TIDMLAND
RNS Number : 4610F
Land Securities Group PLC
18 May 2017
Forward-looking statements
These annual results, the Annual Report and Land Securities'
website may contain certain "forward-looking statements" with
respect to Land Securities Group PLC (the Company) and the Group's
financial condition, results of its operations and business, and
certain plans, strategy, objectives, goals and expectations with
respect to these items and the economies and markets in which the
Group operates.
Forward-looking statements are sometimes, but not always,
identified by their use of a date in the future or such words as
"anticipates", "aims", "due", "could", "may", "should", "expects",
"believes", "intends", "plans", "targets", "goal" or "estimates"
or, in each case, their negative or other variations or comparable
terminology. Forward-looking statements are not guarantees of
future performance. By their very nature forward-looking statements
are inherently unpredictable, speculative and involve risk and
uncertainty because they relate to events and depend on
circumstances that will occur in the future. Many of these
assumptions, risks and uncertainties relate to factors that are
beyond the Group's ability to control or estimate precisely. There
are a number of such factors that could cause actual results and
developments to differ materially from those expressed or implied
by these forward-looking statements. These factors include, but are
not limited to, changes in the political conditions, economies and
markets in which the Group operates (including the outcome of the
negotiations to leave the EU); changes in the legal, regulatory and
competition frameworks in which the Group operates; changes in the
markets from which the Group raises finance; the impact of legal or
other proceedings against or which affect the Group; changes in
accounting practices and interpretation of accounting standards
under IFRS, and changes in interest and exchange rates.
Any forward-looking statements, made in these annual results,
the Annual Report or Land Securities' website, or made
subsequently, which are attributable to the Company or any other
member of the Group, or persons acting on their behalf, are
expressly qualified in their entirety by the factors referred to
above. Each forward-looking statement speaks only as of the date it
is made. Except as required by its legal or statutory obligations,
the Company does not intend to update any forward-looking
statements.
Nothing contained in these annual results, the Annual Report or
Land Securities' website should be construed as a profit forecast
or an invitation to deal in the securities of the Company.
Annual results for the year ended 31 March 2017
18 May 2017
"Land Securities has delivered a healthy performance driven by a
clear strategy and decisive action. Revenue profit is up due to new
rents from our successful development programme and reduced
interest costs outweighing the impact of last year's disposals. Our
levels of financial and operational gearing are at historic lows,
placing us in an excellent position during a period of geopolitical
and economic uncertainty", said Land Securities' Chief Executive,
Robert Noel.
"Revenue profit increased by 5.5% to GBP382m, and adjusted
diluted earnings per share by 5.7% to 48.3p, while adjusted diluted
NAV per share is down marginally over the year at 1,417p. We've
continued to proactively manage both sides of our balance sheet;
this year, we've refinanced over GBP690m of our bonds and extended
the term of our debt with the issue of GBP700m of new bonds. Our
LTV remains virtually unchanged at 22.2%. Since the year end, we
have refinanced a further GBP273m of bond debt.
"In London, we've completed the 3.1 million sq ft speculative
development programme commenced in 2010 and have our longest ever
average unexpired lease term, as planned. We now have just 283,000
sq ft available to let. The majority of this space is in Nova, a
spectacular new addition to Victoria, which completed last month
and is now 54% let. We have a 1.4 million sq ft pipeline of future
development opportunities to exploit when the time is right.
"In Retail, the transformational changes we've made over the
last few years have led to a particularly strong performance
relative to the sector. Westgate Oxford is 80% pre-let or in
solicitors' hands and on track to open in October, delivering an
eagerly anticipated retail heart for the city. In Leeds, our
leisure extension at White Rose reached practical completion in
March and is fully let. Since the year end, we've acquired a
portfolio of three outlet centres for GBP333m, establishing our
position as the leading owner-manager of outlets in the UK.
"The success of our development programme, combined with the
interest savings we have achieved, sees us recommend a final
dividend of 11.7p which increases the dividend for the year by
10.1%.
"Our strategy has put us in robust health, with significant
capacity and agility to make acquisitions when the time is right.
We're confidently positioned for the future."
Results summary
31 March 31 March
2017 2016 Change
---------------------------------- --------- --------- ------------
Revenue profit(1)(2) GBP382m GBP362m Up 5.5%
---------------------------------- --------- --------- ------------
Valuation (deficit)/surplus(1)(2) GBP(147)m GBP907m Down 1.0%(3)
---------------------------------- --------- --------- ------------
Profit before tax GBP112m GBP1,336m
---------------------------------- --------- --------- ------------
Basic earnings per share 14.3p 169.4p
---------------------------------- --------- --------- ------------
Adjusted diluted earnings
per share(1)(2) 48.3p 45.7p Up 5.7%
---------------------------------- --------- --------- ------------
Dividend per share 38.55p 35.0p Up 10.1%
---------------------------------- --------- --------- ------------
Basic net assets per share 1,458p 1,482p Down 1.6%
---------------------------------- --------- --------- ------------
Adjusted diluted net assets
per share(1) 1,417p 1,434p Down 1.2%
---------------------------------- --------- --------- ------------
Group LTV ratio(1)(2) 22.2% 22.0%
---------------------------------- --------- --------- ------------
1. An alternative performance measure. The Group uses a number
of financial measures to assess and explain its performance, some
of which are considered to be alternative performance measures as
they are not defined under IFRS. For further details, see table 15
in the Business Analysis section.
2. Including our proportionate share of subsidiaries and joint
ventures, as explained in the Financial Review.
3. The % change for the valuation deficit represents the
decrease in value of the Combined Portfolio over the year, adjusted
for net investment.
Activity
-- GBP28m of investment lettings
-- GBP13m of development lettings
-- Acquisitions, development and refurbishment expenditure(1) of GBP301m
-- Disposals(1) of GBP413m
-- Supported a further 183 people from disadvantaged backgrounds
into jobs through our Community Employment Programme
-- Reduced carbon intensity (kgCO2/m2) by 18.5% compared to 2013/14 baseline
Performance
-- Ungeared total property return(1) of 3.7% (IPD Quarterly Universe 4.6%)
-- Total business return(2) of 1.4%
-- Combined Portfolio(2) valued at GBP14.4bn, with a valuation deficit(2) of 1.0%
-- Voids(1) in the like-for-like portfolio: 4.6% (31 March 2016: 2.4%)
Financials
-- Group LTV ratio(2) at 22.2% (31 March 2016: 22.0%), based on
adjusted net debt(2) of GBP3.3bn (31 March 2016: GBP3.2bn)
-- Weighted average maturity of debt at 9.4 years (31 March 2016: 9.6 years)
-- Weighted average cost of debt at 4.2% (31 March 2016: 4.9%)
-- Cash and available facilities of GBP1.6bn
-- Full year dividend of 38.55p, up 10.1%
Development
-- 1 & 2 New Ludgate, EC4 now fully let
-- 20 Eastbourne Terrace, W2 now completed and fully let
-- 1 New Street Square, EC4 now completed and fully let
-- Nova, Victoria, SW1, now completed and 54% let
-- Westgate Oxford on track to open in October, now 80% pre-let or in solicitors' hands
-- 21 Moorfields, EC2 demolition complete and ground works starting in the summer
Recognition
-- Winner: Most Inspiring Energy Reduction Project at the Energy
Management Awards 2016 (London Portfolio)
-- Winner: RICS Best Commercial Building Award 2016 (1 & 2 New Ludgate, EC4)
-- Winner: Property Marketing Commercial Development of the Year
Award 2016 (The Zig Zag Building, SW1)
-- Winner: BREEAM Offices Refurbishment and Fit-Out Awards 2017 (100 Victoria Street, SW1)
-- Winner: Revo Opal Best Mall Retail Award 2017 (White Rose, Leeds)
-- Winner: Aurora Grand Prix Award 2017 (Buchanan Galleries, Glasgow)
1. For further details, see the Business Analysis section.
2. An alternative performance measure. The Group uses a number
of financial measures to assess and explain its performance, some
of which are considered to be alternative performance measures as
they are not defined under IFRS. For further details, see table 15
in the Business Analysis section.
All measures above are presented on a proportionate basis, as
explained in the Financial Review.
Chief Executive's statement
Our results
Ungeared total property return 3.7%
Decrease in adjusted diluted net assets per share 1.2%
Increase in adjusted diluted earnings per share 5.7%
Total business return 1.4%
Our activity
-- GBP28m of investment lettings
-- GBP13m of development lettings
-- Acquisitions of GBP15m
-- Development and refurbishment expenditure of GBP286m
-- Disposals of GBP413m
Land Securities is in a great position. We have a portfolio of
first class assets combined with historically low levels of
operational and financial gearing at a time of geopolitical and
economic uncertainty.
We've largely completed and let our speculative development
programme. Despite being net sellers in the previous year, revenue
profit is up 5.5% to GBP382m and adjusted diluted earnings per
share are up 5.7% to 48.3p. Our adjusted diluted net asset value
per share is down marginally to 1,417p. Our Combined Portfolio is
valued at GBP14.4bn and, with adjusted net debt broadly unchanged
over the year at GBP3.3bn, our loan-to-value is 22.2%. We've
reduced our cost of debt and have access to the funds needed to buy
when opportunities appear.
Despite uncertainty in the outside world, we remain confident of
our core strengths inside the Company and we're recommending a
final dividend of 11.7p - raising the dividend for the year by
10.1%.
Market environment
Put simply, our markets remain in good health but they've paused
for breath.
In the London office market, we expected the occupational
balance to shift from demand to supply during the course of 2017.
The Brexit vote brought that inflexion point forward. In last
year's report, I said a vote to leave the EU would create business
uncertainty, leading to lower occupational demand, falling rental
values and a reduction in construction commitments. This is
happening, though less than we expected. Overall, the UK economy
continued to perform well during the year.
In the retail market, the effect of the referendum was less
clear-cut although, faced with pressure on disposable income,
shoppers have started to show more caution. Retailers were a little
slower to take up new space during the year but we continued to see
opportunities to meet the ever-evolving needs of the most
successful brands.
We won't be sure of the long-term effect of Brexit on our
markets for some time. Negotiations with the EU can only begin in
earnest after the general election. Although the business community
remains in uncharted territory, that doesn't mean we should wait
for change to happen to us. We're taking this time to prepare the
business for the opportunities and challenges we see ahead.
We hope the new government can give businesses as much certainty
as possible on areas including tax, regulation, access to skilled
labour and public spending such as investment in infrastructure -
including desperately needed homes. A clear and ambitious strategy
for improving digital connectivity would have a particularly
powerful impact.
First class portfolio
The foundations of the business are rock solid, underpinned by
our resilient portfolio and low leverage.
In London, our modern, well-located assets are well let, with a
weighted average unexpired lease term on offices of 10.3 years.
Having already scaled back speculative development activity before
the year started, the last 12 months saw us put the finishing
touches on over 1 million sq ft of space, including high-profile
developments at 1 New Street Square, EC4; 20 Eastbourne Terrace,
W2; and Nova, Victoria, SW1, which completed shortly after the year
end. Of the 3.1 million sq ft programme we started in 2010, we have
let or sold all but 283,000 sq ft.
Our retail portfolio is a collection of vibrant destinations
that attract dynamic brands and are well-matched to consumer
trends. During the year, we built and let a leisure extension at
White Rose, Leeds. Our newest destination, Westgate Oxford, is on
schedule to open in October and is 80% spoken for. Since the year
end, we've acquired a portfolio of three outlet centres,
establishing our position as the leading owner-manager of outlets
in the UK.
Strong relationships
Throughout the year, we pursued our vision of being the best
property company in the UK in the eyes of our customers,
communities, partners and employees. Ultimately, their experience
drives our performance. We're responsible for ensuring that Land
Securities can thrive for many years to come. That's why we set
ourselves even higher expectations this year on issues we share
with our customers and communities, such as local employment and
place-making. We've also improved the way we address our climate
impacts and risks.
Great people
In January, we completed the move into new headquarters at 100
Victoria Street, SW1. This is one of our buildings and it expresses
the best of who we are and what we do. We're on one floor of
open-plan workspace supported by innovative technology. Thought has
gone into everything from the way we collaborate to how we minimise
energy and waste. It's the UK's highest rated office fit-out
according to sustainability assessment scheme BREEAM.
Evolving market conditions require role changes in our teams as
our emphasis shifts from selling and development to management and
buying. Our people relish these challenges. We are also enriching
our culture, recruiting more from outside our industry so we gain
fresh perspectives and new capabilities. During the year, we
introduced stretching targets on gender and ethnic diversity and
fairness.
Outlook
We've achieved our plan to have minimal development exposure and
longer lease terms in London offices, a transformed retail
portfolio and low gearing at this point. Over the next 12 months,
we're unlikely to see rental values grow in London unless we have
more certainty on movement of people and the UK's terms of trade
with the EU and the rest of the world. In the retail sector, the
extent to which higher supply chain costs are passed on to
customers remains to be seen. Whatever the outcome, higher costs
tend to reduce take up of space.
In the short term, with significantly reduced risk and a
portfolio of first class assets, we go forward in excellent shape,
ready to make acquisitions when the time is right. Longer term, we
remain confident in our market and our ability to deliver
sustainable growth. We'll continue to address the trends that shape
our business in coming years. For example, the combination of an
ageing population and technological progress will have a huge
effect on the way we live, work, shop, play, travel and are cared
for. In turn, this will affect the way we design, construct and
manage buildings, and how we attract the best talent.
The importance of thinking ahead and acting early was brought
home to me by our completion of Nova in April. Design on this
project started in 2003, when the iPhone was still an idea in Steve
Jobs' head. We must continue to anticipate change so that we can
keep providing the right space for our customers and communities
whatever their future demands - helping businesses and people to
thrive.
Robert Noel
Chief Executive
Financial review
Overview
Table 1: Highlights
Year ended Year ended
31 March 31 March
2017 2016
======================================= ========== ==========
Revenue profit(1) GBP382m GBP362m
Valuation (deficit)/surplus(1) GBP(147)m GBP907m
Profit before tax GBP112m GBP1,336m
======================================= ========== ==========
Basic earnings per share 14.3p 169.4p
Adjusted diluted earnings per share(1) 48.3p 45.7p
Dividend per share 38.55p 35.0p
======================================= ========== ==========
Combined Portfolio(1) GBP14.4bn GBP14.5bn
======================================= ========== ==========
Basic net assets per share 1,458p 1,482p
Adjusted diluted net assets per share 1,417p 1,434p
======================================= ========== ==========
Adjusted net debt(1) GBP3.3bn GBP3.2bn
Group LTV ratio(1) 22.2% 22.0%
======================================= ========== ==========
1. Including our proportionate share of subsidiaries and joint
ventures, as explained in the Presentation of financial information
below.
In my financial review last year, I explained how the quality
and resilience of our assets had been enhanced this decade through
investment in developments and acquisitions, funded by the sale of
weaker assets. Our balance sheet had also been strengthened by
rising values leading to lower gearing, with the additional
disposals in the second half of last year reinforcing the position.
This year, as the property market lost direction following the EU
referendum, our high quality assets and low gearing have helped
limit the impact of declining values in our core markets.
Over the year, our assets fell in value by 1.0% or GBP147m
(including our proportionate share of subsidiaries and joints
ventures) compared with an increase last year of GBP907m. The
decline in asset values is behind both the fall in earnings per
share (14.3p compared with 169.4p last year) and the reductions in
basic and adjusted diluted net assets per share. In contrast, the
Group has delivered strong underlying earnings growth despite the
impact of disposals we made last year. Both revenue profit and
adjusted diluted earnings per share increased this year; revenue
profit was up 5.5% from GBP362m to GBP382m and adjusted diluted
earnings per share were up 5.7% at 48.3p.
Presentation of financial information
Our property portfolio is a combination of properties that are
wholly owned by the Group, part owned through joint arrangements
and those owned by the Group but where a third party holds a
non-controlling interest. Internally, management review the results
of the Group on a basis that adjusts for these forms of ownership
to present a proportionate share. The Combined Portfolio, with
assets totalling GBP14.4bn, is an example of this approach,
reflecting the economic interest we have in our properties
regardless of our ownership structure. We consider this
presentation provides a better explanation to stakeholders of the
activities and performance of the Group, as it aggregates the
results of all of the Group's property interests which under IFRS
are required to be presented across a number of line items in the
statutory financial statements.
The same principle is applied to many of the other measures we
discuss and, accordingly, a number of our financial measures
include the results of our joint ventures and subsidiaries on a
proportionate basis. Measures that are described as being presented
on a proportionate basis include the Group's share of joint
ventures on a line-by-line basis, but exclude the non-owned
elements of our subsidiaries. This is in contrast to the Group's
statutory financial statements, where the Group's interest in joint
ventures is presented as one line on the income statement and
balance sheet, and all subsidiaries are consolidated at 100% with
any non-owned element being adjusted as a non-controlling interest
or redemption liability, as appropriate. Our joint operations are
presented on a proportionate basis in all financial measures.
Most of the measures discussed in this financial review are
presented on a proportionate basis. Measures presented on a
proportionate basis are alternative performance measures as they
are not defined under IFRS. For further details see table 15 in the
Business Analysis section.
Income statement
Our income statement has two key components: the income we
generate from leasing our investment properties net of associated
costs (including finance expense), which we refer to as revenue
profit, and items not directly related to the underlying rental
business, principally valuation changes, profits or losses on the
disposal of properties and exceptional items, which we refer to as
capital and other items.
We present two measures of earnings per share; the IFRS measure
of earnings per share is based on the total profit for the year
attributable to owners of the parent, while adjusted diluted
earnings per share is based on tax-adjusted revenue profit,
referred to as adjusted earnings.
Table 2: Income statement
Year ended Year ended
31 March 31 March
2017 2016
GBPm GBPm
===================================== ========== ==========
Revenue profit (see table 3) 382 362
Capital and other items (see table
6) (270) 974
========== ==========
Profit before tax 112 1,336
Taxation 1 2
Profit attributable to owners of the
parent 113 1,338
===================================== ========== ==========
Basic earnings per share 14.3p 169.4p
Adjusted diluted earnings per share 48.3p 45.7p
===================================== ========== ==========
Profit before tax was GBP112m, GBP1,224m lower than last year
principally due to the valuation deficit this year compared with a
valuation surplus last year. The same movement drives a 155.1p
reduction in earnings per share from 169.4p last year to 14.3p this
year. Adjusted diluted earnings per share increased by 5.7% from
45.7p last year to 48.3p this year as a result of an increase in
revenue profit from GBP362m to GBP382m.
The reasons behind the movements in each component of our income
statement are discussed in more detail below.
Revenue profit
Revenue profit is our measure of underlying pre-tax profit. It
excludes all capital items, such as valuation movements and profits
and losses on disposals, as well as items of an exceptional nature.
Revenue profit is presented on a proportionate basis. We believe
revenue profit better represents the results of the Group's
operational performance to stakeholders as it focuses on the rental
income performance of the business and excludes capital and other
items which can vary significantly from year to year. A full
definition of revenue profit is given in the glossary. The main
components of revenue profit, including the contributions from
London and Retail, are presented in the table below.
Table 3: Revenue profit
Year ended 31 Year ended 31
March 2017 March 2016
Retail London Retail London
Portfolio Portfolio Total Portfolio Portfolio Total Change
GBPm GBPm GBPm GBPm GBPm GBPm GBPm
======================= ========== ========== ===== ========== ========== ===== ======
Gross rental income(1) 335 302 637 355 293 648 (11)
Net service charge
expense (4) (1) (5) (2) (1) (3) (2)
Net direct property
expenditure (16) (16) (32) (24) (17) (41) 9
======================= ========== ========== ===== ========== ========== ===== ======
Net rental income 315 285 600 329 275 604 (4)
Indirect costs (22) (17) (39) (25) (19) (44) 5
======================= ========== ========== ===== ========== ========== ===== ======
Segment profit
before finance
expense 293 268 561 304 256 560 1
======================= ========== ========== ========== ==========
Net unallocated
expenses (40) (34) (6)
Net finance expense (139) (164) 25
======
Revenue profit 382 362 20
======================= ========== ========== ===== ========== ========== ===== ======
1. Includes finance lease interest, after rents payable.
Revenue profit increased by GBP20m from GBP362m last year to
GBP382m for the year ended 31 March 2017. Following asset disposals
we made last year, net rental income declined. However, this was
more than offset by lower net finance expense as explained further
below.
Net rental income
Table 4: Net rental income(1)
Year ended 31 March 2017
GBPm
=========================================== ====
Net rental income for the year ended
31 March 2016 604
Net rental income movement in the
year:
====
Like-for-like investment properties 10
Proposed developments -
Development programme 10
Completed developments 17
Acquisitions since 1 April 2015 2
Sales since 1 April 2015 (40)
Non-property related income (3)
====
(4)
========================================== ====
Net rental income for the year ended
31 March 2017 600
=========================================== ====
1. Including our proportionate share of subsidiaries and joint
ventures, as explained in the Presentation of financial information
above.
Net rental income decreased by GBP4m this year as rental income
growth from our developments and like-for-like portfolio was more
than offset by the impact of properties sold since 1 April 2015.
Significant disposals included The Printworks, Manchester and The
Cornerhouse, Nottingham, both sold this year, and Thomas More
Square, E1, Holborn Gate, WC1 and Times Square, EC4 in London and
three retail parks in Gateshead, Dundee and Derby, all sold last
year. The impact of this year's disposals will continue to be felt
in the coming year as they contributed GBP9m of net rental income
to this year's results. Our developments generated GBP27m of
additional rent following completion of 20 Eastbourne Terrace, W2
and 1 New Street Square, EC4, alongside a full year's income at The
Zig Zag Building and 62 Buckingham Gate, both SW1 and 1 & 2 New
Ludgate, EC4. Like-for-like net rental income growth was GBP10m due
to rent reviews and higher turnover related rents, together with a
reduction in bad debts.
Further information on the net rental income performance of the
London and Retail portfolios is given in the respective business
reviews.
