Final Results - Part 3
Land Securities PLC
23 May 2001
PART 3
FINANCIAL REVIEW
Revenue profit, including four months' contribution of £8.6m, from Land
Securities Trillium (LST), increased from £301.7m to £308.9m. The LST profit
is after goodwill amortisation of £0.8m. The results of continuing operations
reflect £3.2m for the cost of financing the acquisition of Trillium. As
anticipated in last year's financial review, revenue profit has been adversely
affected by sales of properties with higher yields than the initial return
achievable from reinvestment of the proceeds in properties with more growth
potential. Also, as we do not capitalise interest as part of the cost of
development, the implementation of our development programme adversely affects
profits during the expenditure period.
Pre-tax profit of £314.6m includes £6.3m of surpluses over book values arising
on sales of properties and £0.6m of costs incurred in bidding for property
outsourcing business. All bid costs are written off unless LST has either
entered into a binding contract or achieved preferred bidder status. Pre-tax
profit last year of £327.7m included an exceptional contribution of £26.0m
from property sales.
After taking into account the uplift from the annual valuation and retained
earnings, shareholders' funds increased by £369.1m, compared with the previous
year, and diluted net assets per share increased by 5.9% to 1154p per share.
The return on shareholders' equity was 8.9% and the average return over the
last four years has been 13.9%. Compared with a pre-tax WACC for the year
assessed at 8.5%, the total property return on the investment business was
10.5%. Over a four-year period the total property return was 14% compared
with a pre-tax WACC of 9.9%.
Performance measures
for the four years ended 31 March 2001
Average For Over Over Over
year 2 years 3 years 4 years
Return on shareholders'
equity 8.9% 11.9% 11.4% 13.9%
Total investment
property return 10.5% 12.0% 12.0% 14.0%
Pre-tax weighted
average cost of capital 8.5% 8.9% 9.2% 9.9%
Revenue
Investment business
Rental income increased from £479.9m to £498.4m. This has been achieved
despite a further net reduction in income from the accelerated rationalisation
of the portfolio. Adjusting for the effects of acquisitions and sales, rental
income on properties owned throughout the period under review increased by £
32.0m. The main contributions to this increase were £15.9m from reviews and
renewals and £14.9m from the letting of developments. The net effect of
reletting vacant space added a further £6.5m,which is partly offset by a loss
of income of £2.7m due to emptying buildings for redevelopment. The cost of
bad and doubtful debts increased for the first time since 1994 but still
amounted to less than 0.3% of rent roll.
We have secured rental income of £30.1m per annum from our developments that
had not been received at 31 March 2001. This income will flow from
developments which are soon to be started, are in progress or have been
recently completed. The net effect of property sales and acquisitions,
unconditionally exchanged or completed in the year under review, will reduce
rental income in the current year by some £10.2m. Further sales amounting to
£75m have been exchanged unconditionally since the year end and more are in
the course of negotiation or are planned. In the current year we also expect
a rental income shortfall of some £8.0m from properties which will cease to be
income-producing in anticipation of redevelopment or refurbishment.
During the last 12 months there has been a significant further improvement in
rental values which has increased the net reversionary potential of the
portfolio, excluding voids, to over 14.6% at 31 March 2001. There is now
little significant over-renting remaining in the portfolio and within the next
five years the potential shortfall is less than £2.1m of rental income in
relation to renewals or options to break in over-rented properties.
Almost 50% of our rental income is secured on leases without breaks and with
upward only rent reviews for more than 10 years. The average unexpired lease
term within the portfolio is 10.25 years.
We have reduced the Group's net irrecoverable property outgoings to £6.1m,
which is just over 1.2% of rent roll net of ground rents. This is the
smallest shortfall since 1991 and reflects a significant reduction in the
level of voids in the portfolio during that period. Voids within the
portfolio are currently 1.1% of rent roll net of ground rents.
