Annual Report and Accounts 2013 The British Land Company PLC “It’sbeenabusy,actIve yearandourbusInessIs strongergoIngforward” Annual Report and Accounts 2013 BRITISH LAND IS ONE OF EUROPE’S LARGEST REAL ESTATE INVESTMENT TRUSTS (REITS) AND OUR VISION IS TO BE THE BEST. We provide investors with access to a diverse range of quality property assets which we actively manage, finance and develop. We focus mainly on prime UK retail and London office properties as we believe these are the sectors that will outperform and provide shareholders with the best returns. We also have a reputation for delivering industry-leading customer service. Our properties and our approach attracts high-quality occupiers committed to long leases, so we can provide shareholders with security of income as well as capital growth. We believe achieving leading levels of efficiency and sustainability in our buildings helps drive our performance. This is also of increasing importance to occupiers and central to our aim to create environments in which businesses and local communities can thrive. InTegrated RePorting WHy go online? FoR moRe InFoRmation Corporate responsibility information is integrated throughout our corporate website contains detailed You’ll find links throughout this Report, our Annual Report and Accounts and is highlighted with the logos below. information about the Company and is to guide you to further reading or This reflects how managing our environmental, economic and social frequently updated as additional details relevant information. impacts is central to how we do business. It also provides readers with become available. You can sign up insights into the critical linkages in our thinking and activity, and greater for email alerts of our latest news and For more information clarity on the relationship between our financial and non‑financial key our current share price is displayed www.britishland.com/… performance indicators. on the home page. See Page title P00–00 our corporate website EnvironmEntal www.britishland.com our iPad app Social British Land Investor Relations Follow us on Twitter @BritishLandPLC overview: ConTEnTS O C ontents verview DirectoRs’ RePort And BusIness RevIeW FInAncial statemenTs und ersta FInAncial 2–11 48–73 statemenTs And 111–176 nd oveRvIeW ouR PeRFoRmAnCe otheR InFoRmation I ng ou ng What we do 2 Portfolio review 48 Consolidated income statement 112 R delivering our strategy this year 4 Performance review: Retail 53 Consolidated statement of comprehensive income 113 strate delivering superior performance 5 Performance review: offices 57 Consolidated balance sheet 114 Chairman’s statement 6 our corporate responsibility review 60 Consolidated statement of cash flows 115 g Chief Executive’s statement 8 Financial review 62 Consolidated statement of changes in equity 116 Y Financial policies and principles 69 notes to the accounts 117 Report of the auditor 150 Supplementary disclosures 151 Company balance sheet 156 o Report of the auditor 162 u undeRstandIng R 12–47 74–110 ouR strategy goveRnAnCe Supplementary information 163 perf Ten year record 170 o R our markets 12 Chairman’s governance review 74 m other information A Business model 14 our governance structure 75 n Financial calendar 171 ce our strategy 16 Board of directors 76 Analysis of shareholders 171 Short‑term actions 18 management Committees 78 Shareholder information 172 measuring our performance (KPIs) 28 Corporate governance compliance 80 glossary of terms 173 About our business 30 other matters 85 Index 176 managing risk in delivering our strategy 42 Report of the Audit Committee 86 Principal risks and uncertainties 44 Report of the nomination Committee 90 Remuneration Report 92 Additional disclosures 109 directors’ responsibility statement 110 gov er n A n ce FI n A Forward-LookIng statemenTs n This Report contains certain ‘forward‑looking’ statements. or implied by such forward‑looking statements include, Any forward‑looking statements made by or on behalf CIALSTATE Such statements reflect current views on, among other things, among other things, general business and economic conditions of British Land speak only as of the date they are made our markets, activities and prospects. Such ‘forward‑looking’ globally, industry trends, competition, changes in government and no representation, assurance, guarantee or warranty statements can sometimes, but not always, be identified and other regulation, including in relation to the environment, is given in relation to them (whether by British Land or any by their reference to a date or point in the future or the use health and safety and taxation (in particular, in respect of its associates, directors, officers, employees or advisers), m of ‘forward looking’ terminology, including terms such as of British Land’s status as a Real Estate Investment Trust), including as to their completeness, accuracy or the basis E n ‘believes’, ‘estimates’, ‘anticipates’, ‘expects’, ‘forecasts’, labour relations and work stoppages, changes in political and