REG - Land Sec. Group PLC - Preliminary Results to 31 March 2016 <Origin Href="QuoteRef">LAND.L</Origin> - Part 2
17/05/2016 07:05
- Part 2: For the preceding part double click ID:nRSQ4006Ya
date · Resolution to grant planning consent at Worcester Woods· Achieve planning consent and progress lettings for Glow space at Bluewater, Kent
· Progress to time and budget at our committed developments · Westgate Oxford on time and budget · Progress committed developments to time and budget
· Progress key disposals according to plan · Disposals of: Team Valley Retail Park, Gateshead; Kingsway West Retail Park, Dundee; and 100 High Street, Crawley were made in line with our plan
· Implement Community Employment Programme at Westgate Oxford · Implemented and secured 22 jobs for people from disadvantaged backgrounds · Expand the Community Employment Programme to other retail sites
At a glance
· Valuation surplus of 3.7%
· Ungeared total property return of 8.6%
· The portfolio outperformed its IPD Quarterly Universe sector benchmark at 7.1%
· £20.0m of investment lettings
· £2.1m of development lettings
· Like-for-like voids were 1.8% (31 March 2015: 2.4%)
· Units in administration were 0.6% (31 March 2015: 1.1%)
Key indicators
· Footfall in our shopping centres was up 3.4% (national benchmark down 1.3%)
· Same store non-food retail sales were up 1.5% (national benchmark for physical store non-food retail sales down
0.2%)
· Same store catering sales were up 3.8% (national benchmark for catering sales up 1.2%)
· Same centre non-food retail sales, taking into account new lettings and occupier changes, were up 3.3%
· Same centre catering sales, taking into account new lettings and occupier changes, were up 6.6%
· Retailers' rent to sales ratio was 10.2%
· Total occupancy costs (including rent, rates, service charges and insurance) represented 17.8% of sales
Following the transformation of our portfolio, we are now focused on further enhancing the consumer experience at our
assets. Through proactive management, we are providing our customers with the space they need to thrive, bringing in new
brands to improve and refresh the retail, catering and leisure offer for visitors, and playing a positive role in our local
communities.
Buy
During the year, we acquired Castle Quarter in Oxford for £47.2m (our share: £23.6m) in joint venture with The Crown
Estate. This asset is located next to our Westgate Oxford scheme and is set to benefit from the improvement our development
will bring to the city centre. Castle Quarter includes a heritage visitor attraction, a 95-bedroom Malmaison hotel and
numerous restaurants and bars.
Develop
Our 800,000 sq ft joint venture redevelopment of Westgate Oxford is progressing well and is now almost 50% pre-let to
occupiers including John Lewis, Next, Calvin Klein, Joules, Jo Malone, Curzon Cinemas and Sticks'n'Sushi. When the scheme
opens in late 2017, it will transform the retail scene in Oxford providing an amazing new destination with dozens of retail
and catering brands not currently represented in the city.
Disappointingly, during the year we decided to put on hold our plans to extend Buchanan Galleries, Glasgow because of a
conflict between our development programme and rail improvement works at the adjacent Queen Street station. We are
continuing to work on our plans to improve the retail, leisure and food offer at the centre though these are unlikely to be
at the scale previously envisaged.
At Selly Oak, Birmingham we expect to start on site in the autumn to deliver a mixed-use scheme featuring student housing
and 200,000 sq ft of retail and catering space. Completion is scheduled for late 2018. At Worcester Woods, we have
submitted a planning application for a 240,000 sq ft retail park development which is already substantially pre-let and
would bring a much-anticipated John Lewis store to the Worcester consumer. Frustratingly, the planning process has been
delayed but we now hope for a committee date in the summer. At Filmworks, Ealing where we have detailed planning permission
for a leisure and residential development, approval was received in October for the compulsory purchase of remaining land
interests on the site.
Manage
Across the portfolio, our proactive approach to management has delivered strong results, with like-for-like income up and
voids down. Our retail parks and leisure portfolios are virtually full, with occupancy of 100% and 99.3%, respectively.