Property information at 31 March 2001
Shops & %
shopping Retail rent roll
Offices centres warehouse Industrial Total
Voids by rental
value 0.4% 1.2% 3.1% 2.7% 1.1%
Net reversionary 18.7% 11.4% 12.6% 6.4% 14.6% *
Average unexpired
lease term
(years) 8.25 11.0 20.5 9.5 10.25
* Reversionary potential ignoring additional income from letting of voids
31 March 31 March
2000 2001
% of income % of income
Gross reversions 14.6 17.1
Over-rented (5.9) (2.5) **
8.7 14.6
== ===
** of which, 84% is secured for more than 5 years
Property management and administration expenses, which include all the costs
of managing the portfolio, the costs of staff involved in development
projects, together with costs of rent reviews and renewals, reletting of
properties and all office administration operating costs, amounted to some £
35.4m. These costs include £1.2m relating to the internal restructuring and
also additional expenditure on research and computer systems development
together with increased staff costs following several new senior executive
appointments.
Net interest costs increased by £15.7m during the period under review.
Interest receivable was much lower than last year due to significant
expenditure on acquisitions and the implementation of the development
programme. The average cash balance was £94.9m compared with £331.2m for the
previous year and the average return on surplus cash was 6.0% compared with
5.6% for the previous year. The increase in interest payable is mainly due to
the costs of financing the Trillium acquisition.
Acquisition (LST)
LST contributed a unitary charge of £97.3m from the delivery of services to
the DSS in the four months to 31 March 2001. This revenue is subject to
quarterly indexation, and can vary under the PRIME agreement which permits the
DSS to vacate up to 2% per annum of its office accommodation or take
additional space. Over two thirds of the revenue is earned from core
properties intended by the DSS to be occupied until the end of the contract in
2018. Revenue from the DSS is subject to deductions due to unavailability of
space or failure to meet service quality criteria. Deductions in the period
are less than 1% of total revenue.
Expenditure on the provision of services, payments to landlords of leased
properties, maintenance of properties and property management together with
depreciation amounted to £84.1m. Responsibility for the provision of services
such as cleaning, security, maintenance, catering and furniture is
subcontracted to service partners under fixed price agreements ranging from
two to 17 years in length.
Property owned under outsourcing contracts will be held at cost to the Group
and will be subject to annual depreciation. £3.9m was provided for
depreciation on the freehold buildings, leasehold improvements and LST's own
equipment and furniture.
Net interest payable of £4.4m principally comprises interest payable under the
DSS project financing arrangement which was hedged to match the long term
financing by Trillium in April 1998. On acquisition this interest rate swap
was valued at a net liability of £14.9m, which is being released to profit
over the funding term and so interest payable was reduced by £0.4m in the four
month period.
The total property services business that the Group is developing in LST will
be more labour-intensive than the portfolio management and development
activities, and winning new business is likely to involve considerable
front-end costs.
Taxation
The tax charge, equivalent to 26.4% of revenue profit, reflects the benefit of
capital allowances from developments, refurbishments and acquisitions. The
tax charge for LST was £2.6m during the post acquisition period. The
implementation of Financial Reporting Standard 19 'Deferred Tax' will result
in an increase in the effective rate, as capital allowances will be treated as
timing differences. This change in accounting treatment will have no cash
flow effect on the business.
Following the latest property valuation, there is an estimated potential
capital gains tax liability in the region of £540m, equivalent to a 97p
reduction in diluted net assets per share, of which £10m is attributable to
LST.
Earnings and dividends
Adjusted earnings per share increased by 6.3%, from 40.86p to 43.44p, which
takes account of the effects of the share buy-backs in the quarter ended 31
March 2000. The directors propose a final dividend of 23.85p, making an
increase of 4.8% in the distribution for the year.
Cash flow
After all financing costs, dividends and taxation, the Group produced cash
flow for investment of £120m. Capital expenditure, including the acquisition
of Trillium, exceeded proceeds from property sales by £215.4m, so there was a
net cash outflow of £95.4m on the Group's business activities.
