough of Southwark,
this mixed use scheme will include 3,000 new
homes alongside a mix of commercial, retail
and community space.
4.5m sq ft
5 Kingdom Street
Office-led development at Paddington Central.
Revised planning consent received during
the year.
438,000 sq ft
Canada Water, Phase 1 (A1, A2 & K1)
Three buildings delivering a mix of office, retail,
leisure and residential with 265 homes planned
across a range of tenures and affordability.
582,000 sq ft
British Land Annual Report and Accounts 2021
21
THE PRIORITIES FOR OUR BUSINESS continued
Targeting the
opportunities
in Retail &
Fulfilment
Integrating urban logistics
The important role that retail parks
can play in facilitating a successful
omnichannel retail strategy became
clear during Covid-19. With parking
widely available and more stock held on
site, they facilitated the use of click &
collect, enabled returns and supported
mission-based shopping.
Building on this, retailers see an
opportunity to use retail parks to
support logistics through last mile
delivery by shipping from store. This
enables faster delivery times, helping
retailers to compete in a highly
competitive market.
Importantly, retail parks are also more
affordable, enabling retailers to trade
profitably, so increasingly this is their
preferred format.
Retail parks comprise 53% of our retail
portfolio, covering 6.9m sq ft. We are
market leaders in this space, positioning
us well to identify opportunities in the
market to drive value and returns.
Value opportunities in retail parks
This year, we acquired The A1 Retail
Park in Biggleswade for £49m. This is
a modern, well located scheme, easily
accessible from the A1 and within the
Oxford-Cambridge arc, benefitting from
an affluent and growing catchment.
Retail & Fulfilment asset mix, by value
Retail parks
Shopping centres:
Open air scheme
Traditional covered shopping centres
Leisure and other
53%
12%
22%
13%
22
British Land Annual Report and Accounts 2021
As rents stabilise, and building on our
asset management skills, we see a
clear opportunity to drive value from
acquisitions like this.
An emerging and complementary urban
logistics business
To complement our retail parks business,
we are also targeting development-led
opportunities in urban logistics, within
the M25. This year we acquired our first
logistics asset, a 216,000 sq ft warehouse
in Enfield where we have the potential
to deliver a multistorey facility. In the
meantime the asset is fully let.
Identifying alternative and additional use
Logistics is the key additional use
we have identified in our portfolio. The
most viable opportunities are on the
surrounding land at Meadowhall and
Teesside and we are actively progressing
plans in both locations.
We are also evaluating a broader range of
opportunities including office conversion
and residential which we may undertake
ourselves or in partnership.
Amazon Fresh
This year Amazon opened its
first Amazon Fresh grocery store
outside North America at Ealing
Broadway. People can shop
seamlessly with no check out,
and can pick up or return their
Amazon parcels at the same time,
demonstrating the clear crossover
between online and physical retail.
British Land Annual Report and Accounts 2021
23
THE PRIORITIES FOR OUR BUSINESS continued
Active capital
recycling
Marble Arch House
76,000 sq ft office-led building
close to Marble Arch Station, in the
Portman Village. Acquired in 2011,
the building was comprehensively
redeveloped and successfully let to
a range of occupiers in the finance,
technology and professional
sectors. We sold a 75% interest
in the building in December 2020.
Crystallising value from mature assets
Recycling capital out of assets which
do not offer opportunities for us to add
value through asset management or
development, and into assets that do,
is central to our business model.
This year, benefitting from resilient
investment markets, we made timely
sales of £643m of office buildings and
£556m of retail assets, crystallising value
and providing the flexibility to progress
value accretive development elsewhere
in our portfolio.
Clarges
In November we completed the sale of
Clarges, Mayfair, an office-led building,
for £177m to Deka.
This wider scheme included 34 super-
prime apartments in addition to offices
and retail as part of a complex, mixed
use scheme. We took a tactical decision
to pre-sell more than half of the
apartments, achieving new records for
residential space in Mayfair. Overall the
scheme delivered more than £200m
of profit.
Portman Cluster
In December, we sold a 75% interest in
a portfolio of three West End buildings
for £401m to Allianz Real Estate. This
transaction brings our major joint
ventures to seven currently. We are
continuing to manage these buildings
which include 10 Portman Square,
Marble Arch House and our head office at
York House. Each has been substantially
redeveloped in recent years and let to
high quality occupiers.
Yalding House
In November, we sold Yalding House in
Fitzrovia for £42m. Once the home of
BBC Music, this heritage building had
been comprehensively redeveloped in
keeping with the original style.
Retail
In Retail, asset sales have focused on
standalone units and superstores where
we have limited potential to drive value
through asset management. This year
that has included the part sale of
shopping centres at Milton Keynes,
Peterborough and Beaumont Leys.
24
British Land Annual Report and Accounts 2021
Yalding House, previously home to
BBC Music, sold for £42m
Clarges
Super-prime, residential-led
development in Mayfair, comprising
34 apartments and 65,000 sq ft of
offices and retail space.
The office and retail space was
fully let.
£1.2bn
Asset sales
British Land Annual Report and Accounts 2021
25
THE PRIORITIES FOR OUR BUSINESS continued
Our strategy depends
on our people
We have a broad range of expertise across our
business which is critical to the successful delivery
of our strategy.
Our expertise
At British Land, we have created a best
in class platform, with expertise that
goes beyond developing and managing
buildings. From sourcing investment
opportunities, securing planning,
developing, leasing and managing our
space, to financing our activities, our
people are experts at what they do.
The breadth and depth of this skill
set is what enables us to embark
on new opportunities.
Supporting our strategy
This year we acquired our first logistics
opportunity. While that is a new sector
for British Land, our asset management
and leasing teams have established close
relationships with our retail customers
and we have a very strong understanding
of how retailers operate. This will be
invaluable as we look to grow this part
of our business.
We have opportunities to develop
additional logistics space both on our
new acquisition in Enfield and also on our
existing portfolio, and here the expertise
of our planning and development team
will be invaluable. At every step we will
look to do this in the most sustainable
way we can and we have an excellent
track record in this respect.
Canada Water is a 53 acre regeneration
opportunity and one of the most significant
in London. It will draw on the skills and
experience we have across our business.
The progress we have made to date,
with a very flexible planning consent, is
testament to the excellent work of our
team. The work of our community teams
in building strong local connections and
the strength of our reputation elsewhere
on our portfolio were also key to achieving
this. We envisage a broad mix of uses and
already our plans include residential and
higher education and will again draw on
our proven ability to adapt and deliver in
new and complementary areas.
Living our values
Our values and our culture underpin
what we do at British Land. We bring
our passion to what we do, we listen
and understand and we work together to
build for the future. These values guide
and support the way we work and will
help us deliver for all our stakeholders.
26
British Land Annual Report and Accounts 2021
We benefit from a best in class operational platform. Despite
unprecedented challenges to our business and the way we work,
our teams have delivered great progress this year.
Investment
£1.2bn asset sales,
6.2% ahead of book value
Evaluating opportunities
in Retail & Fulfilment
with £284m acquisitions
in the year
Leasing and asset
management
1.7m sq ft retail leasing,
ahead of last year
1 Broadgate pre-let to JLL
Property
management
Supporting our customers
through reopening and
returning to work
Delivering strong
rent collection
Planning
£1.7m sq ft of planning
consents achieved including
2-3 Finsbury Avenue and
5 Kingdom Street
Achieved outline consent
on our 53 acre scheme
at Canada Water
Development
Completion of 100 Liverpool Street
Completion of 1 Triton Square
in May 2021
Commitment to Norton Folgate
and 1 Broadgate
Read more on page 20
Finance
£1.6bn financing in the year
£1.8bn undrawn facilities and cash
Refinancing date extended to early 2025
Senior unsecured credit rating ‘A’
Sustainability
First net zero carbon development
at 100 Liverpool Street
Pathway to Net Zero Carbon published
Targeted support to local
communities throughout
the pandemic
Read more on pages 40-45
Marketing
Demonstrating we are
a trusted partner
Delivering the best places,
and the flexibility our customers
need in the future
People
Ethnicity pay gap
disclosed for the first time
Maintained skills and
training programmes
Supported our teams
through lockdown
Read more on pages 36-39
British Land Annual Report and Accounts 2021
27
MARKET DRIVERS
Key trends in our markets
Economic backdrop
Role of the office
Role of physical retail
We are experiencing a prolonged period
of economic uncertainty, initially as a
result of Brexit and this year reflecting
the Covid-19 pandemic.
If the Government’s roadmap remains on
track, all Covid-related restrictions will
be relaxed in June. In this scenario, the
economic outlook is positive, with pent
up consumer demand expected to fuel
expansion. However, forecasting the
trajectory of this pandemic is difficult.
The efficacy of the vaccine on new
variants is not known so the risk of
further lockdowns remains. In addition,
the longer term impact on employment,
the way we work and shop and what that
means for our cities has yet to play out.
Brexit-related uncertainties have
diminished although we remain in a
period of transition with businesses
still adapting to life outside the EU.
During the pandemic, employees
demonstrated their ability to work from
home effectively and going forward, many
expect to work more flexibly, raising
questions around the role of the office.
However, companies are clear that the
office plays a vitally important role in
shaping the brand and culture of their
business, by supporting recruitment
and training and fostering innovation
and collaboration.
Successful office space will likely be
high quality, modern and sustainable;
offer a mix of collaborative and private
space; provide high-tech solutions to
complement more flexible working
patterns; and be well located for
transport hubs, retail and leisure.
This trend will accelerate polarisation in
offices. Space not meeting these criteria
will become increasingly hard to let,
negatively impacting rents.
The strategic shift toward online retail
was already well advanced prior to
Covid-19 but accelerated during
the pandemic.
The type of retail space that works well
for retailers is also changing rapidly.
This year, that has focused on open
air and out of town retail parks, which
support mission-based shopping and
an online offer. They are also more
affordable, making retail parks the
preferred format for retailers.
Increasingly there is a crossover with
urban logistics. Retailers are using retail
parks to ship from store and third party
logistics operators are looking at
taking space.
However, the retail market remains highly
challenging and the longer term role for
shopping centres is less well defined.
Our strategic response
Our strategic response
Our strategic response
Active capital recycling
Making asset disposals to strengthen our
balance sheet and enable us to progress
acquisition and development opportunities
Progressing value accretive development
Developing modern, tech-enabled space
which supports collaboration and helps
businesses be their most productive
Active capital recycling
Selling retail assets where we cannot
drive value through asset management or
development and investing in Campuses
and Retail & Fulfilment
Realising the potential of our Campuses
Targeting successful businesses in
innovation and growth sectors
Active capital recycling
Selling assets where we cannot drive
value through asset management
or development
Targeting the opportunities in
Retail & Fulfilment
Sourcing and investing in value-led
retail and development-led urban
logistics opportunities
The trajectory of the pandemic remains uncertain A more diverse range of space, reception
Easily accessible retail parks, Mayflower, Basildon
at 1 Broadgate
28
British Land Annual Report and Accounts 2021
Climate change
Social inclusion
Science & technology
The will to tackle climate change
continues to gain momentum as the
need becomes more urgent.
Businesses are under increasing
pressure to reduce their climate impact
from shareholders, customers and
employees, with all expressing a clear
preference for those who demonstrate
good progress. The environmental and
commercial imperatives for sustainability
are therefore closely aligned, driving a
three-fold increase in the number of
companies making net zero
commitments in 2020.
The implication for our industry is
the growing demand for net zero carbon
buildings. In response, real estate owners
must not only build more sustainably but
also upgrade existing stock to ensure
that it meets the same high standards.
The risk of not doing so is ”stranded
assets” which are hard to let.
Making a positive social contribution
increasingly underpins a business’s
licence to operate. The impact of the
pandemic fell unequally across society
so companies were widely expected to
“do the right thing” by their employees,
customers, partners and communities.
These expectations were already building.
Going forward, the contribution that
companies make to local communities
and their relationship with key
stakeholders will see greater scrutiny.
In real estate, shareholders, customers
and employees are looking more
closely at the ethical track record of
the businesses they invest in, pay rent
to or work for, so property owners need
to demonstrate their commitment to
understanding and supporting local
communities and the issues they face.
The important role that science has
played in understanding and managing
the impact of Covid-19 has highlighted
the need for greater scientific resources,
including more people, more workspace
and greater collaboration between
knowledge-based institutions. This is
generating a new and exciting area
of growth in our industry.
Going forward, technology will play a key
role in delivering successful workspace
across the spectrum. As the way we
work evolves, space which best connects
people inside the office with those outside
will be more attractive and occupiers
will increasingly prioritise offices which
support wellbeing through better air
quality, personalised temperature
controls and more automated services.
Our strategic response
Our strategic response
Our strategic response
Progressing value accretive development
Minimising our impact through re-use
and the delivery of lower carbon buildings
Realising the potential of our campuses
Working with our occupiers to address
key local issues through Place
Based initiatives
Realising the potential of our campuses
Aligning our offer to innovation and
growth sectors including life sciences
Active capital recycling
Reweighting the portfolio to modern,
more sustainable space through asset
sales and development
Progressing value accretive development
Sustainable development creates
business, employment and community
opportunities while minimising the impact
of construction
Progressing value accretive development
Incorporating smart features into
our developments
Delivering more sustainable developments,
100 Liverpool Street
Supporting young readers, Teesside Park
Pivoting towards life sciences at Regent’s Place
British Land Annual Report and Accounts 2021
29
OUR KEY PERFORMANCE INDICATORS
Monitoring our
performance
Our strategy is to focus our capital on areas which
leverage our competitive strengths and to invest
behind two strategic themes, our Campuses and
Retail & Fulfilment.
Corporate &
Financial
KPIs
Total property return
LTIP
AI
Committed and near term developments
2021
2020
2019
% of standing investments by floor area
(7.0)%
2021
(6.4)%
2020
(0.9)%
2019
11.2%
8.4%
9.4%
Total accounting return
LTIP
Loan to value (LTV) – proportionally consolidated
2021
2020
2019
(15.1)%
2021
(11.0)%
2020
(3.3)%
2019
Total shareholder return
LTIP
Years until refinance date
2021
2020
2019
(40.5)%
(3.3)%
52.8%
2021
2020
2019
32.0%
34.0%
28.1%
AI
4.0
4.0
3.5
Environment
Reduction in energy intensity of offices
GRESB rating
31%
2020: 16%
5*
Energy intensity was lower than usual this year as a result of Covid-19 restrictions which required assets to
close or operate at lower capacity.
Community
Number of community beneficiaries
Number of community initiatives
23,024
2020: 40,076
94
Beneficiaries typically include local schoolchildren and jobseekers. This year we focused on supporting
those most impacted by Covid-19, but continued to deliver our community programmes where possible.
People
Gender pay gap
27.6%
2020: 27.9%
Ethnicity pay gap
27.3%
First year of reporting
This year, recognising the need to engage more frequently with our people, we conducted multiple pulse
surveys rather than our usual engagement survey which will resume for the year to March 2022.
Links to remuneration:
LTIP
Long-Term Incentive Plan
AI
Annual Incentive Award
30
British Land Annual Report and Accounts 2021
Progress
Priorities for FY22
Key risk indicators
Campuses
– Completion of 100 Liverpool Street
– Commitment to Norton Folgate and 1 Broadgate
– Canada Water planning permission secured and
drawdown of headlease
– TEDI-London, a higher education provider,
signed at Canada Water
– 556,000sq ft of office leasing, including
134,000sq ft pre-let to JLL at 1 Broadgate
Retail & Fulfilment
– 1.7m sq ft of retail leasing
– Acquired first development-led logistics
opportunity in Enfield for £87m
– Acquired retail park in Biggleswade for £49m
– Committed to acquire 22% interest in HUT,
which comprises 10 retail parks.
– Progressing logistics opportunities in
our portfolio
Campuses
– Increase occupier exposure to growth
sectors including life sciences at
Regent’s Place and other uses at
Canada Water, leveraging our flexible
planning consent
– Commitment to develop phase 1 at
Canada Water
– Further progress value accretive
development on our campuses
– Continue to recycle capital
Retail & Fulfilment
– Maintain high occupancy, focusing on
occupiers with strong covenants
– Make value accretive acquisitions of
retail parks and logistics assets
with development potential
– Selective disposals of assets
without asset management
or development potential
– Progress urban logistics opportunities
at Meadowhall and Teesside
– Development exposure
– Market letting risk
(vacancies, expiries,
speculative development)
– Occupier covenant strength
and concentration
– Occupancy and weighted
average lease length
– Execution of targeted
acquisitions and disposals
in line with capital
allocation plan
– Net debt to EBITDA
– Financial covenant headroom
– Liquidity and period until
refinancing is required
– Achieved GRESB 5* rating
– Received SBTi validation for Scope 1, 2 & 3 targets
– Pathway to Net Zero Carbon published
– Net zero carbon asset audits commenced
– Achieved our first net zero carbon development
– Maintain GRESB 5* rating
– Maintain progress with our Pathway to
Net Zero Carbon
– Complete net zero carbon asset audits
– Deliver net zero development at
– EPCs rated F or G
– EPCs below B rating
– Portfolio at high risk
of flood
at 100 Liverpool Street
– Transition Vehicle fully operational
1 Triton Square
– Pilot NABERS UK at 1 Broadgate and
Canada Water
– Effective community response to Covid-19:
supported foodbanks, provided education
materials and donated £1.5m to good causes
– Longer term support through employment and
– Deliver needs based employment,
education and local business
initiatives at priority assets
– Deliver place based initiatives at
retraining programmes
priority assets
– Completed Place Based research into local needs
– Community engagement
– Continue to reduce our gender and
ethnicity pay gap
– Voluntary staff turnover
– Employee engagement
– Continue to improve our staff
and wellbeing
engagement score
– 44% female representation at Board level
– Reported ethnicity pay gap for the first time
– Race Equality Framework launched
– Fairness & Inclusion training mandatory for
all employees
– Promoted disability inclusion at our places
through EnaBLe and signatory to Valuable 500
– Partnered with anti-modern slavery charity
Unseen; launched anti-modern slavery training
– Supported 23 of our people to receive
professional qualifications
British Land Annual Report and Accounts 2021
31
STAKEHOLDER ENGAGEMENT
Our
stakeholders
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
Our partners
and suppliers
Key issues
Why we engage
How we engage
Our customers are all the
people who visit our places.
They includes our occupiers and
their employees and the people
who shop or live in or around
our buildings.
Our communities are all the
people who live in and around
our assets, as well as local
organisations and enterprises.
Our partners and suppliers
include property investors, local
authorities, suppliers and all
other organisations we have
a direct relationship with.
The way people work, shop and
live is changing rapidly. There are
fewer boundaries between these
activities while the need for a more
sustainable approach is growing.
Whilst every community is unique,
shared priorities include education,
employment and wellbeing, as
well as environmental and
local concerns.
Ensuring all partners share
appropriately in the success
of our places.
Understanding how customer
expectations are changing helps
us provide places which meet
more of their needs, driving long
term demand for our space.
Our places thrive when our
communities prosper, helping us
create more successful, inclusive
places that make a positive
local contribution and attract
more customers.
Our places depend on the success
of our relationships with the
organisations that help deliver
them; that requires a clear
understanding of their priorities
and challenges.
We survey visitors to our places
and collect data on how people
use our space and our services.
More than 1,500 retailers are
signed up to BL:Com, our data
sharing app, and we use social
media to keep customers
informed across the business.
Through our Place Based
approach we engage with local
people and partners where we can
make the biggest social impact.
Our Local Charter provides a
flexible framework for delivery.
We maintain an active dialogue
with our partners and develop
long term relationships. Our
Supplier Code of Conduct guides
how we engage with suppliers.
Outcomes of our
engagement*
– Flexibility on rental payments
– Launched bespoke coaching
where appropriate
– Successful pre-let of
1 Broadgate, see page 43
– 1.7m sq ft of retail leasing
programme to support leaders
of our key community partners
– Delivered employment
programmes to support those
impacted by Covid-19
– Progressing plans at Canada
Water in partnership with
London Borough of Southwark,
see page 21.
– Commitment to develop
1 Broadgate with JV partner
GIC, see page 20.
* In addition to the references above, for further details of how these outcomes were achieved see page 105 of the Governance section.
32
British Land Annual Report and Accounts 2021
Our people
Our shareholders
Our people includes everyone employed
at British Land. We are a diverse team,
with a range of backgrounds, skills
and experiences.
Our shareholders are the owners of our
business. Our focus is to deliver value
for shareholders over the long term.
Attracting and retaining talent in a
competitive market.
Delivering long term, sustainable income
and capital growth and minimising our
impact on the environment.
We engage with our people to help them
realise their potential. It is their skills
and experience that drive the quality of
our product.
By addressing shareholders’ views in our
strategy and our communications we are
better able to attract investors who are
long term supporters of our business.
We encourage open and constructive
discussions throughout the business.
Employees can feedback through Company
surveys, regular town hall meetings or a
range of employee meetings.
We provide formal updates on our
business every six months and update
periodically on key news events.
Major shareholders meet
management regularly.
– Launched our new Race Equality
Framework, see page 111.
– Supporting our people through
Covid-19, see pages 34-35.
– Resumption of the dividend
– New strategy, investing behind two key
themes, our Campuses and Retail &
Fulfilment to deliver higher returns
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 proposals are
put to the Board for a decision.
Information on how the Directors
discharged their duty under section 172
during the year, including how they
engaged with key stakeholders, and how
they had regard to the matters set out
above in their discussions and decision-
making, can be found within our Applied
Governance section on starting on
page 105.
Read more about our stakeholders on pages 34-35
British Land Annual Report and Accounts 2021
33
STAKEHOLDER ENGAGEMENT continued
A continuous
dialogue
Supporting our stakeholders through Covid-19 and
helping them to be successful long term.
Focusing on our
customers supports
our purpose
Our offering is customer centric ‘Built
Around You’ and commits us to always
delivering the following for our
customers:
1. The best places
2. The most flexible
3. A trusted partner
Our places offer the widest choice of
spaces; they are well located, greener
and offer best in class technology. In
the current environment, flexibility has
never been more relevant. Across our
offices and our retail space, we offer
our customers a range of options in
terms of lease length and fit out to
meet their needs today and in the
future with the potential to expand
with us. Storey, our flexible workspace
business, is a good example of
that approach. Our deep and long
connections to our places also mean
that we continually invest locally to
enhance the space and, in partnership
with our customers, make a positive
difference to the local community
and environment.
The space we are delivering at
1 Broadgate is an excellent example of
how we have responded to very clear
requirements from our customer
which translated into a pre-letting
of nearly 30% of the office space.
Read more about this on page 43.
Our campus networks, which focus on
common issues such as diversity and
inclusion and mental health, provide
a platform to connect us with our
customers and them with each other.
Reflecting their feedback we are
launching a Place Based “Forum” for
each campus which will include an
online platform as well as virtual and
physical events. We act as a facilitator
to support the return to work, address
key issues such as diversity and
inclusion, support connection with
local communities and use technology
to enable better collaboration.
Customers
This year, most of our customers have
been unable to operate their businesses
in the usual way, at times impacting
their ability to pay rent. Throughout the
pandemic, we worked closely with all
those affected to agree fair and flexible
plans to help them manage rental
payments and we supported them in their
reopening strategy wherever possible.
For our office customers, we worked
fast to make our space Covid-secure
and organised virtual round tables
where occupiers could share learning
experiences on working from home
and returning to the office.
Communities
We have been driving our community
programme for more than 10 years
and have built up a strong network of
community partners, so we were well
placed to deliver effective, targeted
support from the start of the pandemic.
One of our earliest responses was
to introduce a bespoke coaching
programme to help leaders of our
core community partners navigate the
unprecedented challenges. These have
included long term partners such as
the Third Age Project in Regent’s Place,
the Floating Classroom at Paddington
Central and Just Like Us at Broadgate. 25
partners benefitted overall. We provided
educational materials to communities in
and around our places across the UK
through the National Literacy Trust,
benefitting 3,600 families, and we supported
employment programmes at our retail
places and our London campuses.
We supported foodbanks at Regent’s
Place, Canada Water and Paddington
Central as well as The 1928 Project at
St Mary’s Hospital, Paddington, supplying
NHS workers with quality food, and made
additional funds available to support local
community organisations.
Read more about how we have supported
communities on pages 44-45.
“We’re a very ambitious scale up,
but the ability to take decisions
quickly or change our minds is very
important to us and British Land
show real flexibility around that.”
James Brown
Storm 2, Storey customer
“As soon as Covid hit, British Land
asked how they could help; they
were the first to offer a rent free
period and they quickly arranged
planning permission for us to open
a second unit so we could serve the
same number of customers within
the new rules. We are a small start
up but they are investing time and
energy to support our ambitions so
we feel very valued as a customer.”
Arti Poddar
Co-Founder, Guy & Beard, Glasgow Fort
34
British Land Annual Report and Accounts 2021
“Thank you again to the team at
BL for their continued support
in what has been a particularly
difficult year for our sector and our
company and to you and Alice for
your availability and understanding
during our multiple rounds of
discussions since the spring of last
year. It has been incredibly helpful
to be able to share our concerns
openly and to be heard by
our partners.”
Gabriel Shohet
Black Sheep Coffee
“Fiona, our coach, commented that
our team didn’t reflect the dynamic,
vibrant and community-based
organisation she felt we were.
We decided to create an effective
structure with defined roles, and
embarked on a huge programme
to develop people’s capacity to
perform. Our team is transformed,
we’re more professional and
we have a greater voice locally.
We couldn’t have done all this
without the coaching support.”
Lena Choudary-Salter
CEO and Founder of Mosaic
Community Trust
Partners and suppliers
We enjoy a close partnership with our
suppliers which enabled us to co-operate
effectively throughout the pandemic.
We worked hard with our construction
partners at 100 Liverpool Street and
1 Triton Square to minimise delay for our
customers while prioritising the safety
and wellbeing of their team. We focused
on critical activities which drove timelines
but could be done within social distancing
guidelines, such as installing lifts and
smart features and fitting out the
reception areas.
Our people
We engaged closely with our people
throughout the pandemic. We used a
range of communication channels to
support staff and keep them up to date
with our plans, including virtual town
halls and podcasts from the CEO and
Executive Committee members, and our
intranet was a key source of guidance.
Our employee-led networks played
an important role in keeping people
connected, providing advice and practical
support as well as entertainment
for individuals and their families.
Mindfulness sessions were made
available to all employees and we
embraced more flexible working
patterns to help people manage caring
responsibilities. We kept our office
open whenever possible and in line
with Government guidance to enable
those who wanted or needed to come
into the office to do so.
For field-based teams, we undertook
comprehensive risk assessments of our
assets and developed Covid-19 response
plans for each. We introduced weekly
testing, staggered shifts to minimise
the number of people on site and deep
cleaned each office between shifts.
Shareholders
We recognise that providing timely
information to shareholders was acutely
important this year and we therefore
provided an update on rent collection
at each quarter. In addition, we have
maintained our regular investor relations
programme on a virtual basis, including
roadshows, conferences and events.
Read more about our shareholder
engagement on pages 96 and 101.
“From a peak of 900 operatives
on site, we reduced to 35 and
increased only when we could be
sure of our people’s safety and of
course when they felt comfortable
returning. British Land supported
us at every step and made 100
Liverpool Street a place that people
both wanted and felt safe to work.”
Mark Leeming
Project Director 100 Liverpool Street,
Sir Robert McAlpine
“What British Land did well was to
provide support centrally but also
to give each centre the autonomy
to do what was right for them. The
engagement between our senior
team and our occupiers clearly
filtered down to the store managers
which really helped us manage
operations and adapt to
changing regulations.”
Catherine Furlong
British Land Centre Director,
Teesside Park
British Land Annual Report and Accounts 2021
35
PEOPLE AND CULTURE
People and
culture
4th
in the top 10 best performers
in the 2020 Hampton
Alexander Review
9,000
hours of training undertaken
by employees
98%
favourable score when
employees were asked how
British Land was responding
to the pandemic
Embracing a culture of diversity, supporting wellbeing
and championing development.
We understand that a diverse, motivated,
and supported workforce is vital to
connecting with our customers and
delivering our strategy. The last 12
months have shown our people’s
resilience in the face of the pandemic.
We have successfully continued to grow
and develop an inclusive workforce,
promote employee wellbeing and
remain connected despite the
challenge of home working.
Celebrating diversity
At British Land, our purpose is creating
and managing Places People Prefer.
This is about establishing outstanding
places which deliver positive outcomes
for all our stakeholders on a long term
sustainable basis. To achieve our
purpose, we strive to create a diverse
and inclusive workplace where people
can achieve their full potential. We see
the two as intrinsically linked. “Bring
your whole self” is a core value of British
Land; we understand that diversity of
backgrounds promotes diversity of
thought and enhances our business.
Workforce gender diversity,
31 March 2021
Total employees
309
304
Our diversity and inclusion mission is to
make a positive difference to colleagues,
communities and the wider industry by
taking actions to promote equality. We
consider all areas of diversity by working
in close collaboration with our employee
networks: REACH (Race Ethnicity and
Celebrating Heritage), Parents & Carers,
Women’s Network, Pride, Wellbeing,
EnaBLe, Sports & Social, Cycle
and SustainaBLe.
Over the last 12 months our networks
and committees have continued to
progress diversity and inclusion at British
Land. EnaBLe, our network formed to
celebrate ability and promote disability
awareness, has joined up to the Valuable
500 – further committing British Land
to putting disability inclusion on our
business agenda.
We are proud that for the third
consecutive year we are in the top 50
employers, ranked by the Social Mobility
Foundation for employer best practice in
the field of social mobility.
We are pleased to have been recognised
for our policies and practices relating to
equality, diversity and inclusion by being
reassessed and accredited under the
National Equality Standard.
British Land has continued to promote
gender equality and in the 2020 Hampton
Alexander Review we were ranked
4th in the top 10 best performers for
representation of women on Executive
Committees and their Direct Reports.
81
5
In order to further promote our diversity
and inclusion mission, we have rolled out
training to all our employees in fairness,
inclusion and respect. Currently over
75% of our employees have attended
this workshop.
Senior managers
53
Board of Directors
4
Female
Male
36
British Land Annual Report and Accounts 2021
“My role covers three retail assets
so I went from constantly travelling
to being confined to a desk at home
which took some getting used to!
At British Land, we’re lucky to
have so many colleagues to lean on.
At the beginning we had daily calls
to discuss how we were all feeling.
Those are now weekly because
it’s still important for us to stay
in touch and support each other.
I have a great working relationship
with my team and a great network
of support, and that’s really what
has got us through.”
Alan Barker
British Land Centre Manager
Broughton, Crown Point,
Mostyn Champneys
At British Land we recognise that
having a mentor can make a big impact
in developing an individual’s knowledge,
skills and experience and help grow their
network. We have therefore supported
individuals in finding a suitable mentor
within the business and have run speed
mentoring events to facilitate successful
networking opportunities. We have
also recently launched a mentoring
programme for our leadership team
with our Executive Committee and Non-
Executive Directors. Each Non-Executive
Director and Executive Committee
member has been carefully matched to
a member of the British Land leadership
team and tailored to the specific needs
and objectives of the mentee. Overall,
we currently have 55 formal mentorships
across the business.
Developing talent
We understand the importance of both
developing talent within the business and
investing in future talent. “Build for the
future” is a core value of ours. This is
why we continue to support Pathways
to Property and this year our support
contributed to 1,275 students gaining
valuable experience and insights into
the real estate industry.
British Land are also proud to be
partnering with the #10000blackinterns
initiative, a campaign looking to offer
internships to Black students across
the UK to help kick start their careers.
We are excited to be participating in the
Change 100 flagship programme, offering
paid internships to university students or
recent graduates with disabilities or long
term conditions. We are participating as
a way to source a more diverse group of
talent for the long term and have our first
intake signed up and ready to start in
summer 2021.
Continuing to support our talent into
the business remains key to our success.
In the last 12 months we have had eight
graduates across our two schemes,
including three new graduates to our
Commercial Property programme. We
have also welcomed 10 apprentices
throughout the year across different
areas of our business.
We recognise the importance of growing
our talent internally and have continued
to invest in learning and development
initiatives for our employees. Over the
past 12 months we have spent £380,000
on training and over 9,000 hours of
training in total have been undertaken
by our employees across the Company.
Internally we have supported 23
employees to receive professional
qualifications and 42 employees have
moved internally within British Land to
further develop our talent and support
their career ambitions.
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
Be smarter together
– Bring together the
and feed back
right team
– Listen with respect and
without judgement
– Base our actions on
what we learn
– Own our responsibilities
– Support each other
to succeed
Build for the future
– Anticipate needs and
lead with courage
– Grow our expertise and
learn from our experience
– Be accountable for the
legacy we leave
British Land Annual Report and Accounts 2021
37
PEOPLE AND CULTURE continued
Promoting wellbeing
The Covid-19 pandemic has shone a
spotlight on health and the importance
of maintaining a good balance between
work and life priorities. At British Land
employee wellbeing has always been a
focus, with our Wellbeing Committee
leading on ways to support employees’
physical and mental health. With help
from our networks and committees, we
have worked hard to create a culture of
support and understanding for all our
employees, ensuring they know where
they can get the appropriate assistance,
recognising all the difficulties
encountered during this pandemic.
Over the past 12 months we have run
weekly mindfulness sessions to help
employees feel balanced and have a
positive frame of mind as well as having
sessions on coping during and after
lockdown to boost resilience.
Our Parents and Carers Network has
guided the business to help and support
parents and those managing caring
responsibilities whilst working from
home, advocating flexibility and
understanding. This has included
practical support such as providing free
access to online learning tools Twinkl
and Times Tables Rockstars and sharing
practical resources and suggestions,
whilst helping ensure internal
communication delivers a drumbeat
of support and visibility for those with
children and caring responsibility.
Our Sports and Social Committee has
also been helping us keep physically fit
throughout the pandemic with online
gym classes and virtual yoga classes.
Our core value of “listen and understand”
has been applied throughout the
pandemic. We have sent regular surveys
to check-in with employees and ask how
we can help as well as to understand
their wellbeing. Our check-in survey in
2020 asked employees how confident they
were in how British Land was responding
to the pandemic with a 98% favourable
score. It also gave them the chance to
request any form of IT equipment to
ensure they have everything they need
to work effectively from home. The
wellbeing survey was to understand how,
in the third national lockdown,
employees were feeling regarding their
work pressures but also their overall
mental and physical health. This has
provided an insight as to how we can
support our employees further.
Our CSR Committee has guided and
supported all our workforce engagement
activities, such as our check-in surveys
and wellbeing survey. By having a
dedicated Committee with formal
responsibility for the engagement of our
employees, our people always remain
central to our strategy. You can read
more about this on pages 110-111.
For those colleagues who do need to be
in the office we have introduced weekly
Covid testing on our sites as well as
other social distancing measures such
as one-way systems, desk spacing and
limiting the number of employees in
each space to ensure our employees
are working as safely as possible. All
employees were also given a return-to-
work kit with hand sanitiser, face mask,
door opener and water bottle.
Parents and
Carers Network
Eloise, chair of our Parents and Carers Network,
describes below the challenges of being a parent
over the last year and how British Land has
supported those with caring responsibilities
during this time.
“Juggling working from home and
homeschooling two small children
was bewildering to say the least!
But the sense of support at British
Land – right across the business
– was incredible.
During the third lockdown,
when we were all exhausted by
back-to-back meetings, the business
suggested a no meeting zone in the
middle of the day. This had a really
positive impact on my whole
family’s wellbeing.”
38
British Land Annual Report and Accounts 2021
EnaBLe Network
“The launch into full time
working from home last year
really highlighted the importance of
having the right set up to be able to
work effectively, technically as well
as physically. British Land were
amazing to provide adjustments
during this transition and in
November, with help from the
EnaBLe committee, BL launched
an Accessible Tech Buddy Scheme
to further support colleagues with
accessibility requirements for their
technology. This has been another
great step forward in making our
working environment accessible
for all.”
Leanne Williams
Business Analyst in our Group
Technology department and
member of our EnaBLe committee
Keeping connected
Throughout the pandemic our leadership
team has highlighted the importance of
keeping connected with our teams and
colleagues to ensure we can continue
to work and Be Smarter Together. Our
usual monthly staff meetings have been
successfully conducted virtually. This
has allowed our whole Company to
come together to hear key updates
and celebrate our colleagues who have
been awarded our Hats Off – a prize that
recognises colleagues who have been
living our Company values – Bring your
Whole Self, Listen and Understand,
Be Smarter Together and Build for
the Future.
Alongside our staff meetings we have
introduced regular audio and video
podcasts where the Company can hear
from our Chief Executive on our approach
to work during the pandemic. Our
Executive Committee has also launched
podcasts so the Company can get to
know each of our leadership team.
Ensuring open and transparent
communication throughout the pandemic
has enabled all our employees to
continue to be engaged with and aligned
to our purpose and vision for British
Land. We have therefore delivered further
webinars on our Sustainability Strategy,
our financial results, engaging with
customers and customer management
as well as a number of other topics.
While working from home we have
embraced digital shared teams sites
which has not only allowed colleagues to
remain connected but has enabled teams
to swap ideas, collaborate on projects
and improve our teamwork.
Our networks have also kept us engaged
with a series of webinars on important
topics such as fertility awareness,
supporting the next LGBT+ generation,
the History of Black British Activism
and many more.
We also understand that the workplace
is an important place for people to
connect socially. While working from
home we have continued to run social
engagements from virtual pub quizzes to
book clubs to cooking competitions and
even hosting our own British Land’s Got
Talent; all with the help of our employee
networks and committees.
British Land Annual Report and Accounts 2021
39
SUSTAINABILITY
Delivering our
2030 Strategy
1. Net zero carbon
In this first year of
our new Sustainability
Strategy, we have
achieved some early
milestones which support
our 2030 ambitions.
We have committed to achieving a net
zero carbon portfolio by 2030 and have
set out clear targets to reduce both the
embodied carbon in our developments
and the operational carbon across our
portfolio. This year, we published our
Pathway to Net Zero, setting out the
steps we will take across our business
to deliver on that ambition.
Embodied carbon
50%
Operational carbon
75%
reduction in embodied carbon intensity
at our developments to below 500kg
CO2e per sqm by 2030
Progress
This year we updated our Sustainability
Brief, setting a clear standard for
sustainable development at British Land.
We completed our first ever net zero
carbon development at 100 Liverpool
Street; embodied carbon was low at
389kg CO2e per sqm and we offset
residual carbon through accredited
schemes in the Tibetan Plateau
and Mexico.
We have made further commitments
at Norton Folgate and 1 Broadgate;
the average embodied carbon in our
development pipeline is 640kg CO2e per
sqm. This performance benefits from our
commitment to prioritise the re-use of
existing materials.
reduction in operational carbon intensity
by 2030
Progress
This year we completed six net zero
carbon audits at our assets, identifying
interventions which would reduce
operational carbon on an ongoing basis.
This programme is being extended
across our portfolio and is expected
to complete at the end of next year.
To finance these projects, we set up our
Transition Vehicle, funded by an internal
carbon levy of £60 per tonne of embodied
carbon in new developments and an
annual corporate float of £5m. We
completed our first project, fitting LED
lighting at Regent’s Place this year.
The Transition Vehicle also funds the
purchase of certified offsets for embodied
carbon in developments.
100 Liverpool Street
LED light replacement at Regent’s Place
This 2030 sustainability focus area
aligns with the UN’s Sustainable
Development Goal 12
40
British Land Annual Report and Accounts 2021
2. Place Based approach
3. Environmental
leadership
4. Responsible
business
We advocate responsible business
practices across British Land and
throughout our supply chain. Our
key areas of focus are set out below.
Responsible employment
– Investing in training and
professional qualifications
– Connecting with our people
– Providing a safe working environment
Diversity & Inclusion
– Improving gender diversity at all
levels; maintaining a minimum of 35%
female representation on the Board
and reducing the gender pay gap
– Improving ethnic diversity at all levels;
targeting a minimum of two Directors
from an ethnic minority background
and reducing the ethnicity pay gap
– Making our places more inclusive
for everyone
Responsible procurement
– Mandatory modern slavery awareness
training for British Land staff
– Mandating prompt payment
– Responsible procurement standards
See pages 46-47 for more detail of
our progress in each area and our
Sustainability Accounts.
A Place Based approach means
understanding the most important issues
and opportunities in the communities
around each of our places and focusing
our efforts collaboratively, to make the
biggest impact at each place.
We do this through the five key areas
which are common across our portfolio
and identified in our Local Charter:
Our continued strong performance in
sustainability was evidenced this year
by a 5* rating in GRESB, the global ESG
benchmark for real estate, achieved
two years ahead of our target.
To strengthen our performance in
future years we are rolling out BREEAM
In Use operational certifications across
30 assets over the next two years.
– Connect – connecting customers,
suppliers and community partners
around priority local issues
and opportunities
This year the Science Based Targets
initiative validated our climate
commitments as being in line with
a 1.5°C global warming trajectory.
– Education – needs-based initiatives
– Employment – needs-based initiatives
– Supporting local business
– Wellbeing – putting our Wellbeing
Principles into practice
Our strong community links enabled
us to act quickly to help those most
impacted by Covid-19 at our places.
This year, despite these challenges, we
supported 364 people into employment,
with nearly 1,000 receiving meaningful
employment support.
We provided educational materials
through the National Literacy Trust,
benefitting around 3,600 families; and
supported foodbanks and community
hubs at seven of our assets.
We have maintained our market
leading performance in international
ESG benchmarks; performance for 2020
is set out below:
GRESB 2020:
5 star rating,
Green Star
CDP 2020:
A- score
EPRA
Rating 2020:
Gold
MSCI ESG
Rating 2020:
AAA
FTSE4Good
Index 2020:
Top 96th percentile
Science Based
Targets:
approval in 2021
Supporting communities at Regent’s Place
This 2030 sustainability focus area
aligns with UN’s Sustainable
Development Goal 8
This 2030 sustainability focus area
aligns with UN’s Sustainable
Development Goal 12
This 2030 sustainability focus area
aligns with UN’s Sustainable
Development Goal 17
British Land Annual Report and Accounts 2021
41
SUSTAINABILITY continued
Net zero carbon
42
British Land Annual Report and Accounts 2021
JLL’s decision to be based at 1 Broadgate reflects
their ambitions to be a net zero carbon business.
A focus on net zero
JLL has committed to being net zero
carbon across its UK workplaces by 2030
and to spearhead the wider adoption of
net zero carbon buildings across the
industry. This approach underpins many
of their key requirements at 1 Broadgate
and shaped the design of the building.
1 Broadgate will target the BREEAM
Outstanding certification. It will use
100% renewable energy and we will fit
energy efficient air and water source
heat pumps, lighting and lifts and smart
controls. We are adding solar panels
to the roof and will recover office heat
energy for use in the retail units on the
ground floor. We will deliver mixed-mode
ventilation, effectively combining natural
ventilation with air conditioning to reduce
carbon emissions and provide better user
control of the thermal environment. The
façade will be insulated and the glass
designed and treated to manage solar
glare from different orientations. We will
re-purpose the pink granite from the
existing façade as terrazzo flooring and
sustainable, low carbon and responsibly-
sourced materials will be used
throughout the building.
The result is the most operationally
efficient development British Land has
ever delivered. Energy intensity will be
in line with our 2030 targets and the
UKGBC’s 2030-35 energy efficiency targets.
1 Broadgate is our pioneer project for
adopting the NABERS UK approach to
modelling and verification. This provides
a framework against which we can design
and test our plans for the development
to ensure we stay on track to achieve
our target energy efficiency. This
approach can also be used to verify
the performance of the building once
in occupation so we can monitor energy
efficiency throughout its lifecycle.
Embodied carbon at 1 Broadgate will
be above our 2030 target at 901kg CO2e
per sqm. This is partly because certain
design features, such as the terraces
which support wellness and biodiversity
and the retail walkway which improves
the experience for campus visitors, result
in a higher embodied carbon footprint.
However, we have a good track record
of reducing embodied carbon against
concept design. We are also actively
salvaging materials from the current
building for re-use.
Focus on wellbeing
1 Broadgate has also been designed
to the highest standards of wellbeing.
Reflecting feedback from their staff,
JLL wanted a building that offered a
hybrid model of remote and office-based
working to enhance productivity and staff
wellbeing. The design includes more than
47,000 sq ft of roof terraces and space for
over 1,000 bikes. We are targeting the
WELL Platinum rating for wellbeing
and the WIRED Platinum rating for
smart infrastructure.
“Working in partnership with British
Land, we have a real opportunity to
achieve one of the most sustainable
and technologically advanced
workplaces in the UK. 1 Broadgate
will enable us to significantly
push the boundaries to enhance
productivity, improve wellbeing
and support the wider community
through British Land’s approach
to managing the Broadgate campus
and its Community Framework.”
Stephanie Hyde
UK and Ireland CEO at JLL
“The distinguishing feature of
1 Broadgate is that its ambition
grew over time and each step up
was a real collaboration between
developer, designer and contractor.
We truly worked as a team to
instigate, support and sanity check
each improvement. Nothing was
discarded through an assumption
of difficulty and the determination
is still very strong as we enter the
construction life of the building.”
Marie-Louise Schembri
Design Director, Hilson Moran
British Land Annual Report and Accounts 2021
43
SUSTAINABILITY continued
A Place Based approach
“Usually, we run healthy cooking
classes for local families, supported
by the Regent’s Place Community
Fund. When the pandemic hit,
Lifeafterhummus needed to
adapt to meet the needs of the
community. British Land reached
out and asked: ‘How can we help?’.
They donated funds to start our
‘Eat what you Request, Request
what you Eat’ foodbank. Our
volunteers now collect surplus
supplies from 45 stores locally
every week: to date 17 tonnes of
diverted food waste. We would
never have achieved this without
British Land’s support.”
Farrah Rainfly
Lifeafterhummus Community
Benefit Society
Supporting communities
through Covid-19
This year the focus of our community
programme has been on supporting
those impacted by Covid-19. To support
our long term partners, we funded a
bespoke coaching programme through
The Business School (formerly Cass),
helping 25 partners to navigate the
unprecedented challenges.
Working with the National Literacy Trust,
we provided books and activity packs
for vulnerable children through local
community partners, ensuring that
they reached those most in need and
benefitting around 3,600 families.
We supported local organisations like
Lifeafterhummus, who we provided with
funding, space to run a food bank and
volunteering support from our site teams;
security officers from Facebook, one of
our occupiers, also volunteered. We
supported the Euston Foodbank and
Nourish Community Foodbank through
Royal Victoria Place and the 1928 Project,
an initiative to provide NHS workers at
St Mary’s Hospital with good quality food.
With retail and hospitality industries
most acutely impacted by this year’s
lockdown, our efforts have focused on
supporting the many people who became
unemployed as a result. In Edinburgh, we
worked with long term partner Capital
City Partnership on a rapid retail recovery
plan that assisted over 80 businesses
with recruitment and workforce needs
including advice on funding and furlough,
delivered training and information sessions
to over 60 people and supported 30
jobseekers into employment.
44
British Land Annual Report and Accounts 2021
In London initiatives included four virtual
work experience projects for 200 young
people, involving our customers and
local partners, including one focused
on construction and another delivered
as part of Black History Month.
Mental health has been a key focus this
year. Established prior to the pandemic,
our Mental Health Network at Broadgate
has been an important forum where
occupiers can exchange ideas on how to
support their people through Covid with
13 of our customers participating. The
Broadgate team also arrange speakers
from the local area, such as Mind in
Hackney, who have continued their
association with our occupiers
outside the network.
Place Based research
A Place Based approach means
understanding the most important issues
and opportunities in the communities
around each of our places and focusing
our efforts collaboratively, to make the
biggest impact at each place.
To inform that approach, this year we
commissioned independent research into
the social and economic issues in the
diverse communities around 25 of our
places. This work demonstrated that
while there were shared themes, such
as education and employment, there
were also specific local challenges. In
London, this included pockets of income
deprivation, whereas in the North East
and North West, health and education
were identified as key issues for
some communities.
Our focus for the coming year is to
use our local connections including
customers, suppliers and community
partners at our priority assets to address
the key local challenges where we are
most able to make an impact.
“Because our partnership with
British Land is well established and
they genuinely listen to what people
need, we were able to get a new
programme, Retail Rapid Response,
off the ground almost immediately.
We managed to get people into jobs
and help businesses retain jobs.”
“ It’s so important that we talk
openly and honestly about mental
health. The Broadgate Mental
Health Network is a great space
to bounce ideas off different
businesses and professionals.
I always come away with good
resources and opportunities.”
Rona Hunter
Capital City Partnership
Alice Marston
Digital Social Media Manager at
TP ICAP, Broadgate occupier
“Again so many thanks for enabling
our charity to continue to keep our
centre and serve the community &
moreover to buy time to recover
our business plan. No one could
have anticipated the length of the
pandemic and the harm it has
caused to our social fabric and
commercial enterprises. British
Land and its management deserve
a special commendation from all
of us, and from every one of the
75,000 participants who crossed
the threshold of the centre in
the 12 months prior to the first
lockdown one year ago today.”
Mark Ross
Old Diorama Arts Centre
“ We’ve connected with some
amazing people through the IDEA
Paddington network and delivered
projects, always involving local
young people from underrepresented
communities. For Kingfisher, young
people came up with concepts and
facilitated conversations for podcasts,
working with senior leaders and
people of different ages and life
experiences. Not only did this
progress their personal development
and careers, more importantly, the
young people used their skills and
knowledge and had their voices
heard. This was particularly
valuable during the pandemic when
they were isolated at home, unable
to go to university, without work
and not using their skills. There
was a mental health benefit.”
Farah Mohammoud
Founder / Director of social enterprise
You Press
British Land Annual Report and Accounts 2021
45
SUSTAINABILITY continued
Net zero carbon
Focus area
2030 Strategy Indicator
2030 Target
2021 Performance
Programme
level targets
Science Based target – Reduction in Scope 1 and
2 emissions vs 2020
51%
Science Based target – Reduction in Scope 3
emissions intensity vs 2020
55% per sqm
14%
45%
Embodied
50% reduction in embodied emissions
(RICS A1-A5) on new construction and major
renovation projects vs 2019 industry benchmarks
Offices: 500kg CO2e per sqm
Retail & residential: 450kg
CO2e per sqm
Overall: 640kg CO2e per sqm
100% of embodied emissions from completed
new construction and major renovation projects
(RICS A1-A5) offset using certified carbon
offset credits
100%
100%
50% reduction in operational and end-of-life
embodied emissions (B1-B5, C1-C4) at new
developments vs 2019 industry benchmarks
Offices: 275kg CO2e per sqm
Retail & residential: 250kg
CO2e per sqm
Operational
75% operational carbon intensity reduction by
2030 vs 2019 baseline
75%
25% whole building operational energy intensity
improvement by 2030 vs 2019
25%
Whole building operational efficiency
for developments
Landlord procured electricity from
renewable sources
Environmental leadership
Offices: 90kWhe per sqm
Retail: 60kWhe per sqm
Resi: 35kWhe per sqm
100%
98%
Focus area
Indices
2030 Strategy Indicator
2030 Target
2021 Performance
GRESB (Standing Investments) 5-star rating
5-star by 2022
Green
Building
Certifications
Developments on track to achieve BREEAM
Outstanding (Offices); Excellent (Retail);
Home Quality Mark (residential) minimum 31
100%
BREEAM-certified standing assets – all ratings
(design and/or operational BREEAM certificate)
–
BREEAM-certified standing assets – rated
‘Very Good’ or higher2
(design and/or operational BREEAM certificate)
50% by 2025
Energy ratings
Proportion of units with EPCs rated A or B
across Assets Under Management
Water
5% reduction in operational water consumption
vs 2020
–
5%
Materials and
Waste
Operational waste from managed assets that is
re-used, composted, or recycled
Offices: 80%
Retail: 70%
Biodiversity
Biodiversity
Resilience
Development and operational waste diverted
from landfill
New construction and major renovation projects
designed to achieve a 10% net gain in biodiversity
% of managed assets with Biodiversity
Action Plans
% of managed assets and major developments
which have undergone a flood risk assessment
–
100%
100%
100%
1. From 2021, the 2030 Strategy upgraded our BREEAM targets to ‘Outstanding’ for Offices (from Excellent) and ‘Excellent’ for Retail (from ‘Very Good’).
2. Excludes residential.
46
British Land Annual Report and Accounts 2021
To be reported from 2022
Offices: 41%
Retail shopping centres
(landlord only): 38%
Offices: 31%
Retail shopping centres
(landlord only): 19%
To be reported from 2022
5-star
73%
27%
25%
24%
20%
Offices: 71%
Retail: 47%
100%
To be reported from 2022
18%
100%
Place Based approach
Focus area
2021 Performance
Understanding
and responding
to local needs
Connecting
Socio-economic assessments completed at 25 of our places
£1.63m total community investment
23,024 beneficiaries from our community programme
94 initiatives at our places
£170,367 raised at our places and by our people
£53,509 total in-kind contributions
10% BL employees are expert volunteers
22% total volunteering1
Education
Employment
Business
16,403 people benefitting from our education initiatives
77 education initiatives in our places
991 people receiving employment related support or training
364 people supported into employment
13 employment initiatives at our places
10,000 sq ft affordable2 workspace delivered at 1 Triton
37% development supply chain spend within the borough
47% development supply chain spend to SMEs
Wellbeing
Air quality plan delivered at Broadgate
On track to achieve Well Gold certification at 100 Liverpool Street
Achieved WiredScore Platinum rating at 100 Liverpool Street
1. Impacted by Covid.
2. Affordable space includes all affordable workspace, affordable retail space and community space on both a temporary and permanent basis.
Responsible business
Focus area
2021 Performance
Responsible
employment
Invest in our people
£380,000 spent on training and professional qualifications
Supported 23 people to achieve professional / vocational qualifications
Connect with our people
87% company and leadership commitment score
88% staff retention
Provide a safe working environment
Injury Incidence Rate – Offices 45.92, Retail 0.01
Injury Frequency Rate – Developments 0.10
Diversity &
Inclusion
Improve gender diversity at all levels
44% of Board are female
40% of senior management are female
Gender pay gap 27.6%
Responsible
procurement
Improve ethnic diversity at all levels
Compliance with Parker Review recommendations on ethnic diversity
Disclosure of ethnicity pay gap at 27.3% for the first time
75% of employees received Fairness & Inclusion training
Against modern slavery
100% of BL employees paid at least the Real Living Wage
79% of supplier workforce paid the Real Living Wage
Supplier Code of Conduct updated and made mandatory for all suppliers
New partnership with anti-modern slavery charity, Unseen
Mandating prompt payment
Group invoices settled within 23 days on average
Responsible procurement standards
Supplier Code of Conduct updated to widen scope of ”responsible sourcing”
For a summary of our EPRA reporting see pages 235-236
British Land Annual Report and Accounts 2021
47
TASK FORCE ON CLIMATE-RELATED FINANCIAL DISCLOSURES (TCFD)
Climate-Related Financial Disclosures
The Board recognises the scale of the
climate emergency, its potential impact
on real estate and therefore the urgent
need to take mitigating action. With the
built environment accounting for c.40%
of all greenhouse gas emissions, we also
recognise our responsibility to do what
we can to minimise our carbon footprint
and encourage our customers to do the
same. Our achievements in developing
and managing more sustainable space
have been recognised for more than a
decade and building on this, we have set
out an ambitious approach to achieving
net zero carbon by 2030. This is a goal
shared by our investors, customers,
partners and people.
British Land has set out a commitment
to align with TCFD reporting by 2022;
we have set climate targets validated
as 1.5°C-aligned by the Science Based
Targets initiative (SBTi), and we are
a signatory of the Better Buildings
Partnership’s Climate Commitment,
RE100, and the Business Ambition
for 1.5°C.
Our roadmap to full disclosure in 2021/22
Progress to date:
Governance: in 2019/20, our
Board CSR Committee was
established and the 2030 Net
Zero strategy was reviewed by
the Board at its Strategy Day.
The Risk Committee
subsequently established a
TCFD Steering Committee
composed of leaders from
across the business to
undertake the work required
for full TCFD alignment.
Planned for 2021/22:
Transition risk scenario
analysis: this TCFD-aligned
analysis will clarify the
most material risks posed
by future low-carbon
transition scenarios.
Risk screening: in 2019 the
Steering Committee undertook
two climate risk scenario
workshops, where facilitators
from Forum for the Future
reviewed the latest climate
science and ran breakout
sessions on climate
risk identification and
organisational responses.
Physical risk scenario
analysis: in 2020/21, British
Land commissioned Willis
Towers Watson to undertake
a physical risk assessment
of the portfolio in line with
TCFD requirements.
Quantifying transition risks:
British Land is currently
rolling out a series of net zero
audits across the portfolio.
The results will quantify the
financial costs of the key
interventions required
to deliver substantive
improvements in the energy/
carbon efficiency of assets.
Updates to metrics and
targets: for our climate-
related Key Risk and Key
Performance Indicators.
Detailing the organisational
response: outputs from the
scenario analyses and risk
quantification will be reflected
in our corporate strategy,
financial planning and
enterprise risk management
processes as appropriate.
For more information, see our 2021 Sustainability Accounts at britishland.com/data
48
British Land Annual Report and Accounts 2021
Governance
Board oversight of climate-related risks
and opportunities
Our Board Director responsible for
climate-related issues is Simon Carter,
Chief Executive Officer. Previously as
Chief Financial Officer, Simon chaired
our Risk and Sustainability Committees.
To ensure continuity and accountability,
these committees are currently chaired
by Interim Chief Financial Officer
David Walker.
As part of assuming this responsibility,
building his knowledge and informing our
approach, Simon took part in The Prince
of Wales’ 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 ‘Environmental Sustainability’
principal risk category (see pages 78-87).
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.
In Q4 FY21, the CSR Committee received
an update on the physical climate risk
analysis which commenced during
the year.
Governance framework
Board
Executive and
Management
Board of
Directors
Audit
Committee
Corporate
Social
Responsibility
Committee
Risk
Committee
Sustainability
Committee*
TCFD
Steering
Committee*
Management’s role in assessing and
managing climate-related risks
and opportunities
The Board delegates responsibility
for analysing:
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
Corporate Social Responsibility Committee
playing a role from May 2019. Any
resulting disclosure requires
approval by the Audit 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 2021
49
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
5 to 10 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 (CDP, formerly the Carbon Disclosure Project) response, available at britishland.
com/sustainability/reporting/latest-reporting.
Examples of climate-related risks
Extreme weather events
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.
99% 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
Energy Performance Certificates (EPCs): the existing Minimum Energy Efficiency Standard (MEES) could be amended to
increase the minimum standard from ‘E’ to ‘C’ or ‘B’ by 2030.
Impact on corporate strategy
Our sustainability programme monitors the 76% of our portfolio with an EPC rating lower than ‘B’ (by floor area).
As part of commissioning net zero carbon audits, we are piloting a sample of side-by-side NZC/EPC assessments to
ensure the key recommendations of a NZC audit will deliver an improvement to the EPC rating as well.
Impact on financial planning
MEES non-compliance would prevent us from leasing non-compliant space, posing a risk of revenue loss and a potential
liability from non-compliance penalties.
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 pay back 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 on-site solar PV, with 11 assets generating 1,907 MWh in 2020/21.
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
Achieving a rental premium from high efficiency buildings with a Design for Performance approach.
Impact on corporate strategy
Our Sustainability Brief for Developments and Operations 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, our developments at 1 Broadgate and 2-3 Finsbury Avenue are both ‘Pioneer
Projects’ of the Better Buildings Partnership’s Design for Performance project, designed using the NABERS UK energy
efficiency rating system.
Impact on financial planning
The expected rental premium achieved on high efficiency would be factored into our revenue forecasts in the
medium term.
Assessing the resilience of our strategy
Physical risk: Over the past year, British Land has been working with Willis Towers Watson to conduct a physical risk scenario
analysis, including future climate scenarios with global temperature increases of approximately 2°C (RCP2.6) and 4°C (RCP8.5).
The findings of this analysis will be included in next year’s Annual Report.
Transition risk: British Land will complete transition risk analysis over the upcoming year for inclusion in next year’s Annual
Report. Over 2021, British Land completed several transition-focused projects including (i) launching our Pathway to Net Zero,
(ii) commencing our programme of net zero audits across the portfolio, and (iii) achieving validation of our climate targets from
the Science Based Targets initiative (SBTi).
