Operating and Financial Review
Key performance indicators
- 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
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- Forward looking statements
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Business growth led a customer to take space in the property next door. To speed the flow of people moving between offices, we installed a bi-level bridge connecting the two blocks.
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- Operating and Financial Review
- Key performance indicators
Property is a long-term business. Decisions taken to create value over time frequently affect current year's earnings and so the Board measures performance over a range of time periods. Our management judgements over sector views, asset selection, redevelopments, financial structure, corporate and community responsibility all combine to deliver a single set of financial returns and these should be judged against the risk profile adopted.
In measuring and benchmarking performance, a number of key performance indicators are used to indicate the impact of management actions. At the 'total company' level, the three most visible indicators are 'total shareholder return', 'total return' and 'earnings per share growth', reflecting the performance of the whole business. Benchmarking is undertaken against our major quoted peers and the FTSE Real Estate Index.
The key performance indicators demonstrate British Land's strong track record in relative and absolute value creation over the last one, three and five years.
| Performance Indicator | One year | Three years | Five years |
|---|---|---|---|
| Total shareholder return1 | |||
| – British Land | 24.3% | 49.4% | 23.7% |
| – Peer group2 | 21.7% | 39.6% | 20.8% |
| – FTSE Real Estate Index | 22.3% | 45.4% | 19.4% |
| – Ranking in peer group | 2 | 1 | 1 |
| Total return3 | |||
| – British Land | 21.3% | 24.3% | 18.6% |
| – Peer group | 20.8% | 21.2% | 14.6% |
| – Ranking | 2 | 2 | 1 |
| Earnings per share growth4 | |||
| – British Land | 22.0% | 7.9% | 7.5% |
| – Peer group4 | 5.2% | 5.4% | 4.7% |
| – Ranking | 1 | 1 | 2 |
1 Total shareholder return represents growth in share price plus dividends per share (assuming reinvested)
2 Average of major peers - Land Securities, Hammerson, Liberty and SEGRO (some differences in year ends)
3 Total return (pre-exceptional) represents growth in adjusted, diluted net asset value per share plus dividends per share
4 Adjusted diluted earnings per share (excluding exceptional items, profits on asset disposals and revaluation gains)
Non financial performance indicators which are also key to the business and used as measures of progress are, as reported under Portfolio Valuation above:
| Year to March 2007 | British Land | IPD Benchmark |
|---|---|---|
| Like for like rental value growth (ERV) | 6.9% | 4.3% |
| Portfolio capital return per IPD (ungeared) | 10.9% | 10.7% |