Balance sheet
Group capital expenditure amounted to £928.2m, including £331.8m on assets
acquired through the acquisition of Trillium. Freehold and valuable leasehold
properties, forming part of the PRIME contract, were acquired with a fair
value of £313.7m. Capital expenditure on the investment business amounted to
£577.8m, of which £194.4m was incurred on development and refurbishment. £
164.3m of this relates to costs specifically associated with the development
programme. £383.4m was spent on investment acquisitions, primarily with
future development in mind, showing an average initial return of 7.4%.
In the same period, sales of properties with a book value of £424.9m were
unconditionally exchanged or completed for £431.2m after deducting all selling
costs. The properties sold yielded 8.2% and the proceeds exceeded costs to
the Group by £191.6m. In the last five years the Group has sold over £1.3bn of
properties.
Portfolio activity
£m
FRS3
Acquisitions/ profit/
developments Sales (loss)
Retail/leisure 188.3 163.4 (1.3)
Offices 348.0 158.4 5.4
Warehouses and
industrial 41.5 109.4 2.2
577.8 431.2 6.3
==== ==== ===
With the acquisition of Trillium, the Group acquired bank debt of £197.9m
secured on the PRIME contract. This long term debt, fixed by reference to a
matching swap, will be amortised over the remaining 17 years of the contract.
Shortly before the year end, the Group negotiated the release of cash
previously held as additional security by the lender and, since 31 March, the
Group has secured a reduction of 35 basis points in the cost of this funding.
After taking into account the swap, which was subject to fair value accounting
on the acquisition of Trillium, the financing cost of this long term debt to
the Group is approximately 6.75%.
In the last four months of the year under review, the Group drew down an
average £207m under its banking facilities. By applying the long term swap
that was activated on 30 September 2000, the cost of the first £200m drawn
down in that period was approximately 5.85%. The receipt of March quarter
rental payments, together with the deferral of major interest payments due on
31 March, to the next business day of 2 April, resulted in short term deposits
and cash of £29.3m at 31 March. Since that date, further expenditure
including the acquisition of Whitecliff Properties, resulted in a drawdown
under the Group's banking facilities of £110m at the end of April.
In order to meet the future funding requirements of the Group, on 26 March we
put in place a £600m syndicated 5-year bank facility at a margin of 371/2
basis points on the first £400m drawn and 421/2 basis points for any excess,
based on our current rating of A+/A1. By applying the two unmatched swaps,
the second of which can be used on 30 June 2002, £400m drawn down under this
facility would cost the Group an average of 5.65% assuming our rating is
unchanged. After taking into account the improved terms for financing the
PRIME contract and the benefit of linking swaps to the bank facility when
utilised, the Group's average cost of borrowings would be reduced from a
current 8.8% to 8.2%.
In the present environment the Group does not intend to hold significant cash
balances but, if funds are held prior to investment in the business, they will
be invested to achieve the best returns within rigorous controls which are
regularly reviewed by the Board. In all investment decisions careful
consideration is given to creditworthiness and the setting of appropriate
deposit limits in order to minimise exposure to a single institution.
The Group has chosen to increase its banking facilities to provide maximum
flexibility in financing the business going forward, particularly at a time
when having funds on deposit is unattractive. LST's business involves winning
contracts which will need funding in the most appropriate manner and often at
relatively short notice. Long term contracts are likely to require specific
project finance or the use of securitised debt but for contracts which have
fluctuating capital requirements, for example those that are mainly
development-related, appropriately hedged bank finance may be the best method
of financing. When contracts are very substantial and involve significant
property ownership, then joint venture vehicles may be used.
Property development and investment remain long term capital intensive
activities and the Group will continue to minimise the risks of fluctuations
in finance costs resulting from changing interest rates by using mainly fixed
rate debt to match its property commitments. However, as lease lengths are
shortening and the Group considers alternative ways of holding property,
together with managing its portfolio more actively, future funding is likely
to be of shorter maturity than previously.