Net indirect expenses
The indirect costs of the London and Retail portfolios and net
unallocated expenses should be considered together as collectively
they represent the net indirect expenses of the Group including
joint ventures. In total, net indirect expenses were GBP79m
compared with GBP78m last year. The GBP1m increase is largely the
result of higher IT and corporate communication and sustainability
costs, largely offset by lower staff costs due to decreased
headcount and reduced share based payment costs.
Net finance expense (included in revenue profit)
Table 5: Net finance expense(1)
Year ended 31 March 2017
GBPm
========================================== ====
Net finance expense for the year ended 31
March 2016 164
Impact of:
Refinancing (21)
Lower average net debt (7)
Lower capitalised interest 6
Other (3)
========================================== ====
Net finance expense for the year ended 31
March 2017 139
========================================== ====
1. Including our proportionate share of subsidiaries and joint
ventures, as explained in the Presentation of financial information
above.
Our net finance expense has decreased by GBP25m to GBP139m,
primarily due to interest savings following the redemption of the
GBP400m A8 bond in March 2016 and other refinancing undertaken this
year, together with lower average drawings under our bank
facilities. This has been partly offset by lower capitalised
interest following completion of developments.
Capital and other items
An explanation of the main capital and other items is given
below.
Table 6: Capital and other items(1)
Year ended Year ended
31 March 31 March
2017 2016
GBPm GBPm
============================================= ========== ==========
Valuation and profits on disposal
Valuation (deficit)/surplus (147) 907
Movement in impairment of trading
properties 12 16
Profit on disposal of investment properties 20 79
Profit on disposal of trading properties 36 41
Other profits on disposal 11 -
Net finance expense (34) (39)
Exceptional items
Head office relocation 1 (6)
Redemption of medium term notes (170) (27)
Other 1 3
============================================= ========== ==========
Capital and other items (270) 974
============================================= ========== ==========
1. Including our proportionate share of subsidiaries and joint
ventures, as explained in the Presentation of financial information
above.
Valuation of investment properties
Our Combined Portfolio declined in value by 1.0% or GBP147m
compared with an increase last year of GBP907m. A breakdown of
valuation movements by category is shown in table 7.
Table 7: Valuation analysis
Market
value Rental Movement
31 March Valuation value Net initial Equivalent in equivalent
2017 movement change(1) yield yield yield
GBPm % % % % bps
======================= ========= ========= ========== =========== ========== ==============
Shopping centres
and shops 3,663 (1.3) 1.6 4.3 4.8 9
Retail parks 855 (4.2) 0.6 5.5 5.6 24
Leisure and
hotels 1,361 2.3 0.2 5.2 5.4 (6)
London offices 4,153 (4.4) 2.5 4.0 4.7 18
Central London
shops 1,267 6.9 4.7 2.5 4.1 7
Other (Retail
and London) 61 (6.0) 3.4 1.9 3.6 2
======================= ========= ========= ========== =========== ========== ==============
Total like-for-like
portfolio 11,360 (1.4) 1.9 4.2 4.8 11
Proposed developments 6 (33.2) n/a - n/a n/a
Development
programme 1,138 1.3 n/a 0.1 4.2 n/a
Completed developments 1,841 (0.4) 1.9 2.0 4.2 10
Acquisitions 94 0.4 n/a 3.7 3.8 n/a
Total Combined
Portfolio 14,439 (1.0) 1.9 3.6 4.7 9
======================= ========= ========= ========== =========== ========== ==============
1. Rental value change excludes units materially altered during
the year and Queen Anne's Gate, SW1.
Over the year to 31 March 2017, we have seen values fall in most
categories of our Combined Portfolio, largely due to outward yield
movements.
Within the like-for-like portfolio, our shopping centres fell in
value by 1.3% as rental value growth was insufficient to offset a 9
basis points increase in yields. The value of our retail parks was
down 4.2% as lower investor appetite led to yields increasing by 24
basis points. In contrast, leisure and hotels saw yields reduce by
6 basis points with little change in rental values. In London, our
offices saw values decline 4.4% as yields increased. The 2.5%
rental value increase in London offices is distorted by the valuer
moving from net effective to headline rents on a number of assets.
On a consistent basis, net effective rents in London offices were
virtually unchanged over the year. The 6.9% valuation uplift in
central London shops is largely due to Piccadilly Lights where a
replacement screen is being installed.
Outside the like-for-like portfolio, the development programme
saw values increase as construction risk reduced at Nova, Victoria,
SW1 and Westgate Oxford. Completed developments, which largely
comprises our recent London office schemes, proved more resilient
than our like-for-like London office assets, falling in value by
0.4%.
Movement in impairment of trading properties
The movement in impairment of trading properties of GBP12m
(2016: GBP16m) relates to the reversal of previous impairment
charges related to residential land at Ebbsfleet, Kent, where the
valuer's assessment of net realisable value has increased over the
year.
Profits on disposals
Profits on disposals relate to the sale of investment
properties, trading properties, joint ventures and other
investments. We made a total profit on disposals of GBP67m,
compared with GBP120m last year. The profit on disposal of
investment properties of GBP20m includes the disposal of The
Printworks, Manchester and Ealing Filmworks. The profit on disposal
of trading properties of GBP36m includes a profit on the settlement
of our remaining interest in the Kodak land at Harrow, together
with the sale of residential units at Nova and Kings Gate, both
SW1. Other profits on disposal amounted to GBP11m.
Net finance expense (included in capital and other items)
This largely comprises the amortisation of the bond exchange
de-recognition adjustment (as explained in the notes to the
financial statements) and the fair value movement on interest-rate
swaps.
Exceptional items
This year we've classified two items totalling GBP169m as
exceptional. They're excluded from revenue profit by virtue of
their exceptional nature, but form part of our pre-tax profits.
During the year, we purchased some of our bonds with a nominal
value of GBP690m, paying a premium of GBP137m. The redemption
premium and GBP30m of the bond exchange de-recognition adjustment
associated with the redeemed bonds, GBP2m of unamortised issue
costs and GBP1m of associated fees (GBP170m in total) have been
charged to the income statement as a finance expense. Further
details are given in the financing section below.
At 31 March 2016, we provided for the onerous lease on our head
office at 5 Strand, which arose following our commitment to move to
100 Victoria Street, SW1. During the year, we agreed to assign the
lease on 5 Strand to a third party at a lower net cost than
originally estimated and we've therefore released the balance of
the provision of GBP2m. Partly offsetting this release is GBP1m of
relocation costs incurred during the year.
Taxation
As a consequence of the Group's REIT status, income and capital
gains from the qualifying property rental business are exempt from
corporation tax. A property income distribution of at least 90% of
this qualifying income must be made, and this distribution is taxed
as property income at the shareholder level to give a similar tax
position to direct property ownership. Profits on non-qualifying
activities, such as residential sales, are subject to corporation
tax and can be distributed as ordinary dividends. This year, we
were able to offset taxable gains on non-qualifying activities with
brought forward losses. In the year, there was a tax credit of
GBP1m (2016: GBP2m) being a current tax credit of GBPnil (2016:
GBP1m) and a deferred tax credit of GBP1m (2016: GBP1m).
The Group fully complies with tax regulations and HMRC confirmed
the Group's low risk rating. In the year, total taxes borne and
collected by the Group were GBP129m (2016: GBP109m), of which we
directly incurred GBP41m (2016: GBP32m), including environmental
taxes, business rates and stamp duty land tax.
Balance sheet
Table 8: Balance sheet
31 March 31 March
2017 2016
GBPm GBPm
======================================== ======== ========
Combined Portfolio 14,439 14,471
Adjusted net debt (3,261) (3,239)
Other net assets 28 133
Adjusted net assets 11,206 11,365
======== ========
Fair value of interest-rate swaps (4) (34)
Bond exchange de-recognition adjustment 314 368
======================================== ======== ========
Net assets 11,516 11,699
======================================== ======== ========
Net assets per share 1,458p 1,482p
Adjusted diluted net assets per share 1,417p 1,434p
======================================== ======== ========
Our net assets principally comprise the Combined Portfolio less
net debt. We calculate an adjusted measure of net assets, which is
lower than our net assets reported under IFRS due to an adjustment
to increase our net debt to its nominal value. We believe this
better reflects the underlying net assets attributable to
shareholders as it more accurately reflects the future cash flows
associated with our debt instruments.
At 31 March 2017, our net assets per share were 1,458p, a
decrease of 24p or 1.6% from 31 March 2016. At 31 March 2017,
adjusted diluted net assets per share were 1,417p, a decrease of
17p or 1.2% from 31 March 2016, driven by the reduction in the
valuation of the Combined Portfolio.
Table 9 summarises the key components of the GBP159m decrease in
our adjusted net assets over the year.
Table 9: Movement in adjusted net assets(1)
31 March
2017
GBPm
============================================ ========
Adjusted net assets at the beginning of the
year 11,365
Revenue profit 382
Valuation deficit (147)
Profits on disposals 67
Dividends (289)
Redemption of medium term notes (140)
Other (32)
============================================ ========
Adjusted net assets at the end of the year 11,206
============================================ ========
1. Including our proportionate share of subsidiaries and joint
ventures, as explained in the Presentation of financial information
above.
Net debt and gearing
Table 10: Net debt and gearing
31 March 31 March
2017 2016
Net debt GBP2,905m GBP2,861m
Adjusted net debt GBP3,261m GBP3,239m
Gearing 25.2% 24.5%
Adjusted gearing(1) 29.1% 28.5%
Group LTV(2) 22.2% 22.0%
Security Group LTV 28.3% 23.4%
Weighted average cost of debt(2) 4.2% 4.9%
================================= ========= =========
1. Adjusted net debt divided by adjusted net assets
2. Including our proportionate share of subsidiaries and joint
ventures, as explained in the Presentation of financial information
above.
Over the year, our net debt increased by GBP44m to GBP2,905m.
The main elements behind this increase are set out in our statement
of cash flows and note 13 to the consolidated financial
statements.
Adjusted net debt was up GBP22m to GBP3,261m. For a
reconciliation of net debt to adjusted net debt, see note 12 to the
financial statements. Table 11 sets out the main movements behind
the small increase in our adjusted net debt.
Table 11: Adjusted net debt(1)
31 March
2017
GBPm
============================================== ========
Adjusted net debt at the beginning
of the year 3,239
Operating cash inflow (379)
Dividends paid 289
Acquisitions 26
Development/refurbishment capital expenditure 288
Disposals (410)
Redemption of medium term notes 140
Refinancing of interest-rate swaps 33
Other 35
============================================== ========
Adjusted net debt at the end of the year 3,261
============================================== ========
1. Including our proportionate share of subsidiaries and joint
ventures, as explained in the Presentation of financial information
above.
Net operating cash inflow was GBP379m, largely offset by
dividend payments of GBP289m. Capital expenditure was GBP288m
(GBP258m on investment properties and GBP30m on trading
properties), largely relating to our development programme. Net
cashflows from the disposal of investment properties were GBP297m,
from the disposal of trading properties GBP110m and the disposal of
investments in joint ventures GBP3m. The premium payable for the
purchase of the medium term notes was GBP137m.
Most of our gearing measures have increased marginally since 31
March 2016 due to the decrease in the value of our assets and the
small increase in our adjusted net debt. The measure most widely
used in our industry is loan-to-value (LTV). We focus most on Group
LTV, presented on a proportionate basis, which increased marginally
from 22.0% at 31 March 2016 to 22.2% at 31 March 2017. The increase
in our Security Group LTV from 23.4% to 28.3% relates to the medium
term notes we purchased this year. These are held in a different
entity to the issuing company and, for the purposes of calculating
this measure, cannot be offset.
Financing
At 31 March 2017, our committed revolving facilities totalled
GBP1,940m (31 March 2016: GBP1,865m). The GBP75m increase in
committed facilities is the result of two new debt facilities
totalling GBP560m, offset by the cancellation of two existing
facilities. The pricing of our facilities which fall due in more
than one year are between LIBOR +75 basis points and LIBOR +80
basis points. Borrowings under our commercial paper programme
typically have a maturity of less than three months, carry a
weighted average interest rate of approximately LIBOR +29 basis
points and are unsecured. Overall, the amounts drawn under the
syndicated bank debt and commercial paper programme totalled
GBP441m (31 March 2016: GBP432m).
During the year, we purchased GBP690m (nominal value) of our
medium term notes (MTNs). On 8 February 2017, we conducted a tender
exercise which resulted in us buying back GBP635m (nominal value)
of MTNs in three series. In addition during the year, we bought
back GBP55m (nominal value) of MTNs in a number of ad hoc
purchases, following enquiries by bondholders. Further details are
set out in the table below and note 13 to the financial statements.
In conjunction with the tender offer, we issued a new GBP400m MTN
with an expected maturity of 2024 and a GBP300m MTN with an
expected maturity of 2029.
Table 12: Purchase of medium term notes
Medium term note series
A3 A10 A4 A5 A7 Total
GBPm GBPm GBPm GBPm GBPm GBPm
=========================== ==== ==== ==== ==== ==== =====
Nominal value purchased
- Tender offer 206 265 164 - - 635
- Ad hoc purchases 3 7 20 23 2 55
==== ==== ==== ==== ==== =====
209 272 184 23 2 690
==== ==== ==== ==== ==== =====
Premium paid
- Tender offer 28 56 40 - - 124
- Ad hoc purchases 1 1 4 6 1 13
==== ==== ==== ==== ==== =====
29 57 44 6 1 137
Fees / unamortised finance
fees written off - 2 1 - - 3
==== ==== ==== ==== ==== =====
29 59 45 6 1 140
Amortisation of bond
exchange de-recognition
adjustment 19 - 6 5 - 30
Redemption of medium
term notes - total cost 48 59 51 11 1 170
=========================== ==== ==== ==== ==== ==== =====
A premium to par of GBP137m was paid across all of the MTN
purchases, reflecting future coupon savings of GBP206m. Taking into
account the interest cost of the facilities used for the purchases,
we estimate the Group's net interest saving next year will be a
further GBP16m.
The Group's debt (on a proportionate basis) has a weighted
average maturity of 9.4 years, a weighted average cost of 4.2% and
89% is at fixed interest rates. At 31 March 2017, we had GBP1.6bn
of cash and available facilities. This gives the business
considerable flexibility to deploy capital quickly should
acquisition opportunities arise.
Since the end of the year, we have redeemed the Queen Anne's
Gate bond in its entirety. The nominal value amounted to GBP273m at
31 March 2017 and the premium paid was GBP63m. The redemption was
funded by our existing short-term facilities and is expected to
result in an interest saving of GBP8m in the year to 31 March 2018.
Our pro forma cost of debt at 31 March 2017, taking into account
this transaction, is 3.7%.
Dividend
We're recommending a final dividend of 11.7p to be paid on 27
July 2017 entirely as a Property Income Distribution to
shareholders registered at the close of business on 23 June 2017.
Taken together with the three quarterly dividends of 8.95p per
share already paid, our full year dividend will be up 10.1% at
38.55p per share (2016: 35.0p) or GBP305m (2016: GBP276m). The
first quarterly dividend for 2017/18 will be 9.85p per share (2016:
8.95p).
Land Securities has a progressive dividend policy, which aims to
deliver sustainable growth in dividends over time, broadly in line
with our underlying earnings growth as measured by our adjusted
earnings per share. The reason we use underlying earnings is that
it excludes capital and other items such as valuation movements and
non-recurring income or costs.
We don't pay out a fixed percentage of adjusted earnings each
year, due to the earnings volatility that can come from our
investment decisions. For example, when we empty a building in
advance of development, we lose rent which isn't recovered until
after the new building has been built and let. Similarly, selling
assets in the current low interest rate environment is likely to be
earnings dilutive. Our dividend policy aims to smooth out that
earnings volatility with a more consistent dividend
progression.
The degree to which our adjusted earnings per share exceeds the
dividend per share (known as our dividend cover) will vary for the
reasons described above. In addition, when setting our dividend,
we're mindful of the earnings risks we have in the business (for
example, from unlet speculative developments) and the degree of
flexibility we believe we require (for example, if we intend to
sell properties despite the negative impact on earnings).
Last year, we raised our dividend by almost 10% as earnings rose
due to our successful development programme. This year, we've
increased the dividend above our underlying earnings growth as
we've now completed our disposal programme, our speculative
development risk is lower than for many years and we're unlikely to
add to that risk in the short term. In addition to our focus on
risk and flexibility when setting the dividend, we also consider
underlying cash flows, recognising that these are generally lower
than underlying earnings due to the lease incentives we give our
customers and refurbishment capital expenditure. Taking all these
factors together, we anticipate that dividend cover will be in the
range of 1.2x to 1.3x. This range is indicative only although it's
unlikely that we would consistently pay a dividend per share in
excess of our adjusted earnings per share and, as a minimum, we
will satisfy our dividend obligation under the REIT
legislation.
At 31 March, the Company had distributable reserves of GBP3.5bn
which compares to the dividend payable in respect of this year of
GBP305m. We don't anticipate that the level of distributable
reserves will limit distributions for the foreseeable future.
Martin Greenslade
Chief Financial Officer
London Portfolio
Highlights
-- Valuation deficit of 1.3%
-- GBP13m of investment lettings
-- GBP9m of development lettings
Actions and outcomes
Focus for 2016/17 Progress in 2016/17
========================================================= ============================================================
* Outperform IPD sector benchmark * The total return of the London Portfolio was 3.1%
underperforming its IPD sector benchmark at 3.4%
* Complete the letting of 1 & 2 New Ludgate, EC4; Th * 1 & 2 New Ludgate fully let; The Zig Zag Building 89%
e let; and 20 Eastbourne Terrace 90% let
Zig Zag Building, SW1; and 20 Eastbourne Terrace,
W2
* Nova, Victoria 47% let
* Progress development lettings at Nova, Victoria, S
W1
* Submit a planning application at Southwark Street, * Planning resolution granted at Southwark Street and
SE1 and secure planning consent for new screens at planning consent secured for new screens at
Piccadilly Lights, W1 Piccadilly Lights
* Progress to revised time and to budget at our * All achieved except Nova, Victoria over budget and
committed developments delayed
* Secure employment for a further 129 candidates via * Secured employment for 134 candidates
our Community Employment Programme
========================================================= ============================================================
Focus for 2017/18
=============================================================
* Outperforming IPD sector benchmark
* Growing like-for-like net rental income
* Completing the letting of The Zig Zag Building, 20
Eastbourne Terrace and Nova, Victoria
* Completing the construction and letting of Piccadilly
Lights
* Progressing build to grade to time and budget at 21
Moorfields, EC2
* Growing future development pipeline through
acquisitions and 1.4 million sq ft of existing
opportunities within portfolio
* Securing employment for a further 95 candidates via
our Community Employment Programme
* Improving energy management in support of 2030
corporate commitments
=============================================================
At a glance
-- Valuation deficit of 1.3%(1)
-- Ungeared total property return of 3.1%
-- The portfolio underperformed its IPD Quarterly Universe sector benchmark at 3.4%
-- GBP13m of investment lettings and GBP9m of development lettings
-- Like-for-like voids: 7.0%(2) (31 March 2016: 2.9%)
1. On a proportionate basis.
2. Reduces to 3.3% when Piccadilly Lights, SW1, which remains in
like-for-like during the screen replacement, is excluded.
This year supply-constrained conditions in the occupational
market gave way to weaker demand. However, we've been positioning
the business for these conditions, and so are well-placed. Over the
past 12 months, we've completed our speculative development
programme, focused on letting the remaining space, worked to
maximise income and lease length through proactive asset management
and readied the business to start buying when conditions are
right.
In addition, we've increased our emphasis on anticipating change
to ensure our buildings and our service meet our customers' needs,
while at the same time enhancing the environment for our
communities. This approach will deliver long-term value for us.
As a result of our actions, the portfolio is in great shape.
It's occupied by a broad customer base spanning sectors from
finance to fashion and we now have our longest ever weighted
average unexpired lease term of 10.3 years.
Buy
We made no material acquisitions this year. We have the
firepower needed for when the right opportunities appear, but we
will be patient and disciplined.
Develop
At 20 Eastbourne Terrace, W2, we completed a major refurbishment
during the year, creating 93,000 sq ft of contemporary space in an
18-storey tower overlooking Paddington Crossrail station. The
building offers 6,000 sq ft floorplates and a stunning communal
rooftop garden. All of the space is now let, on an average lease
length of more than ten years at record rents.
In the City, we completed 1 New Street Square, EC4. This 275,000
sq ft scheme was pre-let in its entirety to Deloitte on a 20 year
lease.
Nova, Victoria, SW1 completed just after the year-end in April -
a high point in our long-term regeneration of Victoria. The scheme
features two exceptional office buildings, 170 apartments and a
fantastic line-up of restaurants, creating London's newest food
destination. 49% of the 480,000 sq ft office space and 93% of the
retail and food-related space is now let. 148 of the apartments
have now been sold, 10 of them during the year.
The complexities of construction - together with competition for
labour in a busy sector - delayed final completion and impacted
costs. However, the scheme is proving very popular and we're
confident we'll let the remaining space in good time. At Nova East,
the second phase of Nova, Victoria, we're finalising statutory
approvals ready to start on site when the time is right.
We secured planning consent for 798,000 sq ft of space in three
London boroughs. In the City at 21 Moorfields, EC2, we've completed
demolition and will shortly commence piling and construction of a
raft that will sit above the eastern entrance to Liverpool Street
Crossrail station, ready for building 522,000 sq ft in two
buildings. Completing the raft in July 2018 will mean we can
complete construction of the buildings in 24 months, providing an
excellent prospect for the pre-letting market.
In Westminster at 1 Sherwood Street, W1 behind Piccadilly
Lights, we secured planning consent for a 142,000 sq ft mixed use
scheme and in Southwark, at Sumner Street, SE1, resolution to grant
planning consent for 134,000 sq ft.
We have a further 360,000 sq ft in feasibility at Red Lion
Court, SE1.
Manage
We were very active asset managers this year, moving early to
address lease expiries and rent reviews, as well as securing
reversions ahead of expectation.
