Operating and Financial Review

• Overview
• Statements
• Operating and Financial Review
  • Introduction
  • Objectives and strategy
  • British Land's activity in 2006/7
  • Portfolio reshaping
  • Development
  • Asset management
  • Portfolio composition and valuation
  • Property market outlook
  • Retail sector
  • Office sector
  • Financial performance
  • Finance and capital structure
  • Key performance indicators
  • Risk management
  • Partnerships
  • People
  • Forward looking statements
• Corporate Responsibility
• Portfolio Highlights
• Governance
• Financial Statements
• Financial Calendar
• Shareholder Information
• Download Centre

• Print page
• Email page

• Home
• Operating and Financial Review
• British Land's activity in 2006/7

This was a year of real progress and achievement for British Land. We delivered outperformance for shareholders whilst strengthening the Company's prospects to deliver more in the future. As we noted last year, investment market led capital growth is slowing. Our focus on adding value in a more demanding environment is founded on our customer-led strategy. This way we can capture high occupancy levels and rental growth to provide future outperformance for shareholders.

The commentary in this Review highlights the actions we have taken to produce financial outperformance in line with the strategy we describe above. These actions rest on the effectiveness of our people and, as before, much work has gone into building still further our human capital and a performance culture with which to execute our business plans.

Under 'Portfolio Reshaping' we report on over £3 billion (gross) property purchases and sales. These reduced our holdings in market sectors where we forecast weaker customer demand and reinforced our market leadership positions where prospects are strong. It also shows how, even in favoured markets, we keep capital working hard by investing in property best placed to capture demand trends whilst reducing our holdings in more mature assets where we cannot do much more to improve them.

We highlight newer initiatives in Europe and indexed-lease property which leverage our existing market skills into areas where customer demand can drive growth and we perceive pricing to be attractive.

The 'Development' section showcases one of our more distinctive added-value areas. By creating new buildings at the forefront of modern service industry needs, we use our property skills and financial strength to make attractive incremental return. Our notable success in letting these buildings is the acid test of their customer appeal.

Under 'Asset Management' we show the range of work we undertake to better tailor our existing buildings to areas of greatest customer demand. In turn this results in the above market rental growth.

Our 'Property Market Outlook' and sector commentaries explain in more detail the implementation of strategy and its rationale.

In the 'Financial Performance' section and the 'Partnerships' section, the ways we have added value to supplement our property activity are described alongside an explanation of the financial results of this activity and the KPIs that show its effectiveness. Our balance sheet and debt management continue to be distinctive strengths, amplifying property returns. Equally fiscal management and especially our REIT election were major value creators during the year. And by working with others, inter alia through Joint Ventures and Unit Trusts, we earn valuable extra income, leverage our skills and capital and increase manoeuvrability in the property markets.

This year we also highlight more fully, in our Corporate Responsibility Report, our actions on sustainability including the commitment to lead our industry and become carbon neutral. We are a business of the built environment. Our careful use of scarce resources and our buildings' impact in improving our communities and facilitating growth remain integral to our business success. The CR Report may be viewed in full on our website: http://www.britishland.com/crReport/2006/