Final Results - Year Ended 31 March 2000, Part 2

Land Securities PLC 24 May 2000 PART TWO FINANCIAL REVIEW Results Pre-tax profit increased from £293.3m to £327.7m. After excluding surpluses of £26.0m over book values arising on sales of properties, revenue profit for the year increased by 3.1% to £301.7m. The increase of £7.5m in pre-tax revenue profit in the second half of the year, compared with the first half, primarily results from an additional £10.7m of rental income offset by a £3.0m increase in net interest cost. After taking into account the uplift from the annual valuation, the share buy- backs and retained earnings, shareholders' funds increased by £311.4m, compared with the previous year, and diluted net assets per share increased by 11.8% to 1090p per share. The return on shareholders' equity was 15%, and the average return over the last three years has been 15.5%. After taking account of the reduction in the fair value adjustment, net of tax, for marking the Group's debt to market this year, the annual return on shareholders' equity was 17.9%. Increase in diluted net assets per share pence 1 April 1999 975 Valuation surplus 82 Share buy-back 18 Retained earnings 16 Other (1) 31 March 2000 1090 ==== Revenue Rental income increased from £453.6 m to £479.9m 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 £32.3m. First lettings of developments provided an additional £12.4m, including in excess of £1m each from Regis House EC4, Allington House SW1 and Lacon House WC1. Increases from rent reviews and renewals contributed a further £12.2m and the net effect of re-lettings of voids added £4.1m. We have secured rental income of £30.8m per annum from our developments that had not been received at 31 March 2000. This income will flow from developments which are soon to be started, are in progress or have been recently completed. At the same date we had secured £17.5m of annual rental income from the investment portfolio which is subject to rent-free periods. However, property sales, less acquisitions, completed in the year under review will reduce rental income in the current year by some £14.9m. Further sales are also in the course of negotiation or are planned. In the current year, we also expect a shortfall of some £4.1m from properties which will cease to be income-producing in anticipation of redevelopment or refurbishment. Further improvements in rental levels have increased the reversionary potential of the portfolio, excluding voids, to over 8.7% at 31 March 2000. All sectors of the portfolio are now reversionary. There are still some significantly over-rented central London offices but the majority of the leases of these buildings still have many years to expiry. Within the next five years, there is a potential shortfall of less than £4m of rental income subject to renewal or options to break in over-rented offices in central London. Almost 60% 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 12 years. We reduced the Group's net irrecoverable property outgoings by a further £1.2m to £6.3m, which is less than 1.4% of rent roll net of ground rents. This mainly reflects a further reduction in the level of voids in the portfolio to 0.9% of rent roll net of ground rents. Property management and administration expenses include increased expenditure on research, including e-commerce projects, and further computer systems development. We expect to continue to spend substantial sums on research and in re-engineering the business to take advantage of future growth opportunities and to meet the demands of rapidly changing markets. Interest receivable was significantly reduced due to the implementation of the development programme, as we had anticipated, and also, in the last quarter of the period under review, by expenditure of £249.8m on the share buy-back programme. During the year, the average cash balance was reduced from £512.4m to £331.2m at an average return of 5.6% compared with 7.2% for the previous year. The tax charge, equivalent to 24.9% of revenue profit, reflects the benefit of capital allowances from developments, refurbishments and acquisitions. The prior year adjustment reflects the settlement of past years' claims for capital allowances. Assuming no change in the rate of Corporation Tax, we expect the effective tax rate, before prior year adjustments, to remain at broadly similar levels while we progress our development programme. Following the latest annual property valuation, there