At Dashwood House, EC2, we completed rent reviews on GBP6m (86%)
of the income, increasing the rent by 26%. At One New Change, EC4,
we reviewed GBP19m (65%) of the rent increasing the offices by 3%
and the retail by 18%. At Cardinal Place, SW1, we reviewed GBP11m
(48%) of rent increasing the offices by 14% and the retail by 23%,
as well as letting 113,000 sq ft of available space. At 140
Aldersgate Street, EC1, we reviewed GBP1m (44%) of the rent and
achieved a 33% uplift, as well as letting 25,000 sq ft of available
space.
At Piccadilly Lights, W1, we obtained planning consent to
replace the six screens with Europe's most technically advanced
digital screen, maintaining the heritage of the site while giving
advertisers innovative ways to interact with more than 100 million
passers-by each year. Coca-Cola committed to continuing its 60 year
residence and will be joined by Samsung and Hyundai. We have three
remaining advertising opportunities and are in discussion with
other major brands to complete the line-up. We'll be launching the
new screen at this major tourist attraction in November.
Sell
In 2015, to reduce risk, we started a disposal programme of
weaker assets after we had completed asset management plans to
maximise value. The majority of these sales were executed last year
and we successfully completed the programme this year with
disposals totalling GBP46m. Trading property disposals of GBP135m
include sales at Nova, Victoria, SW1 following completion of
residential units, further disposals at Kings Gate, SW1 and the
disposal of our remaining interest in the Kodak land at Harrow.
Sales of other investments totalled GBP13m.
Net rental income
Table 13: Net rental income(1)
31 March 31 March
2017 2016 Change
GBPm GBPm GBPm
==================================== ======== ======== ======
Like-for-like investment properties 203 199 4
Proposed developments - - -
Development programme 16 5 11
Completed developments 62 45 17
Acquisitions since 1 April 2015 2 1 1
Sales since 1 April 2015 - 21 (21)
Non-property related income 2 4 (2)
==================================== ======== ======== ======
Net rental income 285 275 10
==================================== ======== ======== ======
1. On a proportionate basis.
Net rental income in the London Portfolio has increased by
GBP10m from GBP275m to GBP285m, with additional income from
recently completed developments largely offset by lost income from
properties sold last year.
Income from our developments contributed an additional GBP28m
this year, principally at 1 New Street Square, EC4, 20 Eastbourne
Terrace, W2 and Nova, Victoria, SW1. We also benefited from a full
year's income at The Zig Zag Building, SW1, 1 & 2 New Ludgate,
EC4 and 62 Buckingham Gate, SW1. The increase in the like-for-like
portfolio of GBP4m reflects new lettings and settled rent reviews,
partly offset by reduced income at Piccadilly Lights following the
start of refurbishment. Overall, these increases are largely offset
by a GBP21m reduction in net rental income from disposals since 1
April 2015, most notably Thomas More Square, E1, Times Square, EC4
and Haymarket House, SW1.
Outlook
In the current uncertain environment, investment demand is
likely to be lower for all but the very best assets. In the
occupational market, we expect net effective rental values to
weaken but demand from dynamic businesses to continue for high
quality, resilient space. We're well prepared for these conditions
with a portfolio of assets designed to meet the needs of these
customers.
We're ready to add to our portfolio when the time is right. Our
team is tracking around GBP2bn of opportunities, building up our
intelligence network ready for a future investment phase. In
addition, we're preparing 1.4 million sq ft of future development
opportunities for when conditions are right to proceed.
Retail Portfolio
Highlights
-- Valuation deficit of 0.8%
-- GBP15m of investment lettings
-- GBP4m of development lettings
Actions and outcomes
Focus for 2016/17 Progress in 2016/17
========================================================== ==========================================================
* Outperform IPD sector benchmark * The total return of the Retail Portfolio was 4.7%
outperforming its IPD sector benchmark at 1.1%
* Progress lettings at Westgate Oxford; Selly Oak, * Westgate Oxford 68% pre-let; Selly Oak 73% pre-let;
Birmingham; and the White Rose, Leeds leisure and White Rose leisure extension 100% let
extension
* Resolution to grant planning consent at Worcester * Planning consent at Worcester Woods rejected
Woods
* Achieve planning consent and progress lettings for * Planning consent for Glow space at Bluewater
Glow space at Bluewater, Kent achieved. Space 69% pre-let
* Progress to time and budget at our committed * Westgate Oxford on time and budget
developments
* Expand the Community Employment Programme to other * Expanded the Community Employment Programme to St
retail sites David's, Cardiff; White Rose; and Gunwharf Quays,
Portsmouth and secured employment for 49 candidates
========================================================== ==========================================================
Focus for 2017/18
=============================================================
* Outperforming IPD sector benchmark
* Growing like-for-like net rental income
* Progressing lettings at Westgate Oxford; Selly Oak,
Birmingham; and the Plaza reconfiguration at
Bluewater
* Progressing the Plaza reconfiguration at Bluewater to
time and budget
* Successfully launching Westgate Oxford after
achieving practical completion on time and on budget
* Integrating the three newly acquired outlet centres
* Further developing the Community Employment Programme
beyond its current focus on construction with 75
people being supported into jobs in retail
* Improving energy management in support of 2030
corporate commitments
=============================================================
At a glance
-- Valuation deficit of 0.8%(1)
-- Ungeared total property return of 4.7%
-- The portfolio outperformed its IPD Quarterly Universe sector benchmark at 1.1%
-- GBP15m of investment lettings and GBP4m of development lettings
-- Like-for-like voids: 2.8% (31 March 2016: 2.0%) and units in
administration: 0.4% (31 March 2016: 0.5%)
1. On a proportionate basis.
Key indicators
-- Footfall in our shopping centres was down 1.6% (national benchmark down 2.5%)
-- Same centre non-food retail sales, taking into account new
lettings and occupier changes, were up 1.7% (national benchmark for
same centre physical store non-food retail sales down 1.9%;
national benchmark for all retail sales, including online, up
0.3%)
-- Same store non-food retail sales were down 1.1% (national
benchmark for same store physical store non-food retail sales down
2.2%)
-- Retailers' rent to sales ratio in our portfolio was 10.3%,
with total occupancy costs (including rent, rates, service charges
and insurance) representing 17.6% of sales
We went into the year with a portfolio well matched to the
evolving needs and expectations of our customers. Despite
uncertainty in the wider market, retail destinations that provide
consumers with a great experience held up well.
Retailers' and consumers' use of online retailing continues to
influence demand for physical space, and inflation is now putting
pressure on consumer spending. However, we've continued to see good
demand for the best space in the right locations.
Buy
Our acquisitions during the year were limited to a small number
of properties adjacent to space we own. Since the year end, we've
acquired a portfolio of three outlet centres for GBP333m, which,
alongside our existing outlet centres at Gunwharf Quays,
Portsmouth, and The Galleria, Hatfield, establishes our position as
the leading owner-manager of outlets in the UK.
Develop
Our Westgate Oxford development with The Crown Estate is on time
and on budget for opening in October 2017. We've made good progress
on lettings with 80% of the scheme now pre-let or in solicitors'
hands. The latest brands to sign up include Uniqlo, Cath Kidston,
Levis and Molton Brown. We've also invested to ensure the
sustainability of the development, including extending our
Community Employment Programme so local disadvantaged people will
continue to benefit from job opportunities after the centre
opens.
At Selly Oak, Birmingham, 91% of the retail is either pre-let or
in solicitors' hands, demonstrating occupier support for this
potential retail and student housing scheme.
Manage
This year we've secured GBP15m of investment lettings. Our
like-for-like portfolio is virtually full, with voids of just 2.8%
and a weighted average lease term of 8.2 years. We have strong
relationships with vibrant customers, from groundbreaking start-ups
to global brands.
Trinity Leeds continues to be the beating heart of the city and
we've brought new brands to the centre including Lindt, Côte
Brasserie and Indian street food operator Mowgli. We're also
creating an upsized unit for New Look and expanding the centre's
vibrant leisure offer with two new operators.
At White Rose, Leeds, the demise of BHS enabled us to deliver a
55,000 sq ft Next store, doubling its previous space. We also
upsized space for JD Sports, Pandora, Schuh and Holland &
Barrett. Construction of our leisure extension is now complete and
fully let, with the six new restaurants and IMAX cinema units being
fitted out to open later this year.
At Gunwharf Quays, Portsmouth, we introduced Armani and Coach to
build on the centre's strong aspirational offer. We also opened one
of the first Under Armour 'athleisure' outlet stores in the UK.
At Bluewater, Kent, we delivered a 40,000 sq ft flagship for
H&M, who had outgrown their existing unit. We've continued to
broaden the wide range of retail brands on offer, with eight new
openings including Mint Velvet and Michael Kors, and upgraded
stores for LK Bennett and Jigsaw. Online retailer Missguided also
committed to Bluewater. We started construction of the Plaza
leisure reconfiguration this year and expect to complete by
December. The project enables us to bring new leisure operators to
Bluewater and the scheme is 80% pre-let or in solicitors' hands,
with Showcase taking a lease for a four screen extension. We've
also continued to invest in the Learning Shop, which connects
retailers and local unemployed people.
Throughout the year, we developed new relationships and ideas to
keep the customer experience fresh and exciting. For example, we
attracted on trend operators out of central London and into
regional locations, including Dirty Bones and Sticks'n'Sushi at
Westgate. We brought Mercedes into St David's, Cardiff, and
Buchanan Galleries, Glasgow. Cycle brand Ribble's pop-up at St
David's was so successful they're looking at more sites. In total,
we brought 150 pop-up stores and kiosk operators into our assets
this year.
Our retail parks are well matched to customers' needs and remain
100% let. Our leisure parks are 99% let and are all anchored by the
dominant cinema for their catchment, providing a broad,
family-friendly entertainment and food offer.
Sell
Disposals totalled GBP219m during the year. We sold the Ealing
Filmworks development site to a residential developer,
crystallising an element of the development profit up front,
without risk. As we continue our focus on family-orientated leisure
assets, we sold our two drinks-led city centre leisure schemes, The
Printworks, Manchester, and The Cornerhouse, Nottingham. And since
the year end, we've sold our 50% interest in Clapham Shopstop, SW11
to our former joint venture partner.
In February 2016, Accor exercised its right to break the leases
on seven of their 29 hotels. All seven hotels have since been sold
at a premium to their investment values and the remaining Accor
leases, where breaks weren't exercised, now extend to 2031.
Net rental income
Table 14: Net rental income(1)
31 March 31 March
2017 2016 Change
GBPm GBPm GBPm
==================================== ======== ======== ======
Like-for-like investment properties 295 289 6
Proposed developments - - -
Development programme - 1 (1)
Completed developments - - -
Acquisitions since 1 April 2015 2 1 1
Sales since 1 April 2015 9 28 (19)
Non-property related income 9 10 (1)
==================================== ======== ======== ======
Net rental income 315 329 (14)
==================================== ======== ======== ======
1. On a proportionate basis.
Net rental income reduced by GBP14m from GBP329m to GBP315m.
This was largely due to disposals since 1 April 2015. These include
The Cornerhouse, Nottingham and The Printworks, Manchester both
sold in the current year and retail parks in Gateshead, Dundee and
Derby, a leisure park in Maidstone and a supermarket in Crawley,
all sold in the second half of last year. The increase in our
like-for-like portfolio of GBP6m is due to a combination of new
lettings, improved turnover performance and a reduction in bad debt
provisions compared to last year.
Outlook
Current uncertainty and rising costs will continue to affect
consumer confidence and retailers' readiness to invest and expand.
As a result, we expect letting activity to larger occupiers of
retail space and leisure operators to slow in the year ahead.
However, we believe that the best physical stores will play a
critical role for retailers, not least in enabling them to create
memorable brand experiences and to engage with their customers.
Internet sales provide competition to physical space, but we're
also seeing opportunities to help brands develop their multichannel
offer. We'll remain alert to buying opportunities over the next 12
months, but our focus will be on enhancing the space and offer at
our most successful destinations, launching Westgate Oxford in
October and successfully integrating the three new outlet centres
into the portfolio.
Principal risks and uncertainties
The Company has identified certain principal risks and
uncertainties that could prevent the Group from achieving its
strategic objectives and has assessed how these risks could best be
mitigated through a combination of internal controls, risk
management and the purchase of insurance cover. These risks are
reviewed and updated on a regular basis and were last formally
assessed by the Board in May 2017.
A description of the principal risks and uncertainties faced by
the Group, together with an assessment of their impact is set out
below. The Group's approach to the management and mitigation of
these risks is included in the 2017 Annual Report.
Risk description Impact
============================================================== ============================================================
Customers
* Structural changes in customer and consumer * Shift in office and retailer customer demand with
behaviours consequent impact on new lettings, renewal of
existing leases and rental growth
============================================================== ============================================================
Market cyclicality
* Market and political uncertainty or change in * Reduces liquidity and impacts property performance
legislation
* Fall in values
* Limits ability to raise further funding
============================================================== ============================================================
Disruption
* Failure to react effectively to new disruptors within * Asset obsolescence
our sectors, including technological advances
* Loss of competitive advantage
============================================================== ============================================================
People and skills
* Inability to attract, retain and develop the right * Lack the skills necessary to deliver the business
people and skills objectives
============================================================== ============================================================
Major health and safety
incident
* Accidents causing injury to employees, contractors, * Injury or loss of life
occupiers or visitors to our properties
* Criminal/civil proceedings and resultant reputational
damage
* Delays to building projects and access restrictions
to shopping centres
Security threat or attack
* Failure to identify or prevent a major security * Injury, loss of life, damage to buildings
related threat or attack, or react immediately and
effectively
* Loss of consumer confidence with consequent impact on
new lettings, renewal of existing leases and rental
growth
* Loss of income
============================================================== ============================================================
Risk description Impact
============================================================ =======================================================
Cyber threat or attack
* External and internal threat to corporate and * Negative reputational impact
building management systems and data
* Adverse operational and financial impact
============================================================ =======================================================
Sustainability
* Increasing environmental pressure and/or properties * Increased cost base
that do not comply with legislation, meet customer
expectations or are unable to withstand the expected
challenges of climate change * Inability to attract or retain customers
* Premature obsolescence and loss of asset value
============================================================ =======================================================
Development
* Unable to deliver capex programme to agreed returns * Negative valuation movements
and/or occupiers reluctant to commit to take new
space in our developments
* Reduction in income
============================================================ =======================================================
Statement of Directors' Responsibilities
The Annual Report 2017 contains the following statements
regarding responsibility for the financial statements and business
reviews included therein.
The Directors are responsible for preparing the Annual 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. Under that law the Directors
have prepared the Group and parent company financial statements in
accordance with International Financial Reporting Standards (IFRS)
as adopted by the European Union. Directors must not approve the
financial statements unless they are satisfied that they give a
true and fair view of the state of affairs of the Group and the
Company and of the profit and loss of the Group and the Company for
that period.
In preparing these financial statements the Directors are
required to:
-- select suitable accounting policies in accordance with IAS 8
'Accounting Policies, Changes in Accounting Estimates and Errors'
and then apply them consistently;
-- make judgements and accounting estimates that are reasonable and prudent;
-- present information, including accounting policies, in a
manner that provides relevant, reliable, comparable and
understandable information;
-- state that the Group and Company has complied with IFRS as
adopted by the European Union, subject to any material departures
disclosed and explained in the financial statements;
-- provide additional disclosures when compliance with the
specific requirements of IFRS is insufficient to enable users to
understand the impact of particular transactions, other events and
conditions on the Group's and Company's financial position and
performance; and
-- prepare the Group's and Company's financial statements on a
going concern basis, unless it is inappropriate to do so.
The Directors are responsible for keeping adequate accounting
records that are sufficient to show and explain the Group's and
Company's transactions and disclose with reasonable accuracy at any
time the financial position of the Group and the Company, and to
enable them to ensure that the Annual Report complies with the
Companies Act 2006 and, as regards the Group financial statements,
Article 4 of the IAS regulation. They are also responsible for
safeguarding the assets of the Group and the Company and hence for
taking reasonable steps for the prevention and detection of fraud
and other irregularities.
Directors' responsibility statement under the Disclosure and
Transparency Rules
Each of the Directors, whose names and functions are listed
below, confirm that to the best of their knowledge:
-- the Group financial statements, which have been prepared in
accordance with IFRS as adopted by the EU, give a true and fair
view of the assets, liabilities, financial position and profit of
the Group; and
-- the Company financial statements, prepared in accordance with
IFRS as adopted by the EU, give a true and fair view of the assets,
liabilities, financial position, performance and cash flows of the
Company; and
-- the Strategic Report contained in the Annual Report includes
a fair review of the development and performance of the business
and the position of the Group and the Company, together with a
description of the principal risks and uncertainties faced by the
Group and Company.
Directors' statement under the UK Corporate Governance Code
Each of the Directors confirm that to the best of their
knowledge the Annual Report taken as a whole is fair, balanced and
understandable and provides the information necessary for
shareholders to assess the Group's and Company's position,
performance, business model and strategy.
A copy of the financial statements of the Group is placed on the
Company's website. The Directors are responsible for the
maintenance and integrity of statutory and audited information on
the Company's website at www.landsecurities.com. Information
published on the internet is accessible in many countries with
different legal requirements. Legislation in the United Kingdom
governing the preparation and dissemination of financial statements
may differ from legislation in other jurisdictions.
The Directors of Land Securities Group PLC as at the date of
this Annual Report are as set out below:
Dame Alison Carnwath, Chairman*
Robert Noel, Chief Executive
Martin Greenslade, Chief Financial Officer
Edward Bonham Carter, Senior Independent Director*
Kevin O'Byrne*
Chris Bartram*
Simon Palley*
Stacey Rauch*
Cressida Hogg CBE*
Nicholas Cadbury*
*Non-executive Directors
The Statement of Directors' Responsibilities was approved by the
Board of Directors on 17 May 2017 and is signed on its behalf
by:
Robert Noel Martin Greenslade
Chief Executive Chief Financial Officer
Financial statements
Income statement Year ended Year ended
31 March 2017 31 March 2016
Capital Capital
and and
Revenue other Revenue other
profit items Total profit items Total
Notes GBPm GBPm GBPm GBPm GBPm GBPm
================================ ===== ======= ======== ===== ======= ======= ======
Revenue 4 721 66 787 744 198 942
Costs 5 (242) (24) (266) (259) (151) (410)
================================ ===== ======= ======== ===== ======= ======= ======
479 42 521 485 47 532
Profit on disposal of
investment properties - 19 19 - 75 75
Loss on disposal of
investment in joint
venture - (2) (2) - - -
Profit on disposal of
other investment - 13 13 - - -
Net (deficit)/surplus
on revaluation of investment
properties 9 - (186) (186) - 739 739
Operating profit 479 (114) 365 485 861 1,346
Share of post-tax profit
from joint ventures 11 21 48 69 20 179 199
Finance income 6 37 - 37 35 - 35
Finance expense 6 (155) (204) (359) (178) (66) (244)
Profit before tax 382 (270) 112 362 974 1,336
Taxation - 1 1 - 2 2
================================ ===== ======= ======== ===== ======= ======= ======
Profit attributable to
owners of the parent 382 (269) 113 362 976 1,338
======================================= ======= ======== ===== ======= ======= ======
Earnings per share attributable
to owners of the parent:
Basic earnings per share 3 14.3p 169.4p
Diluted earnings per
share 3 14.3p 168.8p
================================ ===== ======= ======== ===== ======= ======= ======
Statement of comprehensive income Year ended
31 March Year ended
2017 31 March 2016
Total Total
GBPm GBPm
Profit attributable to owners
of the parent 113 1,338
========================================== ========== ==============
Items that will not be subsequently
reclassified to the income statement:
Net re-measurement (loss)/gain
on defined benefit pension scheme (12) 18
Deferred tax credit/(charge)
on re-measurement above 2 (3)
Other comprehensive (loss)/income
attributable to owners of the
parent (10) 15
========================================== ========== ==============
Total comprehensive income attributable
to owners of the parent 103 1,353
========================================== ========== ==============
Balance sheets
2017 2016
Notes GBPm GBPm
======================================= ===== ======= =======
Non-current assets
Investment properties 9 12,144 12,358
Intangible assets 36 38
Net investment in finance leases 165 183
Investments in joint ventures 11 1,734 1,668
Investments in subsidiary undertakings - -
Trade and other receivables 123 86
Other non-current assets 51 44
Total non-current assets 14,253 14,377
======================================= ===== ======= =======
Current assets
Trading properties 10 122 124
Trade and other receivables 418 445
Monies held in restricted accounts
and deposits 14 21 19
Cash and cash equivalents 15 30 25
Total current assets 591 613
Total assets 14,844 14,990
======================================= ===== ======= =======
Current liabilities
Borrowings 13 (404) (19)
Trade and other payables (302) (289)
Other current liabilities (7) (19)
Total current liabilities (713) (327)
======================================= ===== ======= =======
Non-current liabilities
Borrowings 13 (2,545) (2,854)
Trade and other payables (25) (28)
Other non-current liabilities (9) (47)
Redemption liability (36) (35)
======================================= ===== ======= =======
Total non-current liabilities (2,615) (2,964)
======================================= ===== ======= =======
Total liabilities (3,328) (3,291)
======================================= ===== ======= =======
Net assets 11,516 11,699
======================================= ===== ======= =======
Equity
Capital and reserves attributable
to owners of the parent
Ordinary shares 80 80
Share premium 791 790
Capital redemption reserve 31 31
Own shares (9) (14)
Share-based payments 8 11
Merger reserve - -
Retained earnings 10,615 10,801
Total equity 11,516 11,699
======================================= ===== ======= =======
The financial statements on pages 27 to 49 were approved by the
Board of Directors on 17 May 2017 and were signed on its behalf
by:
R M Noel M F Greenslade
Directors
Statement of changes Attributable to owners of
in equity the parent
Capital Share-
Ordinary Share redemption Own based Retained Total
shares premium reserve shares payments earnings equity
GBPm GBPm GBPm GBPm GBPm GBPm GBPm
========================== ======== ======== =========== ======= ========= ========= =======
At 1 April 2015 80 789 31 (12) 9 9,709 10,606
Total comprehensive
income for the financial
year - - - - - 1,353 1,353
Transactions with owners:
======== ======== =========== ======= ========= ========= =======
Share-based payments - 1 - 16 2 (6) 13
Dividends paid to owners
of the parent - - - - - (255) (255)
Acquisition of own
shares - - - (18) - - (18)
=======
Total transactions
with owners of the
parent - 1 - (2) 2 (261) (260)
At 31 March 2016 80 790 31 (14) 11 10,801 11,699
Total comprehensive
income for the financial
year - - - - - 103 103
Transactions with owners:
======== ======== =========== ======= ========= ========= =======
Share-based payments - 1 - 11 (3) - 9
Dividends paid to owners
of the parent - - - - - (289) (289)
Acquisition of own
shares - - - (6) - - (6)
======== ======== =========== ======= ========= ========= =======
Total transactions
with owners of the
parent - 1 - 5 (3) (289) (286)
At 31 March 2017 80 791 31 (9) 8 10,615 11,516
========================== ======== ======== =========== ======= ========= ========= =======
Statement of cash flows for the year
ended 31 March 2017
2017 2016
Notes GBPm GBPm
================================================ ===== ===== =======
Cash flows from operating activities
Net cash generated from operations 8 464 451
Interest received 15 21
Interest paid (152) (197)
Capital expenditure on trading properties (12) (32)
Disposal of trading properties 69 190
Other operating cash flows 2 (1)
Net cash inflow from operating activities 386 432
================================================ ===== ===== =======
Cash flows from investing activities
Investment property development expenditure (46) (118)
Acquisition of investment properties (16) (103)
Other investment property related expenditure (80) (100)
Disposal of investment properties 245 1,221
Disposal of other investment 13 -
Cash contributed to joint ventures 11 (67) (62)
Net loan advances to joint ventures 11 (45) (106)
Loan repayments by joint ventures 11 54 14
Distributions from joint ventures 11 44 63
Other investing cash flows (19) 40
Net cash inflow from investing activities 83 849
================================================ ===== ===== =======
Cash flows from financing activities
Proceeds from new borrowings (net of
finance fees) 356 249
Repayment of borrowings 13 (391) (806)
Issue of medium term notes (net of finance
fees) 13 698 -
Redemption of medium term notes 13 (690) (400)
Premium payable on redemption of medium
term notes 13 (137) (26)
Refinancing of derivative financial instruments (4) -
Dividends paid to owners of the parent 7 (289) (262)
Other financing cash flows (7) (26)
================================================ ===== ===== =======
Net cash outflow from financing activities (464) (1,271)
================================================ ===== ===== =======
Increase in cash and cash equivalents
for the year 5 10
Cash and cash equivalents at the beginning
of the year 25 15
================================================ ===== ===== =======
Cash and cash equivalents at the end
of the year 15 30 25
================================================ ===== ===== =======
Notes to the financial statements
1. Basis of preparation and consolidation
Basis of preparation
These financial statements have been prepared on a going concern
basis and in accordance with International Financial Reporting
Standards as adopted by the EU (IFRS), IFRIC Interpretations and
the Companies Act 2006 applicable to companies reporting under
IFRS. The financial statements have been prepared in Pounds
Sterling (rounded to the nearest one million), which is the
presentation currency of the Group (Land Securities Group PLC (the
Company) and all its subsidiary undertakings), and under the
historical cost convention as modified by the revaluation of
investment property, available-for-sale investments, derivative
financial instruments and pension assets.
