Chairman's Statement

Financial Review

Property Review

Management, Governance & CSR

Financial Statements

Management, Governance & CSR

Remuneration Report
Corporate Governance
Business Opportunity & Business Risk Management
Financing Policy & Risk Management
Directors & Officers
Group Executives & Advisers
Corporate Responsibility
Report of the Directors
Report of the Auditors

Report of the Directors

The directors submit their Report and Accounts for the year ended 31 March 2004.

Results and dividends

The results for the year are set out in the consolidated profit and loss account.

The directors recommend the payment of a final dividend of 10.07 pence per share payable on 20 August 2004 to ordinary shareholders on the register at the close of business on 23 July 2004.

Activities

The Group operates in the fields of property investment and development, finance and investment.

Review of business and prospects

Development of the Group’s activities and its prospects are reviewed in the Chairman’s Statement and the Financial and Property Review.

Properties

Changes in properties during the year and details of property valuations at 31 March 2004 are shown in note 14 to the financial statements.

Purchase of own shares

The company was granted authority at the Annual General Meeting in 2003 to purchase its own shares up to a total aggregate value of 10% of the issued nominal capital. That authority expires at this year’s Annual General Meeting and a resolution will be proposed for its renewal. Details of the company’s purchase of its own shares during the year are shown on note 24. Such share purchases have enhanced net asset value and earnings per share.

Directors’ interests in contracts

Except as stated in note 27, no contract existed during the year in relation to the company’s business in which any director was materially interested.

Directors’ and officers’ liability insurance

The company purchases liability insurance covering the directors and officers of the company and its subsidiaries.

Charitable donations

£186,717 (2003: £48,370) was donated during the year. No contributions were made for political purposes.

Reappointment of directors

The directors listed in the section Directors & Officers constituted the Board during the year, except for Cyril Metliss who retired from the Board on 18 July 2003. Under Article 116 of the Articles of Association Nicholas Ritblat, Robert Bowden, Sir Derek Higgs and Lord Burns will retire, each having been previously re-elected at the Annual General Meeting in 2001. They are all eligible for re-election.

Share and loan capital

The issued share capital has altered since 1 April 2003 by fully paid issues and cancellations as follows:

No. of ordinary shares of 25p

8 April 2003, 14 July 2003, 7 October 2003 and 8 January 2004	Shares in lieu of directors’ fees	7,311

30 September 2003	Buy-back of ordinary shares for cancellation	(1,000,000)

6 June 2003 to 28 February 2004	On exercise of options under the 1984 Share Option Scheme	284,869

14 July 2003 to 19 March 2004	On exercise of options under the Sharesave Scheme	156,357

Substantial interests

As at 24 May 2004 the company had been notified of the following major interests in its issued ordinary share capital, disclosed to it in accordance with Sections 198 to 208 of the Companies Act 1985:

	No. of shares (m)	% of issued capital

FMR Corp and Fidelity International Limited	28.9	5.9
ABP Investments for Stichting Pensioenfonds ABP	25.1	5.1
Legal and General Group PLC	16.2	3.3

Payments policy

In the absence of dispute, amounts due to trade and other suppliers are settled as expeditiously as possible within their terms of payment. As at 31 March 2004, there were 28 (2003: 25) suppliers’ days outstanding.

Auditors

On 1 August 2003 Deloitte & Touche, the company’s auditors, transferred their business to Deloitte & Touche LLP, a limited liability partnership incorporated under the Limited Liability Partnership Act 2000. The company’s consent has been given to treating the appointment of Deloitte & Touche as extending to Deloitte & Touche LLP with effect from 1 August 2003 under the provisions of Section 26(5) of the Companies Act 1989. A resolution to re-appoint Deloitte & Touche LLP as the company’s auditors and a resolution concerning their remuneration will be proposed at the forthcoming Annual General Meeting.