In order to increase net rental income, we have secured pre-lettings and planning consents to construct new units on a
number of our retail parks. We are delivering additional retail space at Chadwell Heath and Blackpool and completed the
construction of further units at Lincoln and Dundee prior to disposal. Within our hotel portfolio, Accor has exercised a
break notice on seven of their 29 hotels, effective from 2019. The seven hotels only represent approximately 9% of the
income and we will likely look to sell them once Accor has vacated. Income on the remaining 22 hotels is now secured until
2031.
This year we continued to meet demand for upsized space at our shopping centres from a number of our most popular
retailers. At Bluewater, Kent we completed a new state-of-the-art store for Next and are currently on site delivering a new
flagship store for H&M. Upsized stores were also delivered for H&M at St David's, Cardiff and for Polo Ralph Lauren at
Gunwharf Quays, Portsmouth. At Southside, Wandsworth we completed new stores for Debenhams and Decathlon along with several
new restaurants.
Reflecting growing demand from consumers, we have continued to broaden the range of catering and leisure space across our
portfolio. We negotiated numerous lease surrender and re-let transactions so we could bring fresh and exciting restaurant
brands to our retail and leisure destinations. For example, we secured planning consent for four new restaurant units at
Fountain Park, Edinburgh which are due to complete in early 2017. At Bluewater, we have submitted a planning application to
convert the Glow entertainment space into new leisure and catering units along with an expansion of the popular Showcase
Cinema, all aimed at enhancing the consumer experience. We will also be delivering a Cine UK IMAX cinema and six new
restaurants at White Rose, Leeds.
Sell
During the year we made £384.8m of disposals at a surplus to the 31 March 2015 valuation of 1.4%. Properties sold included
retail parks in Gateshead, Dundee and Derby, a leisure park in Maidstone, and a supermarket in Crawley, which was the last
remaining standalone food store in our portfolio.
Net rental income
Table 10: Net rental income(1)
31 March 2016 31 March 2015 Change
£m £m £m
Like-for-like investment properties 263.7 252.3 11.4
Proposed developments - (0.2) 0.2
Development programme 0.5 1.5 (1.0)
Completed developments 2.7 1.7 1.0
Acquisitions since 1 April 2014 35.4 25.4 10.0
Sales since 1 April 2014 15.7 50.4 (34.7)
Non-property related income 10.5 8.5 2.0
Net rental income 328.5 339.6 (11.1)
1. On a proportionate basis.
Net rental income reduced by £11.1m from £339.6m to £328.5m. This was largely driven by our disposals which included the
three retail parks sold in December 2015. Disposals in the prior year include The Bridges, Sunderland, as well as our 50%
interests in Cabot Circus, Bristol and Princesshay, Exeter. The £34.7m reduction in net rental income due to disposals is
partly offset by our acquisitions, predominantly Bluewater, which contributed an additional £10.0m, and our like-for-like
portfolio which contributed an additional £11.4m of income. The increase in our like-for-like portfolio is largely due to
new lettings, rent reviews, an increase in turnover rents from the Accor hotels and £4.1m of surrender receipts. The £1.0m
increase in net rental income from completed developments relates to The Bishop Centre, Taplow, which completed in July
2014 and is fully let.
Outlook
The retail environment remains fast-paced and challenging, with consumers increasingly demanding in terms of price,
experience and service. Many of the most successful retailers are those that can maximise sales through multiple channels,
from traditional physical stores to online and click & collect. We expect the importance of digital channels to continue to
increase. Retailers are changing the way they think about and use their physical space, with many investing more in shop
design and layout, and using technology to transform their shops into interactive showrooms for their goods and services.
Physical stores that provide the right space in the right place are worth this investment because of the crucial role they
play for retailers in engaging consumers with their brands.
We have worked hard to ensure that our portfolio is made up of the best space for our customers' needs, in the best
locations. This gives us confidence in our future performance.
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 March 2016.
A full 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 2016 Annual
Report.
Risk description Impact
Customers
· Structural changes in customer and consumer behaviours, and pressure on consumer spending. · Shift in office and retailer customer demand with consequent impact on new lettings, renewal of existing leases and rental growth.· Retailers unable to meet existing rental commitments.
Market cyclicality
· Volatility and speed of change of asset valuations and market conditions. · Reduces liquidity and impacts relative property performance.· Fall in values.