is an estimated potential capital gains tax liability in the region of £490m. After taking account of the share buy-back, earnings per share increased from 39.21p to 45.44p and adjusted earnings per share from 39.11p to 40.86p. The Directors propose a final dividend of 22.75p, making an increase of 5.1% for the year. After all financing costs, dividends and taxation, the Group produced cash flow for investment of £79.7m. Capital expenditure exceeded proceeds from property sales by £194.6m, so there was a net cash outflow of £114.9m on the Group's normal business activities. Balance Sheet Expenditure on properties amounted to £370.2m, of which £256.1m was incurred on development and refurbishment. £231.0m of this relates to costs associated with the development programme. £114.1m was spent on investment acquisitions, primarily with future development in mind, showing an average initial return of 6.0%. In the same period, sales of properties with a book value of £281.0m were unconditionally exchanged or completed for £307.0m. This represents a 9.2% surplus over the book value after deducting selling costs. The properties sold yielded 7.4% and the proceeds exceeded cost to the Group by £184.1m. Portfolio Activity £m Acquisitions/ FRS3 Developments Sales profit Retail/Leisure 121.1 166.0 9.8 Offices 233.7 131.7 15.8 Warehouses and industrial 15.4 9.3 0.4 _____ _____ _____ 370.2 307.0 26.0 ==== ==== ==== Following some further conversions into equity and small repayments, total borrowings amounted to £1,556.3m at the year end. Short term investments and cash amounted to £140.1m and the Group also had £175m of bilateral standby facilities available should further funds be required. Prior to investment in the business, funds are 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 setting appropriate deposit limits in order to minimise exposure to a single institution. In the autumn, the Group took advantage of the inverted sterling interest rate yield curve to commit to four forward-starting swaps, amounting in total to £400m. These swaps will substantially fix the cost of new fixed rate borrowing at a competitive cost to the Group. The average coupon of the borrowings raised using the new swaps should be about 5.75%; further explanatory detail can be found in Note 10 on page 37. These swaps are in place to fix the cost of some of the funds that will be required to implement the new development programme and, when utilised, will reduce the average cost of the Group's borrowings, which is currently 9%. In common with many mature UK property investment companies, the current average cost of debt is high, as the majority of borrowings were raised during a period of much higher interest rates and investment returns. Property development and investment is a long term capital-intensive activity and the Group has sought to minimise the risk of fluctuations in finance costs as a result of changes in interest rates by using fixed rate debt to match its property commitments. As lease lengths are shortening and the Group considers alternative ways of holding property, future funding is likely to be of shorter maturity than previously. The fair value of the Group's financial liabilities as at 31 March 2000, as set out in Note 10 on page 37, exceeded book values by £529.4m, reflecting £519.1m in respect of a reduction in long- term interest rates since the borrowings were originally taken out, £13.0m in respect of equity conversion terms of the convertible bonds and a gain of £2.7m on the swaps. The adjustment to fair value, after taking account of tax relief, would reduce reported diluted net assets per share by 65p 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 £1.65bn development programme amounted to some £1.3bn, most of which will be spent over the next five years. Capital creditors at 31 March 2000 amounted to £54.0m and capital commitments were £354.6m. The most relevant measure of gearing, interest cover, was 3.1 times and balance sheet gearing, taking net debt as a percentage of net assets, was 24.5% at 31 March 2000. The Group also views its development programme as a form of gearing and therefore estimates of balance sheet gearing should take this into account. In addition to the extensive development programme, we are considering various other investment opportunities. We are also continuing our active programme of rationalising the portfolio and we have received shareholders' authority to buy back up to