REG - Land Sec. Group PLC - Preliminary results to 31 March 2015 <Origin Href="QuoteRef">LAND.L</Origin> - Part 4
15/07/2015 18:13
- Part 4: For the preceding part double click ID:nRSS5689Nc
2. The adjustment represents the non-owned element of a Group subsidiary's investment in a joint venture which is
excluded from revenue profit and the 'Net surplus/(deficit) on revaluation of investment properties' shown in this note.
3. On 31 October 2014, the Group acquired the remaining 50% interest in Buchanan Galleries, Glasgow from its joint
venture partner, therefore the table above only represents the comprehensive income earned in the year up to this date.
4. On 30 October 2014, the Group disposed of its interest in the Bristol Alliance Limited Partnership, therefore the
table above only represents the comprehensive income earned in the year up to this date.
Year ended 31 March 2014
Joint ventures 20 Fenchurch Street Limited Partnership Nova, Victoria Metro Shopping Fund Limited Partnership Buchanan Partnership St. David's Limited Partnership Westgate Oxford Alliance Partnership Bristol AllianceLimited Partnership The Oriana Limited Partnership Individually material Other Total
JVs at
LS's share
Income statement 100% 100% 100% 100% 100% 100% 100% 100% 50% LS share LS share
£m £m £m £m £m £m £m £m £m £m £m
Revenue(1) 1.4 - 17.4 20.6 44.6 4.4 42.0 13.4 71.9 24.9 96.8
Gross rental income (after rents payable) 1.0 (0.2) 14.4 18.0 33.4 3.6 35.4 12.8 59.2 14.0 73.2
Net rental income/(expense) (3.8) (1.2) 12.8 15.6 27.2 2.8 30.2 12.4 48.0 12.3 60.3
Segment profit/(loss) before interest (4.2) (1.4) 12.2 15.4 26.0 2.4 29.6 11.8 45.9 11.5 57.4
Net interest expense (8.8) (0.6) (6.6) (8.4) (8.8) - - (7.4) (20.3) (2.4) (22.7)
Revenue profit (13.0) (2.0) 5.6 7.0 17.2 2.4 29.6 4.4 25.6 9.1 34.7
Capital and other items
Profit on long-term development contracts - - - - - - - - - 1.0 1.0
Profit on disposal of trading properties - - - - 1.0 - - - 0.5 - 0.5
Profit on disposal of investment properties - - - - - - - - - 0.4 0.4
Impairment of trading properties - - - - (0.6) - - - (0.3) - (0.3)
Net surplus/(deficit) on revaluation of investment properties 201.4 30.2 16.4 (6.4) 17.6 (6.8) (5.4) 65.4 156.2 (0.9) 155.3
Fair value movement on interest-rate swaps - - - - 3.6 - - 3.0 3.3 1.5 4.8
Adjustment for non-wholly owned - - - - - - - - - 0.5 0.5
subsidiary(2)
Profit before tax 188.4 28.2 22.0 0.6 38.8 (4.4) 24.2 72.8 185.3 11.6 196.9
Income tax - - (1.0) - (0.4) - - - (0.7) (0.4) (1.1)
188.4 28.2 21.0 0.6 38.4 (4.4) 24.2 72.8 184.6 11.2 195.8
Net liabilities adjustment(3) - - - - - - - - - (0.3) (0.3)
Post-tax profit 188.4 28.2 21.0 0.6 38.4 (4.4) 24.2 72.8 184.6 10.9 195.5
Other comprehensive income - - 6.0 - - - - - 3.0 0.5 3.5
Total comprehensive income 188.4 28.2 27.0 0.6 38.4 (4.4) 24.2 72.8 187.6 11.4 199.0
50.0% 50.0% 50.0% 50.0% 50.0% 50.0% 50.0% 50.0%
Land Securities' share of total comprehensive income 94.2 14.1 13.5 0.3 19.2 (2.2) 12.1 36.4 187.6 11.4 199.0
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.
2. The adjustment represents the non-owned element of a Group subsidiary's investment in a joint venture which is
excluded from revenue profit and the 'Net surplus/(deficit) on revaluation of investment properties' shown in this note.
3. Joint ventures with net liabilities are carried at zero value in the balance sheet where there is no commitment to
fund the deficit. Where this is the case distributions are included in the consolidated income statement for the year.
