REG - Land Sec. Group PLC - LS half-yearly results to 30 September 2014 <Origin Href="QuoteRef">LAND.L</Origin> - Part 5
11/11/2014 08:31
- Part 5: For the preceding part double click ID:nRSK6520Wd
Total portfolio analysis Notes:
30 September 2014 31 1. The market value figures are determined by the Group's external valuers.2. The valuation movement is stated after adjusting for the effect of SIC 15 under IFRS.3. Refer to glossary for definition.4. Annualised rental income is annual 'rental
March 2014 30 September income' (as defined in the glossary) at the balance sheet date, except that car park and commercialisation income are included on a net basis (after deduction for operational outgoings). Annualised rental income includes temporary lettings.5. Annualised
2014 31 net rent is annual cash rent, after the deduction of ground rents, as at the balance sheet date. It is calculated with the same methodology as annualised rental income but is stated net of ground rent and before SIC15 adjustments.6. Net estimated rental
March 2014 £m £m % % Retail Portfolio Shopping centres and shops 214.8 191.5 4.9% 5.4% Retail warehouses and food stores 73.7 75.8 5.1% 5.1% Leisure and hotels 88.1 86.3 6.0% 6.3% Other 3.5 3.5 3.9% 5.0% Total Retail Portfolio 380.1 357.1 5.2% 5.5% London Portfolio West End 146.7 141.0 3.2% 3.2% City 94.7 91.1 2.6% 3.0% Mid-town 67.8 66.7 3.8% 3.8% Inner London 22.2 20.8 4.6% 5.6% Total London offices 331.4 319.6 3.2% 3.4% Central London shops 70.4 68.9 3.4% 3.6% Other 1.0 1.0 0.7% 0.6% Total London Portfolio 402.8 389.5 3.2% 3.4% Combined portfolio (13) 782.9 746.6 4.5% 4.7% Represented by: Investment portfolio 686.7 653.6 4.3% 4.6% Share of joint ventures 96.2 93.0 2.7% 2.9% Combined portfolio (13) 782.9 746.6 4.5% 4.7% value is gross estimated rental value, as defined in the glossary, after deducting expected ground rents.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. Includes all properties acquired since 1 April 2013.12. Includes all properties sold since 1 April 2013.13. 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.14. As at 30 September 2014, the non-current asset held for sale has been excluded from the combined portfolio and shown separately on the balance sheet as a
'Non-current asset held for sale'.
30 September 2014
31
March 2014
30 September
2014
31
March 2014
£m
£m
%
%
Retail Portfolio
Shopping centres and shops
214.8
191.5
4.9%
5.4%
Retail warehouses and food stores
73.7
75.8
5.1%
5.1%
Leisure and hotels
88.1
86.3
6.0%
6.3%
Other
3.5
3.5
3.9%
5.0%
Total Retail Portfolio
380.1
357.1
5.2%
5.5%
London Portfolio
West End
146.7
141.0
3.2%
3.2%
City
94.7
91.1
2.6%
3.0%
Mid-town
67.8
66.7
3.8%
3.8%
Inner London
22.2
20.8
4.6%
5.6%
Total London offices
331.4
319.6
3.2%
3.4%
Central London shops
70.4
68.9
3.4%
3.6%
Other
1.0
1.0
0.7%
0.6%
Total London Portfolio
402.8
389.5
3.2%
3.4%
Combined portfolio (13)
782.9
746.6
4.5%
4.7%
Represented by:
Investment portfolio
686.7
653.6
4.3%
4.6%
Share of joint ventures
96.2
93.0
2.7%
2.9%
Combined portfolio (13)
782.9
746.6
4.5%
4.7%
1. The market value figures are determined by the Group's external valuers.2. The valuation movement is stated after
adjusting for the effect of SIC 15 under IFRS.3. Refer to glossary for definition.4. Annualised rental income is annual
'rental income' (as defined in the glossary) at the balance sheet date, except that car park and commercialisation income
are included on a net basis (after deduction for operational outgoings). Annualised rental income includes temporary
lettings.5. Annualised net rent is annual cash rent, after the deduction of ground rents, as at the balance sheet date.
