British Land Company PLC

Statement of compliance with the Code of Best Practice
The Company has complied throughout the year with the Provisions of The Combined Code on Corporate Governance 2006. Chris Gibson-Smith performed the role of interim Executive Chairman from 17 October 2008, following the resignation of Stephen Hester, until 12 January 2009, when Chris Grigg was appointed Chief Executive. Although the Combined Code recommends that the roles of the Chairman and Chief Executive should not be exercised by the same individual, the Board does not consider that Chris Gibson-Smith's performance of both roles on an interim basis constituted a breach of the Combined Code.

Board effectiveness
The Board is responsible for the strategy, effective control and management of the Group. There is a written division of responsibilities at the head of the Company between the Chairman and Chief Executive, which has been approved by the Board. There is a formal schedule of matters specifically reserved for Board approval, which includes approval of the annual and quarterly accounts, the approval of authority levels below the Board and material acquisitions, disposals and financing arrangements. The Board delegates authority to the Approvals Committee of the Board, which consists of the executive directors of the Company, in respect of certain transactions within defined, limited parameters. The Board has a regular schedule of meetings together with further meetings as required by the ongoing business of the Company. The executive directors and senior executives who comprise the Executive Committee meet weekly, chaired by the Chief Executive, to deal with the ongoing management of the Group.

The Chairman of the Board and individual directors meet regularly, outside formal Board meetings, as part of each director's continuing contribution to delivery of the Company's strategy and superior returns for shareholders. This process also allows for open two-way discussion about the effectiveness of the Board, its committees and individual directors, both executive and non-executive. By this means the Chairman is continuously aware of the views of individual directors and can act as necessary to deal with any issues relating to Board effectiveness before they can become a risk to the Company.

There is a strong and independent non-executive element on the Board as shown by the details of directors on the Directors and Officers page.

British Land Board performance evaluation
This year, Dr Long of Boardroom Review acted as an independent facilitator for the Board evaluation process. This was designed to assess the quality of the Board's decision making and debate, its overall contribution and value to the long-term health and success of the Company, and its preparation for future challenges. It included a confidential questionnaire, one-to-one interviews with each Director and the Company Secretary, Board and Committee meeting observation and a review of relevant papers. Feedback from the review was provided in the form of a written report and presentation to the Board, which then discussed its findings. The review concluded that the British Land Board rates very highly in its effectiveness and engagement with the Company. Given the Board's desire for continuous improvement, there were a number of issues arising from the review which affect the Board's capacity for effectiveness in the longer term. The review's recommendations focused on sustained efforts to determine, refine and adapt the strategic direction, to understand and respond to the external environment and to improve the collective decision process through effective use of the Board's time.

The annual appraisal process also includes the Senior Independent Non-executive Director meeting to discuss the performance of the Chairman with other directors annually, or more frequently as necessary. In addition, the Chairman meets with each non-executive director annually to discuss their contribution and the Chairman provides the Remuneration Committee with a written appraisal of the Chief Executive's performance for the year. Similarly, the Chief Executive provides the Remuneration Committee with a written assessment of the executive directors' performance.

Committees of the Board
The Board has established Audit, Remuneration and Nomination Committees which operate within defined terms of reference, which are made available on the Company's website www.britishland.com and their minutes are circulated to the Board. The Audit and Remuneration Committees are entirely composed of independent non-executive directors. Robert Swannell is the Senior Independent Non-executive Director.

Attendance at Board or Committee meetings during the year to 31 March 2009
(where '-' is shown, the director listed is not a member of the Committee)

Name	Board	Audit Committee	Remuneration Committee	Nomination Committee
Chris Gibson-Smith	9	-	-	1
Chris Grigg 1	4	-	-
Stephen Hester 2	3	-	-	-
Clive Cowdery	8	4	-	-
Andrew Jones	9	-	-	-
Sir David Michels 3	1	2	2	-
Graham Roberts	9	-	-	-
Tim Roberts	9	-	-	-
Kate Swann	9	-	6	-
Robert Swannell	9	5	-	1
Aubrey Adams 4	7	2	-	-
John Gildersleeve 5	7	-	3	-
Lord Turnbull	9	4	6	1
No. of meetings during the year	9	5	6	1