The Group wishes to retain the opportunity to access the capital markets at
competitive prices and does not intend to use securitisation as a significant
means of raising funds for the development or portfolio management business
units, as this would adversely affect its borrowing margins in the bond
market. Also, this means of financing would generally only be economic if the
secured cash flows are more highly rated than Land Securities' covenant.
The fair values of the Group's financial liabilities as at 31 March 2001, as
set out in Note 15, exceeded book values by £507.3m, reflecting £453.5m in
respect of a reduction in long term interest rates since the borrowings were
originally taken out, £41.6m in respect of the equity conversion terms of the
convertible bonds and £12.2m on swaps. The adjustment to fair value, after
taking account of tax relief, would reduce reported diluted net assets per
share by 59p and would increase balance sheet gearing. There is no obligation
or present intention to redeem or retire the borrowings, other than at
maturity, when their redemption would be made at par.
At the year end, outstanding expenditure on the development programme amounted
to some £1.58bn, most of which will be spent over the next five years.
Capital creditors at 31 March 2001 amounted to £59.5m and capital commitments
were £548m. Since the year end the acquisition of Whitecliff Properties has
been completed and the funding of this development opportunity will require up
to £100m over the next five years.
LST will fund, out of the cash flows generated, the significant capital
expenditure commitments to improve the DSS property estate over the remaining
17-year life of the PRIME agreement. It was named as preferred bidder on the
BBC outsourcing contract on 22 March 2001, which will involve capital
expenditure of some £250m over the next five years and a similar amount in the
following five years. LST was also chosen as preferred bidder on the BT
project on 10 April 2001, which will be financed through a joint venture but
will require an equity contribution which is unlikely to exceed £200m.
The most relevant measure of gearing, interest cover, was 3.04 times and
balance sheet gearing, taking net debt as a percentage of net assets, was
28.1% at 31 March 2001. The Group also views its development programme as a
form of gearing.
The future
Next year the Group will report LST's results separately by means of full
segmental reporting to enable users to identify its earnings contribution
clearly, as this will be the basis on which its business unit's contribution
to the Group can best be valued. Looking ahead, the performance of the
development and portfolio management businesses will also be reported on more
fully within the operational review. With a combination of shorter leases and
more actively managed properties, it is likely that investment properties will
be viewed more as income-generating businesses than passive investments. This
should lead to more emphasis being placed on valuing the anticipated future
cash flows of the three business units rather than the more conventional net
asset valuation approach. However, this transformation may take some time to
achieve. The Group will continue to apply the strategy of increasing
shareholder value through development or refurbishment and by acquiring and
managing assets which can be worked to increase growth potential rather than
by buying completed standing investments. It is also developing a choice of
rental offers and a wider range of services to provide its customers with more
alternatives to meet their occupational requirements and will continue to
compete for property outsourcing contracts in the public and private sectors.
As the Company does not capitalise interest as part of the costs of
development, continuing expenditure on its development programme will
inevitably adversely affect profits until the completed buildings are let and
income-producing. The Group does, however, reflect the changing value of its
developments in progress by including regular valuations of all the investment
property assets in the portfolio. The process of actively managing our
portfolio will involve further property sales and may result in some initial
income shortfall, although we are hopeful that reinvestment in total property
service contracts by LST will soon reverse that process.
The Group continues to favour a distribution policy which broadly reflects
increases in the level of revenue profits over a number of years.
EXTRACT FROM DIRECTORS' REPORT
An interim dividend of 8.65p per share was paid on 8 January 2001 and the
Directors now recommend the payment of a final dividend of 23.85p per share
making a total of 32.50p per share for the year ended 31 March 2001, an
increase of 4.8% over that for the previous year.
Subject to authorisation at the Annual General Meeting, to be held on 10 July
2001, the final dividend will be paid on 23 July 2001 to shareholders
registered on 1 June 2001.