50
British Land Annual Report and Accounts 2021
Risk management
Climate-related risks are identified and
assessed using our risk management
framework, set out on pages 78-87 of
this Report.
We consider climate change within our
‘Environmental Sustainability’ risk, which
has been added as a standalone principal
risk this year reflecting its significance
to both our business and our customers.
Also, the external aspects of climate-
related risks are incorporated within
our ‘Catastrophic Business Event’
and ‘Political and Regulatory outlook’
principal risks. 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 principal risk
category, climate change is monitored
by the Risk Committee.
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 and Operations 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
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.
Metrics and targets
Below are the climate-related metrics and targets against which we currently report.
Climate-related risks
Policy and legal
Extreme weather
Resource supply
EPCs rated F and G
EPCs rated A and B
Portfolio at high risk of flood (% by value)
High flood risk assets with flood management plans (% by value)
Percent of fresh water withdrawn in regions with high or extremely high baseline
water stress
Climate-related opportunities
Resource efficiency
Energy sources
Products and
services
50% improvement in embodied carbon intensity of major developments
completed from April 2020 (kg CO2e per sqm)
75% improvement in whole building carbon intensity of the managed
portfolio by 2030 vs 2019 (Offices)
25% improvement in whole building energy intensity of the managed
portfolio by 2030 vs 2019 (Offices)
Electricity purchased from renewable sources
On-site renewable energy generation (MWh)
Portfolio with green building ratings (% by floor area)
Proportion of gross rental income from BREEAM certified assets
(managed portfolio)
2020
2019
2021
5%
24%
1%
99%
5%
5%
22%
25%
3%
2%
100%
100%
To be reported in future years
2021
2020
2019
640
nr
41%
23%
31%
98%
1,907
27%
16%
96%
1,763
24%
nr
–
–
96%
1,131
18%
53%
nr
nr
British Land Annual Report and Accounts 2021
51
STREAMLINED ENERGY AND CARBON REPORTING (SECR)
Greenhouse gas reporting
Progress in 2021
Covid-19 and related government
restrictions had a dramatic impact
on our operational efficiency, with
the carbon intensity across our office
portfolio reducing by 41% versus our 2019
baseline. Despite this anomalous year,
as a partner of RE100, 93% of landlord
procured energy comes from renewable
sources, with 98% of electricity and
80% of gas from renewable sources.
Additionally, our commercial offices
attained formal ISO 50001 accreditation
for energy management during 2021.
Building on our strong track record of
improving the energy efficiency of our
space, in 2021, we undertook eight
projects expected to result in annual
energy use savings of 2.3m kWh and
carbon savings of 653 tonnes. We have
commenced net zero carbon asset audits
at six of our places which will help
identify more energy efficient initiatives
and we launched our Transition Vehicle
to support the financing of these projects.
The Transition Vehicle is funded by our
internal carbon levy of £60 per tonne of
embodied carbon in our new developments
and this year financed an LED lighting
upgrade at Regent’s Place.
In March 2021, we were pleased
to announce that the Science Based
Target initiative has validated that our
commitments to reduce greenhouse
gas emissions align with a 1.5°C global
warming scenario, the most ambitious
designation available through the SBTi
process. Our key commitments are:
– To reduce absolute Scope 1 and 2
greenhouse gas emissions by 51%
by FY2030 from a FY2020 base year.
– To reduce Scope 3 GHG emissions by
55% per sqm of net lettable area over
the same target timeframe.
2020
2019
2021
0.067
0.021
0.032
0.087
0.031
0.040
0.113
0.034
0.044
To be reported in future years
To be reported in future years
46.21
34.03
38.05
Emissions intensity1,2,5 (tonnes CO2e)
Year ended 31 March
Offices: per sqm net lettable area6
Shopping centres: per sqm, common parts
Retail parks: per parking space
Shopping villages: per sqm
Retail, High Street: per sqm
Total managed portfolio: per £m gross rental and related income3
Absolute emissions Scope 1 and 2:
2021
2,121
2020
2019
2018
2017
7,615
8,105
8,842
19,098
22,318
26,815
34,269
14,239
41,758
Location-based methodology
Market-based methodology
52
British Land Annual Report and Accounts 2021
Absolute Scope 1 and 2 emissions and associated energy use4,5
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
Tonnes CO2e
MWh
2021
2020
2019
2021
2020
6,252
6,327
6,433
33,759
30,715
411
618
123
–
–
Location-based
12,435
15,373
20,258
55,778
62,950
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 portfolio4,5
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
Major developments and refurbishments: embodied carbon
Proportion of Scope 3 emissions (above) assured by an independent third party
Market-based
Location-based
839
19,098
2,121
100%
100%
669
22,318
7,615
100%
100%
1,549
26,814
8,105
100%
100%
–
89,537
–
100%
100%
–
93,665
–
100%
100%
Tonnes CO2e
2021
2020
24,498
33,495
1,343
684
126
28,180
100%
1,624
285
351
13,459
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 2020.
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 2020/21, this accounts for 1.8% of total reported energy consumption and 2.0% of total reported water consumption.
3. Gross Rental Income (GRI) from the managed portfolio comprises Group GRI of £382m (2020: £436m), plus 100% of the GRI generated by joint ventures and funds of
£299m (2020: £287m), less GRI generated assets outside the managed portfolio of £117m (2020: £212m).
4. For full Scope 3 greenhouse gas reporting, see the British Land Sustainability Accounts 2021 at britishland.com/data.
5. Restatements: From 2021, intensity metrics are no longer degree day adjusted and previous years have been restated. Office intensity is reported for Scopes 1-3,
retail intensities are reported for Scopes 1-2. The 2020 Scope 2-related MWh has been restated with more accurate on-site solar power data, and the 2020 Scope 3
emissions from landlord purchased energy has been restated with more accurate data.
6. From 2021, office intensity is reported as whole building intensity and previous years have been restated.
British Land Annual Report and Accounts 2021
53
NON-FINANCIAL REPORTING DISCLOSURE
Non-financial reporting disclosure
Non-financial area
Financial Crime
Compliance
Risk
areas1
D,E
Description of
business model
We operate a
zero-tolerance
approach to bribery,
corruption and fraud.
More information is
available in the Audit
Committee report
on page 116.
Policies
Purpose and scope
Operation and outcome
Anti-Bribery and
Corruption Policy
Anti-Fraud Policy
Whistleblowing
Policy
Anti-Money
Laundering Policy
11, 2, 6
Sustainability
Policy
– Details the expected conduct of all
British Land staff with respect to
relationships with suppliers, agents,
public officials and charitable and
political organisations
– Outlines staff responsibilities
regarding the reporting of any
breaches and details consequences
of breaches for staff and the Group
as a whole
– Provides for staff training and
communication around the policy
as well as monitoring and review
by management
– Provides for fraud prevention training
for all British Land staff and requires
staff participation in any fraud risk
assessments undertaken by the
Group where relevant
– Outlines protocol for the reporting
of suspected fraud with reference to
the Group’s Whistleblowing Policy
– Provides contact details for
the Group’s third-party
whistleblowing service
– Outlines the types of concerns
that can be reported to the
whistleblowing service
– Details safeguarding measures in
place for staff and outlines how the
Group will respond in cases of
whistleblowing
– Lists “red flags” detailing the kind of
suspicious activity that may indicate
an attempt to launder money
– Details monitoring and review
procedures under the policy
– Provides for sustainable decisions to
be our “business as usual” approach
– Outlines our 2030 Strategy – our goals
of making our whole portfolio net zero
carbon as well as growing social value
and wellbeing in the communities in
which we operate
Sustainability Brief
– Aligns with our 2030
Sustainability Strategy
– Gives effect to our Sustainability Policy
– Sets out our sustainability ambitions
and the KPIs and standards required
to achieve them
These robust policies around
Financial Crime Compliance reflect
our zero-tolerance approach to
such activity both in and around the
business; they have been drafted to
provide for education and monitoring
in addition to deterrence and
prevention. The policies are
accessible by all employees via the
intranet and mandatory training is
required for all staff in relation to the
Anti-Bribery and Corruption Policy,
Anti-Fraud Policy and Whistleblowing
Policy. Our Whistleblowing service
can be accessed by all employees
should they prefer to raise a concern
anonymously instead of with their line
manager. This is an independent and
confidential telephone service and
web portal. British Land carries out
due diligence on counterparties to
comply with legislation on money
laundering and to enable it to
consider how a transaction with
the counterparty may reflect
on British Land’s reputation.
The General Counsel and Company
Secretary has overall responsibility
for all four policies. These policies are
regularly reviewed and approved by
the Audit Committee and any matters
raised under these policies are subject
to extensive investigation by the
Company. Regular updates are provided
to the Audit Committee regarding fraud
and whistleblowing matters.
Our Sustainability Policy and Brief
were comprehensively updated
in 2020. Our overall commitment
is to take decisions which are
environmentally and socially
intelligent and make sound financial
sense. This year we introduced an
internal carbon levy of £60 per
tonne of embodied carbon in new
developments ensuring that we
appropriately assess both the
financial and the environmental
impact of our developments. We
participate in key ESG indices to
demonstrate our progress and
publish social and environmental
performance data annually.
Our Head of Developments and Head
of Broadgate have overall responsibility
for our Sustainability Brief and
our Chief Financial Officer has
overall responsibility for our
Sustainability Policy.
Environmental
Matters
Our long term
commitment to
sustainability and
minimising our
environmental
impact is one of
British Land’s key
differentiators. As
occupiers focus on
minimising their
carbon footprint, our
ability to deliver more
sustainable space is
a key advantage.
See page 40.
54
British Land Annual Report and Accounts 2021
Policies
Purpose and scope
Operation and outcome
Non-financial area
Social Matters
Risk
areas1
8, 11,
12, F,
G, H
Description of
business model
British Land has long
recognised that a
commitment to good
social practices is
essential to the way we
operate; as occupiers
increasingly consider the
contribution they make
to society, our ability
to support them is an
advantage. See page 40.
Sustainability
Policy
Sustainability
Brief
Local Charter
Supplier
Code of
Conduct
Health and
Safety Policy
See above
See above
– Outlines our five key focus areas where we
are active in local communities: connection
with local communities; supporting
educational initiatives for local people;
supporting local training and jobs;
supporting local businesses; and
contributing to local people’s
wellbeing and enjoyment
– Outlines standards required of our suppliers
around a number of areas, including but not
limited to: health and safety; working hours;
responsible sourcing; community
engagement; and environmental impact
– Details our zero tolerance approach to:
child labour; forced labour; discrimination;
and bribery, fraud and corruption
– Provides for monitoring, corrective action
and reporting under the policy. Work
Practice Audits are carried out on our
high risk suppliers
– Details how British Land will meet the
requirements of the Health and Safety
at Work Act 1974
– Provides for mandatory training around
Display Screen Equipment and
Manual Handling
– Outlines how health and safety matters are
managed for staff, colleagues, service
providers and others affected by the
Company’s undertakings
– Sets out minimum standards required by all
employees in all their dealings in and on
behalf of the Group
– Gives effect to our core values of Bring Your
Whole Self, Build for the Future, Listen and
Understand and Be Smarter Together
– Comprises a number of separate policies
including but not limited to: our Equal
Opportunities Policy; our Disabled
Workers Policy; our Gender Identity and
Transgender Policy; and our Bereavement,
Compassionate and Emergency Leave Policy
A commitment to good social practices
has long been high on our agenda, and
we place great importance on the way
we work with communities, suppliers
and partners. We believe that
communication is key in ensuring we
meet our social obligations, and by
listening to the needs and concerns of
our staff and communities we are better
able to provide an environment that is
safe, inclusive and welcoming. In 2020
we recognised the greater need to
support mental wellbeing during a very
challenging year which was effected
through regular outreach and
engagement with communities,
occupiers and staff.
Chief Financial Officer has overall
responsibility for our Local Charter;
our Head of Procurement has overall
responsibility for our Supplier Code of
Conduct and Head of Developments has
overall responsibility for our Health and
Safety Policy. All Health and Safety reports
are provided to the Risk Committee.
British Land remains deeply committed
to creating an environment of fairness,
inclusion and respect. Our corporate
values underpin our commitment to
equality, diversity and integrity. We
recognise that our workforce needs
to reflect the communities we serve
in order to create spaces that are
welcoming to all, and our working
practices and employment policies
reflect the importance of social harmony
in everything we do. This year we
updated our mandatory diversity and
inclusion training for all staff and have
provided sessions on Anti-Racism and
Allyship as well as supporting our
Inclusive Networks in their activities
around celebrating diversity – including
Pride Month, Black History Month,
Earth Day, National Single Parent Day
and International Women’s Day. Our
employment policies are made available
to colleagues on the intranet and are
reviewed annually.
The HR Director has overall responsibility
for our employment policies.
British Land operates a zero tolerance
approach to human rights infringements
by any of our suppliers, occupiers or
partners. We carry out due diligence on
all parties that we work with and require
our suppliers to demonstrate the same
commitment to the prevention of human
rights abuses in their operations.
Our Slavery and Human Trafficking
Statement can be found on our website
and is reviewed and updated annually.
Human Rights
British Land recognises
the importance of
respecting human rights
and has been a signatory
to the UN Global
Compact since 2009.
We are committed
to the responsible
management of social,
ethical and environmental
issues across our supply
chain. For further
information about our
activities, see our
Sustainability Accounts.
B, F,
G
Supplier
Code of
Conduct
Slavery and
Human
Trafficking
Statement
See above
– Indicates higher risk areas including the
procurement of specific materials and fair
treatment of workers on construction sites
– Outlines strategy for reduction of risk in
our supply chains with regard to social,
environmental and ethical issues
– Our Anti Modern Slavery training is
mandatory for all directly employed staff
1. Linkages to our Principal risks and other group risks which can be found on pages 78-87.
British Land Annual Report and Accounts 2021
55
Employees
12, B
Employee
Code of
Conduct
British Land requires
our employees to act
in ways that promote
fairness, inclusion and
respect in their dealings
with colleagues,
customers, suppliers
and business partners.
Performance
Review
56
British Land Annual Report and Accounts 2021
Covid-19 has compounded existing
structural challenges for retailers by
accelerating the shift to online shopping,
which now accounts for 33% of retail
sales. As a result, more operators have
entered CVA or administration, but
stronger retailers are adapting their
business models to be successful in this
environment. Several operators, including
Next and M&S have identified out of town
retail parks as playing an important role.
They are more affordable to retailers and
can support an online strategy through
click and collect, facilitating returns
and ship from store. At the same time,
shoppers are more confident visiting
open-air locations they can access by car
and where social distancing can be more
easily managed so footfall and sales have
generally recovered more quickly.
Logistics market
In logistics, investment volumes were
very strong at nearly £12bn over the
year with strong institutional demand
reflecting the very positive fundamentals
in this sector. In the occupational market,
take up for the year was more than 50m
sq ft, significantly ahead of the average
of c.40m sq ft driven the growth of
e-commerce, with e-commerce and
online retailers accounting for over
60% of transactions. Vacancy rates are
declining across the UK but in London,
where space is most constrained and
demand is very strong, vacancy is around
2%. Within the M25, supply is focused
on Grade B and C space, which is less
suitable for modern requirements
and there is a lack of Grade A space.
PERFORMANCE REVIEW
Market
backdrop
Macro-economic context
The Covid-19 pandemic was the backdrop
for the entire financial year. Three
national lockdowns severely impacted
economic activity, leading to the largest
annual contraction in GDP on record at
9.9% for calendar year 2020. However,
with good progress on the vaccination
programme, the Government has set out
a roadmap out of lockdown. In England,
restrictions started to ease in March 2021
with further significant steps taken in
April, including the opening of non-
essential retail and outdoor hospitality
and in May, indoor hospitality was
permitted. As a result, growth is expected
to pick up in the coming quarters with
households having accumulated savings
throughout the lockdown periods.
Consumer confidence has strengthened,
and the index is at its highest since the
pandemic began. Unemployment has
increased to 4.9%, only 0.9 percentage
points higher than a year ago but
reflecting continued support through
the furlough scheme. However, the
trajectory of the pandemic remains
uncertain, with a clear risk to the
recovery posed by variants.
London office market
After a subdued first half, investment
activity rebounded strongly at the start
of the second half, with nearly £5bn of
transactions in the quarter to December
2020, representing nearly 60% of all deals
in the period. Asia-Pacific and European
investors have shown a particular
readiness to look through the pandemic
and invest in prime Central London real
estate, reflecting its long term, secure
income stream and attractive yields
compared to other global cities. The
reintroduction of travel restrictions
during the third lockdown in January
2021 impacted activity in the final quarter
but underlying fundamentals remain
sound and interest rates low so we would
expect activity to pick up as and when
international travel can resume. Prime
yields are c.4% and pricing has generally
been in line with pre-pandemic levels.
Occupational markets have been severely
disrupted by the pandemic, with activity
significantly down as businesses focused
on near term operational challenges and
postponed decisions on new space. As a
result, Central London take up in the year
was 64% below the long term average
although there has been an uptick in
activity more recently. Prime, headline
rents were broadly flat, albeit on low
volumes but incentives have increased.
The vacancy rate rose to 8.8% from
4.3% a year ago, but secondhand space
accounts for more than 77% of supply
with tenant led space an increasingly
significant component. At the same
time, Covid-19 has clearly accelerated
trends in the way that companies use
workspace, sharpening their focus on
modern, high quality and sustainable
space which supports more hybrid
ways of working. As a result, there is
encouraging interest on new space,
particularly from businesses with
requirements three to five years
out and 34% of development under
construction is currently pre-let.
Retail market
Investment activity was mixed in retail.
Volumes were very low in shopping
centres, where lot sizes are typically
larger, and confidence weakened through
the pandemic. Covid-19 has underlined
the important role that well located,
out of town retail can play in online
fulfilment, strengthening investor
appetite and driving volumes up 14% to
£1.7bn in the period. Despite the national
lockdowns, there is a strong buyer pool
demonstrating renewed confidence in
the sector. In particular, the market for
assets which are small-to-medium in
lot size, with secure, sustainable income
streams, has seen more activity. Demand
for standalone superstores was good
throughout the period, again reflecting
their security of income, and there
remains good investor appetite for
assets with alternative use potential.
British Land Annual Report and Accounts 2021
57
PERFORMANCE REVIEW continued
Business
Review
Portfolio valuation
£9,132m
Occupancy1
94.1%
Weighted average lease length to
first break
5.3 yrs
Total property return
(7.0)%
Gross investment activity
£1,690m
Lettings/renewals (sq ft) over 1 year
1.2m
On a proportionally consolidated basis including the
Group’s share of joint ventures and funds.
1. Where occupiers have entered CVA or
administration but are still liable for rates, these
are treated as occupied. If units in administration
are treated as vacant, then the occupancy rate
would reduce from 94.1% to 92.4%.
Portfolio performance
At 31 March 2021
Offices
Retail
Retail Parks
Shopping Centres
Residential
Canada Water
Total
Valuation
£m
Valuation
movement
%
ERV movement
%
Yield shift
bps
Total property
return
%
6,032
2,592
1,367
896
121
387
9,132
(3.8)
(24.7)
(18.6)
(35.7)
(10.6)
(2.5)
(10.8)
0.7
(16.8)
(15.2)
(20.3)
na
na
(7.6)
+9
+81
+45
+143
+37
na
+33
(0.8)
(19.1)
(12.3)
(29.2)
(10.2)
(1.0)
(7.0)
The value of the portfolio was down
10.8%. The value of the Offices portfolio
was down 3.8%, weighted towards the
first half with values down just 0.8% in
the second half. Offices yields moved out
in the first half but were flat in the second
half. Pricing in the investment market
was broadly in line with pre pandemic
levels and supportive of values, although
increased availability put pressure on
lease incentives. Office developments
again were up 0.9%.
Retail values were down 24.7%. Retail
parks were down 18.6%, but the rate
of decline slowed significantly in the
second half, when values were down 6.5%
compared to down 13.1% in the first half.
Shopping centres were down 35.7% in the
year. Both categories saw the rate of ERV
decline slowing over the year, but there
was a notable difference in yields, which
for shopping centres increased by 143
bps weighted toward the second half,
whilst the increase for retail parks
was lower at 45 bps with the majority
of the increase coming in the first half.
Shopping centres have been acutely
impacted by Covid-19 and investor
sentiment here remains weak with little
transactional evidence to underpin value,
particularly for larger assets. Sentiment
has improved in retail parks, where
investment activity has picked up over
the year.
The value of Canada Water fell 2.5%,
down 6.0% in the first half reflecting our
investment into the masterplan including
a new marketing suite but up 3.4% in the
second half on drawdown of the headlease
following the successful clearing of the
Judicial Review process.
Offices outperformed Central London
Offices in the MSCI benchmark by 120
bps and were in line with the All Offices
benchmark on a total returns basis.
Retail underperformed the MSCI All
Retail benchmark due to our exposure
to shopping centres which significantly
underperformed and where our weighting
is higher than the index. As a result,
and reflecting the continued strength of
industrials, the portfolio underperformed
the MSCI All Property total return index
by 820 bps over the period.
58
British Land Annual Report and Accounts 2021
Rent collection
Year to March 20211
As at 18 May, we have collected 83% of rent due between 25 March 2020 and 24 March 2021. Of the remainder, 3% has been
deferred, 5% has been forgiven, 2% relates to tenants that have subsequently moved into administration and the residual 7%
is outstanding.
Rent due between 25 March 2020 and 24 March 2021
Received
Rent deferrals
Rent forgiven
Moved into administration
Outstanding
Total
Collection of adjusted billing3
Offices
99%
1%
–
–
–
100%
£225m
100%
Retail2
71%
5%
9%
3%
12%
100%
£305m
83%
Total
83%
3%
5%
2%
7%
100%
£530m
90%
March 2021 Quarter1
As at 18 May, we have collected 84% of rent due between 25 March and 18 May. Of the remainder, 1% has been forgiven, 3% is
being paid monthly and 12% is outstanding.
Rent due between 25 March and 18 May
Received
Rent deferrals
Rent forgiven
Customer paid monthly
Outstanding
Total4
Collection of adjusted billing3
Offices
98%
–
–
1%
1%
100%
£45m
99%
Retail2
72%
–
1%
5%
22%
100%
£50m
76%
1. As at 18 May.
2. Includes non-office customers located within our London campuses.
3. Total billed rents exclusive of rent deferrals, rent forgiven and tenants moved to monthly payments.
Capital activity
From 1 April 2020
Purchases1
Sales2
Development Spend
Capital Spend
Net Investment
Gross Investment
Offices
£m
–
(643)
98
35
(510)
776
Retail
£m
284
(556)
3
25
(244)
868
Residential
£m
Canada Water
£m
–
(18)
2
–
(16)
20
–
–
26
–
26
26
Total
84%
–
1%
3%
12%
100%
£95m
87%
Total
£m
284
(1,217)
129
60
(744)
1,690
On a proportionally consolidated basis including the Group’s share of joint ventures and funds
1. Includes the purchase of Heritage House, Enfield which exchanged and completed post period end, as well as the commitment to acquire the remaining 22%
interest of HUT at a GAV of £148m.
2. Includes Beaumont Leys sale for £9m which exchanged in the year and completed post period end and St Anne’s sales for £6m which exchanged in the year.
British Land Annual Report and Accounts 2021
59
PERFORMANCE REVIEW continued
The total gross value of our investment
activity since 1 April 2020 was £1,690m.
We made £1.2bn of asset disposals,
overall 6.2% ahead of book value on a
blended NIY of 4.6%. In Offices, we sold
£643m of assets 5.2% ahead of book
value; the most significant was the sale
of a 75% interest in three West End
buildings to Allianz Real Estate for £401m
representing a blended NIY of 4.3%. This
included York House where our head
office is based. We also sold the offices
and retail element of our Clarges scheme
in Mayfair for £177m at a NIY of 3.5%, and
Yalding House for £42m at a NIY of 4.4%.
In Retail, we sold £556m of assets overall
7.0% ahead of book value. The most
significant transactions were the sale of
two Tesco superstores at our centres in
Milton Keynes and Peterborough together
totalling £149m and four standalone
B&Q stores totalling £100m. We sold
our Beaumont Leys shopping centre for
£72m in two separate transactions and
two small retail parks in Lincoln and
Newmarket for a combined total of £21m.
We sold our share of a portfolio of
reversionary interests in Sainsbury’s
superstores for £102m and made further
sales of standalone assets, including
a Tesco in Brislington for £42m and a
David Lloyd gym in Northwood for £51m.
In residential, we sold St Anne’s, our
affordable housing development at
Regent’s Place for £6m and are under
offer on the final residential unit
at Clarges.
We made several notable acquisitions in
Retail. In March 2021 we acquired The A1
Retail Park in Biggleswade, Bedfordshire
for £49m on a NIY of 8.5%. This is a
strong trading, modern, well located
scheme, easily accessible from the A1
and within the Oxford-Cambridge arc.
We expect to deliver attractive financial
returns off stabilised rents and reflecting
our asset management expertise. We saw
a similar opportunity in HUT (Hercules
Unit Trust, which comprises ten prime
retail parks) and in February we voted to
extend its terms, effectively committing
to the acquisition of the 22% interest we
do not own at March 2021 valuation. HUT
had a look-through blended NIY of over
8%, and acquisition of the remaining
interest is anticipated for June 2021
at a gross asset value of £148m.
In May 2021, post period end, we
completed on the acquisition of Heritage
House a 216,000 sq ft urban logistics
warehouse in Enfield for £87m. This
asset is currently fully let to high quality
occupiers Waitrose (for their North
London customer fulfilment centre) and
Crown Records Management and offers
significant redevelopment potential given
the opportunity to increase density.
Sustainability
We launched our 2030 Sustainability
Strategy in June, and building on our
progress over recent years, we achieved
some important milestones as we work
towards our 2030 ambitions. Recognising
our strong performance, we achieved
a GRESB 5* rating and our climate
commitments have been validated by
the Science Based Target initiative
as being in line with a 1.5°C global
warming trajectory.
Net Zero
We are committed to achieving a net
zero carbon portfolio by 2030 and this
year completed our first net zero carbon
development at 100 Liverpool Street. We
were able to retain half of the existing
structure at this building and made
low carbon choices throughout its
construction so embodied carbon was
low at 389kg CO2e per sqm, below our
2030 target of 500 kg CO2e per sqm. We
offset residual embodied carbon through
accredited schemes from the Verified
Carbon Standard, split equally between
restoring 30,000 hectares of forest on the
Tibetan plateau and a teak afforestation
project in Mexico. We mirrored that with
an additional commitment in the UK,
supporting the planting of 150,000 trees
in Cumbria and Scotland. As these
forests mature, they are expected to
offset an additional c.26,000 tonnes
of CO2e, which may contribute to the
offsetting of future development projects.
We were also pleased to achieve
BREEAM Outstanding certification and
are on track for a WELL Gold Standard
certification for this building.
We committed to two new developments
in the year; in line with our strategy both
developments will be net zero carbon.
At 1 Broadgate, we will deliver our most
energy efficient building yet with energy
intensity in line with our stretching
2030 target and the UKGBC’s 2030-35
efficiency target. It is a pioneer project
for adopting the NABERS UK Design for
Performance approach, which provides
a methodology against which we can
design and test our plans to ensure we
stay on track to achieve our target energy
efficiency. The building will have solar
panels on the roof and use energy
efficient lighting and lifts. It includes
more than 47,000 sq ft of roof terraces
and space for over 1,000 bikes. We are
targeting a BREEAM Outstanding
certification, WELL Platinum rating for
wellbeing and WIRED Platinum rating for
digital connectivity. Its embodied carbon
is above our 2030 target at 901 kg CO2e
per sqm mainly due to the design which
includes terraces and a retail walkway,
improving the experience for occupiers
and visitors but resulting in a higher
carbon footprint. However, we have a
good track record of reducing embodied
carbon against concept design. In
addition, we are actively salvaging
materials from the current building for
re-use, including the existing granite
façade which will be repurposed as
flooring. At Norton Folgate, which
comprises three buildings, embodied
carbon is in line with our 2030 targets at
444kg CO2e per sqm. The office buildings
will be all electric and include solar
panels on the roof and we are on track
for a BREEAM Excellent rating in offices
and Very Good in retail. Its operational
energy performance will also support
progress towards our 2030 commitments
with a base build efficiency in line with
the UKGBC’s 2020-2025 interim efficiency
target. Overall, average embodied carbon
in our development pipeline is 640 kg
CO2e per sqm comparing well to our
2030 target of 500 kg CO2e per sqm.
On the standing portfolio, building on
the strong progress we have made to
improve the energy efficiency of our
buildings, we are piloting net zero asset
audits to identify further energy saving
interventions, which if actioned, would
enable us to achieve our target of a 25%
energy intensity reduction by 2030. Six
audits have completed to date. This will
be supported by our Transition Vehicle,
which was set up to finance the
retrofitting of our standing portfolio and
pay for certified offsets and is funded
by an internal carbon levy of £60 per
tonne of embodied carbon on new
developments as well as a £5m annual
float. One of the first projects to benefit
has been an LED lighting upgrade at
Regent’s Place, saving c.100 tonnes
of carbon pa.
60
British Land Annual Report and Accounts 2021
To inform our longer term programme,
this year we commissioned independent
research into the social and economic
issues facing the diverse communities
around 25 of our places. This work
demonstrated that while there were
shared themes, such as education and
employment, there were also specific
local challenges. In the coming year we
will work with local partners to target
the issues where we can make the
greatest impact.
Place Based approach
This year, our community activities
focused on supporting the people in and
around our places who have been most
impacted by Covid-19. The strong local
partnerships we built up over more than
ten years of community engagement
were instrumental in ensuring that we
provided the appropriate support to
those who needed it most. We funded a
bespoke coaching programme through
The Business School (formerly Cass)
helping 25 local partners navigate the
crisis. We supported local foodbanks
including Lifeafterhummus at Regent’s
Place, where our site teams and some
of our occupiers volunteered, the Euston
Foodbank and the Nourish Community
Foodbank, through Royal Victoria Place.
Recognising the severe impact that
prolonged school closures had on many
disadvantaged children, we worked with
the National Literacy Trust to provide
them with books and activity packs,
benefitting an estimated 3,600 families.
With retail and hospitality industries most
acutely impacted by this year’s lockdown,
our efforts have focused on supporting
people who became unemployed in those
sectors as a result. In Edinburgh, we
worked with long term partner Capital
City Partnership on a rapid retail recovery
plan that assisted over 80 businesses
with recruitment and workforce needs
including advice on funding and furlough,
delivered training and information
sessions to over 60 people and supported
30 jobseekers into employment. In
London initiatives included four virtual
work experience projects for over 200
young people, involving our customers
and local partners. Overall, nearly 1,000
people received meaningful employment
support, of which 364 moved into
employment (compared to 508 last year),
which is a fantastic achievement in the
context of the pandemic and reflects how
quickly we were able to mobilise support.
Indicative image of Regent’s Place proposed public realm
British Land Annual Report and Accounts 2021
61
PERFORMANCE REVIEW continued
Campus
focused
London
offices
Portfolio valuation
£6,032m
Occupancy
94.1%
Weighted average lease length to
first break
5.5 yrs
Total property return
(0.8)%
Lettings/renewals (sq ft) over 1 year
168,000
On a proportionally consolidated basis including the
Group’s share of joint ventures and funds.
Campus operational and
financial highlights
– Office values down 3.8%, with the
City down 4.6% and the West End
down 3.2%
– 9 bps yield expansion, more
pronounced in the West End (+13 bps);
City (+2 bps)
– ERVs marginally up overall; down 1.6%
in the City; up 2.0% in the West End.
The increase reflects valuation
assumptions regarding future building
refurbishments, excluding these,
ERVs are down c.1% overall
– Like-for-like income down 1.0%, driven
by expiries ahead of refurbishment
– Leasing activity subdued at 168,000 sq
ft (deals greater than one year) in
the year
– Total lettings and renewals at 395,000
sq ft; further 161,000 sq ft deals
agreed post period end, including
pre-let of 134,000 sq ft to JLL at
1 Broadgate, bringing total leasing
since 1 April to 556,000 sq ft
– Under offer and in negotiations on a
further 474,000 sq ft
– Investment lettings and renewals over
one year, 2.3% ahead of ERV
– 469,000 sq ft rent reviews agreed 9.7%
ahead of passing rent adding £1.7m
to rents
– Occupancy of 94.1%
– Rent collection high at 99% for FY21
Campus operational review
Campuses now account for nearly 90% of
our offices portfolio. Located in some of
London’s most exciting neighbourhoods,
they are well-connected, high quality
environments which foster innovation
and creativity. As the nature of demand
changes, we are well placed to target
successful businesses in innovative
growth sectors as we have done
successfully at Broadgate. One clear
opportunity is in life sciences at Regent’s
Place, benefiting from its location in the
Knowledge Quarter.
Occupancy remains high at 94.1%. We
benefit from a diverse portfolio of high
quality occupiers focused on financial,
corporate and media & technology
sectors. As a result, we have collected
virtually all our rent for the full year (99%).
Leasing activity was inevitably impacted
by Covid-19 as occupiers postponed
decisions on new space to manage their
Covid response. As a result, total leasing
activity was 395,000 sq ft, including
168,000 sq ft of deals over one year
(2.3% ahead of ERV). However, interest
returned towards the end of the year,
particularly on our development
space, where occupiers with sizeable
requirements, two to three years in the
future are looking to secure space which
enables them to perform at their best.
Encouragingly, we let a further 161,000
sq ft post period end bringing total
leasing since 1 April 2020 to 556,000 sq ft,
we are under offer or in negotiations on
a further 474,000 sq ft.
Broadgate
Total leasing activity in the year covered
229,000 sq ft, including 124,000 sq ft of
long term deals. Post period end, we let
a further 134,000 sq ft to JLL for their UK
flagship office at 1 Broadgate. This deal
represented nearly 30% of the offices
space in the building and demonstrates
JLL’s continuing conviction in the
importance of modern, high quality and
sustainable space. Similarly, TP ICAP
increased the size of their office at 135
Bishopsgate, signing for a further 20,000
sq ft and taking them to 143,000 sq ft.
We signed deals with William Blair at
Broadgate Tower (25,000) sq ft and
Western Asset Management at 10
Exchange Square (12,000) sq ft, all ahead
of ERV. We also let 17,000 sq ft of fitted
space to Vorboss at Broadwalk House,
completing in just four weeks despite the
lockdown restrictions. Rent reviews were
agreed on 257,000 sq ft, 4.2% ahead of
passing rent including 146,000 sq ft to
Mayer Brown at 201 Bishopsgate.
62
British Land Annual Report and Accounts 2021
Storey: our flexible workspace brand
Storey our flexible workspace offer, is
now operational across 348,000 sq ft. This
year, we launched a further 48,000 sq ft
of Storey space at 100 Liverpool Street
which was 37% let or under offer at
launch to customers including ITAU BBA
International and Aperion Investment
Group. 13,000 sq ft has been allocated
to Storey Club, which opened on 17 May
2021, providing ad hoc meeting and
events space, as well as lounge and
café areas.
We have been encouraged by the
increase in activity in recent months, with
viewings and enquiries returning to pre
pandemic levels. Leasing activity covered
61,000 sq ft for the year with 14,000 sq ft
let since 1 April 2021. We have seen good
demand from larger overseas corporates
looking for a main UK office, generally
taking larger spaces on longer terms.
We have also seen several of our
existing customers scale up, including
recruitment company Storm 2, BAI
Communications and Levin Group. We
are under offer on a further 48,000 sq ft
and occupancy at stabilised buildings
(let and under offer) is now 79%.
We are still achieving rents at a premium
of more than 30% to a traditional lease
and average lease length is 26 months.
Storey has proved resilient, with rent
collection for the year at 100% reflecting
the strength of its customer base. The
majority of occupiers are UK/European
headquarters, scale up businesses or
large multinationals. Only five customers
deferred rents in the first half and no
further deferrals were required in the
second half.
We continue to modernise our existing
space with asset management initiatives
across the campus, the largest of which
is at 155 Bishopsgate (£35m our share).
Other projects include the part
refurbishment of Broadwalk House,
which completed in the year, and we
are on site with partial refurbishments
of Exchange House and 10 Exchange
Square. This investment ensures that
existing as well as new space is well
positioned to benefit as occupiers
increasingly focus on the best space
for their business. We are also on site
at Exchange Park, which will deliver
1.5 acres of green space, including
amphitheatre style seating and outside
events space which will be open to all and
a range of tree and plant life to support
biodiversity. Works are due to complete
at the end of the year.
A number of exciting new brands have
opened at Broadgate, including the first
UK Eataly, an Italian market concept
including restaurants and bars over two
floors and a terrace which opened at
135 Bishopsgate in April 2021. The new
retail line up at 100 Liverpool Street is
now open, including Gant, Watches of
Switzerland, Tommy Hilfiger and Kiehls
and the UK’s first John Reed Gym, with
live DJs is due to open in the summer.
Storey is now open at 100 Liverpool
Street, offering 48,000 sq ft of flexible
workspace, including Storey Club following
its success at Paddington Central.
The campus saw a valuation fall of 3.6%
reflecting mild yield expansion of 2bps
(all in the first half) and an overall ERV
decline of 1.3%, comprising a fall of 1.5%
in the first half, offset by growth in the
second half. Occupancy is 92.0%, which
is lower than September 2020, with the
inclusion of 100 Liverpool Street which
reached practical completion in the year.
Regent’s Place
At Regent’s Place, technology business
Anaplan signed for 13,000 sq ft at 338
Euston Road. We agreed 59,000 sq ft
of deals and a further 40,000 sq ft of
rent reviews, 21% ahead of previous
passing rent.
Aligning our campuses towards
innovative growth sectors and businesses
is a key area of focus. At Regent’s Place
we see a clear opportunity in life
sciences, reflecting its location within
London’s Knowledge Quarter a unique
part of London between Kings Cross,
Euston Road and Bloomsbury which is
home to over 100 academic, cultural,
research, scientific and media
organisations. We are starting to see
early signs of interest and are under
offer on 20,000 sq ft to two occupiers
in this sector.
The campus was down 3.9% in value,
but benefited from an uplift at 1 Triton
Square, due to profit release given
the proximity to practical completion.
Yield expansion was 17 bps overall, but
weighted towards the first half, partially
offset by ERV growth of 4.2% with a
number of buildings now being valued
on a refurbishment basis. Occupancy
is 96.1%.
Paddington Central
At Paddington, cyber security software
company Trend Micro extended their
7,000 sq ft lease at 2 Kingdom Street by
a further two years. We have agreed rent
reviews covering 109,000 sq ft, 17% ahead
of passing rent.
Pergola, the outdoor dining pop up on the
site of 5 Kingdom Street has performed
exceptionally well on re-opening and The
Cheese Barge, the latest addition to our
food & beverage offer opened in May.
This year, we were pleased to secure
planning permission for an extensive
upgrade to the public realm which will
transform the landscaping and revitalise
the amphitheatre with work due to
commence in the Autumn. Working with
our occupiers and local partners, we
launched a community garden in April
2021 for local schools and community
groups and we are supporting The
Paddington Partnership to deliver a
wayfinding narrative trail around the
area, inspired by community stories
and art.
The campus saw a valuation fall of 2.4%,
reflecting yield expansion of 7 bps (all in
the first half) and ERV decline of 0.3%.
Values benefited from progress made on
planning at 5 Kingdom Street. Occupancy
is 98.4%.
British Land Annual Report and Accounts 2021
63
PERFORMANCE REVIEW continued
Retail
Portfolio valuation (BL share)
£2,592m
Occupancy1
94.1%
Weighted average lease length to
first break
5.1 yrs
Total property return
(19.1)%
Lettings/renewals (sq ft) over 1 year
962,000
On a proportionally consolidated basis including the
Group’s share of joint ventures and funds.
1. Where occupiers have entered CVA or
administration but are still liable for rates, these
are treated as occupied. If units in administration
are treated as vacant, then the occupancy rate for
Retail would reduce from 94.1% to 90.6%.
Retail operational and
financial highlights
– Total Retail portfolio value down 24.7%
reflecting the ongoing impact of
Covid-19 and higher vacancies
due to CVA and administrations
– Yield expansion of 81bps overall;
+143bps for shopping centres,
weighted to the second half and
+45bps for retail parks, weighted
to the first half
– ERVs down 16.8%; down 20.3% for
shopping centres and down 15.2% for
retail parks, weighted to the first half
– Like-for-like income down 17.4%
including the impact of CVAs
and administrations
– Leasing activity ahead of last year
with 962,000 sq ft deals greater than
one year; 19% below passing rent
– Total lettings and renewals at 1.7m sq ft
– Strong pipeline with 583,000 sq ft
under offer, 5.8% below March 2021
ERV and 29% below passing rent
– Further 524,000 sq ft of rent reviews
agreed 2.3% ahead of passing rent
– Good occupancy levels at 94.1%
– Footfall since re-opening 88% of
same period in 2019; like-for-like
sales 104% of the same period in 2019
(both excluding F&B)
– 71% of FY21 rent collected; 72% of
March 2021 quarter rent now collected
Performance review
Operational performance
Our priority has been helping our
occupiers to trade safely when permitted,
keeping our centres full with the right
mix of retailers who are additive to our
places and maximising rent collection.
We are pragmatic and proactive in our
approach, working with successful,
financially strong retailers to ensure
leasing structures are appropriate and
deliver sustainable cash flows. Often this
has meant accepting rents which are
below previous passing rents, but are
more appropriate in the current
environment and sustainable
longer term.
Despite a challenging occupational
market, overall leasing volumes were
ahead of last year, with deals over one
year accounting for 79% of activity (by
rent) but were 11.5% below ERV and 19%
below previous passing rent. We have a
strong pipeline of deals, with 583,000 sq
ft under offer, of which 348,000 sq ft is at
our retail parks.
Retail parks, which account for 53%
of our Retail assets, have proved more
resilient throughout the pandemic. They
are well connected and affordable to
retailers meaning they play an important
role in a successful online retail strategy
facilitating click and collect, returns and
ship from store. We have seen this trend
accelerate as rates of online shopping
have increased with shoppers more
confident visiting open-air locations
they can access easily by car and where
social distancing can be more effectively
managed. Shopping centres account for
34% of our retail portfolio, with open air
covered schemes comprising 12% and
traditional covered centres 22%. Many of
our open air schemes were deliberately
acquired for their development potential,
including Ealing Broadway where we
have the potential to deliver a fifth
London Campus.
More retailers are assessing their
physical footprint to ensure they have
the right space for their business model.
Examples include Home Bargains, who
have taken space at two of our retail
parks, the Kingston Centre, Milton
Keynes (20,000 sq ft) and Mayflower,
Basildon (15,000 sq ft) and Aldi, who have
also taken space at the Kingston Centre
(23,300) sq ft and Crown Point retail park
in Denton (20,000 sq ft). We negotiated
five renewals and one new letting with
Sports Direct at our retail parks together
totalling 87,800 sq ft and four renewals
with Next totalling 56,600 sq ft. We were
delighted that Amazon Fresh chose our
Ealing Broadway centre for their first
physical store outside North America.
We also agreed 53 rent reviews,
delivering a 2.3% increase in rent
on average.
64
British Land Annual Report and Accounts 2021
Footfall and sales have recovered strongly since reopening, as set out below:
Footfall
– Portfolio
– Retail parks
Retailer sales
– Portfolio
– Retail parks
FY21 performance
Performance since
reopening1,2
% of FY20
Benchmark
outperformance3,4,5
% same period
in 2019
60.3%
69.3%
56.8%
63.9%
+21.3ppt
+30.3ppt
+14.6ppt
+21.7ppt
88.3%
99.8%
104.1%
109.2%
1. Excludes F&B and excludes assets for periods when non-essential retail was required to close.
2. The period 11 April 2021 – 16 May 2021.
3. Footfall benchmark: ShopperTrak UK National Footfall Index.
4. Retailer sales benchmark: BDO High Street Index.
5. Footfall benchmark average includes year on two-year for the month of March 2021, retailer sales benchmark average excludes the last week of March 2021 due to
lockdown annualising.
Inevitably, Covid-19 related restrictions
affected the cash flow of many of our
occupiers and hence their ability to pay
rent. We have collected 71% of rent for
FY21 and 72% of rent for the March 2021
quarter (see Supplementary Tables for
full disclosure).
We have made good progress on rent
collection as a result of continuous
engagement with our customers across
the year. For those customers most
affected, primarily smaller independent
businesses, we have agreed pragmatic
and equitable solutions for the periods of
closure which include monthly payments
and concessions. We have also engaged
on a case by case basis with larger
customers facing cash flow difficulties,
often combining our discussions on the
payment of legacy rents with those on
lease extensions and leasing new space.
CVAs and administrations
Over the year, there has been an increase
in CVAs and administrations. We have
seen 49 occupiers enter into CVAs or
Administration accounting for 205 units.
Of these units, 66 have closed, 110
have seen reduced rents and 29 were
unaffected. Overall, this has resulted in
a £25.3m reduction in annualised rents.
British Land Annual Report and Accounts 2021
65
PERFORMANCE REVIEW continued
Development
At 31 March 2021
Recently completed
Committed
Near term
Medium term
Current
Value
£m
403
657
191
Cost to
complete
£m
–
488
806
ERV
£m
19.4
65.1
53.7
ERV
Let
£m
15.5
26.9
–
Sq ft
‘000
520
1,247
1,156
6,847
On a proportionally consolidated basis including the Group’s share of joint ventures and funds (except area which is shown at 100%).
Campus developments:
further enhancing the
mix of uses
Development is one of the key ways
in which we realise the potential of our
Campuses. Through development and
comprehensive refurbishments, we are
providing modern, sustainable space,
built around the evolving needs of our
customers. More than ever, the ability to
deliver this into environments which are
safe and engaging will be an advantage,
generating a lasting positive impact
beyond the individual buildings.
Completed developments
We reached practical completion at 100
Liverpool Street (520,000 sq ft) in October
2020 and in March 2021, 100 Liverpool
Street became our first net zero carbon
development, when we offset the residual
carbon associated with this building.
The building is 81% let, rising to 89%
including 48,000 sq ft allocated to Storey
which launched in February 2021.
Occupiers at the building include
Peel Hunt, SMBC Europe and Milbank
Tweed. 68% of the retail space is let or
under offer and with let space now open
in line with Government regulations.
Committed developments
Our committed pipeline now stands at
1.2m sq ft, comprising 1 Triton Square
at Regent’s Place, Norton Folgate and
1 Broadgate. 1 Broadgate (546,000 sq ft)
will be one of the most energy efficient
buildings we have delivered and aligns
with JLL’s net zero carbon ambitions.
Demolition of the existing buildings
commenced in May 2021. Norton Folgate
is a 336,000 sq ft scheme, comprising
302,000 sq ft of office space, alongside
retail and leisure space creating a mixed
use development which is in keeping with
the historic fabric of the area. Benefitting
from its location in Shoreditch, close to
Shoreditch High Street and Spitalfields
market, this building is ideally suited to
technology and creative firms and we
expect to generate higher rents closer
to completion when the buildings can
be viewed.
Portfolio
Progressing value accretive development
is one of our four priorities and we have
made excellent progress in the year.
Recently completed and committed
developments now total 1.8m sq ft and
are 50% pre let, securing £42m of future
rent. Total development exposure is now
5.3% of portfolio gross asset value with
speculative exposure at 6.6% (which is
based on ERV), within our internal risk
parameters of 12.5%.
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 10.7% of portfolio ERV. We continue to
create options for development across
our portfolio with 1.7m sq ft of detailed
planning permissions achieved in the
year and a further 1.2m sq ft under
consideration; we also delivered over
8m sq ft of outline planning permissions
(based on gross external area, primarily
at Canada Water).
The construction market has been
impacted by lockdown so cost inflation
remains low at c.0.5%. The FY20/21
pipeline has shifted outwards, with
reduced competition driving down
prices, but with some upward pressure
likely given reduced labour availability,
constrained logistics and fluctuating
material costs as a result of Covid-19
and Brexit. Our Brexit risks were
tightly controlled with limited effects
felt from the transition. Overall, inflation
is expected to be flat in the current year,
increasing steadily through 2022 and
2023 to recent norms of 3%.
66
British Land Annual Report and Accounts 2021
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.
Progress at this development has been
slower as a result of social distancing
requirements but we reached practical
completion after the year end in May 2021.
Near Term pipeline
Our near term pipeline now covers 1.2m
sq ft with the first phase of Canada Water,
comprising three buildings, accounting
for half of that. Building A1 at Canada
Water provides a mix of office, retail and
residential space over 272,000 sq ft. A2
is an office-led building, including a
new leisure centre built for the London
Borough of Southwark, altogether
covering 248,000 sq ft. K1 is a solely
residential building, providing 79
affordable homes. We are targeting
BREEAM Outstanding on all the office
space and Home Quality Mark Beta 3*
on the residential. Enabling works have
commenced and we expect to place the
main build contracts in the coming months.
At 5 Kingdom Street, Paddington Central,
our planning application to increase our
consented scheme from 206,000 sq ft to
438,000 sq ft was approved by the Mayor
in October 2020. Phase 2 of our mixed
use development at Aldgate accounts for
the remaining 136,000 sq ft. This phase
will deliver 159 build to rent homes with
19,000 sq ft of office space as well as
retail accommodation. We have planning
consent for the building and will be in
a position to start on site in calendar
Q4 2021.
Medium Term Pipeline
The most significant campus scheme
in our medium term pipeline, outside
Canada Water, is 2-3 Finsbury Avenue at
Broadgate where we received consent for
our revised scheme covering 704,000 sq
ft in the year. Our new plans add more
than 130,000 sq ft to the previous
consent. This building will target the
BREEAM ‘Outstanding’ certification in
construction. The building is currently
generating an income through short
term, more flexible lettings, including
40,000 sq ft allocated to Storey. The
further phases at Canada Water cover
4.5m sq ft of mixed use space.
Retail & Fulfilment
development: enhancing
and repositioning our
portfolio for the future
We are unlikely to undertake standalone
retail development in the near term but
we are actively identifying opportunities
for the development of urban logistics
space on our portfolio and potential
acquisitions. In addition, we have a
number of mixed use opportunities
at our retail centres which align well
to our strategy.
Opportunities to add uses
At Ealing Broadway, we completed
the successful refurbishment of 54
The Broadway, our first office scheme
in Ealing in December 2020 which is
fully let to the Department of Work
and Pensions. We are working up plans
for a comprehensive refurbishment of
International House, which is returned
to us in mid 2022, as well as an exciting
redevelopment of 10-40 The Broadway,
an office led mixed use scheme covering
303,000 sq ft that will sit adjacent to our
Ealing Broadway shopping centre outside
the new Crossrail entrance. 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.
We are scoping the broader retail
portfolio for alternative and additional
use opportunities. Following an initial
assessment, we have identified 2.4m sq ft
of opportunities with the most significant
being logistics on the surrounding land at
Meadowhall and Teesside (together c. 1m
sq ft). At Meadowhall, we have existing
outline planning permission on a
development plot separate from the
shopping centre and would expect to
submit a reserved matters application
this year. At Teesside, we have a similar
opportunity on land outside the retail
park and are working up our plans for a
logistics use. We made our first logistics
acquisition of a warehouse in Enfield
covering 216,000 sq ft in April 2021.
Located inside the M25, this site is
a prime urban logistics site and the
coverage is low at c.40% presenting a
clear opportunity to increase densification
by expanding the footprint as well as
through multi-level development. The
planning environment in Enfield is
supportive for intensification of uses,
particularly logistics. In the meantime, the
site is fully let and is highly reversionary.
British Land Annual Report and Accounts 2021
67
PERFORMANCE REVIEW continued
Canada Water: 53 acre
masterplan for a new urban
centre in Central London
Highlights
– Planning secured on Canada Water
Masterplan, a 5m sq ft mixed use
scheme in May 2020
– Drawdown of 500 year headlease
with Southwark Council completed
in December 2020
– Signed first pre-let with higher
education enterprise, TEDI-London
for their new campus
– Targeting annual development returns
in the low teens
– Advancing plans to bring in partners
to support the delivering of the
wider scheme
– Net valuation movement down 2.5%
but with an uplift of 3.4% in the second
half, reflecting headlease drawdown
At Canada Water, we are working with the
London Borough of Southwark to deliver
a 5m sq ft mixed use scheme, including
around 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 free up capacity 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 May 2020 we secured outline
planning permission on the entire 5m sq
ft masterplan, including detailed consent
on the first three buildings, covering
582,000 sq ft. In December, having
successfully overcome a Judicial Review
challenge, we completed the drawdown
of the 500-year headlease with Southwark
Council, effectively combining the
ownership of all our assets at Canada
Water into a single 500-year headlease
with Southwark Council as the Lessor. The
headlease allows for the comprehensive
redevelopment and investment in the
site, with Southwark Council owning an
initial 20% interest and with the ability
to participate in the development, up
to a maximum of 20% with returns
pro-rated accordingly.
This is a ten to twelve year programme
for which we will target annual
development returns in the low teens.
In parallel, we are advancing plans to
bring in partners to support the delivery
of the wider scheme and have had some
encouraging conversations. We have
commenced enabling works for the first
phase and expect to place the main build
contract in the coming months.
The first three buildings will deliver
265 homes, of which over 35% will be
affordable (split 70% social rent and
30% intermediate housing), as well as
commercial space, public spaces and
improved pedestrian connections. As part
of our commitment to the early delivery
of affordable housing, we will deliver
building K1 which is solely residential,
comprising 79 homes (all affordable)
in Phase 1. The other buildings in that
phase are A1, which provides 186 homes
(including eight affordable) alongside
offices and a small amount of retail
space, together covering 272,000 sq ft
and A2, which is offices-led but includes
a 56,000 sq ft leisure centre within the
248,000 sq ft building.
We are exploring a range of alternative
uses, including healthcare, life sciences,
senior living and higher education, and
we are pleased that, higher education
provider, TEDI-London a global partnership
68
British Land Annual Report and Accounts 2021
with King’s College London, Arizona State
University and UNSW Sydney has chosen
Canada Water as the location for its new
campus. TEDI-London has taken an initial
13,000 sq ft for their modular campus
with the option to expand to 40,000 sq ft
which we will deliver in phases as the
organisation grows. Longer term, we plan
to work with TEDI to deliver a permanent
home for around 1,000 students within
the Canada Water Masterplan. These
plans align with our wider strategy to
focus the business on growing sectors
and demonstrates strong progress against
our priority to realise the potential of our
campuses. Our planning permission at
Canada Water is deliberately flexible so
as we move forward, we can take account
of changes in demand by amending our
offices, residential and retail allocations
as appropriate.
Sustainability
The Canada Water Masterplan will be
one of the most genuinely sustainable
regeneration projects in the UK.
Sustainability is engrained in all aspects
of the masterplan, with a key focus on
delivering net-zero carbon, promoting
wellbeing and significantly
increasing biodiversity.
We are reducing embodied carbon in
construction and minimising carbon
emissions during operation through
efficient design, the use of low carbon
materials (such as high recycled content
in steel and ‘earth-friendly’ concrete)
and new building technologies. We are
also adopting NABERS UK Design for
Performance modelling to design to
the highest efficiency and performance,
whilst also allowing for future adaptation
to suit emerging green technologies. K1
will be one of our first all-electric buildings.
All buildings will target BREEAM
Certification (Commercial Outstanding,
Retail Excellent, Residential Home
Quality Mark) and as part of our holistic
approach to sustainability, the Canada
Water Masterplan will also achieve
BREEAM Communities Certification.
Wellbeing principles are at the heart of
the Canada Water Masterplan and we
aim to create an environment, accessible
to all, that links people and places. We
will enhance the individual experience
through the use of smart technologies, by
improving local air quality and providing
access to nature. We will increase
biodiversity through the enhancement of
existing green spaces and creation of 12
acres of open space, including a 3.5 acre
park, connected to 130 acres of parks,
woodlands and water.
Working with local communities
We are excited to be making progress
at Canada Water and we recognise that
developing such a large part of London
carries real responsibilities to the
community that lives, works and studies
in and around the area. We worked with
Southwark Council to develop a Social
Regeneration Charter to capture local
residents’ priorities for the development,
which commits us to working in
partnership to deliver on these.
This approach is now a model for
development across the borough.
This year we have worked closely
with our community partners to support
those most impacted by Covid-19. We
provided increased funding to grassroots
organisations and local charities such
as Time & Talents, who ran a foodbank
close to Canada Water and five of our
local partners now receive professional
coaching support via The Business
School to support them and their
organisations to emerge from this crisis.
Our partnership with Construction Youth
Trust continues to grow; despite the
restrictions, they delivered meaningful
employer engagement to over 800
students at schools local to Canada
Water. We are continuing to work with
Tree Shepherd to provide low-cost
workspace with business support and
advice to help local entrepreneurs get
their businesses off the ground.
The project aims to become self-
sustaining and create a network of local
entrepreneurs to inform the ongoing
programme and maximise outreach
within the local community. We have
also signed up to the Southwark Stands
Together pledge which sets out five
commitments to tackle racism and
inequality in the borough of Southwark.
Valuation
The net valuation movement for Canada
Water over the year showed a fall of 2.5%
to £387m with values down 6.0% in the
first half, reflecting continued investment
to support the delivery of the Masterplan,
such as a new marketing suite. We saw
an uplift of 3.4% in the second half
reflecting the drawdown of the headlease.
Canada Water Masterplan
British Land Annual Report and Accounts 2021
69
FINANCIAL REVIEW
“This has been a
unique year and
we have clearly
demonstrated
resilience.”
David Walker
Interim Chief Financial Officer
Finance review
Year ended 31 March
Underlying Profit1,2
Underling earning per share1,2
IFRS (loss) after tax
Dividend per share
Total accounting return1,3
EPRA Net Tangible Assets
per share1,2
IFRS net assets
LTV1,4,5
Weighted average interest rate5
Underlying Profit
2020
£306m
32.7p
£(1,114)m
15.97p
(11.0%)
773p
£7,147m
34.0%
2.5%
2021
£201m
18.8p
£(1,083)m
15.04p
(15.1%)
648p
£5,983m
32.0%
2.9%
Underlying Profit for the year ended 31 March 2020
Like-for-like rent (incl. CVA and administrations)
Provisions for outstanding rents, service charge and
deferred rents1
Provisions for tenant incentives
Finance cost reductions
Net divestment
Developments
Fees & other income
Underlying Profit for the year ended 31 March 2021
£m
306
(43)
(59)
2
8
(21)
10
(2)
201
1. See Glossary on website for definitions.
2. See Table B within supplementary disclosure for reconciliations to IFRS metrics.
3. See Note 2 within the financial statements for calculation.
4. See Note 17 within the 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.
Overview
Financial performance for the year has been significantly
impacted by Covid-19 and an already challenged retail
environment. Underlying Profit is down 34.3% at £201m, while
underlying earnings per share (EPS) is down 42.5% at 18.8p.
1. The year on year impact of provisions for outstanding rents, service charge
and deferred rents was £59m. This reflects the difference between the £65m
charge to the income statement in the year to 31 March 2021 (as disclosed
in Note 13 of the financial statements) and the £6m charge in the year to
31 March 2020.
Underlying Profit decreased by £105m, primarily due to
provisions for outstanding rent, service charge and rent
deferrals made in light of Covid-19, as well as a reduction in
like-for-like rents and the impact of disposals made during
the period. Lower market interest rates alongside our hedging
approach and financing activity increased Underlying Profit
by £8m.
Net divestment decreased earnings by £21m in the year.
Proceeds from sales have and will be deployed into our value
accretive development programme. The recently completed
and committed schemes are expected to generate earnings
accretion of £50m, of which 50% is already pre-let.
70
British Land Annual Report and Accounts 2021
Since April 2020, we have completed £1.2bn of asset disposals,
overall 6.2% ahead of book value. This included £556m of
retail disposals, primarily the sale of three Tesco superstores
totalling £191m and four standalone B&Q stores totalling
£100m. We sold our Beaumont Leys shopping centre for £72m
in two separate transactions and two retail parks in Lincoln and
Newmarket for a combined total of £21m. We sold our share of
a portfolio of reversionary interests in Sainsbury’s superstores
for £102m and made further sales of standalone retail assets,
including a Tesco in Brislington for £42m and a David Lloyd
gym in Northwood for £51m.