¹ 4 Board meetings held since Board appointment on 12 January 2009

² 4 Board meetings held during Board membership to 15 November 2008, the date of cessation

³ 2 Board meetings and 2 Audit Committee and 2 Remuneration Committee meetings held during Board membership to 11 July 2008, the date of cessation

⁴ 7 Board and 2 Audit Committee meetings held since Board appointment on 1 September 2009

⁵ 7 Board and 3 Remuneration Committee meetings held since Board appointment on 1 September 2009

Nomination Committee
The Nomination Committee's responsibilities include making recommendations to the Board on all new Board appointments and succession planning. It consists of Chris Gibson-Smith, Lord Turnbull and Robert Swannell.

The Nomination Committee during the year has considered the appointment of the new Chief Executive and also succession planning, the structure, size and composition of the Board and its committees, the recommendations to the Board of directors retiring by rotation for re-election by shareholders and the renewal of non-executive directors' letters of appointment.

Remuneration policy and Committee
Details of the Group remuneration policy and Committee are set out in the remuneration report.

Audit Committee
The Audit Committee meets regularly during the year aligned to the quarterly financial reporting timetable. During the financial year it met on five occasions. It has been chaired by Robert Swannell throughout the year and includes three other non-executive directors, Clive Cowdery, Lord Turnbull and Aubrey Adams (appointed 1 September 2008). The Committee's responsibilities include:

• monitoring the integrity of the financial statements of the Company and any formal announcements relating to the Company's financial performance;
• reviewing the Company's internal financial controls and the Company's internal control and risk management systems;
• monitoring and reviewing the effectiveness of the Company's internal audit function;
• making recommendations to the Board in relation to the appointment of the external auditor and approving the remuneration and terms of engagement of the external auditor;
• reviewing and monitoring the external auditor's independence, objectivity and effectiveness;
• reviewing and monitoring the valuation process; and
• developing and implementing policy on the engagement of the external auditor to supply non-audit services, taking into account relevant ethical guidance.

The Audit Committee has undertaken each of the above responsibilities during the year on which it has received and reviewed relevant reports from management, the valuers, the internal and the external auditors. It has agreed a schedule of internal audit reviews of various of the Group's processes and controls to be undertaken, and has reviewed the results of those reviews already completed.

Areas reviewed by the committee during the financial year included the:

• Group's key risks by priority and their mitigations;
• annual report on Internal Control prepared to support the Board sign-off on the systems of internal control within the Group;
• valuation processes, particularly with regard to the effect of current market conditions on the pricing of assets, and estimates for development properties. This included valuer and internal property analyst presentations to the Committee;
• monitoring of processes and procedures in place to ensure the Board is able effectively to assess borrowing covenant compliance headroom and forecast sensitivity;
• Group's exposure to bank counterparties arising from syndicated and bilateral loan facilities, deposits and interest rate swap derivatives;
• tenant credit risk for top occupiers representing over 50% of Group rental income;
• treasury processes including cash management, electronic payments and trades;
• occupational health and safety management;
• corporation tax;
• Songbird investment valuation;
• corporate and property insurance programme and renewal process; and
• documentation policy and summary of business documentation.

Rotation of directors
Under the Articles of Association of the Company, each director retires at the third Annual General Meeting ('AGM') after the general meeting at which he was last elected.

Non-executive directors
The Board considers that Aubrey Adams, Clive Cowdery, John Gildersleeve, Kate Swann, Robert Swannell and Lord Turnbull are independent non-executive directors. In making this determination the Board has considered whether each director is independent in character and judgement and whether there are relationships or circumstances which are likely to affect, or could affect, the director's judgement. The Board believes that it is evident from consideration of the non-executive directors' biographies detailed on the Directors and Officers page that they are of the integrity and stature to perform their roles of independent non-executive directors. In particular the Board considers that Robert Swannell remains independent although he has served over nine years on the Board. This was concluded after considering his integrity and the effectiveness with which he carries out his responsibilities to the Company. In addition, in a Board where many have joined the Company relatively recently, Mr Swannell provides a valuable continuity of knowledge and experience to the benefit of the Company.