During the year, the Group has reviewed the presentation of the
financial statements and has made some changes with the intention
of simplifying the way in which the Group's results are presented.
One of the main changes is from reporting to the nearest hundred
thousand pounds, to reporting to the nearest million pounds.
Additionally, certain insignificant line items that were previously
presented separately in the financial statements have been
aggregated. Where line items have been aggregated in the primary
statements, explanatory notes providing a breakdown of the
aggregated balances are included in the notes to the financial
statements.
The preparation of financial statements in conformity with
generally accepted accounting principles (GAAP) requires the use of
estimates and assumptions that affect the reported amounts of
assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting
period. Although these estimates are based on management's best
knowledge of the amount, event or actions, actual results
ultimately may differ from those estimates.
The accounting policies used in these financial statements are
consistent with those applied in the last annual financial
statements, as amended where relevant to reflect the adoption of
new standards, amendments and interpretations which became
effective in the year. These amendments have not had an impact on
the financial statements.
A number of new standards and amendments to standards have been
issued but are not yet effective for the Group. The most
significant of these, and their potential impact on the Group's
accounting, are set out below:
IFRS 15 Revenue from Contracts with Customers (effective from 1
April 2018) - the standard will be applicable to service charge
income, other property related income, trading property sales
proceeds and proceeds from the sale of investment properties, but
not rental income arising from the Group's leases with tenants.
Based on the transactions impacting the current financial year and
future known transactions, the Group does not expect the adoption
of IFRS 15 to have a material impact on the Group's reported
results. However, we will continue to assess new transactions as
they arise to the date of adoption.
IFRS 9 Financial Instruments (effective from 1 April 2018) - the
standard applies to classification and measurement of financial
assets and financial liabilities, impairment provisioning and hedge
accounting. The Group is in the process of assessing the impact of
IFRS 9, but adoption of the new standard may impact the measurement
and presentation of the Group's financial liabilities.
IFRS 16 Leases (effective from 1 April 2019) - the adoption of
this standard is not expected to significantly impact the
recognition of rental income earned under the Group's leases with
tenants. The Group holds a small number of operating leases as a
lessee which are affected by this standard, however, these are not
material to the financial statements.
On 17 May 2017, the consolidated financial statements of the
Group and this preliminary announcement were authorised for issue
in accordance with a resolution of the Directors and will be
delivered to the Registrar of Companies following the Group's
Annual General Meeting. Statutory accounts for the year ended 31
March 2016 have been filed unqualified and do not contain any
statement under Section 498(2) or Section 498(3) of the Companies
Act 2006. The annual financial information presented in this
preliminary announcement for the year ended 31 March 2017 is based
on, and consistent with, the financial information in the Group's
audited financial statements for the year ended 31 March 2017. The
audit report on these financial statements is unqualified and did
not contain a statement under Section 498(2) or 498(3) of the
Companies Act 2006. This preliminary announcement does not
constitute statutory financial statements of the Group within the
meaning of Section 235 of the Companies Act 2006. Whilst the
information included in this preliminary announcement has been
prepared in accordance with the recognition and measurement
criteria of IFRS, this announcement does not itself contain
sufficient information to comply with IFRS.
A copy of the Group's Annual Report for the year ended 31 March
2016 can be found at www.landsecurities.com/investors.
Basis of consolidation
The consolidated financial statements for the year ended 31
March 2017 incorporate the financial statements of the Company and
all its subsidiary undertakings. Subsidiary undertakings are those
entities controlled by the Company. Control exists where an entity
is exposed to variable returns and has the ability to affect those
returns through its power over the investee.
The results of subsidiaries and joint ventures acquired or
disposed of during the year are included from the effective date of
acquisition or to the effective date of disposal. Accounting
policies of subsidiaries and joint ventures which differ from Group
accounting policies are adjusted on consolidation.
Where instruments in a subsidiary held by third parties are
redeemable at the option of the holder, these interests are
classified as a financial liability, called the redemption
liability. The liability is carried at fair value; the value is
reassessed at the balance sheet date and movements are recognised
in the income statement.
Intra-group balances and any unrealised gains and losses arising
from intra-group transactions are eliminated in preparing the
consolidated financial statements. Unrealised gains arising from
transactions with joint ventures are eliminated to the extent of
the Group's interest in the joint venture concerned. Unrealised
losses are eliminated in the same way, but only to the extent that
there is no evidence of impairment.
Our property portfolio is a combination of properties that are
wholly owned by the Group, part owned through joint arrangements
and properties owned by the Group but where a third party holds a
non-controlling interest. Internally, management review the results
of the Group on a basis that adjusts for these different forms of
ownership to present a proportionate share. The Combined Portfolio,
with assets totalling GBP14.4bn, is an example of this approach,
reflecting the economic interest we have in our properties
regardless of our ownership structure. We consider this
presentation provides a better explanation to stakeholders of the
activities and performance of the Group, as it aggregates the
results of all of the Group's property interests which under IFRS
are required to be presented across a number of line items in the
statutory financial statements.
The same principle is applied to many of the other measures we
discuss and accordingly, a number of our financial measures include
the results of our joint ventures and subsidiaries on a
proportionate basis. Measures that are described as being presented
on a proportionate basis include the Group's share of joint
ventures on a line-by-line basis, and are adjusted to exclude the
non-owned elements of our subsidiaries. This is in contrast to the
Group's statutory financial statements, where the Group's interest
in joint ventures is presented as one line on the income statement
and balance sheet, and all subsidiaries are consolidated at 100%
with any non-owned element being adjusted as a non-controlling
interest or redemption liability, as appropriate. Our joint
operations are presented on a proportionate basis in all financial
measures.
2. Segmental information
The Group's operations are organised into two operating
segments, being the London Portfolio and the Retail Portfolio. The
London Portfolio includes all our London offices and central London
shops and the Retail Portfolio includes all our shopping centres
and shops (excluding central London shops), hotels and leisure
assets and retail park properties. All of the Group's operations
are in the UK.
Management has determined the Group's operating segments based
on the information reviewed by senior management to make strategic
decisions. During the year, the chief operating decision maker was
the Executive Committee (ExecCom), which comprised the Executive
Directors, the managing directors of the Retail and London
portfolios, the Group General Counsel and Company Secretary, the
Group HR Director and the Corporate Affairs and Sustainability
Director. The information presented to ExecCom includes reports
from all functions of the business as well as strategy, financial
planning, succession planning, organisational development and
Group-wide policies.
The Group's primary measure of underlying profit before tax is
revenue profit. However, segment profit is the lowest level to
which the profit arising from the on-going operations of the Group
is analysed between the two segments. The Group manages its
financing structure, with the exception of joint ventures, on a
pooled basis and, as such, debt facilities and finance expenses
(other than those relating to joint ventures) are not specific to a
particular segment. Unallocated income and expenses (Group
services) are items incurred centrally which are neither directly
attributable nor can be reasonably allocated to individual
segments.
All items in the segmental information note are presented on a
proportionate basis. A reconciliation from the Group income
statement to the information presented in the segmental information
note is included in table 25.
2017 2016
Retail London Total Retail London Total
Revenue profit GBPm GBPm GBPm GBPm GBPm GBPm
Rental income 342 296 638 363 287 650
Finance lease interest 1 9 10 1 9 10
================================== ====== ====== ===== ====== ====== =====
Gross rental income
(before rents payable) 343 305 648 364 296 660
Rents payable(1) (8) (3) (11) (9) (3) (12)
================================== ====== ====== ===== ====== ====== =====
Gross rental income
(after rents payable) 335 302 637 355 293 648
====== ====== ===== ====== ====== =====
Service charge income 56 45 101 56 46 102
Service charge expense (60) (46) (106) (58) (47) (105)
====== ====== ===== ====== ====== =====
Net service charge expense (4) (1) (5) (2) (1) (3)
Other property related
income 20 14 34 21 17 38
Direct property expenditure (36) (30) (66) (45) (34) (79)
================================== ====== ====== ===== ====== ====== =====
Net rental income 315 285 600 329 275 604
Indirect property expenditure (21) (16) (37) (25) (18) (43)
Depreciation (1) (1) (2) - (1) (1)
================================== ====== ====== ===== ====== ====== =====
Segment profit before
finance expense 293 268 561 304 256 560
Joint venture finance
expense (4) (17) (21) (4) (17) (21)
================================== ====== ====== ===== ====== ======
Segment profit 289 251 540 300 239 539
================================== ====== ====== ====== ======
Group services - other
income 2 4
- expense (42) (38)
Finance income 37 35
Finance expense (155) (178)
Revenue profit 382 362
================================== ====== ====== ===== ====== ====== =====
1. Included within rents payable is finance lease interest
payable of GBP1m (2016: GBP1m) and GBP1m (2016: GBPnil), for the
Retail and London portfolios, respectively.
Reconciliation of revenue
profit to profit before
tax 2017 2016
Total Total
GBPm GBPm
============================== ===== =====
Revenue profit 382 362
Capital and other items
Valuation and profits
on disposals
===== =====
Profit on disposal of
investment properties 20 79
Loss on disposal of
investment in joint
venture (2) -
Profit on disposal of
other investment 13 -
Net (deficit)/surplus
on revaluation of investment
properties (147) 907
Movement in impairment
of trading properties 12 16
Profit on disposal of
trading properties 36 41
===== =====
(68) 1,043
Net finance expense
===== =====
Fair value movement
on interest-rate swaps (8) (11)
Amortisation of bond-exchange
de-recognition adjustment (24) (23)
Other (2) (5)
===== =====
(34) (39)
Exceptional items
===== =====
Head office relocation 1 (6)
Premium payable on redemption
of medium term notes (170) (27)
===== =====
(169) (33)
Other 1 3
Profit before tax 112 1,336
================================ ===== =====
3. Performance measures
Three of the Group's key financial performance measures are
adjusted diluted earnings per share, adjusted diluted net assets
per share and total business return. In the tables below we present
earnings per share and net assets per share calculated in
accordance with IFRS, together with our own adjusted measures and
certain measures required by EPRA. We also present the calculation
of total business return.
Adjusted earnings, which is a tax adjusted measure of revenue
profit, is the basis for the calculation of adjusted earnings per
share. We believe adjusted earnings and adjusted earnings per share
better represent the results of the Group's operational performance
to stakeholders as they focus on the rental income performance of
the business and exclude capital and other items which can vary
significantly from year to year.
Adjusted net assets excludes the fair value of interest-rate
swaps used for hedging purposes and the bond exchange
de-recognition adjustment. We believe this better reflects the
underlying net assets attributable to shareholders as it more
accurately reflects the future cash flows associated with our debt
instruments.
Total business return is calculated as the cash dividends paid
in the year plus the change in adjusted diluted net assets per
share, divided by the opening adjusted diluted net assets per
share. We consider this to be a useful measure for shareholders as
it gives an indication of the total return on investment over the
year.
EPRA measures for both earnings per share and net assets per
share have been included to assist comparison between European
property companies.
Earnings per share 2017 2016
Profit Profit
for for
the the
financial EPRA Adjusted financial EPRA Adjusted
year earnings earnings year earnings earnings
GBPm GBPm GBPm GBPm GBPm GBPm
Profit attributable
to owners of the parent 113 113 113 1,338 1,338 1,338
Taxation - (1) (1) - (2) (2)
Valuation and profits
on disposal - 68 68 - (1,043) (1,043)
Net finance expense(1) - 10 34 - 16 39
Exceptional items(2) - 170 169 - 27 33
Other - (1) (1) - (3) (3)
========================= ========== ========= ========= ========== ========= =========
Profit used in per share
calculation 113 359 382 1,338 333 362
========================= ========== ========= ========= ========== ========= =========
IFRS EPRA Adjusted IFRS EPRA Adjusted
========================= ========== ========= ========= ========== ========= =========
Basic earnings per share 14.3p 45.4p 48.4p 169.4p 42.2p 45.9p
Diluted earnings per
share 14.3p 45.4p 48.3p 168.8p 42.0p 45.7p
========================= ========== ========= ========= ========== ========= =========
1. The difference in the adjustment for EPRA earnings and
adjusted earnings relates to the amortisation of the bond exchange
de-recognition adjustment, which is included in EPRA earnings, but
excluded from adjusted earnings.
2. The difference in the adjustment for EPRA earnings and
adjusted earnings relates to the head office relocation costs,
which are included in EPRA earnings, but excluded from adjusted
earnings.
Net assets per share 2017 2016
EPRA Adjusted EPRA Adjusted
Net net net Net net net
assets assets(1) assets assets assets(1) assets
GBPm GBPm GBPm GBPm GBPm GBPm
Net assets attributable
to owners of the parent 11,516 11,516 11,516 11,699 11,699 11,699
Fair value of interest-rate
swaps - Group - 2 2 - 32 32
- Joint
ventures - 2 2 - 2 2
Bond exchange de-recognition
adjustment - - (314) - - (368)
Deferred tax liability
arising on business
combination - 4 4 - 5 5
Goodwill on deferred
tax liability - (4) (4) - (5) (5)
============================================================ ====== ========= ======== ====== ========= ========
Net assets used in per
share calculation 11,516 11,520 11,206 11,699 11,733 11,365
============================================================ ====== ========= ======== ====== ========= ========
IFRS EPRA Adjusted IFRS EPRA Adjusted
============================================================ ====== ========= ======== ====== ========= ========
Net assets per share 1,458p n/a 1,418p 1,482p n/a 1,439p
Diluted net assets per
share 1,456p 1,456p 1,417p 1,476p 1,481p 1,434p
============================================================ ====== ========= ======== ====== ========= ========
1. For EPRA triple net assets, see table 16.
Number of shares 2017 2016
Weighted Weighted
average 31 March average 31 March
million million million million
Ordinary shares 801 801 801 801
Treasury shares (10) (10) (10) (10)
Own shares (1) (1) (1) (1)
=========================== ======== ======== ======== ========
Number of shares - basic 790 790 790 790
Dilutive effect of share
options 1 1 3 3
=========================== ======== ======== ======== ========
Number of shares - diluted 791 791 793 793
=========================== ======== ======== ======== ========
Total business return 2017 2016
pence pence
(Decrease)/increase in adjusted diluted
net assets per share (17) 141
Dividend paid per share in the year
(note 7) 37 32
======================================== ===== =====
Total return (a) 20 173
======================================== ===== =====
Adjusted diluted net assets per share
at the beginning of the year (b) 1,434 1,293
Total business return (a/b) 1.4% 13.4%
======================================== ===== =====
4. Revenue
All revenue is classified within the 'Revenue profit' column of
the income statement, with the exception of proceeds on the sale of
trading properties which is presented in the 'Capital and other
items' column. Also included in the 'Capital and other items'
column is the non-owned element of the Group's subsidiaries which
is excluded from revenue profit.
2017 2016
Capital Capital
and and
Revenue other Revenue other
profit items Total profit items Total
GBPm GBPm GBPm GBPm GBPm GBPm
================================== ======= ======= ===== ======= ======= =====
Rental income (excluding
adjustment for lease incentives) 541 2 543 571 3 574
Adjustment for lease incentives 44 - 44 29 - 29
================================== ======= ======= ===== ======= ======= =====
Rental income 585 2 587 600 3 603
Service charge income 92 2 94 94 - 94
Other property related income 32 - 32 36 - 36
Trading property sales proceeds - 62 62 - 195 195
Finance lease interest 10 - 10 10 - 10
Other income 2 - 2 4 - 4
================================== ======= ======= ===== =======
Revenue per the income statement 721 66 787 744 198 942
================================== ======= ======= ===== ======= ======= =====
The following table reconciles revenue per the income statement
to the individual components of revenue presented in note 2.
2017 2016
Adjustment Adjustment
for for
non-wholly non-wholly
Joint owned Joint owned
Group ventures subsidiaries(1) Total Group ventures subsidiaries(1) Total
GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
Rental income 587 53 (2) 638 603 50 (3) 650
Service charge
income 94 9 (2) 101 94 8 - 102
Other property
related income 32 2 - 34 36 2 - 38
Trading property
sales proceeds 62 72 - 134 195 - - 195
Finance lease interest 10 - - 10 10 - - 10
Other income 2 - - 2 4 - - 4
======================= ===== ========= ================ ===== ===== ========= ================ =====
Revenue in the
segmental information
note 787 136 (4) 919 942 60 (3) 999
======================= ===== ========= ================ ===== ===== ========= ================ =====
1. This represents the interest in X-Leisure which we do not
own, but which is consolidated in the Group numbers.
5. Costs
All costs are classified within the 'Revenue profit' column of
the income statement, with the exception of the cost of sale of
trading properties, amortisation of intangible assets and head
office relocation costs which are presented in the 'Capital and
other items' column. Also included in the 'Capital and other items'
column is the non-owned element of the Group's subsidiaries which
is excluded from revenue profit.
2017 2016
Capital Capital
and and
Revenue other Revenue other
profit items Total profit items Total
GBPm GBPm GBPm GBPm GBPm GBPm
=============================== ======= ======= ===== ======= ======= =====
Rents payable 10 - 10 11 - 11
Service charge expense 95 1 96 96 - 96
Direct property expenditure 58 - 58 72 - 72
Indirect property expenditure 79 - 79 80 - 80
Cost of trading property
disposals - 33 33 - 154 154
Movement in impairment of
trading properties(1) - (12) (12) - (11) (11)
Head office relocation(2) - (1) (1) - 6 6
Amortisation of intangible
assets - 2 2 - 1 1
Impairment of goodwill - 1 1 - 1 1
Costs per the income statement 242 24 266 259 151 410
=============================== ======= ======= ===== ======= ======= =====
1. The movement in impairment of trading properties in the years
ended 31 March 2017 and 2016 relates to the reversal of previous
impairment charges related to residential land, where the valuer's
assessment of net realisable value increased over the year.
2. The net credit of GBP1m in respect of the head office
relocation comprises the GBP2m release of an onerous lease
provision following the assignment of the lease on the Group's
previous head office at lower net cost than originally anticipated,
together with relocation costs of GBP1m. The cost of GBP6m in the
prior year reflects the creation of the provision in respect of the
onerous lease and relocation costs committed to at that time.
The following table reconciles costs per the income statement to
the individual components of costs presented in note 2.
2017 2016
Adjustment Adjustment
for for
non-wholly non-wholly
Joint owned Joint owned
Group ventures subsidiaries(1) Total Group ventures subsidiaries(1) Total
GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
Rents payable 10 1 - 11 11 1 - 12
Service charge
expense 96 11 (1) 106 96 9 - 105
Direct property
expenditure 58 8 - 66 72 7 - 79
Indirect property
expenditure 79 2 - 81 80 2 - 82
Trading property
disposals 33 65 - 98 154 - - 154
Movement in impairment
of trading properties (12) - - (12) (11) (5) - (16)
Head office relocation (1) - - (1) 6 - - 6
Amortisation of
intangible asset 2 - - 2 1 - - 1
Impairment of goodwill 1 - - 1 1 - - 1
Costs in the segmental
information note 266 87 (1) 352 410 14 - 424
======================= ===== ========= ================ ===== ===== ========= ================ =====
1. This represents the interest in X-Leisure which we do not
own, but which is consolidated in the Group numbers.