Financing
· Lack of availability of bank funding. · Increased cost of borrowing.· Limits ability to refinance existing debt maturities and fund forward cash requirements.
Liability structure
· Liability structure is unable to adapt to changing asset strategy or property values. · Bank debt not able to be drawn.· Unable to raise new debt or no flexible debt to repay.· Potentially constrains business decisions.
Development
· Occupiers reluctant to enter into commitments to take new space in our developments. · Negative valuation movements.· Reduction in income.
People and skills
· Inability to attract, retain and develop the right people and skills. · Lack the skills necessary to deliver the business objectives.
Risk description Impact
Sustainability
· Properties do not comply with legislation or meet customer expectations. · Increased cost base.· Inability to attract or retain customers.· Premature obsolescence and loss of asset value.
Major health and safety incident
· Accidents causing injury to employees, contractors, occupiers and visitors to our properties. · Criminal/civil proceedings and resultant reputational damage.· Delays to building projects and can restrict access to shopping centres.
Security threat or attack
· Failure to identify or prevent a major security 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.
Cyber threat or attack
· External and internal threat to systems and data. · Negative reputational impact.· Adverse operational and financial impact.
Statement of Directors' Responsibilities
The Annual Report 2016 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 (IFRSs) 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 IFRSs 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 IFRSs 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 IFRSs 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 IFRSs 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
Kevin O'Byrne, Senior Independent Director*
Chris Bartram*
Simon Palley*
Stacey Rauch*
Edward Bonham Carter*
Cressida Hogg CBE*
*Non-executive Directors
The Statement of Directors' Responsibilities was approved by the Board of Directors on 16 May 2016 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 2015
31 March 2016
Revenue Capital and other items Total Revenue Capital and other items Total
profit profit
Notes £m £m £m £m £m £m
Revenue 3 744.4 198.1 942.5 711.2 59.2 770.4
Costs 4 (258.7) (150.7) (409.4) (258.7) (46.0) (304.7)
485.7 47.4 533.1 452.5 13.2 465.7
Profit on disposal of investment properties 2 - 75.1 75.1 - 107.1 107.1
Profit on disposal of investments in joint ventures 2 - - - - 3.3 3.3
Net surplus on revaluation of investment properties 10 - 738.4 738.4 - 1,770.6 1,770.6
Operating profit 485.7 860.9 1,346.6 452.5 1,894.2 2,346.7
Share of post-tax profit from joint ventures 11 19.6 178.8 198.4 32.0 293.8 325.8
Interest income 5 35.1 - 35.1 29.4 - 29.4
Interest expense 5 (178.3) (60.7) (239.0) (184.8) (64.6) (249.4)
Revaluation of redemption liabilities - (4.6) (4.6) - (8.5) (8.5)
Gain on business combination - - - - 2.2 2.2
Impairment of goodwill - (0.9) (0.9) - (29.7) (29.7)
Profit before tax 362.1 973.5 1,335.6 329.1 2,087.4 2,416.5
Taxation - 2.4 2.4 - 0.3 0.3
Profit for the financial year attributable to owners of the parent 362.1 975.9 1,338.0 329.1 2,087.7 2,416.8
Earnings per share attributable to owners of the parent (pence):
Basic earnings per share 7 169.4 306.1
Diluted earnings per share 7 168.8 304.7
Statement of comprehensive income Year ended Year ended 31 March 2015
31 March 2016
Total Total
Notes £m £m
Profit for the financial year attributable to owners of the parent 1,338.0 2,416.8
Items that may be subsequently reclassified
to the income statement:
Share of joint ventures' fair value movements on interest- 11 (0.1) (1.7)