We completed £643m of office disposals since November; the
most significant transaction was the sale of a 75% interest in
a portfolio of three buildings in the West End to Allianz Real
Estate for £401m representing a blended NIY of 4.3%. We also
sold the offices and retail element of our Clarges scheme in
Mayfair for £177m at a NIY of 3.5% and Yalding House for
£42m at a NIY of 4.4%.
Overall valuations have reduced by 10.8% on a proportionally
consolidated basis resulting in an overall EPRA NTA per share
decline of 16.3%.
Financing activity of £1.6bn included the extension by a further
year of £1.1bn unsecured bank facilities: £650m RCFs were
extended to 2025 and in March 2021 our £450m ESG-linked RCF
was extended to 2026. New loans of £460m were arranged, for
British Land, HUT and our new Joint Venture with Allianz.
LTV has decreased by 200bps during the year to 32.0%. The
primary driver of the movement was asset disposals which
reduced LTV by 780bps. This was partially offset by valuation
declines adding 420bps and development spend adding 140bps.
As a result, our financial position remains strong with £1.8bn
of undrawn facilities and cash and no requirement to refinance
until early 2025. We retain significant headroom to our debt
covenants, meaning the Group could withstand a further fall
in asset values across the portfolio of 46% prior to taking any
mitigating actions.
Fitch Ratings as part of the annual review in August 2020
affirmed all our credit ratings, including the senior unsecured
rating at ‘A’, with a Stable Outlook.
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.
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.
This year, the Group has adopted the new EPRA NAV metrics;
Net Reinvestment Value (NRV), Net Tangible Assets (NTA) and
Net Disposal Value (NDV). We are reporting NTA in place of the
previous EPRA net asset value (NAV). Similarly, NDV replaces
the previous EPRA triple net asset value measure (NNNAV).
The total accounting return is now calculated based on EPRA
NTA. Definitions of these metrics are shown in Table B of the
supplementary disclosures.
Management monitors EPRA NTA 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 NTA, 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.
Income statement
1. Underlying Profit
Underlying Profit is the measure that we use 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 loss after tax.
Gross rental income
Property operating expenses
Net rental income
Net fees and other income
Administrative expenses
Net financing costs
Underlying Profit
Underlying tax charge
Non-controlling interests in
Underlying Profit
EPRA adjustments1
IFRS (loss) after tax
Underlying EPS
IFRS basic EPS
Dividend per share
Section
1.2
1.3
1.4
2
1.1
2
3
2020
£m
560
(82)
478
13
(74)
(111)
306
–
2021
£m
508
(141)
367
11
(74)
(103)
201
(26)
12
(1,432)
(1,114)
32.7p
3
(1,261)
(1,083)
18.8p
(110.0)p (111.2)p
15.04p
15.97p
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.
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.
British Land Annual Report and Accounts 2021
71
FINANCIAL REVIEW continued
1.1 Underlying EPS
Underlying EPS is 18.8p, down 42.5%. This reflects the
Underlying Profit decline of 34.3% and an underlying tax
charge of £26m, partially offset by the impact of prior year
share buybacks. The tax charge follows the temporary
suspension of the dividend which resulted in a shortfall in
our REIT property income distributions, creating a corporation
tax liability. With the reinstatement of the dividend, we do not
expect this to repeat in future years.
Receivables
Less than 90 days
90 – 182 days
183 – 365 days
More than 365 days
Trade debtors
Deferred rents
Total
Debtor
balance
Provision
balance
% provided
for
FY 21
impact
£45m
£20m
£31m
£13m
£109m
£10m
£119m
£14m
£14m
£31m
£13m
£72m
£6m
£78m
31%
70%
100%
100%
66%
60%
66%
£14m
£14m
£31m
–
£59m
£6m
£65m
1.2 Net rental income
£m
478
14
(25)
(43)
The above balances are presented on a proportionally consolidated basis, net
of VAT.
The table below presents trade debtors and the associated
provision balance by both aging profile and level of credit risk:
Trade debtors
2
367
(53)
(6)
Less than 90 days
90 – 182 days
183 – 365 days
More than 365 days
Total
Low
High
Medium
CVAs &
Total
admins
£8m £45m
£5m £10m
£8m £20m
£4m
£2m
£6m £17m £31m
£3m
£8m £13m
£3m
–
£35m £10m £23m £41m £109m
£22m
£6m
£5m
£2m
2020
Net
divestment
Develop-
ments
Like for like
rent (incl.
CVA and
adminis-
trations)
Provisions
for
outstanding
rents and
service charge1
Provisions
for deferred
rents
2021
Provisions
for tenant
incentives
1. The year on year impact of provisions for outstanding rents and service charge
was £53m. This reflects the difference between the £59m charge to the income
statement in the year to 31 March 2021 (as disclosed in Note 13 of the financial
statements) and the £6m charge in the year to 31 March 2020.
Net sales of income producing assets over the last 24 months
reduced net rents by £25m in the year. Proceeds from sales
are being reinvested in the committed development pipeline
which is expected to deliver £85m in rents in future years and
including the recent commitment of Norton Folgate and
1 Broadgate, is already 50% pre-let.
Retail like-for-like net rental decline is 17.4% in the year.
This reflects the impact of CVAs and administrations, declining
ERVs, longer void periods and reduced car park income over
the closure period. The offices portfolio saw a like-for-like
decline of 1.0%, which was primarily driven by expiries at
Exchange House and 155 Bishopsgate ahead of refurbishment.
Office developments contributed £14m of new rental income,
with 135 Bishopsgate and 100 Liverpool Street completing
earlier in the year.
In light of Covid-19, provisions made against trade debtors
increased by £53m compared to the prior year. In the March
2020 quarter we deferred rent of £10m which is held as accrued
income, and an impairment of £6m was made against this to
account for risk to recoverability over the next three quarters.
We take a systematic approach to provisioning for rent
receivables, based on both aging profile and credit quality.
We are provided at 66% on rent receivables and service charge
based on balances outstanding at year end. When taking into
account post year end rent receipts of £24m this increases to
85% for trade debtors. Further detail on balances, provisions
and the charge in FY21 made against them are set out in the
table below:
Less than 90 days
90 – 182 days
183 – 365 days
More than 365 days
Total
Low
£1m
£1m
£5m
£2m
£9m
Provision balance
Medium
High
CVAs &
Total
admins
£8m £14m
£4m
£8m £14m
£4m
£6m £17m £31m
£8m £13m
£3m
£5m £17m £41m £72m
£1m
£1m
£3m
–
The above balances are presented on a proportionally consolidated basis, net
of VAT.
The impact of provisions made against tenant incentives
decreased by £2m compared to the previous year, with a
£18m provision charge recognised in the year.
1.3 Administrative expenses
Administrative expenses have been of particular focus across
the business this year, and despite the cost resulting from our
Covid response, they have remained flat on the prior year, at
£74m. The Group’s EPRA operating cost ratio increased to
37.9% (2019/20: 23.5%) as a result of a significant increase in
property outgoing expenses due to provisions made in respect
of rental debtors, accrued income and tenant incentive, as
well as lower rental income following sales activity. Excluding
provisions made in respect of tenant debtors, accrued income
and tenant incentives, the Group’s operating cost ratio is 20.7%
(2019/20: 18.7%).
1.4 Net financing costs
£m
(111)
5
7
4
(103)
(4)
(2)
(2)
72
British Land Annual Report and Accounts 2021
2020
Financing
activity
Lower
market
rates
Net
divestment
Develop-
ments
Convertible
bond
maturity
Other
2021
Financing activity undertaken over the last 24 months has
reduced costs by £5m in the year, predominantly as a result
of prior year debt liability management, partially offset by the
repayment of the £350m zero coupon convertible bond at its
maturity in June as planned using existing facilities.
Balance sheet
As at March
Section
Property assets
Other non-current assets
We have a balanced approach to interest rate risk management.
At 31 March 2021, we were fully hedged on a spot basis, and
we had interest rate hedging on 78% of our projected debt on
average over the next five years. Our use of interest rate caps
as part of our hedging means that the cost of around half of our
debt benefits while market rates remain low and, compared to
the prior year, we’ve seen a £7m reduction in finance costs
from the impact of lower market rates year on year. Our
weighted average interest rate remained low at 2.9%.
The reduction in finance costs from net divestment is due to the
proceeds from £1.2bn of asset disposals, being used to repay
our revolving credit facilities, as well as being reinvested into
development pipeline.
2. IFRS loss after tax
The main difference between IFRS loss after 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 £1,083m, compared
with a loss after tax for the prior year of £1,114m. IFRS basic
EPS was (111.2)p per share, compared to (110.0)p per share
in the prior year. The IFRS loss after tax for the year primarily
reflects the downward valuation movement on the Group’s
properties of £888m, the capital and other income loss from
joint ventures and funds to £409m and the Underlying profit
of £201m. The Group valuation movement and capital and
other income loss from joint ventures and funds was driven
principally by outward yield shift of 33bps and ERV decline of
7.6% in the portfolio resulting in a valuation a decline of 10.8%.
The basic weighted average number of shares in issue during
the year was 927m (2019/20: 934m).
3. Dividends
In October we announced the intention to resume paying
dividends semi-annually, calculated at 80% of Underlying
EPS based on the most recently completed six-month period.
Applying this policy, the Board are proposing a final dividend
for the year ended 31 March 2021 of 6.64p per share. Payment
will be made on Friday 6 August 2021 to shareholders on the
register at close of business on Friday 25 June 2021. The
dividend will be a Property Income Distribution and no
SCRIP alternative will be offered.
2020
£m
11,177
131
11,308
(252)
(3,854)
–
7,202
773p
112
(167)
7,147
2021
£m
9,140
51
9,191
(203)
(2,938)
–
6,050
648p
59
(126)
5,983
Other net current liabilities
Adjusted net debt
Other non-current liabilities
EPRA Net Tangible Assets
EPRA NTA per share
Non-controlling interests
Other EPRA adjustments1
IFRS net assets
Proportionally consolidated basis.
6
4
5
1. EPRA Net Tangible Assets NTA is a proportionally consolidated measure
that is based on IFRS net assets excluding the mark-to-market on derivatives
and related debt adjustments, the carrying value of intangibles, the mark-to-
market on the convertible bonds, as well as deferred taxation on property
and derivative valuations. The metric includes the valuation surplus on
trading properties and is adjusted for the dilutive impact of share options.
Details of the EPRA adjustments are included in Table B within the
supplementary disclosures.
4. EPRA Net Tangible Assets per share
pence
773
19
3
(8)
(1)
(1)
648
(137)
2020
Valuation
performance
Underlying
Profit
Property
disposals
Dividend
Other
2021
Finance
liability
management
The 16.3% decrease in EPRA NTA per share reflects a valuation
decrease of 10.8% combined with the Group’s gearing.
Office valuations were down 3.8%, primarily due to the
uncertainty of economic outlook and potential changes
as a result of Covid-19. As a result, and coupled with lower
investment market activity, yields moved out 9bps although
ERV was marginally up. Developments again outperformed
the standing portfolio and saw a valuation gain of 0.9%.
Valuations in Retail were down 24.7%, with outward yield
shift of 81bps and ERV decline of 16.8%. These values reflect
ongoing structural challenges faced by occupiers, compounded
by Covid-19 and limited investment market activity. Across
our largest assets, yields have moved between 60-170bps.
For retail parks, improving liquidity in the market provided
some valuation evidence, particularly for smaller parks.
Our external valuers have included an explanatory note in
relation to Covid-19 in their valuation reports, recognising
that it continues to affect real estate markets globally.
However, their opinions are not subject to “material valuation
uncertainty” (as defined by VPS 3 and VPGA 10 of the RICS
Valuation – Global Standards), concluding that there was
British Land Annual Report and Accounts 2021
73
FINANCIAL REVIEW continued
an adequate quantum of market evidence upon which to base
their opinions of value. The current market uncertainty has
been reflected in the valuations in a number of ways, depending
on the relevant property sub-market. For retail, as well as
adjusting yields and reflecting agreed concessions, our valuers
have reduced assumed turnover rent. Where concessions have
not been agreed, and rent collection has been inconsistent, they
have deducted 3-6 months rent as a capital sum. For offices,
the uncertainty has principally been reflected through
assumed void periods and incentive packages.
5. IFRS net assets
IFRS net assets at 31 March 2021 were £5,983m, a decrease of
£1,164m from 31 March 2020. This was primarily due to IFRS
loss after tax of £1,083m and the interim dividend paid in the
year of £78m.
Cash flow, net debt and financing
6. Adjusted net debt1
£m
(3,854)
1,186
149
(2,938)
(52)
(230)
(76)
(33)
(28)
2020
Disposals
Acqui-
sitions
Develop-
ment and
capex
Net cash
from
operations
Dividends
Corporation
tax
Other
2021
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 £1,134m whilst development spend
totalled £185m with a further £45m on capital expenditure
related to asset management on the standing portfolio. The
value of recently completed and committed developments is
£1,060m, with £488m costs to come. Speculative development
exposure is 6.6% of ERV. There are 1.2m sq ft of developments
in our near term pipeline with anticipated cost of £806m.
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
Group
Proportionally consolidated
2020
2021
2020
2021
£3,247m £2,249m
£3,854m £2,938m
£3,294m £2,291m
25.1%
28.9%
£4,158m £3,183m
32.0%
34.0%
1.9%
5.8
2.2%
4.3
2.5%
3.8
2.9%
3.0
6.8 years
7.0 years
7.5 years
7.6 years
At 31 March 2021, our proportionally consolidated LTV was
32.0%, down from 34.0% at 31 March 2020. The impact of asset
disposals reduced LTV by 780 bps. This was partially offset by
valuation declines which added 420 bps, as well as development
spend which added 140 bps. Note 17 of the financial statements
sets out the calculation of the Group and proportionally
consolidated LTV.
We are committed to maintaining good long-term relationships
with debt providers in the different markets, with around 30
lenders in bank facilities and private placements alone. This
year we have carried out financing of £1.6bn involving 14
different lenders.
In March 2021, we extended our £450m ESG-linked RCF by a
further year to 2026 with all eight banks in agreement. Earlier
in the year, we extended an additional £650m of RCFs, by a
further year to 2025. Our £350m convertible bond was repaid
at its scheduled maturity in June 2020 as planned using RCFs.
In December 2020 we signed a £100m unsecured loan facility
with Homes England to fund specified infrastructure works
which will accelerate the delivery of up to 3,000 homes at
Canada Water. The loan facility has a seven-year term
which may be extended at our request, subject to Homes
England’s approval.
For HUT, one of the bank facilities which was due to mature
in September 2020 was refinanced in May 2020 with a £200m
facility to December 2023, secured on a portfolio of HUT’s
retail parks.
In March 2021, we also raised a £160.5m seven-year loan from
SMBC for our new Joint Venture with Allianz in which we have
a 25% stake, secured on the assets of the JV.
This is a SONIA based loan and we are considering the
processes for transition of our existing range of LIBOR based
debt and derivatives to reference SONIA, alongside emerging
market practice.
As a result of this activity, at 31 March 2021 British Land had
£1.8bn of undrawn facilities and cash and no requirement to
refinance until early 2025.
Our debt and interest rate management approach has enabled
us to maintain a low weighted average interest rate of 2.9%.
This is a 40bps increase from 31 March 2020, and is due to the
repayment of our RCFs with proceeds from disposals, which
will be redrawn as we deploy proceeds into developments
or acquisitions. Our use of interest rate caps as part of our
hedging means that the cost on around half of our debt
benefits while market rates remain low.
Fitch Ratings, as part of their annual review in August 2020
affirmed our senior unsecured credit rating ‘A’, our long term
IDR credit rating ‘A-‘ and short term IDR credit rating ‘F1’, with
Stable Outlook.
The current environment reinforces the importance of a strong
balance sheet.
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.
David Walker
Interim Chief Financial Officer
74
British Land Annual Report and Accounts 2021
FINANCIAL POLICIES AND PRINCIPLES
Financial
strength
and balanced
approach
We have worked consistently over recent years to
achieve a robust financial footing, positioning us
well to meet the challenges of this year and to
pursue market opportunities.
term and achieve market rate finance
in the medium to longer term. The
hedging required and 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 2021, our
proportionally consolidated LTV was 32.0%
and the Group measure was 25.1%. 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 remains
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 reviewing 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 financing
markets. Based on our current
commitments and available facilities, the
Group has no requirement to refinance
until early 2025. British Land’s undrawn
facilities and cash amounted to £1.8bn
at 31 March 2021.
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 hedging on 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 hedging profile
across proportionally consolidated net
debt. At 31 March, our debt was fully
hedged on a spot basis, with interest rate
hedging on 78% 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
British Land Annual Report and Accounts 2021
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 £2.9bn (British
Land share £2.6bn) of new finance in unsecured
and secured loan facilities, Sterling bonds and
US Private Placements. 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, and the
launch of our Sustainable Finance Framework
during the year enables us to issue sustainable/
green finance to help the implementation of our
Sustainability Strategy.
£3.2bn
total drawn debt
(proportionally
consolidated)
in over
20
debt instruments
Phase maturity of debt portfolio
The maturity profile of our debt is managed with
a spread of repayment dates, currently between
one and 17 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.
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.
7.6 years
average drawn
debt maturity
(proportionally
consolidated)
£1.8bn
undrawn 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, as required for
the business.
£1.9bn
total facilities
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 only 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’, long term IDR credit rating ‘A-’,
and short term IDR credit rating ‘F1’, affirmed
by Fitch during the year with Stable outlook.
32.0%
LTV (proportionally
consolidated)
A
senior unsecured
credit rating
76
British Land Annual Report and Accounts 2021
Group borrowings
Unsecured financing for the Group
includes bilateral and syndicated
revolving bank facilities (with initial
maturities usually of five years, often
extendable); US Private Placements with
maturities up to 2034; and the Sterling
unsecured bond maturing in 2029.
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
£4.7bn as at 31 March 2021.
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 2021, these assets
generated £28m 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 . A new bank loan
was arranged during the year for our
JV with Allianz which included LTV
and ICR covenants.
Hercules Unit Trust has two term bank
loan facilities maturing in 2022 and 2023
arranged for its business and secured on
its property portfolios, without recourse
to British Land. These loans include LTV
ratios of 65% and 60%, and income
based covenants.
The securitisations of Broadgate £1,215m
and Meadowhall £554m have weighted
average maturities of 9.5 years and 7.4
years respectively. 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
As 31 March
Net borrowings to adjusted capital and reserves
Net unsecured borrowings to unencumbered assets
2017
%
29
26
2018
%
29
23
2019
%
29
21
2020
%
40
30
2021
%
33
25
British Land Annual Report and Accounts 2021
77
MANAGING RISK IN DELIVERING OUR STRATEGY
Managing risk
Our integrated risk management approach
Top down
Strategic risk management
Bottom up
Operational risk management
Board/Audit Committee/CSR Committee
Review external environment
Robust assessment of principal risks
Set risk appetite and parameters
Determine strategic action points
Assess effectiveness of risk management process
and internal control 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
n
o
i
t
c
a
e
t
a
i
r
p
o
r
p
p
a
e
k
a
t
d
n
a
s
l
o
r
t
n
o
c
k
s
i
r
&
s
I
R
K
r
o
t
i
n
o
M
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.
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.
Our integrated approach combines a top
down strategic view with a complementary
bottom up operational process, with
three lines of defence, as outlined in the
diagram above. 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
priorities and the external environment
in which we operate – this is our risk
appetite. It is integral to both 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.
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 all activities. 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.
Internal audit acts as an independent
and objective assurance function by
evaluating the effectiveness of our
risk management and internal control
processes, through independent review.
In summary, our approach to risk
management is centred on being
risk-aware, clearly defining our risk
For British Land,
effective risk management
is fundamental to how we
do business. It represents
a cornerstone of executing
our strategy and positioning
the business for growth
whilst delivering positive
outcomes on a long term
sustainable basis.
Our key activities in the year
– Implemented our robust crisis management
plans in response to Covid-19; the Board and
key Committees met regularly to mitigate the
risks across our business
– Assessment of emerging risks including the
longer term implications of Covid-19 on the
role of offices and physical retail and our
strategic response. Covid-19 has acted as
a catalyst for existing trends of the shift
to online retail and more flexible
working practices
– Proactively managed our rent collection and
occupier risk in a challenging market backdrop
– Maintaining our financial resilience and
sufficient liquidity
– Brexit Planning Steering Committee operated
prior to Brexit to assess risks and co-ordinate
our mitigating actions; now being managed as
part of business as usual
– Managing sustainability and climate-related
risk and opportunities. Undertook scenario
analysis of physical risks in line with
TCFD requirements
Our priorities for 2021/22
– Continue to proactively manage the
ongoing risks arising from Covid-19
and the implications for our strategy
– Effective risk management of our key
operational risks including development,
investment in new opportunities, our
partnerships with third parties, our asset
management capability and leasing and
occupier risks
– Further enhance our internal control
framework and ensure this is fully
embedded across the Group
– Enhance our cyber security and
IT infrastructure
– Environmental matters including scenario
analysis of our transition risks as we move
towards full compliance of TCFD by FY22
78
British Land Annual Report and Accounts 2021
appetite, responding to changes to our
risk profile quickly and having a strong
risk management culture among
employees with clear roles and
accountability. Our organisational
structure ensures close involvement
of senior management in all significant
decisions as well as in-house management
of our property management activities
and development.
To read more about the Board and
Audit Committee’s risk oversight,
see pages 99-100 and 120.
Our risk appetite
Our risk appetite lies at the heart of our
risk management and is integral to both
business planning and decision making.
The Group’s risk appetite is reviewed
annually as part of the strategy review
process and approved by the Board, in
order to guide the actions management
takes in executing our strategy.
We have identified a dashboard of Key
Risk Indicators (KRIs) for each internal
principal risk with specific tolerances
for each, which are integrated with the
operations of the business (summarised
below). Their aim is to provide early
signals to alert management to
increasing risk exposures or trends that
could threaten the achievement of our
priorities and allows informed decision
making. Our KRIs 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. The risk
indicators are a mixture of leading and
lagging indicators and focus on the most
significant judgements affecting our risk
exposure, including our investment and
development strategy; the level of
occupational and development
exposure; our sustainability risks;
and our financial resilience.
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. Our appetite
for financial risk has reduced over the
last few years, whilst our appetite for
operational risk has increased reflecting
our strategy for active capital recycling,
investment in growth sectors and
developments. It also recognises the
structural changes affecting our markets,
which have been compounded by Covid-19.
During the year, we have continued to
actively manage our incremental risk
exposure by:
– Taking a pragmatic approach to
leasing to maximise occupancy and
improve rent collection. Our income
collection risk is elevated with our
occupier covenant risk in terms
of percentage of rent classified as
‘high risk’, having operated above
our optimal tolerance level in the near
term given the impact of Covid-19 on
our customers. We continue to actively
monitor and work proactively with our
customers who have been
disproportionately affected by the
pandemic to agree pragmatic and
equitable solutions. We also perform
occupier covenant checks so that we
can be proactive in managing exposure
to weaker occupiers.
– Accelerated sales of non-core assets,
executing £1.2bn of sales since April
2020, enhancing the strength and
resilience of our balance sheet.
– Disciplined approach to development
including managing our speculative
exposure, using a broad range of
contractors and closely monitoring,
coupled with our successful
pre-letting strategy.
– Maintaining an efficient capital
structure and liquidity position. We
retain significant headroom to our
Group debt covenants and refinance
proactively, and based on our current
commitments, available bank facilities
and debt maturities, we have no
requirement to refinance until
early 2025.
– Supporting our people and promoting
both their physical and mental wellbeing.
Dashboard of Key Risk Indicators (KRIs)
Principal internal risks
Key risk indicators
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 our portfolio in joint ventures and funds
Development strategy
– Total development exposure <12.5% of portfolio by value
– Speculative development exposure <12.5% of portfolio ERV
– Residential development exposure
– Progress on execution of key development projects against plan (including evaluating yields on cost)
Capital structure
Finance strategy
Environmental
sustainability
People
– Manage our LTV through the property cycle
– Net debt to EBITDA
– Financial covenant headroom
– Period until refinancing is required of not less than two years
– Percentage of debt with interest rate hedging (average over next five years)
– Flexible debt facilities
– Energy performance certificates
– Percentage of portfolio at high risk of flood
– Voluntary staff turnover
– Employee engagement and wellbeing
Income sustainability
– Market letting risk including vacancies, upcoming expiries and breaks, and speculative development
– Occupier covenant strength and concentration (including percentage of rent classified as ’High Risk’)
– Occupancy and weighted average unexpired lease term
British Land Annual Report and Accounts 2021
79
MANAGING RISK IN DELIVERING OUR STRATEGY continued
Covid-19 action plans
– Implemented business continuity and
remote working plans to enable effective
working from home for all our employees
who did not need to be on-site
– Actively monitored employees’ mental
and physical wellbeing, and the health
and safety of our employees remains a
top priority
– Preparation and implementation of
detailed asset plans to manage both the
closure and reopening of stores safely
with robust Covid-19 safeguards in place
in line with Government guidelines. Also
prepared and implemented detailed plans
for each of our office assets as well as
detailed guidance for our occupiers for
the continuing safe occupation throughout
the pandemic
– Worked closely with our customers,
partners, local communities and
organisations associated with our
places to ensure we could provide
appropriate support
– Worked proactively with customers to
maximise occupancy and rent collection
– Disciplined approach to development
including a balanced approach to our
speculative exposure
– Collaboration with our suppliers to ensure
the viability of our supply chain and the
continuity required; also important given
the continued uncertainty brought about
by Brexit
– Prepared action plans with contingency to
deal with material imports, labour supply
and maintain programmes for all our
developments, having implemented the
current Construction Leadership Council
Site Operating Procedures
– Extensive forecasting, stress testing and
modelling of various scenarios to ensure
our financial position remains strong and
we take appropriate actions. The key steps
taken to improve our financial resilience
included accelerating non-core asset
sales, maintaining sufficient liquidity,
temporarily suspending our dividend
and stringently managing our cost base
Our risk focus
The continually evolving circumstances
caused by the Covid-19 pandemic,
coupled with the backdrop of geopolitical
and macroeconomic uncertainty, has, and
continues to present a rapidly changing
near term operating environment for
our business to navigate. Whilst our
performance has been impacted, our
financial position remains strong and
demonstrates the importance of our risk
management to protect our business
through this period of uncertainty and
adapt to a rapidly-changing environment.
We have robust crisis management
and business continuity plans in place
and acted swiftly in dealing with the
exceptional challenges posed by Covid-19;
our focus has been to ensure the safety
of our people; our assets are securely
maintained and to support our
customers, suppliers and local
communities as set out on the left.
Looking forward, whilst the successful
rollout of the Government’s vaccination
programme provides optimism, it is
anticipated that Covid-19 will still be
prevalent in society. Therefore, risk
management and the Group’s continued
ability to be flexible in responding to the
risks as they evolve will be fundamental
to our business.
Brexit, and potential for disruption, was
also a key focus of the Group during the
year and we took appropriate actions to
mitigate the key risks to our business.
The key operational steps taken included
maintaining sufficient liquidity and
financial resilience, working with our
development contractors to minimise
cost and delay risk to our development
programme, increasing stocks of spare
parts to ensure the continued operation
of our assets and updating our crisis
management plans to improve our
response to unpredictable events.
Whilst the UK and EU reached a trade
agreement shortly before the end of the
transition period, we continue to actively
monitor any risks through this period of
transition and remain alert to any new
issues which may arise.
During the year, the Risk Committee has
also focused on some key operational
risk areas across the business including:
– occupier risk and managing our
exposure to customers or sectors in
a more challenging market backdrop
– covenant strength of potential
construction contractors and
managing our exposure
– health, safety and environmental risk
management. Our Health and Safety
management system was re-certified
under ISO 45001
– 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, key financial
controls and counterparties
– procurement and new supplier
onboarding process
– internal audit and implementing
control findings
– information security and key controls
– compliance audits across our assets
Our principal risks
and assessment
Our risk management framework
is structured around the principal
risks facing British Land. We use a
risk scoring matrix to ensure risks
are evaluated consistently; we assess
both the likelihood and the financial and
reputational impact. From this we identify
both the external and internal strategic
and operational principal risks which
currently have a higher likelihood and
potential impact on our business. Whilst
the Board recognises that it has fairly
limited control over the external principal
risks, it reviews their potential impact on
our business and these are taken into
account in our decision making. For our
internal principal risks the Board makes
sure that appropriate controls and
processes are in place to manage
these risks.
The Board confirms that a robust
assessment of the principal and
emerging risks facing the Company,
including those that would threaten its
business model, future performance,
solvency or liquidity, was carried out
during the year taking into account the
evolving Covid-19 risk and the economic
and political environment.
In accordance with our risk management
process, Covid-19 is viewed as an
overarching risk rather than a single
principal risk. It has had a material
negative impact on our business, in
particular resulting in reduced rent
collection in our Retail business, an
increase in failures amongst our retailer
customer base and reduced physical
80
British Land Annual Report and Accounts 2021
occupancy at our office-led assets.
Changes in Government regulation and
intervention in leasing contracts have
occurred which also present a risk to our
business, such as the rent moratorium.
The impact of the pandemic continues
to evolve and affect our entire risk
landscape. We have incorporated
commentary into each principal risk
(as set out on pages 82-87) which
we continue to actively monitor.
Our current assessment is that the
majority of our principal risks we flagged
as elevated last year remain heightened.
While the good progress on the
vaccination programme and roadmap
out of lockdown provides optimism,
the trajectory of the pandemic is highly
uncertain with risks from future variants
and thus it is too early to conclude that
the risks to our business have reduced.
Albeit, the risks to Economic Outlook and
Investment Markets have reduced from
the elevated levels immediately after
the outset of the pandemic, whilst the
risks to our Development Strategy and
People, have increased. See Risk
heat map below.
We have also added one principal risk
as a standalone risk being Environmental
Sustainability in light of the significance
to the business and our customers; and
the external aspects of climate risks are
incorporated within our catastrophic
business event and political and
regulatory risks.
The principal risks are summarised
below and detailed overleaf, 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 priorities.
Our risk assessment
Principal risk
External risks
1 Economic outlook
2
Political and regulatory outlook
3a
Office investment market
3b
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
11
Environmental sustainability
Internal risks – operational
12
People
13
Income sustainability
Key
Our priorities
Realising the potential of
our Campuses
Progressing value
accretive development
Targeting the opportunities
in Retail & Fulfilment
Active capital recycling
Related
priority
Change
year on
year
Risk heat map
1
d
o
o
h
i
l
e
k
L
i
4b
2
13
6
4a
7
5
8
10
3b
12
3a
11
9
Impact
Change year on year
No change
Increase
Decrease
New risk
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
H. Health and Safety
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 2020 point.
British Land Annual Report and Accounts 2021
81
PRINCIPAL RISKS
External risks
Risks and impacts
1 Economic outlook
The UK economic climate presents
risks and opportunities in property
and financing markets and to the
businesses of our customers
which can impact both the
delivery of our strategy and
our financial performance.
How we monitor and manage the risk
Change in risk assessment in year
– The Risk Committee reviews quarterly the
economic environment in which we operate
to assess whether 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 business model focuses on a high quality
portfolio underpinned by our balance sheet
and financial strength.
2 Political and regulatory outlook
Significant political events and
regulatory changes, including the
UK’s decision to leave the EU, and
Government policy response to the
pandemic, bring risks principally in
four areas:
– reluctance of investors and
businesses to make investment
and occupational decisions whilst
the outcome remains uncertain
– 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
– the impact on the businesses
of our occupiers as well as our
own business
– Whilst we cannot 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
New risk
82
British Land Annual Report and Accounts 2021
– The Covid-19 pandemic has brought substantial
economic contraction, with the UK’s GDP falling
9.9% for the calendar year 2020, severely
impacting both our markets and the
businesses of our customers.
– The combination of strong Government spending
(in particular the Job Retention Scheme), low
inflation and low interest rates helped mitigate
some of the impact of Covid-19.
– Economic growth is expected to bounce back
relatively quickly as restrictions ease and
the Government has set out a four-stage
roadmap with a view to lifting all restrictions
by 21 June 2021.
– Overall, the risk to the economic outlook has
slightly reduced from the elevated level last year,
in view of the good progress with the vaccination
programme and the economy is on track for full
reopening in June. Albeit, the trajectory of the
pandemic remains a key area of uncertainty
and any significant re-emergence of Covid-19
or new variants could result in the imposition of
restrictions and further economic damage and
there are also concerns that inflation may rise.
– The Board and executive team have taken
appropriate action to help us navigate the near
term challenges and determine the longer term
strategic direction of the business focused on
four priorities.
– The political risk outlook remains high dictated
by the national and global response to Covid-19.
Furthermore, the global geopolitical and trade
environments remain uncertain.
– While the UK managed to secure a deal with
the EU, avoiding major disruption to trade, the
realities of the new trading relationship are
expected to dampen economic growth in the
short term. Also, further uncertainty remains
until the agreement in respect of financial
services is finalised.
– Changes in Government regulation and
intervention in leasing contracts have occurred,
which have presented a risk to our business,
such as the rent moratorium. Also, the very
recent court decisions on CVAs and Restructuring
Plans have clarified the methods occupiers can
use to adversely alter their rental and other
obligations to property owners. There is also
increased potential for tax rises on businesses.
– We continue to regularly monitor proposed and
actual changes in legislation and regulations and
with the help of professional bodies, if possible,
mitigate the risks to our business. During the
year we have engaged with the British Property
Federation in their response to the Government’s
call for evidence on how to address the impact of
Covid-19 on commercial rents.
External risks
Risks and impacts
How we monitor and manage the risk
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.
– We maintain strong relationships with
agents and 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
– 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 wellbeing, energy efficiency,
community and sustainable design to
our business strategy. Our social and
environmental targets enhance our
customer offer; for example, all our new
developments are net zero carbon and
we facilitate customer networks and
local partnerships on all our campuses.
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
(including more working
from home) 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.
Some or all of these
trends could be
accelerated by
the pandemic.
Change in risk assessment in year
London Offices
– Whilst the London investment market was understandably subdued
in the period following the initial outbreak of Covid-19, in the second
half of the year, overseas investors have shown an increased
readiness to look through the pandemic and invest in prime
London offices, and thus this risk has reduced. The final
quarter of calendar year 2020 saw c.£5bn of transactions.
– Whilst the reintroduction of travel restrictions during the third
lockdown in January 2021 impacted activity in the last quarter,
transaction volumes are expected to pick up as restrictions are
lifted, particularly in the context of low interest rates. The London
Office investment market is expected to remain attractive globally
given its transparency, liquidity and its yield differential.
– This year, benefitting from the resilient office investment market,
we made timely sales of £643m of standalone office buildings.
Retail
– The retail investment market was significantly weaker, reflecting
challenges in the occupational market, resulting in yield expansion
particularly in the first half of the year.
– There has been limited liquidity and lack of transactional evidence,
particularly for shopping centres, where lot sizes are typically larger,
and confidence weakened through the pandemic. However, sentiment
has improved in retail parks, which have weathered the pandemic
better and where investment activity has picked up with £1.7bn of
transactions in the year, slightly lowering this risk to our business.
In particular, the market for assets which are small to medium in lot
size, with secure, sustainable income streams, has seen more activity.
– This year, benefitting from pockets of demand in the retail investment
market, we have sold £556m of retail assets focused on standalone
units and superstores where we have limited potential to drive value
through asset management.
London Offices
– The Covid-19 pandemic affected leasing activity which is significantly
down as businesses focused on near term operational challenges
and postponed decisions on new space, and will undoubtedly
cause many businesses to consider how to use their offices
most productively and safely going forward. As a result, the type of
space businesses need will evolve, and this risk remains elevated.
– Across the market, prime headline rents have generally been flat,
albeit on low volumes and incentives have increased. The vacancy
rate rose to 8.8% from 4.3% a year ago, but secondhand space
accounts for most of the supply with tenant-led space an
increasingly significant component.
– Covid-19 has accelerated a focus on quality space, with occupiers
increasingly focused on the best space for their business, their
people and the environment. We are seeing encouraging interest in
new space, particularly from businesses with requirements two to
three years in the future for modern, high quality and sustainable
space which supports more hybrid ways of working.
Retail
– Covid-19 has had a significant impact on retail, which was already
facing structural challenges as a result of the growth of online.
The risks to the retail occupational market have remained high in
the near term; and have played out in several ways, including rent
reductions, rent deferments and non-payment, but also an increase
in retailers entering CVAs or administrations. We had elevated this
risk last year in response to Covid-19 and this risk remains heightened.
– Stronger retailers are increasingly focused on how best to align their
models to the growth of online; this has included a growing interest
in retail parks which are more affordable and can support an online
strategy through click & collect.
– Our priority has been on keeping our centres full of the right mix
of retailers who are additive to our places. We are pragmatic and
proactive in our approach, working with successful, financially strong
retailers to ensure leasing structures are appropriate and deliver
sustainable cash flows. At times, this has meant accepting rents
which are below previous passing rents, but are more appropriate
in the current environment and sustainable longer term.
British Land Annual Report and Accounts 2021
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. These
market factors may also result
in weaker investor demand for
real estate.
Regulation and capital costs of
lenders may increase cost of finance,
as could increased risk in terms of
economic outlook.
– 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.
– Should inflationary pressure result in increased
interest rates, funding costs may increase.
We have interest rate hedging on 78% of
our projected debt on average over the
next five years.
– Markets were adversely affected globally
by the Covid-19 outbreak. Governments
and central banks responded with significant
interest rate cuts (to all-time lows) and
economic stimulus packages to offset
the effects and support economies.
– In the UK, lenders’ appetite and support varies
in different debt markets. Strength of sponsor
and quality of property remain key factors.
– Availability of finance for retail assets significantly
reduced, but there is more support for logistics,
offices and build to rent residential. Initial LTVs
reduced and margins increased throughout 2020;
however, overall costs of finance remain low
reflecting low market interest rates.
– We maintain good long term relationships with
– British Land maintains good access to its
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,
customers and people.
our key financing partners.
– The scale and quality of our business enable us
to access a diverse range of sources of finance
with a spread of repayment dates. We aim
always to have a significant level of undrawn,
committed, unsecured revolving facilities to
ensure we have adequate financing available 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, governance and processes 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.
primary sources of funds in the unsecured
markets, given our ‘A’ credit rating, as well as
to secured markets for joint ventures and funds,
and the risk to our business in this respect has
remained broadly stable.
– This risk was increased last year (and remains
elevated) as the Group’s operations have been
severely impacted in the year by the Covid-19
pandemic. Our core crisis management team
overseen by the Executive Committee co-ordinated
the Group’s operational response to the pandemic,
including managing communications with
stakeholders and implementing health and
safety procedures. Also, this involved managing
the various lockdown restrictions which closed
non-essential retail across our portfolio and
required measures to be implemented to allow
occupiers to continue to use their offices.
– Terrorism and social unrest remain a threat
and our crisis management team have regular
training and carry out mock incidents to test
processes and procedures.
– The wider use and enhancement of digital
technology across the Group increases the risks
associated with information and cyber security,
with an increasing risk from legacy system
vulnerabilities, social engineering and phishing.
In the wider market, there has been an increase
in cyber attacks being perpetrated and in
response we have further enhanced our security
position and controls. In addition, all staff
continue to undertake mandatory cyber security
awareness training. During the year, we have
established an InfoSec Committee reporting to
the Risk Committee which will oversee further
enhancing our cyber security and IT infrastructure
and review and improve our key IT controls.
Key
Change in risk assessment from last year
Increase
No change
Decrease
New risk
84
British Land Annual Report and Accounts 2021
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
involves 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
– We have reviewed the capital plan in light of
Covid-19 and are focused on recycling capital
out of mature retail and office assets into value
accretive development and new growth sectors.
– We have made good progress, executing £1.7bn
of capital activity since April 2020. This includes
£1.2bn of sales, overall, at 6.2% ahead of valuation.
– Recycling capital out of assets which do not offer
opportunities for us to add value through asset
management or development and into assets
that do is central to our business model going
forward. Overall, the risk remains broadly the
same as last year.
– Progressing value accretive development is one
of our key priorities for our business and is a
fundamental driver of value, but is inherently
higher risk, particularly when pursued on a
speculative basis. We actively manage our
development risk and pre-letting our space is
an important part of that approach. We limit
our total development exposure to 12.5% of the
total portfolio by value as well as limiting our
speculative development exposure to 12.5% of
the total portfolio ERV.
– During the year, our development sites initially
experienced delays following shutdowns due to
the pandemic. All our sites are now operational
and strict Covid-19 protocols have been introduced,
in accordance with the current Construction
Leadership Council Site Operating Procedures.
Since April 2020, we have successfully completed
both 100 Liverpool Street and 1 Triton Square.
– We have flexibility to commit to near term
development programme as and when
appropriate. During the year we have committed
to Norton Folgate and 1 Broadgate, increasing
total development exposure to 5.3% of the
portfolio value and our speculative exposure
to 6.6% of portfolio ERV (and thereby slightly
increasing the risk). Also we have commenced
enabling works for the first phase of our Canada
Water masterplan. We will continue to exploit our
development pipeline but ensure we mitigate risk
through a combination of timing, pre-lets and
joint ventures.
– 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 within targeted ranges
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. We measure inflationary pressure
on construction materials and labour costs and
make appropriate allowances in our cost
estimates and include within our fixed
price contracts.
– Detailed selection and close monitoring of
contractors and key subcontractors including
covenant reviews.
– Experienced development management team
closely monitors design, construction and overall
delivery process.
– Early engagement and strong relationships
with planning authorities. The Board considers
the s.172 factors to ensure the impact on
the environment and communities is
adequately addressed.
– Through our Place Based approach, we
engage with communities where we operate
to incorporate stakeholder views in our
development activities, as detailed in
our Sustainability Brief.
– We engage with our development suppliers
to manage environmental and social risks,
including through our Supplier Code of Conduct,
Sustainability Brief and Health and Safety Policy.
British Land Annual Report and Accounts 2021
85
PRINCIPAL RISKS continued
Internal risks
Risks and impacts
9 Capital structure – leverage
How we monitor and manage the risk
Change in risk assessment in year
Our capital structure recognises the
balance between performance, risk
and flexibility:
– leverage magnifies property returns,
– We manage our use of debt and equity finance
to balance the benefits of leverage against
the risks, including magnification of property
valuation movements.
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.
11 Environmental sustainability
A failure to anticipate and prepare
for (i) environmental risks and
(ii) preventative steps taken by
government and society represents
a principal and emerging risk.
This risk category includes the:
– increased exposure of assets to
environmental hazards, driven by
climate change
– policy risk from the cost of complying
with new climate regulations with
specific performance and/or
technology requirements
– overall compliance requirements
from existing and emerging
environmental regulation
– leasing risk as a result of less
sustainable / non-compliant buildings
– 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 only 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.
– We are currently undertaking TCFD-aligned
scenario analyses to assess our exposure to
climate-related physical and transition risks.
This workstream is overseen by the Risk and
Sustainability Committees, with Board-level
oversight from the Audit and CSR
Board Committees.
– Underpinned by our SBTi-approved climate
targets, our guiding corporate policies (the
Pathway to Net Zero and the Sustainability Brief)
establish a series of climate and energy targets
to ensure our alignment with a societal
transition to net zero that limits global
warming to 1.5°C.
– Our property management department
operates an environmental management system
(EMS) aligned with ISO 14001. In 2020, our
commercial offices achieved formal third
party ISO 14001 certification.
– 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.
86
British Land Annual Report and Accounts 2021
– The current uncertain environment reinforces
the importance of a strong balance sheet. Over
the last few years, we have actively lowered our
leverage, and continued to benefit from a strong
financial position. This risk remains unchanged,
with our proportionally consolidated LTV of
32%, despite valuation falls. We have retained
significant headroom to our Group debt covenants
which could withstand a further fall in values of
c.46%, before any mitigating actions.
– Despite the challenging market conditions, the
scale of our business and quality of our assets
have enabled us to access a broad range of debt
finance on attractive terms in different markets
and this risk remains stable.
– Our strong senior unsecured rating ‘A’, long term
IDR credit rating ‘A-’ and short term IDR credit
rating ‘F1’ were all affirmed by Fitch during the
year, with a stable outlook.
– During the year we have extended £650m of
revolving credit facilities to 2025, and £450m
to 2026, and have £1.8bn of undrawn facilities
and cash and no requirement to refinance until
early 2025.
– The Board recognises the scale of the climate
emergency, its potential impact on real estate
and therefore the urgent need to take mitigating
action; and we have added this as a standalone
risk this year. During the year we launched our
2030 Sustainability Strategy, which sets out
ambitious targets to be net zero carbon by 2030
and includes a focus on environmental leadership.
– In this first year, we have achieved some
important milestones including our first net zero
carbon development at 100 Liverpool Street, our
Pathway to Net Zero Carbon and the launch of
our Transition Vehicle, to finance energy efficient
improvements across the portfolio. The Science
Based Targets initiative also validated our climate
targets as being aligned with a 1.5°C global
warming trajectory.
– We continue to work towards full TCFD alignment
in climate risk disclosure by 2022, and undertook
a portfolio-wide physical risk scenario analysis
in the year. As occupying sustainable buildings
becomes increasingly important to occupiers,
our guiding policies – the Sustainability Brief
and Pathway to Net Zero – play an important
role in setting standards aligned to external
expectations. For example, our new
developments target ambitious sustainability
ratings (‘Outstanding’ targeted for new office
developments) and operational efficiency
through NABERS Design for Performance.
– See pages 48-53 for further detail of our
approach to environmental sustainability
and climate change.
Internal risks
Risks and impacts
12 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.
13 Income sustainability
We are mindful of maintaining
sustainable income streams which
underpin shareholder returns and
provide the platform from which
to grow the business. This could be
adversely affected by non-payment
of rent; occupier failures; inability to
re-let space on equivalent terms; as
well as potential structural changes
to lease obligations.
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
How we monitor and manage the risk
Change in risk assessment in year
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, wellbeing 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.
– We have a broad range of expertise across our business
which is critical to the successful delivery of our strategy.
– The Covid-19 crisis presented a health and safety risk
to our people and made day-to-day operations more
difficult and complex, however this risk has lessened
as a result of the successful vaccination roll out.
The health and wellbeing of our people remains
our priority and we were quick to encourage all
our office-based staff to work from home and
followed Government guidelines.
– As we entered the next phase of Covid-19 and third
lockdown we saw a more tangible impact on our
employees both in terms of their physical and mental
health and wellbeing, clearly indicated by the results of
our pulse wellbeing surveys. We have taken a number
of steps to promote wellbeing, but it is clear that
Covid-19 has negatively impacted the wellbeing of
our employees, notwithstanding all the measures
we have put in place.
– Despite this backdrop our people have delivered great
progress this year. Our voluntary staff turnover was low
at 6% in the year, albeit we anticipate this to increase
slightly as the recruitment market opens up post
lockdown. During the year, there have been a number
of changes to our senior leadership team and we
have set out our new strategy to more actively
focus on development, active management and
repositioning assets.
– We undertake comprehensive profit
– Our income has been negatively impacted by the
and cash flow 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.
challenges facing the retail market, compounded by
the pandemic, as Covid-19 and related restrictions
have affected the cash flow of many of our occupiers,
primarily in our retail business, and hence their ability
to pay rent.
– Our income risk was heightened at last year end
and remains so; encompassing higher levels of non-
payment of rent; an increase in occupiers entering
CVAs or administrations; and the inability to re-let
space on equivalent terms; as well as potential
structural changes to lease obligations (which may
result in increased income volatility). Also, the very
recent court decisions on CVAs and Restructuring
Plans have clarified the methods occupiers can use
to adversely alter their rental and other obligations
to property owners.
– We have been actively monitoring our rental collection
together with our exposure to occupiers at risk of
default and administration. Our approach has been both
pragmatic and proactive to maximise occupancy and
rent collection. For those customers most affected,
primarily smaller independent retailers, we have
agreed pragmatic and equitable solutions for the
periods of closure which include monthly payments
and partial concessions. We have also engaged on a
case by case basis with larger customers facing cash
flow difficulties, often combining our discussions on the
payment of legacy rents with those on lease extensions
and new space. As a result, we have now collected 83%
of rent for FY21 (Office 99%; Retail 71%).
British Land Annual Report and Accounts 2021
87
VIABILITY STATEMENT
Viability
statement
Assessment of prospects
We have worked consistently over several
years to ensure that British Land has a
strong and robust financial position and
we are now benefitting from that;
– The Group has access to £1.8bn
undrawn facilities and cash. Before
factoring in any income receivable, the
facilities and cash would be sufficient
to cover forecast capital expenditure,
property operating costs, administrative
expenses, maturing debt and interest
over the next 12 months.
– The Group retains significant
headroom to debt covenants, has no
income or interest cover covenants
on unsecured debt and has no
requirement to refinance until
early 2025.
– In the year we extended £1.1bn of
RCFs by a further year (£650m to 2025
and £450m to 2026), and refinanced
the £200m HUT loan facility to
December 2023. We also signed
a £100m loan facility with Homes
England to fund specified infrastructure
work at Canada Water and a £160.5m
loan from SMBC to the Allianz joint
venture, secured on its office assets.
The strategy and risk appetite drive
the Group’s forecasts. These cover a five
year period and consist of a base case
forecast which includes committed
transactions only; and a forecast
which also includes non-committed
transactions the Board expects the Group
to make, in line with the Group’s strategy.
A five year forecast is considered to
be the optimum balance between the
Group’s long term business model to
create Places People Prefer and the
fact property investment is a long term
business with weighted average lease
lengths and drawn debt maturities in
excess of five years (5.3 and 7.6 years
respectively at March 2021), offset by
the progressively unreliable nature of
forecasting in later years, particularly
given the historically cyclical UK
property industry.
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 2026.
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 82-87
summaries 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 2026.
The most severe but plausible downside
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 FY22, the impact of 100% of
our high risk and 50% of our medium
risk tenants (see Note 1 Basis of
preparation, significant accounting
policies and accounting judgements)
entering administration, and lower
rent collection (c.70% collection rate)
to continue for a further two years.
– A reduction in investment property
demand to the level seen in the last
severe downturn in 2008/2009,
with outward yield shift to 9%
net equivalent yield.
– The outcome of the ‘severe downside
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 46% to, at its lowest
level, 4%, 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 early 2025. 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 severe downside scenario the
refinancing date reduces to early 2024.
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 meet 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 ‘severe downside 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 2026.
Going concern
The Directors also considered it
appropriate to prepare the financial
statements on the going concern basis,
as explained in the Governance Review.
The Strategic Report was approved by the
Board on 25 May 2021 and signed on its
behalf by:
Simon Carter
Chief Executive
88
British Land Annual Report and Accounts 2021
Governance
90
93
94
96
101
Board of Directors
Governance at a glance
Chairman’s introduction
Governance Review
Key investor relations activities
during the year
Key themes for the year
Board activity
Stakeholder engagement statement
102
103
104
108 Workforce engagement statement
110
Report of the Corporate Social
Responsibility Committee
Report of the Nomination Committee
Report of the Audit Committee
Directors’ Remuneration Report
Directors’ Report and
additional disclosures
Directors’ responsibilities statement
112
116
122
144
147
British Land Annual Report and Accounts 2021
89
BOARD OF DIRECTORS
BOARD OF DIRECTORS
Driving success
Driving success
Our Board develops
strategy and leads
British Land to achieve
long term success.
Tim Score
Non-Executive Chairman
Appointed as a Non-Executive Director
in March 2014 and as Chairman in
July 2019.
N
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 the Senior Independent Director
of Pearson plc, a Non-Executive Director
of 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.
Simon Carter
Chief Executive
Appointed to the Board as Chief Financial
Officer in May 2018 and as Chief
Executive in November 2020.
Skills and experience
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.
Skills and experience
Preben has 30 years’ experience in
driving long-term growth for British
banking businesses.
He was Chief Executive of Close Brothers
Group plc for 11 years from 2009 until
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.
Laura Wade-Gery
Non-Executive Director
Appointed as a Non-Executive Director
in May 2015.
R
N
Skills and experience
Laura has deep knowledge of digital
transformation and customer experience
and brings her experience leading
business change management to
the Board.
She is Chair of NHS Digital and a
Non-Executive Director of NHS England.
Until April 2021, she was a Non-Executive
Director of John Lewis Partnership plc.
Previously, Laura was Executive Director
of 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).
R
A
N
Preben Prebensen
Senior Independent Non-Executive
Director
Appointed as a Non-Executive Director
in September 2017 and Senior
Independent Director in July 2020.
90
British Land Annual Report and Accounts 2021
Irvinder Goodhew
Non-Executive Director
Appointed as a Non-Executive Director
in October 2020.
N
C
Skills and experience
Irvinder brings over 25 years of
experience through operational, strategic
and digital transformation roles in a
broad range of sectors including retail,
consulting and financial services.
She is currently a Transformation Director
at Lloyds Banking Group plc, a position she
has held since 2018. Previously, Irvinder
held several senior executive positions in
the UK and Australia across operations,
strategy and transformation for FTSE 100/
ASX organisations including J Sainsbury
plc, Coles Group and BOC Group. Irvinder’s
industry experience is complemented with
a career in global strategy consulting
including her role as a Partner with AT
Kearney leading their consumer and retail
practice in Australia and New Zealand.
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
(UKRI) in 2018. She is also a fellow of
the Royal Society and Royal Academy
of Engineering.
Alastair Hughes
Non-Executive Director
Appointed as a Non-Executive Director
in January 2018.
N
C
A
Skills and experience
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.
Loraine Woodhouse
Non-Executive Director
Appointed as a Non-Executive Director
in March 2021.
A
Skills and experience
Loraine has extensive experience across
all finance disciplines and has worked
within many different sectors including
real estate and retail.
Loraine has been Chief Financial Officer
of Halfords Group plc since 1 November
2018. Prior to joining Halfords, Loraine
spent five years in senior finance roles
within the John Lewis Partnership. In
2014 Loraine was appointed Acting Group
Finance Director and then, subsequently,
Finance Director of Waitrose. Prior to
that, Loraine was Chief Financial Officer
of Hobbs, Finance Director of Capital
Shopping Centres Limited and Finance
Director of Costa Coffee Limited. Loraine’s
early career included finance and
investor relations roles at Kingfisher Plc.
Lynn Gladden
Non-Executive Director
Appointed as a Non-Executive Director
in March 2015.
C
R
British Land Annual Report and Accounts 2021
91
BOARD OF DIRECTORS continued
Nicholas Macpherson
Non-Executive Director
Appointed as a Non-Executive Director
in December 2016.
A
Brona McKeown
General Counsel and Company Secretary
Appointed as General Counsel and
Company Secretary in January 2018.
Board Committee membership key
Audit Committee
A
C Corporate Social Responsibility Committee
N Nomination Committee
R Remuneration Committee
Chair of a Board Committee
Skills and experience
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,
a Director of The Scottish American
Investment Company PLC and a
member of the Advisory Council to Arcus
Infrastructure Partners. 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.
Skills and experience
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.
Board attendance
Director
Tim Score
Alastair Hughes
Irvinder Goodhew
Laura Wade-Gery
Lynn Gladden
Nicholas Macpherson
Preben Prebensen
Loraine Woodhouse
Simon Carter
Former Directors who served during the year
Chris Grigg
William Jackson
Rebecca Worthington
Scheduled
meetings
Ad hoc
meetings
7/7
7/7
4/4
7/7
7/7
7/7
7/7
1/1
7/7
5/5
7/7
5/5
6/6
6/6
2/2
6/6
6/6
6/6
6/6
–
6/6
4/4
6/6
4/4
Total
13/13
13/13
6/6
13/13
13/13
13/13
13/13
1/1
13/13
9/9
13/13
9/9
Full attendance by the Board of Directors at every meeting was met during the year. The Board of Directors has made itself available for a total of six meetings at short
notice in order to receive important updates and make time sensitive decisions. 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. There were a number of
occasions throughout the year where executive succession issues were discussed at full Board meetings. Executive Directors, where appropriate, were not present
for those parts of the meetings.
92
British Land Annual Report and Accounts 2021
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
Executive
Chief
Executive
Audit
Committee
Corporate
Social
Responsibility
Committee
Nomination
Committee
Remuneration
Committee
Executive
Committee
Investment
Committee
Risk
Committee
Management
Community
Investment
Committee
Transition
Vehicle
Committee
Health
and Safety
Committee
Sustainability
Committee
British Land Annual Report and Accounts 2021
93
CHAIRMAN’S INTRODUCTION
2021 Corporate Governance Report
Application of the Principles
of the UK Corporate
Governance Code
In addition to the reports listed on the
contents page, the following sections of
this Governance Report outline how the
Principles of the Code have been applied
throughout the year:
96
97
98
99
Board Leadership & Company Purpose
Division of Responsibilities
Composition, Succession & Evaluation
Audit, Risk Management &
Internal Control
100
Remuneration
In a year of uncertainty, the Board
has worked with management to
provide oversight and challenge,
while maintaining effective
governance and strong leadership.
I am pleased to present the Corporate Governance Report for
the year ended 31 March 2021.
Like it has for many, Covid-19 has brought about a unique set of
challenges to the boardroom that had the potential to disrupt
the leadership of the business at a time when it was needed
most. The impact on our business and the work we have done
to support our customers, suppliers, staff and others is set out
in detail within the Strategic Report on pages 32-36. I want to
take this opportunity to describe the governance challenges
that the Board has faced and the work that we have done to
overcome them to continue to operate effectively.
Notwithstanding the challenges in basic meeting
administration, business continuity and even how many of us
could sit at the boardroom table, the Board has acted decisively
and entrepreneurially in response to rapidly evolving market
forces and challenging macroeconomic conditions. In doing so
we have sought to carefully balance the impacts on and needs
of our stakeholders, the environment, our reputational integrity
and, importantly, our shareholders. Our focus on Governance,
underpinned by our committed approach to making the right
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British Land Annual Report and Accounts 2021
decisions, at the right time, based on the right information, has
guided us through a year of uncertainty and difficult conditions.
The Board has worked closely with management to provide
oversight, challenge and debate to drive positive outcomes.
The Board has met mostly virtually (either wholly or in a hybrid
format) throughout the year, including for our annual strategy
review with management. We have been able to rely on the
quality of the reporting that management provide as well as the
open and respectful nature of our debates to ensure that Board
and Committee meetings remained effective and constructive.
In addition to navigating the challenges brought about by
Covid-19 and the economic shock that followed, the Board
has seen a number of key personnel changes during the year
which are detailed below and in the report of the Nomination
Committee on page 112. In reshaping the composition of the
Board, I am delighted with the progress we have made towards
our diversity targets this year; an area where we will continue
to focus and strive for excellence.
I am particularly pleased that in our annual Board effectiveness
evaluation, the external assessor concluded that our Board had
continued to function very well despite the operational challenges
it faced in the year. Further details of the evaluation and the
outputs that the Board will focus on during the coming year
can be found within the Governance Report on pages 98-99.
Good governance underpins the way in which the business
of the Group is managed, our behaviour and our corporate
culture. We are reporting against the 2018 UK Corporate
Governance Code (the ‘Code’) available at 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 all relevant provisions of the Code throughout
the year.
Last year’s Report was the first to include a statement on how
the Board had regard to the matters set out in s172(1)(a) to (f)
of the Companies Act 2006. Our s172 statement can be found
on page 33 within the Strategic Report. Full details of how the
Directors have had regard to their responsibilities under s172
are set out within our Applied Governance section on pages
102-111. This is a new section in this Report and brings
together, in one place, the disclosures on workforce and
stakeholder engagement, descriptions of principal decisions
taken by the Board and the matters that have been considered
throughout the decision making process. We will continue to
report in this way and hope that you find it a useful addition.
As reported last year, for the purposes of Provision 5 of the
Code, the Board has designated the CSR Committee as our
prescribed method for overseeing workforce engagement.
In allocating this responsibility to a Committee, rather than
to a single non-executive director, we are providing greater
resource at Board level and demonstrating our commitment
to excellent workforce engagement.