6. Net finance expense 2017 2016
Capital Capital
and and
Revenue other Revenue other
profit items Total profit items Total
GBPm GBPm GBPm GBPm GBPm GBPm
Finance income
Other interest receivable 2 - 2 1 - 1
Interest receivable from
joint ventures 35 - 35 34 - 34
37 - 37 35 - 35
===================================== ======= ======= ====== ======= ======= ======
Finance expense
Bond and debenture debt (144) - (144) (169) - (169)
Bank and other short-term
borrowings (15) - (15) (20) - (20)
Fair value movement on interest-rate
swaps - (8) (8) - (11) (11)
Amortisation of bond exchange
de-recognition adjustment - (24) (24) - (23) (23)
Redemption of medium term
notes - (170) (170) - (27) (27)
Revaluation of redemption
liabilities - (3) (3) - (5) (5)
Other interest payable (1) 1 - - - -
===================================== ======= ======= ====== ======= ======= ======
(160) (204) (364) (189) (66) (255)
Interest capitalised in
relation to properties under
development 5 - 5 11 - 11
===================================== ======= ======= ====== ======= ======= ======
(155) (204) (359) (178) (66) (244)
===================================== ======= ======= ====== ======= ======= ======
Net finance expense (118) (204) (322) (143) (66) (209)
Joint venture net finance
expense (21) (21)
===================================== ======= ======= ====== ======= ======= ======
Net finance expense included
in revenue profit (139) (164)
===================================== ======= ======= ====== ======= ======= ======
During the year, the Group purchased medium term notes (MTNs)
with a nominal value of GBP690m (2016: GBP400m) for a premium of
GBP137m (2016: GBP26m). The redemption premium and GBP30m (2016:
GBPnil) of the bond exchange de-recognition adjustment associated
with the purchased bonds have been expensed to the income statement
in the year, as an exceptional item, along with GBP1m (2016:
GBPnil) of bank tender fees and the GBP2m (2016: GBP1m) write-off
of unamortised issue costs. Further details are given in note
13.
Finance lease interest payable of GBP2m (2016: GBP1m) is
included within rents payable as detailed in note 2.
7. Dividends
Pence per share 2017 2016
Ordinary dividends Payment
paid date PID Non-PID Total GBPm GBPm
=========================== ========== ===== ======= ===== ==== ====
For the year ended
31 March 2015:
10 April
Third interim 2015 7.9 - 7.9 63
24 July
Final 2015 8.15 - 8.15 64
For the year ended
31 March 2016:
9 October
First interim 2015 8.15 - 8.15 64
7 January
Second interim 2016 - 8.15 8.15 64
8 April
Third interim 2016 8.15 - 8.15 64
28 July
Final 2016 10.55 - 10.55 83
For the year ended
31 March 2017:
7 October
First interim 2016 8.95 - 8.95 71
6 January
Second interim 2017 - 8.95 8.95 71
Gross dividends 289 255
Dividends in statement
of changes in equity 289 255
Timing difference on
payment of withholding
tax - 7
======================================= ===== ======= ===== ==== ====
Dividends in the statement
of cash flows 289 262
======================================= ===== ======= ===== ==== ====
A third quarterly interim dividend of 8.95p per ordinary share,
or GBP71m in total (2016: 8.15p or GBP64m in total), was paid on 7
April 2017 as a Property Income Distribution (PID). The Board has
recommended a final dividend for the year ended 31 March 2017 of
11.7p per ordinary share (2016: 10.55p) to be paid as a PID. This
final dividend will result in a further estimated distribution of
GBP92m (2016: GBP83m). Subject to shareholders' approval at the
Annual General Meeting, the final dividend will be paid on 27 July
2017 to shareholders registered at the close of business on 23 June
2017. The total dividend paid and recommended in respect of the
year ended 31 March 2017 is therefore 38.55p per ordinary share
(2016: 35.0p).
A Dividend Reinvestment Plan (DRIP) has been available in
respect of all dividends paid during the year.
8. Net cash generated from operations
2017 2016
Reconciliation of operating profit to net
cash generated from operations GBPm GBPm
Operating profit 365 1,346
============================================= ==== =====
Adjustments for:
Net deficit/(surplus) on revaluation of
investment properties 186 (739)
Movement in impairment of trading properties (12) (11)
Profit on disposal of trading properties (29) (41)
Profit on disposal of investment properties (19) (75)
Profit on disposal of other investment (13) -
Loss on disposal of investment in joint
venture 2 -
Share-based payment charge 5 8
Other 8 6
============================================= ==== =====
493 494
Changes in working capital:
Increase in receivables (17) (33)
Decrease in payables and provisions (12) (10)
============================================= ==== =====
Net cash generated from operations 464 451
============================================= ==== =====
9. Investment properties
2017 2016
GBPm GBPm
============================================= ====== ======
Net book value at the beginning of the year 12,358 12,158
Acquisitions 14 157
Capital expenditure: Investment portfolio 80 91
Developments 46 104
Capitalised interest 5 9
Disposals (205) (900)
Net movement in finance leases 32 -
Net (deficit)/surplus on revaluation of
investment properties (186) 739
============================================= ====== ======
Net book value at 31 March 12,144 12,358
============================================= ====== ======
The market value of the Group's investment properties, as
determined by the Group's external valuer, differs from the net
book value presented in the balance sheet due to the Group
presenting lease incentives, tenant finance leases and head leases
separately. The following table reconciles the net book value of
the investment properties to the market value.
2017 2016
Group Adjustment Group Adjustment
(excl. for (excl. for
joint Joint proportionate Combined joint Joint proportionate Combined
ventures) ventures(1) share(2) Portfolio ventures) ventures(1) share(2) Portfolio
GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
================== ========= =========== ============= ========= ========= =========== ============= =========
Net book value 12,144 1,763 (34) 13,873 12,358 1,630 (34) 13,954
Plus: tenant lease
incentives 311 57 (1) 367 268 43 - 311
Less: head leases
capitalised (31) (8) - (39) (14) - - (14)
Plus: properties
treated as
finance
leases 238 - - 238 220 - - 220
================== ========= =========== ============= ========= ========= =========== ============= =========
Market value 12,662 1,812 (35) 14,439 12,832 1,673 (34) 14,471
================== ========= =========== ============= ========= ========= =========== ============= =========
Net
(deficit)/surplus
on revaluation
of investment
properties (186) 40 (1) (147) 739 171 (3) 907
================== ========= =========== ============= ========= ========= =========== ============= =========
1. Refer to note 11 for a breakdown of this amount by entity.
2. This represents the interest in X-Leisure which we do not
own, but which is consolidated in the Group numbers.
The net book value of leasehold properties where head leases
have been capitalised is GBP1,169m (2016: GBP968m).
Investment properties include capitalised interest of GBP206m
(2016: GBP201m). The average rate of interest capitalisation for
the year is 4.7% (2016: 5.0%). The historical cost of investment
properties is GBP6,713m (2016: GBP6,720m).
10. Trading properties
Development
land and
infrastructure Residential Total
GBPm GBPm GBPm
========================= =============== =========== ======
At 1 April 2015 85 137 222
Capital expenditure 10 17 27
Capitalised interest - 2 2
Disposals (19) (119) (138)
Movement in impairment 12 (1) 11
At 31 March 2016 88 36 124
Capital expenditure 17 2 19
Disposals (9) (24) (33)
Movement in impairment 12 - 12
At 31 March 2017 108 14 122
========================= =============== =========== ======
The cumulative impairment provision at 31 March 2017 in respect
of Development land and infrastructure was GBP67m (31 March 2016:
GBP79m); and in respect of Residential was GBP1m (31 March 2016:
GBP1m).
11. Joint arrangements
The Group's joint arrangements are described below:
Joint ventures Percentage Business Year end Joint venture partner
owned segment date(1)
&
voting
rights
============================ ========== ======== =========== ======================
Held at 31 March 2017
20 Fenchurch Street 50% London 31 March Canary Wharf Group
Limited Partnership plc
Nova, Victoria(2) 50% London 31 March Canada Pension Plan
Investment Board
Metro Shopping 50% Retail 31 March Delancey Real Estate
Fund Limited Partnership(3) Partners Limited
St. David's Limited 50% Retail 31 December Intu Properties
Partnership plc
Westgate Oxford 50% Retail 31 March The Crown Estate
Alliance Limited Commissioners
Partnership
The Oriana Limited 50% London 31 March Frogmore Real Estate
Partnership(4) Partners Limited
Partnership
Harvest(5)(6) 50% Retail 31 March J Sainsbury plc
The Ebbsfleet Limited 50% London 31 March Ebbsfleet Property
Partnership(6) Limited
Millshaw Property 50% Retail 31 March Evans Property Group
Co. Limited(6)(7) Limited
West India Quay 50% Retail 31 March Schroder Exempt
Unit Trust(6)(8) Property Unit Trust
============================ ========== ======== =========== ======================
Joint operation Ownership Business Joint operation
interest segment partners
Bluewater, Kent 30% Retail M&G Real Estate
and GIC
Lend Lease Retail
Partnership
Hermes and Aberdeen
Asset Management
============================ ========== ======== =========== ======================
The following joint arrangement was sold in the year
ended 31 March 2017:
Joint ventures
Countryside Land 50% London Countryside Properties
Securities (Springhead) PLC
Limited
============================ ========== ======== =========== ======================
1. The year end date shown is the accounting reference date of
the joint venture. In all cases the Group's accounting is performed
using financial information for the Group's own reporting period
and reporting date.
2. Nova, Victoria includes the Victoria Circle Limited
Partnership, Nova Residential Limited Partnership and Victoria
Circle Developer Limited.
3. On 13 April 2017, Metro Shopping Fund Limited Partnership
(Metro) completed the sale of one of its assets to DV4 (a fund
owned by Delancey Real Estate Asset Management Limited (Delancey)).
On the same date Delancey sold their stake in Metro to Invesco Real
Estate European Fund. The partnership was subsequently renamed "The
Southside Limited Partnership."
4. On 23 September 2016, The Oriana Limited Partnership disposed
of its interest in 26-32 Oxford Street, W1.
5. Harvest includes Harvest 2 Limited Partnership, Harvest
Development Management Limited, Harvest 2 Selly Oak Limited,
Harvest 2 GP Limited and Harvest GP Limited.
6. Included within Other in subsequent tables.
7. At 31 March 2017, the Millshaw Property Co. Limited was in the process of being liquidated.
8. West India Quay Unit Trust is held in the X-Leisure Unit
Trust (X-Leisure) in which the Group holds a 95% share.
All of the Group's joint arrangements have their principal place
of business in the United Kingdom. All of the Group's joint
arrangements own and operate investment property with the exception
of The Ebbsfleet Limited Partnership which holds development land
as trading properties, and Millshaw Property Co. Limited which
disposed of its only property interest in the prior year. The
Westgate Oxford Alliance Limited Partnership, Nova, Victoria and
The Oriana Limited Partnership are also engaged in the development
of investment and trading properties. The activities of all the
Group's joint arrangements are therefore strategically important to
the business activities of the Group.
All joint ventures are registered in England and Wales with the
exception of the Metro Shopping Fund Limited Partnership and West
India Quay Unit Trust which are registered in Jersey.
2017
20 Metro Individually
Fenchurch Shopping St. Westgate The material
Street Fund David's Oxford Oriana JVs
Limited Nova, Limited Limited Alliance Limited (Group
Joint ventures Partnership Victoria Partnership Partnership Partnership Partnership share) Other Total
Group Group
100% 100% 100% 100% 100% 100% 50% share share
Comprehensive income
statement GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
Revenue(1) 48 147 21 43 3 - 131 5 136
====================== =========== ======== =========== =========== ============ =========== ============ ===== =====
Gross rental income
(after rents payable) 39 7 17 35 3 - 50 2 52
====================== =========== ======== =========== =========== ============ =========== ============ ===== =====
Net rental income 37 2 15 29 2 - 43 1 44
====================== =========== ======== =========== =========== ============ =========== ============ ===== =====
Segment profit
before finance
expense 36 1 15 27 2 - 41 1 42
Finance expense (22) (36) (8) - (11) - (39) - (39)
Capitalised interest - 25 - - 10 - 18 - 18
=========== ======== =========== =========== ============ =========== ============ ===== =====
Net finance expense (22) (11) (8) - (1) - (21) - (21)
Revenue profit 14 (10) 7 27 1 - 20 1 21
Capital and other
items
Net surplus/(deficit)
on revaluation
of investment
properties 43 41 - (22) 19 (1) 40 - 40
Profit on disposal
of investment
properties - - 2 - - - 1 - 1
Profit on disposal
of trading properties - 14 - - - - 7 - 7
Profit/(loss) before
tax 57 45 9 5 20 (1) 68 1 69
Taxation - - - - - - - - -
====================== =========== ======== =========== =========== ============ =========== ============ ===== =====
Post-tax profit/(loss) 57 45 9 5 20 (1) 68 1 69
Other comprehensive
income - - - - - - - - -
====================== =========== ======== =========== =========== ============ =========== ============ ===== =====
Total comprehensive
income 57 45 9 5 20 (1) 68 1 69
====================== =========== ======== =========== =========== ============ =========== ============ ===== =====
50% 50% 50% 50% 50% 50% - - -
====================== =========== ======== =========== =========== ============ =========== ============ ===== =====
Group share of
total comprehensive
income 28 23 5 3 10 (1) 68 1 69
====================== =========== ======== =========== =========== ============ =========== ============ ===== =====
1. Revenue includes gross rental income (before rents payable),
service charge income, other property related income and trading
properties disposal proceeds.
2016
20 Metro Individually
Fenchurch Shopping St. Westgate The material
Street Fund David's Oxford Oriana JVs
Limited Nova, Limited Limited Alliance Limited (Group
Joint ventures Partnership Victoria Partnership Partnership Partnership Partnership share) Other Total
Group Group
100% 100% 100% 100% 100% 100% 50% share share
Comprehensive income
statement GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
Revenue(1) 45 - 19 45 3 1 57 3 60
====================== =========== ======== =========== =========== ============ =========== ============ ===== =====
Gross rental income
(after rents payable) 36 - 15 37 3 1 46 3 49
====================== =========== ======== =========== =========== ============ =========== ============ ===== =====
Net rental
income/(expense) 35 (1) 15 30 1 1 41 2 43
====================== =========== ======== =========== =========== ============ =========== ============ ===== =====
Segment profit/(loss)
before finance
expense 33 (1) 14 29 1 1 39 2 41
Finance expense (33) (29) (7) - (6) - (38) - (38)
Capitalised interest - 28 - - 6 - 17 - 17
=========== ======== =========== =========== ============ =========== ============ ===== =====
Net finance expense (33) (1) (7) - - - (21) - (21)
Revenue profit - (2) 7 29 1 1 18 2 20
Capital and other
items
Net surplus on
revaluation of
investment properties 86 87 56 73 19 19 170 1 171
Movement in impairment
of trading properties - - - - - - - 5 5
Profit on disposal
of investment
properties 1 - - - - 4 3 1 4
Profit before tax 87 85 63 102 20 24 191 9 200
Taxation - - (1) - - - (1) - (1)
====================== =========== ======== =========== =========== ============ =========== ============ ===== =====
Post-tax profit 87 85 62 102 20 24 190 9 199
Other comprehensive
income - - - - - - - - -
====================== =========== ======== =========== =========== ============ =========== ============ ===== =====
Total comprehensive
income 87 85 62 102 20 24 190 9 199
====================== =========== ======== =========== =========== ============ =========== ============ ===== =====
50% 50% 50% 50% 50% 50%
====================== =========== ======== =========== =========== ============ =========== ============ ===== =====
Group share of
total comprehensive
income 44 42 31 51 10 12 190 9 199
====================== =========== ======== =========== =========== ============ =========== ============ ===== =====
1. Revenue includes gross rental income (before rents payable),
service charge income, other property related income, trading
properties disposal proceeds and income from long-term development
contracts
2017
20 Metro Individually
Fenchurch Shopping St. Westgate The material
Street Fund David's Oxford Oriana JVs
Limited Nova, Limited Limited Alliance Limited (Group
Joint ventures Partnership Victoria Partnership Partnership Partnership Partnership share) Other Total
Group Group
100% 100% 100% 100% 100% 100% 50% share share
Balance sheet GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
=========== ======== =========== =========== =========== =========== ============ ===== =====
Investment
properties(1) 1,046 809 376 708 412 93 1,722 41 1,763
=========== ======== =========== =========== =========== =========== ============ ===== =====
Non-current
assets 1,046 809 376 708 412 93 1,722 41 1,763
Cash and cash
equivalents 16 43 6 4 10 13 46 3 49
Other current
assets 93 195 7 21 15 28 180 14 194
=========== ======== =========== =========== =========== =========== ============ ===== =====
Current assets 109 238 13 25 25 41 226 17 243
==============
Total assets 1,155 1,047 389 733 437 134 1,948 58 2,006
Trade and
other
payables and
provisions (100) (173) (39) (12) (32) (2) (179) (5) (184)
Current
liabilities (100) (173) (39) (12) (32) (2) (179) (5) (184)
Non-current
liabilities - - (142) (16) - (17) (88) - (88)
=========== ======== =========== =========== =========== =========== ============ ===== =====
Non-current
liabilities - - (142) (16) - (17) (88) - (88)
==============
Total
liabilities (100) (173) (181) (28) (32) (19) (267) (5) (272)
Net assets 1,055 874 208 705 405 115 1,681 53 1,734
============== =========== ======== =========== =========== =========== =========== ============ ===== =====
Market value
of
investment
properties(1) 1,135 815 379 707 411 93 1,770 42 1,812
============== =========== ======== =========== =========== =========== =========== ============ ===== =====
Net
(debt)/cash 16 43 (166) (12) 10 13 (48) 2 (46)
============== =========== ======== =========== =========== =========== =========== ============ ===== =====
2016
20 Metro Individually
Fenchurch Shopping St. Westgate The material
Street Fund David's Oxford Oriana JVs
Limited Nova, Limited Limited Alliance Limited (Group
Joint ventures Partnership Victoria Partnership Partnership Partnership Partnership share Other Total
Group Group
100% 100% 100% 100% 100% 100% 50% share share
Balance sheet GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
=========== ======== =========== =========== =========== =========== ============ ===== ======
Investment
properties(1) 1,008 680 378 716 248 159 1,594 36 1,630
=========== ======== =========== =========== =========== =========== ============ ===== ======
Non-current
assets 1,008 680 378 716 248 159 1,594 36 1,630
Cash and cash
equivalents 12 12 7 7 9 26 37 6 43
Other current
assets 71 259 6 21 1 34 196 40 236
=========== ======== =========== =========== =========== =========== ============ ===== ======
Current assets 83 271 13 28 10 60 233 46 279
==============
Total assets 1,091 951 391 744 258 219 1,827 82 1,909
Trade and
other
payables and
provisions (109) (122) (11) (13) (6) (29) (145) (9) (154)
Current
liabilities (109) (122) (11) (13) (6) (29) (145) (9) (154)
Non-current
financial
liabilities - - (174) - - - (87) - (87)
=========== ======== =========== =========== =========== =========== ============ ===== ======
Non-current
liabilities - - (174) - - - (87) - (87)
==============
Total
liabilities (109) (122) (185) (13) (6) (29) (232) (9) (241)
Net assets 982 829 206 731 252 190 1,595 73 1,668
============== =========== ======== =========== =========== =========== =========== ============ ===== ======
Market value
of
investment
properties(1) 1,075 680 381 732 247 159 1,637 36 1,673
============== =========== ======== =========== =========== =========== =========== ============ ===== ======
Net
(debt)/cash 12 12 (167) 7 9 26 (50) 6 (44)
============== =========== ======== =========== =========== =========== =========== ============ ===== ======
1. The difference between the book value and the market value is
the amount recognised in respect of lease incentives, head leases
capitalised and properties treated as finance leases, where
applicable.