==========
The Report and Financial Statements for the year ended 31 March 2001 will be
posted to shareholders on 9 June 2001. Non-shareholders may request a copy
from the Company Secretary at the Registered Office, 5 Strand, London WC2N
5AF.
Web Site www.landsecurities.co.uk
e-mail landsecurities@landsecurities.co.uk
LAND SECURITIES CONSOLIDATED PROFIT & LOSS ACCOUNT
FOR THE YEAR ENDED 31 MARCH 2001
Acquisition Acquisition 2001 2000
£m £m £m £m
GROSS PROPERTY INCOME
(1) 549.9 97.3 647.2 528.2
===== ===== ===== =====
NET PROPERTY INCOME
(1) 474.8 22.7 497.5 457.2
Property management
and administration
expenses(including bid costs of £0.6m;
2000 £Nil) (2)
(35.4) (10.3) (45.7) (32.1)
----- ----- ----- -----
OPERATING PROFIT 439.4 12.4 451.8 425.1
Profit on sales
of properties 6.3 - 6.3 26.0
----- ----- ----- -----
PROFIT ON ORDINARY
ACTIVITIES BEFORE
INTEREST AND TAXATION 445.7 12.4 458.1 451.1
Interest receivable
and similar income
(3) 6.6 1.0 7.6 19.5
Interest payable and
similar charges (3) (145.7) (5.4) (151.1)(142.9)
----- ----- ----- -----
Revenue profit 300.3 8.6 308.9 301.7
Profit on sales of
properties and bid
costs 6.3 (.6) 5.7 26.0
PROFIT ON ORDINARY
ACTIVITIES BEFORE
TAXATION 306.6 8.0 314.6 327.7
----- -----
Taxation on:
Revenue profit (81.7) (75.1)
Property sales and
bid costs .2 (.6)
Taxation (4) (81.5) (75.7)
----- -----
PROFIT ON ORDINARY
ACTIVITIES AFTER
TAXATION 233.1 252.0
Dividends (5) (170.1)(165.7)
----- -----
RETAINED PROFIT FOR
THE FINANCIAL YEAR 63.0 86.3
===== =====
2001 2001 2000 2000
Basic Diluted Basic Diluted
-------- -------- -------- --------
EARNINGS PER SHARE
(6) 44.57p 44.14p 45.44p 44.97p
ADJUSTED EARNINGS
PER SHARE (6) 43.44p 43.08p 40.86p 40.63p
===== ===== ===== =====
DIVIDENDS PER SHARE
(5) 32.50p 31.00p
DIVIDEND COVER
(times)
Profit after taxation 1.37 1.52
Profit excluding
results of property
sales and bid costs
after taxation 1.34 1.37
====== ======
LAND SECURITIES CONSOLIDATED BALANCE SHEET
31 MARCH 2001
2001 2001 2000 2000
£m £m £m £m
FIXED ASSETS
Intangible assets
Goodwill 41.9 -
Tangible assets
Investment business
properties (9) 7,905.9 7,453.7
Properties held by
Land Securities
Trillium (10) 323.1 -
------- -------
Properties (11) 8,229.0 7,453.7
Other tangible
assets (13) 34.1 14.7
------- -------
8,305.0 7,468.4
------- -------
CURRENT ASSETS
Debtors falling
due within one year 173.6 180.9
Debtors falling due
after more than one
year 1.3 1.7
Investments: short
term deposits and
corporate bonds 22.0 140.1
Cash in hand and
at bank 7.3 -
------- -------
204.2 322.7
CREDITORS falling
due within one year (594.2) (457.1)
------- -------
NET CURRENT
LIABILITIES (390.0) (134.4)
------- -------
TOTAL ASSETS LESS
CURRENT LIABILITIES 7,915.0 7,334.0
CREDITORS falling
due after more than
one year
Debentures, bonds
and loans (1,480.4) (1,282.7)
Convertible bonds (246.1) (247.5)
Other creditors (31.8) (22.0)
Provisions for
liabilities and
charges (5.8) -
------- -------
6,150.9 5,781.8
======= =======