It is calculated with the same methodology as annualised rental income but is stated net of ground rent and before SIC15
adjustments.6. Net estimated rental value is gross estimated rental value, as defined in the glossary, after deducting
expected ground rents.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. Includes all properties acquired since 1 April 2013.12. Includes all properties sold since 1 April 2013.13.
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.14. As at 30 September 2014, the non-current asset held
for sale has been excluded from the combined portfolio and shown separately on the balance sheet as a 'Non-current asset
held for sale'.
Table 14: Lease lengths
Weighted average unexpired lease term at 30 September 2014
Like-for-like portfolio Like-for-like portfolio, completed developments and acquisitions
Mean (1) Mean (1)
years Years
Retail Portfolio
Shopping centres and shops 7.2 7.7
Retail warehouses and food stores 8.5 9.1
Leisure and hotels 8.5 10.0
Total Retail Portfolio 8.0 8.5
London Portfolio
West End 8.6 8.5
City 7.0 7.0
Mid-town 10.8 10.8
Inner London 13.9 13.9
Total London offices 9.2 9.1
Central London shops 8.7 8.4
Total London Portfolio 9.1 9.0
Combined portfolio 8.4 8.8
1. Mean is the rent-weighted average remaining term on leases subject to lease expiry/ break clauses.
Table 15: Development pipeline financial summary
Cumulative movements on the development programme to 30 September 2014 Total scheme details (1)
Market value at start of scheme Capital expenditure incurred to date Capitalised interest to date Valuation surplus Disposals, SIC15 rent Market value at 30 September 2014 Estimated total capital expenditure (3) Estimated total capitalised interest Estimated total development cost (4) Net Income/ ERV (5) Valuation surplus for the six months ended 30 September 2014 (2)
to date (2) and other adjustments
£m £m £m £m £m £m £m £m £m £m £m
Developments let and transferred or sold
Shopping centres and shops - - - - - - - - - - -
Retail warehouses and food stores - - - - - - - - - - -
London Portfolio 92.0 60.8 1.5 116.6 11.1 282.0 60.8 1.5 154.3 14.2 19.6
92.0 60.8 1.5 116.6 11.1 282.0 60.8 1.5 154.3 14.2 19.6
Developments after practical completion, approved or in progress
Shopping centres and shops - - - - - - - - - - -
Retail warehouses and food stores 18.0 19.9 0.4 17.1 (3.4) 52.0 19.9 0.4 38.3 2.7 8.0
London Portfolio 459.4 564.2 38.0 589.2 (83.1) 1,567.7 863.7 68.9 1,392.0 123.4 189.7
477.4 584.1 38.4 606.3 (86.5) 1,619.7 883.6 69.3 1,430.3 126.1 197.7
Movement on proposed developments for the period to 30 September 2014
Proposed developments
Shopping centres and shops - - - - - - - - - - -
Retail warehouses and food stores - - - - - - - - - - -
London Portfolio - - - - - - - - - - -
- - - - - - - - - - -
Notes:
1. Total scheme details exclude properties sold in the period.
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 30 September 2014.
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 30 September 2014 is included in the estimated total cost. Estimated total development cost includes the
cost of residential properties in the development programme (£14.2m for the London Portfolio). 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 30 September 2014 on unlet units.
Table 16: Reconciliation of segment reporting to statutory reporting
The table below reconciles the Group's income statement to the segment note (note 3). 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. The segment 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.
