British Land Company PLC

Thank you. Good morning, everyone. I'm David Walker, Head of Investor Relations at BritishTand, and I'm here on the line today with Chris Grigg, Chief Executive, Simon Carter, our CFO, and Darren Richards, our Head of Real Estate. Before I hand you over to Chris, could I remind those of you joining us by phone that the slides for today's presentation are available to download at BritishTand.com, and you are able to register questions on the conference call at any time during the presentation. For those of you listening through the website, the slides will appear automatically and you can submit written questions via the website and I'll read those out following our prepared remarks. With that, I'll hand you over to Chris.

Thank you, David. Good morning, everybody. As you know, after nearly 12 years, I'm stepping down as CEO of British Land today. It's been an honour to lead this company, to work with so many talented individuals, not least on projects which have literally changed the face of London. The things we've done to reshape and reposition the business over the course of a decade have also been fundamental to our ability to navigate the impact of COVID-19. There are a few key things I'd point to. The quality of our assets, the clarity of our strategy, our focus on operational excellence and the needs of our customers, as well as our strong balance sheet. I'd like to talk through these points in a bit more detail First, the quality of our assets. We've delivered fantastic buildings, including the Cheese Grater, 100 Liverpool Street and Clarges. We've transformed places like Paddington, as you can see here, and Broadgate, of course. This has created tangible value for our shareholders, as well as delivering real benefits for our customers and communities. But we've done all of this while keeping our financial discipline and significantly reducing leverage to a low in the mid-20s in 2018, compared to more than 50% when I joined in 2009. That's meant we've been able to absorb valuation losses on the retail side of our business. But remember, we also have no requirement to refinance until 2024. We have a clear strategy. Our focus on mixed-use campuses is a real differentiator. Because it presents opportunities over time, the product is attractive to our customers, but campuses also allow us to change the mix of uses and type of occupiers so we can react to growth. Again, Broadgate is a great example. Our operational capabilities are simply best in class, from developing world-class buildings and keeping them full to enhancing our environments through placemaking. Our ability to manage our spaces safely and securely has never been more important. We are among the first in our industry to really focus on the customer and to make data central to that. Our insights and the relationships we build will be valuable as we navigate the changing dynamics in our markets. And last, our culture. This isn't something we usually talk about at a results press but I absolutely believe it's one of British Land's real strengths. We're more diverse and inclusive than we were a decade ago. We're innovative and we're flexible. We have a breadth and depth of skill set that goes beyond developing and managing buildings, important as that is, in sustainability, in technology, in marketing, and of course in finance. And we're truly aligned to our purpose, places people prefer. The fact that the board selected someone from within that British land to succeed me is also a strong testament to our culture. Simon was a standout candidate with both an internal and external perspective, both on our business and across the sector. So he offered the right mix of continuity and fresh ideas. I know he's also very clear on the challenges and opportunities that lie ahead. Finally, I'd like to say thank you to all of you. It's been a real pleasure working together. I wish all of you the best of luck and hope to see many of you again in more normal times. I'll speak to you in the Q&A, but for the last time, I'll hand over to Simon for the financials.

