REG - British Land Co PLC British Land Jersey - Final Results - Part 1 <Origin Href="QuoteRef">BLND.L</Origin> - Part 4
17/05/2017 07:06
- Part 4: For the preceding part double click ID:nRSQ3583Fc
Development strategyResponsible executives: Development provides an opportunity for outperformance but usually brings with it elevated risk.This is reflected in our decision-making process around which schemes to develop, the timing of the development, as well as the execution of these projects.The Development Strategy addresses several development risks that could adversely impact underlying income and capital performance including:· development letting exposure· construction timing We manage our levels of total and speculative development exposure as a proportion of the investment portfolio value within a ↓ Development has been an important driver of returns and we have assembled a pipeline of development opportunities with the optionality to progress when the time is right. In a more uncertain environment, we have moderated our current speculative development exposure to only 4% of the portfolio. We are progressing planning and pre-let discussions across the pipeline and positioned ourselves to make timely decisions on our developments going forward.
Chris Grigg, and costs (including construction cost inflation)· major contractor failure· adverse planning judgements target range taking into account associated risks and the impact on key financial metrics. This is monitored quarterly by the
Charles Maudsley, Risk Committee along with progress of developments against plan.· Prior to committing to a development, the Group undertakes a
Tim Roberts detailed appraisal overseen by our Investment Committee including consideration
of returns relative to risk adjusted hurdle rates· Pre-lets are used to reduce development letting
risk where considered appropriate· Competitive tendering of construction contracts and, where appropriate, fixed price
contracts entered into· Detailed selection and close monitoring of contractors including covenant reviews· Experienced
development management team closely monitors design, construction and overall delivery process· Early engagement and strong
relationship with planning authorities· We also actively engage with the communities in which we operate, as detailed in our
Local Charter, to ensure that our development activities consider the interests of all stakeholders· We manage environmental
and social risks across our development supply chain by engaging with our suppliers, including through our Supply Chain Charter,
Sustainability Brief for Developments and Health and Safety Policy
PeopleResponsible executives: A number of critical business processes and decisions lie Our HR strategy is designed to minimise risk through:· informed and skilled recruitment processes· talent, performance ←→ Expert People is one of the four core focus areas of our strategy. We empower our people to make the most of their potential. During the year, we have introduced a number of initiatives to improve organisational effectiveness across the business and to promote wellbeing and health, including offering enhanced Shared Parental Pay to employees.
Chris Grigg 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. management and succession planning for key roles· highly competitive compensation and benefits · people development and
Also, we are focused on creating a culture which encourages diversity and inclusion and are working towards the National Equality Standard.
training· The risk is measured through employee engagement surveys (including the 'Best Companies survey), employee turnover
and retention metrics and regular 'people review' activities. We monitor this through
the number of unplanned executive departures in addition to conducting exit interviews.· We engage with our 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 Supply Chain Charter.
Capital structure - leverageResponsible executives: Our capital structure recognises the balance between performance, We manage our use of debt and equity finance to balance the benefits of leverage against the risks, including a magnification of ↓ Balance sheet metrics remain strong. Our LTV and weighted average interest rate on drawn debt have reduced and interest cover has improved. The impact of investment activity in the year was a net decrease in debt of £0.5 billion. The strength of the Group's balance sheet is reflected in our senior unsecured credit rating which was reaffirmed by Fitch at A- and outlook was upgraded to 'Positive'.
Lucinda Bell risk and flexibility.· Leverage magnifies the impact of property valuation movements.· We aim to manage our LTV through the property cycle such that our financial
capital returns, both position would remain robust in the event of a significant fall in property values. This means we do not adjust our approach to
positive and negative· An increase in leverage increases the risk of a breach of covenants leverage based on changes in market property yields· We manage our investment activity, the size and timing of which can be
on borrowing facilities uneven, as well as our development commitments to ensure that our LTV level remains appropriate· We leverage our equity and
and may increase achieve benefits of scale while spreading risk through joint ventures and funds which are typically partly financed by debt
finance costs without recourse to British Land
Finance Our Finance Strategy We have five key principles guiding our financing which are employed together to manage the risks in this area: diversify our ←→ Given the quality of our business, we have continued to achieve attractive financings which improve earnings and liquidity. As well as being well priced, our financing is robust with an average term of eight years on drawn debt and no requirement for the Group to refinance until early 2021. Our committed bank facilities total £1.8 billion of which £1.3 billon was undrawn at 31 March 2017.
strategyResponsible executives: addresses risks both to continuing solvency and profits generatedFailure to manage refinancing requirement may result in a shortage of funds to sustain sources of finance, phase maturity of debt portfolio, maintain liquidity, maintain flexibility, and maintain strong balance
Lucinda Bell the operations of the business or repay facilities as they sheet metrics · We monitor the period until refinancing is required, which is a key determinant of financing activity, and
fall due. regularly evaluate the financial covenant headroom· 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 Group
Income sustainabilityResponsible executives: We are mindful of maintaining sustainable income streams which underpin a stable and growing dividend and provide the platform from which to grow the business.We consider sustainability · We undertake comprehensive profit and cash flow forecasting incorporating scenario analysis to model the impact of proposed ↑ Despite the uncertainty, the quality of our portfolio and environments has continued to attract strong occupier interest with good leasing performance. Our income streams are secure; underpinned by a high quality, diverse occupier base with 98% occupancy and an average lease length of 8.3 years.