All employee share schemes

All full-time and part-time directors and employees with more than 18 months’ continuous service are eligible to participate in The British Land Share Incentive Plan (‘SIP’), which is approved by the Inland Revenue under the terms of the Income Tax (Earnings and Pensions) Act 2003. Under this Plan participants receive an annual grant of ordinary shares of 25p each (‘Free Shares’), and are also able to participate in a monthly purchase of ordinary shares (‘Partnership Shares’), which British Land matches on a 2:1 basis (‘Matching Shares’). Dividends on these shares are re-invested as ‘Dividend Shares’. Shares under this Plan are generally released to the individual after five years. 2,985 ‘Free Shares’ were allocated to the executive directors in August 2003. The executive directors have also purchased 640 ‘Partnership Shares’ and been awarded 1,280 ‘Matching Shares’ and 30 ‘Dividend Shares’ between the Plan’s inception in August 2003 and 31 March 2004. All these shares are included in the total number of shares in which the executive directors have a beneficial interest shown in the Remuneration Report.

The SIP began in August 2003 and replaced The British Land Employee Share Scheme, which last allocated shares in August 2002. 249,922 ordinary shares are held by 181 participants under this scheme. 14,448 of these shares are held by the executive directors, and are included in the total number of shares in which the executive directors have a beneficial interest shown in the Remuneration Report.

Sharesave Scheme

Under The British Land Sharesave Scheme, executive directors and employees who have served the company for at least two years may be offered options to purchase shares, tied to a savings contract, over a three or five year period. Options are held by 206 employees and executive directors to purchase a total of 362,201 fully paid ordinary shares at prices of 347p, 359p, 377p, 383p, 399p, 438p, 443p and 472p per share, and normally exercisable during certain six month periods between 1 February 2004 and 31August 2009. The options held by directors under this scheme are shown in the Remuneration Report.

Long-Term Incentive Plan

The Long-Term Incentive Plan was approved by shareholders at the Annual General Meeting in 2003. Under the plan the company awards either market value options and/or performance shares (which are similar to restricted shares) to executives and executive directors. These awards are subject to a prescribed performance condition (as detailed in the Remuneration Report) on which the exercise of options and the vesting of performance shares is contingent.

88 executives and executive directors have rights over 559,464 performance shares, which vest after three years (subject to performance conditions); they also hold options to purchase 1,678,397 ordinary shares at prices of 502p and 552p per share which are exercisable between 25 September 2006 and 11 December 2013. These options are exercisable not less than three years and not more than ten years after the date of grant. The interests of executive directors under this scheme are shown in the Remuneration Report.

Share Option Scheme

Options are held by 12 employees and executive directors pursuant to The British Land Company PLC 1984 Share Option Scheme, which is approved under the terms of the Finance Act 1984, to purchase a total of 832,650 fully paid ordinary shares at prices of 322p and 394p per share and exercisable between 6 July 1997 and 22 January 2006. These options are exercisable not less than three years (five years in certain cases) and not more than ten years after the date of grant. As at 24 May 2004, options over 3,649,436 shares had been exercised by the above mentioned employees and executive directors. No further awards will be made under this scheme following the adoption of the new Long-Term Incentive Plan at the 2003 AGM. The options held by executive directors under this scheme are shown in the Remuneration Report.

Restricted Share Plan

The company’s Restricted Share Plan, which was approved by shareholders at the Annual General Meeting in 1997, provides interests in the shares of the company to executives and executive directors.

Executives and executive directors of the company have rights over 2,492,825 ordinary shares of the company. The shares vest not earlier than three years after grant and only on attainment of a performance target, settled on advice from Hewitt Bacon & Woodrow, consulting actuaries, following consultation with the National Association of Pension Funds and the Association of British Insurers. Participants are entitled to receive dividends on their Shares from the date of grant until vesting. No further awards will be made under this plan following the adoption of the new Long-Term Incentive Plan at the 2003 AGM. The interests of directors under this scheme are shown in the Remuneration Report.

Employment policy

The Group places emphasis on employee involvement and keeps employees informed through formal and informal briefings. The company has well established all employee share schemes which are described above.

There were no major changes in the Group’s pension schemes during the year. In the United Kingdom separate pension fund reports are made available to members.

Applications for employment by disabled persons are always fully considered, bearing in mind the aptitudes of the applicants concerned. In the event of members of staff becoming disabled, every effort is made to ensure that their employment with the Group continues and that appropriate training is arranged. It is the policy of the Group that the training, career development and promotion of disabled persons should, as far as possible, be identical with that of other employees.

Health and safety

The Board is committed to achieving the highest standards of care in its attention to health, safety and fire prevention. The Board requires safe working practices to ensure that employees, tenants and the general public are not harmed by the company’s activities.

This report was approved by the Board on 24 May 2004.

Anthony Braine
Secretary

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