Thank you, Chris. Good morning, everyone. The rest of today's presentation will be in three parts. Firstly, what will be my last job as CFO. I'll take you through the financials. Then Darren will talk about our operational performance, putting this in the context of our markets. And then in my first job as CEO, I'll set out my priorities for the business, which are designed to make the most of our competitive edge. Before we do any of that, however, I'd like to take this opportunity to thank Chris. At a personal level, for the guidance and support he has provided me over the last 12 years. but most importantly for the great business built under his leadership. He leaves the business of his world position to navigate the current environment and for more significant shareholder value going forward. I know the board and the rest of the British land team would also like me to pass on their thanks and best wishes for the future. Turning to the results for the six months to September. EPS is down 35%. primarily due to increased provisioning for rental receivables, as well as the impacts of CVAs and admins. EPRA net tangible asset value reduced 10% to £6.93. That's due to a decrease in our portfolio valuation of 7% as a result of a 15% decline in retail and a 3% decline in all. Our financial position remains strong. LTV is 35.7%, up just 170 basis points in the half year. We have access to 1 million of undrawn facilities and cash, significant covenant headroom, and no requirement to refinance until 2024. Following our announcement in October that we intended to resume dividends, our interim dividend will be 8.4p. Based on our new policy of paying out 80% of our underlying EPS, payment will be made in February 2021. Looking at the movements in EPS, capital activity added 0.2p. COVID delayed recognition of development income at 100 Liverpool Street. However, this scheme has now reached practical completion and 1 Triton Square is scheduled to complete in April. With the addition of Norton Fulgate to our committed development programme, we expect recently completed and committed developments will add a further 4.4p to annualised EPS, valued on top of 1.3p already delivered from our post-referendum programme. The impact of COVID-19 has clearly been significant. CVAs and admins in retail resulted in a negative like-for-like of 0.6p. Provisions for outstanding rent service charges and deferrals led to a 5p reduction in EPS. I'll set out details of our approach to provisioning later. Finance and administrative cost savings added 0.8p. The underlying tax charge reduced EPS by one pence, reflecting the temporary suspension of the dividend. This will result in a shortfall in our redistributions, creating a corporation tax liability equivalent to the withholding tax on the shortfall. Turning to net rents, let me draw out some key points. Like-for-like decline in retail was 10%. Of the $13 million reduction in retail income, $6 million relates to the impact of CBH in that period, with the remaining $7 million the result of declining ERVs, longer volume reduced car parking income over the closure period. Like-for-like growth in offices was 4% driven by letting activity at 1FA and 338 Euston Road. Provisions for outstanding rents and service charge income reduced net rents by 31 million. We provided 13 million against deferred rents and provisioning for tenant incentives increased by 2 million. Developments contributed Bishop's Gate, partially offset by expiries of one broad gate ahead of redevelopment. Moving to rent collection. For those customers materially impacted by COVID, we're making good progress in agreeing pragmatic and equitable solutions for the period of closure. These include monthly payments, deferrals and partial concessions, typically in return for more favorable lease terms. The concessions fall away if rent is not paid to Since our announcement in early October, our September collection rates have continued to improve. The table shows our collection stats for rents due between 29 September and 10 November. As of 10 November we have collected 77% and 62% across our retail assets. Tables for March and June rents are set out in the appendix. The impact of provisioning has been significant, as you can see from this slide. We take a systematic approach based on both ageing profile and credit quality. In the first subtotal, you can see that as at the 30th of September, 96 million of rents were outstanding. 37 million has been provided against these balances, resulting in a PLL charge in the period of 27 million, with the balance recognised Turning to service charges, £22 million was outstanding at our period end, of which £7 million has been provided, with an earnings impact of £5 million every year. For rent deferrals, which primarily relate to the March quarter, £25 million is held as accrued income on the balance sheet. We have provided £13 million against this. These balances will fall due over the next five quarters. We agreed 5 million of rent concessions in the period. Under the accounting standards, rent concessions are spread over the term of the lease to the first break. Consequently, the impact in the period is immaterial. Finally, it's important to note that following period end, we've collected a further 34 million of outstanding rents and 12 million of service charge. After taking this into account, we have 60% provided for 70% of the service charge. Slide 9 sets out the income statement. With COVID net rents, there was a 1 million decrease in fees and other income. Our consistent focus on cost control resulted in a further 7% reduction in admin expenses. As we announced in October, given improved visibility on the performance of our portfolio during COVID and to satisfy our REIT obligations, we are resuming the dividend. Dividends will now be paid semi-annually rather than quarterly, announced at the time of our interim all-year results, with payments made to shareholders in February and August. Dividends will be paid at a fixed percentage of 80% of underlying earnings per share, based on the most recently completed six-month period. will automatically flex in line with earnings, reflecting the impact of development completions, acquisitions, disposals and trading conditions as they change over time. Crucially, it maximises our strategic and financial flexibility as we take this business forward. Back to the balance sheet. Following the adoption of EPRA's new measures of net asset value, We will now use net tangible assets as our primary measure. Further detail of the new metrics and reconciliations in old reporting measures are set out in the appendices. The reduction in net tangible assets was driven by reduced property valuation, partially offset by undistributed underlying profit and the gain on property disposals made during the period. Darren will cover the valuation moves The strength of our debt metrics continues to be one of our key competitive advantages, and here we're really benefiting from the work we've done over many years. This has been recognised by Fitch, who affirmed our single-A unsecured rating in August. We have undrawn facilities and cash of $1 billion. In the last six months, we've repaid our $350 million conversion. Taking into account committed capex and future debt maturities, we don't have to raise any finance until 2024. Our LTV is 35.7%, up just 170 basis points since May. That's despite the valuation flaws we've seen. And this has been more than offset by post-period asset sales of $430 million. Financing activity and our use of caps has kept our weighted average interest rate lower 2.5%, and delivered 5 million in savings in the period. With no income or interest cover covenants on British Land's unsecured debt, we continue to have significant headroom, and we could withstand the falling asset values across the portfolio of 42% before taking any mitigating action. Our financial resilience is key in the current environment, allowing us to navigate confidently through the uncertainty of COVID, whilst remaining agile to take advantage of opportunities within our portfolio and in the wider market. And on that note, I'll hand over to Darren, who will provide an operational update on our portfolio.