rate swaps treated as cash flow hedges
Revaluation of other investments 0.4 -
Items that will not be subsequently reclassified
to the income statement:
Re-measurement gain on defined benefit pension scheme 18.0 3.7
Deferred tax on re-measurement gain on defined benefit pension scheme (3.1) (1.5)
Other comprehensive income for the financial year attributable to owners of the parent 15.2 0.5
Total comprehensive income for the financial year attributable to owners of the parent 1,353.2 2,417.3
Balance sheets
Group Company
2016 2015 2016 2015
Notes £m £m £m £m
Non-current assets
Investment properties 10 12,357.7 12,158.0 - -
Intangible assets 38.1 34.7 - -
Other property, plant and equipment 5.1 9.6 - -
Net investment in finance leases 182.6 185.1 - -
Loan investment - 49.5 - -
Investments in joint ventures 11 1,668.2 1,433.5 - -
Investments in subsidiary undertakings - - 6,200.1 6,192.2
Other investments 13.8 12.8 - -
Trade and other receivables 86.1 54.0 - -
Pension surplus 25.2 7.0 - -
Total non-current assets 14,376.8 13,944.2 6,200.1 6,192.2
Current assets
Trading properties and long-term development contracts 12 123.4 222.3 - -
Trade and other receivables 445.4 402.7 17.1 14.8
Monies held in restricted accounts and deposits 15 19.7 10.4 3.5 -
Cash and cash equivalents 16 24.7 14.3 0.1 0.1
Total current assets 613.2 649.7 20.7 14.9
Non-current assets held for sale - 283.4 - -
Total assets 14,990.0 14,877.3 6,220.8 6,207.1
Current liabilities
Borrowings 14 (18.7) (190.7) - -
Trade and other payables (289.3) (367.3) (1,036.7) (1,108.2)
Provisions (18.5) (2.6) - -
Derivative financial instruments (0.7) (3.8) - -
Current tax liabilities - (3.7) - -
Total current liabilities (327.2) (568.1) (1,036.7) (1,108.2)
Non-current liabilities
Borrowings 14 (2,854.3) (3,593.0) - -
Trade and other payables (28.5) (29.6) - -
Provisions (5.5) - - -
Derivative financial instruments (31.2) (37.7) - -
Redemption liabilities (34.9) (35.3) - -
Deferred tax (9.5) (7.3) - -
Total non-current liabilities (2,963.9) (3,702.9) - -
Total liabilities (3,291.1) (4,271.0) (1,036.7) (1,108.2)
Net assets 11,698.9 10,606.3 5,184.1 5,098.9
Equity
Capital and reserves attributable to the owners of the parent
Ordinary shares 80.1 80.1 80.1 80.1
Share premium 790.2 789.4 790.2 789.4
Capital redemption reserve 30.5 30.5 30.5 30.5
Own shares (13.8) (11.1) - -
Merger reserve - - 373.6 373.6
Share-based payments 11.1 8.7 11.1 8.7
Retained earnings 10,800.8 9,708.7 3,898.6 3,816.6
Total equity 11,698.9 10,606.3 5,184.1 5,098.9
The financial statements on pages 25 to 50 were approved by the Board of Directors on 16 May 2016 and were signed on its
behalf by:
R M Noel M F Greenslade
Directors
Statement of changes in equity Attributable to owners of the parent Group
Ordinary shares Share premium Capital redemption reserve Own shares Share-based payments Retained earnings Total
equity
£m £m £m £m £m £m £m
At 1 April 2014 79.9 788.3 30.5 (9.2) 6.3 7,522.5 8,418.3
Total comprehensive income for the financial year - - - - - 2,417.3 2,417.3
Transactions with owners:
Exercise of options - 1.3 - - - - 1.3
Dividends to owners of the parent 0.2 (0.2) - - - (229.8) (229.8)
Fair value of share-based payments - - - - 6.0 - 6.0
Release on exercise of share options - - - - (3.6) 3.6 -
Settlement and transfer of shares to employees on exercise of share options, net of proceeds - - - 9.9 - (4.7) 5.2
Acquisition of own shares - - - (11.8) - (0.2) (12.0)
Total transactions with owners of the parent 0.2 1.1 - (1.9) 2.4 (231.1) (229.3)
At 31 March 2015 80.1 789.4 30.5 (11.1) 8.7 9,708.7 10,606.3
Total comprehensive income for the financial year - - - - - 1,353.2 1,353.2
Transactions with owners:
Exercise of options - 0.8 - - - - 0.8
Dividends to owners of the parent - - - - - (255.4) (255.4)