a further 14.9% of the issued share capital. We have the flexibility and balance sheet strength to pursue a variety of alternatives with the prime objective of maximising shareholder value. The Future The Group continues to apply the strategy of increasing shareholder value by development or refurbishment and by acquiring assets which can be worked to increase growth potential rather than by buying completed standing investments in a very competitive direct property market. We are also considering a range of other property propositions which seek to take advantage of customers' changing requirements as they respond to the opportunities presented by new technology and increasingly wish to employ less of their capital in property assets. We have also taken advantage of a weak equity market for the quoted property sector by buying back shares and will extend this process if the Board considers it appropriate. As we do not capitalise interest as part of the cost of development, the implementation of a substantial development programme inevitably adversely affects profits during the expenditure period. We do, however, reflect the changing value of our developments in progress by obtaining regular valuations of all the property assets in our portfolio. As part of active portfolio management, we have also accelerated our disposal programme as we try to anticipate the effects of changes in technology and demographics on future property values. This process is likely to result in an initial income shortfall when the proceeds from property sales are reinvested in our development activities. However, such investment will provide increasing capital growth and income for shareholders in the future. Last year we suggested that a low inflationary environment should discourage some of the excesses which have damaged the UK property industry in the past and led to significant cyclical fluctuations. We still anticipate less volatility than in the past, which, together with prudent accounting policies, supports the maintenance of a lower level of sustainable dividend cover than in periods of high inflation. EXTRACT FROM DIRECTORS' REPORT An interim dividend of 8.25p per share was paid on 10 January 2000 and the Directors now recommend the payment of a final dividend of 22.75p per share making a total of 31p per share for the year ended 31 March 2000, an increase of 5.1% over that for the previous year. Subject to authorisation at the Annual General Meeting, to be held on 11 July 2000, the final dividend will be paid on 24 July 2000 to shareholders registered on 9 June 2000. ========== The Report and Financial Statements for the year ended 31 March 2000 will be posted to shareholders on 10 June 2000. 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 2000 2000 1999 ----------------- ----------------- Notes £m £m GROSS PROPERTY INCOME 1 528.2 500.2 ===== ===== NET RENTAL INCOME 1 457.2 427.5 Property management and administration 2 (32.1) (29.0) expenses ----- ----- OPERATING PROFIT 425.1 398.5 Profit on sales of properties 26.0 .6 ----- ----- PROFIT ON ORDINARY ACTIVITIES BEFORE 451.1 399.1 INTEREST AND TAXATION Interest receivable and similar income 3 19.5 38.7 Interest payable and similar charges 3 (142.9) (144.5) Revenue profit 301.7 292.7 Profit on sales of properties 26.0 .6 ----- ----- ----- ----- PROFIT ON ORDINARY ACTIVITIES BEFORE 327.7 293.3 TAXATION Taxation on: Revenue profit (75.1) (76.8) Property sales (.6) (.1) Taxation 4 (75.7) (76.9) ----- ----- PROFIT ON ORDINARY ACTIVITIES AFTER 252.0 216.4 TAXATION Dividends 5 (165.7) (165.2) ----- ----- RETAINED PROFIT FOR THE FINANCIAL YEAR 86.3 51.2 ===== ===== Basic Diluted Basic Diluted ------- ------- ------- ------- - - - - EARNINGS PER SHARE 6 45.44p 44.97p 39.21p 38.95p ADJUSTED EARNINGS PER SHARE 6 40.86p 40.63p 39.11p 38.86p ===== ===== ===== ===== DIVIDENDS PER SHARE 5 31.00p 29.50p DIVIDEND COVER (times) Profit after taxation 1.52 1.31 Profit excluding results of property sales after taxation 1.37 1.31 ====== ====== LAND SECURITIES CONSOLIDATED BALANCE SHEET 31 MARCH 2000 2000 1999 ------ ------ Notes £m £m FIXED ASSETS Tangible assets Properties 7 7,453.7 6,910.5 Other tangible assets 14.7 13.1 ------- ------- 7,468.4 6,923.6 ------- ------- CURRENT ASSETS Debtors falling due within 180.9 71.5 one year Debtors falling due after 1.7 1.0 more than one year Investments: short term deposits and corporate bonds 140.1 486.6 ------- ------- 322.7 559.1 CREDITORS falling