Board changes
After over 11 years as CEO, Chris Grigg stepped down from the
role on 18 November 2020 and left the Board on 31 December
2020. Following a thorough search process, Simon Carter was
appointed as his successor, details of which are set out
on page 113.
In January 2021 we announced the appointment of Bhavesh
Mistry as CFO. Bhavesh joins us from Tesco PLC where he was
Deputy Chief Financial Officer and will join the Board on 19 July
2021. As announced on 18 November 2020, David Walker, our
Head of Investor Relations, is our Interim CFO until Bhavesh
joins later this summer.
Irvinder Goodhew joined the Board in October 2020 and has
joined our CSR Committee. After extending his tenure last year,
William Jackson left the Board on 31 March 2021. Preben
Prebensen was appointed as William’s successor as the Senior
Independent Director and Alastair Hughes replaced William
on the Nomination Committee, with both changes becoming
effective at the end of the 2020 AGM. Irvinder Goodhew and
Laura Wade-Gery joined the Nomination Committee in
November 2020.
Due to a conflict of interest, Rebecca Worthington stepped
down from the Board and as Chair of the Audit Committee on
31 December 2020. We are pleased to have welcomed Loraine
Woodhouse to the Board on 1 March who took on the role
of Chair of the Audit Committee on 31 March 2021. Preben
Prebensen chaired the Audit Committee on an interim basis
between Rebecca’s departure and Loraine’s appointment and
remains a member of the Committee. Further details on the
appointments of the Directors and the formal, rigorous and
transparent process that was undertaken can be found in
the Nomination Committee Report on pages 113-114.
All Directors in role at 31 March 2021, with the exception of
William Jackson, will stand for re-election at the 2021 AGM.
2021 AGM
As you will be aware, in 2020 we were unable to invite
shareholders to attend the AGM due to the Government
enforced Covid-19 restrictions that were in place at the time.
In 2021, we will be offering shareholders the opportunity to
participate and vote virtually in our AGM from the comfort and
safety of their homes. The AGM will be broadcast via an online
portal where shareholders will be able to watch and listen to
the presentations made by me and the Chief Executive. There
will be an opportunity to ask questions via telephone
conference and vote electronically in real time.
We will be holding the physical meeting at Storey Club at
100 Liverpool Street. Physical attendance will be permitted
on a limited basis due to the need to prepare in anticipation of
Covid-19 restrictions which might still be in place, and we urge
any shareholders wanting to attend in person to firstly consider
attending virtually. If you are unable to do so we would ask you
to pre-register your intention to physically attend by following
the instructions within our Notice of Meeting. If you are unable
to attend in either capacity, I 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 2021
95
GOVERNANCE REVIEW
Board Leadership & Company Purpose
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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, in turn creating value over the long term.
Culture and stakeholder engagement
The Company’s purpose is core to every decision taken by
the Board. As detailed on pages 12-13 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 108-109.
The Board, supported by an expert management team,
continues 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 2021, the Board comprised the
Chairman, the CEO and seven independent Non-
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 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 and with the
proper degree 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 virtually
during February 2021. 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 CEO, 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 2021
strategy days included: sustainable long term value;
urban logistics (with a presentation from McKinsey &
Company); innovation and life sciences sectors; our
campus proposition; and Canada Water.
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.
The British Land Leadership 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 act as 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 a number of
examples of how decisions in the boardroom have been
shaped by the impacts on our stakeholders are described
in the stakeholder engagement statement on pages
104-107. Further information on British Land’s
contribution to wider society can be found on pages 32-47.
Engagement with major shareholders
Institutional investors and analysts receive regular
communications from the Company. This year, recognising
the increased uncertainty around Covid-19 and the need for
more timely information, we provided quarterly updates on
rent collection in addition to our regular reporting. Despite
Covid-19 restrictions, we delivered our usual investor
programme including an investor event and roadshows
which both the CEO and CFO attended. We also
participated in our usual investor conferences which were
delivered online, detailed on page 101. We look forward to
holding individual and group investor meetings, events
and tours of major assets once it becomes feasible.
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British Land Annual Report and Accounts 2021
In July 2020, the Company virtually hosted a Sustainability
Investor & Analyst event that reached over 200 participants.
The CFO and senior management gave presentations
and held a Q&A session to launch the 2030 Sustainability
Strategy. The presentations were recorded and are available
to view on our website britishland.com/investors/results-
reports-presentations.
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.
Although the Covid-19 pandemic has limited physical
outreach to investors, the Chairman is committed to
understanding and sharing the views of major shareholders
within the boardroom. The Chairman, Senior Independent
Director, CEO and CFO are available to address any
concerns our stakeholders may wish to raise.
In addition to the Chairman’s efforts, the Chief Executive
provides a written report at each scheduled Board
meeting which includes a summary of market activity and
commentary on investor meetings in the period. We also
receive direct feedback on key roadshows, which is made
available to the Board as appropriate.
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’ Conflicts of Interest Policy on an
annual basis. The Policy was last amended in November 2019
and reviewed with no changes recommended in November
2020. 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 138 within the
Remuneration Report.
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 britishland.com/
structure-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 93
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. 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 between the outbreak of the Covid-19
crisis in March 2020 and the publication of the
full year results at the end of May 2020.
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 Secretariat assists the
Board and Committee Chairs in agreeing the agenda
in sufficient time before the meeting to allow for
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 2021
97
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
on our website at 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:
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 evaluating and
overseeing culture and stakeholder engagement.
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
Investment, Head of Strategy, Digital & Technology,
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.
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 2021
Composition, Succession
& Evaluation
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 114.
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 113.
The Notice of Meeting for the 2021 Annual General
Meeting details the specific reasons that 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 90-92 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 114.
Board evaluation
The effectiveness of the Board and its Committees was
conducted by No 4, an external evaluation firm.
↓
↓
Stage 1
December 2020
No 4 met with the Chairman to discuss the scope and
focus of the evaluation
Stage 2
January 2021
No 4 attended a Board meeting and held individual
interviews with each Board Director, the General
Counsel and Company Secretary and the Head
of Secretariat
↓
↓
↓
Stage 3
February/March 2021
No 4 attended a further Board meeting and Committee
meetings including the strategy review
Stage 4
March 2021
Draft report discussed with Chair prior to finalisation
and presentation to the whole Board
Stage 5
March/April 2021
Post Board presentation
No 4 provided feedback to the Chairs of the Audit,
Nomination, Remuneration and CSR Committees on
the performance of each Committee. The performance of
the Chair was also discussed with the Senior Independent
Director who subsequently met with the other Non-Executive
Directors to further consider the Chair’s performance,
taking into account the views of the Executive Directors.
In addition to the formal Board evaluation, the Board Chair
met each Non-Executive Director individually during the
year to discuss their contribution to the Board.
Outcomes
Overall, the evaluation report from No 4 reflected very well
on the Board and concluded that the Board is effective by
almost all measures. It was described as open, collegiate,
of high calibre and committed.
No 4 made a number of recommendations for the Board to
focus on, including:
– Dedicating time to gain insight from Non-Executive
Directors’ wider experiences;
– Developing key measures and KPIs to monitor progress
against the strategy;
– Maintaining social contact between Non-Executive
Directors and the wider Company; and
– Inviting external speakers to Board meetings.
The Board intends to implement the recommendations made
by No 4 and will report on progress in the 2022 Annual Report.
The review confirmed that good progress has been made on
the recommendations of last year’s evaluation:
– the Board has progressed succession planning as seen in
the appointment of Simon Carter as Chief Executive Officer;
– the Group strategy has been refined and four strategic
principles have been introduced with further refinement
made at the strategy off-site;
the CSR Committee reviewed its terms of reference to
refine its scope and incorporate relevant responsibilities;
and several employee surveys have been conducted
throughout the year to further our understanding and
monitoring of culture and values. For more information
see the CSR report on pages 110-111.
No 4 has no other connection with British Land or its Directors.
Audit, Risk Management
& Internal Control
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 147 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 116-121.
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, in conjunction with the Risk Committee
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 2021, 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.
Page 120 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
British Land Annual Report and Accounts 2021
99
GOVERNANCE REVIEW continued
Audit, Risk Management
& Internal Control
Remuneration
The Company’s remuneration policies and practices
are designed to support our strategy and promote
the long term sustainable success of the business.
We have a clear strategy, focused on our Campuses
and Retail & Fulfilment, which positions our business
for growth. To deliver this strategy, we will focus on
our Campuses and Retail & Fulfilment. Delivering
against this strategy creates the inputs for 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 Remuneration
Committee is also responsible for establishing
remuneration of the members of the
Executive Committee.
The 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 122.
internationally recognised COSO Internal Control
Integrated Framework.
Audit, Risk Management & Internal Control
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; and
– Disclosure Committee: membership comprises
the Chief Executive, 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
a 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 2021 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 2021
Key investor relations activities during the year
May 2020
– Full Year Results
Presentation
– Full Year Results Roadshow
June 2020
– Goldman Sachs European
Financials Conference
– Morgan Stanley Europe &
EEMEA Conference
– Private Client
Investor Roadshow
July 2020
– Sustainability Investor &
Analyst event
– Operational update following
June quarter rent collection
– AGM, with Q&A
published online
August 2020
– HSBC European Real
Estate Conference
September 2020
– BofA Securities Global
Real Estate Conference
October 2020
– Operational update following
September quarter
rent collection
November 2020
– Half Year Results
Presentation
– Half Year Results Roadshow
December 2020
– UBS Global Real
Estate Conference
– US Investor Roadshow
– Private Client
Investor Roadshow
January 2021
– Operational update following
December quarter rent collection
– Peel Hunt/Davy
Equities Conference
– Barclays European Real
Estate Conference
– European Investor
Roadshow
March 2021
– Citi Annual Global CEO
Property Conference
– BofA Real Estate
CEO Conference
British Land Annual Report and Accounts 2021
101
Adapting our retail
strategy to maximise
the opportunities within
Retail & Fulfilment
See pages 22 and 23
Applied
Governance
The following section brings our
disclosures around Board activity,
stakeholder engagement and decision
making together in one place. We hope
that you will find it useful in understanding
the Board’s work.
Additional information on key areas of focus
can be found within the following parts of
the Strategic Report.
Realising
the potential of
our Campuses
See page 16
Active capital
recycling and value
accretive development
See page 24
Diversity
See page 36
Our response
to Covid-19
See page 80
102
British Land Annual Report and Accounts 2021
BOARD ACTIVITY
APPLIED GOVERNANCE
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.
Throughout the year the Board has met more
frequently than usual due to Covid-19 and the search
for new Executive and Non-Executive Board members.
Board discussions have covered a wide range of topics
with a significant amount of time spent on the
following strategic areas:
Strategic topic
Areas on which the Board has focused during the year
Customer Orientation
– Residential strategy
– Retail landscape and occupier insolvency
– Financial support to occupiers and service partners during the Covid-19 pandemic
Right Places
Expert People
– Approval of planning permission and drawdown of the Headlease at Canada Water
– The development of 1 Broadgate and Norton Folgate
– Overseeing our Retail disposal strategy
– Capital plan and long term development pipeline
– The safety and wellbeing of our workforce following the outbreak of Covid-19 and
the nationwide lockdowns
– Keeping our places running effectively and our people safe as lockdowns were
imposed and eased
– Decisions on remuneration in the context of Covid-19
– Employee surveys to check in on employee wellbeing throughout the pandemic
– Approval of the Race at Work Charter and strategy for racial equality
– Executive succession and Non-Executive appointments
Capital Efficiency
– Resuming and restructuring the dividend
– Refinancing and capital allocation to ensure liquidity and covenant headroom
– Capital recycling through disposals and the formation of joint ventures
Sustainability
– 2030 Sustainability Strategy
– Creating the Transition Vehicle
– Diversity and inclusion at all levels of our business
– Prioritising re-use of existing buildings
– Place Based approach
Driving forward diversity
This year we were proud to place 4th in the FTSE100 for the proportion of women in Executive Committee and direct report
roles. We have since appointed Loraine Woodhouse as a Non-Executive Director and going forward we will maintain and
improve the balance we have achieved to date. We are promoting diversity across all levels of the business and we were
pleased to record a continued reduction in the median gender pay gap for British Land.
We have pursued various ethnic diversity initiatives during the year, which you can read more about on page 111 in the
CSR Committee report. We are pleased to have made progress on our diversity mix at Board level during the year.
British Land Annual Report and Accounts 2021
103
STAKEHOLDER ENGAGEMENT STATEMENT
Our Board
strategy event
The Company holds an off-site strategy event each
year where the Board and Executive Committee
come together to focus on the development of
the Company’s strategy.
Realising the
potential of our
Campuses
As well as considering
development opportunities within
the existing portfolio, the Board
and Investment Committee
discussed investment
opportunities in growth
sectors supported by external
presentations on those markets.
Targeting the
opportunities
in Retail &
Fulfilment
Management and the Non-
Executive Directors considered
the realignment of the Retail
portfolio towards areas for growth
and value, whilst leveraging
British Land’s expertise in
asset management.
Progressing
value accretive
development
The Board and management team
reviewed the development pipeline
against the capital plan and
considered opportunities to
leverage our development
expertise. Value accretive
development is a core
component of our strategy.
Active capital
recycling
The event included a review of the
principles for recycling capital
from mature and off strategy
assets into development and
investment in growth sectors.
Management will continue to
evaluate opportunities to release
capital through joint ventures
and disposals.
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British Land Annual Report and Accounts 2021
APPLIED GOVERNANCE
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 in and developing properties
to managing and curating our spaces,
means we need to have a continuous
dialogue with a wide group of
stakeholders including customers,
communities, partners (including local
authorities) and suppliers, our people
and shareholders. Consideration for
our stakeholders is embedded from the
start of a business proposal to the point
at which it is considered by the Board.
This approach is part of our culture and
our formal processes and ensures that
having regard to the impact of our
decisions on our stakeholders is
integral to how we do business at
British Land. This supports our
governance aim of the right people
making the right decisions, efficiently
and supported by the right information.
How do we engage with our stakeholder groups?
Stakeholders are at the centre of our decision making process to ensure that as a business we produce Places People Prefer.
Pages 34-35 provide case studies from the year; below is a summary of our approach with each stakeholder group.
Our customers
Our communities,
partners and suppliers
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 long term. Our pre-let to JLL at 1 Broadgate as detailed on the
following pages is a prime example of this approach.
Communities
We seek to become an integral part of our communities to drive positive outcomes.
For example, our Young Readers Programme and partnership with the National Literacy
Trust have benefitted over 48,000 school children since 2012 by working collaboratively
with local schools and our customers to enhance their life chances and employability.
Suppliers
We maintain a continuous dialogue with our suppliers through our procurement
management process. We use our onboarding process to provide early clarity of our
values, and our ethical and environmental expectations. We continually challenge
ourselves to work better with our suppliers to ensure that we are ’great to do
business with’.
Local authorities
We work extensively with local authorities at our developments such as Southwark
Borough Council at Canada Water and The City of London at Norton Folgate. At
Canada Water, 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 108-109 outlines the work we
do to ensure the views of our workforce are known and taken into account in
decision making.
British Land Annual Report and Accounts 2021
105
STAKEHOLDER ENGAGEMENT STATEMENT continued
How Directors have regard for
the matters set out within s172 of
the Companies Act 2006 in Board
discussions and decision making:
Our formal s172 statement is within
the Strategic Report on page 33. The
following provides additional detail on
how Directors have had regard for the
matters set out within s172(1) (a)-(f)
and the effect that regard has had on
principal decisions taken by the Board
during the year.
Decision papers that are brought to
the Board have first been endorsed
by either the Executive or Investment
Committee. At both levels, proposals 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 Directors have
a clear understanding of the impacts
of their decisions. Training has been
provided by the Secretariat to paper
writers to ensure that those people that
are drafting decision items have a clear
understanding of how best to assist
Directors in discharging their duties.
The past year has shown how important
these factors are in steering the business
through turbulent times.
The examples that follow describe in
detail the approach taken by the Board
and the wider business in decision making.
APPLIED GOVERNANCE
The impact of s172 on
decisions during the year:
Dividend policy
1 Broadgate
The Board took the decision on 25 March
2020 to suspend dividends temporarily in
light of the financial uncertainty arising
from the Covid-19 pandemic. The rationale
for that decision and the factors that were
considered in taking it were reported on
page 97 of the 2020 Annual Report.
The Company announced in an
operational update on 9 October 2020
that it would move to half yearly dividend
payments, based on a fixed rate of 80%
of underlying earnings per share. In
reaching the decision to move from
quarterly to half yearly payments
the Board considered the impact on
shareholders and whether there was
a particular reliance on more frequent
distributions. The Board also considered
the long term consequences of the
decision in the context of both greater
capital flexibility afforded to the business
which provides greater strategic capability
and the ability of the Company to adhere
to its obligations under the REIT regime.
The Company announced on 8 April 2021
that JLL had signed an agreement for
lease for 134,000 square feet of space at
1 Broadgate as well as our commitment
to the development of this building.
In the press release, Stephanie Hyde, UK
and Ireland CEO at JLL said ’Working in
partnership with British Land, we have
a real opportunity to achieve one of the
most sustainable and technologically
advanced workplaces in the UK.’
Central to the Board’s decision to commit
the capital requirements to redevelop
1 Broadgate, was the commitment
from JLL to a pre-let. JLL’s needs as a
business and employer are integral to the
design of the building, underlined by their
15 year commitment to the space.
The Board also considered the impact
on our joint venture partner at Broadgate,
GIC, as well as the long list of suppliers
and services that will be required
throughout the development.
Underpinning all of the above was
the profitability of the development. In
agreeing the investment into 1 Broadgate,
the Board considered its duties to
shareholders in delivering an
attractive return on capital.
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British Land Annual Report and Accounts 2021
Covid-19
Priorities
Disposals
As described on pages 14-15 within
the Strategic Report, the Board took
decisions during the year to invest
behind two strategic themes, Campuses
and Retail & Fulfilment. This involves
targeting value opportunities in retail and
growth opportunities in innovative sectors
such as life sciences and urban logistics.
In its deliberations, the Board considered
organisational structure and the
opportunities for talent within the
business to grow.
A key driver for the Board was to
maximise value creation for the benefit of
shareholders and joint venture partners,
often in the form of institutional investors.
On 23 December 2020, the Company
announced the disposal of a 75% interest
in a portfolio of three buildings in the
West End to Allianz Real Estate.
This transaction demonstrates the
Board’s commitment to recycle capital
out of mature assets to provide resources
to invest into developments such as
Norton Folgate and 1 Broadgate which
the Board committed capital to during
the year.
In recycling capital out of mature assets,
the Board considers the ability of the
Company to progress its strategy both
now and in the future. In doing so the
Board is delivering further shareholder
value, securing opportunities for suppliers
and employees and continuing to have a
positive impact on the communities in
which we operate.
We are confident that these decisions
have demonstrated the importance
we place on maintaining our reputation
for high standards of business conduct
and how we deliver long term value for
shareholders while considering all of
our stakeholders and our contribution
to wider society.
British Land Annual Report and Accounts 2021
107
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.
We have not had to furlough any of
our own employees and we took action
early in the year to help our smaller
customers, especially in the retail sector,
who were suffering as a result of the
pandemic. The forgiveness or deferral of
rent was agreed with a long term view in
mind, to assist customers with otherwise
successful business models, to emerge
from the crisis intact and continue to be
occupiers at our places in the future.
We supported our employees in working
remotely with wellbeing programmes and
increased flexibility so that our people
could balance demands such as home
schooling with business needs.
We worked carefully with suppliers and
partners in closing and safely reopening
construction sites as well as providing
support to local communities through
our Community Investment Fund.
At the same time, the Board continued
to drive strategic initiatives to deliver
shareholder returns and long term
value creation.
Workforce engagement is central
to how we do business.
A member of our Executive Committee hosts 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.
Our internal communications team also sends out a weekly
email with updates and details of key events.
Company Conference
In ordinary times, our people are brought together from across
our business once a year to attend our Company Conference
which includes presentations by the Chairman, Chief Executive
and other members of our senior management team. There
are also team building events and a chance for colleagues to
interact socially.
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 who meet monthly to discuss key issues. The BLLT has
played an important role during the pandemic of facilitating
two-way dialogue between the Executive Committee and the
rest of the business. During the year the Executive Committee
sought feedback from BLLT members on how to maximise the
purpose and efficiency of the Team. The recommendations
were discussed by the Executive Committee and have been
implemented starting from January 2021. The recommendations
included: regular deep dives into technical areas such as CVAs,
the use of BLLT members for important projects such as
the response to Covid-19, and advance notice of Company
announcements so the wider leadership team could support
the roll out of key announcements.
WORKFORCE ENGAGEMENT STATEMENT
APPLIED GOVERNANCE
Engaging with
our workforce
The CSR Committee 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 as detailed in its report over the page. As
reported last year, we believe the CSR Committee remains
the most effective method of overseeing our engagement
with the workforce as it provides a greater resource at Board
level dedicated to engagement than designating a single
Non-Executive Director.
Workforce engagement initiatives:
Communication
Internal communication
The Company has worked remotely either in part or as an entire
workforce, with the exception of staff that are required to be at
our places, for the full year under review. The business moved
rapidly to implement changes in technology that enabled
Company-wide meetings to continue remotely and for teams to
collaborate effectively. Management and the Board have relied
on an increased level of internal communication both formally
and informally to ensure business continuity and the welfare of
our people.
Communication was an integral part of ensuring the successful
transition from a fully staffed office, to skeleton crews and
finally welcoming our people back. We utilised new media
formats including CEO podcasts and virtually broadcasted
Company meetings to ensure plans were communicated
sensitively and effectively. The success in relocating our own
people during this pandemic has been leveraged commercially,
as we now look to use our own experiences to help our
customers in their transition back to the office.
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British Land Annual Report and Accounts 2021
Financial awareness
At the half and full year, our Chief Executive Officer,
Chief Financial Officer and Head of Real Estate 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 Scheme. Employee
share ownership encourages employees to focus on long
term Company performance and aligns their interests
with shareholders.
Bonus awards impacted due to Covid-19
Our CEO engaged directly with employees to communicate the
deferral and reduction of FY20 bonuses paid during the year
due to the impact that Covid-19 had on our business, suppliers,
customers and communities. The decisions were taken with
guidance from our Remuneration Committee and Board.
Further details can be found within the Directors’
Remuneration Report on page 123.
How the Directors have engaged with
the workforce
Employee surveys
The Board reviewed regular wellbeing surveys and pulse
surveys during the year to monitor the impact of the pandemic
and difficult working conditions.
BL employee networks
As discussed on pages 38 and 39 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. The CSR Committee
receives presentations by the Chairs of our networks to engage
with key issues at Board level. Network Chairs have direct
access to members of the Executive Committee and each
network has an Executive Committee member sponsor.
Mentoring
During the year the Board endorsed a proposal for Non-
Executive Directors and Executive Committee members to
mentor highly performing talent within the business. As well
as providing development coaching to the workforce, this also
provides members of the Board with direct engagement with
employees. More information on the mentoring scheme can
be found on page 37.
The effect of engagement on decisions
taken during the year:
Support during Covid-19
During the pandemic, feedback from our networks has driven
changes in our working approach to ensure that colleagues are
supported in managing the various challenges brought about
by working through a lockdown. As a result of direct feedback
from the Parents and Carers Network, the Executive Committee
implemented a 90-minute meeting-free window to reduce
screen fatigue and create a designated time within the working
day to assist in managing home life and improving wellbeing.
The business also supported employees with additional tech
and equipment as required. Our Wellbeing Committee has led
the way on a number of initiatives to promote mindfulness and
social interaction during Covid-19.
Racial equality
Following the tragic death of George Floyd and the prominent
Black Lives Matter movement during the summer of 2020,
together with our employees we considered whether there was
more we could do as an organisation to tackle structural racial
inequality. Our Chief Executive and senior management team
met with members of our REACH network to understand the
importance of recognising and improving structural racial
inequality. Following extensive employee engagement, the
Board considered and approved a strategy for race equality
at British Land, approved the Race at Work Charter and
committed to publishing the Company’s ethnicity pay report
in 2021. The Board and workforce also received diversity and
inclusion training. Oversight of this important area of work is
the responsibility of the CSR Committee. More details on the
work that the Committee has carried out during the year can
be found over the page.
British Land Annual Report and Accounts 2021
109
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
for both our communities and
the environment.
I am pleased to present the report of the CSR Committee
for the year ended 31 March 2021.
The Committee was set up two years ago 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. We welcomed Irvinder Goodhew as
a member of the Committee when she joined the Board in
October 2020. Having a larger Committee reflects the wider
responsibilities and ever-increasing importance of the matters
we oversee.
The information below sets out in detail the activity undertaken
by the Committee during the year ended 31 March 2021. I hope
that you find it useful in understanding our work.
Three-pillar approach
In its second year, the Committee has continued to operate on a
three-pillar approach that enables the fulfilment of our primary
roles of being a first-class employer, building and managing
first-class buildings for our occupiers and communities, and
delivering this in a sustainable way. Following the publication
of the Sustainability Strategy we have two threads under
sustainability; being the wider environment and the
specific communities surrounding our properties.
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British Land Annual Report and Accounts 2021
Employee engagement and culture
As a Committee, we continue to be encouraged by the number
and quality of mechanisms in place for employee engagement,
noting that British Land continues to use many of the
mechanisms to engage with employees suggested by the FRC
Guidance on Board Effectiveness. As a company we have been
remotely working for over 12 months and have carried out
pulse surveys on Covid-19 and wellbeing to check in with
employees and adjust the support we offer accordingly.
As Directors, we have a number of ways in which we interact
with employees. Lynn Gladden, Chris Grigg and Irvinder
Goodhew have been the subject of “in conversation” sessions
with employees which explored a wide range of subjects.
Although we have not been able to hold them this year, we are
looking forward to restarting physical Board meetings that have
either a breakfast or lunch with an equal number of employees.
The Company has a strong set of networks and employee-led
committees with different focus areas. We invite the networks
to our meetings on a rotation basis to update us on their events,
achievements and plans. This also allows us to interact with
employees and gives us a greater insight into the culture of
the Company. We were proud to place 48th on the 2020 Social
Mobility Employer Index which takes into consideration
company culture, recruitment and progression processes.
The networks have proved to be vital forums during the
pandemic for employees to interact with each other and
have provided additional support for employee well being.
For example, the Parents and Carers Network have often
shared practical advice and importantly highlighted the needs
of employees in less visible caring roles over the past year as
well as tips on home schooling. We have been impressed by
the work achieved by all the networks and their perseverance
during difficult times to remain engaged. Further details on
these and our other committees can be found in our People
and culture section from page 36.
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 although higher
than the historically low rates seen in 2020. We reviewed how
Covid-19 impacted our construction sites and how we were
able to reopen sites safely.
Engaging with our occupiers, both current and future, has
demonstrated that strong environmental credentials are an
increasingly key requirement for them and this is also driving
our focus on more sustainable buildings which in turn supports
leasing, enabling us 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
Environment
We guided the development of the recently published
2030 Sustainability Strategy and oversee its progress.
The strategy pushes British Land to reach net zero carbon
on new developments, underpinned by a commitment to
GRESB performance on wider environmental matters and key
principles of responsible business, such as prompt payment
to suppliers. The Committee formally oversees the Transition
Vehicle which will be key to achieving net zero. The Vehicle will
finance the offsetting of embodied carbon on new developments
as well as funding sustainable initiatives on our existing
portfolio. 100 Liverpool Street was our first net zero carbon
development where residual carbon was offset using certified
schemes. More information on the Transition Vehicle can be
found on page 40 and further information on our approach to
sustainability can be found on pages 40-41.
Community
Our Place Based approach is central to our 2030 Sustainability
Strategy to positively impact and build connections in our
communities. By using our Local Charter this approach
will bring together local stakeholders, including customers,
suppliers and community groups in collaboration to make the
greatest impact. The Community Investment Fund provides
funding to charities and community organisations in and
around our places. The Fund has been operating for a
decade and has made great contributions and built real
ties with our communities.
Key areas of focus for the year ended
31 March 2021
Last year, we set out three main areas of focus during our
second year as a Committee. We aimed to review diversity
in the workforce, including drivers affecting diversity and
what policies were in place or were needed to ensure we
have a diverse workforce and pipeline for future success. In
collaboration with the Race, Equality and Celebrating Heritage
(REACH) network, during the year we signed up to the Race at
Work Charter, developed our first Race Equality Framework,
and held mandatory fairness, inclusion and respect training for
all employees and the Board. This year was the first year that
we have published our ethnicity pay gap data which we will use
as a measure of our ethnic diversity. We have also begun to use
recruitment specialists to seek ethnic minority candidates to be
included in employment shortlists.
In addition, we are proud to support the 10,000 Black Interns
initiative that is designed to transform the prospects of young
black people in the UK by offering paid work experience. Such
initiatives will raise the profile of issues surrounding race and
encourage an open conversation. As a Committee, we held a
deep-dive session to begin to delve into ethnic diversity issues,
what we can do to improve equality and how we can measure
improvement. We expect even greater progress to be made in
the coming years.
This year we were pleased to come 4th in the Hampton-
Alexander Review for the proportion of women in Executive
Committee and direct report roles, and to join the Change 100
programme that partners with university students and recent
graduates with disabilities or long term conditions. The various
initiatives outlined above show good progress in this area and
we will continue to strive towards making our workplace
more diverse.
Last year we undertook a review of British Land’s engagement
with our communities, considering how to maximise positive
social impact through our business activities, connections
and partners. We have now taken formal oversight of the
Community Investment Fund and substantial work has been
undertaken under our Placed Based approach; further
information on this can be found on pages 44-45.
Finally, we set out to review how we embed sustainability in
all that we do. Not only have we published the Sustainability
Strategy with targets for 2030, but this has also been translated
into tangible action plans on how we will achieve them. A
highlight of the year, which demonstrates how we interact with
our stakeholders to achieve our goals, is the work we did with
JLL in relation to our development at 1 Broadgate, more details
of which can be found at page 43. All Executive Committee
members and the majority of staff have sustainability targets
and this has driven a cultural change in the Company. This can
be seen in the newly formed SustainaBLe employee network
that shows there is grassroots demand in our employee base
to drive sustainability forward.
Key areas of focus for the coming year
We plan to continue our work on diversity, and how we can
address the drivers affecting diversity to ensure our people
can bring their whole selves to work and that we have a diverse
workforce and pipeline for future success. Executive Committee
members each have objectives to reduce the Ethnicity Pay Gap
for the upcoming year and progress will be published in the
2022 Annual Report. We will also report on the Race Equality
objectives that were set in March 2021.
Our Sustainability Strategy has only just begun its journey,
and we will monitor progress against our targets, seeking
to maintain good progress for the environment and our
communities. We will also continue to focus on achieving
best in class construction and health and safety.
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
Position
Date of
Committee
appointment
Attendance
Alastair Hughes
Lynn Gladden
Irvinder Goodhew
Chairman
1 Apr 2019
Member
1 Apr 2019
Member
1 Oct 2020
3/3
3/3
2/2
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 Community, Head of Portfolio
Sustainability and Head of Sustainable Developments, are
invited to attend each Committee meeting. The Committee
provides a verbal update to the Board in relation to all of its
meetings and activities.
Committee effectiveness
The Committee’s effectiveness was reviewed as part of the
wider external Board evaluation which concluded that the
Committee had operated effectively. The Committee reviewed
and updated its terms of reference during the year, which are
available on our website britishland.com/committees.
Alastair Hughes
Chairman of the CSR Committee
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111
As well as Executive Director changes we have also
appointed Irvinder Goodhew (as previously announced in last
year’s report) who became a member of the CSR Committee
upon joining. With Rebecca Worthington stepping down on
31 December we commenced a search for a replacement who
would be able to chair the Audit Committee. In February we
announced the appointment of Loraine Woodhouse who joined
the Board on 1 March 2021 and took on the role of Chair of the
Audit Committee on 31 March 2021 to lead the Committee
through the year end process.
Having extended William Jackson’s appointment for a
maximum of 12 months last year, William left the Board on
31 March 2021.
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, assisted
by the work of the CSR Committee, in ensuring a diverse
pipeline for succession. 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 both in this Report and in the People and Culture
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
REPORT OF THE NOMINATION COMMITTEE
Ensuring a balanced
and diverse Board
The Nomination Committee
supports the Board on composition,
succession and diversity matters.
I am pleased to present the report of the Nomination
Committee for the year ended 31 March 2021.
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. We undertook a
thorough review of the skills and experience on the Board to
ensure that succession plans maintained the correct balance
of skills and experience to deliver the strategy over the
coming years.
We adhered to our formal, rigorous selection, appointment and
induction processes for new Directors in a year where there
have been a number of changes to the Board. Chris Grigg
stepped down after 11 years as CEO, and we conducted a
search for his successor which, after a rigorous process
involving both internal and external candidates, resulted in
the appointment of Simon Carter with effect from 18 November
2020. This in turn led to the search for a replacement for Simon
as CFO and we were delighted to announce the appointment in
January 2021 of Bhavesh Mistry who will join us on 19 July 2021.
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British Land Annual Report and Accounts 2021
Committee composition and governance
The Committee has five members. At the 2020 AGM, William
Jackson stepped down from the Committee, and was replaced
by Alastair Hughes. Additionally, in November 2020 Laura
Wade-Gery and Irvinder Goodhew joined the Committee.
Therefore, as at the 31 March 2021 year end the Committee
comprised: Tim Score, Preben Prebensen, Alastair Hughes,
Laura Wade-Gery and Irvinder Goodhew.
Details of the Committee’s membership and attendance at
meetings during the year are set out in the table below.
Director
Position
Date of Committee appointment
Chairman
Tim Score
William Jackson1
Member
Preben Prebensen Member
Alastair Hughes1
Member
Laura Wade-Gery2 Member
Irvinder Goodhew2 Member
1 Apr 2017
11 Apr 2011
19 July 2019
29 July 2020
18 Nov 2020
18 Nov 2020
Attendance
5/5
1/1
5/5
4/4
2/2
2/2
1. William Jackson stepped down from the Committee on 29 July 2020 at
which point Alastair Hughes joined the Committee.
2. Laura Wade-Gery and Irvinder Goodhew joined the Committee on
18 November 2020.
3. The other Non-Executive Directors who are not Committee members attended
a Committee meeting on 28 August 2020 to consider executive succession.
Key areas of focus during the year
Director search and selection
As explained in the introduction there were a number of
Director appointments during the year.
The search process for each 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 searches resulted in the following appointments:
– 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 joined the Board on 1 October 2020.
– Simon Carter as Chief Executive Officer from 18 November
2020. Simon is a proven, growth-orientated business leader
with significant real estate experience and expertise across
various asset classes as well as over two years as CFO of
the Company.
– Bhavesh Mistry as Chief Financial Officer. Bhavesh is
currently Deputy Chief Financial Officer at Tesco PLC,
a position he has held for over two years. Prior to that he
spent more than five years at Whitbread PLC, where he was
Finance Director of Whitbread Hotels & Restaurants. He has
previously held senior positions in finance and strategy at
Virgin Media and Anheuser-Busch InBev and qualified as
a Chartered Accountant at KPMG.
– Loraine Woodhouse as a Non-Executive Director and Chair
of the Audit Committee. Loraine is currently Chief Financial
Officer of Halfords. Prior to joining Halfords, Loraine spent
five years in senior finance roles within the John Lewis
Partnership, including Acting Group Finance Director and
subsequently, Finance Director of Waitrose. Prior to that,
Loraine was Chief Financial Officer of Hobbs, Finance
Director of Capital Shopping Centres Limited and
Finance Director of Costa Coffee Limited.
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.
Preben Prebensen and Alastair Hughes completed their
first three year terms in September and December 2020
respectively. In making recommendations for reappointments,
the Committee considered their performance and ability to
contribute effectively to Board discussions and to challenge
the performance of management.
The Committee is satisfied that, following the Board and
Committee composition changes described above as well as the
externally facilitated Board effectiveness evaluation, the Board
and its Committees continue to maintain an appropriate balance
of skills and experience required to fulfil their roles effectively.
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. 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.
British Land Annual Report and Accounts 2021
113
REPORT OF THE NOMINATION COMMITTEE continued
Accordingly, the Committee recommended to the Board that all
serving Directors be put forward for election or re-election at
the 2021 AGM.
Biographies for each Director can be found on pages 90-92.
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 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.
Selection and appointment process
The Committee oversees the selection and appointment
process for Board appointment, which is summarised in
the figure below.
Board Diversity and Inclusion Policy
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:
Performance against objectives and updating objectives:
The objectives from the Policy in force for the year ended
31 March 2021 included:
– the intention to maintain a balance such that at least
30% of the Board are women. As at 31 March 2021, 4 out
of 9 Directors (44%) were women. It should be noted that
Bhavesh Mistry joining in July will take the number of
Directors to 10, meaning that percentage will decrease.
The objective in the Policy is being amended to have
women making up at least 35% of the Board;
– the intention to have at least one Director from an ethnic
minority background on the Board by the end of 2020. The
appointment of Irvinder Goodhew means that the Company
has complied with the Parker Review and its policy as at
31 March 2021. In addition, the appointment of Bhavesh
Mistry means that the Company will exceed this objective.
As a result, the objective is being amended to maintain at
least two Directors from an ethnic minority background;
Interview
A formal, multi-stage
interview process is used to
assess the candidates. For
each appointment the choice
of interviewer 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.
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.
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British Land Annual Report and Accounts 2021
– to maintain the improved gender balance of its leadership
teams and senior management. Senior management is
defined as the Executive Committee and employees in the
BLLT. The gender balance of senior management was 64%
male and 36% female as at 31 March 2020 and was 60% male
and 40% female at 31 March 2021. The objective is being
amended to maintain or improve the gender and ethnicity
balance of its leadership teams and senior management;
– 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 2021 the Board comprised
44% women, while the Executive Committee composition
has increased from 36% to 42% women. Clear accountability
for diversity and inclusion is delivered through the Corporate
Social Responsibility Committee, which monitors progress on
diversity and inclusion objectives and relevant initiatives within
British Land.
The Policy can be found on our website
britishland.com/committees.
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’ responsibilities;
6. details of 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 externally facilitated Board
effectiveness evaluation conducted during the year is
described in the Governance Review on pages 98-99.
The Committee’s effectiveness during the year was evaluated
as part of the wider external Board evaluation and concluded
that the Committee operated effectively.
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.
The Committee also reviewed its terms of reference during the
year and no changes were recommended. The terms are
available on our website britishland.com/committees.
Average Board member age over a
four-year period1
Composition2
Tenure2
2021
2020
2019
2018
56 years old
56 years old
55 years old
55 years old
1. As at AGM date of 13 July 2021.
2. As at 31 March 2021.
Chairman
Executive Directors
Non-Executive Directors
1
1
7
0-3 years
3-6 years
6-9 years
2
4
2
British Land Annual Report and Accounts 2021
115
REPORT OF THE AUDIT COMMITTEE
Monitoring quality
and integrity
The Audit Committee monitors the
quality and integrity of the financial
reporting and valuation process.
I am pleased to present the report of the Audit Committee for
the year ended 31 March 2021. Rebecca Worthington stepped
down from the Board on 31 December 2020 and I was appointed
as a Non-Executive Director on 1 March 2021 and then,
subsequently, Chair of the Committee on 31 March. I would
like to thank Preben Prebensen for acting as Interim Chair of
the Committee for the period between Rebecca’s departure
and my appointment. Preben will remain as a member of the
Committee. I would also like to thank Rebecca for her work
as a member and Chair of the Committee, particularly through
the period under review where the Committee has faced unique
challenges posed by Covid-19.
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.
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British Land Annual Report and Accounts 2021
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.
Key areas of focus
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 principal 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 receives reports from the Group’s valuers
twice a year and challenges the valuation assumptions,
methodology and outputs. The Committee also works with
management to assess the effectiveness of the valuers and
monitors the proportion of the portfolio for which each valuer
has responsibility.
The Committee closely monitored the financial impact
of Covid-19 and the application and appropriateness of the
Group’s provisioning policy in respect of debtors and tenant
incentives. Management’s conclusions were reviewed by
the external auditor who also provided assurance to the
Committee. The Committee has continuously scrutinised
the assumptions and approach taken throughout the year.
Committee composition and governance
I became Chair of the Committee on 31 March 2021. 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:
Committee continued to operate effectively. 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
britishland.com/committees.
Director
Loraine Woodhouse1
Preben Prebensen2
Alastair Hughes
Nicholas Macpherson
Rebecca Worthington2
Position
Chair
Member
Member
Member
Chair
Date of Committee
appointment
Attendance
31 March 2021
1 Jan 2021
1 Jan 2018
1 Apr 2017
1 Jan 2018
0/0
1/1
3/3
3/3
2/2
1. Loraine Woodhouse was appointed Chair of the Committee on 31 March 2021
but attended one meeting in March as a guest.
2. Rebecca Worthington stepped down from the Audit Committee on
31 December 2020, at which point Preben Prebensen became Interim Chair
of the Committee until 31 March 2021.
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 as appropriate.
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’s effectiveness was reviewed as part of the
wider external Board evaluation which concluded that the
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 information below sets out in detail the activity undertaken
during the year by the Committee. I hope that you find it useful
in understanding our work.
Loraine Woodhouse
Chair of the Audit Committee
British Land Annual Report and Accounts 2021
117
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 2021,
and the actions taken to address these issues, are set out in the following table:
Significant issues considered
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
1. The impact of Covid-19 on the assessment of
the Group’s principal risks and uncertainties,
risk appetite and viability statement.
2. Provisioning for rental arrears.
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.
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.
How these issues were addressed
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 78-87;
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 82-87.
The Committee considered management’s approach in determining
appropriate provisioning levels for rental arrears and tenant incentives
that had accrued over the Covid-19 pandemic, challenging assumptions
and methodology where appropriate. The Committee also received a
report from the external auditor. The Committee was satisfied that the
provisioning approach was appropriate and proportionate for the Group.
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
formation of a joint venture with Allianz. The external auditor separately reviewed
management’s judgements in relation to these transactions and determined that
the approach was appropriate.
The Committee reviewed the REIT tests performed by management and concluded
that the Company’s REIT status had been maintained in the year, noting the
payment of a corporation tax charge that fell due as a consequence of the dividend
suspension for part of 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
made in preparing these valuations were highlighted.
The Committee analysed the reports and reviewed the valuation outcomes,
challenging assumptions made where appropriate.
In particular, the Committee challenged the methodology used to incorporate
the impact of Covid-19 into the valuations. The Committee analysed the differing
impact the pandemic had on subsectors of the retail portfolio such as covered
shopping centres and open-air retail parks.
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 2021
External Audit
PricewaterhouseCoopers LLP (PwC) was appointed as the
Group’s external auditor for the 2015 Annual Report following
a formal competitive tender process. Given the continuing
effectiveness of PwC in their role as external auditor, the
Committee believes it is in the best interests of shareholders
for PwC to remain in role for the following financial year and for
a competitive tender process to be completed during 2024
ahead of the 2025 year end audit.
The year under review is Sandra Dowling’s second year as
engagement partner following a 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.
The Group has appointed BDO LLP to provide audit services
to a number of subsidiary and joint venture companies. The
appointment will result in a lower overall audit cost to the
Group as well as internal resource efficiencies.
Fees and non-audit services
The Committee discussed the audit fee for the 2021 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 in accordance with
the FRC’s 2019 Revised Ethical Standard. 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.
Total fees for non-audit services amounted to £0.04m, which
represents 7% of the total Group audit fees payable for the year
ended 31 March 2021. Details of all fees charged by the external
auditor during the year are set out on page 171.
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
2021, 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 level of challenge, knowledge and
competence of the audit team, had been maintained at an
appropriate standard during the year.
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 2021 AGM.
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 alongside 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 key financial controls, financial reporting
system upgrades, insurance, cyber security, Canada Water
and the Group’s leasing strategy. Overall, no significant control
issues were identified although several process and control
improvements were proposed, with follow up audits scheduled
where necessary.
British Land Annual Report and Accounts 2021
119
REPORT OF THE AUDIT COMMITTEE continued
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 2021.
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 and emerging 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. The assessment
of emerging risks includes a bottom-up review of all
business units and a 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.
At half year, the Committee accepted a recommendation
from the Risk Committee to amend the covenant headroom
key risk indicator. At the full year, the Committee reviewed
management’s assessment of the key risk indicators to ensure
that our risk appetite was aligned to our priorities and the
market environment.
The Committee continued to have particular regard for
the risks relating to Covid-19, including occupier credit risk
exposure and development contractor exposure, alongside
risks emerging from the UK’s political and economic outlook
following the departure from the European Union. Specifically,
in relation to Brexit, the Committee received updates towards
the end of 2020 on the Company’s preparedness for a
‘No Deal’ outcome.
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
2021, 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 2021 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. 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.
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 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 78-87.
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.
120
British Land Annual Report and Accounts 2021
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. The Group’s valuers and external auditor have confirmed
to the Committee that the process undertaken by British Land
to accommodate the valuation of its real estate portfolio is best
in class.
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 britishland.com/reports.
Focus for the coming year
During the year ending 31 March 2022 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, operational and IT controls, the Company’s
strategy, software development life cycles, sustainability and
Canada Water.
British Land Annual Report and Accounts 2021
121
DIRECTORS’ REMUNERATION REPORT
Aligning incentive
with strategy
Our Remuneration Policy
aligns management incentives
with our strategy.
122
British Land Annual Report and Accounts 2021
Dear Shareholders
The Committee had three members during 2020/21 –
Lynn Gladden, Preben Prebensen and myself.
A key focus of the Committee during the year under review
has been to apply judgement in unusual circumstances. We
have wanted to balance thoughtfully the experiences of our
shareholders, customers and other stakeholders during
the pandemic with our duty to incentivise and reward our
workforce in their efforts to sustain and grow the business.
In making key decisions, we have been in close dialogue
with the executive members of the Board and our fellow
non-executives. We have discussed at length how the pandemic
has impacted all of our people, having been briefed at each
meeting by the HR Director, who was also in charge of the
Company’s internal Covid-19 response. This has enabled the
Committee to remain in touch with the Company’s plans and
actions to support employee wellbeing, hearing about concerns
and achievements through regular surveys and other ways of
understanding the issues. This connection has been important
in our decision making. In addition, we have carefully
considered the interests of the wider stakeholders of the
Company with a particular focus on their longer term interests.
In addition to the challenges brought about by Covid-19, the
Committee has worked alongside the Nomination Committee
and the Board on the leaving arrangements for Chris Grigg,
the appointment of Simon Carter as CEO and Bhavesh Mistry
as CFO.
In the remainder of this statement I seek to provide an overview
of the key decisions the Committee has taken during the year.
CEO change
Chris Grigg stood down as Chief Executive on 18 November
2020 and from the Board on 31 December 2020. He was
considered a good leaver for the purposes of his outstanding
unvested Long-Term Incentive Plan (‘LTIP’) awards, which
have been pro-rated and treated in line with the good leaver
provisions in the plan rules. Chris will also be eligible for an
annual bonus for the 2020/21 year pro-rated for the proportion
of the year that he worked. Details are provided on page 130.
Simon Carter was appointed as successor to Chris as Chief
Executive with effect from 18 November and his salary was
increased to £750,000 from that date. His other remuneration
arrangements as an Executive Director remain unchanged.
Further details are provided on page 128.
Remuneration arrangements for Bhavesh Mistry
On 18 January 2021 we announced the appointment of Bhavesh
Mistry as Chief Financial Officer who will start on 19 July 2021.
Bhavesh’s remuneration arrangements will be fully in
accordance with our Remuneration Policy.
Bhavesh will receive a base salary of £490,000 and benefits
including a car allowance (or equivalent cash supplement) of
£16,700, be eligible for private healthcare for himself and his
family, life assurance, ill health income protection and other
all-employee benefits. He will also receive a cash pension
allowance of 15% base salary, which is in line with the
pension rate applicable to the wider workforce.
Bhavesh will be eligible to participate in the British Land
Annual Incentive Plan for the 2021/22 financial year with
a maximum bonus opportunity of 150% of base salary on a
time pro-rated basis payable in cash with one third deferral
into shares for three years in accordance with the policy.
Bhavesh will be eligible to participate in the LTIP.
In order to replace existing unvested incentive awards from
his current employer that will lapse as a consequence of his
appointment at British Land, upon joining Bhavesh will receive
rights over British Land shares in accordance with the Policy.
Remuneration Policy
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
will review the policy in the coming year and intend to consult
on any proposed changes before putting it to the AGM in 2022.
The current policy is summarised on pages 126-127 of this
Annual Report.
Remuneration in respect of the year ended 31 March 2021
and the impact of Covid-19
The impact of Covid-19 on the business and the measures
taken during the year to navigate carefully the challenges
that we faced during the pandemic are detailed on page 107.
The Company has a detailed programme of stakeholder
engagement as detailed on pages 104-109 which the
Committee and Board have relied upon to facilitate informed
and appropriate decision making. The Committee has sought
to balance the reward and incentivisation of our people with
the challenging conditions and difficult outcomes that our
shareholders and stakeholders experienced throughout
the year.
Following the temporary suspension of our dividend in the
outset of the pandemic, we are pleased to have been able to
resume dividend payments during the year. We are pleased
that we did not have to furlough any of our own employees nor
drawdown on any available Government Covid-19 financial
support. We remain well aware of the impact of Covid-19 on
our communities, suppliers and customers and have offered
support to those groups throughout the year. We forgave or
deferred rent for many of our smaller customers in most
distress and worked with our suppliers on construction
sites to return to work as soon as was safely practicable.
The whole Board waived an amount equal to 20% of their
respective salaries and fees from 1 April to 31 July 2020.
As set out in the 2020 Directors’ Remuneration Report, having
reflected at length on the impact of Covid-19 on the Company,
our shareholders and wider stakeholders at that time, the
Committee with the full support of the Executive Directors
scaled back the level of estimated bonus for the year ending
31 March 2020 by 42% to 41.4% and 42.2% of salary for
Chris and Simon respectively, just over a quarter of the
maximum opportunity.
British Land Annual Report and Accounts 2021
123
DIRECTORS’ REMUNERATION REPORT continued
The Committee deferred the decision on whether to pay all,
part or none of these scaled back bonuses until July 2020 at
which point the most immediate impact of the pandemic on our
stakeholders was known and could be taken into account. The
Committee approved the payment of the scaled back bonuses
to the Executive Directors as well as similarly scaled back
bonuses for the Executive Committee and 115 other senior
managers. The rest of the business, comprising our more
junior employees, received their bonuses in accordance with
the usual annual incentive timetable. Simon Carter took the
decision to invest his full cash bonus, net of income tax and
national insurance, into Company shares.
The Remuneration Policy operated as intended in terms
of Company performance and quantum during the year.
Executives volunteered to scale back their bonus pay outs in
order to align the outcome with the experiences of the wider
Company, our customers and other stakeholders. The scale
back for Executive Directors was from c.94% to 80% out of
a maximum opportunity of 150% of salary. The reduction
represents a broadly similar amount for employees as a whole.
The Remuneration Committee considered that management’s
approach had been thoughtful and appropriately met the need
to reward performance during the year against the backdrop
of Covid-19 and its impact on the Company’s financial results.
In setting the grant level of the 2020 LTIP, we considered
the impact that Covid-19 had on our share price. The grants
were scaled back to 225% of salary for Executive Directors,
compared with 250% in previous years and a maximum level
of 300% in accordance with the policy.
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. In doing so we have regard to
risks inherent in the business and marketplace, providing the
opportunity for executives to earn rewards in a manner which
is proportionate to the value delivered against clear targets.
We maintained the structure of our incentives this year and did
not alter any of the targets that we set. However, with the lack
of transparency on retail rental income in particular at the start
of the year, we decided that the element of the Annual Incentive
Plan dedicated to profits should be split with half focused on
costs only. We delayed the setting of profit targets for the other
half until September when we felt able to set underlying profit
targets for the full year.
As explained last year, we introduced two balance sheet
resilience measures which focused on both the level of our
liquidity over the year and the refinancing date for our debt.
These were important to ensure the Company focused on both
preserving shareholder value in the long term and retaining
flexibility to handle significant uncertainty. Continuing to be
able to finance our development programme is important
and drives long term value.
The Committee considered a holistic assessment of the
Company’s performance against the targets set at the
beginning and midway through the year. In particular, the
Committee reviewed the Company’s ability to collect rental
payments against the context of the wider property market.
The Committee considers the levels that have been awarded
appropriately reflect the efforts of the Executive Directors,
incentivise future performance and balance the impact of the
year under review on our shareholders’ and wider stakeholders.
Remuneration in respect of the year commencing 1 April 2021
Salaries
The Executive Directors are both new in their post this year
and their salaries are accordingly lower than those of their
predecessors and will not be reviewed from the date of
appointment until 2022. The Non-Executive Directors’
and the Chairman’s fee levels remain unchanged.
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. Further
information is set out on page 128.
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 and the intended level of award will not be
higher than 250% of salary.
Pensions
We are committed to ensuring that pension contributions across
our workforce are equitable. Executive Directors receive the
same pension benefit as the wider workforce at 15% of salary.
124
British Land Annual Report and Accounts 2021
The British Land Defined Benefit and Employer Financed
Retirement Benefit Schemes (‘EFRB’) were both non-
contributory schemes which were closed to new members.
During 2020 a consultation with the active members of the
Defined Benefit and EFRB Scheme took place. Following this
period of consultation we agreed to close both schemes to
future accrual.
Gender and ethnicity pay gap
Our work to narrow the gender pay gap since 2017 continued
during the year and the latest gender pay gap for the 5 April
2021 snapshot shows a modest reduction in the median pay
gap of 0.3% to 27.6% from 27.9% for British Land. Broadgate
Estates, a subsidiary company, shows a further reduction in
the median pay gap from 35.5% to 32.9%. More information
can be found at britishland.com/gender-pay-gap.
This year we have published our ethnicity pay gap along with
others from the property industry. The British Land median
ethnicity pay gap between white and BAME employees in respect
of 2021 is 27.3%. As this is the first time we are reporting our
ethnicity pay gap, there is no prior year comparison.
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 2021 AGM.
Yours sincerely,
Laura Wade-Gery
Chair of the Remuneration Committee
British Land Annual Report and Accounts 2021
125
DIRECTORS’ REMUNERATION REPORT continued
REMUNERATION AT A GLANCE
How we align
rewards to
delivering
our strategy
As set out on pages 14-15,
we have set out a new
strategy which clearly
positions our business
for growth focused on two
core areas, our Campuses
and Retail & Fulfilment.
Delivering against these priorities lays
the foundation for future value creation.
We take a long term approach to
running our business; our focus is to
deliver positive outcomes for all of our
stakeholders on a long term, sustainable
basis which can mean that actions taken
in any one year take time to deliver value.
To deliver on this strategy, we have developed four priorities:
Targeting
opportunities
in Retail &
Fulfilment
Realising the
potential of
our Campuses
Active capital
recycling
Progressing
value accretive
developments
People & Sustainability
We have developed a best in class
platform, including a broad range of skills
across our business, which will support
the delivery of our strategy. Read more
on pages 36-39.
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.
Our remuneration philosophy is to
incentivise and reward employees across
the Group. We set objectives for our
Executive Directors which are cascaded
throughout the business, with Executive
Committee sponsors, so that they are
integrated within the day-to-day
management 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 the delivery
of objectives linked to our priorities and
annual financial performance.
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 and (iii) what we
reward Executive Directors for delivering.
1 year performance
3 year performance
Profit and revenue targets
Refinancing date and
liquidity targets
Total Property Return
outperformance
Annual
profitability
Balance sheet resilience
Property valuation changes
Net Asset
Value changes
Dividends and share price
movements
Targeting opportunities in
Retail & Fulfilment
Realising the potential of
our Campuses
Active capital
recycling
Strategic targets to deliver
our priorities
Progressing value
accretive developments
People &
Sustainability
Total Property Return outperformance
Total Accounting Return
outperformance
Total Shareholder Return
outperformance
126
British Land Annual Report and Accounts 2021
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 britishland.com/committees.
Element of
remuneration
Fixed
Link to strategy
Basic salary Attracts and retains expert people with
the appropriate degree of expertise and
experience to deliver agreed strategy
Benefits
Pension
contribution
Annual
Incentive
Variable
Performance measures related to British
Land’s strategic focus and the Executive
Directors’ 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
rewards to net property performance
and shareholder distributions
Total Shareholder Return (TSR)
directly correlates reward with
shareholder returns
Framework
Reviewed annually and increases typically in line with
the market and general salary increases throughout
the Group
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 CEO and CFO at 15%
of salary
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
LTIP grants were set at 225% last year, but have
been at the level of 250% of salary in the form of
performance shares in previous years, within the
maximum value of an LTIP award of 300% of salary
Executive Directors’ remuneration
The tables below show the 2021 actual remuneration against potential opportunity for the year ended 31 March 2021 and 2020
actual remuneration for each Executive Director. The figures for Chris Grigg’s actual and potential 2021 remuneration are
pro-rated to reflect part service during the year.
Full disclosure of the single total figure of remuneration for each of the Directors is set out in the table on page 130.
Chris Grigg
2021 actual
2021 potential1
2020 actual
Simon Carter
£’000
£1,309
2021 actual
£3,030
2021 potential1
£1,534
2020 actual
£’000
£1,149
£2,365
£819
0
1,000
2,000
3,000
4,000
0
500
1,000
1,500
2,000
2,500
Salary
Benefits
Pension
Annual Incentive
Long term incentives
Salary
Benefits
Pension
Annual Incentive
Long term incentives
1. 2021 potential assumes that both annual and long term incentives pay out in full.
British Land Annual Report and Accounts 2021
127
The following pages set out how
the Committee intends to apply the
Remuneration Policy during the
coming year.
DIRECTORS’ REMUNERATION REPORT continued
How we intend to apply our
Remuneration Policy during
the year commencing
1 April 2021
Executive Directors’
remuneration
Basic salaries
The Executive Directors are both new in
their post this year and their salaries are
accordingly lower than their predecessors.
Simon Carter’s salary for the year beginning
1 April 2021 remains unchanged from the
level awarded upon his appointment as
CEO. Bhavesh Mistry’s salary was agreed
in accordance with the Remuneration
Policy and will be effective from his
joining date, 19 July 2021.
Annual Incentive awards
The maximum bonus opportunity for
Executive Directors remains unchanged
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 Committee has agreed
that the same performance measures
and weighting should apply for the year
ahead as operated last year. This is set
out in the table below.
Director
Simon Carter
Bhavesh Mistry
Basic salary
£000
750
490
Pension and benefits
Both Executive Directors will receive
a 15% of salary pension contribution/
allowance. Benefits will be provided
in line with the policy and include a car
allowance and private medical insurance.
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 2022
Remuneration Report. In assessing how
the Executive Directors performed during
the year commencing 1 April 2021, 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
below. This year, once again, 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.
Proportion of Annual Incentive
as a percentage of maximum opportunity
Measure
Net Asset
Value changes
Annual
profitability
Quantitative
measures:
70% reward
weighting
Balance sheet resilience
measures:
Targeting opportunities
in Retail & Fulfilment
Realising the potential of
Campuses
Active capital
recycling
Progressing value
accretive developments
People & Sustainability
Strategic measures
30% reward
weighting
128
British Land Annual Report and Accounts 2021
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%
30%
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 2021. 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 June 2020, as shown on page 134.
Measure
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.
Link to strategy
The TPR measure is designed
to link reward to strong
performance at the gross
property level.
Measured relative to
TPR performance will be assessed
against the performance of an IPD
sector weighted benchmark.
Weighting
40%
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.
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
our stakeholders.
Non-Executive Directors’ fees
Fees paid to the Chairman and Non-Executive Directors are positioned around 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 2020.
Chairman’s annual fee
Non-Executive Director’s annual fee
Senior Independent Director’s annual fee
Audit or Remuneration Committee Chair’s annual fee
Audit or Remuneration Committee member’s annual fee
CSR Committee Chair’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 2021
129
DIRECTORS’ REMUNERATION REPORT continued
How we applied our Remuneration Policy
during the year ended 31 March 2021
The following pages set out how we implemented the Directors’ Remuneration Policy during the year ended 31 March 2021 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 2021 and show comparative figures for the year ended 31 March 2020.