20 Fenchurch Street Limited Partnership Nova, Victoria Metro Shopping Fund Limited Partnership Buchanan Partnership(2) St. David's Limited Partnership Westgate Oxford Alliance Partnership Bristol AllianceLimited Partnership(3) The Oriana Limited Partnership Individually material Other Total
JVs at
LS's share
Balance sheet at 100% 100% 100% 100% 100% 100% 100% 100% 50% LS share LS share
31 March 2015
£m £m £m £m £m £m £m £m £m £m £m
Investment properties(1) 916.4 453.2 308.6 - 641.6 100.0 - 242.4 1,331.1 71.9 1,403.0
Non-current assets 916.4 453.2 308.6 - 641.6 100.0 - 242.4 1,331.1 71.9 1,403.0
Cash and cash equivalents 6.6 4.0 10.2 - 6.2 8.6 - 62.2 48.9 9.3 58.2
Other current assets 35.0 184.8 6.0 - 23.2 1.0 - 28.2 139.1 32.5 171.6
Current assets 41.6 188.8 16.2 - 29.4 9.6 - 90.4 188.0 41.8 229.8
Total assets 958.0 642.0 324.8 - 671.0 109.6 - 332.8 1,519.1 113.7 1,632.8
Trade and other payables and provisions (66.0) (97.0) (5.9) - (13.2) (2.6) - (41.4) (113.0) (4.8) (117.8)
Current liabilities (66.0) (97.0) (5.9) - (13.2) (2.6) - (41.4) (113.0) (4.8) (117.8)
Trade and other payables and provisions - - - - - - - - - - -
Non-current financial liabilities - - (147.0) - - - - - (73.5) (8.0) (81.5)
Non-current liabilities - - (147.0) - - - - - (73.5) (8.0) (81.5)
Total liabilities (66.0) (97.0) (152.9) - (13.2) (2.6) - (41.4) (186.5) (12.8) (199.3)
Net assets 892.0 545.0 171.9 - 657.8 107.0 - 291.4 1,332.6 100.9 1,433.5
Market value of investment properties(1) 948.2 453.2 310.6 - 660.0 100.0 - 242.6 1,357.3 72.2 1,429.5
Net (debt)/cash 6.6 4.0 (136.8) - 6.2 8.6 - 62.2 (24.6) 1.3 (23.3)
Balance sheet at
31 March 2014
Investment properties(1) 686.8 265.2 235.4 268.0 523.2 60.0 509.2 392.0 1,469.9 101.5 1,571.4
Non-current assets 686.8 265.2 235.4 268.0 523.2 60.0 509.2 392.0 1,469.9 101.5 1,571.4
Cash and cash equivalents 3.8 13.2 8.4 1.2 12.2 2.0 4.8 12.8 29.2 7.4 36.6
Other current assets 1.0 131.6 4.8 5.2 27.0 0.6 34.2 16.0 110.2 43.0 153.2
Current assets 4.8 144.8 13.2 6.4 39.2 2.6 39.0 28.8 139.4 50.4 189.8
Total assets 691.6 410.0 248.6 274.4 562.4 62.6 548.2 420.8 1,609.3 151.9 1,761.2
Trade and other payables and provisions (30.8) (34.6) (6.4) (4.2) (14.2) (1.2) (13.6) (17.0) (61.0) (4.6) (65.6)
Current liabilities (30.8) (34.6) (6.4) (4.2) (14.2) (1.2) (13.6) (17.0) (61.0) (4.6) (65.6)
Trade and other payables and provisions - (12.8) - - - - - - (6.4) (1.1) (7.5)
Non-current financial liabilities - - (142.8) - (157.6) - (5.2) (166.8) (236.2) (8.6) (244.8)
Non-current liabilities - (12.8) (142.8) - (157.6) - (5.2) (166.8) (242.6) (9.7) (252.3)
Total liabilities (30.8) (47.4) (149.2) (4.2) (171.8) (1.2) (18.8) (183.8) (303.6) (14.3) (317.9)
Net assets 660.8 362.6 99.4 270.2 390.6 61.4 529.4 237.0 1,305.7 137.6 1,443.3
Market value of investment properties(1) 687.6 265.2 237.2 270.0 544.4 60.0 534.6 398.0 1,498.5 101.9 1,600.4
Net (debt)/cash 3.8 13.2 (134.4) 1.2 (145.2) 6.2 (0.2) (153.8) (204.6) (3.6) (208.2)
1. The difference between the book value and the market value is the amount included in Other current assets in respect
of lease incentives, head leases capitalised and properties treated as finance leases.