on which they were prepared. other than in accordance with A TS ‘intends’, ‘plans’, ‘projects’, ‘goal’, ‘target’, ‘aim’, ‘may’, ‘will’, economic stability, changes in occupier demand and tenant our legal and regulatory obligations (including under the uK ‘would’, ‘could’, ‘should’ or similar expressions or in each default and the availability and cost of finance. These and Financial Conduct Authority’s Listing Rules and disclosure ND case their negative or variations or comparable terminology. other risks are described in greater detail in the section of Rules and Transparency Rules), British Land does not intend o this Report headed ‘Principal risks and uncertainties’. Such or undertake to update or revise forward‑looking statements I THER By their nature, forward‑looking statements involve inherent forward‑looking statements should therefore be construed to reflect any changes in British Land’s expectations with regard risks and uncertainties because they relate to future events in light of such factors. Information contained in this Report thereto or any changes in information, events, conditions n and circumstances which may or may not occur and may be F relating to British Land or its share price, or the yield on its or circumstances on which any such statement is based. o beyond our ability to control or predict. Therefore they should shares are not guarantees of, and should not be relied upon R be regarded with caution. Important factors that could cause m as an indicator of, future performance. ATI actual results, performance or achievements of British Land to differ materially from any outcomes or results expressed ON directors’ report and business review The British Land Company PLC Annual Report and Accounts 2013 1 overview: WHAT WE do whatwedo WE are onE oF EuRope’S largest reits And ouR vision is To be the best And the partner oF choice. FoR uS, being the best meanS delivering SuperioR Total retuRnS To ouR sharehoLders. ouR Portfolio ouR approach And values British Land manages a portfolio of commercial We take a responsible and collaborative property worth £16.4 billion, of which our share £16.4bn approach to business so our brand is both is £10.5 billion. our portfolio is focused primarily trusted and valued by stakeholders. managing on high‑quality uK retail locations and London Commercial property value our environmental, social and economic offices. We like those sectors because they impacts is also central to how we do business, are large and liquid markets with the best adding value to our assets and delivering value growth potential for rents and capital values. to our shareholders. We also have property in sectors which complement our core business, principally £ 1 0 . 5 b n our people are one of our major assets and leisure and residential. how they do business is embodied by our British Land share values which differentiate us and help deliver We invest in and develop high‑quality buildings a brand people and organisations want to in prime locations and then manage them to engage with. We aim to attract and retain a high standard with a focus on occupier needs experts in their fields and to leverage their at every stage. It’s an approach that’s proved significant experience, specialist expertise, successful; each year our properties attract 9 6 . 8 % skill and judgement across our business. over 300 million visits and are home to over They understand and anticipate the changing 1,000 different organisations and retail brands. Percentage of portfolio let needs of stakeholders and their approach The quality and attractiveness of our portfolio helps make British Land a partner of choice is reflected in the high level of occupancy – for a wide range of stakeholders. 96.8% – and the fact that occupiers sign long leases with us. This means we generate secure long‑term rental income. only a small 3 0 0 m proportion 9.6% of rent is subject to break or expiry in the next three years – significantly number of visits each year lower than the sector average. ouR Portfolio dId you knoW? InTegrity We do what is right 4.3% • We partner with a range of well‑known OTHER businesses and manage assets on their not what is easy. behalf. A number of our properties are 35.4% OFFICES held in joint ventures with other investors including norges, Tesco, Sainsbury’s, Blackstone and uSS. one TeAm • Recent research showed our development Working collaboratively with £10.5 billion activity will contribute £1.2 billion to the uK economy and create 32,300 jobs both internal and external between 2011 and 2015. While much stakeholders. 60.3% of our construction activity takes place in London, it creates jobs in communities RETAIL exCellenCe across the uK. We are the best we can be • Recent awards won include: ‘Property Company of the year – offices’; ‘Property and have a growth mindset. Week Sustainability Achievement Award’; ‘Carbon disclosure Project Leadership Index’; and ‘Best FTSE 100 website’. You can see more at www.britishland.com/ COMMERCIAL ACUMEN about‑us/awards.