20 Metro Individually
Fenchurch Shopping St. Westgate The material
Street Fund David's Oxford Oriana JVs
Limited Nova, Limited Limited Alliance Limited (Group
Joint ventures Partnership Victoria Partnership Partnership Partnership Partnership share) Other Total
Group Group
50% 50% 50% 50% 50% 50% 50% share share
Net investment GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
At 1 April
2015 446 272 86 329 54 146 1,333 101 1,434
Total
comprehensive
income 44 42 31 51 10 12 190 9 199
Cash
contributed - - - - 62 - 62 - 62
Loan advances 1 100 1 - - - 102 4 106
Loan
repayments - - - (14) - - (14) - (14)
Property and
other
distributions - - - - - (56) (56) - (56)
Cash
distributions - - (15) - - (7) (22) (41) (63)
At 31 March
2016 491 414 103 366 126 95 1,595 73 1,668
Total
comprehensive
income 28 23 5 3 10 (1) 68 1 69
Cash
contributed - - - - 67 - 67 - 67
Loan advances 8 37 - - - - 45 - 45
Loan
repayments - (37) (1) (16) - - (54) - (54)
Other
distributions - - - - - - - (12) (12)
Cash
distributions - - (3) - - (37) (40) (4) (44)
Disposal of
investment - - - - - - - (5) (5)
At 31 March
2017 527 437 104 353 203 57 1,681 53 1,734
============== =========== ======== =========== =========== =========== =========== ============ ===== ======
12. Capital structure
2017 2016
Adjustment Adjustment
for for
non-wholly non-wholly
Joint owned Joint owned
Group ventures subsidiaries(1) Combined Group ventures subsidiaries(1) Combined
GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
======================== ====== ========= ================ ======== ====== ========= ================ ========
Property portfolio
Market value of
investment
properties 12,662 1,812 (35) 14,439 12,832 1,673 (34) 14,471
Trading properties 122 126 - 248 124 156 - 280
Total property portfolio
(a) 12,784 1,938 (35) 14,687 12,956 1,829 (34) 14,751
======================== ====== ========= ================ ======== ====== ========= ================ ========
Net debt
Borrowings 2,949 93 - 3,042 2,873 85 - 2,958
Monies held in
restricted
accounts and deposits (21) - - (21) (19) - - (19)
Cash and cash
equivalents (30) (49) - (79) (25) (43) - (68)
Fair value of
interest-rate
swaps 2 2 - 4 32 2 - 34
Fair value of foreign
exchange swaps 5 - - 5 - - - -
======================== ====== ========= ================ ======== ====== ========= ================ ========
Net debt (b) 2,905 46 - 2,951 2,861 44 - 2,905
Less: Fair value
of interest-rate
swaps (2) (2) - (4) (32) (2) - (34)
Reverse bond exchange
de-recognition (note
13) 314 - - 314 368 - - 368
======================== ====== ========= ================ ======== ====== ========= ================ ========
Adjusted net debt
(c) 3,217 44 - 3,261 3,197 42 - 3,239
======================== ====== ========= ================ ======== ====== ========= ================ ========
Adjusted total equity
Total equity (d) 11,516 - - 11,516 11,699 - - 11,699
Fair value of
interest-rate
swaps 2 2 - 4 32 2 - 34
Reverse bond exchange
de-recognition (note
13) (314) - - (314) (368) - - (368)
======================== ====== ========= ================ ======== ====== ========= ================ ========
Adjusted total equity
(e) 11,204 2 - 11,206 11,363 2 - 11,365
======================== ====== ========= ================ ======== ====== ========= ================ ========
Gearing (b/d) 25.2% 25.6% 24.5% 24.8%
Adjusted gearing
(c/e) 28.7% 29.1% 28.1% 28.5%
Group LTV (c/a) 25.2% 22.2% 24.7% 22.0%
Security Group LTV 28.3% 23.4%
Weighted average
cost of debt 4.2% 4.2% 4.9% 4.9%
======================== ====== ========= ================ ======== ====== ========= ================ ========
1. This represents the interest in X-Leisure which we do not
own, but which is consolidated in the Group numbers.
13. Borrowings
31 March 2017 31 March 2016
Effective Nominal/ Nominal/
interest notional Fair Book notional Fair Book
Secured/ Fixed/ rate value value value value value value
unsecured floating % GBPm GBPm GBPm GBPm GBPm GBPm
======================= =========== ========== ========= ========= ====== ====== ========= ====== ======
Current borrowings
Sterling
5.253% QAG Bond Secured Fixed 5.3 18 22 18 17 20 17
Commercial paper
LIBOR
Sterling Unsecured Floating + margin 3 3 3 2 2 2
LIBOR
Euro Unsecured Floating + margin 261 261 261 - - -
LIBOR
Swiss Franc Unsecured Floating + margin 28 28 28 - - -
LIBOR
US Dollar Unsecured Floating + margin 94 94 94 - - -
Total current
borrowings 404 408 404 19 22 19
================================================ ========= ========= ====== ====== ========= ====== ======
Non-current borrowings
Sterling
========= ====== ====== ========= ====== ======
A3 5.425% MTN
due 2022 Secured Fixed 5.5 46 53 46 255 291 255
A10 4.875% MTN
due 2025 Secured Fixed 5.0 28 34 28 300 351 298
A12 1.974% MTN
due 2026 Secured Fixed 2.0 400 411 399 - - -
A4 5.391% MTN
due 2026 Secured Fixed 5.4 27 33 27 211 254 210
A5 5.391% MTN
due 2027 Secured Fixed 5.4 585 749 583 608 749 606
A6 5.376% MTN
due 2029 Secured Fixed 5.4 318 420 317 318 398 317
A13 2.399% MTN
due 2031 Secured Fixed 2.4 300 314 299 - - -
A7 5.396% MTN
due 2032 Secured Fixed 5.4 321 441 320 323 410 321
A11 5.125% MTN
due 2036 Secured Fixed 5.1 500 689 499 500 624 499
Bond exchange
de-recognition
adjustment (314) (368)
========= ====== ====== ======
2,525 3,144 2,204 2,515 3,077 2,138
5.253% QAG Bond Secured Fixed 5.3 255 310 255 272 327 272
Syndicated bank LIBOR
debt Secured Floating + margin 55 55 55 430 430 430
Amounts payable
under finance
leases Unsecured Fixed 5.7 31 42 31 14 18 14
Total non-current
borrowings 2,866 3,551 2,545 3,231 3,852 2,854
======
Total borrowings 3,270 3,959 2,949 3,250 3,874 2,873
================================================ ========= ========= ====== ====== ========= ====== ======
Reconciliation of the movement in
borrowings
2017 2016
GBPm GBPm
============================================= ===== =====
At the beginning of the year 2,873 3,784
Proceeds from new borrowings 361 249
Repayment of borrowings (391) (806)
Redemption of medium term notes (690) (400)
Issue of medium term notes (net of
finance fees) 698 -
Amortisation of bond exchange de-recognition
adjustment 24 23
Bond exchange de-recognition adjustment
on redemption of medium term notes 30 -
Foreign exchange movement on non-GBP
borrowings 23 23
Other 21 -
At 31 March 2,949 2,873
============================================= ===== =====
Medium term notes (MTNs)
The MTNs are secured on the fixed and floating pool of assets of
the Security Group. Debt investors benefit from security over a
pool of investment properties, development properties and the
Group's investment in Westgate Oxford Alliance Limited Partnership,
Nova, Victoria, the St. David's Limited Partnership and 20
Fenchurch Street Limited Partnership, in total valued at GBP12.9bn
at 31 March 2017 (31 March 2016: GBP12.6bn). The secured debt
structure has a tiered operating covenant regime which gives the
Group substantial flexibility when the loan-to-value and interest
cover in the Security Group are less than 65% and more than 1.45
times respectively. If these limits are exceeded, the operating
environment becomes more restrictive with provisions to encourage a
reduction in gearing. The interest rate is fixed until the expected
maturity, being two years before the legal maturity date for each
MTN, whereupon the interest rate for the last two years may either
become LIBOR plus an increased margin (relative to that at the time
of issue), or subject to a fixed coupon uplift, depending on the
terms and conditions of the specific notes.
The effective interest rate is based on the coupon paid and
includes the amortisation of issue costs. The MTNs are listed on
the Irish Stock Exchange and their fair values are based on their
respective market prices.
On 8 February 2017, the Group purchased GBP635m of MTNs for a
premium of GBP124m. The Group purchased GBP206m of its A3 MTN due
in 2022, GBP265m of its A10 MTN due in 2025 and GBP164m of its A4
MTN due in 2026. On the same date, the Group issued a GBP400m
1.974% MTN due in 2026 and a GBP300m 2.399% MTN due in 2031. Costs
associated with the issues of the new MTNs of GBP2m have been
capitalised within non-current borrowings.
Earlier in the year, the Group also purchased a further GBP55m
of MTNs for a premium of GBP13m. The Group purchased GBP3m of its
A3 MTN due in 2022, GBP7m of its A10 MTN due in 2025, GBP20m of its
A4 MTN due in 2026, GBP23m of its A5 MTN due in 2027 and GBP2m of
its A7 MTN due in 2032. The table below summarises the aggregate
purchases, together with the premiums paid.
MTN purchases
31 March
2017 31 March 2016
Purchases Premium Purchases Premium
GBPm GBPm GBPm GBPm
======================== ========= ======= ========= =======
A8 4.875% MTN due 2019 - - 400 26
A3 5.425% MTN due 2022 209 29 - -
A10 4.875% MTN due 2025 272 57 - -
A4 5.391% MTN due 2026 184 44 - -
A5 5.391% MTN due 2027 23 6 - -
A7 5.396% MTN due 2032 2 1 - -
======================== ========= ======= ========= =======
690 137 400 26
======================== ========= ======= ========= =======
Syndicated and bilateral bank debt
Authorised Drawn Undrawn
==========
2017 2016 2017 2016 2017 2016
Maturity
as at
31 March
2017 GBPm GBPm GBPm GBPm GBPm GBPm
================ ========== ===== ===== ==== ==== ===== =====
Syndicated debt 2021-22 1,815 1,380 55 430 1,760 950
Bilateral debt 2021 125 485 - - 125 485
1,940 1,865 55 430 1,885 1,435
=========================== ===== ===== ==== ==== ===== =====
At 31 March 2017, our committed revolving facilities totalled
GBP1,940m (31 March 2016: GBP1,865m). The GBP75m increase in
committed facilities is the result of a GBP435m syndicated debt
facility being arranged on 14 June 2016, and a GBP125m bilateral
debt facility being arranged on 31 January 2017, offset by the
cancellation of GBP350m of bilateral facilities on 14 June 2016 and
the cancellation of a GBP135m bilateral facility on 24 November
2016.
All syndicated and bilateral facilities are committed and
secured on the assets of the Security Group. In the year ended 31
March 2017, the amounts drawn under the Group's bilateral
facilities and syndicated bank debt decreased by GBP375m.
The terms of the Security Group funding arrangements require
undrawn facilities to be reserved where syndicated and bilateral
facilities mature within one year, or where commercial paper has
been issued. Accordingly, the Group's available undrawn facilities
at 31 March 2017 were GBP1,499m (31 March 2016: GBP1,433m),
compared with undrawn facilities of GBP1,885m (31 March 2016:
GBP1,435m).
Queen Anne's Gate Bond
On 29 July 2009, the Group issued a GBP360m bond secured on the
rental cash flows from the commercial lease with the UK Government
over Queen Anne's Gate (QAG). The QAG Bond is a fully amortising
bond with a final maturity in February 2027 and a fixed interest
rate of 5.253% per annum. At 31 March 2017, the bond had an
amortised book value of GBP273m (31 March 2016: GBP289m). Since 31
March 2017, the Group has redeemed the QAG bond in its entirety,
for a premium to nominal value of GBP63m.
Fair values
The fair values of any floating rate financial liabilities are
assumed to be equal to their nominal value, but adjusted for the
effect of exit fees payable on redemption. The fair values of the
MTNs and the QAG Bond fall within Level 1, the syndicated,
bilateral facilities, commercial paper, interest-rate swaps and
foreign exchange swaps fall within Level 2, and the amounts payable
under finance leases fall within Level 3, as defined by IFRS 13.
The fair value of the amounts payable under finance leases is
determined using a discount rate of 4.2% (31 March 2016: 4.9%).
Bond exchange de-recognition
On 3 November 2004, a debt refinancing was completed resulting
in the Group exchanging all of its outstanding bond and debenture
debt for new MTNs with higher nominal values. The new MTNs did not
meet the IAS 39 conditions to be considered substantially different
from the debt that they replaced. Consequently, the book value of
the new debt is reduced to the book value of the original debt by
the 'bond exchange de-recognition' adjustment which is then
amortised to zero over the life of the new MTNs. The amortisation
is included in finance expense in the income statement.
14. Monies held in restricted accounts
and deposits
2017 2016
GBPm GBPm
Cash at bank and in hand 12 11
Short-term deposits 9 8
21 19
========================================= ==== ====
The credit quality of monies held in restricted accounts and
deposits can be assessed by reference to external credit ratings of
the counterparty where the account or deposit is placed.
2017 2016
GBPm GBPm
Counterparties with external credit
ratings
A 13 11
BBB+ 8 8
21 19
==================================== ==== ====
15. Cash and cash equivalents
2017 2016
GBPm GBPm
Cash at bank and in hand 21 24
Short-term deposits 9 1
30 25
================================ ==== ====
Short-term deposits
The credit quality of cash and cash equivalents can be assessed
by reference to external credit ratings of the counterparty where
the account or deposit is placed.
2017 2016
GBPm GBPm
Counterparties with external credit
ratings
A 29 24
BBB+ 1 1
30 25
==================================== ==== ====
16. Events after the reporting period
On 13 April 2017, the Group's joint arrangement, The Metro
Shopping Fund Limited Partnership, completed the sale of ShopStop,
Clapham Junction to DV4 (a fund owned by Delancey Real Estate Asset
Management Limited (Delancey)). On the same date Delancey sold its
stake in Metro to Invesco Real Estate European Fund. The
partnership was subsequently renamed The Southside Limited
Partnership and the GBP85m third-party debt in the fund was repaid
in full.
Since 31 March 2017, the Group has redeemed the GBP273m Queen
Anne's Gate bond in its entirety at a premium of GBP63m. The
redemption was financed through existing Group facilities.
On 15 May 2017, the Group acquired three retail outlet centres
from Britel Fund Trustees Limited (as trustee of the BT Pension
Scheme). The three assets, Freeport, Braintree, Clarks Village,
Street and Junction 32, Castleford, were acquired for a total
consideration of GBP333m.
Business analysis
Table 15: Alternative performance measures
The Group has applied the European Securities and Markets
Authority (ESMA) 'Guidelines on Alternative Performance Measures'
in these annual results. In the context of these results, an
alternative performance measure (APM) is a financial measure of
historical or future financial performance, position or cash flows
of the Group which is not a measure defined or specified in
IFRS.
The table below summarises the APMs included in these annual
results, where the definitions and reconciliations of these
measures can be found, as well where further discussion is
included. The definitions of all APMs are included in the Glossary
and further discussion of these measures can be found in the
financial review.
Nearest IFRS measure Reconciliation
========================= ================================== ==============
Revenue profit Profit before tax Note 2
========================= ================================== ==============
Profit attributable to owners
Adjusted earnings of the parent Note 3
========================= ================================== ==============
Adjusted earnings
per share Basic earnings per share Note 3
========================= ================================== ==============
Adjusted diluted
earnings per share Diluted earnings per share Note 3
========================= ================================== ==============
Net assets attributable to
Adjusted net assets owners of the parent Note 3
========================= ================================== ==============
Adjusted net assets Net assets attributable to
per share owners of the parent Note 3
========================= ================================== ==============
Adjusted diluted
net assets per Net assets attributable to
share owners of the parent Note 3
========================= ================================== ==============
Total business
return n/a Note 3
========================= ================================== ==============
Combined Portfolio Investment properties Note 9
========================= ================================== ==============
Net surplus/deficit on revaluation
Valuation surplus/deficit of investment properties Note 9
========================= ================================== ==============
Adjusted net debt Borrowings Note 12
========================= ================================== ==============
Group LTV n/a Note 12
========================= ================================== ==============
Table 16: EPRA performance measures
31 March
2017
Land
Securities EPRA
Definition for EPRA measure Notes measure measure
================== =================================== ===== =========== ==========
Adjusted earnings Recurring earnings from 3 GBP382m GBP359m
core operational activity(1)
Adjusted earnings Adjusted earnings per weighted
per share number of ordinary shares(1) 3 48.4p 45.4p
Adjusted diluted Adjusted diluted earnings
earnings per per weighted number of ordinary
share shares(1) 3 48.3p 45.4p
Adjusted net Net assets adjusted to exclude 3 GBP11,206m GBP11,520m
assets fair value movements on
interest-rate swaps(2)
Adjusted diluted
net assets Adjusted diluted net assets
per share per share(2) 3 1,417p 1,456p
Triple net Adjusted net assets amended n/a GBP10,502m
assets to include the fair value
of financial instruments
and debt
Diluted triple
net assets Diluted triple net assets
per share per share n/a 1,328p
Annualised rental income
less non-recoverable costs
Net initial as a % of market value plus
yield (NIY) assumed purchasers' costs(3) 3.6% 4.2%
Topped-up NIY adjusted for rent free
NIY periods(3) 4.2% 4.4%
ERV of vacant space as a
% of ERV of Combined Portfolio
Voids/vacancy excluding the development
rate programme(4) 4.6% 4.0%
Total costs as a percentage
of gross rental income (including
Cost ratio direct vacancy costs)(5) 17.9% 18.1%
Total costs as a percentage
of gross rental income (excluding
direct vacancy costs)(5) n/a 16.2%
====================================================== ===== =========== ==========
1. EPRA adjusted earnings and EPRA adjusted earnings per share
include the amortisation of bond exchange de-recognition of GBP24m
and the net head office relocation credit of GBP1m.
2. EPRA adjusted net assets and adjusted diluted net assets per share include the bond exchange de-recognition adjustment of GBP314m.
3. Our NIY and Topped-up NIY relate to the Combined Portfolio,
excluding properties in the development programme that have not yet
reached practical completion, and are calculated by our external
valuer. EPRA NIY and EPRA Topped-up NIY calculations are consistent
with ours, but excludes all developments.
4. Our measure reflects voids in our like-for-like portfolio
only. The EPRA measure reflects voids in the Combined Portfolio
excluding only the development programme.
5. The EPRA cost ratio is calculated based on gross rental
income after rents payable, whereas our measure is based on gross
rental income before rents payable. We do not calculate a cost
ratio excluding direct vacancy costs as we do not consider this to
be helpful.
Table 17: Top 12 occupiers at 31 March 2017
% of Group
rent(1)
=================== ==========
Deloitte 5.2
Accor 5.1
Central Government 5.1
Mizuho Bank 1.7
Boots 1.5
Sainsbury's 1.3
Taylor Wessing 1.2
H&M 1.2
K&L Gates 1.2
M&S 1.1
Cineworld 1.1
Telecity Group 1.1
26.8
=================== ==========
1. On a proportionate basis.
Table 18: Development pipeline and trading property development
schemes at 31 March 2017
Development pipeline
Property Total Forecast
Net Actual/ development total
Description Ownership Letting Market income/ estimated costs development
of interest Size status value ERV completion to date cost
use % sq ft % GBPm GBPm date GBPm GBPm
================ ============ ========= ======= ======= ====== ======== =========== ============ ============
Developments
after practical
completion
================ ============ ========= ======= ======= ====== ======== =========== ============ ============
The Zig Zag
Building, Nov
SW1(1) Office 100 192,700 89 382 17 2015 182 182
================
Retail 38,700 89
============================= ========= ======= ======= ====== ======== =========== ============ ============
20 Eastbourne May
Terrace, W2 Office 100 92,800 90 130 6 2016 67 67
================ ============ ========= ======= ======= ====== ======== =========== ============ ============
Developments
approved or
in progress
================ ============ ========= ======= ======= ====== ======== =========== ============ ============
Nova, Victoria, Apr
SW1 Office 50 481,400 42 396 21 2017 259 259
================
Retail 79,200 93
============================= ========= ======= ======= ====== ======== =========== ============ ============
Oriana, W1 Jul
- Phase II Retail 50 30,700 100 47 2 2017 19 20
================ ============ ========= ======= ======= ====== ======== =========== ============ ============
Oct
Westgate Oxford Retail 50 793,000 68 183 14 2017 148 211
Proposed
developments
================ ============ ========= ======= ======= ====== ======== =========== ============ ============
Selly Oak,
Birmingham Retail 50 200,000 n/a n/a n/a 2019 n/a n/a
================
Residential 89,000 n/a n/a n/a 2019 n/a n/a
================ ============ ========= ======= ======= ====== ======== =========== ============ ============
Developments
let and
transferred
or sold
================ ============ ========= ======= ======= ====== ======== =========== ============ ============
1 New Street Oct
Square, EC4 Office 100 274,800 100 n/a(3) 16 2016 168 168
================ ============ ========= ======= ======= ====== ======== =========== ============ ============
1 & 2 New Apr
Ludgate, EC4 Office 100 355,300 100 n/a(3) 24 2015 248 248
================
Retail 26,700 100
============================= ========= ======= ======= ====== ======== =========== ============ ============
Oriana, W1
- Phase II(2) Retail 50 41,800 100 n/a(3) n/a n/a n/a n/a
================ ============ ========= ======= ======= ====== ======== =========== ============ ============
1. Includes retail within Kings Gate, SW1.
2. This represents the disposal of 28-32 Oxford Street, W1.
3. Once properties are transferred from the development
pipeline, we do not report on their individual value.
Where the property is not 100% owned, floor areas and letting
status shown above represent the full scheme whereas all other
figures represent our proportionate share. Letting % is measured by
ERV and shows letting status at 31 March 2017. Trading property
development schemes are excluded from the development pipeline.
Total development cost
Refer to glossary for definition. Of the properties in the
development pipeline at 31 March 2017, the only properties on which
interest was capitalised on the land cost were Westgate Oxford and
Nova, Victoria, SW1.
Net income/ERV
Net income/ERV represents headline annual rent on let units plus
ERV at 31 March 2017 on unlet units, both after rents payable.
Trading property development schemes
Property Sales Total Forecast
exchanged Actual/ development total
Description Ownership Number by estimated costs development
of interest Size of unit completion to date cost
use % sq ft units % date GBPm GBPm
================ ============ ========= ======= ====== ========== =========== ============ ============
Kings Gate, Oct
SW1 Residential 100 108,600 100 95 2015 163 163
Nova, Victoria, Apr
SW1 Residential 50 166,800 170 87 2017 146 146
Oriana, W1 Jul
- Phase II Residential 50 20,200 18 22 2017 14 15
Jul
Westgate Oxford Residential 50 36,700 59 - 2017 7 10
================ ============ ========= ======= ====== ========== =========== ============ ============
Table 19: Combined Portfolio value by location at 31 March
2017
Hotels,
Shopping leisure,
centres Retail residential
and shops parks Offices & other Total
% % % % %
============================= ========== ====== ======= ============ =====
Central, inner and outer
London 14.6 0.2 46.7 3.4 64.9
South East and East 10.4 3.5 - 0.9 14.8
Midlands - 0.6 - 0.4 1.0
Wales and South West 2.5 0.5 - 4.5 7.5
North, North West, Yorkshire
and Humberside 7.1 0.9 0.1 0.5 8.6
Scotland and Northern
Ireland 2.7 0.3 - 0.2 3.2
============================= ========== ====== ======= ============ =====
Total 37.3 6.0 46.8 9.9 100.0
============================= ========== ====== ======= ============ =====
% figures calculated by reference to the Combined Portfolio
value of GBP14.4bn.