30 September 2014
£m Group income statement Joint Proportionate share of Total Revenue Capital and other items
ventures (1) earnings (2) profit
Rental income 283.9 40.3 (1.5) 322.7 322.7 -
Finance lease interest 5.2 0.1 - 5.3 5.3 -
Gross rental income (before rents payable) 289.1 40.4 (1.5) 328.0 328.0 -
Rents payable (5.8) (0.9) - (6.7) (6.7) -
Gross rental income (after rents payable) 283.3 39.5 (1.5) 321.3 321.3 -
Service charge income 41.1 5.2 (0.3) 46.0 46.0 -
Service charge expense (40.6) (5.8) 0.3 (46.1) (46.1) -
Net service charge (expense)/ income 0.5 (0.6) - (0.1) (0.1) -
Other property related income 15.9 0.8 - 16.7 16.7 -
Direct property expenditure (30.4) (5.3) 0.2 (35.5) (35.5) -
Net rental income 269.3 34.4 (1.3) 302.4 302.4 -
Indirect expenses (39.5) (1.6) - (41.1) (41.1) -
Other income 1.8 - - 1.8 1.8 -
231.6 32.8 (1.3) 263.1 263.1 -
(Loss)/ profit on disposal of trading properties (0.4) 0.2 - (0.2) - (0.2)
Profit on disposal of investment properties 36.8 1.4 - 38.2 - 38.2
Net surplus on revaluation of investment properties 788.9 93.2 (1.9) 880.2 - 880.2
Amortisation of intangible asset (0.4) - - (0.4) - (0.4)
Business combination costs (2.7) - - (2.7) - (2.7)
Impairment of trading properties (0.6) (0.4) - (1.0) - (1.0)
Operating profit 1,053.2 127.2 (3.2) 1,177.2 263.1 914.1
Interest expense (104.6) (13.9) - (118.5) (108.0) (10.5)
Interest income 14.9 - - 14.9 14.9 -
Fair value movement on interest rate swaps (8.9) 0.1 - (8.8) - (8.8)
Revaluation of redemption liabilities (6.3) - 3.2 (3.1) - (3.1)
Impairment of goodwill (30.6) - - (30.6) - (30.6)
917.7 113.4 - 1,031.1 170.0 861.1
Share of post-tax profit from joint ventures 113.4 (113.4) - - - -
Profit before tax 1,031.1 - - 1,031.1 170.0 861.1
Income tax 0.1 - - 0.1 - 0.1
Profit for the year 1,031.2 - - 1,031.2 170.0 861.2
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 segment 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 segment note.
Glossary
Adjusted earnings per share (Adjusted EPS)
Earnings per share based on revenue profit after related tax.
Adjusted net asset value (Adjusted NAV) per share
NAV 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. Unless stated
otherwise, references are to the combined portfolio when the investment property business is discussed.
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 2013.
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 future 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 (EPS)
Profit after taxation attributable to owners of the Parent divided by the weighted average number of ordinary shares in
issue during the period.
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 valuers.
Equivalent yield
Calculated by the Group's external valuers, 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 valuers. 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
14.
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, bond
exchange de-recognition, capitalised interest and interest on the pension scheme assets and liabilities). The calculation
excludes joint ventures.
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 entity in which the Group holds an interest and is jointly controlled by the Group and one or more partners under a
contractual arrangement. Decisions on financial and operating policies essential to the operation, performance and
financial position of the venture require each partner's consent.
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 2013, but excluding
those which are acquired, sold or included in the development pipeline at any time since that date.
Like-for-like managed properties
Properties in the like-for-like portfolio other than those in our joint ventures which we do not manage operationally.
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 valuers, 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 asset value (NAV) per share
Equity attributable to owners of the Parent divided by the number of ordinary shares in issue at the period end.
Net initial yield
Net initial yield is a calculation by the Group's external valuers 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 the Group's 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.
Outline planning consent
This gives consent in principle for a development, and covers matters such as use and building mass. Full details of the
development scheme must be provided in an application for 'reserved matters approval', including detailed layout, scale,
appearance, access and landscaping, before a project can proceed. An outline planning permission will lapse if the
submission of 'reserved matters' have not been made within three years, or if it has not been implemented within three
years or within two years of the final approval of 'reserved matters', unless otherwise expressly stated within conditions
attached to the permission itself or, for any permissions granted on or before 1 October 2009, a successful application has
been made to extend the time within which 'reserved matters' application can be submitted, or the overall limit for
commencement of development.
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.
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 valuers, 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 interest, plus joint venture profit before interest, 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 interest payable resulting from the amortisation of the bond exchange de-recognition
adjustment, debt restructuring charges and any items of an unusual 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 Land Securities 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 valuers. 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, plus the change in adjusted diluted net asset value per share, divided by the adjusted diluted net
asset value 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
year, 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.
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
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