Executive Directors
Chris Grigg3
Simon Carter 4
Taxable
benefits
Other items in
the nature of
remuneration
Pension or
pension
allowance
Annual
Incentives1
Long term
incentives2
2021
£000
15
20
2021
£000
9
10
2021
£000
164
89
2021
£000
524
473
2021
£000
0
0
Salary
2021
£000
597
557
Total
2021
£000
1,309
1,149
Fixed
remuneration
Variable
remuneration
2021
£000
785
676
2021
£000
524
473
1. Estimated outcomes. 2021 Annual Incentive outcomes are subject to the publication of final MSCI results.
2. Forecast outcomes. 2021 Long Term Incentive outcomes are subject to confirmation of final vesting levels in June 2021.
3. Chris Grigg’s remuneration is in respect of the period from 1 April 2020 to his departure from the Board on 31 December 2020. Details of any payments after he
stepped down as a Director are set out on page 137.
4. Simon Carter’s salary reflects the period from 1 April 2020 to 17 November 2020 as CFO for which he was paid a pro-rated salary based on a full year equivalent
of £500,000 and the period from 18 November 2020 to 31 March 2021 as CEO for which he was paid a pro-rated salary based on a full year equivalent of £750,000.
Additionally, as previously disclosed, the full Board waived an amount equal to 20% of their respective fees and salaries for the four months from April to July 2020
in response to the Covid-19 pandemic.
Chris Grigg
Simon Carter
2020
£000
874
500
2020
£000
20
20
2020
£000
16
13
2020
£000
262
75
20201
£000
362
211
20201
£000
0
0
2020
£000
1,534
819
2020
£000
1,172
608
2020
£000
362
211
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 2020 Report; the actual outcomes are reflected in the table above. Annual Incentive payments for Chris Grigg and
Simon Carter represent 41.4% and 42.2% of their respective salaries as confirmed on page 123.
Notes to the single total figure of remuneration table (audited)
Fixed pay
Taxable benefits: Taxable benefits include car allowance for Chris Grigg £12,600 and Simon Carter £16,700 and private
medical insurance.
Other items in the nature of remuneration: Includes 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.
Pensions: Chris Grigg did not participate in any British Land pension plan. Instead he received cash allowances, in lieu of pension
at a rate of 25% of salary at the time of his departure. As stated in the 2019 Report it was agreed with Chris that in order to align
his pension with that of the wider workforce, his annual pension allowance would reduce by 5% per annum. 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 2021.
Executive Director
Simon Carter
Defined benefit
pension accrued at
31 March 2021
£000
39
Normal
retirement
age
60
There are no additional benefits that will become receivable by a Director in the event that a Director retires early.
130
British Land Annual Report and Accounts 2021
Annual Incentives FY21 (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 2021 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.94% of salary for the
two Executive Directors against a maximum opportunity of 150%.
Executives volunteered to scale back their bonus pay outs in order to align the outcome with the experiences of the wider
Company, our customers and other stakeholders. The Remuneration Committee considered that management’s approach had
been thoughtful and appropriately met the need to reward performance during the year against the backdrop of Covid-19 and its
impact on the Company’s financial results. The Committee therefore agreed that bonus payouts for the year ending 31 March
2021 be scaled back to 80% of salary. Chris Grigg’s bonus amount was pro-rated taking into account his departure date of
31 December 2020.
The Quantitative measure
Net Asset Value changes
Weighting
20%
Total Property Return
vs MSCI Benchmark
20%
-310bps
Annual Profitability
30%
Non-leasing related costs
15%
Underlying Profit1
Balance Sheet Resilience
Refinancing
Assessed by comparing
forecast net debt to the
finance we have in place
Liquidity
Based on available
facilities and cash
Sub-total
15%
20%
10%
10%
70%
Performance
in line with
minimum
expectations
(0% Payout
except TPR of
17% Payout)
Performance
in line with
expectations
Performance
in line with
maximum
expectations
(100% Payout)
Final
outcome
(% of
max)
Final
outcome
(% of
salary) Performance range
0bps
+125bps
0.00% 0.00%
£102.0m
£98.5m
£95.0m
15.00% 22.50%
£91m
£194m
£196m
£204m
£199m
7.5% 11.25%
17% payout for matching
the MSCI Benchmark
rising to 100% payout for
outperforming by 125bps
0% payout for meeting a
threshold level rising to
100% payout
0% payout for meeting a
threshold level rising to
100% payout
24 months
36 months
£1.0bn
46
months
£1.5bn
£1.37bn
0% payout for meeting a
threshold level rising to 100%
payout for at least matching a
stretch level
0% payout for meeting a
threshold level rising to 100%
payout for at least matching a
stretch level
10% 15.00%
7.4% 11.10%
39.9% 59.85%
1. Profit outcome of £201m moderated by minus £2m to £199m to account for a duplication with the cost target.
Note: The above chart is a forecast of the 2021 TPR outcomes which will depend on performance against MSCI figures that will only become available after the
publication of this Report and as such, represent an estimate of the final figures.
British Land Annual Report and Accounts 2021
131
DIRECTORS’ REMUNERATION REPORT continued
7.5%
7.5%
11.25%
Final outcome
(% of max)
Final outcome
(% of salary)
22.00%
33.00%
Performance achieved
Adapted strategy to reflect the
acceleration of trends in Retail and
Offices caused by pandemic which
was prioritised by the Board
Completed phased reopening of
British Land workplaces and kept
all essential and non-essential
retail open subject to lockdown
rules and Government guidance.
Kept employees safe and provided
strong oversight for the wellbeing
during the pandemic.
Supported customers in reopening
sites in-line with Government
guidelines. Provided support to
customers unable to operate via
rent concessions. Developed
customer communication plans.
Active engagement with
Government on rent moratorium
and business rates.
Dividend resumed with policy to pay
out 80% of EPS
83% total rent collected for FY21:
Offices 99%, Retail 71%
100 Liverpool Street achieved PC in
September 2020. 1 Triton Square
due to PC in FY22. Committed to
develop Norton Folgate and 1
Broadgate (following pre-let agreed
with JLL). Completed drawdown of
headlease at Canada Water and
commenced enabling works
for phase 1.
BL Median Gender Pay Gap reduced
by 0.3% to 27.6%. BL Median
Ethnicity Pay Gap reported for the
first time at 27.3%.
3.75%
3.75%
3.75%
1.875%
1.875%
2%
5%
0.00%
Chris Grigg
Strategic
objective
Right
Places
Measure
Weighting
Refine and focus
strategy including
response to pandemic
Complete phased
reopening plan
including British
Land workplaces
Customer
Orientation
Capital
Efficiency
Engage with
customers to
identify their priorities,
provide support and
strengthen
relationships
Public engagement
on Covid-19 support
recovery
Re-establish dividend
Optimise rent and
service charge
collection
Deliver the capital plan
Expert
People
Reduce Gender
Pay Gap
3.75%
132
British Land Annual Report and Accounts 2021
Simon Carter
Strategic
objective
Right
Places
Measure
Develop business
strategy (on CEO
appointment)
Customer
Orientation
Public engagement
on Covid-19
Improvements made
to business systems
Deliver against
capital plan
Capital
Efficiency
Deliver HUT
refinancing and
Homes England Loan
Re-establish dividend
Implement CSR
strategy
Expert
People
Reduce Gender
Pay Gap
Optimise resource to
mitigate new hires and
prioritise key areas
Total bonus calculation
Chris Grigg
Simon Carter
Chris Grigg 3
Simon Carter
Weighting
7.5%
6.25%
Performance achieved
New strategy in place. Pivoting to
growth and value opportunities
across Campuses and Retail
& Fulfilment. Good progress
against priorities
Active engagement with
Government on rent moratorium
and business rates reform including
specific proposal on equitable
solution to withdraw moratorium
Phase 2 of business systems
project successfully delivered
12.5% £1.2bn of sales, overall 6.1% ahead
of book value, comprising £640m of
mature office assets and £560m of
retail assets
HUT terms extended and effectively
committed to acquire remaining
22% interest. Secured HUT
refinancing and £100m Homes
England Loan
Dividend resumed with policy to pay
out 80% of EPS
Published pathway to net zero.
Launched Transition Fund and
progressed TCFD. Achieved
GRESB 5*. 100 Liverpool Street
achieved BREAM outstanding
rating and first net carbon neutral
development for British Land.
3.75% BL Median Gender Pay Gap reduced
by 0.3% to 27.6%. BL Median
Ethnicity Pay Gap reported for the
first time at 27.3%
Vacant roles filled by internal
candidates during initial response
to pandemic
Final outcome
(% of max)
Final outcome
(% of salary)
23.00%
34.50%
6.00%
1.875%
1.875%
5.00%
2.00%
1.875%
2.50%
0.00%
1.875%
Final outcome
(% of max)
Final outcome
(% of salary)
61.90%
62.90%
92.85%
94.35%1
Scaled back
bonus
(% of salary)2
80.00%
80.00%
1. This final outcome includes an additional amount equal to 1% of opportunity in line with the remuneration terms agreed under Chris Grigg’s settlement agreement
to align his bonus % to that of other Executive Directors
2. As described on page 111 the Committee scaled back the bonus outcome for Executive Directors to 80% of salary.
3. Chris Grigg’s Bonus payment will be pro-rated to 60% of salary to take into account his departure date of 31 December 2020.
One third of the annual bonus (after tax has been paid) is used to purchase shares which are then held for three years by the
Executive Director.
2020 comparative: In June 2020, the Committee confirmed that the underperformance of TPR compared to the IPD benchmark
was -410bps rather than the estimate of -460bps made for the purposes of the single total figure of remuneration table in the
2020 Annual Report. This did not alter the amount of bonus earned.
British Land Annual Report and Accounts 2021
133
DIRECTORS’ REMUNERATION REPORT continued
Long term incentives (audited)
The information in the long term incentives column in the single total figure of remuneration table (see page 130) 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 2021 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 26 June 2018, and which will vest on 26 June 2021, were subject to three
performance conditions over the three-year period to 31 March 2021. The first condition (40% of the award) measured British
Land’s Total Property Returns (TPR) relative to the funds in the sector weighted MSCI Annual Universe (the Benchmark)
previously the IPD UK Annual Property 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 -4.8% per annum when compared to the
Benchmark of -2.5%. The TAR element is also expected to lapse based on British Land’s TAR of -9.9% per annum compared to
0.3% 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 MSCI 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 2022 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 -17.06%
compared to a median of 8.05% and 5.11% for the FTSE 100 and Property companies comparator groups respectively.
Executive Director
Chris Grigg
Simon Carter
Performance
shares or options
Number of performance
shares awarded
Shares
Shares
313,984
177,733
Estimated value of
award on vesting
£000
nil
nil
Estimated dividend
equivalent and interest
£000
nil
nil
Increase in value as a
result of share price
movement between grant
and vesting
£000
nil
nil
2020 comparative: As set out in the 2020 Annual Report, the 2017 LTIP awards lapsed in full on 26 June 2020 as expected.
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 225% of basic
salary at grant. The Remuneration Committee exercised discretion and reduced the LTIP grant size by 10% to reflect the share
price at the date of grant relative to the share price in recent years.
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 412.4p. The performance conditions attached to these awards are set out in the
Remuneration Policy approved by shareholders in July 2019 and summarised on page 127.
Performance shares
Executive Director
Chris Grigg1
Simon Carter
Grant date
22/06/2020
22/06/2020
Number of
performance
shares granted
476,807
272,812
Face value
£000
1,966
1,125
End of
performance
period
31/03/23
31/03/23
Percentage vesting on
achievement of minimum
performance threshold
%
20%
20%
Vesting date
22/06/23
22/06/23
1. The treatment of Chris’ performance shares upon leaving shares is explained on page 137.
134
British Land Annual Report and Accounts 2021
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 2021, William Jackson, Irvinder Goodhew and Tim Score have each received
shares in full or part satisfaction of their fees.
Outstanding scheme interests as at 31 March 2021
Shares held
Unvested share
plan awards
(subject to
performance
measures)
683,928
Unvested share
plan awards
(not subject to
performance
measures)
6,603
Vested but
unexercised
share plan
awards
0
Total shares
subject to
outstanding
share plan
awards
690,531
Director
Simon Carter
Tim Score (Chair)
Lynn Gladden
Irvinder Goodhew
Alastair Hughes
Nicholas Macpherson
Preben Prebensen
Laura Wade-Gery
Loraine Woodhouse
Former Directors who served during the year
Chris Grigg1
William Jackson
Rebecca Worthington1
543,025
1,341
1,439,146
1,983,512
As at 1 April
2020
142,085
62,070
18,339
nil
7,371
5,600
20,000
9,585
nil
As at 31 March
2021
171,798
80,905
18,339
2,593
7,371
5,600
20,000
9,585
4,036
Total of all share
plan awards and
shareholdings as
at 31 March 2021
862,329
80,905
18,339
2,593
7,371
5,600
20,000
9,585
4,036
1,459,709
143,728
3,000
1,081,407
153,630
3,000
3,064,919
153,630
3,000
1. Holding is as at the date of departure of 31 December 2020. Outstanding share scheme interests held by Chris Grigg reflect the lapsed position as at
31 December 2020.
In addition, on 7 April 2021, the following Non-Executive Directors were allotted shares at a price of 518.2 pence per share in full
or part satisfaction of their fees:
Non-Executive Director
Tim Score
Irvinder Goodhew
Shares allotted
4,871
1,623
Acquisitions of ordinary shares after the year end
The Chief Executive has 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
Simon Carter
Date of purchase
Partnership
or award
Purchase price
shares Matching shares
Dividend shares
14/04/21
14/05/21
509.87p
517.35p
30
29
60
58
–
–
Other than as set out above, there have been no further changes since 31 March 2021.
British Land Annual Report and Accounts 2021
135
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 are 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 2021 are shown below:
Executive Director
Simon Carter1 (incumbent CEO)
Chris Grigg2 (former CEO)
Guideline as
percentage of
basic salary
225%
225%
Guideline
holding
332,399
409,702
Holding counting
toward guidelines at
31 March 2021
174,264
1,082,748
% of Salary Held
(Based on
31 March 2021
Shareholding)
118%
595%
1. Simon’s holding is as at 31 March 2021 using the methodology described above. The holding guidelines are calculated using the 31 March 2021 VWAP of 507.67p.
2. Chris’ holding is as at the date of his departure, 31 December 2020, using the methodology described above. The holding guidelines are calculated using the 31
December 2020 VWAP of 479.98p.
Unvested share awards (subject to performance)
Executive Director
Chris Grigg2
Simon Carter
LTIP performance shares
LTIP performance shares
LTIP performance shares
LTIP performance shares
LTIP performance shares
LTIP performance shares
Date of grant
26/06/18
23/07/19
23/06/20
26/06/18
23/07/19
23/06/20
Number
outstanding at
31 March 20211
263,276
196,145
83,604
177,733
233,383
272,812
Subject to
performance
measures
Yes
Yes
Yes
Yes
Yes
Yes
End of
performance
period
31/03/21
31/03/22
31/03/23
31/03/21
31/03/22
31/03/23
Vesting date
26/06/21
23/07/22
23/06/23
26/06/21
23/07/22
23/06/23
1. The LTIP awards granted in June 2018 are also included within the ‘2021 Long Term Incentives’ column of the single total figure of remuneration table on page 130.
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 page 134.
2. The outstanding figures for Chris have been pro-rated for time served up to the date of his departure on 31 December 2020. Further details on the treatment of his
share scheme interests upon leaving the Company can be found on the following page.
136
British Land Annual Report and Accounts 2021
Unvested option awards (not available to be exercised)
Executive
Director
Chris Grigg1
Simon Carter
Sharesave options
Sharesave options
Date of grant
–
18/06/19
Number
outstanding at
31 March 2021
–
4,137
Option price
pence
–
435.0
Subject to
performance
measures
–
No
End of
performance
period
–
0
Date becomes
exercisable Exercisable until
–
28/02/23
–
01/09/22
1. Chris’ sharesave options lapsed on cessation of office on 31 December 2020.
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 2021
695,652
743,494
Option price
pence Exercisable until
30/06/211
575
30/06/211
538
1. Options are available to exercise until six months after leaving date.
Payments to past Directors and for loss of office (audited)
Chris Grigg ceased to be a Director of the Company and left the Company on 31 December 2020. The treatment of his
remuneration arrangements upon leaving the Company was in line with policy. During the year ended 31 March 2021 British Land
has made the following payments in line with the treatment disclosed.
A payment in lieu of notice for the period from when he left the Company to the end of his notice period, being 9 September 2021,
will be paid in monthly payments. This comprises base salary and car allowance of £615,787, pension contributions/allowance of
£131,759 and the value of other benefits of £6,066. These payments may be reduced by the value of any alternative paid
employment secured during the period until 9 September 2021.
LTIP awards will continue to vest as Chris is considered a good leaver and therefore performance shares have been pro-rated in
line with the good leaver policy. This comprises 263,276 Performance Shares under the 2018 LTIP award, 196,145 Performance
Shares under the 2019 LTIP award and 83,604 Performance Shares under the 2020 LTIP award. As detailed on page 134 the 2018
LTIP award is expected to lapse in full.
Chris Grigg holds vested but unexercised LTIP options which were granted in 2011 and 2012 which he has until 30 June 2021 to
exercise. Awards under the SAYE and SIP all employee plans also lapsed on cessation.
A contribution towards his legal fees of £4,250 plus VAT was provided.
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
Simon Carter
Date of service
contract
18/11/20
Normal
notice period
to be given by
Company
12 months
In accordance with the Code, all continuing Executive and Non-Executive 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 2021
137
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. Chris received a fee of £82,500
(no overseas travel allowances and benefits deemed to be taxable) from BAE Systems plc in respect of the nine months ending
31 December 2020, which he retained in full (2020 full year: £87,252).
Relative importance of spend on pay
The graph below shows the amount spent on the remuneration for all employees (including Executive Directors) relative to the
amount spent on distributions to shareholders for the years to 31 March 2021 and 31 March 2020. The remuneration of employees
decreased by 1.5% relative to the prior year. Distributions to shareholders include ordinary and, where offered, scrip dividends.
No scrip alternative was offered during the year ended 31 March 2021. The material decrease of 81% in the amount spent on
distributions to shareholders reflects the conclusion of the share buyback programme the previous year, as well as the
Board’s decision to temporarily suspend the dividend during the outbreak of the Covid-19 pandemic in 2020.
2020/21
2019/20
0
0
100
200
300
400
100
200
300
400
£65m
£78m
£66m
£420m
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 2011 to 31 March 2021 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 2011 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 the Chief Executive over the same period as the Total Shareholder Return graph.
The single total figure of remuneration represents the sum of the amounts paid to Chris Grigg and Simon Carter for the
respective periods that they served as Chief Executive during the year, being £1.093m and £0.551m respectively. The Annual
Incentive awards against maximum opportunity and LTIP vesting percentages represent the year end awards and forecast vesting
outcome respectively and are the same for both Chris and Simon. 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
Chief Executive’s single total figure of remuneration (£000)
Annual Incentive awards against maximum opportunity (%)
Long term incentive awards vesting rate against maximum
opportunity (%)
2011/12
2012/13
2013/14
2014/15
2015/16
2016/17
2017/18
2018/19
2019/201
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
2020/212
1,644
53
99
63
98
93
54
15
16
0
0
0
1. Confirmed outcome.
2. Forecast outcome.
138
British Land Annual Report and Accounts 2021
Total shareholder return
The graph below shows British Land’s total shareholder return for the 10 years to 31 March 2021, which assumes that £100 was
invested on 1 April 2011. 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 (£)
200
150
100
50
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
31 March
2021
The British Land Company PLC
FTSE All-Share REIT’s sector
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 126.
The single total figure of remuneration represents a blended amount calculated by reference to the amounts paid to Chris Grigg
and Simon Carter for the respective periods that they served as Chief Executive during the year.
CEO pay ratio
Method
CEO single figure (£000)
Upper quartile
Median
Lower quartile
2018
B
1,653
13:1
22:1
33:1
2019/20
C
1,534
14:1
22:1
33:1
2020/21
A
1,644
16:1
23:1
35:1
The salary and total pay for the individuals identified at the Lower quartile, Median and Upper quartile positions in 2020/21 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.
British Land Annual Report and Accounts 2021
139
DIRECTORS’ REMUNERATION REPORT continued
2020/21 Employee pay
Upper quartile
Median
Lower quartile
Salary
Total pay
82
56
41
101
70
47
Directors’ remuneration compared to remuneration of British Land employees
The table below shows the percentage changes in different elements of the Directors’ remuneration relative to the previous
financial year and the average percentage changes in those elements of remuneration for employees of the listed parent company
British Land. Positive changes in the fees paid to Non-Executive Directors are attributable to additional fees paid in respect of
additional Committee or Board responsibilities during the course of the year, rather than an increase in the level of fees paid.
Reductions are as a result of the whole Board waiving 20% of their respective salaries or fees for the four month period between
April and July 2020 in response to the Covid-19 pandemic. Chris Grigg, Irvinder Goodhew, William Jackson and Loraine Woodhouse
are not included in the table below as they were appointed or departed during the year. The 2% increase in employee salaries was
due to promotional increases during the year rather than a group-wide increase. Similarly, the increase in annual incentive of
84% reflects a higher company multiplier in 2021 compared to 2020 which was scaled back due to the impact of Covid-19.
Remuneration element
Simon Carter1
Tim Score2
Lynn Gladden
Alastair Hughes
Nicholas Macpherson
Preben Prebensen
Laura Wade-Gery
Average employees
2020 vs 2021
Base salary/fees
% change1
Benefits
% change
Annual bonus
% change
n/a
20%
-6%
-3%
-7%
12%
0%
2%
n/a
0%
0%
0%
0%
0%
0%
1%
n/a
n/a
n/a
n/a
n/a
n/a
n/a
84%
1. Simon Carter was appointed as CEO during the year which led to an increase in his basic salary as detailed on page 123.
2. Tim Score’s 2020 fee was smaller due to becoming Chairman part way through the year ending 31 March 2020 which accounts for the percentage increase in fees
received for the year ended 31 March 2021.
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, ethnicity 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 is satisfied with the current Policy and feels the opportunity and alignment are appropriate at
the current time.
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British Land Annual Report and Accounts 2021
Non-Executive Directors’ remuneration (audited)
The table below shows the fees paid to our Non-Executive Directors for the years ended 31 March 2021 and 31 March 2020:
Chairman and Non-Executive Directors
Tim Score (Chair)
Lynn Gladden
Irvinder Goodhew2
Alastair Hughes
Nicholas Macpherson
Preben Prebensen
Laura Wade-Gery
Loraine Woodhouse2
Former Directors who served during the year
William Jackson
Rebecca Worthington
Fees
Taxable benefits1
Total
2021
£000
350
72
36
88
67
85
86
6
64
63
2020
£000
292
77
–
91
72
76
86
–
87
86
2021
£000
0
0
0
0
0
0
0
0
0
0
2020
£000
–
1
–
–
–
–
–
–
–
–
2021
£000
350
72
36
88
67
85
86
6
64
63
2020
£000
292
78
–
91
72
76
86
–
87
86
1. Taxable benefits include the expenses incurred by Non-Executive Directors. The Company provides the tax gross up on these benefits and the figures shown above
are the grossed up values. There is no variable element to the Non-Executive Directors’ fees.
2. These Non-Executive Directors were not members of the Board from April to July 2020 and therefore did not have the opportunity to waive an amount equal to 20%
of the fees paid in response to the Covid-19 pandemic.
Letters of appointment
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
Irvinder Goodhew
Alastair Hughes
Nicholas Macpherson
Preben Prebensen
Laura Wade-Gery
Loraine Woodhouse
Original date of appointment
20 March 2014
20 March 2015
1 October 2020
1 January 2018
19 December 2016
1 September 2017
13 May 2015
1 March 2021
Effective date of appointment
in most recent letter of appointment
19 July 2019
24 May 2021
1 October 2020
1 January 2021
19 December 2019
1 September 2020
24 May 2021
1 March 2021
Unexpired term (months)
13
37
37
37
25
37
37
37
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 2021, 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
Laura Wade-Gery
Lynn Gladden
Preben Prebensen
Position
Chair
Member
Member
Date of appointment
(to the Committee)
13 May 2015
20 March 2015
1 September 2017
Attendance
8/8
8/8
8/8
During the year ended 31 March 2021, Committee meetings were also part attended by Tim Score (Chairman), Chris Grigg
(former Chief Executive), Simon Carter (former Chief Financial Officer and incumbent Chief Executive), David Walker (Interim 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.
British Land Annual Report and Accounts 2021
141
DIRECTORS’ REMUNERATION REPORT continued
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
britishland.com/committees. The Committee’s key areas of responsibility are:
– setting the Remuneration Policy for Executive Directors and the 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 2021, 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 and Long
Term incentives;
– 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 2020 AGM, but has not been felt to be necessary since then;
– feedback from the HR Director and Remuneration Consultants following consultation with a workforce panel set up to discuss
Executive remuneration;
– the Committee was made aware of the results of engagement surveys and any general themes that are impacting employees.
All-employee communications were sent from Executive Committee members, including the CEO, relating to wider
Company remuneration;
– considering gender and ethnicity 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, and minor changes in line with best
practice were made.
142
British Land Annual Report and Accounts 2021
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 £158,620 (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 (2020)
Directors’ Remuneration Policy (2019)
587,950,839
699,935,009
97.92
98.30
12,489,619
12,073,236
2.08 600,440,458
1.70 712,008,245
8,788,240
840,435
This Remuneration Report was approved by the Board on 25 May 2021.
Laura Wade-Gery
Chair of the Remuneration Committee
British Land Annual Report and Accounts 2021
143
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 2021. The Directors’
Report also encompasses the entirety of our Corporate
Governance Report from pages 90-147 and Other Information
section from pages 229 to 240 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 2021 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,
energy consumption and efficiency
Viability and going
concern statements
Governance arrangements
Employment policies
and employee involvement
Capitalised interest
Directors’ waivers of emoluments
Additional unaudited
financial information
Section in
Annual Report
Page
Strategic Report
Strategic Report
15 to 27
78 to 87
Strategic Report
Strategic Report
Strategic Report
75 to 77
73
49
Strategic Report
52
Strategic Report
88
Governance 94 to 100
Strategic Report
Financial
36 to 39
Statements 172 to 183
123
Governance
Other Information
unaudited 229 to 234
Annual General Meeting (AGM)
The 2021 AGM will be held at 9:30am on 13 July 2021 at Storey
Club, 100 Liverpool Street.
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 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
britishland.com/governance.
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 90-92 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 113. 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 122-143.
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. The Articles provide
that the Company may by ordinary resolution at a general
meeting appoint any person to act as a Director, provided that
notice is given of the resolution identifying the proposed person
by name and that the Company receives written confirmation of
that person’s willingness to act as Director if he or she has not
been recommended by the Board. The Articles also empower
the Board to appoint as a Director any person who is willing to
act as such. The maximum possible number of Directors under
the Articles is 20. In addition to any power of removal conferred
by the Companies Act 2006, the Articles provide that the
Company may by ordinary resolution (and without the need for
any special notice) remove any Director from office. The Articles
also set out the circumstances in which a person shall cease to
be a Director.
The Articles require that at each annual general meeting
each person who is a Director on a specific date selected by
the Board shall retire from office. The date selected shall be
not more than 14 days before, and no later than, the date of the
notice of annual general meeting. A Director who retires at an
annual general meeting shall be eligible for reappointment by
the shareholders.
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 97. Provisions are also
contained in the Company’s Articles which allow the Directors
to authorise potential conflicts of interest.
144
British Land Annual Report and Accounts 2021
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 and are in force at the date of the Report.
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 2020 AGM to allot
relevant securities up to a nominal amount of £77,223,589 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 2021 AGM or the close of business on 30 September
2021, whichever is the sooner. At this year’s AGM, shareholders
will be asked to renew the authority to allot relevant securities.
The Directors were granted authority at the 2020 AGM to allot
shares in the Company and to grant rights to subscribe for,
or convert any security into, shares in the Company up to a
maximum aggregate nominal amount of £77,223,589, as
well as an additional authority to allot shares up to the same
amount on a rights issue only. This authority will apply until the
conclusion of the 2021 AGM. At the 2021 AGM, shareholders will
be asked to renew the allotment authority.
At the 2020 AGM a special resolution was also passed to permit
the Directors to allot shares for cash on a non-pre-emptive
basis both in connection with a rights issue or similar pre-
emptive issue and, otherwise than in connection with any
such issue, up to a maximum nominal amount of £11,583,538.
A further special resolution was passed to permit the Directors
to allot shares for cash on a non-pre-emptive basis up to the
same amount for use only in connection with an acquisition or
a specified capital investment. At this year’s AGM, shareholders
will be asked to renew such powers.
The Company continued to hold 11,266,245 ordinary shares in
treasury during the whole of the year ended 31 March 2021 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 page 205.
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 2021, 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.
Brookfield Asset Management Inc.
Norges Bank
APG Asset Management N.V.
Invesco Ltd.
Interests in
ordinary
shares
Percentage
holding
disclosed %
79,484,562
85,546,962
74,998,396
48,072,042
45,871,686
10.00
9.23
8.09
5.19
4.95
Since the year end, and up to 24 May 2021, the Company had
not received any notifications of interest in its ordinary shares
in accordance with DTR 5.
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.
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.
British Land Annual Report and Accounts 2021
145
DIRECTORS’ REPORT AND ADDITIONAL DISCLOSURES continued
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 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 208.
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 2021 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:
Political donations and expenditure
The Company made no political donations or expenditure
during the year (2020: 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, 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 contributions to good causes during the year
totalled £1,475,171 (2020: £1,620,000). Our Community
Investment Committee approves all expenditure from
our Community Investment Fund.
– 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 2021 AGM.
The Directors’ Report was approved by the Board on
25 May 2021 and signed on its behalf by:
Brona McKeown
General Counsel and Company Secretary
The British Land Company PLC
Company number: 621920
146
British Land Annual Report and Accounts 2021
Directors’ Responsibilities Statement
The Directors are responsible for preparing the Annual Report
and the financial statements in accordance with applicable law
and regulation.
Company law requires the Directors to prepare financial
statements for each financial year. Under that law the Directors
have prepared the Group and Company financial statements
in accordance with international accounting standards in
conformity with the requirements of the Companies Act 2006.
Additionally, the Financial Conduct Authority’s Disclosure
Guidance and Transparency Rules require the Directors
to prepare the Group financial statements in accordance
with international financial reporting standards adopted
pursuant to Regulation (EC) No 1606/2002 as it applies
in the European Union.
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, for the Group and Company, international
accounting standards in conformity with the requirements
of the Companies Act 2006 and, for the Group, international
financial reporting standards adopted pursuant to Regulation
(EC) No 1606/2002 as it applies in the European Union have
been followed, subject to any material departures disclosed
and explained in the financial statements
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.
Each of the Directors, whose names and functions are listed in
the Board of Directors on pages 90-92, 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 international accounting standards in
conformity with the requirements of the Companies Act 2006
and international financial reporting standards adopted
pursuant to Regulation (EC) No 1606/2002 as it applies in
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.
– make judgements and accounting estimates that are
By order of the Board.
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.
Simon Carter
Chief Executive
25 May 2021
British Land Annual Report and Accounts 2021
147
Financial
Statements
149
160
211
223
229
235
237
238
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
148
British Land Annual Report and Accounts 2021
INDEPENDENT AUDITORS REPORT
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 2021 and of the Group’s loss
and the Group’s cash flows for the year then ended;
– the Group financial statements have been properly prepared in accordance with international accounting standards in
conformity with the requirements of the Companies Act 2006;
– 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.
We have audited the financial statements, included within the Annual Report and Accounts 2021 (the “Annual Report”), which
comprise: the Consolidated and Company balance sheets as at 31 March 2021; 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.
Separate opinion in relation to international financial reporting standards adopted pursuant to Regulation (EC) No 1606/2002
as it applies in the European Union
As explained in Note 1 to the financial statements, the Group, in addition to applying international accounting standards in
conformity with the requirements of the Companies Act 2006, has also applied international financial reporting standards adopted
pursuant to Regulation (EC) No 1606/2002 as it applies in the European Union.
In our opinion, the Group financial statements have been properly prepared in accordance with international financial reporting
standards adopted pursuant to Regulation (EC) No 1606/2002 as it applies in the European Union.
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.
Other than those disclosed in Note 5, we have provided no non-audit services to the Group or its controlled undertakings in the
period under audit.
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INDEPENDENT AUDITORS REPORT continued
Our audit approach
Overview
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. 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.
Key audit matters
– Valuation of investment and development properties, either held directly or through joint
Materiality
ventures (Group)
– Recoverability of tenant debtors and incentives (Group)
– Covid-19 (Group and Company)
– Taxation (Group)
– Valuation of investments and loans to subsidiaries and joint ventures (Company)
– Overall Group materiality: £88.8 million (2020: £113.0 million) based on 1% of total assets.
– Specific Group materiality: £14.1 million (2020: £15.9 million), based on 5% of the Group’s
three-year average underlying post-tax profit.
– Overall Company materiality: £79.9 million (2020: £101.7 million) based on 1% of total assets.
– Performance materiality: £66.6 million (Group) and £59.9 million (Company).
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.
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.
Recoverability of tenant debtors and incentives and Valuation of investments and loans to subsidiaries and joint ventures are new
key audit matters this year. Revenue recognition, which was a key audit matter last year, is no longer included because of our
refined risk assessment relating more specifically to the expected credit loss provision. Otherwise, the key audit matters below
are consistent with last year.
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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)
Refer to the Report of the Audit Committee, Notes to
the financial statements – Note 1 (Basis of preparation,
significant accounting policies and accounting judgements),
Note 10 (Property) and Note 11 (Joint ventures and funds).
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 £6,247 million and
for the Group’s share of joint ventures and funds was
£3,048 million as at 31 March 2021.
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’.
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 investor
markets as a result of Covid-19 further contributed to
the subjectivity for the year ended 31 March 2021. 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.
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. For developments valued using the residual valuation
method, we obtained the development appraisal and assessed the
reasonableness of the valuers’ key assumptions. This included
comparing the yield to comparable market benchmarks, comparing
the costs to complete estimates to development plans and contracts,
and considering the reasonableness of other assumptions that are not
so readily comparable with published benchmarks, such as estimated
rental value and developers’ profit.
We spoke with 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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INDEPENDENT AUDITORS REPORT continued
Key audit matter
How our audit addressed the key audit matter
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 operating
properties, we agreed tenancy information to supporting evidence on
a sample basis. 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 and the financial statements.
We have no issues to report in respect of this work.
We have evaluated the methodology utilised by the Directors in
determining the ECL provisions as at 31 March 2021 and we are
satisfied the approach is compliant with the requirements of IFRS 9
Financial Instruments. We verified the mathematical accuracy of the
model and provision calculation.
On a sample basis, we have performed detailed testing over the
underlying data and information used in the ECL model including but
not limited to verifying: the tenant’s year end outstanding receivable
balance; the tenant’s year end unamortised lease incentive balance;
tenant’s credit histories and their current trading performance, the
ageing of the balances; the level of cash collections both during the
year and post year end; and the forward looking macroeconomic
environment amongst other factors.
We have tested the key assumptions within the ECL provision
calculation, being the categorisation of tenants and the percentage
provisioning rates applied to each category. In doing so we had direct
regard to the underlying data and information described above.
We have also assessed the disclosures made in relation to the ECL
provisions and the related sensitivities to the risk categorisation and
the expected loss rate applied and consider them to be reasonable.
We have no issues to report in respect of this work.
Valuation of investment and development properties,
either held directly or through joint ventures (Group)
(continued)
Recoverability of tenant debtors and incentives (Group)
Refer to the Report of the Audit Committee, Notes to
the financial statements – Note 1 (Basis of preparation,
significant accounting policies and accounting judgements),
Note 10 (Property) and Note 13 (Debtors).
The total value of trade debtors recognised within the Group
is £82 million and within joint ventures was £27 million
at 31 March 2021, against which an Expected Credit Loss
(‘ECL’) provision of £57 million and £15 million has been
recognised. Total tenant incentives across the Group is
£149 million and across joint ventures was £79 million
at 31 March 2021, against which an ECL provision of
£23 million and £6 million has been recognised.
As a result of the Covid-19 pandemic and its impact, the
Group has issued rental support to many of its retail tenants.
As negotiations are still ongoing with some tenants as at
31 March 2021, amounts due from these tenants will not
have been waived or collected at the year-end. This has
led to a higher level of tenant debtors outstanding at
31 March 2021 when compared with 31 March 2020.
The Directors have applied the Expected Credit Loss (‘ECL’)
model under IFRS 9 Financial Instruments and utilised a
matrix methodology to determine the provision. The key
assumptions have been the tenants’ credit risk rating and
the related expected loss rate for each risk rating and
ageing combination.
Tenant risk ratings have been determined by the Directors,
taking into consideration information available surrounding
a tenant’s credit rating, financial position and historical
default rates.
Consideration has also been given to the current impact
of Covid-19 and its potential future impact on the tenant’s
business along with industry trends. The expected loss rate
has also taken into consideration the ageing profile of the
debtors, however in the current environment as a result of
Covid-19, the Directors have applied more weight to the risk
rating when determining the ECL provision.
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Key audit matter
How our audit addressed the key audit matter
Recoverability of tenant debtors and incentives (Group)
(continued)
The same key assumptions are applied in the ECL model
for tenant incentives, without the consideration of the ageing
profile which is not relevant for tenant incentive balances.
On the basis that the estimation of an ECL provision against
the tenant debtors and incentives balances has been highly
subjective and contains significant estimation uncertainty,
we have identified this as a key audit matter.
Covid-19 (Group and Company)
Refer to the Strategic Report – Principal risks and
uncertainties and the Viability statement, the Report of the
Audit Committee and the Notes to the financial statements
– Note 1 (Basis of preparation, significant accounting policies
and accounting judgements).
The Covid-19 pandemic has continued to impact the
operations of the Group and Company during the reporting
period, reducing both property valuations and net rental
income severely. The extent of the negative impact of the
pandemic on future performance is difficult to predict as
government intervention continues, such as the UK rent
moratorium, and wider structural challenges in the retail
sector remain.
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 and Company’s going concern
and viability analysis.
There are three key areas most impacted by the increased
estimation uncertainty.
– The valuation of investment and development properties.
– The recoverability of tenant debtors and incentives.
– The going concern forecast of the Group and Company.
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, the
Directors have concluded that preparing the financial
statements on a going concern basis remains appropriate.
The Directors have described their assessment of viability
in the Viability statement in the Annual Report.
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. 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.
Refer to our key audit matter above for details of how we considered
Covid-19 in our procedures in respect of the valuation of investment
and development properties.
Refer to our key audit matter above for details of how we considered
Covid-19 in our procedures in respect of the recoverability of tenant
debtors and incentives.
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. 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.
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 undrawn loan facilities and cash
of £1.8 billion.
We considered whether changes to working practices brought
about by Covid-19 had 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.
Our conclusions relating to going concern and other information are
set out in the ‘Conclusions relating to going concern’ and ‘Reporting
on other information’ sections of our report, respectively, below.
We have no issues to report in respect of this work.
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INDEPENDENT AUDITORS REPORT continued
Key audit matter
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 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.
We have no issues to report in respect of this work.
We obtained the Directors’ impairment assessment for the
recoverability of investments and loans held in subsidiaries and
joint ventures as at 31 March 2021.
We assessed the accounting policy for investments and loans in
subsidiaries and joint ventures to ensure they were compliant with
FRS 101 “Reduced Disclosure Framework”. We verified that the
methodology used by the Directors in arriving at the carrying value
of each subsidiary, and the expected credit loss ‘simplified approach’
provision for intercompany receivables, was compliant with FRS 101.
We identified the key judgement within the requirement for impairment
of both the investments and loans to subsidiaries and investments in
joint ventures to be the underlying valuation of investment property
held by the subsidiaries and joint ventures. For details of our
procedures over investment property valuations please refer
to the related Group key audit matter above.
We have no issues to report in respect of this work.
Taxation (Group)
Refer to the Report of the Audit Committee, the Notes to
the financial statements – Note 1 (Basis of preparation,
significant accounting policies and accounting judgements)
and Note 7 (Taxation).
The UK Real Estate Investment Trust (REIT) regime grants
companies tax-exempt status provided they meet the rules
within the regime. The rules are complex, and the tax-
exempt status has a significant impact on the financial
statements. The complexity of the rules creates a risk of
an inadvertent breach and the Group’s profit becoming
subject to tax.
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.
Following the temporary suspension of dividends relating to
2020, there was a shortfall in the required Property Income
Dividend (‘PID’) for the year ending 31 March 2020. The PID
underpayment is expected to be £149 million and HMRC
have confirmed that the underpayment can be remedied
by payment of corporation tax of £28 million and the Group
would remain compliant with the REIT regime requirements.
The £28 million of corporation tax was paid to HMRC in
February 2021.
Tax provisions are in place to account for the risk of
challenge of certain of the Group’s tax positions. Given
the subjective nature of these provisions, additional audit
focus was placed on tax provisions.
Valuation of investments and loans to subsidiaries and
joint ventures (Company)
Refer to the Notes to the financial statements –
Note A (Significant judgements and sources of estimation
uncertainty) and D (Investments in subsidiaries and joint
ventures, loans to subsidiaries and other investments).
The Company has investments and loans to subsidiaries
of £33,142 million (2020: £34,800 million) and investments
in joint ventures of £106 million (2020: £404 million) as
at 31 March 2021. This is following the recognition of
a £34 million (2020: £nil) provision for impairment on
investments in subsidiaries, an expected credit loss
impairment of £756 million (2020: £935 million) recognised
on loans to subsidiaries, and a £333 million (2020: £nil)
provision for impairment on investments in joint
ventures in the year.
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Key audit matter
How our audit addressed the key audit matter
Valuation of investments and loans to subsidiaries and
joint ventures (Company) (continued)
The Company’s accounting policy for investments and loans
is to hold them at cost less any impairment. Impairment of
the loans is calculated in accordance with IFRS 9, where
expected credit losses are considered to be the excess of
the Company’s interest in a subsidiary or joint venture over
the subsidiary or joint venture’s fair value. Investments in
subsidiaries and joint ventures are assessed for impairment
in line with IAS 36.
Given the inherent judgement and complexity in assessing
both the carrying value of a subsidiary or joint venture
company, and the expected credit loss of intercompany
receivables, this was identified as a key audit matter.
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.
The Group’s properties are spread across a number of subsidiaries with the Group financial statements being a consolidation of
these entities in addition to the properties held by the Group’s joint ventures. All of the work was carried out by the Group audit
team to ensure sufficient coverage and appropriate audit evidence for our opinion on the Group financial statements as a whole.
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
£88.8 million (2020: £113.0 million).
£79.9 million (2020: £101.7 million).
How we determined it
1% of total assets.
1% of total assets.
Financial statements – Group
Financial statements – Company
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
investments and loans in subsidiaries and
joint ventures. 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 £14.1 million (2020: £15.9 million) for items within underlying post-tax profit.
For 2021, this equates to 5% of the three year average profit after tax adjusted for capital and other items. The benchmark was
updated on the basis that the measure used to calculate specific materiality has fluctuated over the last three years. For 2020,
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 post-tax profit is a secondary financial indicator of the Group (Refer to Note 2 of the financial statements
where the term is defined in full).
We use performance materiality to reduce to an appropriately low level the probability that the aggregate of uncorrected and
undetected misstatements exceeds overall materiality. Specifically, we use performance materiality in determining the scope
of our audit and the nature and extent of our testing of account balances, classes of transactions and disclosures, for example
in determining sample sizes. Our performance materiality was 75% of overall materiality, amounting to £66.6 million for the
Group financial statements and £59.9 million for the Company financial statements.
British Land Annual Report and Accounts 2021
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INDEPENDENT AUDITORS REPORT continued
In determining the performance materiality, we considered a number of factors – the history of misstatements, risk assessment
and aggregation risk and the effectiveness of controls – and concluded that an amount at the upper end of our normal range
was appropriate.
We agreed with the Audit Committee that we would report to them misstatements identified during our audit above £4.4 million
(Group audit) (2020: £5.6 million) and £4.0 million (Company audit) (2020: £5.0 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 that we would report to them misstatements identified during our Group audit
above £1.0 million (2020: £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.
Conclusions relating to going concern
Our evaluation of the directors’ assessment of the Group’s and the Company’s ability to continue to adopt the going concern basis
of accounting included:
– Corroborated key assumptions (eg liquidity forecasts and financing arrangements) to underlying documentation and ensured
this was consistent with our audit work in these areas;
– Considered management’s forecasting accuracy by comparing how the forecasts made at the half year compare to the actual
performance in the second half of the year;
– Understood and assessed the appropriateness of the key assumptions used both in the base case and in the severe but
plausible downside scenario, including assessing whether we considered the downside sensitivities to be appropriately severe;
– Tested the integrity of the underlying formulas and calculations within the going concern and cash flow models;
– Considered the appropriateness of the mitigating actions available to management in the event of the downside scenario
materialising. Specifically, we focused on whether these actions are within the Group’s control and are achievable; and
– Reviewed the disclosures provided relating to the going concern basis of preparation and found that these provided an
explanation of the directors’ assessment that was consistent with the evidence we obtained.
Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that,
individually or collectively, may cast significant doubt on the Group’s and the Company’s ability to continue as a going concern
for a period of at least twelve months from when the financial statements are authorised for issue.
In auditing the financial statements, we have concluded that the directors’ use of the going concern basis of accounting in the
preparation of the financial statements is appropriate.
However, because not all future events or conditions can be predicted, this conclusion is not a guarantee as to the Group’s and
the Company’s ability to continue as a going concern.
In relation to the directors’ reporting on how they have applied the UK Corporate Governance Code, we have nothing material to
add or draw attention to in relation to the directors’ statement in the financial statements about whether the directors considered
it appropriate to adopt the going concern basis of accounting.
Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant sections
of this 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.
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With respect to the Strategic Report and Directors’ Report and additional disclosures, we also considered whether the disclosures
required by the UK Companies Act 2006 have been included.
Based on our work undertaken in the course of the audit, the Companies Act 2006 requires us also to report certain opinions and
matters as described below.
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 2021 is consistent with the financial statements and
has been prepared in accordance with applicable legal requirements.
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.
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.
Corporate governance statement
The Listing Rules require us to review the directors’ statements in relation to going concern, longer-term viability and that part of
the corporate governance statement relating to the Company’s compliance with the provisions of the UK Corporate Governance
Code specified for our review. Our additional responsibilities with respect to the corporate governance statement as other
information are described in the Reporting on other information section of this report.
Based on the work undertaken as part of our audit, we have concluded that each of the following elements of the corporate
governance statement, included within the 2021 Corporate Governance Report is materially consistent with the financial
statements and our knowledge obtained during the audit, and we have nothing material to add or draw attention to in relation to:
– The directors’ confirmation that they have carried out a robust assessment of the emerging and principal risks;
– The disclosures in the Annual Report that describe those principal risks, what procedures are in place to identify emerging
risks and an explanation of how these are being managed or mitigated;
– The directors’ statement in the financial statements about whether they considered it appropriate to adopt the going concern
basis of accounting in preparing them, and their identification of any material uncertainties to the Group’s and Company’s
ability to continue to do so over a period of at least twelve months from the date of approval of the financial statements;
– The directors’ explanation as to their assessment of the Group’s and Company’s prospects, the period this assessment
covers and why the period is appropriate; and
– The directors’ statement as to whether they have a reasonable expectation that the Company will be able to continue in
operation and meet its liabilities as they fall due over the period of its assessment, including any related disclosures drawing
attention to any necessary qualifications or assumptions.
Our review of the directors’ statement regarding the longer-term viability of the Group was substantially less in scope than an
audit and only consisted of making inquiries and considering the directors’ process supporting their statement; checking that
the statement is in alignment with the relevant provisions of the UK Corporate Governance Code; and considering whether the
statement is consistent with the financial statements and our knowledge and understanding of the Group and Company and their
environment obtained in the course of the audit.
In addition, based on the work undertaken as part of our audit, we have concluded that each of the following elements of the
corporate governance statement is materially consistent with the financial statements and our knowledge obtained during
the audit:
– The directors’ statement that they consider the Annual Report, taken as a whole, is fair, balanced and understandable, and
provides the information necessary for the members to assess the Group’s and Company’s position, performance, business
model and strategy;
– The section of the Annual Report that describes the review of effectiveness of risk management and internal control
systems; and
– The section of the Annual Report describing the work of the Audit Committee.
We have nothing to report in respect of our responsibility to report when 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.
British Land Annual Report and Accounts 2021
157
INDEPENDENT AUDITORS REPORT 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, 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.
Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our
responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud. The extent to which
our procedures are capable of detecting irregularities, including fraud, is detailed below.
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 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. We also considered those laws and regulations
that have a direct impact on the financial statements such as the Companies Act 2006. 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, management bias
in accounting estimates and judgemental areas of the financial statements such as the valuation of investment and development
properties and the expected credit loss provisions in respect of tenant debtors and incentives (see related key audit matters
above). Audit procedures performed by the 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;
– 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;
– Challenging assumptions and judgements made by management in their significant areas of estimation; 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. We are less likely to become aware of instances of
non-compliance with laws and regulations that are not closely related to events and transactions reflected in the financial
statements. 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.
Our audit testing might include testing complete populations of certain transactions and balances, possibly using data
auditing techniques. However, it typically involves selecting a limited number of items for testing, rather than testing complete
populations. We will often seek to target particular items for testing based on their size or risk characteristics. In other cases,
we will use audit sampling to enable us to draw a conclusion about the population from which the sample is selected.
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.
158
British Land Annual Report and Accounts 2021
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 obtained 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
7 years, covering the years ended 31 March 2015 to 31 March 2021.
Sandra Dowling (Senior Statutory Auditor)
for and on behalf of PricewaterhouseCoopers LLP
Chartered Accountants and Statutory Auditors
London
25 May 2021
British Land Annual Report and Accounts 2021
159
FINANCIAL STATEMENTS
Consolidated income sheet
For the year ended 31 March 2021
Revenue
Costs2
Joint ventures and funds (see also below)3
Administrative expenses
Valuation movement
Profit on disposal of investment properties and investments
Net financing costs
financing income
financing charges
Profit (loss) on ordinary activities before taxation
Taxation
Profit (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
Loss on disposal of investment properties,
trading properties and investments
Taxation
2021
Capital
and other
£m
–
–
–
(409)
–
(888)
28
15
(3)
12
(1,257)
(4)
(1,261)
(55)
(1,206)
Underlying1
£m
468
(180)
288
52
(74)
–
–
–
(62)
(62)
204
(26)
178
3
175
Note
3
3
3
11
4
6
6
7
2
2
2020
Capital
and other
£m
87
(70)
17
(306)
–
(1,105)
1
–
(41)
(41)
(1,434)
2
(1,432)
(99)
(1,333)
Total
£m
468
(180)
288
(357)
(74)
(888)
28
Underlying1
£m
526
(148)
378
79
(73)
–
–
1
(67)
(66)
318
–
318
12
306
15
(65)
(50)
(1,053)
(30)
(1,083)
(52)
(1,031)
(111.2)p
(111.2)p
Note
Underlying1
£m
2021
Capital
and other
£m
Total
£m
Underlying1
£m
2020
Capital
and other
£m
4
7
11
52
–
–
–
–
52
–
(409)
–
(1)
1
(409)
52
(409)
–
(1)
1
(357)
79
–
–
–
–
79
–
(284)
(22)
–
–
(306)
Total
£m
613
(218)
395
(227)
(73)
(1,105)
1
1
(108)
(107)
(1,116)
2
(1,114)
(87)
(1,027)
(110.0)p
(110.0)p
Total
£m
79
(284)
(22)
–
–
(227)
1. See definition in Note 2 and a reconciliation between Underlying Profit and IFRS profit in Note 21.
2. Included within ‘Costs’ is a charge relating to provision for impairment of tenant debtors, accrued income and tenant incentives of £60m (2019/2020: £24m), disclosed in further
detail in Note 10 and Note 13.
3. Included within ‘Joint ventures and funds’ is a charge relating to provision for impairment of loans to joint ventures of £144m (2019/20: £nil), disclosed in further detail in Note 11.
160
160
British Land Annual Report and Accounts 2021
British Land Annual Report and Accounts 2021
FINANCIAL STATEMENTS
Consolidated income sheet
For the year ended 31 March 2021
Revenue
Costs2
Administrative expenses
Valuation movement
Net financing costs
financing income
financing charges
Joint ventures and funds (see also below)3
11
Profit on disposal of investment properties and investments
Profit (loss) on ordinary activities before taxation
Taxation
Profit (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
Loss on disposal of investment properties,
trading properties and investments
Taxation
Underlying1
Note
2021
Capital
and other
£m
Underlying1
£m
468
(180)
288
52
(74)
–
–
–
(62)
(62)
204
(26)
178
3
175
–
–
–
–
(409)
(888)
28
15
(3)
12
(4)
(55)
2021
Capital
and other
£m
(409)
–
–
(1)
1
52
–
–
–
–
Total
£m
468
(180)
288
(357)
(74)
(888)
28
15
(65)
(50)
(30)
(52)
52
(409)
–
(1)
1
(1,257)
(1,053)
(1,261)
(1,083)
(1,206)
(1,031)
(111.2)p
(111.2)p
3
3
3
4
6
6
7
2
2
4
7
11
£m
526
(148)
378
79
(73)
–
–
1
(67)
(66)
318
–
318
12
306
2020
Capital
and other
£m
87
(70)
17
(306)
–
1
–
2
(1,105)
(1,105)
(41)
(41)
(108)
(107)
(1,434)
(1,116)
(1,432)
(99)
(1,333)
(1,114)
(87)
(1,027)
(110.0)p
(110.0)p
Total
£m
613
(218)
395
(227)
(73)
1
1
2
Total
£m
79
(284)
(22)
–
–
2020
Capital
and other
£m
(284)
(22)
–
–
–
79
–
–
–
–
Note
Underlying1
£m
Total
£m
Underlying1
£m
1. See definition in Note 2 and a reconciliation between Underlying Profit and IFRS profit in Note 21.
2. Included within ‘Costs’ is a charge relating to provision for impairment of tenant debtors, accrued income and tenant incentives of £60m (2019/2020: £24m), disclosed in further
detail in Note 10 and Note 13.
3. Included within ‘Joint ventures and funds’ is a charge relating to provision for impairment of loans to joint ventures of £144m (2019/20: £nil), disclosed in further detail in Note 11.
52
(409)
(357)
79
(306)
(227)
Consolidated statement of comprehensive income
For the year ended 31 March 2021
Loss for the year after taxation
Other comprehensive income:
Items that will not be reclassified subsequently to profit or loss:
Net actuarial loss on pension scheme
Valuation movement 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
Deferred tax on items of other comprehensive income
Other comprehensive (loss) income for the year
Total comprehensive loss for the year
Attributable to non-controlling interests
Attributable to shareholders of the Company
2021
£m
(1,083)
2020
£m
(1,114)
(13)
(1)
(14)
2
1
3
6
–
1
1
2
(1)
1
–
(5)
(1,088)
(52)
(1,036)
2
(1,112)
(86)
(1,026)
160
British Land Annual Report and Accounts 2021
British Land Annual Report and Accounts 2021
British Land Annual Report and Accounts 2021
161
161
FINANCIAL STATEMENTS continued
Consolidated balance sheet
As at 31 March 2021
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
Interest rate and currency derivative assets
Debtors
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 NTA per share1
1. As defined in Note 2.
Note
2021
£m
2020
£m
10
10
11
12
17
10
13
17
17
14
17
15
16
17
6,326
2
6,328
2,120
20
30
135
6
8,639
26
56
154
236
8,875
(161)
(219)
(7)
(387)
(2,249)
(128)
–
(128)
(2,505)
(2,892)
5,983
234
1,307
213
16
4,154
5,924
59
5,983
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
2
648p
773p
Tim Score
Chairman
David Walker
Interim Chief Financial Officer
The financial statements on pages 160 to 210 were approved by the Board of Directors and signed on its behalf on 25 May 2021.
Company number 621920
162
162
British Land Annual Report and Accounts 2021
British Land Annual Report and Accounts 2021
FINANCIAL STATEMENTS continued
Consolidated balance sheet
As at 31 March 2021
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
Interest rate and currency derivative assets
Cash and short term deposits
Debtors
Current assets
Trading properties
Debtors
Total assets
LIABILITIES
Current liabilities
Creditors
Corporation tax
Short term borrowings and overdrafts
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
EPRA NTA per share1
1. As defined in Note 2.
Equity attributable to shareholders of the Company
Non-controlling interests
Total equity
Note
2021
£m
2020
£m
10
10
11
12
17
10
13
17
17
14
17
15
16
17
8,639
10,976
8,875
11,245
6,326
2
6,328
2,120
20
30
135
6
26
56
154
236
(161)
(219)
(7)
(387)
(2,249)
(128)
–
(128)
(2,505)
(2,892)
5,983
234
1,307
213
16
4,154
5,924
59
5,983
8,188
68
8,256
2,358
125
231
6
–
20
56
193
269
(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
2
648p
773p
Consolidated statement of cash flows
For the year ended 31 March 2021
Rental income received from tenants
Fees and other income received
Operating expenses paid to suppliers and employees
Indirect taxes (paid) received in respect of operating activities
Sale of trading properties
Cash generated from operations
Interest paid
Interest received
Corporation taxation payments
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 (paid) received in respect of investing activities
Loan repayments from joint ventures and funds
Investment in and loans to joint ventures and funds
Capital distributions from joint ventures and funds
Net cash inflow (outflow) 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 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
Note
11
19
2021
£m
320
38
(125)
(15)
–
218
(70)
–
(33)
34
149
(172)
(52)
1,073
–
–
(5)
108
(2)
40
(84)
4
910
–
–
(76)
(1)
(10)
(7)
(1,218)
214
(1,098)
(39)
193
154
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
17
154
193
Tim Score
Chairman
David Walker
Interim Chief Financial Officer
The financial statements on pages 160 to 210 were approved by the Board of Directors and signed on its behalf on 25 May 2021.
Company number 621920
162
British Land Annual Report and Accounts 2021
British Land Annual Report and Accounts 2021
British Land Annual Report and Accounts 2021
163
163
FINANCIAL STATEMENTS continued
Consolidated statement of changes in equity
For the year ended 31 March 2021
Balance at 1 April 2020
Loss for the year after taxation
Revaluation of owner-occupied property
Gains on cash flow hedges – Group
Gains on cash flow hedges – joint ventures
Reserves transfer on disposal of owner-occupied property
Net actuarial loss on pension scheme
Deferred tax on items of other comprehensive income
Other comprehensive income
Total comprehensive income for the year
Fair value of share and share option awards
Dividends payable in year (8.40p per share)
Dividends payable by subsidiaries
Balance at 31 March 2021
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
Share
capital
£m
234
–
–
–
–
–
–
–
–
–
–
–
–
234
240
–
–
–
–
–
–
–
–
–
(6)
–
–
234
Share
premium
£m
1,307
–
–
–
–
–
–
–
–
–
–
–
–
1,307
1,302
–
–
–
–
–
–
–
5
–
–
–
–
1,307
Hedging
and
translation
reserve1
£m
12
–
–
2
–
–
–
–
2
2
–
–
–
14
Re-
valuation
reserve
£m
26
–
(1)
–
1
(30)
–
6
(24)
(24)
–
–
–
2
11
–
–
1
–
–
1
1
–
–
–
–
–
12
26
–
1
–
(1)
–
–
–
–
–
–
–
–
26
Merger
reserve
£m
213
–
–
–
–
–
–
–
–
–
–
–
–
213
213
–
–
–
–
–
–
–
–
–
–
–
–
213
Retained
earnings
£m
5,243
(1,031)
–
–
–
30
(13)
–
17
(1,014)
3
(78)
–
4,154
6,686
(1,027)
–
–
–
–
–
(1,027)
–
(2)
(119)
(295)
–
5,243
Non-
controlling
interests
£m
112
(52)
–
–
–
–
–
–
–
(52)
–
–
(1)
59
Total
£m
7,035
(1,031)
(1)
2
1
–
(13)
6
(5)
(1,036)
3
(78)
–
5,924
8,478
(1,027)
1
1
(1)
–
1
(1,026)
5
(2)
(125)
(295)
–
7,035
211
(87)
–
1
–
–
1
(86)
–
–
–
–
(13)
112
Total
equity
£m
7,147
(1,083)
(1)
2
1
–
(13)
6
(5)
(1,088)
3
(78)
(1)
5,983
8,689
(1,114)
1
2
(1)
–
2
(1,112)
5
(2)
(125)
(295)
(13)
7,147
1. The balance at the beginning of the current year includes £15m in relation to translation and (£3m) in relation to hedging (2019/20: £15m and (£4m)). Opening and closing
balances in relation to hedging relate to continuing hedges only.