2. On 31 October 2014, the Group acquired the remaining 50% interest in Buchanan Galleries, Glasgow from its joint
venture partner and now recognises it as a subsidiary undertaking.
3. On 30 October 2014, the Group disposed of its interest in the Bristol Alliance Limited Partnership.
Joint ventures 20 Fenchurch Street Limited Partnership Nova, Victoria Metro Shopping Fund Limited Partnership Buchanan Partnership St. David's Limited Partnership Westgate Oxford Alliance Partnership Bristol AllianceLimited Partnership The Oriana Limited Partnership Individually material JVs at Other Total
LS's share
Net investment 50% 50% 50% 50% 50% 50% 50% 50% 50% LS share LS share
£m £m £m £m £m £m £m £m £m £m £m
At 1 April 2013 175.6 126.5 37.0 138.2 186.1 29.8 268.7 82.1 1,044.0 257.0 1,301.0
Total comprehensive income 94.2 14.1 13.5 0.3 19.2 (2.2) 12.1 36.4 187.6 11.4 199.0
Cash contributed - - - 1.3 - 3.3 - - 4.6 0.1 4.7
Property and other contributions 0.1 - - - - - - - 0.1 - 0.1
Distributions - - (0.8) (4.7) - (0.2) (16.1) - (21.8) (5.6) (27.4)
Loan advances 60.5 40.7 - - - - - - 101.2 15.9 117.1
Loan repayments - - - - (10.0) - - - (10.0) (0.9) (10.9)
Disposals - - - - - - - - - (140.3) (140.3)
At 31 March 2014 330.4 181.3 49.7 135.1 195.3 30.7 264.7 118.5 1,305.7 137.6 1,443.3
Total comprehensive income 93.5 38.2 32.2 2.0 70.9 12.1 8.7 52.2 309.8 14.3 324.1
Cash contributed - - 4.9 1.1 - 10.7 - - 16.7 - 16.7
Property and other contributions 0.1 - - - - - - - 0.1 0.1 0.2
Distributions - - (0.9) (1.9) - - (8.6) (15.3) (26.7) (33.0) (59.7)
Loan advances 22.0 53.1 - - 78.3 - - - 153.4 0.5 153.9
Loan repayments - - - - (15.6) - - (9.7) (25.3) (11.7) (37.0)
Disposals - - - (136.3) - - (264.8) - (401.1) (6.9) (408.0)
At 31 March 2015 446.0 272.6 85.9 - 328.9 53.5 - 145.7 1,332.6 100.9 1,433.5
12. Trading properties and long-term development contracts
Group
Development land and infrastructure Residential Total Long-term development contracts Total
trading properties
£m £m £m £m £m
At 1 April 2013 86.2 57.2 143.4 9.4 152.8
Capital expenditure 3.7 30.5 34.2 - 34.2
Capitalised interest 0.9 1.9 2.8 - 2.8
Disposals - (9.3) (9.3) - (9.3)
Transfer from investment properties - 5.8 5.8 - 5.8
Impairment release 5.3 - 5.3 - 5.3
Contract costs deferred - - - 1.3 1.3
At 31 March 2014 96.1 86.1 182.2 10.7 192.9
Capital expenditure 6.5 48.2 54.7 0.6 55.3
Capitalised interest 0.5 3.1 3.6 - 3.6
Disposals (20.1) - (20.1) - (20.1)
Impairment release 1.9 - 1.9 - 1.9
Contract costs impaired - - - (11.3) (11.3)
At 31 March 2015 84.9 137.4 222.3 - 222.3
The cumulative impairment provision at 31 March 2015 in respect of Development land and infrastructure was £91.3m (31 March
2014: £98.1m); and in respect of Residential was £nil (31 March 2014: £0.3m).