Lucinda Bell of our income streams in:· execution of investment strategy and capital recycling, notably timing transactions· Pro-active asset management approach to maintain strong occupier line-up. We monitor
We are actively managing the impact of our investment strategy and office lease expiry profile on our income profile. Looking forward, we're conscious of potential headwinds for our occupiers, however we continue to expect our high quality portfolio to benefit from increasing polarisation.
Charles Maudsley of reinvestment of sale proceeds· nature and structure our market letting exposure including vacancies, upcoming expiries and breaks and tenants in administration as well as our
Tim Roberts of leasing activity· nature and timing of asset management and development activity weighted average lease length· We have a high quality and diversified occupier base and monitor concentration of exposure
to individual occupiers or sectors· We are proactive in addressing key lease breaks and expiries to minimise periods of
vacancy· We actively engage with the communities in which we operate, as detailed in our Local Charter, to ensure we provide
buildings that meet the needs of all relevant stakeholders
Income sustainabilityResponsible executives:
Lucinda Bell
Charles Maudsley
Tim Roberts
We are mindful of maintaining sustainable income streams which underpin a
stable and growing dividend and provide the platform from which to grow the
business.We consider sustainability
of our income streams in:· execution of investment strategy and capital
recycling, notably timing
of reinvestment of sale proceeds· nature and structure
of leasing activity· nature and timing of asset management and development
activity
· We undertake comprehensive profit and cash flow forecasting incorporating
scenario analysis to model the impact of proposed transactions· Pro-active
asset management approach to maintain strong occupier line-up. We monitor
our market letting exposure including vacancies, upcoming expiries and breaks
and tenants in administration as well as our weighted average lease length·
We have a high quality and diversified occupier base and monitor concentration
of exposure
to individual occupiers or sectors· We are proactive in addressing key lease
breaks and expiries to minimise periods of vacancy· We actively engage with
the communities in which we operate, as detailed in our Local Charter, to
ensure we provide buildings that meet the needs of all relevant stakeholders
↑ Despite the uncertainty, the quality of our portfolio and environments has
continued to attract strong occupier interest with good leasing performance.
Our income streams are secure; underpinned by a high quality, diverse occupier
base with 98% occupancy and an average lease length of 8.3 years.
We are actively managing the impact of our investment strategy and office
lease expiry profile on our income profile. Looking forward, we're conscious
of potential headwinds for our occupiers, however we continue to expect our
high quality portfolio to benefit from increasing polarisation.
Key
Change from last year
↑ Risk exposure has increased
←→ No significant change in risk exposure
↓ Risk exposure has reduced
Directors' responsibility statement
The Directors are responsible for preparing the Annual Report, the Directors'
Remuneration Report and the financial statements in accordance with applicable
law and regulations.
Company law requires the Directors to prepare financial statements for each
financial year. Under that law the Directors have prepared the Group financial
statements in accordance with International Financial Reporting Standards
(IFRSs) as adopted by the European Union, and the parent Company financial
statements in accordance with United Kingdom Generally Accepted Accounting
Practice (United Kingdom Accounting Standards and applicable law).
Under Company law the Directors must not approve the financial statements
unless they are satisfied that they give a true and fair view of the state of
affairs of the Group and the Company and of the profit or loss of the Group
for that period. In preparing these financial statements, the Directors are
required to:
· select suitable accounting policies and then apply them consistently
· make judgements and accounting estimates that are reasonable and
prudent
· state whether IFRSs as adopted by the European Union and applicable UK
Accounting Standards have been followed, subject to any material departures
disclosed and explained in the Group and parent Company financial statements
respectively and
· prepare the financial statements on the going concern basis unless it
is inappropriate to presume that the Company will continue in business
The Directors are responsible for keeping adequate accounting records that are
sufficient to show and explain the Company's transactions and disclose with
reasonable accuracy at any time the financial position of the Company and the
Group 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. They
are also responsible for safeguarding the assets of the Company and the Group
and hence for taking reasonable steps for the prevention and detection of
fraud and other irregularities.
The Directors are responsible for the maintenance and integrity of the
Company's website. Legislation in the United Kingdom governing the preparation
and dissemination of financial statements may differ from legislation in other
jurisdictions.
The Directors consider that the Annual Report and Accounts, taken as a whole,
is fair, balanced and understandable and provides the information necessary
for shareholders to assess the Company's position and performance, business
model and strategy.
Each of the Directors confirm that, to the best of their knowledge:
· the Group financial statements, which have been prepared in accordance
with IFRSs as adopted by the EU, give a true and fair view of the assets,
liabilities, financial position and profit of the Group and
· 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,
together with a description of the principal risks and uncertainties that it
faces
By order of the Board.
Lucinda Bell
This information is provided by RNS
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