The terms and conditions of appointment of non-executive directors are available for inspection at the Company's registered office and at the AGM.

Internal Control
The directors are responsible for the maintenance of a sound system of internal control. The Board continues to apply the internal control provisions of The Combined Code on Corporate Governance (the Code) through a continuous process for identifying, evaluating and managing the significant risks the Group faces. This process has been in place throughout the year and up to the date of approval of this report, and the Group has been in compliance with the provisions set out in Section 1 of the Code. The Board is responsible for the Group's system of internal control and for reviewing its effectiveness. Such a system is designed to manage rather than eliminate the risk of failure to achieve business objectives, and can only provide reasonable and not absolute assurance against material misstatement or loss.

The Group applies two fundamental control principles:

• a defined schedule of matters reserved for decision by the Board; and
• a detailed authorisation process which ensures that no material commitments are entered into without competent and proper authorisation by more than one approved executive.

In compliance with the provisions of the Code, the Board continuously reviews the effectiveness of the Group's system of internal control. The key risks that the Group faces and features of the internal control system that operated throughout the period covered by the accounts are described below:

Identification and evaluation of commercial risks and related control objectives
British Land has undertaken a comprehensive risk assessment, which has identified 10 principal risks that affect the Group. The responsibility for management of each key risk has been clearly identified and delegated by the Board to specific executive directors and senior executives within the Group. The executive directors have close involvement with the day-to-day operational matters of the Group. In addition to the meetings of the Board frequent meetings of the executive directors take place to review the Group's activities.

The Board and the executive directors consider the risk implications of business decisions. These include matters such as treasury policies and major transactions. The control environment is supported by the various committees of the Board including the Audit Committee, the Corporate Responsibility Committee and the Derivatives Committee. The way each risk is managed within the Group is considered at least annually by the executive directors and the Audit Committee. The Group re-assesses these risks on a regular basis to ensure that any risk arising from changes in the Group's operations or the external environment are identified and appropriately managed.

In order to provide relevant and timely information to the directors and executives with responsibility for managing risks, the Group has the following key information systems which generate reports as follows:

• a management reporting system which includes regular working capital reports and forecasts; operational reporting on property purchases, sales, rental income and portfolio management; and
• regular reporting to the Board on financial and treasury matters.

Monitoring
The Audit Committee meets regularly throughout the year and has reviewed the Group's internal controls. The Audit Committee has agreed a schedule of internal audit reviews of several of the Group's processes and controls to be undertaken, and has reviewed the results of those reviews already completed. The Head of Internal Audit reports directly to the Audit Committee.

Investor Relations

The directors place considerable importance on maintaining open and clear communication with investors. The Company's Investor Relations department is dedicated to facilitating communication with shareholders. The Company has an ongoing programme of dialogue and meetings between the executive directors and its shareholders, where a wide range of relevant issues including strategy, performance, the market, management and governance are discussed within the constraints of the information already known to the market. In addition, the Company undertakes regular roadshows to the US, Europe and Japan and participates in sector conferences.

The directors consider it is important to understand the views of shareholders, and at each scheduled Board meeting the directors receive a written report of the major issues which have been raised with management. Meetings are also held between shareholders and the Senior Independent Non-executive Director and other non-executive directors, and the Company facilitates such meetings on request.

During the course of a year, shareholders are kept informed of the progress of the Company through results statements and other announcements that are released through the London Stock Exchange and other news services. Company announcements and presentations are made available simultaneously on our website, affording all shareholders full access to material information. Shareholders can also raise questions directly with the Company at any time through a facility on the website.

Additionally, there is an opportunity at the AGM for individual shareholders to question the Chairman and the Chairmen of the Audit, Remuneration and Nomination Committees. At the meeting, the Company complies with the Code as it relates to voting, including votes withheld, the separation of resolutions, the attendance of committee chairmen and voting by poll. The Annual Report and Notice of Meeting are sent to shareholders at least 20 working days prior to the AGM. The voting results are announced to the London Stock Exchange and are available on the website and on request. In July 2008, all AGM resolutions were passed on a poll and were approved by substantial majorities in excess of 96% in each case.