Table 20: Combined Portfolio performance relative to IPD
Total property returns - year ended 31 March 2017
Land Securities IPD (1)
% %
========================== =============== === ===
Retail - Shopping centres 3.6 1.1
- Retail parks 1.3 1.3 (2)
Central London shops 9.8 8.6
========================== =============== === === ===
Central London offices 2.0 2.6
========================== =============== === === ===
Total 3.7 (3) 4.6
========================== =============== === === ===
1. IPD Quarterly Universe
2. IPD Retail Warehouses Quarterly Universe
3. Includes leisure, hotel portfolio and other
Table 21: Cost analysis
Year Year
ended ended
31 31
March March
2017 2016
==================== ===== ========= ======== ================= ===== ====== ===== ======
Cost Cost
Total ratio Total ratio
GBPm GBPm %(1) GBPm %(1)
==================== ===== ========= ======== ================= ===== ====== ===== ======
Gross rental
income (before
rents payable) 648
==================== ===== ======== ================= ===== ====== ===== ======
Gross rental
income (after Managed
rents payable) 637 Direct operations 8 1.2 8 1.2
==================== ===== ================= ===== ====== ===== ======
Net service Tenant
charge expense (5) property default 2 0.3 9 1.4
==================== ===== ================= ===== ====== ===== ======
Net direct property Void related
expenditure (32) costs costs 13 2.0 15 2.3
==================== ===== ================= ===== ====== ===== ======
Other direct
property
Net rental income 600 GBP37m costs 12 1.9 12 1.8
==================== ===== ======== ================= ===== ====== ===== ======
Indirect costs (39)
==================== =====
Segment profit
before finance Development
expense 561 Indirect expenditure 16 2.5 20 3.0
==================== ===== ================= ===== ====== ===== ======
Net unallocated expenses
expenses (40)
==================== =====
Net finance GBP79m Asset management,
expense - Group (118)
Net finance administration
expense - joint and
ventures (21)
==================== =====
Revenue profit 382 compliance 65 10.0 59 9.0
==================== ===== ======== ================= ===== ====== ===== ======
Total (incl.
direct
vacancy
Total GBP116m costs) 116 17.9 123 18.7
========= ======== ================= ===== ====== ===== ======
Total
cost Head office
ratio(1) 17.9% relocation (1) 6
========= ======== ================= ===== ====== ===== ======
EPRA costs
(incl.
direct
vacancy
costs) 115 18.1 129 19.9
================= ===== ====== ===== ======
Less: Direct
vacancy
costs (12) (15)
EPRA (excl.
direct
vacancy
costs) 103 16.2 114 17.5
1. Percentages represent costs divided by gross rental income
including finance leases, before rents payable. This is with the
exception of EPRA measures which represent costs divided by gross
rental income including finance leases, after rents payable.
Table 22: Combined Portfolio analysis
Like-for-like segmental analysis
Annualised Annualised Net estimated
Market Valuation Rental rental net rental
value(1) movement(2) income(3) income(4) rent(5) value(6)
31 31 31 31 31 31 31 31
March March Surplus/ Surplus/ March 31March March March March March March
2017 2016 (deficit) (deficit) 2017 2016 2017 2017 2016 2017 2016
GBPm GBPm GBPm % GBPm GBPm GBPm GBPm GBPm GBPm GBPm
================ ====== ====== ========== ========== ====== ======= ========== ====== ====== ======= ======
Retail Portfolio
Shopping
centres
and shops 3,663 3,677 (47) (1.3%) 194 195 184 179 180 195 190
Retail parks 855 886 (37) (4.2%) 52 52 52 51 50 51 51
Leisure and
hotels 1,361 1,323 30 2.3% 82 84 81 79 78 82 81
Other 20 20 - (2.0%) 2 2 1 2 2 2 2
Total Retail
Portfolio 5,899 5,906 (54) (0.9%) 330 333 318 311 310 330 324
================ ====== ====== ========== ========== ====== ======= ========== ====== ====== ======= ======
London Portfolio
West End 2,020 2,084 (87) (4.3%) 89 88 91 89 84 98 96
City 797 797 (25) (3.1%) 29 28 29 32 32 40 37
Mid-town 1,013 1,053 (50) (5.1%) 40 39 40 43 42 49 49
Inner London 323 320 (13) (7.8%) 14 13 14 15 9 17 17
================ ====== ====== ========== ========== ====== ======= ========== ====== ====== ======= ======
Total London
offices 4,153 4,254 (175) (4.4%) 172 168 174 179 167 204 199
Central
London
shops 1,267 1,181 82 6.9% 45 44 34 34 45 58 55
Other 41 45 (4) (7.8%) 2 2 1 1 1 1 1
================ ====== ====== ========== ========== ====== ======= ========== ====== ====== ======= ======
Total London
Portfolio 5,461 5,480 (97) (1.8%) 219 214 209 214 213 263 255
================ ====== ====== ========== ========== ====== ======= ========== ====== ====== ======= ======
Like-for-like
portfolio (10) 11,360 11,386 (151) (1.4%) 549 547 527 525 523 593 579
Proposed
developments
(3) 6 4 (3) (33.2%) - - - - - - -
Development
programme
(11) 1,138 1,013 14 1.3% 21 8 25 1 - 60 63
Completed
developments
(3) 1,841 1,771 (7) (0.4%) 63 47 70 40 16 86 85
Acquisitions
(12) 94 90 - 0.4% 4 2 4 4 4 4 3
Sales (13) - 207 - - 11 56 - - 13 - 12
Combined
Portfolio 14,439 14,471 (147) (1.0%) 648 660 626 570 556 743 742
================ ====== ====== ========== ========== ====== ======= ========== ====== ====== ======= ======
Properties
treated
as finance
leases (10) (10)
================ ====== ====== ========== ========== ====== =======
Combined
Portfolio 14,439 14,471 (147) (1.0%) 638 650
================ ====== ====== ========== ========== ====== ======= ========== ====== ====== ======= ======
Total portfolio analysis
Annualised Annualised Net estimated
Market Valuation Rental rental net rental
value(1) movement(2) income(3) income(4) rent(5) value(6)
31 31 31 31 31 31 31 31 31
March March Surplus/ Surplus/ March March March March March March March
2017 2016 (deficit) (deficit) 2017 2016 2017 2017 2016 2017 2016
GBPm GBPm GBPm % GBPm GBPm GBPm GBPm GBPm GBPm GBPm
============= ====== ====== ========= ========= ====== ====== ========== ====== ====== ====== ======
Retail
Portfolio
Shopping
centres
and
shops 3,860 3,790 (37) (0.9%) 195 196 185 179 180 210 205
Retail
parks 861 890 (40) (4.5%) 52 68 52 51 50 51 51
Leisure
and
hotels 1,384 1,542 30 2.2% 94 98 82 80 91 83 93
Other 20 20 - (1.9%) 2 2 1 2 2 2 2
============= ====== ====== ========= ========= ====== ====== ========== ====== ====== ====== ======
Total Retail
Portfolio 6,125 6,242 (47) (0.8%) 343 364 320 312 323 346 351
============= ====== ====== ========= ========= ====== ====== ========== ====== ====== ====== ======
London
Portfolio
West End 3,247 3,262 (103) (3.2%) 123 109 127 107 97 156 156
City 1,853 1,814 (14) (0.8%) 66 65 67 53 36 88 83
Mid-town 1,336 1,325 (48) (3.7%) 48 41 55 42 41 67 67
Inner
London 323 320 (13) (7.8%) 14 28 14 15 9 17 17
============= ====== ====== ========= ========= ====== ====== ========== ====== ====== ====== ======
Total London
offices 6,759 6,721 (178) (2.8%) 251 243 263 217 183 328 323
Central
London
shops 1,514 1,462 82 5.7% 52 51 42 40 49 68 67
Other 41 46 (4) (7.9%) 2 2 1 1 1 1 1
============= ====== ====== ========= ========= ====== ====== ========== ====== ====== ====== ======
Total London
Portfolio 8,314 8,229 (100) (1.3%) 305 296 306 258 233 397 391
============= ====== ====== ========= ========= ====== ====== ========== ====== ====== ====== ======
Combined
Portfolio 14,439 14,471 (147) (1.0%) 648 660 626 570 556 743 742
============= ====== ====== ========= ========= ====== ====== ========== ====== ====== ====== ======
Properties
treated
as finance
leases (10) (10)
============= ====== ====== ========= ========= ====== ======
Combined
Portfolio 14,439 14,471 (147) (1.0%) 638 650
============= ====== ====== ========= ========= ====== ======
Represented
by:
Investment
portfolio 12,628 12,800 (187) (1.5%) 585 600 571 523 527 650 650
Share of
joint
ventures 1,811 1,671 40 2.3% 53 50 55 47 29 93 92
============= ====== ====== ========= ========= ====== ====== ========== ====== ====== ====== ======
Combined
Portfolio 14,439 14,471 (147) (1.0%) 638 650 626 570 556 743 742
============= ====== ====== ========= ========= ====== ====== ========== ====== ====== ====== ======
Like-for-like segmental analysis
Gross
estimated
rental Net initial Equivalent Voids
value(7) yield(8) yield(9) (by ERV)(3)
31 31 31 31 31 31 31 31
March March March March March March March March
2017 2016 2017 2016 2017 2016 2017 2016
GBPm GBPm % % % % % %
========================= ====== ====== ====== ====== ====== ====== ====== ======
Retail Portfolio
Shopping centres
and shops 203 197 4.3% 4.4% 4.8% 4.7% 3.9% 2.9%
Retail parks 52 52 5.5% 5.1% 5.6% 5.4% - -
Leisure and hotels 82 81 5.2% 5.3% 5.4% 5.5% 0.7% 0.5%
Other 2 2 3.8% 6.3% 8.3% 8.2% 33.3% 21.7%
========================= ====== ====== ====== ====== ====== ====== ====== ======
Total Retail Portfolio 339 332 4.7% 4.7% 5.0% 5.0% 2.8% 2.0%
========================= ====== ====== ====== ====== ====== ====== ====== ======
London Portfolio
West End 98 96 4.0% 3.8% 4.6% 4.5% 7.6% 4.7%
City 41 38 3.8% 3.7% 4.8% 4.5% - -
Mid-town 50 51 4.0% 3.8% 4.5% 4.4% - 0.4%
Inner London 17 17 4.2% 2.6% 5.0% 4.9% - -
========================= ====== ====== ====== ====== ====== ====== ====== ======
Total London offices 206 202 4.0% 3.7% 4.7% 4.5% 3.6% 2.3%
Central London shops 58 56 2.5% 3.5% 4.1% 4.0% 18.6% 4.9%
Other 1 1 0.9% 1.0% 1.3% 1.5% 33.3% 16.7%
========================= ====== ====== ====== ====== ====== ====== ====== ======
Total London Portfolio 265 259 3.6% 3.6% 4.5% 4.4% 7.0% 2.9%
========================= ====== ====== ====== ====== ====== ====== ====== ======
Like-for-like portfolio
(10) 604 591 4.2% 4.2% 4.8% 4.7% 4.6% 2.4%
Proposed developments
(3) - - - - n/a n/a n/a n/a
Development programme
(11) 61 64 0.1% - 4.2% 4.0% n/a n/a
Completed developments
(3) 87 85 2.0% 0.8% 4.2% 4.1% n/a n/a
Acquisitions (12) 4 3 3.7% 3.6% 3.8% n/a n/a n/a
Sales (13) - 12 - 5.5% n/a n/a n/a n/a
Combined Portfolio 756 755 3.6% 3.5% 4.7% n/a n/a n/a
========================= ====== ====== ====== ====== ====== ====== ====== ======
Total portfolio analysis Notes:
1. The market value
Gross figures are determined
estimated by the Group's external
rental Net initial valuer.
value(7) yield(8) 2. The valuation movement
31 31 31 31 is stated after adjusting
March March March March for the effect of SIC15
2017 2016 2017 2016 under IFRS.
GBPm GBPm % % 3. Refer to glossary
========================= ====== ====== ====== ====== for definition.
Retail Portfolio 4. Annualised rental
Shopping centres income is annual 'rental
and shops 219 213 4.1% 4.2% income' (as defined
Retail parks 52 52 5.4% 5.1% in the glossary) at
Leisure and hotels 83 93 5.2% 5.3% the balance sheet date,
Other 2 2 3.8% 6.3% except that car park
========================= ====== ====== ====== ====== and commercialisation
Total Retail Portfolio 356 360 4.5% 4.6% income are included
========================= ====== ====== ====== ====== on a net basis (after
London Portfolio deduction for operational
West End 156 156 3.0% 2.8% outgoings). Annualised
City 89 84 2.7% 1.7% rental income includes
Mid-town 68 69 3.0% 3.0% temporary lettings.
Inner London 17 17 4.2% 2.6% 5. Annualised net rent
========================= ====== ====== ====== ====== is annual cash rent,
Total London offices 330 326 3.0% 2.5% after the deduction
Central London shops 69 68 2.4% 3.1% of ground rents, as
Other 1 1 0.9% 1.1% at the balance sheet
========================= ====== ====== ====== ====== date. It is calculated
Total London Portfolio 400 395 2.9% 2.6% with the same methodology
========================= ====== ====== ====== ====== as annualised rental
Combined Portfolio 756 755 3.6% 3.5% income but is stated
========================= ====== ====== ====== ====== net of ground rent
and before SIC15 adjustments.
6. Net estimated rental
value is gross estimated
Represented by: rental value, as defined
Investment portfolio 661 661 3.7% 3.7% in the glossary, after
Share of joint ventures 95 94 2.4% 1.7% deducting expected
========================= ====== ====== ====== ====== ground rents.
Combined Portfolio 756 755 3.6% 3.5% 7. Gross estimated
========================= ====== ====== ====== ====== rental value (ERV)
- refer to glossary
for definition. The
figure for proposed
developments relates
to the existing buildings
and not the schemes
proposed.
8. Net initial yield
- refer to glossary
for definition. This
calculation includes
all properties including
those sites with no
income.
9. Equivalent yield
- refer to glossary
for definition. Proposed
developments are excluded
from the calculation
of equivalent yield
on the Combined Portfolio.
10. The like-for-like
portfolio - refer to
glossary for definition.
Capital expenditure
on refurbishments,
acquisitions of head
leases and similar
capital expenditure
has been allocated
to the like-for-like
portfolio in preparing
this table.
11. The development
programme - refer to
glossary for definition.
Net initial yield figures
are only calculated
for properties in the
development programme
that have reached practical
completion.
12. Includes all properties
acquired since 1 April
2015.
13. Includes all properties
sold since 1 April
2015.
Table 23: Lease lengths
Weighted average
unexpired lease
term at 31 March
2017
Like-for-like
portfolio,
completed
Like-for-like developments
portfolio and acquisitions
Mean(1) Mean(1)
Years Years
=============================== ============= =================
Retail Portfolio
Shopping centres and shops 6.5 6.5
Retail parks 7.6 7.6
Leisure and hotels 12.4 12.5
Other 1.9 1.9
=============================== ============= =================
Total Retail Portfolio 8.2 8.2
=============================== ============= =================
London Portfolio
West End 8.0 8.0
City 6.1 10.9
Mid-town 9.5 12.2
Inner London 15.8 15.8
=============================== ============= =================
Total London offices 8.6 10.3
Central London shops 6.8 7.2
Other 6.7 6.7
=============================== ============= =================
Total London Portfolio 8.3 9.9
=============================== ============= =================
Combined Portfolio 8.2 9.1
=============================== ============= =================
1. Mean is the rent weighted average of the unexpired lease term
across all leases (excluding short-term leases). Term is defined as
the earlier of tenant break or expiry.
Table 24: Development pipeline financial summary
Cumulative movements on the development
programme to 31 March 2017 Total scheme details(1)
======================================================================== ================================================== =================
Valuation
Market Disposals, (deficit)/surplus
value SIC15 Market for the
at Capital rent value Estimated Estimated Estimated year
start expenditure Capitalised Valuation and at 31 total total total Net ended
of incurred interest surplus/(deficit) other March capital capitalised development Income/ 31 March
scheme to date to date to date(2) adjustments 2017 expenditure(3) interest cost(4) ERV(5) 2017(2)
GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
============= ====== =========== =========== ================= =========== ====== ============== =========== =========== ======== =================
Developments
let
and
transferred
or sold
Shopping
centres
and shops - - - - - - - - - - -
Retail parks - - - - - - - - - - -
London
Portfolio 137 283 16 405 4 845 277 15 416 40 (9)
============= ====== =========== =========== ================= =========== ====== ============== =========== =========== ======== =================
137 283 16 405 4 845 277 15 416 40 (9)
============= ====== =========== =========== ================= =========== ====== ============== =========== =========== ======== =================
Developments
after
practical
completion,
approved or
in
progress
Shopping
centres
and shops 30 115 8 32 (2) 183 171 10 211 14 10
Retail parks - - - - - - - - - - -
London
Portfolio 212 385 44 401 (87) 955 272 44 528 46 4
============= ====== =========== =========== ================= =========== ====== ============== =========== =========== ======== =================
242 500 52 433 (89) 1,138 443 54 739 60 14
============= ====== =========== =========== ================= =========== ====== ============== =========== =========== ======== =================
Movement on proposed developments
for the year ended 31 March 2017
======================================================================== ============== =========== =========== ======== =================
Proposed
developments
Shopping
centres
and shops - - - - - - - - - - -
Retail parks 4 2 - (3) 3 6 44 1 51 3 (3)
London
Portfolio - - - - - - - - - - -
============= ====== =========== =========== ================= =========== ====== ============== =========== =========== ======== =================
4 2 - (3) 3 6 44 1 51 3 (3)
============= ====== =========== =========== ================= =========== ====== ============== =========== =========== ======== =================
1. Total scheme details exclude properties sold in the year.
2. Includes profit realised on the disposal of investment
properties and any surplus or deficit on investment properties
transferred to trading.
3. For proposed development properties the estimated total
capital expenditure represents the outstanding costs required to
complete the scheme as at 31 March 2017.
4. Includes the property at its market value at the start of the
financial year in which the property was added to the development
programme together with estimated capitalised interest. For
proposed development properties, the market value of the property
at 31 March 2017 is included in the estimated total cost. Estimated
costs for proposed schemes could still be subject to material
change prior to final approval.
5. Net headline annual rent on let units plus net ERV at 31 March 2017 on unlet units.
Table 25: Reconciliation of segmental information note to
statutory reporting
The table below reconciles the Group's income statement to the
segmental information note (note 2 to the financial statements).
The Group's income statement is prepared using the equity
accounting method for joint ventures and includes 100% of the
results of the Group's non-wholly owned subsidiaries. In contrast,
the segmental information note is prepared on a proportionately
consolidated basis and excludes the non-wholly owned share of the
Group's subsidiaries. This is consistent with the financial
information reviewed by management.
Year ended 31 March
2017
Group Joint Proportionate Total Revenue Capital
income ventures(1) share GBPm profit and
statement GBPm of GBPm other
GBPm earnings(2) items
GBPm GBPm
============================== ========== ============= ============= ====== ======== ========
Rental income 587 53 (2) 638 638 -
Finance lease interest 10 - - 10 10 -
============================== ========== ============= ============= ====== ======== ========
Gross rental income
(before rents payable) 597 53 (2) 648 648 -
Rents payable (10) (1) - (11) (11) -
============================== ========== ============= ============= ====== ======== ========
Gross rental income
(after rents payable) 587 52 (2) 637 637 -
========== ============= ============= ====== ======== ========
Service charge income 94 9 (2) 101 101 -
Service charge expense (96) (11) 1 (106) (106) -
========== ============= ============= ====== ======== ========
Net service charge expense (2) (2) (1) (5) (5) -
Other property related
income 32 2 - 34 34 -
Direct property expenditure (58) (8) - (66) (66) -
============================== ========== ============= ============= ====== ======== ========
Net rental income 559 44 (3) 600 600 -
Indirect property expenditure (79) (2) - (81) (81) -
Other income 2 - - 2 2 -
============================== ========== ============= ============= ====== ======== ========
482 42 (3) 521 521 -
Profit on disposal of
investment properties 19 1 - 20 - 20
Loss on disposal of
investment in joint
venture (2) - - (2) - (2)
Profit on disposal of
other investment 13 - - 13 - 13
Net (deficit)/surplus
on revaluation of investment
properties (186) 40 (1) (147) - (147)
Movement in impairment
of trading properties 12 - - 12 - 12
Profit on disposal of
trading properties 29 7 - 36 - 36
Head office relocation 1 - - 1 - 1
Other (3) - 4 1 - 1
Operating profit 365 90 - 455 521 (66)
Finance income 37 - - 37 37 -
Finance expense (359) (21) - (380) (176) (204)
Share of post-tax profit
from joint ventures 69 (69) - - - -
Profit before tax 112 - - 112 382 (270)
Taxation 1 - - 1 - 1
============================== ========== ============= ============= ====== ======== ========
Profit attributable
to owners of the parent 113 - - 113 382 (269)
============================== ========== ============= ============= ====== ======== ========
1. Reallocation of the share of post-tax profit from joint
ventures reported in the Group income statement to the individual
line items reported in the segmental information note.
2. Removal of the non-wholly owned share of results of the
Group's subsidiaries. The non-wholly owned subsidiaries are
consolidated at 100% in the Group's income statement, but only the
Group's share is included in revenue profit reported in the
segmental information note.