164
164
British Land Annual Report and Accounts 2021
British Land Annual Report and Accounts 2021
FINANCIAL STATEMENTS continued
Consolidated statement of changes in equity
For the year ended 31 March 2021
Hedging
and
Re-
valuation
reserve
Share
capital
Share
translation
premium
reserve1
£m
234
£m
1,307
£m
12
Retained
earnings
£m
Merger
reserve
£m
213
5,243
7,035
Non-
controlling
Total
interests
£m
£m
112
Total
equity
£m
7,147
(1,031)
(1,031)
(52)
(1,083)
Balance at 1 April 2020
Loss for the year after taxation
Revaluation of owner-occupied property
Gains on cash flow hedges – Group
Gains on cash flow hedges – joint ventures
Reserves transfer on disposal of owner-occupied property
Net actuarial loss on pension scheme
Deferred tax on items of other comprehensive income
Other comprehensive income
Total comprehensive income for the year
Fair value of share and share option awards
Dividends payable in year (8.40p per share)
Dividends payable by subsidiaries
Balance at 31 March 2021
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
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
Deferred tax on items of other comprehensive income
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
(6)
£m
26
(1)
(30)
(24)
(24)
–
–
1
–
6
–
–
–
2
–
1
–
–
–
–
–
–
–
–
–
(1)
14
11
–
–
2
–
–
–
–
2
2
–
–
–
–
–
–
1
–
1
1
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
5
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
30
(13)
–
17
3
–
–
–
–
–
–
–
(2)
(119)
(295)
–
(1)
2
1
–
(13)
6
(5)
3
–
(1)
1
1
–
1
5
(2)
(125)
(295)
–
(1)
2
1
–
6
3
(13)
(5)
(1)
1
2
–
2
5
(2)
–
–
–
–
–
–
–
–
–
–
1
–
–
1
–
–
–
–
(1,027)
(1,026)
(86)
(1,112)
(125)
(295)
(13)
7,147
(13)
112
234
1,307
213
4,154
5,924
240
1,302
26
213
6,686
8,478
(1,027)
(1,027)
(1,014)
(1,036)
(52)
(1,088)
(78)
(78)
(78)
(1)
5,983
(1)
59
211
(87)
8,689
(1,114)
1. The balance at the beginning of the current year includes £15m in relation to translation and (£3m) in relation to hedging (2019/20: £15m and (£4m)). Opening and closing
balances in relation to hedging relate to continuing hedges only.
234
1,307
12
26
213
5,243
7,035
Notes to the accounts
1 Basis of preparation, significant accounting policies and
accounting judgements
The financial statements for the year ended 31 March 2021
have been prepared on the historical cost basis, except for the
revaluation of properties, investments classified as fair value
through profit or loss and derivatives. The financial statements
are prepared in accordance with international accounting
standards in conformity with the requirements of the Companies
Act 2006 (‘IFRS’) and the applicable legal requirements of the
Companies Act 2006. In addition to complying with international
accounting standards in conformity with requirements of the
Companies Act 2006, the consolidated financial statements also
comply with international financial reporting standards adopted
pursuant to Regulation (EC) No 1606/2002 as it applies in the
European Union.
On 31 December 2020 EU-adopted IFRS was brought into UK law
and became UK-adopted international accounting standards, with
future changes to IFRS being subject to endorsement by the UK
Endorsement Board. The consolidated financial statements will
transition to UK-adopted international accounting standards for
financial periods beginning 1 April 2021.
In the current financial year the Group has adopted a number of
minor amendments to standards effective in the year issued by
the IASB, none of which have had a material impact on the Group.
These amendments include IAS 1 and IAS 8 (amended) – Definition
of Material, IFRS 3 (amended) – Definition of a Business, IFRS 9
(amended) – criteria for hedge accounting on transition from
LIBOR to IBOR and IFRS 16 (amended).
A number of new standards and amendments to standards
and interpretations have been issued but are not yet effective
for the current accounting period. These amendments include
amendments to IFRS 16, ‘Leases’ – Covid-19 related rent
concessions, amendments to IFRS 7, IFRS 4 and IFRS 16 Interest
Rate Benchmark Reform – Phase 2, amendments to IAS 1,
Presentation of financial statements’ on classification of liabilities,
a number of narrow-scope amendments to IFRS 3, IAS 16, IAS 17
and some annual improvements on IFRS 1, IFRS 9, IAS 41 and
IFRS 16 and narrow scope amendments to IAS 1, Practice
statement 2 and IAS 8. The above amendments are not
expected to have a significant impact on the Group’s results.
Going concern
The financial statements are prepared on a going concern basis.
Whilst the balance sheet shows that the Group is in a net current
liability position, predominantly as a result of the $220m of Senior
US Dollar Loan Notes that are reaching maturity within the next
12 months, the Group has access to £1.8bn of undrawn facilities
and cash, which provides the Directors with a reasonable
expectation that the Group will be able to meet these current
liabilities as they fall due. In making this assessment the
Directors took into account forecast cash flows and covenant
compliance, including stress testing through the impact of
sensitivities as part of a ‘severe downside scenario’. Before
factoring in any income receivable, the undrawn facilities
and cash would also be sufficient to cover forecast capital
expenditure, property operating costs, administrative expenses,
maturing debt and interest over the next 12 months from the
approval date of these financial statements.
Having assessed the Principal risks, the Directors believe that the
Group is well placed to manage its financing and other business
risks satisfactorily despite the uncertain economic climate, and
have a reasonable expectation that the Company and the Group
have adequate resources to continue in operation for at least
12 months from the signing date of these financial statements.
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 100.
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 negative goodwill 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. Where joint ventures and associates, including funds
generate losses after tax, these are recognised initially against
the Group’s equity investment. If the Group’s equity investment
is nil, these are subsequently then recognised against other
long term interests, principally long-term loans.
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.
164
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British Land Annual Report and Accounts 2021
British Land Annual Report and Accounts 2021
165
165
FINANCIAL STATEMENTS continued
Notes to the accounts continued
1 Basis of preparation, significant accounting policies and
accounting judgements continued
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. On disposal of owner-occupied property,
any surplus is transferred directly to retained earnings.
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 the lower of cost and
net realisable value. Trading property disposals are recognised in
line with the Group’s revenue accounting policies.
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. Lease
incentives, such as rent-free periods and cash contributions to
tenant fit-out, and guaranteed rent increases are recognised as
part of the investment property balance. The Group calculates
the expected credit loss for lease incentives and guaranteed
rent increases based on lifetime expected credit losses under the
IFRS 9 simplified approach.
166
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British Land Annual Report and Accounts 2021
British Land Annual Report and Accounts 2021
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 classified as fair value
through profit or loss is recognised in the capital and other column
of the income statement.
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 maturity,
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.
FINANCIAL STATEMENTS continued
Notes to the accounts continued
1 Basis of preparation, significant accounting policies and
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 classified as fair value
through profit or loss is recognised in the capital and other column
of the income statement.
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 maturity,
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
accounting judgements continued
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. On disposal of owner-occupied property,
any surplus is transferred directly to retained earnings.
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 the lower of cost and
net realisable value. Trading property disposals are recognised in
line with the Group’s revenue accounting policies.
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. Lease
incentives, such as rent-free periods and cash contributions to
part of the investment property balance. The Group calculates
the expected credit loss for lease incentives and guaranteed
rent increases based on lifetime expected credit losses under the
IFRS 9 simplified approach.
166
British Land Annual Report and Accounts 2021
tenant fit-out, and guaranteed rent increases are recognised as
balance sheet.
1 Basis of preparation, significant accounting policies and
accounting judgements continued
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.
For leases where a single payment is received to cover both rent
and service charge, the service charge component is separated
out and reported as service charge income.
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.
Lease modifications are defined as a change in the scope of
a lease, or the consideration of a lease, that was not part of
the original terms and conditions of the lease. Modifications to
operating leases the Group holds as a lessor are accounted for
from the effective date of the modification. Modifications take into
account any prepaid or accrued lease payments relating to the
original lease as part of the lease payments for the new lease.
The revised remaining consideration under the modified lease is
then recognised in rental income on a straight-line basis over
the remaining lease term.
Concessions granted to tenants where rent has been reduced
or waived for a specified period are accounted for as lease
modifications. Concessions granted to tenants which allow the
deferral of rent payments to the Group are not accounted for
as lease modifications on the basis there is no change to the
consideration or scope of the lease.
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 predominantly to the provision of
asset management, property management, development
management and administration services to joint ventures
and funds. 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.
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.
British Land Annual Report and Accounts 2021
British Land Annual Report and Accounts 2021
167
167
FINANCIAL STATEMENTS continued
Notes to the accounts continued
1 Basis of preparation, significant accounting policies and
accounting judgements continued
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.
The general risk environment in which the Group operates
remained heightened during the period, which is largely due to
the continued level of uncertainty associated with the impact of
Covid-19, the significant deterioration in the UK retail market and
relatively weak investment markets.
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.
Impairment provisioning of lease debtors (including accrued
income) and lease incentives, which are presented within
investment properties, are now considered to be an area of
significant estimation. The impact of Covid-19 has given rise to
an increase in lease debtors due from tenants along with higher
loss rates. Consequently the impairment provisions, calculated
using the expected credit loss model under IFRS 9 against
these balances, are higher than in previous periods.
The key assumptions within the expected credit loss model
include the tenants’ credit risk rating and the related loss rates
assumed for each risk rating depending on the ageing profile. In
the current environment as a result of Covid-19, more weighting
is given to risk rating when determining expected credit losses.
Tenant risk ratings are determined by management, taking into
consideration information available surrounding a tenant’s credit
rating, financial position and historical loss rates. Consideration
is also given for the current impact of Covid-19 and its potential
impact over the next 12 months on their business along with
industry trends. Tenants are classified as being in Administration
or CVA, high, medium or low risk based on this information. The
assigned loss rates for these risk categories are reviewed at each
balance sheet date. The same key assumptions are applied in
the expected credit loss model for tenant incentives, without the
consideration of the ageing profile which is not relevant for these
balances. The loss rates attributed to each credit risk rating for
tenant incentives is lower than that attributed to lease debtors on
the basis that the associated credit risk on these balances, which
relate to the tenant’s future lease liabilities, is lower than that
168
168
British Land Annual Report and Accounts 2021
British Land Annual Report and Accounts 2021
associated to current tenant debtors outstanding as a result
of Covid-19.
As provisioning is a new area of significant estimation in the
current year several additional tables, including sensitivity
disclosures, have been provided relating to lease debtors in
Note 13 and lease incentives in Note 10.
Other less significant areas of estimation include the valuation
of interest rate derivatives, the determination of share-based
payment expense, the actuarial assumptions used in calculating
the Group’s retirement benefit obligations 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.
FINANCIAL STATEMENTS continued
Notes to the accounts continued
1 Basis of preparation, significant accounting policies and
associated to current tenant debtors outstanding as a result
accounting judgements continued
of Covid-19.
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.
The general risk environment in which the Group operates
remained heightened during the period, which is largely due to
the continued level of uncertainty associated with the impact of
Covid-19, the significant deterioration in the UK retail market and
relatively weak investment markets.
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.
Impairment provisioning of lease debtors (including accrued
income) and lease incentives, which are presented within
investment properties, are now considered to be an area of
significant estimation. The impact of Covid-19 has given rise to
an increase in lease debtors due from tenants along with higher
loss rates. Consequently the impairment provisions, calculated
using the expected credit loss model under IFRS 9 against
these balances, are higher than in previous periods.
The key assumptions within the expected credit loss model
include the tenants’ credit risk rating and the related loss rates
assumed for each risk rating depending on the ageing profile. In
the current environment as a result of Covid-19, more weighting
is given to risk rating when determining expected credit losses.
Tenant risk ratings are determined by management, taking into
consideration information available surrounding a tenant’s credit
rating, financial position and historical loss rates. Consideration
is also given for the current impact of Covid-19 and its potential
impact over the next 12 months on their business along with
industry trends. Tenants are classified as being in Administration
or CVA, high, medium or low risk based on this information. The
assigned loss rates for these risk categories are reviewed at each
balance sheet date. The same key assumptions are applied in
the expected credit loss model for tenant incentives, without the
consideration of the ageing profile which is not relevant for these
balances. The loss rates attributed to each credit risk rating for
tenant incentives is lower than that attributed to lease debtors on
the basis that the associated credit risk on these balances, which
relate to the tenant’s future lease liabilities, is lower than that
As provisioning is a new area of significant estimation in the
current year several additional tables, including sensitivity
disclosures, have been provided relating to lease debtors in
Note 13 and lease incentives in Note 10.
Other less significant areas of estimation include the valuation
of interest rate derivatives, the determination of share-based
payment expense, the actuarial assumptions used in calculating
the Group’s retirement benefit obligations 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.
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.
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
2021
Relevant
number
of shares
million
927
930
927
930
927
927
Relevant
earnings
£m
175
175
175
175
(1,031)
(1,031)
Earnings
per share
pence
Relevant
earnings
£m
18.9
18.8
18.9
18.8
306
306
306
306
(111.2)
(111.2)
(1,027)
(1,027)
2020
Relevant
number
of shares
million
Earnings
per share
pence
934
937
934
937
934
934
32.8
32.7
32.8
32.7
(110.0)
(110.0)
Net asset value
The Group adopted the EPRA issued new best practice guidelines in the year ending 31 March 2021, incorporating three new measures of
net asset value: EPRA Net Tangible Assets (NTA), Net Reinvestment Value (NRV) and Net Disposal Value (NDV). EPRA NTA is considered
to be the most relevant measure for the Group and is now the primary measure of net assets, replacing the previously reported EPRA
Net Asset Value metric. The total accounting return is now calculated based on EPRA NTA. Further detail on the adopted metrics is
included within the supplementary disclosures (Table B).
The net assets and number of shares for each performance measure are shown below. A reconciliation between IFRS net assets
and the three EPRA net asset valuation metrics, and the relevant number of shares for each performance measure, are shown within
the supplementary disclosures (Table B). EPRA NTA is a measure that is based on IFRS net assets excluding the mark-to-market on
derivatives and related debt adjustments, the carrying value of intangibles and deferred taxation on property and derivative valuations.
The metric includes the valuation surplus on trading properties and is adjusted for the dilutive impact of share options.
Net asset value per share
EPRA
EPRA NTA
EPRA NRV
EPRA NDV
IFRS
Basic
Diluted
2021
Relevant
number
of shares
million
Net asset
value per
share
pence
Relevant
net assets
£m
2020
Relevant
number of
shares
million
Net asset
value per
share
pence
933
933
933
927
933
648
707
609
645
641
7,202
7,872
6,762
7,147
7,147
932
932
932
927
932
773
845
726
771
767
Relevant
net assets
£m
6,050
6,599
5,678
5,983
5,983
168
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British Land Annual Report and Accounts 2021
169
169
FINANCIAL STATEMENTS continued
Notes to the accounts continued
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 Tangible Assets per share and dividend paid in the year as a percentage of the EPRA Net Tangible Assets per share at the start of
the year.
Total accounting return
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
Provision for impairment of trade debtors and accrued income
Provision for impairment of tenant incentives and guaranteed
rent increases
Other fees and commissions expenses
Costs
2021
2020
Decrease in
NTA per share
pence
(125)
Dividend per
share paid
pence
8.40
Total
accounting
return
(15.1%)
Decrease in
NTA per share
pence
(131)
Dividend per
share paid
pence
31.47
Total
accounting
return
(11.0%)
2021
Capital
and other
£m
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
Underlying
£m
370
7
–
377
–
64
7
20
468
–
(59)
(45)
(52)
(8)
(16)
(180)
288
2020
Capital
and other
£m
–
–
–
–
87
–
–
–
87
(70)
–
–
–
–
–
(70)
17
Underlying
£m
431
(3)
5
433
–
64
8
21
526
–
(61)
(46)
(4)
(20)
(17)
(148)
378
Total
£m
370
7
–
377
–
64
7
20
468
–
(59)
(45)
(52)
(8)
(16)
(180)
288
Total
£m
431
(3)
5
433
87
64
8
21
613
(70)
(61)
(46)
(4)
(20)
(17)
(218)
395
The cash element of net rental income (gross rental income less property operating expenses) recognised during the year ended
31 March 2021 from properties which were not subject to a security interest was £202m (2019/20: £316m). Property operating expenses
relating to investment properties that did not generate any rental income were £nil (2019/20: £nil). Contingent rents of £5m (2019/20: £3m)
were recognised in the year.
Further detail on the provision for impairment of trade debtors, accrued income, tenant incentives and guaranteed rent increases is
disclosed in Note 10 and Note 13.
170
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British Land Annual Report and Accounts 2021
British Land Annual Report and Accounts 2021
The Group also measures financial performance with reference to total accounting return. This is calculated as the movement in EPRA
Net Tangible Assets per share and dividend paid in the year as a percentage of the EPRA Net Tangible Assets per share at the start of
FINANCIAL STATEMENTS continued
Notes to the accounts continued
2 Performance measures continued
Total accounting return
the year.
Total accounting return
3 Revenue and costs
Rent receivable
Spreading of tenant incentives and guaranteed rent increases
Management and performance fees (from joint ventures and funds)
Surrender premia
Gross rental income
Trading property sales proceeds
Service charge income
Other fees and commissions
Revenue
Trading property cost of sales
Service charge expenses
Property operating expenses
Provision for impairment of trade debtors and accrued income
Provision for impairment of tenant incentives and guaranteed
Other fees and commissions expenses
rent increases
Costs
2021
2020
Decrease in
Dividend per
Total
Decrease in
Dividend per
Total
NTA per share
share paid
accounting
NTA per share
share paid
accounting
pence
(125)
pence
8.40
return
(15.1%)
pence
(131)
pence
31.47
return
(11.0%)
Underlying
Underlying
2021
Capital
and other
£m
2020
Capital
and other
£m
£m
370
7
–
377
–
64
7
20
468
–
(59)
(45)
(52)
(8)
(16)
(180)
288
Total
£m
370
7
–
377
–
64
7
20
468
–
(59)
(45)
(52)
(8)
(16)
(180)
288
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
£m
431
(3)
5
433
–
64
8
21
526
–
(61)
(46)
(4)
(20)
(17)
(148)
378
Total
£m
431
(3)
5
433
87
64
8
21
613
(70)
(61)
(46)
(4)
(20)
(17)
(218)
395
87
87
(70)
–
–
–
–
–
–
–
–
–
–
–
–
(70)
17
The cash element of net rental income (gross rental income less property operating expenses) recognised during the year ended
31 March 2021 from properties which were not subject to a security interest was £202m (2019/20: £316m). Property operating expenses
relating to investment properties that did not generate any rental income were £nil (2019/20: £nil). Contingent rents of £5m (2019/20: £3m)
were recognised in the year.
disclosed in Note 10 and Note 13.
Further detail on the provision for impairment of trade debtors, accrued income, tenant incentives and guaranteed rent increases is
4 Valuation movements on property
Consolidated income statement
Revaluation of properties
Revaluation of owner-occupied 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
2021
£m
2020
£m
(886)
(2)
(409)
(1,297)
(1)
(1,298)
(1,105)
–
(284)
(1,389)
1
(1,388)
2021
£m
0.5
0.1
0.6
0.2
0.8
–
0.8
2020
£m
0.3
0.4
0.7
0.1
0.8
–
0.8
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British Land Annual Report and Accounts 2021
171
171
FINANCIAL STATEMENTS continued
Notes to the accounts continued
6 Net financing costs
Underlying
Financing charges
Facilities 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 movement on fair value hedge accounted derivatives1
Valuation movement on fair value hedge accounted debt1
Capital financing costs
Fair value movement on convertible bonds
Valuation movement on non-hedge accounted derivatives
Financing income
Valuation movement on non-hedge accounted derivatives
Net financing charges – capital
Net financing costs
Total financing income
Total financing charges
Net financing costs
2021
£m
2020
£m
(22)
31
(74)
(4)
(69)
7
(62)
–
–
(62)
(83)
83
–
(3)
–
(3)
15
15
12
15
(65)
(50)
(25)
30
(76)
(4)
(75)
8
(67)
1
1
(66)
62
(62)
3
(4)
(40)
(41)
–
–
(41)
1
(108)
(107)
1. The difference between valuation movement on designated fair value hedge accounted derivatives (hedging instruments) and the valuation movement on fair value hedge
accounted debt (hedged item) represents hedge ineffectiveness for the period of £nil (2019/20: £nil).
Interest payable on unsecured bank loans and related interest rate derivatives was £11m (2019/20: £9m). Interest on development
expenditure is capitalised at the Group’s weighted average interest rate of 2.2% (2019/20: 1.9%). The weighted average interest rate
on a proportionately consolidated basis at 31 March 2021 was 2.9% (2019/20: 2.5%).
172
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FINANCIAL STATEMENTS continued
Notes to the accounts continued
6 Net financing costs
Underlying
Financing charges
Facilities 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 movement on fair value hedge accounted derivatives1
Valuation movement on fair value hedge accounted debt1
Capital financing costs
Fair value movement on convertible bonds
Valuation movement on non-hedge accounted derivatives
Financing income
Valuation movement on non-hedge accounted derivatives
Net financing charges – capital
Net financing costs
Total financing income
Total financing charges
Net financing costs
1. The difference between valuation movement on designated fair value hedge accounted derivatives (hedging instruments) and the valuation movement on fair value hedge
accounted debt (hedged item) represents hedge ineffectiveness for the period of £nil (2019/20: £nil).
Interest payable on unsecured bank loans and related interest rate derivatives was £11m (2019/20: £9m). Interest on development
expenditure is capitalised at the Group’s weighted average interest rate of 2.2% (2019/20: 1.9%). The weighted average interest rate
on a proportionately consolidated basis at 31 March 2021 was 2.9% (2019/20: 2.5%).
(22)
31
(74)
(4)
(69)
(62)
7
–
–
(62)
(83)
83
–
(3)
–
(3)
15
15
12
15
(65)
(50)
(25)
30
(76)
(4)
(75)
8
(67)
1
1
(66)
62
(62)
3
(4)
(40)
(41)
–
–
(41)
1
(108)
(107)
2021
£m
2020
£m
7 Taxation
Taxation (expense) income
Current taxation
Underlying profit
Current period UK corporation taxation (2020/21: 19%; 2019/20: 19%)
Underlying profit adjustments in respect of prior periods1
Total current underlying profit taxation expense
Capital profit
Current period UK corporation taxation (2020/21: 19%; 2019/20: 19%)
Capital profit adjustments in respect of prior periods
Total current capital profit taxation income
Total current taxation (expense) income
Deferred taxation on revaluations and derivatives
Group total taxation (expense) income
Attributable to joint ventures and funds
Total taxation (expense) income
Taxation reconciliation
Loss on ordinary activities before taxation
Less: loss attributable to joint ventures and funds2
Group loss on ordinary activities before taxation
Taxation on loss on ordinary activities at UK corporation taxation rate of 19% (2019/20: 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 (expense) income
2021
£m
2020
£m
(2)
(24)
(26)
–
1
1
(25)
(5)
(30)
1
(29)
–
–
–
(1)
5
4
4
(2)
2
–
2
(1,053)
358
(695)
132
(134)
–
(5)
(23)
(30)
(1,116)
227
(889)
169
(165)
(5)
(2)
5
2
1. Includes the £28m corporation tax charge in relation to the year ended 31 March 2020, discussed below, offset by other credits in respect of prior periods of £4m relating to tax
provisions in respect of historic taxation matters and points of uncertainty.
2. A current taxation income of £1m (2019/20: £nil) and a deferred taxation credit of £nil (2019/20: £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 2021 was £26m (2019/20: £nil). Taxation income
attributable to Capital and other profit was £1m (2019/20: income of £4m). Corporation taxation payable at 31 March 2021 was £7m
(2019/20: £17m) as shown on the balance sheet.
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 12 months of the end of each accounting period.
Following the temporary suspension of the dividend to best ensure we could effectively support our customers who were hardest hit
and protect the long term value of the business as a result of Covid-19, there was a shortfall in the required distributions for the year
ended 31 March 2020. We agreed with HMRC that we would remain compliant with the REIT regime requirements through payment of
corporation tax at 19% on the underpayment of the PID requirement for the year to 31 March 2020 arising as a consequence of Covid-19.
The taxable PID underpayment is expected to be £149m and the resulting corporation tax thereon of £28m has been paid in the year
ended 31 March 2021.
Following the resumption of the dividend, it is expected that the PID requirement for the year to 31 March 2021 and subsequent years
will be satisfied in full on a timely basis through dividend payments.
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173
173
FINANCIAL STATEMENTS continued
Notes to the accounts continued
8 Staff costs
Staff costs (including Directors)
Wages and salaries
Social security costs
Pension costs
Equity-settled share-based payments
2021
£m
53
7
3
3
66
2020
£m
56
7
6
(3)
66
The average monthly number of employees of the Company during the year was 326 (2019/20: 300). The average monthly number of
Group employees, including those employed directly at the Group’s properties and their costs recharged to tenants, was 634 (2019/20:
672). The average monthly number of employees of the Company within each category of persons employed was as follows: Retail: 27;
Offices: 16; Canada Water: 17; Developments: 39; Storey: 10; Support Functions: 217. The average monthly number of employees of the
Group within each category of persons employed was as follows: Retail: 27; Offices: 16; Canada Water: 17; Developments: 39; Storey: 10;
Support Functions: 217; Property Management: 308.
The Executive Directors and Non-Executive Directors are the key management personnel. Their emoluments are disclosed in the
Remuneration Report on pages 122 to 143.
Staff costs
The Group’s equity-settled share-based payments comprise the following:
Scheme
Long Term Incentive Plan (LTIP)
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
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 and the prior year the Group granted performance shares 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 for these performance conditions. The key inputs used to obtain
fair values for LTIP awards are shown below.
22 June 2020
24 July 2019
Awards with
holding
period
£4.09
£0.00
28.3%
3
0.0%
0.0%
£1.01
£1.30
£3.51
Awards with
no holding
period
£4.09
£0.00
28.3%
3
0.0%
0.0%
£1.18
£1.51
£4.09
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
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.
174
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FINANCIAL STATEMENTS continued
Notes to the accounts continued
8 Staff costs
Staff costs (including Directors)
Wages and salaries
Social security costs
Pension costs
Equity-settled share-based payments
2021
£m
53
7
3
3
66
2020
£m
56
7
6
(3)
66
The average monthly number of employees of the Company during the year was 326 (2019/20: 300). The average monthly number of
Group employees, including those employed directly at the Group’s properties and their costs recharged to tenants, was 634 (2019/20:
672). The average monthly number of employees of the Company within each category of persons employed was as follows: Retail: 27;
Offices: 16; Canada Water: 17; Developments: 39; Storey: 10; Support Functions: 217. The average monthly number of employees of the
Group within each category of persons employed was as follows: Retail: 27; Offices: 16; Canada Water: 17; Developments: 39; Storey: 10;
Support Functions: 217; Property Management: 308.
The Executive Directors and Non-Executive Directors are the key management personnel. Their emoluments are disclosed in the
Remuneration Report on pages 122 to 143.
The Group’s equity-settled share-based payments comprise the following:
Fair value measure
Monte Carlo model simulation and Black-Scholes option valuation models
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
During the year and the prior year the Group granted performance shares 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 for these performance conditions. The key inputs used to obtain
fair values for LTIP awards are shown below.
Staff costs
Scheme
Long Term Incentive Plan (LTIP)
Restricted Share Plan (RSP)
Save As You Earn schemes (SAYE)
Remuneration Report.
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.
22 June 2020
24 July 2019
Awards with
Awards with
no holding
Awards with
period
holding period
Awards with
no holding
holding
period
£4.09
£0.00
28.3%
3
0.0%
0.0%
£1.01
£1.30
£3.51
£4.09
£0.00
28.3%
3
0.0%
0.0%
£1.18
£1.51
£4.09
£5.35
£0.00
17.1%
3
0.0%
0.47%
£1.41
£1.40
£4.89
period
£5.35
£0.00
17.1%
3
0.0%
0.47%
£1.54
£1.53
£5.35
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), it is not planned to admit new employees to the scheme and during the year
the scheme was closed to future accrual, effective 1 September 2020. Active members were therefore moved to deferred status in the
year with future pension contributions payable to the Defined Contribution Pension Schemes of the Group.
The Group has two 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 £3m (2019/20: £6m), of which £5m (2019/20: £5m) relates to defined contribution
plans, £1m (2019/20: £1m) relates to the current service cost of the defined benefit schemes and a credit of £3m (2019/20: £nil) relates
to a curtailment gain, presented as a past service cost, as a result of the closure of the defined benefit schemes to future accrual.
The last full actuarial valuation of the scheme was performed by the scheme actuary, First Actuarial LLP, as at 31 March 2018. The
employer does not expect to make any payments during the year to 31 March 2022. The major assumptions used for the actuarial
valuation were:
Discount rate
Salary inflation
Pensions increase
Price inflation
2021
% pa
2.0
–
3.4
3.5
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
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
2021
£m
68
42
68
178
2020
£m
60
50
51
161
93.8% 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 surplus1
Liability recognised in the balance sheet
2021
£m
(152)
178
(26)
–
2020
£m
(131)
161
(30)
–
2019
£m
(147)
160
(13)
–
2018
£m
(147)
152
(5)
–
2017
£m
(167)
154
–
(13)
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 (2019/20: £nil), therefore the surplus in the defined benefit schemes of £26m (2019/20: £30m) is irrecoverable.
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
Increase/(decrease) in defined
scheme obligations
Change in
assumption
+0.5%
+0.5%
+0.5%
+1 year
2021
£m
(14)
–
12
6
2020
£m
(11)
1
12
4
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British Land Annual Report and Accounts 2021
British Land Annual Report and Accounts 2021
British Land Annual Report and Accounts 2021
175
175
FINANCIAL STATEMENTS continued
Notes to the accounts continued
9 Pensions continued
History of experience gains and losses
Total actuarial (loss) gain 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 £53m (2019/20: £40m).
Movements in the present value of defined benefit obligations were as follows:
At 1 April
Current service cost
Curtailment gain
Interest cost
Actuarial (loss) gain
(Loss) gain from change in financial assumptions
Gain on scheme liabilities arising from experience
Benefits paid
At 31 March
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
2021
£m
(13)
(8.6%)
2020
£m
–
(0.3%)
2019
£m
–
0.1%
2018
£m
9
6.1%
2017
£m
(12)
7.2%
2021
£m
(131)
(1)
3
(4)
(26)
1
6
(152)
2021
£m
161
4
10
9
(6)
178
2020
£m
(147)
(2)
–
(4)
17
–
5
(131)
2020
£m
160
4
1
1
(5)
161
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 decrease the surplus.
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.
176
176
British Land Annual Report and Accounts 2021
British Land Annual Report and Accounts 2021
FINANCIAL STATEMENTS continued
Notes to the accounts continued
9 Pensions continued
History of experience gains and losses
Total actuarial (loss) gain 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 £53m (2019/20: £40m).
Movements in the present value of defined benefit obligations were as follows:
At 1 April
Current service cost
Curtailment gain
Interest cost
Actuarial (loss) gain
Benefits paid
At 31 March
(Loss) gain from change in financial assumptions
Gain on scheme liabilities arising from experience
Movements in the fair value of the scheme assets were as follows:
2021
£m
(13)
(8.6%)
2020
£m
–
(0.3%)
2019
£m
–
0.1%
2018
£m
9
6.1%
2017
£m
(12)
7.2%
(152)
(131)
2021
£m
(131)
(1)
3
(4)
(26)
1
6
2021
£m
161
4
10
9
(6)
178
2020
£m
(147)
(2)
–
(4)
17
–
5
2020
£m
160
4
1
1
(5)
161
At 1 April
Interest income on scheme assets
Contributions by employer
Actuarial gain
Benefits paid
At 31 March
Asset volatility
Changes in bond yields
Inflation risk
Life expectancy
in an increase in the liabilities.
Through its defined benefit plans, the Group is exposed to a number of risks, the most significant of which are detailed below:
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.
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.
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 decrease the surplus.
The majority of the scheme’s obligations are to provide benefits for the life of the member, so increases in life expectancy will result
10 Property
Property reconciliation for the year ended 31 March 2021
Carrying value at 1 April 2020
Additions
– property purchases
– development expenditure
– capitalised interest and staff costs
– capital expenditure on asset
management initiatives
– right-of-use assets
Disposals
Right-of-use assets 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 2021
Lease liabilities (Notes 14 and 15) 1
Less valuation surplus on right-of-use assets2
Valuation surplus on trading properties
Group property portfolio valuation at 31 March 2021
Non-controlling interests
Group property portfolio valuation at 31 March 2021 attributable to shareholders
(5)
3,042
1
2,176
–
386
Retail
Level 3
£m
3,188
Offices and
Residential
Level 3
£m
3,941
Canada
Water
Level 3
£m
400
Developments
Level 3
£m
659
Investment
and
development
properties
Level 3
£m
8,188
Trading
Properties
£m
20
Owner-
Occupied
Level 3
£m
68
52
3
–
–
(3)
–
–
25
4
20
–
75
(421)
–
16
(683)
–
8
2
7
(699)
–
–
(202)
–
–
–
29
–
(36)
–
(7)
–
–
76
7
6
–
89
(10)
–
(22)
6
–
–
722
52
101
11
34
2
200
(1,130)
(36)
(6)
(886)
–
(4)
6,326
–
–
–
–
–
–
–
–
6
–
–
–
26
–
3
–
–
–
3
(66)
–
–
(2)
(1)
–
2
Total
£m
8,276
52
104
11
34
2
203
(1,196)
(36)
–
(888)
(1)
(4)
6,354
(108)
(8)
9
6,247
(137)
6,110
1. The £25m difference between lease liabilities of £108m and £133m per Notes 14 and 15 relates to a £25m lease liability where the right-of-use asset is classified as property,
plant and equipment.
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 cash flows over the term
of the lease agreements. IFRS 16 right-of-use assets are not externally valued, their fair values are determined by management, and are therefore not included in the Group
property portfolio valuation of £6,247m above.
Additions include capital expenditure in response to climate change, in line with our Sustainability Strategy to reduce both the embodied
carbon in our developments and the operational carbon across the Group’s property portfolio. For further details, refer to the
Sustainability section of the Strategic Report on pages 40 to 53.
176
British Land Annual Report and Accounts 2021
British Land Annual Report and Accounts 2021
British Land Annual Report and Accounts 2021
177
177
FINANCIAL STATEMENTS continued
Notes to the accounts continued
10 Property continued
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 cash flows over the term
of the lease agreements. IFRS 16 right-of-use assets are not externally valued, their fair values are determined by management, and are therefore not included in the Group
property portfolio valuation of £8,106m above.
Property valuation
The different valuation method levels are defined below:
Level 1:
Level 2:
Level 3:
Quoted prices (unadjusted) in active markets for identical assets or liabilities.
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).
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 pages. There were no transfers
between levels in the year.
The general risk environment in which the Group operates remained heightened during the period, which is largely due to the impact of
Covid-19, uncertainty regarding the impact of the UK’s exit from the EU, the significant deterioration in the UK retail market and weak
investment markets. This environment has had, and may continue to 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 –
Global Standards 2019, published by The Royal Institution of Chartered Surveyors.
178
178
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British Land Annual Report and Accounts 2021
FINANCIAL STATEMENTS continued
Notes to the accounts continued
10 Property continued
Property reconciliation for the year ended 31 March 2020
Retail
Level 3
£m
4,317
Offices and
Residential
Level 3
£m
3,776
Canada
Level 3
£m
318
Water
Developments
Investment
and
development
properties
Level 3
£m
8,931
Trading
Properties
£m
87
Owner-
Occupied
Level 3
£m
73
Level 3
£m
520
41
129
5
2
–
–
–
–
3
177
(26)
(15)
–
24
21
49
4
–
–
–
–
–
–
33
94
156
9
92
74
425
–
5
–
(1,105)
(10)
8,188
–
–
–
–
–
–
–
–
–
–
–
20
(58)
(67)
–
–
–
–
–
–
–
1
–
(1)
–
(5)
68
3,941
400
659
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
19
1
–
36
5
61
–
(58)
45
(1,158)
–
(19)
3,188
34
2
–
54
48
138
(14)
35
–
–
–
6
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
Group property portfolio valuation at 31 March 2020 attributable to shareholders
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 cash flows over the term
of the lease agreements. IFRS 16 right-of-use assets are not externally valued, their fair values are determined by management, and are therefore not included in the Group
property portfolio valuation of £8,106m above.
Property valuation
The different valuation method levels are defined below:
Level 1:
Level 2:
Quoted prices (unadjusted) in active markets for identical assets or liabilities.
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 pages. There were no transfers
between levels in the year.
The general risk environment in which the Group operates remained heightened during the period, which is largely due to the impact of
Covid-19, uncertainty regarding the impact of the UK’s exit from the EU, the significant deterioration in the UK retail market and weak
investment markets. This environment has had, and may continue to 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 –
Global Standards 2019, published by The Royal Institution of Chartered Surveyors.
10 Property continued
The Covid-19 pandemic has continued to impact global financial markets and market activity in many sectors, with some real estate
markets having experienced lower levels of transactional activity and liquidity. In some cases, ‘lockdowns’ have been applied – in varying
degrees – to reflect further ‘waves’ of Covid-19. While these may imply a new stage of the crisis, they are not unprecedented in the same
way as the initial impact. As at the valuation date property markets are mostly functioning again, with transaction volumes and other
relevant evidence returning to levels which our valuers consider to be an adequate quantum of market evidence upon which to base their
opinions of value. Accordingly, and for the avoidance of doubt, our valuers have not reported their valuations as being subject to ’material
valuation uncertainty’ as defined by VPS 3 and VPGA 10 of the RICS Valuation – Global Standards. Our valuers have, however, highlighted
the market context under which their opinions have been prepared and, in recognition of the potential for market conditions to move
rapidly in response to changes in the control or future spread of Covid-19, the importance of the valuation date.
In preparing their valuations, our valuers have considered the impact of concessions agreed with tenants at the balance sheet date,
which mainly relate to rent deferrals and rent-free periods, on valuations, primarily of retail assets. They have also given consideration
to occupiers in higher risk sectors, and those assumed to be at risk of default, in determining the appropriate yields to apply.
At 31 March 2020 all of our external valuation reports included a ‘material valuation uncertainty’ declaration, which emphasised that
less certainty – and a higher degree of caution – should be attached to the valuations than would normally be the case. In light of this,
we reviewed the ranges used for our sensitivity analysis, and adopted expanded ranges to reflect this increased uncertainty. No such
declaration was included in our valuation reports at 31 March 2021, with our external valuers concluding that there was an adequate
quantum of market evidence upon which to base opinions of value. Consequently, for the purposes of our sensitivity tables, we have
determined it appropriate to revert to the ranges adopted in reporting periods in which the ‘material valuation uncertainty’ declaration
was not present, as we have the same level of certainty over our external valuations, being +/-5% for ERV, +/-25bps for NEY and +/-5%
for development costs.
There has been no change in the valuation methodology used for investment property as a result of Covid-19.
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 Interim 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 116 to 121.
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
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
2021
Joint
ventures
and funds
£m
40
124
506
2,378
3,048
(26)
3,022
Group
£m
1,375
1,642
849
2,381
6,247
(137)
6,110
Total
£m
1,415
1,766
1,355
4,759
9,295
(163)
9,132
Group
£m
1,420
2,097
1,348
3,241
8,106
(185)
7,921
2020
Joint
ventures
and funds
£m
54
183
765
2,270
3,272
(36)
3,236
Total
£m
1,474
2,280
2,113
5,511
11,378
(221)
11,157
178
British Land Annual Report and Accounts 2021
British Land Annual Report and Accounts 2021
British Land Annual Report and Accounts 2021
179
179
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 2021
ERV per sq ft
Equivalent yield
Costs to complete per sq ft
Valuation
technique
Investment
methodology
Investment
methodology
Residual
methodology
Investment
methodology
Residual
methodology
Min
£
2
9
22
2
65
Max
£
32
176
53
2
90
Average
£
Min
%
Max
%
Average
%
Min
£
Max
£
Average
£
18
58
50
2
77
5
4
5
5
4
14
6
6
5
14
8
5
5
5
6
–
–
46
475
13
85
162
343
260
–
2
–
89
–
48
Investment
Retail
Offices
Canada Water1
Residential
Developments
Total
Trading properties
at fair value
Group property
portfolio valuation
1. Includes owner-occupied.
Fair value at
31 March 2021
£m
2,118
2,918
387
66
723
6,212
35
6,247
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
Valuation
technique
Investment
methodology
Investment
methodology
Investment
methodology
Investment
methodology
Residual
methodology
Min
£
2
9
15
38
48
Max
£
87
177
31
38
62
Average
£
Min
%
Max
%
Average
%
Min
£
Max
£
Average
£
21
60
20
38
55
4
4
2
4
4
11
5
6
4
5
7
4
4
4
4
–
–
–
–
–
85
421
–
–
15
62
–
–
367
220
Investment
Retail
Offices1
Canada Water
Residential
Developments
Total
Trading properties
at fair value
Group property
portfolio valuation
1. Includes owner-occupied.
Fair value at
31 March 2020
£m
3,128
3,851
364
70
660
8,073
33
8,106
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 2021
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 2021
£m
2,579
5,244
387
93
829
Impact on valuations
Impact on valuations
Impact on valuations
+5% ERV
£m
97
236
58
1
62
-5% ERV
£m
(96)
(264)
(60)
(1)
(61)
-25bps NEY
£m
91
368
71
2
101
+25bps NEY
£m
(85)
(327)
(64)
(1)
(89)
-5% costs
£m
2
17
77
–
25
+5% costs
£m
(2)
(16)
(77)
–
(27)
9,132
454
(482)
633
(566)
121
(122)
180
180
British Land Annual Report and Accounts 2021
British Land Annual Report and Accounts 2021
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 2021
ERV per sq ft
Equivalent yield
Costs to complete per sq ft
Average
£
Min
%
Max
%
Average
%
Min
£
Max
£
Average
£
Fair value at
31 March 2021
£m
Valuation
technique
Investment
2,118
methodology
Investment
2,918
methodology
Residual
387
methodology
Investment
66
methodology
Residual
723
methodology
Fair value at
31 March 2020
£m
Valuation
technique
Investment
3,128
methodology
Investment
3,851
methodology
Investment
364
methodology
Investment
70
methodology
Residual
660
methodology
Min
£
2
9
22
2
65
Min
£
2
9
15
38
48
Max
£
32
176
53
2
90
Max
£
87
177
31
38
62
18
58
50
2
77
21
60
20
38
55
5
4
5
5
4
4
4
2
4
4
14
6
6
5
14
11
5
6
4
5
8
5
5
5
6
7
4
4
4
4
162
343
260
46
475
–
89
85
421
–
–
–
–
–
2
–
–
–
–
–
13
85
–
48
15
62
–
–
367
220
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
Average
£
Min
%
Max
%
Average
%
Min
£
Max
£
Average
£
Total
Trading properties
at fair value
Group property
portfolio valuation
1. Includes owner-occupied.
6,212
35
6,247
Total
Trading properties
at fair value
Group property
portfolio valuation
1. Includes owner-occupied.
8,073
33
8,106
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 2021
Fair value at
31 March 2021
Impact on valuations
Impact on valuations
Impact on valuations
+5% ERV
-5% ERV
-25bps NEY
+25bps NEY
-5% costs
+5% costs
£m
2,579
5,244
387
93
829
9,132
£m
97
236
58
1
62
454
£m
(96)
(264)
(60)
(1)
(61)
(482)
£m
91
368
71
2
101
633
£m
(85)
(327)
(64)
(1)
(89)
(566)
£m
2
17
77
–
25
£m
(2)
(16)
(77)
–
(27)
121
(122)
Group property portfolio valuation including share
of joint ventures and funds
1. Includes trading properties at fair value.
Investment
Retail
Offices
Canada Water1
Residential
Developments
Investment
Retail
Offices1
Canada Water
Residential
Developments
Retail
Offices1
Canada Water
Residential
Developments
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 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.
All other factors being equal:
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)
– 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.
Provision for impairment of tenant incentives and guaranteed rent increases
A provision of £23m (31 March 2020: £17m) has been made for impairment of tenant incentives and contracted rent uplift balances
(guaranteed rents). The charge to the income statement in relation to write-offs and provisions for impairment for tenant incentives
and guaranteed rents was £8m (2019/20: £20m) (see Note 3). The Directors consider that the carrying amount of tenant incentives is
approximate to their fair value.
The tables below summarise tenant incentives and guaranteed rent increases balances and associated expected credit losses grouped
by credit risk ratings. The split between Offices and Retail has been disclosed on the basis that Offices balances have a lower assumed
credit risk as a result of the impact of Covid-19 in comparison to Retail tenants and relate to the significant majority of tenant incentive
balances at year end with an immaterial provision for impairment applied.
Credit Risk
CVA2 / Administration
High
Medium
Low
Total Group
Joint ventures and funds
Total
Tenant
incentives1
£m
4
22
8
50
84
14
98
Retail
Provision
£m
(4)
(17)
(1)
–
(22)
(3)
(25)
Net tenant
incentives
£m
–
5
7
50
62
11
73
2021
Offices
Tenant
incentives1
£m
–
1
1
63
65
65
130
Provision
£m
–
(1)
–
–
(1)
(3)
(4)
Net tenant
incentives
£m
–
–
1
63
64
62
126
Tenant
incentives1
£m
4
23
9
113
149
79
228
Total
Provision
£m
(4)
(18)
(1)
–
(23)
(6)
(29)
Net tenant
incentives
£m
–
5
8
113
126
73
199
Percentage
provided3
%
80%
79%
15%
–
15%
8%
13%
1. The tenant incentives balance includes guaranteed rent increases.
2. Company Voluntary Arrangements.
3. The percentage provided is calculated using the unrounded tenant incentive and provision balance.
180
British Land Annual Report and Accounts 2021
British Land Annual Report and Accounts 2021
British Land Annual Report and Accounts 2021
181
181
FINANCIAL STATEMENTS continued
Notes to the accounts continued
10 Property continued
Credit Risk
CVA2 / Administration
High
Medium
Low
Total Group
Joint ventures and funds
Total
Tenant
incentives1
£m
4
11
12
36
63
24
87
Retail
Provision3
£m
(3)
(6)
(2)
–
(11)
(4)
(15)
Net
£m
1
5
10
36
52
20
72
Tenant
incentives1
£m
–
–
2
76
78
43
121
2020
Offices
Provision3
£m
–
–
–
–
–
(2)
(2)
Net
£m
–
–
2
76
78
41
119
Tenant
incentives1
£m
4
11
14
112
141
67
208
Total
Provision3
£m
(3)
(6)
(2)
–
(11)
(6)
(17)
Percentage
provided4
%
60%
51%
16%
–
8%
9%
8%
Net
£m
1
5
12
112
130
61
191
1. The tenant incentives balance includes guaranteed rent increases.
2. Company Voluntary Arrangements.
3. The £11m provision for Total Group in the table above represents provisions for impairment of tenant incentives and guaranteed rent increases held by the Group. In the year ended
31 March 2020, the Group also held general provisions for impairment of tenant incentives and guaranteed rent increases of £6m, resulting in a total provision of £17m.
4. The percentage provided is calculated using the unrounded tenant incentive and provision balance.
The tenant incentive balance does not relate to amounts billed and therefore there is no concept of being past due. The expected credit
losses are determined in line with the provisioning approach detailed in Note 1, with the key assumptions being the absolute probability
of loss assumed for each credit risk rating and a tenant’s assigned credit risk rating. A 10% increase/decrease in the loss rates assumed
for each credit risk rating would result in a £2m increase/decrease to provisions for impairment of tenant incentives. This sensitivity
analysis has been performed on medium and high risk tenants and tenants in CVA or Administration only as the significant estimation
uncertainty is wholly related to these. A 10% increase/decrease in the percentage share of high and low risk Retail tenants incentives
only, i.e. assuming 10% of tenant incentives move from medium to high risk and 10% of tenant incentives move from low to medium risk
and vice versa, would result in a £5m increase/decrease in provisions for impairment of tenant incentives. A movement in the share of
Offices tenant incentives within each credit risk rating has not been considered as management believes there is less uncertainty
associated to the assumption on Offices tenants’ credit risk ratings. A 10% increase or decrease represents management’s assessment
of the reasonable possible change in loss rates and movement in the percentage share of tenant incentives within each credit risk rating.
The table below shows the movement in provisions for impairment of tenant incentives during the year ending 31 March 2021 on a Group
and on a proportionally consolidated basis.
Movement in provisions for impairment of tenant incentives
Provisions for impairment of tenant incentives as at 1 April 2020
Write-offs of tenant incentives
Increase in provision for impairment of tenant incentives
Total provision charge recognised in income statement
Provisions for impairment of tenant incentives as at 31 March 2021
Group
£m
Proportionally
consolidated
£m
17
(2)
8
8
23
17
(6)
18
18
29
Additional property disclosures – including covenant information
At 31 March 2021, the Group property portfolio valuation of £6,247m (2019/20: £8,106m) comprises freeholds of £3,127m (2019/20: £4,139m);
virtual freeholds of £1,055m (2019/20: £1,050m); long leaseholds of £1,945m (2019/20 £2,822m); and short leaseholds of £120m (2019/20:
£95m). The historical cost of properties was £4,812m (2019/20: £5,981m).
Cumulative interest capitalised against investment, development and trading properties amounts to £104m (2019/20: £103m).
Properties valued at £1,017m (2019/20: £961m) were subject to a security interest and other properties of non-recourse companies
amounted to £575m (2019/20: £772m), totalling £1,592m (2019/20: £1,733m).
Included within the property valuation is £7m (2019/20: £12m) in respect of accrued contracted rental uplift income and £142m (2019/20:
£129m) in respect of other tenant incentives. 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.
182
182
British Land Annual Report and Accounts 2021
British Land Annual Report and Accounts 2021
11 Joint ventures and funds
Summary movement for the year of the investments in joint ventures and funds
At 1 April 2020
Additions
Disposals
Share of loss on ordinary activities after taxation1
Distributions and dividends:
– Capital
– Revenue
Hedging and exchange movements
At 31 March 2021
Joint ventures
£m
2,188
209
(41)
(330)
(4)
(26)
1
1,997
Funds
£m
170
–
(12)
(27)
–
(8)
–
123
Total
£m
2,358
209
(53)
(357)
(4)
(34)
1
2,120
Equity
£m
1,659
63
(13)
(213)
(4)
(34)
1
1,459
Loans
£m
699
146
(40)
(144)
–
–
–
661
Total
£m
2,358
209
(53)
(357)
(4)
(34)
1
2,120
1. The share of loss on ordinary activities after taxation comprises equity accounted losses of £213m and IFRS 9 impairment charges against loans of £144m, relating to loans
owed by MSC Property Intermediate Holdings Limited (£131m) and WOSC Partners Limited Partnership (£13m). In accordance with IFRS 9, management has assessed the
recoverability of loans to joint ventures. Amounts due are expected to be recovered by a joint venture selling its properties and investments and settling financial assets, net of
financial liabilities. The net asset value of a joint venture is considered to be a reasonable approximation of the available assets that could be realised to recover the amounts
due and the requirement to recognise expected credit losses.
FINANCIAL STATEMENTS continued
Notes to the accounts continued
10 Property continued
Credit Risk
CVA2 / Administration
High
Medium
Low
Total Group
Joint ventures and funds
Total
Retail
Tenant
incentives1
Provision3
incentives1
Provision3
Tenant
incentives1
Provision3
Percentage
provided4
£m
(3)
(6)
(2)
–
(11)
(4)
(15)
Net
£m
1
5
10
36
52
20
72
Tenant
£m
–
–
2
76
78
43
121
£m
4
11
12
36
63
24
87
2020
Offices
£m
–
–
–
–
–
(2)
(2)
Net
£m
–
–
2
76
78
41
119
Total
£m
(3)
(6)
(2)
–
(11)
(6)
(17)
£m
4
11
14
112
141
67
208
Net
£m
1
5
12
112
130
61
191
%
60%
51%
16%
–
8%
9%
8%
1. The tenant incentives balance includes guaranteed rent increases.
2. Company Voluntary Arrangements.
3. The £11m provision for Total Group in the table above represents provisions for impairment of tenant incentives and guaranteed rent increases held by the Group. In the year ended
31 March 2020, the Group also held general provisions for impairment of tenant incentives and guaranteed rent increases of £6m, resulting in a total provision of £17m.
4. The percentage provided is calculated using the unrounded tenant incentive and provision balance.
The tenant incentive balance does not relate to amounts billed and therefore there is no concept of being past due. The expected credit
losses are determined in line with the provisioning approach detailed in Note 1, with the key assumptions being the absolute probability
of loss assumed for each credit risk rating and a tenant’s assigned credit risk rating. A 10% increase/decrease in the loss rates assumed
for each credit risk rating would result in a £2m increase/decrease to provisions for impairment of tenant incentives. This sensitivity
analysis has been performed on medium and high risk tenants and tenants in CVA or Administration only as the significant estimation
uncertainty is wholly related to these. A 10% increase/decrease in the percentage share of high and low risk Retail tenants incentives
only, i.e. assuming 10% of tenant incentives move from medium to high risk and 10% of tenant incentives move from low to medium risk
and vice versa, would result in a £5m increase/decrease in provisions for impairment of tenant incentives. A movement in the share of
Offices tenant incentives within each credit risk rating has not been considered as management believes there is less uncertainty
associated to the assumption on Offices tenants’ credit risk ratings. A 10% increase or decrease represents management’s assessment
of the reasonable possible change in loss rates and movement in the percentage share of tenant incentives within each credit risk rating.
The table below shows the movement in provisions for impairment of tenant incentives during the year ending 31 March 2021 on a Group
and on a proportionally consolidated basis.
Movement in provisions for impairment of tenant incentives
Provisions for impairment of tenant incentives as at 1 April 2020
Write-offs of tenant incentives
Increase in provision for impairment of tenant incentives
Total provision charge recognised in income statement
Provisions for impairment of tenant incentives as at 31 March 2021
Additional property disclosures – including covenant information
Proportionally
consolidated
Group
£m
£m
17
(6)
18
18
29
17
(2)
8
8
23
At 31 March 2021, the Group property portfolio valuation of £6,247m (2019/20: £8,106m) comprises freeholds of £3,127m (2019/20: £4,139m);
virtual freeholds of £1,055m (2019/20: £1,050m); long leaseholds of £1,945m (2019/20 £2,822m); and short leaseholds of £120m (2019/20:
£95m). The historical cost of properties was £4,812m (2019/20: £5,981m).
Cumulative interest capitalised against investment, development and trading properties amounts to £104m (2019/20: £103m).
Properties valued at £1,017m (2019/20: £961m) were subject to a security interest and other properties of non-recourse companies
amounted to £575m (2019/20: £772m), totalling £1,592m (2019/20: £1,733m).
Included within the property valuation is £7m (2019/20: £12m) in respect of accrued contracted rental uplift income and £142m (2019/20:
£129m) in respect of other tenant incentives. 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.
182
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British Land Annual Report and Accounts 2021
British Land Annual Report and Accounts 2021
183
183
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 2021
Partners
Property sector
Group share
Summarised income statements
Revenue4
Costs
Administrative expenses
Net interest payable
Underlying Profit (loss)
Net valuation movement
Capital financing costs
Profit (loss) on disposal of investment properties and investments
Loss on ordinary activities before taxation
Taxation
Loss on ordinary activities after taxation
Other comprehensive income
Total comprehensive expense
British Land share of total comprehensive 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 (liabilities)
British Land share of net assets (liabilities) less shareholder loans
Broadgate
REIT
Ltd
Euro Bluebell LLP
(GIC)
City Offices
Broadgate
50%
MSC Property
Intermediate
Holdings Ltd5
Norges Bank
Investment
Management
Shopping Centres
Meadowhall
50%
WOSC Partners Limited
Partnership5
Norges Bank
Investment
Management
West End
Offices
25%
£m
216
(79)
137
–
(61)
76
(172)
–
–
(96)
–
(96)
–
(96)
(48)
22
4,501
13
160
4,674
(94)
(1,306)
(988)
–
(2,388)
2,286
1,143
£m
85
(49)
36
–
(29)
7
(421)
–
–
(414)
–
(414)
3
(411)
(205)
1
779
17
20
816
(37)
(552)
(472)
(17)
(1,078)
(262)
–
£m
12
(6)
6
–
–
6
(57)
–
–
(51)
–
(51)
–
(51)
(13)
–
163
4
5
172
(3)
–
(218)
(4)
(225)
(53)
–
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.
4. Revenue includes gross rental income at 100% share of £262m (2019/20: £284m).
5. In accordance with the Group’s accounting policies detailed in Note 1, the Group recognises a nil equity investment in joint ventures in a net liability position at period end.
6. During the year ended 31 March 2021 the Group entered into a joint arrangement with Allianz SE, the new joint venture holds properties which were previously wholly owned by
the Group.
184
184
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British Land Annual Report and Accounts 2021
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 2021
Summarised income statements
Partners
Property sector
Group share
Revenue4
Costs
Administrative expenses
Net interest payable
Underlying Profit (loss)
Net valuation movement
Capital financing costs
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 (liabilities)
Profit (loss) on disposal of investment properties and investments
Loss on ordinary activities before taxation
Taxation
Loss on ordinary activities after taxation
Other comprehensive income
Total comprehensive expense
British Land share of total comprehensive expense
British Land share of distributions payable
50%
£m
216
(79)
137
–
(61)
76
(172)
–
–
–
–
(96)
(96)
(96)
(48)
22
4,501
13
160
4,674
(94)
(1,306)
(988)
–
(2,388)
2,286
1,143
50%
£m
85
(49)
36
–
(29)
(421)
7
–
–
–
3
1
(414)
(414)
(411)
(205)
779
17
20
816
(37)
(552)
(472)
(17)
(1,078)
(262)
–
£m
12
(6)
(57)
(51)
(51)
(51)
(13)
6
–
–
6
–
–
–
–
–
4
5
163
172
(3)
–
(218)
(4)
(225)
(53)
–
British Land share of net assets (liabilities) less shareholder loans
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.
4. Revenue includes gross rental income at 100% share of £262m (2019/20: £284m).
5. In accordance with the Group’s accounting policies detailed in Note 1, the Group recognises a nil equity investment in joint ventures in a net liability position at period end.
6. During the year ended 31 March 2021 the Group entered into a joint arrangement with Allianz SE, the new joint venture holds properties which were previously wholly owned by
the Group.