Going concern
The Group's business activities, together with the factors likely to affect its future development, performance and position are set out in the Business Review. The financial position of the Group, its cash flows, liquidity position and borrowing facilities are described in the Financial Performance section of the Business Review. In addition on the Financing and cash flow page the Group's financing policy is shown.

The current economic conditions have created a number of uncertainties with regard to future market valuation movements which may affect the Group's ability to remain within the covenants for its unsecured banking facilities, details of which are included in the Financing and cash flow page of the Business Review section. The Group has considerable undrawn debt facilities and cash deposits in excess of current drawn banking facilities. It also benefits from a diverse and secure income stream from leases with long average lease terms. As a consequence, the directors believe that the Group is well placed to manage its business risks satisfactorily despite the current uncertain economic outlook.

Accordingly, after making enquiries, the directors have a reasonable expectation that the Company and the Group have adequate resources to continue in operational existence for the foreseeable future. Accordingly, they continue to adopt the going concern basis in preparing the annual report and accounts.

Statement of directors' responsibilities
The directors are responsible for preparing the Annual Report, 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. The directors are required by the IAS Regulation to prepare the Group financial statements under IFRS as adopted by the European Union. The Group financial statements are also required by law to be properly prepared in accordance with the Companies Act 1985 and Article 4 of the IAS Regulation.

International Accounting Standard 1 requires that IFRS financial statements present fairly for each financial year the Company's financial position, financial performance and cash flows. This requires the faithful representation of the effects of transactions, other events and conditions in accordance with the definitions and recognition criteria for assets, liabilities, income and expenses set out in the International Accounting Standards Board's 'Framework for the preparation and presentation of financial statements'. In virtually all circumstances, a fair presentation will be achieved by compliance with all applicable IFRSs. However, directors are also required to:

• properly select and apply accounting policies;
• present information, including accounting policies, in a manner that provides relevant, reliable, comparable and understandable information; and
• provide additional disclosures when compliance with the specific requirements in IFRS are insufficient to enable users to understand the impact of particular transactions, other events and conditions on the entity's financial position and financial performance.

The directors have elected to prepare the parent company financial statements in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards and applicable law). The parent company financial statements are required by law to give a true and fair view of the state of affairs of the Company. In preparing these financial statements, the directors are required to:

• select suitable accounting policies and then apply them consistently;
• make judgements and estimates that are reasonable and prudent;
• state whether applicable UK Accounting Standards have been followed, subject to any material departures disclosed and explained in the financial statements; 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 proper accounting records that disclose with reasonable accuracy at any time the financial position of the Company and enable them to ensure that the parent company financial statements comply with the Companies Act 1985. They are also responsible for safeguarding the assets of the Company 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 corporate and financial information included on the Company's website. Legislation in the United Kingdom governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.

Auditors and valuers
The Audit Committee meets with the auditors and valuers to discuss with them the scope and conclusions of their work. The Committee is specifically charged under its terms of reference with considering matters relating to the audit appointment, the independence and objectivity of the auditors, and reviewing the results and effectiveness of the audit. With respect to other services provided by the auditors the following framework is in place:

• audit related services - the auditors are one of a number of firms providing audit related services, which include formal reporting relating to borrowings, shareholder and other circulars and various other regulatory reports and work in respect of acquisition and disposals. Where they must carry out the work because of their office or are best placed to do so, the auditors are selected. In other circumstances the selection depends on which firm is best suited;
• tax advisory - the auditors are one of a number of firms that provide tax advisory services. The selection depends on who is best suited in the circumstances; and
• general consulting - the auditors do not provide general consultancy services except in rare circumstances, and then only after consideration that they are best placed to provide the service and that their independence and objectivity would not be compromised.

An analysis of fees paid to the auditors is set out in note 5 earlier on this page.

The arrangements with auditors and valuers have been approved by the Audit Committee and are regularly reviewed in the light of changing requirements and best practice.

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