Year ended 31 March
2016
Group Joint Proportionate Total Revenue Capital
income ventures(1) share GBPm profit and
statement GBPm of GBPm other
GBPm earnings(2) items
GBPm GBPm
============================== ========== ============= ============= ====== ======== ========
Rental income 603 50 (3) 650 650 -
Finance lease interest 10 - - 10 10 -
============================== ========== ============= ============= ====== ======== ========
Gross rental income
(before rents payable) 613 50 (3) 660 660 -
Rents payable (11) (1) - (12) (12) -
============================== ========== ============= ============= ====== ======== ========
Gross rental income
(after rents payable) 602 49 (3) 648 648 -
========== ============= ============= ====== ======== ========
Service charge income 94 8 - 102 102 -
Service charge expense (96) (9) - (105) (105) -
========== ============= ============= ====== ======== ========
Net service charge expense (2) (1) - (3) (3) -
Other property related
income 36 2 - 38 38 -
Direct property expenditure (72) (7) - (79) (79) -
============================== ========== ============= ============= ====== ======== ========
Net rental income 564 43 (3) 604 604 -
Indirect property expenditure (80) (2) - (82) (82) -
Other income 4 - - 4 4 -
============================== ========== ============= ============= ====== ======== ========
488 41 (3) 526 526 -
Profit on disposal of
investment properties 75 4 - 79 - 79
Net surplus on revaluation
of investment properties 739 171 (3) 907 - 907
Movement in impairment
of trading properties 11 5 - 16 - 16
Profit on disposal of
trading properties 41 - - 41 - 41
Head office relocation (6) - - (6) - (6)
Other (2) (1) 6 3 - 3
Operating profit 1,346 220 - 1,566 526 1,040
Finance income 35 - - 35 35 -
Finance expense (244) (21) - (265) (199) (66)
Share of profit from
joint ventures 199 (199) - - - -
Profit before tax 1,336 - - 1,336 362 974
Taxation 2 - - 2 - 2
============================== ========== ============= ============= ====== ======== ========
Profit attributable
to owners of the parent 1,338 - - 1,338 362 976
============================== ========== ============= ============= ====== ======== ========
1. Reallocation of the share of post-tax profit from joint
ventures reported in the Group income statement to the individual
line items reported in the segmental information note.
2. Removal of the non-wholly owned share of results of the
Group's subsidiaries. The non-wholly owned subsidiaries are
consolidated at 100% in the Group's income statement, but only the
Group's share is included in revenue profit reported in the
segmental information note.
Table 26: Acquisitions, disposals and capital expenditure
Year ended 31 March 2017 Year
ended
31 March
2016
Group Combined Combined
(excl. Adjustment Portfolio Portfolio
joint Joint for proportionate GBPm GBPm
ventures) ventures share
GBPm GBPm GBPm
================================================ ========== ========= ================== =========== ===========
Investment properties
================================================ ========== ========= ================== =========== ===========
Net book value at the
beginning of the year 12,358 1,630 (34) 13,954 13,529
Acquisitions 14 1 - 15 123
Capital expenditure 126 114 - 240 312
Capitalised interest 5 13 - 18 23
Disposals (205) (39) - (244) (940)
Net movement in finance
leases 32 9 1 42 -
Transfer to trading
properties - (5) - (5) -
Net (deficit)/surplus
on revaluation of investment
properties (186) 40 (1) (147) 907
Net book value at the
end of the year 12,144 1,763 (34) 13,873 13,954
Profit on disposal of investment properties 19 1 - 20 79
================================================ ========== ========= ================== =========== ===========
Trading properties
================================================ ========== ========= ================== =========== ===========
Net book value at the
beginning of the year 124 157 - 281 337
Capital expenditure 19 27 - 46 61
Capitalised interest - 5 - 5 6
Disposals (33) (68) - (101) (140)
Transfer from investment
properties - 5 - 5 -
Movement in impairment 12 - - 12 16
Net book value at the
end of the year 122 126 - 248 280
Profit on disposal
of trading properties 29 7 - 36 41
================================================ ========== ========= ================== =========== ===========
Investment in joint
ventures
================================================ ========== ========= ================== =========== ===========
Loss on disposal of investment in joint venture (2) - - (2) -
================================================ ========== ========= ================== =========== ===========
Other investments
================================================ ========== ========= ================== =========== ===========
Profit on disposal
of other investment 13 - - 13 -
================================================ ========== ========= ================== =========== ===========
Acquisitions, development and refurbishment GBPm GBPm
expenditure
=============================================== ==== =====
Acquisitions of investment property 15 123
Capital expenditure - investment property 81 160
Development capital expenditure - investment
properties 159 152
Capital expenditure - trading properties 19 51
Development capital expenditure - trading
property 27 10
=============================================== ==== =====
Acquisitions, development and refurbishment
expenditure 301 496
=============================================== ==== =====
Disposals GBPm GBPm
=============================================== ==== =====
Net book value - investment property disposals 244 940
Net book value - trading property disposals 101 140
Profit on disposal - investment property 20 79
Profit on disposal - trading property 36 41
Loss on disposal - investment in joint
venture (2) -
Profit on disposal - other investment 13 -
Disposal of asset held for sale - 283
Other 1 10
=============================================== ==== =====
Total disposal proceeds 413 1,493
=============================================== ==== =====
Investor information
1. Company website: www.landsecurities.com
The Group's half-yearly and annual reports to shareholders, and
results announcements and presentations, are available to view and
download from the Company's website. The website also provides
details of the Company's current share price, the latest news about
the Group, its properties and operations, and details of future
events and how to obtain further information.
2. Registrar: Equiniti Group PLC
Enquiries concerning shareholdings, dividends and changes in
personal details should be referred to the Company's registrar,
Equiniti Group PLC (Equiniti), in the first instance. They can be
contacted using the details below:
Telephone:
0371 384 2128 (from the UK)
+44 121 415 7049 (from outside the UK)
Lines are open from 08:30 to 17:30, Monday to Friday, excluding
UK public holidays
Correspondence address:
Equiniti Group PLC
Aspect House
Spenser Road
Lancing
West Sussex
BN99 6DA
Information on how to manage your shareholding can be found at
https://help.shareview.co.uk. If you are not able to find the
answer to your question within the general Help information page, a
personal enquiry can be sent directly through Equiniti's secure
e-form on their website. Please note that you will be asked to
provide your name, address, shareholder reference number and a
valid e-mail address. Alternatively, shareholders can view and
manage their shareholding through the Land Securities share portal
which is hosted by Equiniti - simply visit
https://portfolio.shareview.co.uk and follow the registration
instructions.
3. Shareholder enquiries
If you have an enquiry about the Company's business or about
something affecting you as a shareholder (other than queries which
are dealt with by the Registrar), please email Investor Relations
(see details in 8. below).
4. Share dealing services: www.shareview.co.uk
The Company's shares can be traded through most banks, building
societies and stockbrokers. They can also be traded through
Equiniti. To use their service, shareholders should contact
Equiniti: 0345 603 7037 from the UK. Lines are open Monday to
Friday 08:30 to17:30, excluding UK public holidays.
5. 2016/17 final dividend
The Board has recommended a final dividend for the year ended 31
March 2017 of 11.7p per ordinary share to be paid as a Property
Income Distribution (PID). Subject to shareholders' approval at the
Annual General Meeting, the final dividend will be paid on 27 July
2017 to shareholders registered at the close of business on 23 June
2017. The total dividend paid and payable in respect of the year
ended 31 March 2017 is 38.55p (2016: 35.0p). The first quarterly
dividend for the year ended 31 March 2018 will be 9.85p. It will be
paid entirely as a PID on 6 October 2017, to shareholders on the
register at the close of business on 8 September 2017.
6. Dividend related services
Dividend payments to UK shareholders - Dividend Mandates
We recommend that dividends are paid directly into a nominated
bank or building society account through the Bankers Automated
Clearing System (BACS). This service provides cleared funds on the
dividend payment date, is more secure than sending a cheque by post
and avoids the inconvenience of paying each dividend by cheque.
This arrangement is only available in respect of dividends paid in
sterling.
Dividend payments to overseas shareholders - International
Payment Service
For international shareholders who would prefer to receive
payment of their dividends in local currency and directly into
their local bank account, an Overseas Payment Service (OPS) is
available. This can be more convenient and effective than otherwise
receiving dividend payments by sterling cheque or into a UK bank
account.
The OPS service is available from Equiniti who, in partnership
with Citibank, may be able to convert sterling dividends into your
local currency at competitive rates and either arrange for those
funds to be sent to you by currency draft or credited to your bank
account directly.
Dividend Reinvestment Plan (DRIP)
A DRIP is available from Equiniti. This facility provides an
opportunity by which shareholders can conveniently and easily
increase their holding in the Company by using their cash dividends
to buy more shares. Participation in the DRIP will mean that your
dividend payments will be reinvested in the Company's shares and
these will be purchased on your behalf in the market on, or as soon
as practical after, the dividend payment date.
You may only participate in the DRIP if you are resident in the
European Economic Area, Channel Islands or Isle of Man.
For further information (including terms and conditions) and to
register for any of these dividend-related services, simply visit
www.shareview.co.uk.
7. Financial reporting calendar
2017
Annual Report and AGM Notice mailed 12 June
to shareholders
Annual General Meeting 13 July
Half-yearly results announcement 14 November
2018
Financial year end 31 March
Preliminary results announcement 15 May*
* Provisional date only
8. Investor relations enquiries
For investor relations enquiries, please contact Edward Thacker,
Head of Investor Relations at Land Securities, by telephone on +44
(0)20 7413 9000 or by email at
investor.relations@landsecurities.com.
Glossary
Adjusted earnings per share (Adjusted EPS)
Earnings per share based on revenue profit after related
tax.
Adjusted net assets per share
Net assets per share adjusted to remove the effect of the
de-recognition of the 2004 bond exchange and cumulative fair value
movements on interest-rate swaps and similar instruments.
Adjusted net debt
Net debt excluding cumulative fair value movements on
interest-rate swaps, the adjustment arising from the de-recognition
of the bond exchange and amounts payable under finance leases. It
generally includes the net debt of subsidiaries and joint ventures
on a proportionate basis.
Book value
The amount at which assets and liabilities are reported in the
financial statements.
BREEAM
Building Research Establishment's Environmental Assessment
Method.
Combined Portfolio
The Combined Portfolio comprises the investment properties of
the Group's subsidiaries, on a proportionately consolidated basis
when not wholly owned, together with our share of investment
properties held in our joint ventures.
Completed developments
Completed developments consist of those properties previously
included in the development programme, which have been transferred
from the development programme since 1 April 2015.
Development pipeline
The development programme together with proposed
developments.
Development programme
The development programme consists of committed developments
(Board approved projects with the building contract let),
authorised developments (Board approved), projects under
construction and developments which have reached practical
completion within the last two years but are not yet 95% let.
Diluted figures
Reported results adjusted to include the effects of potentially
dilutive shares issuable under employee share schemes.
Dividend Reinvestment Plan (DRIP)
The DRIP provides shareholders with the opportunity to use cash
dividends received to purchase additional ordinary shares in the
Company immediately after the relevant dividend payment date. Full
details appear on the Company's website.
Earnings per share
Profit after taxation attributable to owners of the parent
divided by the weighted average number of ordinary shares in issue
during the year.
EPRA
European Public Real Estate Association.
EPRA net initial yield
EPRA net initial yield is defined within EPRA's Best Practice
Recommendations as the annualised rental income based on the cash
rents passing at the balance sheet date, less non-recoverable
property operating expenses, divided by the gross market value of
the property. It is consistent with the net initial yield
calculated by the Group's external valuer.
Equivalent yield
Calculated by the Group's external valuer, equivalent yield is
the internal rate of return from an investment property, based on
the gross outlays for the purchase of a property (including
purchase costs), reflecting reversions to current market rent and
such items as voids and non-recoverable expenditure but ignoring
future changes in capital value. The calculation assumes rent is
received annually in arrears.
ERV - Gross estimated rental value
The estimated market rental value of lettable space as
determined biannually by the Group's external valuer. For
investment properties in the development programme, which have not
yet reached practical completion, the ERV represents management's
view of market rents.
Fair value movement
An accounting adjustment to change the book value of an asset or
liability to its market value (see also mark-to-market
adjustment).
Finance lease
A lease that transfers substantially all the risks and rewards
of ownership from the lessor to the lessee.
Gearing
Total borrowings, including bank overdrafts, less short-term
deposits, corporate bonds and cash, at book value, plus cumulative
fair value movements on financial derivatives as a percentage of
total equity. For adjusted gearing, see note 12.
Gross market value
Market value plus assumed usual purchaser's costs at the
reporting date.
Head lease
A lease under which the Group holds an investment property.
Interest Cover Ratio (ICR)
A calculation of a company's ability to meet its interest
payments on outstanding debt. It is calculated using revenue profit
before interest, divided by net interest (excluding the
mark-to-market movement on interest-rate swaps, foreign exchange
swaps, bond exchange de-recognition, capitalised interest and
interest on the pension scheme assets and liabilities). The
calculation excludes joint ventures.
IPD
Refers to the MSCI IPD Direct Property indexes which measure
property level investment returns in the UK.
Interest-rate swap
A financial instrument where two parties agree to exchange an
interest rate obligation for a predetermined amount of time. These
are generally used by the Group to convert floating-rate debt or
investments to fixed rates.
Investment portfolio
The investment portfolio comprises the investment properties of
the Group's subsidiaries, on a proportionately consolidated basis
where not wholly owned.
Joint venture
An arrangement in which the Group holds an interest and which is
jointly controlled by the Group and one or more partners under a
contractual arrangement. Decisions on the activities of the joint
venture that significantly affect the joint venture's' returns,
including decisions on financial and operating policies and the
performance and financial position of the operation, require the
unanimous consent of the partners sharing control.
Lease incentives
Any incentive offered to occupiers to enter into a lease.
Typically, the incentive will be an initial rent-free period, or a
cash contribution to fit-out or similar costs. For accounting
purposes the value of the incentive is spread over the
non-cancellable life of the lease.
LIBOR
The London Interbank Offered Rate, the interest rate charged by
one bank to another for lending money, often used as a reference
rate in bank facilities.
Like-for-like portfolio
The like-for-like portfolio includes all properties which have
been in the portfolio since 1 April 2015, but excluding those which
are acquired, sold or included in the development pipeline at any
time since that date.
Loan-to-value (LTV)
Group LTV is the ratio of adjusted net debt, including
subsidiaries and joint ventures, to the sum of the market value of
investment properties and the book value of trading properties of
the Group, its subsidiaries and joint ventures, all on a
proportionate basis, expressed as a percentage. For the Security
Group, LTV is the ratio of net debt lent to the Security Group
divided by the value of secured assets.
Market value
Market value is determined by the Group's external valuer, in
accordance with the RICS Valuation Standards, as an opinion of the
estimated amount for which a property should exchange on the date
of valuation between a willing buyer and a willing seller in an
arm's-length transaction after proper marketing.
Mark-to-market adjustment
An accounting adjustment to change the book value of an asset or
liability to its market value (see also fair value movement).
Net assets per share
Equity attributable to owners of the parent divided by the
number of ordinary shares in issue at the year end. Net assets per
share is also commonly known as net asset value per share (NAV per
share).
Net initial yield
Net initial yield is a calculation by the Group's external
valuer of the yield that would be received by a purchaser, based on
the Estimated Net Rental Income expressed as a percentage of the
acquisition cost, being the market value plus assumed usual
purchasers' costs at the reporting date. The calculation is in line
with EPRA guidance. Estimated Net Rental Income is determined by
the valuer and is based on the passing cash rent less ground rent
at the balance sheet date, estimated non-recoverable outgoings and
void costs including service charges, insurance costs and void
rates.
Net rental income
Net rental income is the net operational income arising from
properties, on an accruals basis, including rental income, finance
lease interest, rents payable, service charge income and expense,
other property related income, direct property expenditure and bad
debts. Net rental income is presented on a proportionate basis.
Over-rented
Space where the passing rent is above the ERV.
Passing cash rent
The estimated annual rent receivable as at the reporting date
which includes estimates of turnover rent and estimates of rent to
be agreed in respect of outstanding rent review or lease renewal
negotiations. Passing cash rent may be more or less than the ERV
(see over-rented, reversionary and ERV). Passing cash rent excludes
annual rent receivable from units in administration save to the
extent that rents are expected to be received. Void units and units
that are in a rent-free period at the reporting date are deemed to
have no passing cash rent. Although temporary lets of less than 12
months are treated as void, income from temporary lets is included
in passing cash rents.
Planning permission
There are two common types of planning permission: full planning
permission and outline planning permission. A full planning
permission results in a decision on the detailed proposals on how
the site can be developed. The grant of a full planning permission
will, subject to satisfaction of any conditions, mean no further
engagement with the local planning authority will be required to
build the consented development. An outline planning permission
approves general principles of how a site can be developed. Outline
planning permission is granted subject to conditions known as
'reserved matters'. Consent must be sought and achieved for
discharge of all reserved matters within a specified time-limit,
normally three years from the date outline planning permission was
granted, before building can begin. In both the case of full and
outline planning permission, the local planning authority will
'resolve to grant permission'. At this stage, the planning
permission is granted subject to agreement of legal documents, in
particular the s106 agreement. On execution of the s106 agreement,
the planning permission will be issued. Work can begin on
satisfaction of any 'pre-commencement' planning conditions.
Pre-let
A lease signed with an occupier prior to completion of a
development.
Pre-development properties
Pre-development properties are those properties within the
like-for-like portfolio which are being managed to align vacant
possession within a three year horizon with a view to
redevelopment.
Property Income Distribution (PID)
A PID is a distribution by a REIT to its shareholders paid out
of qualifying profits. A REIT is required to distribute at least
90% of its qualifying profits as a PID to its shareholders.
Proposed developments
Proposed developments are properties which have not yet received
final Board approval or are still subject to main planning
conditions being satisfied, but which are more likely to proceed
than not.
Qualifying activities/ Qualifying assets
The ownership (activity) of property (assets) which is held to
earn rental income and qualifies for tax-exempt treatment (income
and capital gains) under UK REIT legislation.
Real Estate Investment Trust (REIT)
A REIT must be a publicly quoted company with at least
three-quarters of its profits and assets derived from a qualifying
property rental business. Income and capital gains from the
property rental business are exempt from tax but the REIT is
required to distribute at least 90% of those profits to
shareholders. Corporation tax is payable on non-qualifying
activities in the normal way.
Rental value change
Increase or decrease in the current rental value, as determined
by the Group's external valuer, over the reporting period on a
like-for-like basis.
Rental income
Rental income is as reported in the income statement, on an
accruals basis, and adjusted for the spreading of lease incentives
over the term certain of the lease in accordance with SIC 15. It is
stated gross, prior to the deduction of ground rents and without
deduction for operational outgoings on car park and
commercialisation activities.
Return on average capital employed
Group profit before net finance expense, plus joint venture
profit before net finance expense, divided by the average capital
employed (defined as shareholders' funds plus adjusted net
debt).
Return on average equity
Group profit before tax plus joint venture tax divided by the
average equity shareholders' funds.
Revenue profit
Profit before tax, excluding profits on the sale of non-current
assets and trading properties, profits on long-term development
contracts, valuation movements, fair value movements on
interest-rate swaps and similar instruments used for hedging
purposes, the adjustment to finance expense resulting from the
amortisation of the bond exchange de-recognition adjustment, debt
restructuring charges, and any other items of an exceptional
nature.
Reversionary or under-rented
Space where the passing rent is below the ERV.
Reversionary yield
The anticipated yield to which the initial yield will rise (or
fall) once the rent reaches the ERV.
Scrip dividend
A scrip dividend is when shareholders are offered the
opportunity to receive dividends in the form of shares instead of
cash.
Security Group
Security Group is the principal funding vehicle for the Group
and properties held in the Security Group are mortgaged for the
benefit of lenders. It has the flexibility to raise a variety of
different forms of finance.
Temporary lettings
Lettings for a period of one year or less. These are included
within voids.
Topped-up net initial yield
Topped-up net initial yield is a calculation by the Group's
external valuer. It is calculated by making an adjustment to net
initial yield in respect of the annualised cash rent foregone
through unexpired rent-free periods and other lease incentives. The
calculation is consistent with EPRA guidance.
Total business return
Dividend paid per share in the year plus the change in adjusted
diluted net assets per share, divided by adjusted diluted net
assets per share at the beginning of the year.
Total cost ratio
Total cost ratio represents all costs included within revenue
profit, other than rents payable and financing costs, expressed as
a percentage of gross rental income before rents payable.
Total development cost (TDC)
Total development cost refers to the book value of the site at
the commencement of the project, the estimated capital expenditure
required to develop the scheme from the start of the financial year
in which the property is added to our development programme,
together with capitalised interest, being the Group's borrowing
costs associated with direct expenditure on the property under
development. Interest is also capitalised on the purchase cost of
land or property where it is acquired specifically for
redevelopment. The TDC for trading property development schemes
excludes any estimated tax on disposal.
Total property return
Valuation movement, profit/loss on property sales and net rental
income in respect of investment properties expressed as a
percentage of opening book value, together with the time weighted
value for capital expenditure incurred during the current period,
on the combined property portfolio.
Total Shareholder Return (TSR)
The growth in value of a shareholding over a specified period,
assuming that dividends are reinvested to purchase additional units
of the stock.
Trading properties
Properties held for trading purposes and shown as current assets
in the balance sheet.
Turnover rent
Rental income which is related to an occupier's turnover.
Valuation surplus/deficit
The valuation surplus/deficit represents the increase or
decrease in the market value of the Combined Portfolio, adjusted
for net investment. The market value of the Combined Portfolio is
determined by the Group's external valuer.
Voids
Voids are expressed as a percentage of ERV and represent all
unlet space, including voids where refurbishment work is being
carried out and voids in respect of pre-development properties.
Temporary lettings for a period of one year or less are also
treated as voids.
Weighted average cost of capital (WACC)
Weighted average cost of debt and notional cost of equity, used
as a benchmark to assess investment returns.
Weighted average unexpired lease term
The weighted average of the unexpired term of all leases other
than short-term lettings such as car parks and advertising
hoardings, temporary lettings of less than one year, residential
leases and long ground leases.
Yield shift
A movement (negative or positive) in the equivalent yield of a
property asset.
Zone A
A means of analysing and comparing the rental value of retail
space by dividing it into zones parallel with the main frontage.
The most valuable zone, Zone A, is at the front of the unit. Each
successive zone is valued at half the rate of the zone in front of
it.
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR EDLFFDEFBBBQ
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May 18, 2017 02:00 ET (06:00 GMT)
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