Fair value of share-based payments - - - - 7.9 - 7.9
Release on exercise of share options - - - - (5.5) 5.5 -
Settlement and transfer of shares to employees on exercise of share options, net of proceeds - - - 15.7 - (11.2) 4.5
Acquisition of own shares - - - (18.4) - - (18.4)
Total transactions with owners of the parent - 0.8 - (2.7) 2.4 (261.1) (260.6)
At 31 March 2016 80.1 790.2 30.5 (13.8) 11.1 10,800.8 11,698.9
Statement of changes in equity Company
Ordinary shares Share premium Capital redemption reserve Merger reserve Share-based payments Retained earnings(1) Total
equity
£m £m £m £m £m £m £m
At 1 April 2014 79.9 788.3 30.5 373.6 6.3 4,098.2 5,376.8
Loss for the year ended 31 March 2015 - - - - - (55.4) (55.4)
Exercise of options - 1.3 - - - - 1.3
Dividends paid to owners of the parent 0.2 (0.2) - - - (229.8) (229.8)
Fair value of share-based payments - - - - 6.0 - 6.0
Release on exercise of share options - - - - (3.6) 3.6 -
At 31 March 2015 80.1 789.4 30.5 373.6 8.7 3,816.6 5,098.9
Profit for the year ended 31 March 2016 - - - - - 331.9 331.9
Exercise of options - 0.8 - - - - 0.8
Dividends paid to owners of the parent - - - - - (255.4) (255.4)
Fair value of share-based payments - - - - 7.9 - 7.9
Release on exercise of share options - - - - (5.5) 5.5 -
At 31 March 2016 80.1 790.2 30.5 373.6 11.1 3,898.6 5,184.1
1. Available for distribution.
Statement of cash flows for the year ended 31 March 2016 Group Company
2016 2015 2016 2015
Notes £m £m £m £m
Cash flows from operating activities
Net cash generated from operations 9 451.0 447.5 - -
Interest received 21.0 8.1 - -
Interest paid (196.6) (198.3) - -
Employer contributions to defined benefit pension scheme (0.8) (1.9) - -
Capital expenditure on trading properties (32.2) (50.7) - -
Disposal of trading properties 190.6 28.8 - -
Corporation tax paid (0.3) - - -
Net cash inflow from operating activities 432.7 233.5 - -
Cash flows from investing activities
Investment property development expenditure (118.2) (196.2) - -
Acquisition of investment properties and other investments (102.5) (105.7) - -
Acquisitions treated as business combinations (net of cash acquired) - (699.3) - -
Other investment property related expenditure (99.8) (74.1) - -
Disposal of investment properties 1,220.6 466.7 - -
Expenditure on non-property related non-current assets (8.1) (4.4) - -
Receipt of investments in long-term debtor 49.5 - - -
Disposal of joint ventures - 275.2 - -
Cash contributed to joint ventures 11 (62.6) (16.7) - -
Loan advances to joint ventures 11 (105.9) (153.9) - -
Loan repayments by joint ventures 11 13.9 37.0 - -
Distributions from joint ventures 11 62.5 59.7 - -
Net cash inflow/(outflow) from investing activities 849.4 (411.7) - -
Cash flows from financing activities
Cash received on issue of shares arising from exercise of share options 5.3 6.5 - -
Purchase of own shares and treasury shares (18.4) (12.0) - -
Proceeds from new loans (net of finance fees) 249.2 419.9 - -
Repayment of loans 14 (1,206.5) (13.6) - -
(Increase)/decrease in monies held in restricted accounts and deposits 15 (9.3) 4.1 - -
Premium payable on redemption of medium term notes (26.2) - - -
Decrease in finance leases payable (1.0) (1.4) - -
Dividends paid to owners of the parent 8 (262.0) (229.4) - -
Distributions paid by non-wholly owned subsidiaries (2.8) (2.5) - -
Net cash (outflow)/inflow from financing activities (1,271.7) 171.6 - -
Increase/(decrease) in cash and cash equivalents for the year 10.4 (6.6) - -
Cash and cash equivalents at the beginning of the year 14.3 20.9 0.1 0.1
Cash and cash equivalents at the end of the year 16 24.7 14.3 0.1 0.1
The Company cash flow statement excludes transactions, including the payment of dividends, which are settled on the
Company's behalf by other Group undertakings.