due within (457.1) (424.8) one year ------- ------- NET CURRENT (134.4) 134.3 (LIABILITIES)/ASSETS ------- ------- TOTAL ASSETS LESS CURRENT 7,334.0 7,057.9 LIABILITIES CREDITORS falling due after more than one year Debentures, bonds and loans (1,282.7) (1,295.0) Convertible bonds (247.5) (272.4) Other creditors (22.0) (20.1) ------- ------- 5,781.8 5,470.4 ======= ======= CAPITAL AND RESERVES Called up share capital 522.4 554.3 Share premium account 9 305.2 284.0 Capital redemption reserve 9 36.0 - Revaluation reserve 9 3,582.4 3,286.5 Other reserves 9 141.2 632.0 Profit and loss account 9 1,194.6 713.6 ------- ------- EQUITY SHAREHOLDERS' FUNDS 5,781.8 5,470.4 ======= ======= NET ASSETS PER SHARE 6 1107p 987p DILUTED NET ASSETS PER SHARE 6 1090p 975p LAND SECURITIES CONSOLIDATED CASH FLOW STATEMENT (ABRIDGED) FOR THE YEAR ENDED 31 MARCH 2000 2000 1999 ------ ------ £m £m OPERATING PROFIT 425.1 398.5 Depreciation 2.8 2.4 Net change in debtors/creditors 4.3 9.0 ----- ---- NET CASH INFLOW FROM OPERATING 432.2 409.9 ACTIVITIES Net financing costs (111.6) (107.4) ----- ----- NET CASH INFLOW FROM OPERATING ACTIVITIES AND INVESTMENTS AFTER 320.6 302.5 FINANCING COSTS Taxation paid (74.1) (73.4) ----- ----- FREE CASH FLOW FOR INVESTING AND 246.5 229.1 DIVIDENDS Net cash outflow on capital expenditure (194.6) (135.4) (Note 11) Equity dividends paid (166.8) (155.6) ----- ----- CASH OUTFLOW BEFORE USE OF LIQUID RESOURCES AND FINANCING (114.9) (61.9) MANAGEMENT OF LIQUID RESOURCES (Note 346.5 60.7 12) NET CASH (OUTFLOW)/INFLOW FROM (232.0) .8 FINANCING --- --- DECREASE IN CASH IN YEAR (.4) (.4) ===== ===== RECONCILIATION OF NET CASH FLOW TO MOVEMENTS IN NET DEBT FOR THE YEAR ENDED 31 MARCH 2000 2000 1999 ------ ------ £m £m Decrease in cash in year (.4) (.4) Cash (inflow)/outflow from (increase)/decrease in debt (Note 13) (11.3) .8 Cash inflow from decrease in liquid (346.5) (60.7) resources ------- ------ Change in net debt resulting from cash (358.2) (60.3) flow Non-cash changes in debt 24.7 82.5 ------ ------ Movement in net debt in year (333.5) 22.2 Net debt at 1 April (1,082.7) (1,104.9) ------ ------ Net debt at 31 March (1,416.2) (1,082.7) ======= ======= LAND SECURITIES OTHER PRIMARY STATEMENTS FOR THE YEAR ENDED 31 MARCH 2000 2000 1999 ------ ------ £m £m STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSES Profit on ordinary activities after taxation 252.0 216.4 Unrealised surplus on valuation of properties (Note 454.0 332.9 7) Taxation on valuation surpluses realised on sales (5.2) - of properties ------ ----- Total gains and losses recognised since last 700.8 549.3 financial statements ======= ======= NOTE OF HISTORICAL COST PROFITS AND LOSSES Profit on ordinary activities before taxation 327.7 293.3 Valuation surplus of previous years realised on sales of 158.1 75.1 properties Taxation on valuation surpluses realised on sales (5.2) - of properties ------- ------- Historical cost profit on ordinary activities before 480.6 368.4 taxation Taxation (75.7) (76.9) ------- ------- Historical cost profit on ordinary activities after 404.9 291.5 taxation Dividends (165.7) (165.2) ------- ------- Retained historical cost profit for 239.2 126.3 the year ======= ======= RECONCILIATION OF MOVEMENTS IN EQUITY SHAREHOLDERS' FUNDS Profit on ordinary activities after taxation 252.0 216.4 Dividends (165.7) (165.2) ------- ------- Retained profit for the financial year 86.3 51.2 Unrealised surplus on valuation of properties 454.0 332.9 Taxation on valuation surpluses realised on sales (5.2) - of properties Premium arising on issues of 22.0 71.6 shares Issues of shares 4.1 13.2 Purchase and cancellation of own shares (249.8) - ------- ------- 311.4 468.9 Opening equity shareholders' 5,470.4 5,001.5 funds ------- ------- Closing equity shareholders' 5,781.8 5,470.4 funds ======= ======= LAND SECURITIES - SUPPLEMENTARY INFORMATION The financial information on pages 28 to 38 is abridged and does not constitute the group's full Financial Statements for the years ended 31 March 1999 or 31 March 2000. Full Financial Statements for the year ended 31 March 1999 (which received an unqualified audit report) have been filed with the Registrar of Companies. Financial Statements for the year ended 31 March 2000 will be presented to the Members at the forthcoming Annual General Meeting; the auditors have indicated that their report on these Financial Statements will be unqualified. NOTE 1 NET RENTAL INCOME 2000 1999 ------ ------ £m £m Rental income 479.9 453.6 Service charges and other recoveries 48.3 46.6 ----- ----- Gross property income 528.2 500.2 Ground rents payable (16.4) (18.6) Other property outgoings (54.6) (54.1) (71.0) (72.7) ----- ----- 457.2 427.5 ===== ===== All income was derived from within the United Kingdom from continuing operations. No operations were discontinued during the year. Other property outgoings are costs incurred in the direct maintenance and upkeep of investment properties. Void costs, which include those relating to empty properties pending redevelopment and refurbishment, and costs of investigating potential development schemes which are not proceeded with, are also included. NOTE 2 PROPERTY MANAGEMENT AND ADMINISTRATION EXPENSES 2000 1999 ------ ------ £m £m These include Auditors' remuneration .2 .2 Staff costs 13.9 13.3 Directors' remuneration 1.7 1.6 Depreciation of other tangible assets 2.6 2.2 Property management and administration expenses consist of all costs of managing the portfolio, including the costs of staff involved in development projects, together with costs of rent reviews and renewals, relettings of properties and all office administration and operating costs of the group. No staff costs or overheads are capitalised. NOTE 3 INTEREST 2000 1999 ------ ------ £m £m RECEIVABLE: Short term deposits and corporate bonds 18.7 36.8 Other interest receivable .8 1.9 ----- ----- 19.5 38.7 ===== ===== PAYABLE: Borrowings not wholly repayable within five years 139.9 142.5 Borrowings wholly repayable within five 1.1 1.0 years Other interest payable 1.9 1.0 ----- ----- 142.9 144.5 ===== ===== Interest payable includes £0.2m (1999 £Nil) in respect of the bank loan and overdraft. NOTE 4 TAXATION 2000 1999 ------ ------ £m £m On revenue profit for the year 79.1 77.3 Adjustments relating to previous years (4.0) (.5) ----- ----- On revenue profit 75.1 76.8 On property sales .6 .1 ----- ----- 75.7 76.9 ===== ===== The amount of tax on capital gains which would become payable in the event of sales of the properties at the amounts at which they are stated in Note 7 is in the region of £490m (1999 £430m). NOTE 5 EQUITY DIVIDENDS 2000 1999 pence pence 2000 1999 per per £m £m share share ------ ------ ------ ------ Interim paid 8.25 7.85 46.8 45.2 Proposed final 22.75 21.65 118.9 120.0 ----- ----- ----- ----- 31.00 29.50 165.7 165.2 ===== ===== ===== ===== Interim paid includes an additional £0.7m (1999 £1.7m) of prior year final dividend and £0.1m (1999 £0.4m) of interim dividend arising from increases in share capital before the record dates of 11 June 1999 and 3 December 1999 respectively. NOTE 6 EARNINGS AND NET ASSETS PER SHARE Profit after Weighted average Earnings per taxation no of shares share ---------------- ---------------- ---------------- EARNINGS 2000 1999 2000 1999 2000 1999 PER SHARE £m £m m m pence pence ------ ------ ------ ------ ------ ------ Earnings per share 252.0 216.4 554.4 551.9 45.44 39.21 Effect of dilutive securities: Convertible 11.3 13.0 30.8 36.8 bonds Share .2 .3 options ----- ----- ----- ----- ----- ----- Diluted earnings 263.3 229.4 585.4 589.0 44.97 38.95 per share ----- ----- ----- ----- ----- ----- ADJUSTED EARNINGS PER SHARE Earnings per share 252.0 216.4 554.4 551.9 45.44 39.21 Effect of results of property (25.4) (.5) (4.58) (.10) sales after taxation ----- ----- ----- ----- ----- ----- Adjusted earnings 226.6 215.9 554.4 551.9 40.86 39.11 per share ----- ----- ----- ----- ----- ----- Diluted earnings 263.3 229.4 585.4 589.0 44.97 38.95 per share Effect of results of property (25.4) (.5) (4.34) (.09) sales after taxation ----- ----- ----- ----- ----- ----- Adjusted diluted earnings 237.9 228.9 585.4 589.0 40.63 38.86 per share ----- ----- ----- ----- ----- ----- Adjusted earnings and adjusted diluted earnings per share have been disclosed to show measures of earnings that reflect the principal operating activities of the group. NET ASSETS PER SHARE Net assets per share are calculated on net assets of £5,781.8m (1999 £5,470.4m) and on 522.4m shares (1999 554.3m shares). The diluted net assets per share are calculated on adjusted net assets of £6,034.5m (1999 £5,747.9m) and on 553.8m shares (1999 589.6m shares) after adjusting for the effects of the exercise of share options and of conversion rights relating to the convertible bonds on net assets and the number of shares in issue. NOTE 7 PROPERTIES Leasehold ----------------- Over Under 50 50 years years Freehold to run to