13. Capital structure
Group
2015 2014
Group Joint ventures Adjustment for non-wholly owned subsidiaries(1) Combined Group Joint Adjustment for non-wholly owned subsidiaries(1) Combined
ventures
£m £m £m £m £m £m £m £m
Property portfolio
Market value of investment properties 12,634.9 1,429.5 (33.0) 14,031.4 10,288.8 1,600.4 (29.8) 11,859.4
Trading properties and long-term contracts 222.3 115.1 - 337.4 192.9 91.7 - 284.6
Non-current assets held for sale 283.4 - - 283.4 - - - -
Total property portfolio (a) 13,140.6 1,544.6 (33.0) 14,652.2 10,481.7 1,692.1 (29.8) 12,144.0
Net debt
Borrowings 3,783.7 79.4 (0.2) 3,862.9 3,362.2 244.9 (0.1) 3,607.0
Monies held in restricted accounts and deposits (10.4) - - (10.4) (14.5) - - (14.5)
Cash and cash equivalents (14.3) (58.2) - (72.5) (20.9) (36.6) 0.1 (57.4)
Fair value of interest-rate swaps 37.7 2.1 - 39.8 - - - -
Fair value of foreign exchange swaps 3.8 - - 3.8 3.7 (0.1) - 3.6
Net debt (b) 3,800.5 23.3 (0.2) 3,823.6 3,330.5 208.2 - 3,538.7
Less: Fair value of interest-rate swaps (37.7) (2.1) - (39.8) (3.7) 0.1 - (3.6)
Less: Fair value of foreign exchange swaps (3.8) - - (3.8) - - - -
Reverse bond exchange de-recognition (note 14) 391.7 - - 391.7 413.2 - - 413.2
Adjusted net debt (c) 4,150.7 21.2 (0.2) 4,171.7 3,740.0 208.3 - 3,948.3
Adjusted total equity
Total equity (d) 10,606.3 - - 10,606.3 8,418.3 - - 8,418.3
Fair value of interest-rate swaps 37.7 2.1 - 39.8 3.7 (0.1) - 3.6
Fair value of foreign exchange swaps 3.8 - - 3.8 - - - -
Reverse bond exchange de-recognition (note 14) (391.7) - - (391.7) (413.2) - - (413.2)
Adjusted total equity (e) 10,256.1 2.1 - 10,258.2 8,008.8 (0.1) - 8,008.7
Gearing (b/d) 35.8% 36.1% 39.6% 42.0%
Adjusted gearing (c/e) 40.5% 40.7% 46.7% 49.3%
Group LTV (c/a) 31.6% 28.5% 35.7% 32.5%
Security Group LTV 31.5% 35.5%
Weighted average cost of debt 4.5% 4.5% 5.0% 5.0%
1. This represents the interest in X-Leisure which we do not own, but is consolidated in the Group numbers.
14. Borrowings
Group
2015 2014
Secured/ Fixed/ Effective Nominal/ notional value£m Fair Book value£m Nominal/ notional value£m Fair Book value£m
unsecured floating interest rate% value£m value£m
Current borrowings
Sterling
5.253% QAG Bond Secured Fixed 5.3 14.6 17.5 14.6 13.2 15.0 13.2
Bilateral facilities Secured Floating LIBOR + margin - - - 500.0 500.0 500.0
Commercial paper Unsecured Floating LIBOR + margin 30.1 30.1 30.1 - - -
Euro
Commercial paper Unsecured Floating EURIBOR + margin 146.0 146.0 146.0 - - -
Total current borrowings 190.7 193.6 190.7 513.2 515.0 513.2
Non-current borrowings
Sterling
4.875% MTN due 2019 Secured Fixed 5.0 400.0 436.0 398.7 400.0 441.1 398.2
5.425% MTN due 2022 Secured Fixed 5.5 255.3 298.3 254.9 255.3 290.8 254.8
4.875% MTN due 2025 Secured Fixed 4.9 300.0 357.2 298.0 300.0 332.6 297.9
5.391% MTN due 2026 Secured Fixed 5.4 210.7 260.1 210.1 210.7 242.9 210.0
5.391% MTN due 2027 Secured Fixed 5.4 608.3 767.1 606.2 608.6 703.3 606.4
5.376% MTN due 2029 Secured Fixed 5.4 317.6 410.1 316.2 317.5 366.3 316.1
5.396% MTN due 2032 Secured Fixed 5.4 322.6 426.5 321.0 322.7 375.1 321.0
5.125% MTN due 2036 Secured Fixed 5.1 500.0 653.5 498.7 500.0 570.2 498.7
Bond exchange de-recognition adjustment (391.7) (413.2)
2,914.5 3,608.8 2,512.1 2,914.8 3,322.3 2,489.9
5.253% QAG Bond Secured Fixed 5.3 289.4 347.0 289.4 304.0 346.0 304.0
Syndicated bank debt Secured Floating LIBOR + margin 180.0 180.0 180.0 15.0 15.0 15.0
Bilateral facilities Secured Floating LIBOR + margin 595.0 595.0 595.0 10.0 10.0 10.0
Amounts payable under finance leases Unsecured Fixed 7.2 16.5 20.7 16.5 30.1 43.0 30.1
Total non-current borrowings 3,995.4 4,751.5 3,593.0 3,273.9 3,736.3 2,849.0
Total borrowings 4,186.1 4,945.1 3,783.7 3,787.1 4,251.3 3,362.2
Reconciliation of the movement in borrowings Group
2015 2014
£m £m
At the beginning of the year 3,362.2 3,751.4
Repayment of loans (13.6) (911.3)
Proceeds from new loans 431.0 500.0
Foreign exchange on commercial paper (4.9) -
Amortisation of finance fees 1.1 1.1
Amortisation of bond exchange de-recognition adjustment 21.5 19.6
Net movement in finance lease obligations (13.6) 1.4
At 31 March 3,783.7 3,362.2
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 the Westgate Oxford Alliance
Limited Partnership, Nova, Victoria and the St. David's Limited Partnership, valued at £12.3bn at 31 March 2015 (2014:
£9.7bn). 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 the 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 is LIBOR plus a step-up margin. The effective interest rate
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.
