Annual Report and Accounts 2014 P Eople Have a Choice Where They Work, Sh Op and Live
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Annual Report and Accounts 2014 P eoPLe have A choiCe wheRe theY WoRk, sh oP And Live. We Aim To create outstanding plac eS which mAke A PoSiTive diffeRenCe T o PeoPLe’S everyday LiveS. Place: /pleis/ noun an area or location. An office campus or building, shopping centre or park, retail outlet, venue or residential building. People: /’pi:p( )l/ noun persons in general or considered collectively. Customers (occupiers), users (office workers, shoppers and visitors), residents, local community, intermediaries (e.g. agents) and other related stakeholders. Prefer: /pri’f :/ verb like better than any other. Tend to choose because it meets your needs. fOr MORE INFOrMATIOn feedback cOrporate responsibility You’ll find links throughout this Report, to guide We value your feedback. We believe that operating sustainably and behaving you to further reading or relevant information. Please contacts us at: responsibly are fundamental to creating long-term value. information relating to social, environmental find more information on our website Our corporate website and ethical issues is therefore integrated throughout www.britishland.com www.britishland.com this Report. This provides the reader with insight into the critical linkages in our thinking and activity. see page title Our iPad app it also shows more directly how we create value P00–00 British Land investor relations not just for our investors but for our other key stakeholders and the society in which we operate. follow us on twitter @BritishLandPLC contents Hig HligHts of tHe year contents Strategic Report 2–42 Portfolio returns boosted by our actions and strengthening strategic report markets. What we do 2 our portfolio 3 Increased letting activity driven by improving occupier demand. Places People Prefer 4 chairman’s statement 8 chief executive’s review 10 Significant development returns as 2010 West end programme our business model 14 completes along with further pre-lets. the markets we operate in 16 Key market trends 17 Significant investment adding to core income and replenishing right places, customer orientation capital efficiency, expert people 18 development pipeline. Delivering our strategy and KPis 30 Managing risk 36 Taking advantage of stronger debt markets to raise £1.5 billion Principal risks 38 of new finance. corporate responsibility 42 Performance review 43–58 PerfOrMance review ePRA net asset value Per sHare carbOn eMissiOns Business review Portfolio review 44 since 2009 retail and leisure review 47 6 8 8 p – 3 6 % office and residential review 49 Up 15.4%. We have reduced our scope 1 and 2 financial review 51 carbon emissions across our like-for-like financial policies and principles 56 dividend Per sHare portfolio by 36% since 2009. 2 7 . 0 p custOMer satisfactiOn Up 2.3%, in line with previous announcements. 7 . 8 / 1 0 in our biennial independent customer Total accOunting return satisfaction survey our occupiers scored us 7.8 out of 10 for ‘satisfaction with landlord’ 2 0 . 0 % outperforming the industry average of 5.1 remuneration59–108 Governance and reflecting the increase in our net asset out of 10. gOvernance and reMuneratiOn Value per share and income yield from EmplOyee satisfactiOn chairman’s governance review 60 the dividend. our governance structure 62 Board of Directors 66 POrtfOliO valuatiOn1 One Star governance review 68 We achieved a one star rating in the sunday report of the audit committee 74 £ 1 2 . 0 b n times Best companies to Work for survey report of the nomination committee 79 Up 8.3% with asset management and 2014 (2013: one star). remuneration report 82 development contributing half the uplift. remuneration Policy 84 remuneration implementation report 94 underlying PrOfit befOre tax ePRA PerfOrMance Measures additional disclosures 108 as at 31 March (£m) 2014 2013 2012 £ 2 9 7 m ePRA earnings 295 268 262 the sections from strategic report to governance Up 8.4% reflecting the accretive ePRA NAV 7,027 5,967 5,381 and remuneration make up the Directors’ report ePRA NNNAV 6,700 5,522 5,148 investment of our equity placing for the purposes of the companies act 2006. Financial statements and other information 109–180 proceeds, development lettings as at 31 March (%) 2014 2013 2012 FINANCIAL STATEMENTS and higher like-for-like growth. ePRA net initial yield 4.8 5.5 5.2 AND OtHER INFOrMATIOn underlying ePs ePRA ‘topped-up’ net initial yield 5.3 5.7 5.8 Directors’ responsibility statement 110 ePRA vacancy rate 5.2 3.4 2.4 report of the auditor 111 2 9 . 