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 (IFRSs), IFRIC Interpretations and the Companies Act 2006 applicable to companies
reporting under IFRSs. The financial statements have been prepared in Pounds Sterling (rounded to the nearest hundred
thousand), which is the presentation currency of the Group (Land Securities Group PLC and all of 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.
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 are consistent with those applied in the year ended 31 March 2015, as amended to reflect the
adoption of the new Standards, Amendments to Standards and Interpretations which are mandatory for the year ended 31 March
2016.
The following accounting standards or interpretations were effective for the financial year beginning 1 April 2015 and have
been applied in preparing these financial statements to the extent they are relevant to the preparation of financial
information:
· IAS 19 (amendment) 'Defined Benefit Plans: Employee Contributions amendments to IAS 19'
· Annual Improvements to the IFRSs 2010-2012 Cycle (various standards)
None of the standards above have impacted the Group's reporting.
On 16 May 2016, 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 2015 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 2016 is based on, and consistent with, the financial
information in the Group's audited financial statements for the year ended 31 March 2016. 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 IFRSs, this announcement does not itself contain sufficient
information to comply with IFRSs.
A copy of the Group's Annual Report for the year ended 31 March 2015 can be found at www.landsecurities.com/investors.
Land Securities Group PLC has not presented its own statement of comprehensive income (and separate income statement), as
permitted by Section 408 of Companies Act 2006. The profit for the year of the Company, dealt with in its financial
statements, was £331.9m (2015: loss of £55.4m). The merger reserve arose on 6 September 2002 when the Company acquired 100%
of the issued share capital of Land Securities PLC. The merger reserve represents the excess of the cost of acquisition
over the nominal value of the shares issued by the Company to acquire Land Securities PLC. The merger reserve does not
represent a realised or distributable profit. The capital redemption reserve represents the nominal value of cancelled
shares.
The presentation of certain items in the income statement has been reviewed during the year, and the 'Release of impairment
of trading properties' is now aggregated within Costs.
Basis of consolidation
The consolidated financial statements for the year ended 31 March 2016 incorporate the financial statements of Land
Securities Group PLC (the Company) and all its subsidiary undertakings (the Group). 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.
Business combinations are accounted for under the acquisition method. Any excess of the purchase price of business
combinations over the fair value of the assets, liabilities and contingent liabilities acquired and resulting deferred tax
thereon is recognised as goodwill. Any discount received is credited to the income statement in the year of acquisition as
a 'gain on business combination'. The Group recognises any non-controlling interest in the acquiree on an
acquisition-by-acquisition basis, either at fair value or at the non-controlling interest's proportionate share of the
recognised amounts of the acquiree's identifiable net assets. Acquisition-related costs are expensed as incurred. If the
business combination is achieved in stages, the acquisition date carrying value of the acquirer's previously held equity
interest in the acquiree is re-measured to fair value at the acquisition date and any gains or losses arising from such
re-measurement are recognised in the income statement.
Joint arrangements are those entities over whose activities the Group has joint control, established by contractual
agreement. Interests in joint arrangements are accounted for as either a joint venture or a joint operation in accordance
with IFRS 11 'Joint Arrangements'. A joint arrangement is accounted for as a joint venture when the Group, along with the
other parties that have joint control of the arrangement, have rights to the net assets of the arrangement. Joint ventures
are equity accounted in accordance with IAS 28 (revised). The equity method requires the Group's share of the joint
venture's post-tax profit or loss for the year to be presented separately in the income statement and the Group's share of
the joint venture's net assets to be presented separately in the balance sheet. Joint ventures with net liabilities are
carried at zero value in the balance sheet where there is no commitment to fund the deficit and any distributions are
included in the consolidated income statement for the year.
A joint arrangement is accounted for as a joint operation when the Group, along with the parties that have joint control of
the arrangement, have rights to the assets and obligations for the liabilities relating to the arrangement. Joint
operations are accounted for by including the Group's share of the assets, liabilities, income and expenses on a
line-by-line basis.
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.
A number of the financial measures used internally by the Group to measure performance include the results of partly-owned
subsidiaries and joint ventures on a proportionate basis. Measures that are described as being 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 applies equity
accounting to its interest in joint ventures, presenting its interest as one line on the income statement and balance
sheet, and all subsidiaries are consolidated at 100% with any
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