Broadgate
REIT
Ltd
Euro Bluebell LLP
(GIC)
MSC Property
Intermediate
Holdings Ltd5
Norges Bank
Investment
Management
City Offices
Broadgate
Shopping Centres
Meadowhall
WOSC Partners Limited
Partnership5
Norges Bank
Investment
Management
West End
Offices
25%
BL West End
Offices Limited6
Allianz SE
The SouthGate Limited
Partnership
Aviva
Investors
West End
Offices
25%
Shopping
Centres
50%
USS
joint
ventures1
Universities
Superannuation
Scheme Group PLC
Shopping
Centres
50%
£m
6
(1)
5
–
(1)
4
(26)
–
8
(14)
–
(14)
–
(14)
(3)
–
520
4
6
530
(9)
(158)
(15)
(11)
(193)
337
84
£m
10
(10)
–
–
(1)
(1)
(62)
–
–
(63)
–
(63)
–
(63)
(32)
–
144
3
5
152
(4)
–
–
(28)
(32)
120
60
£m
12
(10)
2
–
–
2
(57)
–
–
(55)
–
(55)
–
(55)
(27)
3
131
1
5
137
(5)
–
(31)
–
(36)
101
50
Hercules Unit Trust
joint ventures
and sub-funds2
Other
joint ventures
and funds3
Total
2021
Total
Group share
2021
Retail
Parks
Various
£m
30
(14)
16
–
(1)
15
(65)
–
(7)
(57)
–
(57)
–
(57)
(29)
8
236
1
12
249
(9)
–
–
–
(9)
240
122
£m
–
–
–
–
(1)
(1)
–
–
–
(1)
3
2
–
2
1
4
–
1
1
2
–
–
(3)
–
(3)
(1)
–
£m
371
(169)
202
–
(94)
108
(860)
–
1
(751)
3
(748)
3
(745)
(356)
38
6,474
44
214
6,732
(161)
(2,016)
(1,727)
(60)
(3,964)
2,768
1,459
£m
182
(85)
97
–
(45)
52
(409)
–
(1)
(358)
1
(357)
1
(356)
3,067
22
104
3,193
(78)
(968)
(805)
(27)
(1,878)
1,315
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.
184
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British Land Annual Report and Accounts 2021
185
185
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
West End
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.
186
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British Land Annual Report and Accounts 2021
British Land Annual Report and Accounts 2021
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
Summarised income statements
Partners
Property sector
Group share
Revenue4
Costs
Administrative expenses
Net interest payable
Underlying Profit
Net valuation movement
Capital financing costs5
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
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
50%
£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
50%
£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
–
–
–
–
–
–
–
–
–
3
4
218
225
(4)
–
(217)
(4)
(225)
–
–
British Land share of net assets less shareholder loans
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.
Broadgate
REIT
Ltd
Euro Bluebell LLP
(GIC)
MSC Property
Intermediate
Holdings Ltd
Norges Bank
Investment
Management
City Offices
Broadgate
Shopping Centres
Meadowhall
WOSC Partners Limited
Partnership
Norges Bank
Investment
Management
West End
Offices
25%
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.
186
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British Land Annual Report and Accounts 2021
187
187
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:
Surplus (deficit) 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
2021
£m
119
(26)
93
(47)
–
(2)
44
10
34
2
32
12 Other investments
At 1 April
Additions
Transfers / disposals
Revaluation
Amortisation
At 31 March
Fair value
through
profit or loss
£m
111
3
(109)
1
–
6
2021
Amortised
cost
£m
3
–
(1)
–
–
2
Intangible
assets
£m
11
5
–
–
(4)
12
Fair value
through
profit or loss
£m
114
4
–
(7)
–
111
Total
£m
125
8
(110)
1
(4)
20
2020
Amortised
cost
£m
5
2
(4)
–
–
3
Intangible
assets
£m
10
4
–
–
(3)
11
2020
£m
131
(27)
104
(56)
1
(2)
47
(2)
49
2
47
Total
£m
129
10
(4)
(7)
(3)
125
The amount included in the fair value through profit or loss relates to private equity / venture capital investments of £6m (2019/20: £2m)
which are categorised as Level 3 in the fair value hierarchy and government bonds of £nil (2019/20: £16m) which are classified as
Level 1. The fair values of private equity / venture capital investments are determined by the Directors.
As at 31 March 2020, fair value through profit or loss included £93m comprising interests as a trust beneficiary. The trust’s assets
comprise freehold reversions in a pool of commercial properties, comprising Sainsbury’s superstores. This interest was sold for £102m
in the year ending 31 March 2021.
188
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British Land Annual Report and Accounts 2021
British Land Annual Report and Accounts 2021
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:
Surplus (deficit) 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
12 Other investments
Transfers / disposals
At 1 April
Additions
Revaluation
Amortisation
At 31 March
Fair value
through
profit or loss
Amortised
cost
£m
Intangible
assets
Fair value
through
profit or loss
Amortised
cost
£m
Intangible
assets
2021
(1)
3
–
–
–
2
£m
111
(109)
3
1
–
6
£m
11
5
–
–
(4)
12
Total
£m
125
(110)
8
1
(4)
20
£m
114
4
–
–
(7)
111
2020
(4)
5
2
–
–
3
The amount included in the fair value through profit or loss relates to private equity / venture capital investments of £6m (2019/20: £2m)
which are categorised as Level 3 in the fair value hierarchy and government bonds of £nil (2019/20: £16m) which are classified as
Level 1. The fair values of private equity / venture capital investments are determined by the Directors.
As at 31 March 2020, fair value through profit or loss included £93m comprising interests as a trust beneficiary. The trust’s assets
comprise freehold reversions in a pool of commercial properties, comprising Sainsbury’s superstores. This interest was sold for £102m
in the year ending 31 March 2021.
2021
£m
119
(26)
93
(47)
–
(2)
44
10
34
2
32
£m
10
4
–
–
(3)
11
2020
£m
131
(27)
104
(56)
1
(2)
47
(2)
49
2
47
Total
£m
129
10
(4)
(7)
(3)
125
13 Debtors
Trade and other debtors
Prepayments and accrued income
Rental deposits
2021
£m
38
14
4
56
2020
£m
29
10
17
56
Trade and other debtors are shown after deducting a provision for impairment against tenant debtors of £57m (2019/20: £14m). Accrued
income is shown after deducting a provision for impairment of £5m (2019/20: £nil). The provision for impairment is calculated as an expected
credit loss on trade and other debtors in accordance with IFRS 9 as set out in Note 1.
The charge to the income statement for the year in relation to provisions for impairment of trade receivables and accrued income was
£52m (2019/20: £4m), as disclosed in Note 3. Within this charge, £9m (2019/20: £nil) represents provisions for impairment made against
receivable balances related to billed rental income due on 25 March rent quarter day. Rental income is recognised on a straight-line
basis over the lease term in accordance with IFRS 16. The majority of rental income relating to 25 March rent quarter day has, therefore,
not yet been recognised in the income statement in the current year and is instead recognised as deferred income, within current
liabilities as at 31 March 2021. As the rent due on 25 March has been billed to the tenant, however, the Group is required to provide
for expected credit losses at the balance sheet date in accordance with IFRS 9. This creates a mismatch in the period between the
recognition of rental income and the impairment of the associated rent receivable.
The increase in provisions for impairment of trade debtors and accrued income of £48m (2019/20: £3m) is equal to the charge to the income
statement of £52m (2019/20: £4m), less write-offs of trade debtors of £4m (2019/20: £1m).
The Directors consider that the carrying amount of trade and other debtors is approximate to their fair value. Further details about the
Group’s credit risk management practices are disclosed in Note 17.
The tables below summarise the ageing profile for tenant debtors and associated expected credit losses, grouped by credit risk rating. The
expected credit losses are determined in line with the provisioning approach detailed in Note 1. The majority of outstanding tenant debtors
relate to tenants in the Retail sector.
Provisions for impairment of tenant debtors
Tenant debtors
31 March 2021
Provision
Net tenant debtor
Percentage
provided1
Credit risk
CVA /
Administration
High
Medium
Low
Total Group
Joint ventures
and funds
Total
< 90
days
£m
90 – 182
days
£m
183 –
365 days
£m
> 365
days
£m
Total
£m
< 90
days
£m
90 – 182
days
£m
183 –
365 days
£m
> 365
days
£m
Total
£m
< 90
days
£m
90 – 182
days
£m
183 –
365 days
£m
> 365
days
£m
Total
£m
6
8
4
15
33
12
45
7
4
2
4
17
3
20
14
4
2
4
24
7
31
6
1
–
1
8
33
17
8
24
82
5
27
13 109
(6)
(4)
(1)
(1)
(12)
(2)
(14)
(7)
(4)
(1)
(1)
(13)
(1)
(14)
(14)
(4)
(2)
(4)
(24)
(7)
(31)
(6)
(1)
–
(1)
(8)
(5)
(13)
(33)
(13)
(4)
(7)
(57)
(15)
(72)
–
4
3
14
21
10
31
–
–
1
3
4
2
6
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
4
4
17
25
12
37
Total
%
100%
75%
47%
28%
69%
56%
66%
1. The percentage provided is calculated using the unrounded tenant debtor and provision balance.
188
British Land Annual Report and Accounts 2021
British Land Annual Report and Accounts 2021
British Land Annual Report and Accounts 2021
189
189
FINANCIAL STATEMENTS continued
Notes to the accounts continued
13 Debtors continued
Tenant debtors
31 March 2020
Provision
Net tenant debtor
Percentage
provided1
< 90
days
£m
90 – 182
days
£m
183 – 365
days
£m
> 365
days
£m
Total
£m
< 90
days
£m
90 – 182
days
£m
183 – 365
days
£m
> 365
days
£m
Total
£m
< 90
days
£m
90 – 182
days
£m
183 – 365
days
£m
> 365
days
£m
Total
£m
4
2
9
8
23
7
30
2
1
–
–
3
2
5
3
1
–
–
4
1
5
–
–
–
–
–
–
–
9
4
9
8
30
10
40
(2)
(2)
(2)
(1)
(7)
(1)
(8)
(2)
(1)
–
–
(3)
(1)
(4)
(3)
(1)
–
–
(4)
(1)
(5)
–
–
–
–
–
–
–
(7)
(4)
(2)
(1)
(14)
(3)
(17)
2
–
7
7
16
6
22
–
–
–
–
–
1
1
–
–
–
–
–
–
–
–
–
–
–
–
–
–
2
–
7
7
16
7
23
Total
%
96%
87%
19%
7%
47%
30%
43%
Credit risk
CVA /
Administration
High
Medium
Low
Total Group
Joint ventures
and funds
Total
1. The percentage provided is calculated using the unrounded tenant debtor and provision balance.
Provisions for impairment of accrued income
The table below summarises accrued income and associated expected credit losses, grouped by credit risk rating. The expected credit
losses are determined in line with the provisioning approach detailed in Note 1. Accrued income relates to concessions offered to
tenants in the form of the deferral of rental payments. Rental income relating to the year ending 31 March 2021, which has not yet been
invoiced, is recognised on an accruals basis in accordance with the underlying lease.
Credit risk
CVA / Administration
High
Medium
Low
Total Group
Joint ventures and funds
Total
31 March 2021
31 March 2020
Accrued
income
£m
1
4
2
2
9
1
10
Provision
£m
(1)
(4)
–
–
(5)
(1)
(6)
Net accrued
income
£m
–
–
2
2
4
–
4
Percentage
provided1
%
100%
100%
25%
10%
56%
100%
60%
Accrued
income
£m
–
–
–
–
–
–
–
Provision
£m
–
–
–
–
–
–
–
Net accrued
income
£m
–
–
–
–
–
–
–
Percentage
provided
%
–
–
–
–
–
–
–
1. The percentage provided is calculated using the unrounded accrued income and provision balance.
The table below summarises the movement in provisioning for impairment of tenant debtors and accrued income during the year ending
31 March 2021.
Movement in provisions for impairment of tenant debtors and accrued income
Provisions for impairment of tenant debtors and accrued income as at 1 April 2020
Write-offs of tenant debtors
Increase in provision for impairment of tenant debtors
Increase in provision for impairment of accrued income
Total increase in provision charge recognised in income statement
Provision for impairment of tenant debtors and accrued income as at 31 March 2021
Group
£m
Proportionally
consolidated
£m
14
(4)
47
5
52
62
17
(4)
59
6
65
78
190
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British Land Annual Report and Accounts 2021
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FINANCIAL STATEMENTS continued
Notes to the accounts continued
Tenant debtors
31 March 2020
Provision
Net tenant debtor
Percentage
provided1
< 90
90 – 182
183 – 365
> 365
days
£m
days
£m
days
£m
days
Total
£m
£m
< 90
days
£m
90 – 182
183 – 365
days
£m
days
£m
> 365
days
£m
Total
£m
< 90
days
£m
90 – 182
183 – 365
> 365
days
£m
days
£m
days
Total
£m
£m
4
2
9
8
23
7
30
2
1
–
–
3
2
5
3
1
–
–
4
1
5
–
–
–
–
–
–
–
9
4
9
8
30
10
40
(2)
(2)
(2)
(1)
(7)
(1)
(8)
(2)
(1)
–
–
(3)
(1)
(4)
–
–
–
–
–
–
–
(7)
(4)
(2)
(1)
(14)
(3)
(17)
2
–
7
7
16
6
22
–
–
–
–
–
1
1
1. The percentage provided is calculated using the unrounded tenant debtor and provision balance.
Provisions for impairment of accrued income
The table below summarises accrued income and associated expected credit losses, grouped by credit risk rating. The expected credit
losses are determined in line with the provisioning approach detailed in Note 1. Accrued income relates to concessions offered to
tenants in the form of the deferral of rental payments. Rental income relating to the year ending 31 March 2021, which has not yet been
invoiced, is recognised on an accruals basis in accordance with the underlying lease.
31 March 2021
31 March 2020
Accrued
income
£m
Provision
Net accrued
income
£m
Percentage
provided1
Accrued
income
£m
Net accrued
Percentage
provided
Provision
£m
income
£m
1
4
2
2
9
1
10
£m
(1)
(4)
–
–
(5)
(1)
(6)
%
100%
100%
25%
10%
56%
100%
60%
–
–
–
–
–
–
–
13 Debtors continued
Credit risk
CVA /
Administration
High
Medium
Low
Total Group
Joint ventures
and funds
Total
Credit risk
CVA / Administration
High
Medium
Low
Total Group
Joint ventures and funds
Total
31 March 2021.
1. The percentage provided is calculated using the unrounded accrued income and provision balance.
The table below summarises the movement in provisioning for impairment of tenant debtors and accrued income during the year ending
(3)
(1)
–
–
(4)
(1)
(5)
–
–
2
2
4
–
4
–
–
–
–
–
–
–
–
–
–
–
–
–
–
Total
%
96%
87%
19%
7%
47%
30%
43%
–
–
–
–
–
–
–
2
–
7
7
16
7
23
–
–
–
–
–
–
–
14
(4)
47
5
52
62
%
–
–
–
–
–
–
–
£m
17
(4)
59
6
65
78
Movement in provisions for impairment of tenant debtors and accrued income
Provisions for impairment of tenant debtors and accrued income as at 1 April 2020
Write-offs of tenant debtors
Increase in provision for impairment of tenant debtors
Increase in provision for impairment of accrued income
Total increase in provision charge recognised in income statement
Provision for impairment of tenant debtors and accrued income as at 31 March 2021
13 Debtors continued
The impact of Covid-19 has given rise to an increase in rental debtors due from tenants as a result of delays in receiving payment.
Provisioning for impairment of rental debtors is considered to be an area of significant estimation at the balance sheet date and, as
a result, we include sensitivity tables, below, to illustrate the impact of changes in assumptions on provisions for impairment of rental
debtors and accrued income recognised at the balance sheet date.
The key assumptions within the expected credit loss model include the loss rates assumed for each credit risk rating and ageing
combination and a tenant’s assigned credit risk ratings. The sensitivity table, below, illustrates the impact on provisions as a result of
firstly, changing the absolute loss rate percentages for each ageing and credit risk category and secondly, the impact of changing the
percentage share of high and low risk debtors for Retail tenants only, i.e. assuming 10% of debtors move from medium to high risk and
10% of debtors move from low to medium risk and vice versa. A 10% increase or decrease represents management’s assessment of the
reasonable possible change in loss rates.
Provision for impairment of tenant debtors
Provision for impairment of accrued income
Group total provision for impairment of tenant debtors
and accrued income
Impact on provisions
Impact on provisions
Provision at
31 March 2021
£m
57
5
10% Increase in
loss rates1
£m
1
–
10% Decrease in loss
rates1
£m
(6)
(1)
10% Increase in %
share of high risk
tenant debtors2
£m
5
1
10% Decrease in %
share of high risk
tenant debtors2
£m
(5)
(1)
62
1
(7)
6
(6)
1. This sensitivity analysis has been performed on medium and high risk tenants and tenants in CVA or Administration only as the significant estimation uncertainty is wholly
related to these.
2. This sensitivity analysis has been performed on Retail tenants only. A movement in the share of Offices tenant debtors within each credit risk rating has not been considered as
management believes there is less uncertainty associated to the assumption on Offices tenants’ credit risk ratings.
14 Creditors
Trade creditors
Other taxation and social security
Accruals
Deferred income
Lease liabilities
Rental deposits due to tenants
2021
£m
55
25
68
62
5
4
219
2020
£m
55
27
89
58
7
17
253
Proportionally
consolidated
Group
£m
15 Other non-current liabilities
Lease liabilities
2021
£m
128
128
2020
£m
156
156
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.
190
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191
191
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 2021
Temporary differences
Deferred tax liabilities year ended 31 March 2021
Property and investment revaluations
Net deferred tax liabilities
Deferred tax assets year ended 31 March 2020
Interest rate and currency derivative revaluations
Temporary differences
Deferred tax liabilities year ended 31 March 2020
Property and investment revaluations
Net deferred tax assets (liabilities)
1 April
2020
£m
Debited to
income
£m
5
5
£m
(6)
(6)
(1)
(5)
(5)
£m
–
–
(5)
Credited
to equity
£m
–
–
31 March
2021
£m
–
–
£m
6
6
6
£m
–
–
–
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%).
The following corporation tax rate has 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% (2019/20: 19%) of £nil (2019/20: £4m) 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
£137m (2019/20: £135m) exist at 31 March 2021.
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 2021, the Group had an unrecognised deferred tax asset calculated at 19% (2019/20: 19%) of £45m (2019/20: £52m)
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 2021, the value of such properties is £801m (2019/20: £254m) and if these properties were to be sold and no tax exemption
was available, the tax arising would be £0.3m (2019/20: £21m).
192
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British Land Annual Report and Accounts 2021
British Land Annual Report and Accounts 2021
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 2021
Temporary differences
Deferred tax liabilities year ended 31 March 2021
Property and investment revaluations
Net deferred tax liabilities
Deferred tax assets year ended 31 March 2020
Interest rate and currency derivative revaluations
Temporary differences
Deferred tax liabilities year ended 31 March 2020
Property and investment revaluations
Net deferred tax assets (liabilities)
1 April
2020
£m
5
5
£m
(6)
(6)
(1)
1 April
2019
£m
1
6
7
£m
(6)
(6)
1
Debited to
income
Credited
to equity
£m
31 March
2021
£m
£m
£m
Debited to
income1
Credited
to equity2
£m
31 March
2020
£m
£m
(5)
(5)
£m
–
–
(5)
£m
(1)
(1)
(2)
£m
–
–
(2)
–
–
6
6
6
–
–
–
–
–
–
£m
–
–
–
–
–
–
5
5
£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%).
The following corporation tax rate has 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% (2019/20: 19%) of £nil (2019/20: £4m) 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
£137m (2019/20: £135m) exist at 31 March 2021.
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 2021, the Group had an unrecognised deferred tax asset calculated at 19% (2019/20: 19%) of £45m (2019/20: £52m)
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 2021, the value of such properties is £801m (2019/20: £254m) and if these properties were to be sold and no tax exemption
was available, the tax arising would be £0.3m (2019/20: £21m).
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
Unsecured
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
Facilities 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
Total net debt
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
Footnote
1
2
2
2
2
3
4,5
2021
£m
361
89
241
358
1,049
157
102
67
111
112
–
298
77
37
37
80
102
181
1,361
2,410
128
(135)
(154)
2,249
(70)
2,179
2,249
133
2,382
(75)
2,307
2021
£m
358
358
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
3,247
163
3,410
(112)
3,298
2020
£m
515
515
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 2021 was £2,291m (2019/20: £3,294m). Included in this is the principal amount of secured borrowings and other borrowings of
non-recourse companies of £998m of which the borrowings of the partly-owned subsidiary, Hercules Unit Trust, not beneficially owned by the Group are £79m.
4. Included within cash and short term deposits is the cash and short term deposits of Hercules Unit Trust, of which £8m is the proportion not beneficially owned by the Group.
5. Cash and deposits not subject to a security interest amount to £145m (2019/20: £173m).
192
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British Land Annual Report and Accounts 2021
193
193
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
2021
£m
161
169
846
738
496
–
2,249
2,410
(7)
(154)
2,249
2020
£m
637
188
829
1,141
107
600
2,865
3,502
(62)
(193)
3,247
0% Convertible bond 2015 (maturity 2020)
On 9 June 2020, the £350 million convertible bonds were redeemed at par in cash.
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
1,978
–
546
2,524
128
(135)
(154)
2,363
(70)
2,293
2021
Book value
£m
1,871
–
539
2,410
128
(135)
(154)
2,249
(70)
2,179
Difference
£m
107
–
7
114
–
–
–
114
–
114
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
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).
194
194
British Land Annual Report and Accounts 2021
British Land Annual Report and Accounts 2021
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
Net debt
Interest rate and currency derivatives
Cash and short term deposits
2021
£m
161
169
846
738
496
–
2,249
2,410
(7)
(154)
2,249
£m
1,964
347
1,191
3,502
169
(231)
(193)
3,247
(107)
3,140
2020
£m
637
188
829
1,141
107
600
2,865
3,502
(62)
(193)
3,247
£m
58
64
–
6
–
–
–
64
–
64
0% Convertible bond 2015 (maturity 2020)
On 9 June 2020, the £350 million convertible bonds were redeemed at par in cash.
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
£m
1,978
–
546
2,524
128
(135)
(154)
2,363
(70)
2,293
£m
1,871
–
539
2,410
128
(135)
(154)
2,249
(70)
2,179
£m
107
114
–
7
–
–
–
–
114
114
£m
2,022
347
1,197
3,566
169
(231)
(193)
3,311
(107)
3,204
2021
2020
Fair value
Book value
Difference
Fair value
Book value
Difference
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).
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) 1
Less property and investments attributable to non-controlling interests
Total assets for LTV calculation
2021
£m
25.1%
2,291
(79)
(154)
8
2,066
6,247
2,120
26
(163)
8,230
2020
£m
28.9%
3,294
(113)
(193)
6
2,994
8,106
2,358
131
(221)
10,374
1. The £24m difference between other investments and plant, property and equipment per the balance sheet totalling £50m, relates to a right-of-use asset recognised under a
lease which is classified as property, plant and equipment which is not included within Total assets for the purposes of the 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) 1
Less property attributable to non-controlling interests
Total assets for proportional LTV calculation
2021
£m
32.0%
3,262
(79)
(258)
10
2,935
6,247
3,048
26
(163)
9,158
2020
£m
34.0%
4,271
(113)
(322)
6
3,842
8,106
3,272
131
(221)
11,288
1. The £24m difference between other investments and plant, property and equipment per the balance sheet totalling £50m, relates to a right-of-use asset recognised under a
lease which is classified as property, plant and equipment which is not included within Total assets for the purposes of the LTV calculation.
194
British Land Annual Report and Accounts 2021
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British Land Annual Report and Accounts 2021
195
195
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
2021
£m
33%
2,291
(79)
(154)
8
2,066
5,983
–
9
188
115
(59)
6,236
2020
£m
40%
3,294
(113)
(193)
6
2,994
7,147
6
13
199
141
(112)
7,394
In calculating Adjusted Capital and Reserves for the purpose of the unsecured debt financial covenants, there is an adjustment of £188m
(2019/20: £199m) 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 £145m less the relevant proportion of cash and deposits
of the partly-owned subsidiary/non-controlling interests of £6m)
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) 1
Less investments in joint ventures
Less encumbered assets (Note 10)
Unencumbered Assets
2021
£m
25%
2020
£m
30%
2,291
3,294
(139)
(998)
1,154
6,247
2,120
26
(2,120)
(1,592)
4,681
(169)
(1,156)
1,969
8,106
2,358
131
(2,358)
(1,733)
6,504
1. The £24m difference between other investments and plant, property and equipment per the balance sheet totalling £50m, relates to a right-of-use asset recognised under a
lease which is classified as property, plant and equipment which is not included within Unencumbered Assets for the purposes of the covenant calculation.
196
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British Land Annual Report and Accounts 2021
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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:
Less the relevant proportion of borrowings of the partly-owned subsidiary/non-controlling interests
Plus the relevant proportion of cash and deposits of the partly-owned subsidiary/non-controlling interests
Net Borrowings not to exceed 175% of Adjusted Capital and Reserves
Principal amount of gross debt
Less cash and deposits (balance sheet)
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
In calculating Adjusted Capital and Reserves for the purpose of the unsecured debt financial covenants, there is an adjustment of £188m
(2019/20: £199m) 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 £145m less the relevant proportion of cash and deposits
of the partly-owned subsidiary/non-controlling interests of £6m)
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) 1
Less investments in joint ventures
Less encumbered assets (Note 10)
Unencumbered Assets
1. The £24m difference between other investments and plant, property and equipment per the balance sheet totalling £50m, relates to a right-of-use asset recognised under a
lease which is classified as property, plant and equipment which is not included within Unencumbered Assets for the purposes of the covenant calculation.
2021
£m
33%
2,291
(79)
(154)
2,066
5,983
8
–
9
188
115
(59)
6,236
2020
£m
40%
3,294
(113)
(193)
6
2,994
7,147
6
13
199
141
(112)
7,394
2021
£m
25%
2020
£m
30%
2,291
3,294
(139)
(998)
1,154
6,247
2,120
26
(2,120)
(1,592)
4,681
(169)
(1,156)
1,969
8,106
2,358
131
(2,358)
(1,733)
6,504
17 Net debt continued
Reconciliation of movement in Group net debt for the year ended 31 March 2021
Short term borrowings
Long term borrowings
Derivatives1
Total liabilities from financing activities4
Cash and cash equivalents
Net debt
2020
£m
637
2,865
(62)
3,440
(193)
3,247
Cash flows
£m
(637)
(367)
14
(990)
39
(951)
Transfers3
£m
161
(161)
–
–
–
–
Reconciliation of movement in Group net debt for the year ended 31 March 2020
Short term borrowings
Long term borrowings
Derivatives2
Total liabilities from financing activities5
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)
–
–
–
–
Foreign
exchange
£m
–
(44)
44
–
–
–
Foreign
exchange
£m
–
21
(21)
–
–
–
Arrangement
costs
amortisation
£m
2
2
–
4
–
4
Fair value
£m
(2)
(46)
(3)
(51)
–
(51)
Arrangement
costs
amortisation
£m
–
5
–
5
–
5
Fair value
£m
22
37
(21)
38
–
38
2021
£m
161
2,249
(7)
2,403
(154)
2,249
2020
£m
637
2,865
(62)
3,440
(193)
3,247
1. Cash flows on derivatives include £24m 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 £990m shown above represents net cash flows on capital payments in respect of interest rate derivatives of £10m, decrease in bank and other borrowings of
£1,218m and drawdowns on bank and other borrowings of £214m shown in the consolidated statement of cash flows, along with £24m of net receipts on derivative interest.
5. Cash flows of £390m shown above represents net cash flows on capital payments in respect of interest rate derivatives 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.
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
–
2021
Level 2
£m
(135)
Level 3
£m
–
–
–
–
–
–
–
–
(135)
128
–
128
(7)
(6)
(6)
–
–
–
(6)
Total
£m
(135)
(6)
(141)
128
–
128
(13)
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
196
British Land Annual Report and Accounts 2021
British Land Annual Report and Accounts 2021
British Land Annual Report and Accounts 2021
197
197
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 (Note 14)
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
2021
£m
154
42
2
126
9
6
339
(141)
(2,410)
(133)
(128)
–
–
(2,812)
(2,473)
2020
£m
193
46
3
209
22
111
584
(180)
(3,155)
(163)
(167)
(347)
(2)
(4,014)
(3,430)
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 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 is considering the processes for transition of existing LIBOR based debt and derivatives to reference SONIA, alongside
emerging market practice.
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 2021, the fair value of these derivatives is a net liability of £124m. Interest rate swaps with a fair value of £nil 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 2021 was £nil (2019/20: £nil).
198
198
British Land Annual Report and Accounts 2021
British Land Annual Report and Accounts 2021
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
Financial liabilities
Amortised cost
Creditors (Note 14)
Gross debt
Lease liabilities (Notes 14 and 15)
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)
Derivatives not in designated accounting relationships
Convertible bond
Fair value through other comprehensive income
Derivatives in designated cash flow hedge accounting relationships1,2
Total
2021
£m
154
42
2
126
9
6
339
(141)
(2,410)
(133)
(128)
–
–
(2,812)
(2,473)
2020
£m
193
46
3
209
22
111
584
(180)
(3,155)
(163)
(167)
(347)
(2)
(4,014)
(3,430)
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 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
emerging market practice.
The Group is considering the processes for transition of existing LIBOR based debt and derivatives to reference SONIA, alongside
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 2021, the fair value of these derivatives is a net liability of £124m. Interest rate swaps with a fair value of £nil 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 2021 was £nil (2019/20: £nil).
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 2021.
Variable rate debt hedged
Outstanding: at one year
at two years
at five years
at ten years
2021
£m
875
1,050
250
250
2020
£m
855
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 2021, the fair value of these derivatives is a net asset of £132m. Interest rate swaps with a fair value of £126m have been
designated as fair value hedges under IFRS 9 (2019/20: asset of £209m).
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)
2021
£m
2,249
–
2,249
2020
£m
2,317
930
3,247
All the debt is effectively Sterling denominated except for £6m of USD debt of which £6m is at a variable rate (2019/20: £5m).
At 31 March 2021 the weighted average interest rate of the Sterling fixed rate debt is 4.2% (2019/20: 3.2%). The weighted average period
for which the rate is fixed is 9.2 years (2019/20: 8.0 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
2021
100%
78%
2020
81%
75%
2021
Increase
78
(9)
161
Decrease
(78)
10
(161)
2020
Increase
58
(12)
173
74
–
(60)
–
106
1
Decrease
(58)
15
(173)
(81)
(1)
1. The movement used for sensitivity analysis represents the largest annual change in the three-month Sterling LIBOR over the last 10 years.
2. This movement used for sensitivity analysis represents the largest annual change in the seven-year Sterling swap rate over the last 10 years.
198
British Land Annual Report and Accounts 2021
British Land Annual Report and Accounts 2021
British Land Annual Report and Accounts 2021
199
199
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 2021 position a 27%
appreciation (largest annual change over the last 10 years) in the USD relative to Sterling would result in a £nil change (2019/20: £nil)
in reported profits.
USD denominated
Assets
Liabilities
2021
£m
8
2020
£m
4
2021
£m
6
2020
£m
5
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 2021 amounted to £154m (2019/20: £193m). Deposits and interest rate deposits were placed
with financial institutions with BBB+ or better credit ratings.
At 31 March 2021, the fair value of all interest rate derivative assets was £135m (2019/20: £231m).
At 31 March 2021, 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 £67m (2019/20: £94m). This represents 0.8% (2019/20: 0.8%)
of gross assets.
The deposit exposures are with UK banks and UK branches of international banks.
Trade receivables:
Trade receivables are presented net of provisions for impairment for expected credit losses. Expected credit losses are calculated on
initial recognition of trade receivables and subsequently in accordance with IFRS 9, taking into account historic and forward-looking
information. See Note 13 for further details and credit risk related disclosures.
Lease incentives:
Lease incentives are included within the investment property balance and provisions for impairment for expected credit losses for lease
incentives are recognised within trade receivables. Expected credit losses are calculated on initial recognition of tenant incentives and
subsequently in accordance with IFRS 9, taking into account historic and forward-looking information. See Note 10 for further details
and credit risk related disclosures.
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.
200
200
British Land Annual Report and Accounts 2021
British Land Annual Report and Accounts 2021
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 2021 position a 27%
appreciation (largest annual change over the last 10 years) in the USD relative to Sterling would result in a £nil change (2019/20: £nil)
Assets
Liabilities
2021
£m
8
2020
£m
4
2021
£m
6
2020
£m
5
in reported profits.
USD denominated
Credit risk management
any collateral obtained.
Banks and financial institutions:
of gross assets.
Trade receivables:
Lease incentives:
and credit risk related disclosures.
Liquidity 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
Cash and short term deposits at 31 March 2021 amounted to £154m (2019/20: £193m). Deposits and interest rate deposits were placed
with financial institutions with BBB+ or better credit ratings.
At 31 March 2021, the fair value of all interest rate derivative assets was £135m (2019/20: £231m).
At 31 March 2021, 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 £67m (2019/20: £94m). This represents 0.8% (2019/20: 0.8%)
The deposit exposures are with UK banks and UK branches of international banks.
Trade receivables are presented net of provisions for impairment for expected credit losses. Expected credit losses are calculated on
initial recognition of trade receivables and subsequently in accordance with IFRS 9, taking into account historic and forward-looking
information. See Note 13 for further details and credit risk related disclosures.
Lease incentives are included within the investment property balance and provisions for impairment for expected credit losses for lease
incentives are recognised within trade receivables. Expected credit losses are calculated on initial recognition of tenant incentives and
subsequently in accordance with IFRS 9, taking into account historic and forward-looking information. See Note 10 for further details
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.
17 Net debt continued
Liquidity risk management continued
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.
Debt1
Interest on debt
Derivative payments
Lease liability payments
Total payments
Derivative receipts
Net payment
Operating leases with tenants
Liquidity surplus (deficit)
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
161
76
148
8
393
(191)
202
290
88
88
Within
one year
£m
638
90
11
11
750
(31)
719
406
(313)
(313)
Following
year
£m
171
73
15
9
268
(25)
243
241
(2)
86
Following
year
£m
179
81
156
10
426
(207)
219
342
123
(190)
2021
Three to
five years
£m
785
189
199
29
1,202
(221)
981
505
(476)
(390)
2020
Three to
five years
£m
581
215
132
25
953
(179)
774
724
(50)
(240)
Over five
years
£m
1,213
270
145
329
1,957
(74)
1,883
555
(1,328)
(1,718)
Over five
years
£m
1,980
356
258
465
3,059
(193)
2,866
911
(1,955)
(2,195)
Total
£m
2,330
608
507
375
3,820
(511)
3,309
1,591
(1,718)
Total
£m
3,378
742
557
511
5,188
(610)
4,578
2,383
(2,195)
1. Gross debt of £2,410m (2019/20: £3,502m) represents the total of £2,330m (2019/20: £3,378m), less unamortised issue costs of £10m (2019/20: £10m), plus fair value
adjustments to debt of £90m (2019/20: £134m).
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
£154m of which £145m is not subject to a security interest (see footnote 5 to net debt table on page 193). Further liquidity can be
achieved through sales of property assets or investments and financing activity.
The Group’s property portfolio is valued externally at £6,247m and the share of joint ventures and funds’ property is valued at £3,048m.
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
2021
£m
347
1,049
294
1,690
–
–
–
1,690
2020
£m
50
1,046
–
1,096
20
–
–
1,116
200
British Land Annual Report and Accounts 2021
British Land Annual Report and Accounts 2021
British Land Annual Report and Accounts 2021
201
201
FINANCIAL STATEMENTS continued
Notes to the accounts continued
17 Net debt continued
Liquidity risk management continued
The undrawn facilities are comprised of British Land undrawn facilities of £1,690m plus undrawn facilities of Hercules Unit Trust
totalling £nil.
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 five years
(2019/20: 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
2021
£m
290
241
505
392
110
33
20
1,591
2020
£m
406
342
724
638
192
52
29
2,383
Lease commitments
The Group’s leasehold investment properties are typically under non-renewable leases without significant restrictions. Lease liabilities
are payable in line with the disclosure below and 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.
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
2021
2020
Minimum
lease
payments
£m
8
9
29
329
375
(242)
133
Interest
£m
Principal
£m
3
3
9
227
242
5
6
20
102
133
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
202
202
British Land Annual Report and Accounts 2021
British Land Annual Report and Accounts 2021
FINANCIAL STATEMENTS continued
Notes to the accounts continued
The undrawn facilities are comprised of British Land undrawn facilities of £1,690m plus undrawn facilities of Hercules Unit Trust
The Group leases out all of its investment properties under operating leases with a weighted average lease length of five years
(2019/20: six years). The future aggregate minimum rentals receivable under non-cancellable operating leases are as follows:
17 Net debt continued
Liquidity risk management continued
totalling £nil.
18 Leasing
Operating leases with tenants
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
Lease commitments
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
The Group’s leasehold investment properties are typically under non-renewable leases without significant restrictions. Lease liabilities
are payable in line with the disclosure below and 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.
2021
£m
290
241
505
392
110
33
20
2020
£m
406
342
724
638
192
52
29
1,591
2,383
Minimum
lease
payments
£m
8
9
29
329
375
(242)
133
2021
2020
Interest
Principal
£m
£m
Interest
£m
Principal
£m
3
3
9
227
242
5
6
20
102
133
4
4
12
328
348
7
6
13
137
163
Minimum
lease
payments
£m
11
10
25
465
511
(348)
163
19 Dividends
As announced on 9 October 2020, dividend payments were resumed in the year ended 31 March 2021 following the temporary
suspension in March 2020. Under the Group’s revised dividend policy, going forward the dividend will be paid semi-annually, fixed at 80%
of Underlying earnings per share based on the most recently completed six-month period.
The Final dividend payment for the six-month period ending 31 March 2021 will be 6.64p. Payment will be made on 6 August 2021 to
shareholders on the register at close of business on 25 June 2021. The Final dividend will be a Property Income Distribution and no
SCRIP alternative will be offered.
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 britishland.com/dividends
for details.
Payment date
Current year dividends
06.08.2021
19.02.2021
Prior year dividends
07.02.2020
08.11.2019
Dividend
2021 Final
2021 Interim
2020 2nd interim
2020 1st interim
02.08.2019
03.05.2019
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
2019 4th interim
2019 3rd interim
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
6.64
8.40
15.04
7.9825
7.9825
15.97
7.751
7.75
2021
£m
78
78
–
78
(2)
76
2020
£m
74
74
73
74
295
–
295
–
295
2021
937,938,097
43,895
–
937,981,992
2020
960,589,072
1,144,135
(23,795,110)
937,938,097
Of the issued 25p ordinary shares, 7,376 shares were held in the ESOP trust (2019/20: 7,376), 11,266,245 shares were held as treasury
shares (2019/20: 11,266,245) and 926,708,371 shares were in free issue (2019/20: 926,664,476). No treasury shares were acquired by the
ESOP trust during the year. All issued shares are fully paid.
Hedging and translation reserve
The hedging and translation reserve comprises the effective portion of the cumulative net change in the fair value of cash flow and
foreign currency hedging instruments, as well as all foreign exchange differences arising from the translation of the financial
statements of foreign operations. The foreign exchange differences also include the translation of the liabilities that hedge the
Company’s net investment in a foreign subsidiary.
Revaluation reserve
The revaluation reserve relates to owner-occupied properties and investments in joint ventures and funds. £30m has been transferred
from the revaluation reserve to retained earnings in the year ended 31 March 2021, relating to the disposal of owner-occupied properties.
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.
202
British Land Annual Report and Accounts 2021
British Land Annual Report and Accounts 2021
British Land Annual Report and Accounts 2021
203
203
FINANCIAL STATEMENTS continued
Notes to the accounts continued
20 Share capital and reserves continued
At 31 March 2021, options over 2,990,894 ordinary shares were outstanding under employee share option plans. The options had a
weighted average life of 2.1 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
2020
Granted
Vested but
not exercised
Exercised/
Vested
Lapsed
At 31 March
2021
Exercise
price (pence)
Exercise dates
From
To
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
(2,833)
–
–
–
(2,251)
–
–
–
(5,084)
(5,379)
(2,960)
(6,118)
(109,666)
(8,148)
(33,506)
(10,927)
(161,830)
(125,500)
(26,675)
(1,785)
–
–
5,230
–
13,049
23,426
23,001
120,621
19,580
469,065
350,147
(492,494) 1,024,119
–
–
–
–
–
–
–
–
–
–
–
(34,258)
–
(32,853)
791,304
(3,895)
47,509
(1,108)
785,719
(13,084)
33,095
(5,918)
108,588
(71,662)
116,618
(16,960)
–
(96,212)
(275,950) 1,882,833
– (1,032,912)
–
–
– (1,032,912)
–
83,942
83,942
(5,084) (1,801,356) 2,990,894
476
572
495
697.00
608.00
608.00
508.00
508.00
549.00
549.00
435.00
435.00
336.00
336.00
447.00
510.00
575.00
451.00
538.00
563.00
601.00
600.00
617.17
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
01.09.23
01.09.25
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
01.03.21
01.03.20
01.03.22
01.03.21
01.03.23
01.03.22
01.03.24
01.03.23
01.03.25
01.03.24
01.03.26
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
617.17
681.40
28.06.20
26.06.21
28.06.27
26.06.28
Date of grant
Share options Sharesave Scheme
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
07.07.20
07.07.20
5,379
2,960
11,348
112,499
21,197
56,932
33,928
284,702
145,080
–
–
674,025
–
–
–
–
–
–
–
–
–
495,740
351,932
847,672
Long Term Incentive Plan – options vested, not exercised
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
34,258
32,853
795,199
48,617
798,803
39,013
180,250
133,578
96,212
2,158,783
–
–
–
–
–
–
–
–
–
–
Long Term Incentive Plan – unvested options
28.06.17
26.06.18
Total
Weighted average exercise
price of options (pence)
1,032,912
83,942
1,116,854
3,949,662
–
–
–
847,672
563
336
204
204
British Land Annual Report and Accounts 2021
British Land Annual Report and Accounts 2021
FINANCIAL STATEMENTS continued
Notes to the accounts continued
20 Share capital and reserves continued
At 31 March 2021, options over 2,990,894 ordinary shares were outstanding under employee share option plans. The options had a
weighted average life of 2.1 years. Details of outstanding share options and shares awarded to employees including Executive Directors
are set out below and on the following page:
Date of grant
Share options Sharesave Scheme
At 1 April
2020
Vested but
Granted
not exercised
Exercised/
Vested
At 31 March
Exercise
Lapsed
2021
price (pence)
From
To
Exercise dates
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
07.07.20
07.07.20
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
28.06.17
26.06.18
Total
–
–
495,740
351,932
847,672
674,025
Long Term Incentive Plan – options vested, not exercised
697.00
608.00
608.00
508.00
508.00
549.00
549.00
435.00
435.00
336.00
336.00
447.00
510.00
575.00
451.00
538.00
563.00
601.00
600.00
617.17
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
01.09.23
01.09.25
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
01.03.21
01.03.20
01.03.22
01.03.21
01.03.23
01.03.22
01.03.24
01.03.23
01.03.25
01.03.24
01.03.26
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
5,379
2,960
11,348
112,499
21,197
56,932
33,928
284,702
145,080
34,258
32,853
795,199
48,617
798,803
39,013
180,250
133,578
96,212
2,158,783
1,032,912
83,942
1,116,854
3,949,662
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
(2,833)
(109,666)
(2,251)
(5,379)
(2,960)
(6,118)
(8,148)
(33,506)
(10,927)
(161,830)
(125,500)
(26,675)
(1,785)
–
–
–
5,230
13,049
23,426
23,001
120,621
19,580
469,065
350,147
(5,084)
(492,494) 1,024,119
(13,084)
785,719
(34,258)
(32,853)
(3,895)
(1,108)
(5,918)
(71,662)
(16,960)
(96,212)
791,304
47,509
33,095
108,588
116,618
–
–
–
–
(275,950) 1,882,833
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
Long Term Incentive Plan – unvested options
– (1,032,912)
– (1,032,912)
–
83,942
83,942
617.17
681.40
28.06.20
26.06.21
28.06.27
26.06.28
Weighted average exercise
price of options (pence)
563
336
476
572
495
847,672
(5,084) (1,801,356) 2,990,894
20 Share capital and reserves continued
Date of grant
Performance Shares Long Term Incentive Plan
28.06.17
26.06.18
23.07.19
22.06.20
Restricted Share Plan
26.06.18
19.06.19
22.06.20
Total
Weighted average price of shares (pence)
At 1 April
2020
Granted
Exercised/
Vested
Lapsed
At 31 March
2021
1,657,709
1,036,370
1,040,588
–
3,734,667
–
–
–
1,247,130
1,247,130
590,171
762,293
–
1,352,464
–
–
869,946
869,946
5,087,131
609
2,117,076
410
–
–
–
–
–
–
–
–
–
–
–
(1,657,709)
(284,004)
(215,293)
(397,340)
–
752,366
825,295
849,790
(2,554,346) 2,427,451
551,813
(38,358)
739,300
(22,993)
842,062
(27,884)
(89,235) 2,133,175
(2,643,581) 4,560,626
531
585
Share price
at grant date
(pence)
Vesting date
617.17
681.40
535.60
408.90
28.06.20
26.06.21
23.07.29
22.06.30
681.40
538.20
412.40
26.06.21
19.06.29
25.06.30
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.
From 1 April 2021, the Group intends to change to reporting under two principal sectors, Campuses and Retail & Fulfilment, in line with
changes to how management intends to review the performance of the business.
204
British Land Annual Report and Accounts 2021
British Land Annual Report and Accounts 2021
British Land Annual Report and Accounts 2021
205
205
FINANCIAL STATEMENTS continued
Notes to the accounts continued
21 Segment information continued
Segment result
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
Offices
Retail
Canada Water
Other/unallocated
Total
2021
£m
156
86
242
134
69
203
133
69
202
2020
£m
166
71
237
145
63
208
146
57
203
2021
£m
195
56
251
126
28
154
121
28
149
2020
£m
236
71
307
189
66
255
193
60
253
2021
£m
2020
£m
2021
£m
2020
£m
7
–
7
5
–
5
1
–
1
9
–
9
8
–
8
3
–
3
3
–
3
–
–
–
4
–
4
4
–
4
(48)
–
(48)
(42)
–
(42)
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)
2021
£m
361
142
503
265
97
362
207
97
304
2020
£m
415
142
557
346
129
475
300
117
417
2021
£m
304
(103)
201
2020
£m
417
(111)
306
201
(1,257)
3
(1,053)
306
(1,434)
12
(1,116)
503
(142)
16
377
–
64
7
20
468
557
(142)
18
433
87
64
8
21
613
A reconciliation between net financing costs in the consolidated income statement and net financing costs of £103m (2019/20: £111m)
in the segmental disclosures above can be found within Table A in the supplementary disclosures. Of the total revenues above,
£nil (2019/20: £nil) was derived from outside the UK.
206
206
British Land Annual Report and Accounts 2021
British Land Annual Report and Accounts 2021
Offices
Retail
Canada Water
Other/unallocated
Total
2021
£m
2020
£m
2021
£m
2020
£m
2021
£m
156
86
242
134
69
203
133
69
202
2020
£m
166
71
237
145
63
208
146
57
203
2021
£m
195
56
251
126
28
154
121
28
149
2020
£m
236
71
307
189
66
255
193
60
253
7
–
7
5
–
5
1
–
1
9
–
9
8
–
8
3
–
3
3
–
3
–
–
–
4
–
4
4
–
4
(48)
–
(48)
(42)
–
(42)
FINANCIAL STATEMENTS continued
Notes to the accounts continued
21 Segment information continued
Segment result
Gross rental income
British Land Group
Share of joint ventures and funds
Total
Total
Total
Net rental income
British Land Group
Share of joint ventures and funds
Operating result
British Land Group
Share of joint ventures and funds
Reconciliation to Underlying Profit
Operating result
Net financing costs
Underlying Profit
Underlying Profit
Capital and other
Reconciliation to loss on ordinary activities before taxation
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)
2021
£m
361
142
503
265
97
362
207
97
304
2020
£m
415
142
557
346
129
475
300
117
417
2021
£m
304
(103)
201
2020
£m
417
(111)
306
201
306
(1,257)
(1,434)
3
12
(1,053)
(1,116)
503
(142)
16
377
–
64
7
20
557
(142)
18
433
87
64
8
21
468
613
A reconciliation between net financing costs in the consolidated income statement and net financing costs of £103m (2019/20: £111m)
in the segmental disclosures above can be found within Table A in the supplementary disclosures. Of the total revenues above,
£nil (2019/20: £nil) was derived from outside the UK.
21 Segment information continued
Segment assets
Offices
2021
£m
Property assets
British Land Group
Share of joint ventures and funds
Total
3,622
2,418
6,040
2020
£m
4,470
2,323
6,793
Retail
2021
£m
1,988
604
2,592
2020
£m
2,960
913
3,873
Canada Water
Other/unallocated
2021
£m
387
–
387
2020
£m
364
–
364
2021
£m
121
–
121
2020
£m
147
–
147
Total
2021
£m
2020
£m
6,118
3,022
9,140
7,941
3,236
11,177
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 tangible assets (diluted)
Non-controlling interests
EPRA adjustments
Net assets
2021
£m
9,140
51
9,191
(203)
(2,938)
–
6,050
59
(126)
5,983
2020
£m
11,177
131
11,308
(252)
(3,854)
–
7,202
112
(167)
7,147
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
2021
£m
282
51
–
333
2020
£m
72
56
–
128
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 £7m (2019/20: £8m). Directors are the key management personnel and have the authority and responsibility for
planning, directing and controlling the activities of the entity. Details of Directors’ remuneration are given in the Remuneration Report
on pages 122 to 143. 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.
206
British Land Annual Report and Accounts 2021
British Land Annual Report and Accounts 2021
British Land Annual Report and Accounts 2021
207
207
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 increase / (decrease) in cash and cash equivalents
Cash and cash equivalents at 1 April
Cash and cash equivalents at 31 March
Hercules Unit Trust
2021
£m
(214)
(52)
(162)
2020
£m
(366)
(87)
(279)
Hercules Unit Trust
2021
£m
627
(402)
225
(59)
166
2020
£m
1,002
(564)
438
(112)
326
Hercules Unit Trust
2021
£m
10
29
39
2020
£m
(11)
40
29
The Hercules Unit Trust is a closed-ended property Unit Trust. The unit price at 31 March 2021 is £127 (2019/20: £280). 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.
Post 31 March 2021, the Group expects to purchase the remaining 21.9% of units in issue under the terms of the Unit Trust Agreement,
in-line with a decision to extend the Trust following a unitholder vote in February 2021. The unit purchase price is expected to be
materially in-line with the unit price as at 31 March 2021 which corresponds to an anticipated aggregate purchase price and net
assets to be acquired from the non-controlling interests of £40m.
26 Subsequent events
There have been no significant events since year end.
208
208
British Land Annual Report and Accounts 2021
British Land Annual Report and Accounts 2021
FINANCIAL STATEMENTS continued
Notes to the accounts continued
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 increase / (decrease) in cash and cash equivalents
Cash and cash equivalents at 1 April
Cash and cash equivalents at 31 March
Hercules Unit Trust
Hercules Unit Trust
2021
£m
(214)
(52)
(162)
2021
£m
627
(402)
225
(59)
166
2021
£m
10
29
39
2020
£m
(366)
(87)
(279)
2020
£m
1,002
(564)
438
(112)
326
2020
£m
(11)
40
29
Hercules Unit Trust
The Hercules Unit Trust is a closed-ended property Unit Trust. The unit price at 31 March 2021 is £127 (2019/20: £280). 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.
Post 31 March 2021, the Group expects to purchase the remaining 21.9% of units in issue under the terms of the Unit Trust Agreement,
in-line with a decision to extend the Trust following a unitholder vote in February 2021. The unit purchase price is expected to be
materially in-line with the unit price as at 31 March 2021 which corresponds to an anticipated aggregate purchase price and net
assets to be acquired from the non-controlling interests of £40m.
26 Subsequent events
There have been no significant events since year end.
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
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
British Land Superstores (Non Securitised)
Number 2 Limited
Caseplane Limited
Cavendish Geared Limited
Drake Circus Leisure Limited
FRP Group 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
PC Canal Limited
Pillar (Fulham) Limited
Pillar Projects Limited
Plymouth Retail Limited
Regent’s Place Holding 2 Limited
Regents Place Management Company Limited
Regents Place Residential Limited
Regis Property Holdings Limited
Shoreditch Support Limited
Surrey Quays Limited
TBL (Lisnagelvin) Limited
TBL (Maidstone) Limited
TBL Properties Limited
Teesside Leisure Park Limited
Topside Street Limited
United Kingdom Property Company Limited
Wardrobe Place Limited
Companies House
reg number
06514283
05661132
02779045
09190208
02844685
05341380
02728455
02835919
04181514
05656174
08700158
01185513
05886735
09712919
02850420
02444288
10368557
11864307
07136724
11241644
00891470
02360815
05294243
03853983
03854615
03863190
02672136
11253428
00266486
00483257
Name
17-19 Bedford Street Limited
18-20 Craven Hill Gardens Limited
20 Brock Street Limited
39 Victoria Street 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
BL Aldgate Development Limited
BL Aldgate Holdings Limited
BL Bradford Forster 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 Infrastructure Limited
BL CW Developments Limited
BL CW Developments Plot A1 Limited
BL CW Developments Plot A2 Limited
BL CW Developments Plot G1 Limited
BL CW Developments Plot D1/2 Company Limited
BL CW Developments Plot K1 Company Limited
BL CW Devs Plots F1 2 3 Company Limited
BL CW Developments Plots H1 H2 Company Limited
BL CW Developments Plots L1 L2 L3 Company Limited
BL CW Lower GP Company Limited
BL Davidson Limited
BL Eden Walk Limited
BL Goodman (LP) Limited
BL Holdings 2010 Limited
BL Osnaburgh St Residential Limited
BL Paddington Holding Company 2 Limited
BL Paddington Property 1 Limited
BL Paddington Property 3 Limited
BL Piccadilly Residential Limited
BL Retail Indirect Investments Limited
BL Shoreditch Development Limited
BL West End Investments Limited
BL Whiteley Retail Limited
BLD (A) Limited
BLD (Ebury Gate) Limited
BLD Property Holdings Limited
BLSSP (PHC 5) Limited
BLU Securities Limited
Boldswitch Limited
British Land City Offices Limited
British Land Department Stores Limited
British Land Offices (Non-City) Limited
Companies House
reg number
07398971
07667839
07401697
07037133
07829315
00635800
05270158
05270196
05270137
05270219
05070564
05876405
07780266
09400407
09400541
09400411
09400409
09400413
09400414
12253583
10664198
10782150
10782335
10782458
10997879
10997465
12253559
12141281
12140906
10663292
04220125
10620935
05056902
07353966
06874523
11863746
11863429
11863747
08707494
12288466
05326670
07793483
11254281
00467242
03863852
00823907
04104061
03323061
02307096
03946069
05312262
02740378
208
British Land Annual Report and Accounts 2021
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British Land Annual Report and Accounts 2021
209
209
FINANCIAL STATEMENTS continued
Notes to the accounts continued
27 Audit exemptions taken for subsidiaries continued
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 Chess No. 1 Limited Partnership
BL CW Lower Limited Partnership
BL CW Upper Limited Partnership
BL Lancaster Limited Partnership
BL Shoreditch Limited Partnership
Hereford Shopping Centre Limited Partnership
Paddington Block A Limited Partnership
Name
Paddington Block B Limited Partnership
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
210
210
British Land Annual Report and Accounts 2021
British Land Annual Report and Accounts 2021
FINANCIAL STATEMENTS continued
Notes to the accounts continued
27 Audit exemptions taken for subsidiaries continued
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 Chess No. 1 Limited Partnership
BL CW Lower Limited Partnership
BL CW Upper Limited Partnership
BL Lancaster Limited Partnership
BL Shoreditch Limited Partnership
Hereford Shopping Centre Limited Partnership
Paddington Block A Limited Partnership
Name
Paddington Block B Limited Partnership
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
Company balance sheet
As at 31 March 2021
Fixed assets
Investments and loans to subsidiaries
Investments in joint ventures
Other investments
Interest rate and currency 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
Lease liabilities
Interest rate and currency derivative liabilities
Net assets
Equity
Called up share capital
Share premium
Other reserves
Merger reserve
Retained earnings
Total equity
Note
2021
£m
2020
£m
D
D
D
E
G
E
E
H
E
E
I
33,142
106
41
135
–
33,424
5
89
94
34,800
404
31
231
5
35,471
13
142
155
(161)
(70)
(27,376)
(27,607)
(27,513)
(5)
(71)
(28,682)
(28,758)
(28,603)
5,911
6,868
(1,891)
(25)
(128)
(2,044)
(2,635)
–
(165)
(2,800)
3,867
4,068
234
1,307
(5)
213
2,118
3,867
234
1,307
(5)
213
2,319
4,068
The loss after taxation for the year ended 31 March 2021 for the Company was £113m (year ended 31 March 2020: £896m loss).
Tim Score
Chairman
David Walker
Interim Chief Financial Officer
The financial statements on pages 211 to 222 were approved by the Board of Directors and signed on its behalf on 25 May 2021.
Company number 621920
210
British Land Annual Report and Accounts 2021
British Land Annual Report and Accounts 2021
British Land Annual Report and Accounts 2021
211
211
FINANCIAL STATEMENTS continued
Company statement of changes in equity
For the year ended 31 March 2021
Balance at 1 April 2020
Dividend paid
Fair value of share and share option awards
Net actuarial loss on pension schemes
Loss for the year after taxation
Balance at 31 March 2021
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
Share
capital
£m
234
–
–
–
–
234
240
–
(6)
–
–
–
234
Share
premium
£m
1,307
–
–
–
–
1,307
1,302
5
–
–
–
–
1,307
Other
reserves
£m
(5)
–
–
–
–
(5)
(5)
–
–
–
–
–
(5)
Merger
reserve
£m
213
–
–
–
–
213
Profit and loss
account
£m
2,319
(78)
3
(13)
(113)
2,118
213
–
–
–
–
–
213
3,631
–
(119)
(295)
(2)
(896)
2,319
Total
equity
£m
4,068
(78)
3
(13)
(113)
3,867
5,381
5
(125)
(295)
(2)
(896)
4,068
The value of distributable reserves within the profit and loss account is £818m (2019/20: £918m) (unaudited). An explanation of how
distributable reserves are determined, and any limitations, is set out on page 214 of Note A, within the Distributable reserves section.
212
212
British Land Annual Report and Accounts 2021
British Land Annual Report and Accounts 2021
FINANCIAL STATEMENTS continued
Company statement of changes in equity
For the year ended 31 March 2021
Balance at 1 April 2020
Dividend paid
Fair value of share and share option awards
Net actuarial loss on pension schemes
Loss for the year after taxation
Balance at 31 March 2021
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
Share
capital
£m
234
Share
premium
£m
1,307
Other
reserves
£m
(5)
reserve
£m
213
Merger
Profit and loss
–
–
–
–
–
(6)
–
–
–
–
–
–
–
5
–
–
–
–
(5)
(5)
–
–
–
–
–
–
–
–
–
234
1,307
(5)
213
account
£m
2,319
(78)
3
(13)
(113)
–
(119)
(295)
(2)
(896)
2,319
–
–
–
–
–
–
–
–
–
Total
equity
£m
4,068
(78)
3
(13)
(113)
5
(125)
(295)
(2)
(896)
4,068
234
1,307
213
2,118
3,867
240
1,302
213
3,631
5,381
The value of distributable reserves within the profit and loss account is £818m (2019/20: £918m) (unaudited). An explanation of how
distributable reserves are determined, and any limitations, is set out on page 214 of Note A, within the Distributable reserves section.
Notes to the financial statements
(A) Accounting policies
The financial statements for the year ended 31 March 2021 have been prepared on the historical cost basis, except for the revaluation
of derivatives which are measured at fair value. These financial statements have been prepared in accordance with The Companies Act
2006 as applicable to companies using Financial Reporting Standard 101 Reduced Disclosure Framework (‘FRS 101’).
The financial statements apply the recognition, measurement and presentation requirements of international accounting standards in
conformity with the requirements of the Companies Act 2006, but make amendments where necessary in order to comply with the Act
and take advantage of the FRS 101 exemptions. Instances in which advantages of the FRS 101 disclosure exemptions have been taken
are set out below.
The Company has taken advantage of the exemption under S.408 Companies Act 2006, to prepare an individual profit and loss account
where Group accounts are prepared.
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.
The accounting policies used are otherwise consistent with those contained in the Company’s financial statements for the year ended
31 March 2020.
212
British Land Annual Report and Accounts 2021
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British Land Annual Report and Accounts 2021
213
213
FINANCIAL STATEMENTS continued
Notes to the financial statements continued
(A) Accounting policies continued
Going concern
The financial statements are prepared on a going concern basis. The balance sheet shows that the Company is in a net current liability
position. This results from loans due to subsidiaries of £27,376m 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 12 months. The net current liability position also results from the $220m of Senior US Dollar Loan notes that are reaching
maturity within the next 12 months. The Company has access to £1.8bn of undrawn facilities and cash, which provides the Directors with
comfort that the Company will be able to meet these current liabilities as they fall due. 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 100.