CAPITAL AND RESERVES
Called up share
capital 523.6 522.4
Share premium
account (14) 312.0 305.2
Capital redemption
Reserve (14) 36.0 36.0
Revaluation reserve
(14) 3,696.4 3,582.4
Other reserves (14) 324.6 141.2
Profit and loss
Account (14) 1,258.3 1,194.6
------- -------
EQUITY SHAREHOLDERS'
FUNDS 6,150.9 5,781.8
======= =======
NET ASSETS PER
SHARE (7) 1175p 1107p
DILUTED NET ASSETS
PER SHARE (7) 1154p 1090p
LAND SECURITIES CONSOLIDATED CASH FLOW STATEMENT (ABRIDGED)
FOR THE YEAR ENDED 31 MARCH 2001
(Part A - 2001 figures)
Investment Land Securities
business Trillium
£m £m
2001 2001
£m £m
--------- --------- --------- -------
OPERATING PROFIT 451.8
Depreciation and
amortisation 8.6
Net change in
debtors/creditors 5.2
-------
NET CASH INFLOW
FROM OPERATING
ACTIVITIES 438.2 27.4 465.6
RETURNS ON
INVESTMENTS
AND SERVICING OF
FINANCE
Interest received 8.8 1.0 9.8
Interest paid (99.4) (4.4) (103.8)
NET CASH OUTFLOW
FROM RETURNS ON
INVESTMENTS AND
SERVICING FINANCE (90.6) (3.4) (94.0)
TAXATION -
Corporation tax paid
(86.6) (.9) (87.5)
------- ------- -------
NET CASH INFLOW FROM
OPERATING ACTIVITIES
AND INVESTMENTS
AFTER FINANCE
CHARGES AND
TAXATION 261.0 23.1 284.1
CAPITAL EXPENDITURE
Additions to
properties (574.0) (11.0) (585.0)
Sales of properties 491.3 - 491.3
Investing in
properties (82.7) (11.0) (93.7)
Increase in other
tangible assets (4.9) (2.6) (7.5)
Net cash outflow on
capital expenditure (87.6) (13.6) (101.2)
Acquisition
(Note 18) (114.2)
Equity dividends
paid (164.1)
------
CASH OUTFLOW BEFORE
USE OF LIQUID
RESOURCES AND
FINANCING (95.4)
MANAGEMENT OF
LIQUID
RESOURCES AND
FINANCING (Note 16) 118.1
Issues of shares 1.2
Purchase and
cancellation of
own shares (6.0)
(Decrease)/increase
in debt (Note 17) (14.1)
NET CASH OUTFLOW
FROM FINANCING (18.9)
------
INCREASE/(DECREASE)
IN CASH IN YEAR 3.8
======
RECONCILIATION OF
NET CASH FLOW TO
MOVEMENTS IN NET DEBT
Increase/(decrease)
in cash in year 3.8
Cash outflow/
(inflow) from
decrease/(increase)
in debt 14.1
Cash inflow from
decrease in liquid
resources (118.1)
-------
Change in net debt
resulting from cash
flow (100.2)
Non-cash changes in
debt 1.4
Loan acquired with
new group
undertaking (Note
8) (212.8)
-------
Movement in net
debt in year (311.6)
Net debt at 1 April (1,416.2)
-------
Net debt at 31
March (Note 19) (1,727.8)
=======
LAND SECURITIES CONSOLIDATED CASH FLOW STATEMENT (ABRIDGED)
FOR THE YEAR ENDED 31 MARCH 2001
(Part B - 2000 comparative figures)
2000 2000
£m £m
--------- ---------
OPERATING PROFIT 425.1
Depreciation and
amortisation 2.8
Net change in
debtors/creditors 4.3
-------
NET CASH INFLOW FROM
OPERATING ACTIVITIES 432.2
RETURNS ON
INVESTMENTS AND
SERVICING OF FINANCE
Interest received 29.5
Interest paid (141.1)
NET CASH OUTFLOW
FROM RETURNS ON
INVESTMENTS AND
SERVICING FINANCE (111.6)
TAXATION -
Corporation tax paid (74.1)
-------
NET CASH INFLOW FROM
OPERATING ACTIVITIES
AND INVESTMENTS AFTER
FINANCE CHARGES AND
TAXATION 246.5
CAPITAL EXPENDITURE