4 p financial statements 114 IFRS PerfOrMance Measures notes to the accounts 119 Down 3% primarily as a result company balance sheet 153 of disposals made last year. as at 31 March (£m) 2014 2013 2012 IFRS profit before tax 1,110 260 479 supplementary disclosures 159 other information 165 1 Our share of UK portfolio excluding £89 million IFRS net assets 7,117 5,687 5,104 of assets held in europe. ten year record 175 shareholder information 176 glossary of terms 178 The British Land Company PLC Annual Report and Accounts 2014 1 Strategic report WHat We Do We are… …one of europe’s largest publicly-listed real estate companies. We manage, develop and finance a £17.8 billion portfolio of properties of which our share is £12.0 billion. our portfolio is focused on high-quality retail locations around the UK and london offices. Our portfolio REIT legislation Our markets P18–21 P16 P16–17 Our objective is… Our strategy is… …to deliver long-term and …to create and operate places that people RIGHT prefer P18–23 sustainable total returns to our will when making a decision where to PLACES shareholders. We do this by work, shop and live. We are customer-oriented, creating places people prefer. enabling us to develop a deep understanding CUSTOMER P24–25 of what is important to people who use our ORIENTATION places; we employ a lean team ofexpert CAPITAL people who translate this understanding into the EFFICIENCY P26–27 creation of the right places to meet peoples’ needs; and our capital efficiency means we EXPERT P28–29 business model can effectively finance our portfolio. PEOPLE P14–15 Our scale… Our team… …gives us significant advantages. operationally, we …is small and agile, best able to react quickly to benefit from the breadth of our occupier relationships opportunities. although we manage a large and our ability to develop and leverage best practice property portfolio, we are a team of 242 employees. across our portfolio. financially, our scale gives us our employees focus on the most highly-skilled a cost of capital advantage. We are able to access and value-added activities. it keeps our operating a broad range of debt providing us with flexible and costs low and allows us to be more flexible. competitively priced financing. customer orientation financing People P24–25 P26–27 P28–29 Our partners… Our values… integrity We do what is right not what is easy. …are some of the best known property …underpin everything we do. investors and food retail businesses. We believe behaving responsibly ONE teaM Partnerships are an important part of our and managing social and Working collaboratively both with business, allowing us access to attractive environmental issues are internal and external stakeholders. investment opportunities, the ability to core to our ability to deliver excellence share risk, and work with people with long-term value. We are the best we can be and complementary skills. have a growth mindset. governance P59–81 Commercial acuMen strategic partnerships corporate responsibility We take the lead in our field. P26 P42 2 The British Land Company PLC Annual Report and Accounts 2014 strategic rePort o Ur Portfolio Strategic Report 2–42 our properties are home UK RETAIL and leisure LondOn Office and residential to over 1,000 different As the UK’s largest listed owner and our offices and Residential portfolio manager of retail space, our portfolio is focused on London reflecting its organisations and are places is well matched to the different ways position as a leading global city, a place where over 99,000 people people shop today, from major regional where people want to work, live and work or live. they are visited shopping centres to single occupier visit. We have an attractive mix of locations. We are focused on being high-quality buildings in well-managed around 300 million times the preferred destination for retailers environments and a pipeline of each year. and their customers by being the development projects which will best provider of spaces and services. add significantly to our portfolio. increasingly, our offices are in mixed- use environments which include retail and residential elements. Performance review 43–58 £ 1 7 . 8 b n £10.4bn £7.4bn assets under ManageMent assets under ManageMent assets under ManageMent £ 1 2 . 0 b n £6.9bn £5.1bn Of wHicH we Own Of wHicH we Own Of wHicH we Own 3 1 . 9 msq ft 24.6m sq ft 7.3m sq ft Of floor sPace Of floor sPace Of floor sPace £608m 1 5 3 remuneration59–108 Governance and cOntracted REnt Shopping centres Office-led, Mixed-use campuses Over 54 acres witH 33 buildings (including developments) 9 6 . 1 % 66 54 OccuPancy rate retail Parks stand-alOne Office buildings 1 0 . 3years 85 8 weigHted average lease lengtH food suPerstOres Office AND RESIDENTIAL developments retail and leisure portfolio Offices and residential P20 P21 retail and leisure performance review Offices and residential performance review P47–48 P49–50 Financial statements and other information 109–180 GEOGRAPHICAL PORTFOLIO BREAKDOWN1 London South East Other 39.0% 53.6% 7.4% 1 Pro forma for committed developments at estimated end value.