Syndicated and bilateral bank debt
Group
Maturity Authorised Drawn Undrawn
as at
31 March 2015
2015 2014 2015 2014 2015 2014
£m £m £m £m £m £m
Syndicated debt 2020 1,255.0 1,085.0 180.0 15.0 1,075.0 1,070.0
Bilateral debt 2016 -18 985.0 985.0 595.0 510.0 390.0 475.0
2,240.0 2,070.0 775.0 525.0 1,465.0 1,545.0
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 2015 were £1,288.9m (2014: £1,045.0m), compared with undrawn facilities of £1,465.0m (2014:
£1,545.0m).
All syndicated and bilateral facilities are committed and secured on the assets of the Security Group. In the year ended 31
March 2015, the amounts drawn under the Group's bilateral facilities and syndicated bank debt increased by £250.0m,
primarily to fund the acquisition of Bluewater, Kent. To increase our financial headroom following the acquisition, the
£500.0m short-term bank facility in place at 31 March 2014 was cancelled and replaced with a facility for the same amount
expiring in September 2016.
At 31 March 2014 the Group had a £1.085bn authorised credit facility with a maturity of December 2016, which was £15.0m
drawn. In March 2015, the borrowings under this facility were repaid and the facility was cancelled in full. At the same
time a new £1.255bn facility was entered into, which matures in March 2020. The new facility was £180.0m drawn at 31 March
2015. This facility is committed and is secured on the assets of the Security Group.
The Group actively maintains a mixture of notes with final maturities between 2019 and 2036, commercial paper and
medium-term committed bank facilities that are designed to ensure that the Group has sufficient available funds for its
operations and its committed capital expenditure programme.
Management monitors the Group's available funds as follows:
Group
2015 2014
£m £m
Cash and cash equivalents 14.3 20.9
Available facilities 1,288.9 1,045.0
Cash and available undrawn facilities 1,303.2 1,065.9
As a proportion of drawn debt 31.3% 28.4%
The Group's core financing structure is in the Security Group, although the remaining Non-Restricted Group may also secure
independent funding.
Queen Anne's Gate Bond
On 29 July 2009, the Group issued a £360.3m 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 2015 the bond had an amortised book value of £304.0m (2014:
£317.2m).
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 and bilateral facilities fall within Level 2, and the amounts payable under finance leases fall within Level 3,
as defined by IFRS 13.
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 requirement to be
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 interest expense in the income statement.
15. Monies held in restricted accounts and deposits
Group
2015 2014
£m £m
Cash at bank and in hand 8.2 7.6
Short-term deposits 2.2 6.9
10.4 14.5
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.
Group
2015 2014
£m £m
Counterparties with external credit ratings
A 10.4 14.5
10.4 14.5
16. Cash and cash equivalents
Group Company
2015 2014 2015 2014
£m £m £m £m
Cash at bank and in hand 6.6 18.2 0.1 0.1
Short-term deposits 7.7 2.7 - -
14.3 20.9 0.1 0.1
Short-term deposits
The effective interest rate on short-term deposits was 0.3% at 31 March 2015 (2014: 0.3%) and had an average maturity of
1.5 days (2014: 2.0 days).
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.
Group
2015 2014
£m £m
Counterparties with external credit ratings
A 12.8 20.3
A- 1.5 0.6
14.3 20.9
17. Business combinations
The Group has accounted for the following
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