Additions to
properties (386.3)
Sales of properties 196.1
Investing in
properties (190.2)
Increase in other
tangible assets (4.4)
Net cash outflow on
capital expenditure (194.6)
Acquisition (Note 18) -
Equity dividends paid (166.8)
------
CASH OUTFLOW BEFORE
USE OF LIQUID
RESOURCES AND
FINANCING (114.9)
MANAGEMENT OF LIQUID
RESOURCES AND
FINANCING (Note 16) 346.5
Issues of shares .6
Purchase and
cancellation of own
shares (243.9)
(Decrease)/increase
in debt (Note 17) 11.3
NET CASH OUTFLOW
FROM FINANCING (232.0)
------
INCREASE/(DECREASE)
IN CASH IN YEAR (.4)
======
RECONCILIATION OF
NET CASH FLOW TO
MOVEMENTS IN NET DEBT
Increase/(decrease)
in cash in year (.4)
Cash outflow/
(inflow) from
decrease/(increase)
in debt (11.3)
Cash inflow from
decrease in liquid
resources (346.5)
-------
Change in net debt
resulting from cash
flow (358.2)
Non-cash changes
in debt 24.7
Loan acquired with
new group undertaking
(Note 8) -
-------
Movement in net
debt in year (333.5)
Net debt at 1 April (1,082.7)
-------
Net debt at 31
March (Note 19) (1,416.2)
=======
MAJOR NON-CASH TRANSACTIONS
Part of the consideration for the acquisition of the group undertaking that
occurred during the year comprised shares. Further details of the acquisition
are set out in Note 8.
LAND SECURITIES OTHER PRIMARY STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2001
2001 2000
-------- --------
£m £m
STATEMENT OF TOTAL
RECOGNISED GAINS AND
LOSSES
Profit on ordinary
activities after
taxation 233.1 252.0
Unrealised surplus
on valuation of
properties (Note 14) 299.3 454.0
Taxation on valuation
surpluses realised
on sales of
properties (1.8) (5.2)
------- -------
Total gains and
losses recognised
since last financial
statements 530.6 700.8
======= =======
NOTE OF HISTORICAL
COST PROFITS AND
LOSSES
Profit on ordinary
activities before
taxation 314.6 327.7
Valuation surplus of
previous years
realised on sales of
properties 185.3 158.1
Taxation on valuation
surpluses realised on
sales of properties (1.8) (5.2)
------- -------
Historical cost
profit on ordinary
activities before
taxation 498.1 480.6
Taxation (81.5) (75.7)
------- -------
Historical cost
profit on ordinary
activities after
taxation 416.6 404.9
Dividends (170.1) (165.7)
------- -------
Retained historical
cost profit for
the year 246.5 239.2
======= =======
RECONCILIATION OF
MOVEMENTS IN EQUITY
SHAREHOLDERS' FUNDS
Profit on ordinary
activities after
taxation 233.1 252.0
Dividends (170.1) (165.7)
------- -------
Retained profit for
the financial year 63.0 86.3
Unrealised surplus
on valuation of
properties 299.3 454.0
Taxation on valuation
surpluses realised on
sales of properties (1.8) (5.2)
Premium arising on
issues of shares 7.5 22.0
Issues of shares 1.2 4.1
Purchase and
cancellation of own
shares (.1) (249.8)
------- -------
369.1 311.4
Opening equity
shareholders' funds 5,781.8 5,470.4
------- -------
Closing equity
shareholders' funds 6,150.9 5,781.8
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