Investments and loans
Investments and loans in subsidiaries and joint ventures are stated at cost less any impairment. Impairment is calculated in accordance
with IFRS 9. Impairment of investments is calculated in accordance with IAS 36. Further detail is provided below.
Significant judgements and sources of estimation uncertainty
The key source of estimation uncertainty relates to the Company’s investments in and loans to subsidiaries and joint ventures. In
estimating the requirement for impairment of investments, management make assumptions and judgements on the value of these
investments using inherently subjective underlying asset valuations, supported by independent valuers with reference to investment
properties held by the subsidiary or joint ventures which are held at fair value. The assumptions and inputs used in determining the fair
value are disclosed in Note 10 of the consolidated financial statements.
In accordance with IFRS 9, management has assessed the recoverability of amounts due to the Company from its subsidiaries and
joint ventures. Amounts due to the Company from subsidiaries and joint ventures are recovered through the sale of properties and
investments held by subsidiaries and joint ventures and through settling financial assets, net of financial liabilities, that the subsidiaries
and joint ventures hold with counterparties other than the Company. This is essentially equal to the net asset value of the subsidiary or
joint venture and therefore the net asset value of the subsidiary or joint venture is considered to be a reasonable approximation of the
available assets that could be realised to recover the amounts due and the requirement to recognise expected credit losses. As a result,
the expected credit loss is considered to be equal to the excess of the Company’s interest in a subsidiary or joint venture in excess of the
subsidiary or joint venture’s fair value.
At 31 March 2021, the Company has recognised a £1,123 million impairment in the Company’s financial statements, in relation to
investment in joint ventures and subsidiaries and intercompany loans. The impairment is predominantly as a result of the decline in
the value of the investment property held by each subsidiary and joint venture.
Distributable reserves
Included in the retained earnings the Company had distributable reserves of £818m as at 31 March 2021 (2019/2020: £918m) (unaudited).
When making a distribution to shareholders, the Directors determine profits available for distribution by reference to “Guidance on
realised and distributable profits under the Companies Act 2006” issued by the Institute of Chartered Accountants in England and
Wales and the Institute of Chartered Accountants of Scotland in April 2017.
The profits of the Company have been received predominantly in the form of interest income, gains on disposal of investments,
management and administration fee income and dividends from subsidiaries. The availability of distributable reserves in the Company is
dependent on those dividends meeting the definition of qualifying consideration within the guidance and on available cash resources of
the Group and other accessible sources of funds. Additionally, the Company does not recognise internally generated gains in the current
and prior years from intra-Group sales of investments or investment properties as distributable until they are realised, usually through
onward sale to external third parties. The distributable reserves are therefore subject to any future restrictions or limitations at the
time such distribution is made.
(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 £35m (2019/20: £36m), social security costs of £5m (2019/20: £4m) and pension costs of
£1m (2019/20: £4m). Details of the Executive Directors’ remuneration are disclosed in the Remuneration Report on pages 122 to 143.
Details of the number of employees of the Company are disclosed in Note 8 of the consolidated financial statements.
Audit fees in relation to the parent Company only were £0.5m (2019/20: £0.3m).
214
214
British Land Annual Report and Accounts 2021
British Land Annual Report and Accounts 2021
FINANCIAL STATEMENTS continued
Notes to the financial statements continued
(A) Accounting policies continued
Going concern
The financial statements are prepared on a going concern basis. The balance sheet shows that the Company is in a net current liability
position. This results from loans due to subsidiaries of £27,376m 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 12 months. The net current liability position also results from the $220m of Senior US Dollar Loan notes that are reaching
maturity within the next 12 months. The Company has access to £1.8bn of undrawn facilities and cash, which provides the Directors with
comfort that the Company will be able to meet these current liabilities as they fall due. 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 100.
Investments and loans
Investments and loans in subsidiaries and joint ventures are stated at cost less any impairment. Impairment is calculated in accordance
with IFRS 9. Impairment of investments is calculated in accordance with IAS 36. Further detail is provided below.
Significant judgements and sources of estimation uncertainty
The key source of estimation uncertainty relates to the Company’s investments in and loans to subsidiaries and joint ventures. In
estimating the requirement for impairment of investments, management make assumptions and judgements on the value of these
investments using inherently subjective underlying asset valuations, supported by independent valuers with reference to investment
properties held by the subsidiary or joint ventures which are held at fair value. The assumptions and inputs used in determining the fair
value are disclosed in Note 10 of the consolidated financial statements.
In accordance with IFRS 9, management has assessed the recoverability of amounts due to the Company from its subsidiaries and
joint ventures. Amounts due to the Company from subsidiaries and joint ventures are recovered through the sale of properties and
investments held by subsidiaries and joint ventures and through settling financial assets, net of financial liabilities, that the subsidiaries
and joint ventures hold with counterparties other than the Company. This is essentially equal to the net asset value of the subsidiary or
joint venture and therefore the net asset value of the subsidiary or joint venture is considered to be a reasonable approximation of the
available assets that could be realised to recover the amounts due and the requirement to recognise expected credit losses. As a result,
the expected credit loss is considered to be equal to the excess of the Company’s interest in a subsidiary or joint venture in excess of the
subsidiary or joint venture’s fair value.
At 31 March 2021, the Company has recognised a £1,123 million impairment in the Company’s financial statements, in relation to
investment in joint ventures and subsidiaries and intercompany loans. The impairment is predominantly as a result of the decline in
the value of the investment property held by each subsidiary and joint venture.
Distributable reserves
Included in the retained earnings the Company had distributable reserves of £818m as at 31 March 2021 (2019/2020: £918m) (unaudited).
When making a distribution to shareholders, the Directors determine profits available for distribution by reference to “Guidance on
realised and distributable profits under the Companies Act 2006” issued by the Institute of Chartered Accountants in England and
Wales and the Institute of Chartered Accountants of Scotland in April 2017.
The profits of the Company have been received predominantly in the form of interest income, gains on disposal of investments,
management and administration fee income and dividends from subsidiaries. The availability of distributable reserves in the Company is
dependent on those dividends meeting the definition of qualifying consideration within the guidance and on available cash resources of
the Group and other accessible sources of funds. Additionally, the Company does not recognise internally generated gains in the current
and prior years from intra-Group sales of investments or investment properties as distributable until they are realised, usually through
onward sale to external third parties. The distributable reserves are therefore subject to any future restrictions or limitations at the
time such distribution is made.
(B) Dividends
(C) Employee information
Details of dividends paid and proposed are included in Note 19 of the consolidated financial statements.
Employee costs include wages and salaries of £35m (2019/20: £36m), social security costs of £5m (2019/20: £4m) and pension costs of
£1m (2019/20: £4m). Details of the Executive Directors’ remuneration are disclosed in the Remuneration Report on pages 122 to 143.
Details of the number of employees of the Company are disclosed in Note 8 of the consolidated financial statements.
Audit fees in relation to the parent Company only were £0.5m (2019/20: £0.3m).
(D) Investments in subsidiaries and joint ventures, loans to subsidiaries and other investments
On 1 April 2020
Additions
Disposals
Amortisation
Provision for impairment
As at 31 March 2021
Shares in
subsidiaries
£m
18,856
–
–
–
(34)
18,822
Loans to
subsidiaries
£m
15,944
535
(1,403)
–
(756)
14,320
Investments in
joint ventures
£m
404
35
–
–
(333)
106
Other
investments
£m
31
30
(16)
(4)
–
41
Total
£m
35,235
600
(1,419)
(4)
(1,123)
33,289
The historical cost of shares in subsidiaries is £19,090m (2019/20: £19,090m). The historical cost of investments in joint ventures is
£439m (2019/20: £404m) net of provision for impairment of £333m (2019/20: £nil). The historical cost includes £236m (2019/20: £204m)
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 £71m (2019/20: £57m).
(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
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
Facilities 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.
2021
£m
361
89
241
691
157
102
67
111
112
298
77
37
37
80
102
181
1,361
2,052
128
(135)
(89)
1,956
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
214
British Land Annual Report and Accounts 2021
British Land Annual Report and Accounts 2021
British Land Annual Report and Accounts 2021
215
215
FINANCIAL STATEMENTS continued
Notes to the financial statements continued
(E) 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
2021
£m
161
–
657
738
496
–
1,891
2,052
(7)
(89)
1,956
(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.
(G) Debtors
Trade and other debtors
Prepayments and accrued income
2021
£m
2
3
5
Trade and other debtors are shown after deducting a provision for impairment against tenant debtors of £2m (2019/20: £nil). The
provision for impairment is calculated as an expected credit loss on trade and other debtors in accordance with IFRS 9.
2020
£m
5
188
599
1,141
107
600
2,635
2,640
(66)
(142)
2,432
2020
£m
13
–
13
2020
£m
6
15
21
29
71
2021
£m
15
3
15
37
70
£m
234
–
234
£m
240
–
(6)
234
Ordinary shares
of 25p each
937,938,097
43,895
937,981,992
Ordinary shares
of 25p each
960,589,072
1,144,135
(23,795,110)
937,938,097
(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 2020
Share issues
At 31 March 2021
Issued, called and fully paid
At 1 April 2019
Share issues
Repurchased and cancelled
At 31 March 2020
216
216
British Land Annual Report and Accounts 2021
British Land Annual Report and Accounts 2021
Notes to the financial statements continued
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.
Trade and other debtors are shown after deducting a provision for impairment against tenant debtors of £2m (2019/20: £nil). The
provision for impairment is calculated as an expected credit loss on trade and other debtors in accordance with IFRS 9.
FINANCIAL STATEMENTS continued
(E) 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
(F) Pension
(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 2020
Share issues
At 31 March 2021
Issued, called and fully paid
At 1 April 2019
Share issues
Repurchased and cancelled
At 31 March 2020
2021
£m
161
–
657
738
496
–
1,891
2,052
(7)
(89)
1,956
2021
£m
2
3
5
2021
£m
15
3
15
37
70
2020
£m
5
188
599
1,141
107
600
2,635
2,640
(66)
(142)
2,432
2020
£m
13
–
13
2020
£m
6
15
21
29
71
£m
234
–
234
£m
240
–
(6)
234
Ordinary shares
of 25p each
937,938,097
43,895
937,981,992
Ordinary shares
of 25p each
960,589,072
1,144,135
(23,795,110)
937,938,097
(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.
(K) Disclosures relating to subsidiary undertakings
The Company’s subsidiaries and other related undertakings
at 31 March 2021 are listed on the next page. Companies which
entered the liquidation process post 31 March 2021 are marked
with an asterisk (*). All Group entities are included in the
consolidated financial results.
At 31 March 2021, the Company has £nil of capital commitments
(2019/20: £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.
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. 44 Esplanade, St Helier, Jersey JE1 0BD.
3. 14 Porte de France, 4360 Esch-sur-Alzette, Luxembourg.
216
British Land Annual Report and Accounts 2021
British Land Annual Report and Accounts 2021
British Land Annual Report and Accounts 2021
217
217
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
BL Shoreditch Development 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 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
Linestair 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
UK Tax Resident
Company Name
1 & 4 & 7 Triton Limited
10 Brock Street Limited
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
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
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
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 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
BL CW Developments Plot G1 Limited
BL CW Developments Plot K1
Company Limited
BL CW Developments Plots F1, F2, F3
Company 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
218
218
British Land Annual Report and Accounts 2021
British Land Annual Report and Accounts 2021
FINANCIAL STATEMENTS continued
Notes to the financial statements continued
Direct holdings
Company Name
BL Bluebutton 2014 Limited
BL Davidson Limited
BL European Fund Management LLP
BL Guaranteeco Limited
Indirect holdings
UK/Overseas Tax
Resident Status
Company Name
UK Tax Resident
1 & 4 & 7 Triton Limited
UK Tax Resident
10 Brock Street Limited
UK Tax Resident
10 Triton Street Limited
UK Tax Resident
17-19 Bedford Street Limited
BL Intermediate Holding Company Limited
UK Tax Resident
18-20 Craven Hill Gardens Limited
BL Intermediate Holding Company 2 Limited
UK Tax Resident
20 Brock Street Limited
UK Tax Resident
20 Triton Street Limited
UK Tax Resident
338 Euston Road Limited
BL Shoreditch Development Limited
BLSSP (Funding) Limited
Bluebutton Property Management UK Limited
(50% interest)
Boldswitch (No 1) Limited
Boldswitch Limited
(Founder Shares)1
British Land City
British Land (White) 2015 Limited (Jersey)
British Land City 2005 Limited
British Land Company Secretarial 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
Linestair 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 Tax Resident
UK Tax Resident
UK Tax Resident
UK Tax Resident
UK Tax Resident
UK Tax Resident
UK Tax Resident
UK Tax Resident
UK Tax Resident
UK Tax Resident
UK Tax Resident
UK Tax Resident
UK Tax Resident
UK Tax Resident
UK Tax Resident
UK Tax Resident
UK Tax Resident
UK Tax Resident
UK Tax Resident
UK Tax Resident
Adamant Investment Corporation Limited
B.L.C.T. (12697) Limited (Jersey)1
350 Euston Road Limited
39 Victoria Street Limited
Aldgate Place (GP) Limited
Aldgate Land One Limited
Aldgate Land Two Limited
Apartpower Limited
Ashband Limited
B.L. Holdings Limited
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
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 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
BL CW Developments Plot G1 Limited
BL CW Developments Plot K1
Company Limited
BL CW Developments Plots F1, F2, F3
Company 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
Company Name
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 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)
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
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
Company Name
BL High Street and Shopping Centres Holding
Company Limited
BL Holdings 2010 Limited
BL Lancaster Investments Limited
BL Lancaster Limited Partnership
(Partnership interest)
BL Leisure and Industrial Holding
Company Limited
BL Logistics Investment Limited
BL Meadowhall Holdings Limited
BL Meadowhall Limited
BL Newport Limited
BL Offices GP 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 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 Properties Limited
BL Retail Property Holdings Limited
BL Retail Warehousing Holding
Company Limited
BL Sainsbury Superstores Limited
(50% interest)
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
BL Wardrobe Court Holdings Limited
BL West (Watling House) Limited
BL West End Investments Limited
BL West End Offices Limited Partnership
BL West End Offices Limited (25% interest)
BL Whiteley Limited
BL Whiteley Retail Limited
BL Woolwich Limited
BL Woolwich Nominee 1 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
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
218
British Land Annual Report and Accounts 2021
British Land Annual Report and Accounts 2021
British Land Annual Report and Accounts 2021
219
219
FINANCIAL STATEMENTS continued
Notes to the financial statements continued
Company Name
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 Properties Limited
BLD Property Holdings Limited
BLSSP (PHC 5) 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
BVP Developments Limited
Canada Water Offices Limited
Casegood Enterprises
Caseplane Limited
Cavendish Geared II Limited
Cavendish Geared Limited
Caymall 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
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
Company Name
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
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
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
Glenway 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
Hereford Old Market Limited
Hereford Shopping Centre GP Limited
Hereford Shopping Centre
Limited Partnership
HUT Investments Limited (Jersey)
(78.14% interest)1
Industrial Real Estate Limited
Insistmetal 2 Limited
UK/Overseas Tax
Resident Status
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
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
UK Tax Resident
UK Tax Resident
UK Tax Resident
Overseas Tax Resident
UK Tax Resident
UK Tax Resident
220
220
British Land Annual Report and Accounts 2021
British Land Annual Report and Accounts 2021
FINANCIAL STATEMENTS continued
Notes to the financial statements continued
BL Woolwich Nominee 2 Limited
UK Tax Resident
Cheshine Properties Limited
UK/Overseas Tax
Resident Status
Company Name
UK Tax Resident
Chester Limited1
UK Tax Resident
Chrisilu Nominees Limited
Blaxmill (Twenty-nine) Limited
UK Tax Resident
City of London Office Unit Trust (Jersey)
(Units) (35.94% interest)1
Overseas Tax Resident
Company Name
Blackglen Limited
Blackwall (1)
BLD (A) Limited
BLD (Ebury Gate) Limited
BLD (SJ) Investments Limited
BLD (SJ) Limited
BLD Properties Limited
BLD Property Holdings Limited
BLSSP (PHC 5) 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
Brunswick Park Limited
BVP Developments Limited
Canada Water Offices Limited
Casegood Enterprises
Caseplane Limited
Cavendish Geared II Limited
Cavendish Geared Limited
Caymall Limited
UK Tax Resident
UK Tax Resident
UK Tax Resident
UK Tax Resident
UK Tax Resident
UK Tax Resident
UK Tax Resident
UK Tax Resident
UK Tax Resident
UK Tax Resident
UK Tax Resident
UK Tax Resident
UK Tax Resident
UK Tax Resident
UK Tax Resident
UK Tax Resident
UK Tax Resident
UK Tax Resident
UK Tax Resident
UK Tax Resident
UK Tax Resident
UK Tax Resident
UK Tax Resident
UK Tax Resident
UK Tax Resident
UK Tax Resident
UK Tax Resident
UK Tax Resident
UK Tax Resident
UK Tax Resident
UK Tax Resident
UK Tax Resident
UK Tax Resident
UK Tax Resident
UK Tax Resident
UK Tax Resident
UK Tax Resident
UK Tax Resident
UK Tax Resident
UK Tax Resident
UK Tax Resident
UK Tax Resident
UK Tax Resident
UK Tax Resident
UK Tax Resident
UK Tax Resident
UK Tax Resident
Clarges Estate Property Management
Co Limited
Comgenic Limited
Cornish Residential Properties
Trading 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
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
Glenway 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
Hereford Old Market Limited
Hereford Shopping Centre GP Limited
Hereford Shopping Centre
Limited Partnership
HUT Investments Limited (Jersey)
(78.14% interest)1
Industrial Real Estate Limited
Insistmetal 2 Limited
Overseas Tax Resident
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
Overseas Tax Resident
UK Tax Resident
UK Tax Resident
UK Tax Resident
Overseas Tax Resident
UK Tax Resident
UK Tax Resident
Broughton Retail Park Limited (Jersey) (Units)
(78.14% interest)1
Broughton Unit Trust (78.14% interest)1
Overseas Tax Resident
Overseas Tax Resident
Company Name
Ivorydell Limited
Ivorydell Subsidiary Limited
Jetbloom Limited
Lancaster General Partner 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
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)
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 (88.9% interest)
Parwick Holdings Limited
Parwick Investments Limited
PC Canal Limited
PC Lease Nominee Ltd
PC Partnership Nominee Ltd
Piccadilly Residential 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
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
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
Company Name
Pillar (Cricklewood) Limited
Pillar (Dartford) Limited
Pillar (Fulham) Limited
Pillar Broadway Limited
Pillar City Limited
Pillar Dartford No.1 Limited
Pillar Denton Limited
Pillar Developments Limited
Pillar Europe Management Limited
Pillar Fort Limited
Pillar Gallions Reach Limited
Pillar Glasgow 1 Limited
Pillar Hercules No.2 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
Prudential Property Investments 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 (89.9%)
Regents Place Residential Limited
Rigphone Limited
Rohawk Properties Limited
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
St. Stephens Shopping Centre Limited
Stockton Retail Park Limited
Storey London Offices Limited
Storey Offices Limited
Storey Spaces Limited
Surrey Quays Limited
Tailress Limited
TBL (Bromley) Limited
TBL (Bury) 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
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
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
220
British Land Annual Report and Accounts 2021
British Land Annual Report and Accounts 2021
British Land Annual Report and Accounts 2021
221
221
FINANCIAL STATEMENTS continued
Notes to the financial statements continued
Company Name
TBL (Lisnagelvin) Limited
TBL (Maidstone) Limited
TBL Holdings Limited
TBL Properties Limited
Teesside Leisure Park Limited (51% interest)
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 Retail and Warehouse Company Limited
The Whiteley Co-Ownership (Member interest)
(50% interest)
Tollgate Centre Colchester Limited
Topside Street Limited
Tweed Premier 4 Limited
Union Property Corporation Limited
Union Property Holdings (London) Limited
United Kingdom Property Company Limited
Valentine Co-ownership Trust
(Member interest) (39.07% interest)
Valentine Unit Trust (Jersey) (Units)
(78.14% 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 GP Limited (25% interest)
WOSC Partners LP (Partnership interest)
(25% 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
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
222
222
British Land Annual Report and Accounts 2021
British Land Annual Report and Accounts 2021
FINANCIAL STATEMENTS continued
Notes to the financial statements continued
Company Name
TBL (Lisnagelvin) Limited
TBL (Maidstone) Limited
TBL Holdings Limited
TBL Properties Limited
Teesside Leisure Park Limited (51% interest)
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 Retail and Warehouse Company Limited
The Whiteley Co-Ownership (Member interest)
(50% interest)
Tollgate Centre Colchester Limited
Topside Street Limited
Tweed Premier 4 Limited
Union Property Corporation Limited
Union Property Holdings (London) Limited
United Kingdom Property Company Limited
Valentine Co-ownership Trust
(Member interest) (39.07% interest)
Valentine Unit Trust (Jersey) (Units)
(78.14% 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 GP Limited (25% interest)
WOSC Partners LP (Partnership interest)
(25% 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
Overseas Tax Resident
Overseas Tax Resident
UK Tax Resident
UK Tax Resident
UK Tax Resident
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 2021
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 income1
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)2
Result attributable to shareholders of
the Company
Group
£m
382
(105)
277
(74)
11
214
(62)
152
(26)
126
Year ended 31 March 2021
Year ended 31 March 2020
Joint
ventures
and funds
£m
142
(45)
97
Less non-
controlling
interests
£m
(16)
9
(7)
Proportionally
consolidated
£m
508
(141)
367
Group
£m
436
(70)
366
Joint ventures
and funds
£m
142
(13)
129
Less non-
controlling
interests
£m
(18)
1
(17)
Proportionally
consolidated
£m
560
(82)
478
–
–
97
(45)
52
–
52
–
–
(7)
4
(3)
–
(3)
(74)
11
304
(103)
201
(26)
175
(1,298)
87
(1,036)
(73)
12
305
(66)
239
–
239
(1)
–
128
(49)
79
–
79
–
1
(16)
4
(12)
–
(12)
(74)
13
417
(111)
306
–
306
(1,389)
57
(1,026)
1. Group gross rental income includes £5m (2019/20: £3m) of all-inclusive rents relating to service charge income.
2. Includes other comprehensive income, movement in dilution of share options and the movement in items excluded for EPRA NTA.
Summary balance sheet based on proportional consolidation as at 31 March 2021
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 Tangible 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
646
2,421
–
–
3,067
Less non-
controlling
interests
£m
(163)
–
–
–
(163)
Group
£m
2,183
3,663
387
121
6,354
2,120
20
(262)
(2,249)
5,983
(2,120)
30
(74)
(903)
–
–
–
5
99
(59)
Mark-to-
market on
derivatives
and related
debt
adjustments
£m
–
–
–
–
–
–
–
–
115
115
Share
options
£m
–
–
–
–
–
–
–
14
–
14
Valuation
surplus on
trading
properties
£m
–
9
–
–
9
Intangibles
£m
–
–
–
–
–
–
–
–
–
9
–
(12)
–
–
(12)
Lease
liabilities
£m
(74)
(53)
–
–
(127)
–
–
127
–
–
EPRA
NTA
31 March
2021
£m
2,592
6,040
387
121
9,140
–
38
(190)
(2,938)
6,050
648p
EPRA
NTA
31 March
2020
£m
3,873
6,793
364
147
11,177
–
125
(246)
(3,854)
7,202
773p
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 NTA per share (Note 2)
1. Included within the total property value of £9,140m (2019/20: £11,177m) are right-of-use assets net of lease liabilities of £8m (2019/20: £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 cash flows over the term of the
lease agreements.
222
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British Land Annual Report and Accounts 2021
223
223
FINANCIAL STATEMENTS continued
Supplementary disclosures continued
Unaudited unless otherwise stated
Table A continued
EPRA Net Tangible Assets movement
Opening EPRA NTA
Income return
Capital return
Dividend paid
Purchase of own shares
Closing EPRA NTA
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 NTA
EPRA NRV
EPRA NDV
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 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
Year ended
31 March 2021
Year ended
31 March 2020
£m
7,202
175
(1,249)
(78)
–
6,050
Pence
per share
773
19
(136)
(8)
–
648
£m
8,639
306
(1,323)
(295)
(125)
7,202
Pence
per share
904
33
(139)
(31)
6
773
2021
2020
£m
175
175
Pence
per share
18.9
18.8
4.6%
5.2%
8.3%
£m
306
306
2021
2020
Net assets
£m
6,050
6,599
5,678
Net asset
value per
share
(pence)
648
707
609
Net assets
£m
7,202
7,872
6,762
Pence
per share
32.8
32.7
4.6%
5.1%
6.3%
Net asset
value per
share
(pence)
773
845
726
2021
£m
(1,031)
2020
£m
(1,027)
25
5
(1)
888
(28)
–
410
–
(12)
(55)
201
(26)
175
(4)
2
–
1,105
(1)
(17)
284
22
41
(99)
306
–
306
(1,031)
–
(1,031)
(1,027)
–
(1,027)
224
224
British Land Annual Report and Accounts 2021
British Land Annual Report and Accounts 2021
Supplementary disclosures continued
FINANCIAL STATEMENTS continued
Unaudited unless otherwise stated
Table A continued
EPRA Net Tangible Assets movement
Opening EPRA NTA
Income return
Capital return
Dividend paid
Purchase of own shares
Closing EPRA NTA
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 NTA
EPRA NRV
EPRA NDV
(Audited)
Exclude:
Year ended
31 March 2021
Pence
£m
per share
7,202
175
(1,249)
(78)
–
6,050
773
19
(136)
(8)
–
648
Year ended
31 March 2020
£m
8,639
306
(1,323)
(295)
(125)
7,202
Pence
per share
904
33
(139)
(31)
6
773
2021
2020
£m
175
175
£m
6,050
6,599
5,678
Pence
per share
18.9
18.8
4.6%
5.2%
8.3%
Net asset
value per
share
(pence)
648
707
609
2021
2020
Net assets
Net assets
£m
306
306
£m
7,202
7,872
6,762
2021
£m
25
5
(1)
888
(28)
410
–
–
(12)
(55)
201
(26)
175
Pence
per share
32.8
32.7
4.6%
5.1%
6.3%
Net asset
value per
share
(pence)
773
845
726
2020
£m
(4)
2
–
(1)
(17)
284
22
41
(99)
306
–
306
1,105
(1,031)
(1,027)
–
–
(1,031)
(1,027)
Calculation and reconciliation of EPRA/IFRS earnings and EPRA/IFRS earnings per share
Loss attributable to the shareholders of the Company
(1,031)
(1,027)
Group – current taxation
Group – deferred taxation
Joint ventures and funds – taxation
Group – valuation movement
Group – profit 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
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)
Remove anti-dilutive effect
IFRS Weighted average number of shares (diluted)
2021
Number
million
938
(11)
927
–
3
930
(3)
927
2020
Number
million
945
(11)
934
–
3
937
(3)
934
Net assets per share (Audited)
EPRA published its latest Best Practices Recommendations in October 2019 which included three new Net Asset Valuation metrics,
EPRA Net Tangible Assets (NTA), EPRA Net Reinstatement Value (NRV) and EPRA Net Disposal Value (NDV). These metrics are effective
from 1 January 2020 and have been adopted in the current year. A reconciliation between the new EPRA net asset valuation metrics and
the previous measures is shown on the following page.
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
Intangible assets
Less non-controlling interests
EPRA Net Tangible Assets (NTA)
Intangible assets
Purchasers’ costs
EPRA Net Reinstatement Value (NRV)
Deferred tax arising on revaluation movements
Purchasers’ costs
Mark-to-market on derivatives and related debt adjustments
Mark-to-market on debt
EPRA Disposal Value (NDV)
2021
2020
£m
5,983
–
115
14
9
(12)
(59)
6,050
12
537
6,599
(1)
(537)
(115)
(268)
5,678
Pence
per share
648
707
609
£m
7,147
6
141
18
13
(11)
(112)
7,202
11
659
7,872
(9)
(659)
(141)
(301)
6,762
Pence
per share
773
845
726
EPRA NTA is considered to be the most relevant measure for the Group and is now the primary measure of net assets, replacing
the previously reported EPRA NAV metric. EPRA NTA assumes that entities buy and sell assets, thereby crystallising certain levels of
unavoidable deferred tax. Due to the Group’s REIT status, deferred tax is only provided at each balance sheet date on properties outside
the REIT regime. As a result deferred taxes are excluded from EPRA NTA for properties within the REIT regime. For properties outside
of the REIT regime, deferred tax is included to the extent that it is expected to crystallise, based on the Group’s track record and tax
structuring. EPRA NRV reflects what would be needed to recreate the Group through the investment markets based on its current
capital and financing structure. EPRA NDV reflects shareholders’ value which would be recoverable under a disposal scenario, with
deferred tax and financial instruments recognised at the full extent of their liability.
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)
2021
Number
million
938
(11)
927
3
3
933
2020
Number
million
938
(11)
927
3
2
932
224
British Land Annual Report and Accounts 2021
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British Land Annual Report and Accounts 2021
225
225
FINANCIAL STATEMENTS continued
Supplementary disclosures continued
Unaudited unless otherwise stated
Table B continued
Reconciliation of new EPRA net asset valuation metrics to previous metrics
EPRA Net Tangible Assets
Adjustment for:
Intangibles
EPRA Net Asset Value
Per share measure
EPRA Net Reinstatement Value
Adjustment for:
Purchasers’ costs
EPRA Net Asset Value
Per share measure
As the Group’s EPRA NDV is the same as the EPRA NNNAV, there are no reconciling items.
EPRA Net Disposal Value
EPRA NNNAV
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 (2019/20: one year).
226
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British Land Annual Report and Accounts 2021
31 March
2021
£m
6,050
12
6,062
650p
31 March
2021
£m
6,599
(537)
6,062
650p
31 March
2021
£m
5,678
5,678
609p
2021
£m
6,118
3,022
(1,224)
7,916
648
8,564
425
(29)
396
51
447
4.6%
5.2%
5
452
5.3%
447
42
12
501
5.9%
31 March
2020
£m
7,202
11
7,213
774p
31 March
2020
£m
7,872
(659)
7,213
774p
31 March
2020
£m
6,762
6,762
726p
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%
As the Group’s EPRA NDV is the same as the EPRA NNNAV, there are no reconciling items.
31 March
31 March
FINANCIAL STATEMENTS continued
Supplementary disclosures continued
Unaudited unless otherwise stated
Table B continued
Reconciliation of new EPRA net asset valuation metrics to previous metrics
EPRA Net Tangible Assets
Adjustment for:
Intangibles
EPRA Net Asset Value
Per share measure
EPRA Net Reinstatement Value
Adjustment for:
Purchasers’ costs
EPRA Net Asset Value
Per share measure
EPRA Net Disposal Value
EPRA NNNAV
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 (2019/20: one year).
31 March
2021
£m
6,050
12
6,062
650p
31 March
2021
£m
6,599
(537)
6,062
650p
2021
£m
5,678
5,678
609p
2021
£m
6,118
3,022
(1,224)
7,916
648
8,564
425
(29)
396
51
447
4.6%
5.2%
5
452
5.3%
447
42
12
501
5.9%
31 March
2020
£m
7,202
11
7,213
774p
31 March
2020
£m
7,872
(659)
7,213
774p
2020
£m
6,762
6,762
726p
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%
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 2021, plus an allowance for
estimated purchasers costs. Estimated purchasers 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
2021
£m
42
507
8.3%
2020
£m
38
603
6.3%
The above is stated for the UK portfolio only. A discussion of significant factors affecting vacancy rates is included within the Strategic
Report (page 57).
EPRA Cost Ratios (Unaudited)
Property operating expenses
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 debtors, tenant incentives and accrued income (D)
Adjusted EPRA Cost ratio (including direct vacancy costs and excluding impairment of tenant debtors, accrued
income, tenant incentives and guaranteed rent increases) (A-D)/C
Adjusted EPRA Cost ratio (excluding direct vacancy costs and excluding impairment of tenant debtors, accrued
income, tenant incentives and guaranteed rent increases) (B-D)/C
Overhead and operating expenses capitalised (including share of joint ventures and funds)
2021
£m
96
74
45
(7)
(4)
(21)
183
(31)
152
341
142
483
2020
£m
69
73
14
(8)
(5)
(16)
127
(30)
97
398
142
540
37.9%
31.5%
23.5%
18.0%
83
26
20.7%
18.7%
14.3%
13.1%
6
6
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 debtors, tenant incentives and accrued
income which are exceptional items in the current year, to show the impact of these items on the ratios.
226
British Land Annual Report and Accounts 2021
British Land Annual Report and Accounts 2021
British Land Annual Report and Accounts 2021
227
227
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
2021
£m
493
11
4
508
2020
£m
558
(3)
5
560
1. Group gross rental income includes £5m (2019/20: £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
Investment properties
Incremental lettable space
No incremental lettable space
Tenant incentives
Other material non-allocated types of expenditure
Capitalised interest
Total property related capital expenditure
Conversion from accrual to cash basis
Total property related capital expenditure on cash basis
Year ended 31 March 2021
Year ended 31 March 2020
Joint
ventures
and funds
£m
–
25
–
28
5
1
2
61
14
75
Group
£m
52
104
1
31
2
5
6
201
34
235
Total
£m
52
129
1
59
7
6
8
262
48
310
Joint
ventures
and funds
£m
54
126
–
20
6
1
4
211
11
222
Group
£m
94
156
1
82
9
5
4
351
9
360
Total
£m
148
282
1
102
15
6
8
562
20
582
The above is presented on a proportionally consolidated basis, excluding non-controlling interests and business combinations. The
‘Other material non-allocated types of expenditure’ category contains capitalised staff costs of £6m (2019/20: £6m).
228
228
British Land Annual Report and Accounts 2021
British Land Annual Report and Accounts 2021
OTHER INFORMATION (UNAUDITED)
Data includes Group’s share of Joint Ventures and Funds (includes Hercules Unit Trust)
FY21 rent collection1
Rent due between 25 March 2020 and 24 March 2021
Received
Rent deferrals
Rent forgiven
Moved to administration
Outstanding
Total
Collection of adjusted billing3
March 2021 rent collection1
Rent due between 25 March and 18 May
Received
Rent deferrals
Rent forgiven
Customer paid monthly
Outstanding
Total
Collection of adjusted billing3
1. As at 18 May.
2. Includes non-office customers located within our London campuses.
3. Total billed rents exclusive of rent deferrals, rent forgiven and tenants moved to monthly payments.
Since 1 April 2020
Purchases
Completed
A1 Retail Park, Biggleswade
Heritage House, Enfield2
Exchanged
Hercules Unit Trust units
Total
1. BL share of annualised rent topped up for rent frees.
2. Exchanged and completed post period end.
Since 1 April 2020
Sales
Completed
Tescos, Milton Keynes & Peterborough
Portfolio of Sainsbury’s stores2
B&Qs, Various
Beaumont Leys (Bradgate Mall)
Beaumont Leys (Fletcher Mall)3
David Lloyd, Northwood
Tesco, Brislington
Valentine Retail Park, Lincoln
Picton Place/James Street, London
Studlands Retail Park, New Market
Debenhams, Chelmsford
Deepdale Retail Park (unit A), Preston
Marble Arch House, York House & 10 Portman Sq
Clarges, Mayfair
Yalding House, London
Orwell House, London
Clearwater Development, Theale
Sector
Retail
Logistics
Sector
Retail
Retail
Retail
Retail
Retail
Retail
Retail
Retail
Retail
Retail
Retail
Retail
Offices
Offices
Offices
Offices
Residential
1. BL share of annualised rent topped up for rent frees.
2. The portfolio was the indirect ownership (25.5%) of the reversionary interest of 26 Sainsbury’s stores.
3. Exchanged and completed post period end.
Offices
99%
1%
–
–
–
100%
£225m
100%
Offices
98%
–
–
1%
1%
100%
£45m
99%
Retail2
71%
5%
9%
3%
12%
100%
£305m
83%
Retail2
72%
–
1%
5%
22%
100%
£50m
76%
Total
83%
3%
5%
2%
7%
100%
£530m
90%
Total
84%
–
1%
3%
12%
100%
£95m
87%
Price (100%)
£m
Price (BL Share)
£m
Annual Passing Rent
£m1
49
87
148
284
49
87
148
284
5
2
12
19
Price (100%)
£m
Price (BL Share)
£m
Annual Passing Rent
£m1
149
102
100
63
9
51
42
24
14
11
4
4
535
177
42
23
12
149
102
100
63
9
51
42
9
14
11
4
2
401
177
42
23
12
9
–
8
5
1
2
3
1
1
1
–
–
12
5
2
1
–
British Land Annual Report and Accounts 2021
229
OTHER INFORMATION (UNAUDITED) continued
Since 1 April 2020
Sales
Exchanged
St Anne’s, Regents Place
Total
1. BL share of annualised rent topped up for rent frees.
Portfolio Valuation by Sector
Sector
Residential
Price (100%)
£m
Price (BL Share)
£m
Annual Passing Rent
£m1
6
1,368
6
1,217
–
51
At 31 March 2021
West End
City
Offices
Retail Parks
Shopping Centre
Superstores
Department Stores
High Street
Leisure
Retail
Residential2
Canada Water
Total
Standing Investments
Developments
Group
£m
3,297
317
3,614
831
409
47
10
91
162
1,550
121
387
5,672
4,559
1,113
JVs & Funds
£m
167
2,251
2,418
536
487
–
–
1
18
1,042
–
–
3,460
3,357
103
Total
£m
3,464
2,568
6,032
1,367
896
47
10
92
180
2,592
121
387
9,132
7,916
1,216
H1
(2.5)
(4.0)
(3.1)
(13.1)
(18.1)
(0.2)
(34.3)
(14.0)
(11.3)
(14.9)
(9.1)
(6.0)
(7.3)
(8.1)
(0.9)
Change%1
H2
(0.8)
(0.7)
(0.8)
(6.5)
(19.9)
1.7
(32.3)
(9.8)
(3.3)
(11.4)
(1.9)
3.4
(3.8)
(4.5)
1.9
FY
(3.2)
(4.6)
(3.8)
(18.6)
(35.7)
0.7
(55.3)
(22.4)
(14.2)
(24.7)
(10.6)
(2.5)
(10.8)
(12.4)
(0.6)
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 2021
Annualised as at 31 March 2021
Group
JVs & Funds
131
16
147
84
50
5
1
5
12
157
3
7
314
18
80
98
51
43
–
–
–
1
95
–
–
193
Total
149
96
245
135
93
5
1
5
13
252
3
7
507
Group
JVs & Funds
116
6
122
71
40
3
1
5
12
132
1
–
255
7
77
84
46
40
–
–
–
1
87
–
–
171
Total
123
83
206
117
80
3
1
5
13
219
1
–
426
Canada Water is now excluded from the standing investment analysis as it is valued as a development asset on a residualised basis
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.
230
British Land Annual Report and Accounts 2021
Portfolio Net Yields1,2
As at 31 March 2021
West End
City
Offices
Retail Parks
Shopping Centre
Superstores
Department Stores
High Street
Leisure
Retail
Total
EPRA net initial
yield
%
3.7
3.0
3.4
7.8
6.8
5.9
(0.4)
4.8
6.3
7.1
4.6
EPRA topped up
net initial yield
Overall topped up
net initial yield
%3
4.4
3.8
4.1
8.1
7.1
7.3
(0.4)
5.0
6.4
7.5
5.2
%4
4.4
3.8
4.1
8.2
7.3
7.3
(0.4)
5.0
7.0
7.6
5.3
Net equivalent
yield
%
4.5
4.4
4.5
7.5
7.6
5.7
9.4
6.0
6.9
7.4
5.4
Net equivalent
yield movement
bps
13
2
9
45
143
(31)
(23)
42
90
81
33
Net reversionary
yield
%
5.3
5.0
5.1
7.4
7.0
5.9
15.1
6.5
5.5
7.1
5.9
ERV Growth
%5
2.0
(1.6)
0.7
(15.2)
(20.3)
0.2
(23.5)
(17.1)
(10.3)
(16.8)
(7.6)
On a proportionally consolidated basis including the Group’s share of joint ventures and funds
Canada Water is now excluded from the standing investment analysis as it is valued as a development asset on a residualised basis
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 MSCI.
Total Property Return (as calculated by MSCI)
12 months to 31 March 2021
%
Capital Return
– ERV Growth
– Yield Movement1
Income Return
Total Property Return
Offices
Retail
Total
British Land
MSCI
British Land
MSCI
British Land
(3.6)
0.7
9 bps
3.0
(0.8)
(4.5)
(1.0)
20 bps
3.8
(0.8)
(24.7)
(16.8)
81 bps
7.3
(19.1)
(12.9)
(9.0)
30 bps
5.5
(8.1)
(10.8)
(7.6)
33 bps
4.2
(7.0)
MSCI
(3.2)
(2.8)
1 bps
4.5
1.2
On a proportionally consolidated basis including the Group’s share of joint ventures and funds
1. Net equivalent yield movement.
Top 20 Tenants by Sector
As at 31 March 2021
Retail
Next
Walgreens (Boots)
M&S Plc
Tesco
J Sainsbury
JD Sports
Dixons Carphone
Frasers Group
TJX (Tk Maxx)
Virgin
Asda Group
Hutchison Whampoa Ltd
DFS Furniture
TGI Fridays
River Island
H&M
Primark
Wilkinson
Homebase
Pets at Home
% of retail rent
Offices
% of office rent
Visa
TP ICAP Plc
5.4 Facebook
4.7 UK Government
4.2 Dentsu Aegis1
3.1
3.1 Herbert Smith Freehills
2.9 Gazprom
2.9 Microsoft Corp
2.6
2.5 SMBC
2.0
Vodafone
2.0 Deutsche Bank
1.9 Henderson
1.9 Reed Smith
1.8
1.6 Mayer Brown
1.5 Ctrip.com (Skyscanner)
1.5 Mimecast Ltd
1.5 Credit Agricole
1.5 Kingfisher
1.2 Milbank LLP
The Interpublic Group (McCann)
8.6
6.9
4.8
4.3
3.5
2.9
2.7
2.5
2.4
2.2
2.1
1.9
1.8
1.7
1.6
1.5
1.4
1.3
1.3
1.2
1. Taking into account their pre-let of 310,000 sq ft at 1 Triton Square, and the break of existing space at 10 & 20 Triton St, % contracted rent would rise to 8.9%
British Land Annual Report and Accounts 2021
231
OTHER INFORMATION (UNAUDITED) continued
Major Holdings
As at 31 March 2021
Broadgate
Regent’s Place
Paddington Central
Meadowhall, Sheffield
Drake’s Circus, Plymouth
Glasgow Fort
Ealing Broadway
Teesside, Stockton
New Mersey, Speke
Giltbrook, Nottingham
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 2021
West End
City
Offices
Retail Parks
Shopping Centre
Superstores
Department Stores
High Street
Leisure
Retail
Total
BL Share
%
50
100
100
50
100
78
100
100
68
100
Sq ft
‘000
4,468
1,740
958
1,500
1,190
510
540
569
502
198
Rent (100%)
£m pa1,4
Occupancy
rate %2,4
Lease
length yrs3,4
184
78
46
72
14
16
13
14
13
7
92.0
96.1
98.4
94.9
87.0
91.7
90.7
90.9
95.8
100.0
7.3
3.8
5.3
4.1
5.4
5.4
3.4
3.2
4.6
5.6
Average lease length yrs
Occupancy rate %
To expiry
To break
EPRA Occupancy
Occupancy1,2,3
5.5
8.4
6.7
6.4
5.7
6.3
23.1
3.7
13.0
6.5
6.6
4.3
7.2
5.5
4.7
4.4
6.3
22.9
3.1
12.8
5.1
5.3
96.3
84.6
91.3
93.3
91.0
96.6
97.0
91.0
94.0
92.5
91.8
96.6
90.7
94.1
94.7
93.3
96.6
97.0
93.7
94.0
94.1
94.1
Canada Water is now excluded from the standing investment analysis as it is valued as a development asset on a residualised basis
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 94.1% to
95.4% 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. If units in administration are treated as vacant, then
the occupancy rate for Retail would reduce from 94.1% to 90.6%, and total occupancy would reduce from 94.1% to 92.4%.
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.
232
British Land Annual Report and Accounts 2021
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%
2021
%
37.9
28.1
66.0
15.0
9.8
0.5
0.1
1.0
2.0
28.4
1.3
4.3
100.0
77%
2021
£m
3,464
2,568
6,032
1,367
896
47
10
92
180
2,592
121
387
9,132
6,984
Annualised Rent & Estimated Rental Value (ERV)
As at 31 March 2021
West End3
City3
Offices3
Retail Parks
Shopping Centre
Superstores
Department Stores
High Street
Leisure
Retail
Residential4
Total
Annualised rent (valuation basis)
£m1
Group
JVs & Funds
108
7
115
74
42
3
1
5
12
137
1
253
7
71
78
50
43
–
–
–
1
94
–
172
ERV
£m
Total
165
124
289
114
88
3
2
7
11
225
1
515
Total
115
78
193
124
85
3
1
5
13
231
1
425
Average rent
£psf
Contracted2
59.9
54.5
57.6
22.2
24.1
17.8
0.7
11.5
17.3
20.6
12.7
28.1
ERV
69.0
55.2
62.5
19.6
24.1
14.4
3.1
14.5
14.6
19.3
11.4
30.6
Canada Water is now excluded from the standing investment analysis as it is valued as a development asset on a residualised basis
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. Stand-alone residential.
Rent Subject to Open Market Rent Review1
For period to 31 March
As at 31 March 2021
West End
City
Offices
Retail Parks
Shopping Centre
Superstores
Department Stores
High Street
Leisure
Retail
Residential
Total
2022
£m
2023
£m
2024
£m
2025
£m
2026
£m
2022-24
£m
2022-26
£m
7
-
7
11
6
–
–
–
–
17
1
25
22
1
23
9
8
1
–
–
–
18
–
41
4
16
20
6
3
1
–
–
–
10
–
30
15
8
23
7
3
–
–
–
1
11
–
34
1
27
28
6
2
–
–
–
–
8
–
36
33
17
50
26
17
2
–
–
–
45
1
96
49
52
101
39
22
2
–
–
1
64
1
166
On a proportionally consolidated basis including the Group’s share of joint ventures and funds
Canada Water is now excluded from the standing investment analysis as it is valued as a development asset on a residualised basis
1. Reflects standing investment only.
Rent Subject to Lease Break or Expiry1
For period to 31 March
As at 31 March 2021
West End
City
Offices
Retail Parks
Shopping Centre
Superstores
Department Stores
High Street
Leisure
Retail
Residential
Total
% of contracted rent
2022
£m
29
7
36
17
16
–
–
2
–
35
–
71
14.8
2023
£m
24
4
28
15
15
2
–
1
–
33
–
61
12.8
2024
£m
12
13
25
24
10
–
–
1
–
35
–
60
12.8
2025
£m
9
4
13
12
8
–
–
1
–
21
–
34
7.2
2026
£m
12
16
28
14
13
–
–
–
1
28
–
56
11.8
2022-24
£m
2022-26
£m
65
24
89
56
41
2
–
4
–
103
–
192
40.4
86
44
130
82
62
2
–
5
1
152
–
282
59.4
On a proportionally consolidated basis including the Group’s share of joint ventures and funds
Canada Water is now excluded from the standing investment analysis as it is valued as a development asset on a residualised basis
1. Reflects standing investment only.
British Land Annual Report and Accounts 2021
233
OTHER INFORMATION (UNAUDITED) continued
Recently Completed and Committed Developments
As at
31 March 2021
100 Liverpool Street
Total Recently Completed
1 Triton Square4
Norton Folgate
1 Broadgate
Total Committed
Other Capital Expenditure3
Sector
Office
Office
Office
Office
BL Share
%
100% sq ft
‘000 PC Calendar Year
Current Value
£m
Cost to come
£m1
50
100
100
50
520
520
365
336
546
1,247
Q3 2020
Q2 2021
Q3 2023
Q2 2025
403
403
443
120
94
657
–
–
32
229
227
488
34
ERV
£m2
19.4
19.4
22.8
22.2
20.1
65.1
Pre-let
£m
15.5
15.5
21.9
–
5.0
26.9
1. From 1 April 2021. 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. Capex committed and underway within our investment portfolio relating to leasing and asset management.
4. Completed post year end in May.
Near Term Development Pipeline
As at 31 March 2021
5 Kingdom Street
Aldgate Place, Phase 2
Canada Water, Plot A13
Canada Water, Plot A23
Canada Water, Plot K13
Total Near Term
Other Capital Expenditure4
Sector
Office
Residential
Mixed Use
Mixed use
Residential
BL Share
100% sq ft
%
100
100
100
100
100
‘000
438
136
272
248
62
1,156
Earliest Start
on Site
Q2 2022
Q3 2021
Q3 2021
Q3 2021
Q3 2021
Current Value
£m
117
28
30
16
–
191
Cost to Come
£m1
344
99
218
120
25
806
97
ERV
£m2
30.1
6.5
6.7
10.4
–
53.7
Let &
Under Offer
Planning
£m
Status
– Consented
– Consented
– Consented
– Consented
– Consented
–
1. From 1 April 2021. 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. The London Borough of Southwark has confirmed they will not be investing in Phase 1. The BL ownership share will change over time as costs are incurred and is
expected to be c.98-99% by PC.
4. 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 2021
2-3 Finsbury Avenue
Eden Walk Retail & Residential
Ealing – 10-40 The Broadway
Ealing – International House
Gateway Building
Euston Tower
Canada Water – Future phases1
Total Medium Term
Sector
Office
Mixed Use
Mixed Use
Office
Leisure
Other
Mixed Use
BL Share
%
50
50
100
100
100
100
100
100% Sq ft
‘000
Planning Status
704 Consented
452 Consented
303 Pre-submission
165 Pre-submission
105 Consented
620 Pre-submission
4,498 Consented
6,847
1. The London Borough of Southwark has the right to invest in up to 20% of the completed development. The BL ownership share will change over time depending on
the level of contributions made, but will be no less than 80%.
234
British Land Annual Report and Accounts 2021
SUSTAINABILITY PERFORMANCE MEASURES
EPRA best practice recommendations on
sustainability reporting
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, on site or
completed in the year. The exception
in this table is Energy Performance
Certificates, where we report on all
assets under management. As at
31 March 2021, our managed portfolio
comprised 84% of our assets under
management. Please see the scope
column for indicator-specific
reporting coverage.
We have received Gold Awards for
sustainability reporting from the European
Public Real Estate Association (EPRA),
nine years running. For our full EPRA
sustainability reporting, methodology
and the 2021 DNV Assurance Statement,
please see our Sustainability Accounts
2021 at britishland.com/data. Selected
data has been independently assured
since 2007. Selected data in the
Sustainability Accounts for 2021 has
been independently assured by DNV
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.
Environmental performance1
Total electricity consumption (MWh)
Total district heating and cooling
consumption (MWh)
Total fuel consumption (MWh)
Building energy intensity (kWh)
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)
Total water consumption (m³)
Building water intensity
(m³ per FTE or 10,000 visitors)
Total non-hazardous waste by
disposal route (tonnes and %)
Offices (per sqm)
Shopping centres (per sqm)
Retail Parks (per car parking space)
Shopping villages
Retail, High Street
Location based
Market based
Offices (per sqm, whole building)
Shopping centres (per sqm)
Retail Parks (per car parking space)
Shopping villages
Retail, High Street
Offices
Shopping centres
Retail Parks
Shopping villages
Retail, High Street
Re-used and recycled
Incinerated
Landfilled
Total hazardous waste by
disposal route (tonnes and %)
Re-used and recycled
Incinerated
Landfilled
Sustainably certified assets –
Energy Performance Certificates
(% by floor area)
A to B
C to E
F to G
2021
123,328
2020
2019
(assets or units)
151,504
154,532
108/112
Scope
0
38,134
210
95
129
6,663
12,435
839
0.067
0.021
0.032
658,932
50.5
16.76
41.79
52.31
–
3,189
53%
2,878
47%
1
0%
40
79%
10
21%
0
0%
24%
71%
5%
0
0
108/112
36,290
305
118
149
37,313
257
126
149
To be reported from 2022
To be reported from 2022
81/82
35/35
9/9
31/31
6,556
20,258
1,549
0.113
0.034
0.044
6,945
15,373
669
0.087
0.031
0.040
To be reported from 2022
To be reported from 2022
109/113
109/113
109/113
36/36
9/9
31/31
814,658
12.11
17.42
8.93
46.45
–
10,065
58%
7,368
42%
2
0%
8
84%
2
16%
0
0%
25%
70%
5%
553,282
14.09
nr
nr
nr
–
10,818
57%
8,182
43%
2
0%
5
44%
7
56%
0
0%
73/75
60/61
89/92
89/92
89/92
89/92
89/92
89/92
22% 2578/2865
73% 2578/2865
5% 2578/2865
British Land Annual Report and Accounts 2021
235
SUSTAINABILITY PERFORMANCE MEASURES continued
Social performance2
Employee diversity – gender
Gender pay ratio (total remuneration,
median female to male)
Employee training – average hours
Employee training – annual
performance review
New employees and
employee turnover
Employee health and safety
Asset health and safety
Proportion of managed portfolio
(floor area) where community
activity implemented
Male
Female
Executive Directors
Senior management
Middle and non-management
New hires rate (%)
Departures rate (%)
Absentee rate
Injury frequency rate
Lost day rate
Work-related fatalities
Proportion subject to health and safety
review (%)
Incidents of non-compliance
2021
50%
50%
n/a
81%
69%
16
100%
15%
11%
0%
0
0
0
100%
0
2020
49%
51%
n/a
89%
71%
24.2
100%
16%
12%
1%
0
0
0
100%
0
2019
(assets or units)
Scope
47%
53%
n/a
88%
74%
16.2
100%
20%
19%
1%
0
3.68
0
100%
0
–
–
–
–
–
–
–
–
–
–
–
–
–
114/114
114/114
76%
80%
83%
99/99
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 whole building for Offices and common parts for Retail. Water intensity data covers whole buildings for Offices and common parts for Retail. Per sqm
comprises net internal areas for Offices and common parts for Retail. From 2021, intensity metrics are no longer degree day adjusted and previous years have
been restated.
2. Employee data has been restated using headcount rather than FTE.
Governance indicators
Composition of the highest governance body
Nominating and selecting the highest governance body
Process for managing conflicts on interest
Board’s Executive and Non-Executive Directors pages 90-92 and 115
Appointment process for new Directors pages 112-115
Board procedure for managing conflicts of interest page 97
Annual Report and Accounts 2020
236
British Land Annual Report and Accounts 2021
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)
Dividends declared
Summarised balance sheets1
Total properties at valuation3
Net debt
Other assets and liabilities
EPRA NTA / NAV (fully diluted)6
Cash flow movement – Group only
Cash generated from operations
Other cashflows from operations
Net cash inflow from
operating activities
Cash inflow (outflow) from
capital expenditure, investments,
acquisitions and disposals
Equity dividends paid
Cash (outflow) inflow from
management of liquid resources
and financing
(Decrease) increase in cash5
Capital returns
(Reduction) growth in net assets2
Total accounting return
Total accounting return –
pre-exceptional
Per share information
EPRA NTA / NAV per share7
Memorandum
Dividends declared in the year
Dividends paid in the year
Diluted earnings
Underlying earnings per share
IFRS (loss) earnings per share4
2021
£m
2020
£m
2019
£m
2018
£m
2017
£m
2016
£m
2015
£m
2014
£m
2013
£m
2012
£m
508
367
11
(103)
(74)
201
–
78
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
9,140
(2,938)
(152)
6,050
11,177
(3,854)
(110)
7,213
12,316
(3,521)
(146)
8,649
13,716
(3,973)
(183)
9,560
13,940
(4,223)
(219)
9,498
14,648
(4,765)
191
10,074
13,677
(4,918)
276
9,035
12,040
(4,890)
(123)
7,027
10,499
(4,266)
(266)
5,967
10,337
(4,690)
(266)
5,381
218
(69)
404
(29)
617
(4)
149
375
613
351
2
353
379
(16)
341
(47)
318
(33)
243
(24)
197
(7)
211
(5)
363
294
285
219
190
206
910
(76)
(361)
(295)
187
(298)
346
(304)
470
(295)
230
(235)
(111)
(228)
(660)
(159)
(202)
(203)
(547)
(212)
(1,022)
(39)
232
(49)
(365)
137
(404)
(9)
(538)
–
(283)
6
20
(34)
607
7
213
(2)
630
77
(16.0)% (16.6)%
(15.1)% (11.0)%
(9.5)%
(3.3)%
0.7%
8.9%
(5.7)%
2.7%
11.5%
14.2%
28.6%
24.5%
17.8%
20.0%
10.9%
4.5%
5.5%
9.5%
(15.1)% (11.0)%
(3.3)%
8.9%
2.7%
14.2%
24.5%
20.0%
4.5%
9.5%
648p
774p
905p
967p
915p
919p
829p
688p
596p
595p
15.0p
8.4p
16.0p
31.5p
31.0p
30.5p
18.8p
32.7p
(111.2)p (110.0)p
34.9p
(30.0)p
30.1p
29.6p
37.4p
48.5p
29.2p
28.8p
28.4p
28.0p
27.7p
27.3p
27.0p
26.7p
26.4p
26.3p
26.1p
26.0p
37.8p
14.7p
34.1p
119.7p
30.6p
167.3p
29.4p
110.2p
30.3p
31.5p
29.7p
53.8p
1. Including share of joint ventures and funds.
2. Represents movement in diluted EPRA NTA in 2021 and movement in diluted EPRA NAV from 2020 to 2012.
3. Including surplus over book value of trading and development properties.
4. Including restatement in 2016.
5. Represents movement in cash and cash equivalents under IFRS and movements in cash under UK GAAP.
6. EPRA NTA is disclosed in 2021 and EPRA NAV is disclosed from 2020 to 2012.
7. EPRA NTA per share is disclosed in 2021 and EPRA NAV per share is disclosed from 2020 to 2012.
British Land Annual Report and Accounts 2021
237
SHAREHOLDER INFORMATION
Analysis of shareholders –
31 March 2021
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 20211
%
4,488
2,092
548
203
581
7,912
1,826,034
56.72
4,622,456
26.44
5,541,286
6.93
2.57
6,670,530
7.34 919,321,686
100.00 937,981,992
%
0.19
0.49
0.59
0.71
98.01
100.00
5,402
68.28
9,571,102
1.02
2,510
7,912
31.72 928,410,890
100.00 937,981,992
98.98
100.00
1. Excluding 11,266,245 shares held in treasury.
Registrars
British Land has appointed Equiniti Limited (EQ) to administer
its shareholder register. EQ 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 9:00am to 5.00pm Monday to Friday
excluding public holidays in England and Wales.
Website: shareview.co.uk
By registering with Shareview, shareholders can:
– view your British Land shareholding online
– update your details
– elect to receive shareholder mailings electronically
EQ is also the Registrar for the BLD Property Holdings
Limited Stock.
Share dealing facilities
By registering with Shareview, EQ 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 EQ at shareview.co.uk/dealing or
call 0845 603 7037 (Monday to Friday excluding public holidays
from 8.00am to 6.00pm). 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 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: 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: britishland.com
238
British Land Annual Report and Accounts 2021
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 (PID) 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. As outlined in Note 7 to the accounts, there
was a shortfall in PID payments for the year to 31 March 2020.
We remained compliant with the REIT regime through the
payment of additional corporation tax. 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 britishland.com/governance.
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 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 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 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 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 fca.org.uk/scams or by calling the FCA Consumer
Helpline on 0800 111 6768.
British Land Annual Report and Accounts 2021
239
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.
SHAREHOLDER INFORMATION continued
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 United Kingdom’s withdrawal from the European Union,
(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 “Risk Management” on pages 78-87
(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.
240
British Land Annual Report and Accounts 2021
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britishland.com
Head office and registered office
York House
45 Seymour Street
London
W1H 7LX
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