run Total ------ ------ ------ --- At 1 April 1999: at valuation 5,394.0 1,463.4 53.1 6,910.5 Additions 216.3 185.9 1.3 403.5 Sales (246.8) (61.9) (5.6) (314.3) ------- ------- ------- ------- 5,363.5 1,587.4 48.8 6,999.7 Unrealised surplus on 348.4 99.4 6.2 454.0 valuation (Note 9) ------- ------- ------- ------- At 31 March 2000: at 5,711.9 1,686.8 55.0 7,453.7 valuation ======= ======= ======= ======= The group's additions and sales respectively include £33.3m representing the acquisition of its one third share in the Birmingham Alliance's properties and the consideration it received on the part disposal of the properties which it contributed to the limited partnerships forming the Alliance. Freeholds include £394.0m (1999 £371.1m) of leaseholds with unexpired terms exceeding 900 years; leaseholds under 50 years to run include £10.3m (1999 £9.7m) with unexpired terms of 20 years or less. The historical cost of properties to the group is £3,681.5m (1999 £3,434.2m) NOTE 8 COMMITMENTS FOR FUTURE EXPENDITURE 2000 1999 ------ ------ £m £m Under contract 92.6 102.8 Board authorisations not contracted 262.0 55.8 ----- ----- 354.6 158.6 ===== ===== NOTE 9 RESERVES Capital Profit Share redempt- Revalu- and premium ion ation Other loss account reserve reserve Reserve account Total £m £m £m £m £m £m ------- ------ ------ ------ ------ ------ At 1 April 284.0 - 3,286.5 632.0 713.6 4,916.1 1999 Premium arising on issues of 22.0 22.0 shares Purchase and (194.4) (55.4) (249.8) cancellation of own shares Cancellation of 36.0 36.0 shares on buy-backs Unrealised surplus on valuation 454.0 454.0 of properties Realised on sales of (158.1) 158.1 properties Taxation on valuation surpluses (5.2) (5.2) realised on sales of properties Transfers from other (449.3) 449.3 reserves Retained profit for 86.3 86.3 the year Amortised discount and issue (.8) .8 expenses of bonds ----- ----- ------ ----- ------ ------ At 31 March 305.2 36.0 3,582.4 141.2 1,194.6 5,259.4 2000 ----- ----- ------ ----- ------ ------ NOTE 10 FINANCIAL LIABILITIES 2000 1999 ------ ------ £m £m Debentures, bonds and other loans 1,308.1 1,296.6 Convertible bonds 247.5 272.4 Overdraft .7 .3 ------ ------ 1,556.3 1,569.3 ====== ====== Repayable in: One year or less, or on demand 26.1 1.9 More than one year but no more than two .4 .6 years More than two years but no more than 48.6 11.7 five years More than five years 1,481.2 1,555.1 ------ ------ 1,556.3 1,569.3 ====== ====== Weighted average period of fixed 18.8 19.8 interest rates years years Weighted average interest rate 9.0% 9.0% The amount of debt that is repayable by instalments, where any of the instalments fall due after more than five years, is not material. FAIR VALUES OF FINANCIAL ASSETS AND LIABILITIES Book value Fair value ----------------- ---------------- 2000 1999 2000 1999 ------ ------ ------ ------ £m £m £m £m Short term investments 140.1 486.6 140.1 487.8 and cash Debentures, bonds, other loans and (1,308.8) (1,296.9) (1,827.9) (1,977.0) overdraft Convertible bonds (247.5) (272.4) (260.5) (316.2) ======= ======= ======= ======= Fair value has been calculated by taking the market value, where available, and using a discounted cash flow approach for those financial assets and liabilities that do not have a published market value. It is the intention of the group to repay its debentures, bonds and other loans at maturity. The difference between book value and fair value will not result in any change to the cash outflows of the group unless, at some stage in the future, borrowings are purchased in the market. FINANCIAL INSTRUMENTS In order to fix substantially the cost of future borrowings to finance part of its development programme, the group entered into four forward starting interest rate swaps, each for £100m, during the year. The first two swaps have start dates of 30 September 2000 for 15 years and the other two have start dates of 30 June 2002 for 10 years. The total cost of the new borrowings will depend on the differential between gilt rates and swap rates at the time of the issue but, based on the average differential for the last twelve months, they should cost approximately 6% and 5.25% respectively. The counterparties can extend the duration of each swap on similar terms. As the swaps are forward starting, there is no carrying value in the books of the group as at 31 March 2000. The fair value of the swaps as at 31 March 2000 was £2.7m. NOTE 11 NET CASH OUTFLOW ON CAPITAL EXPENDITURE 2000 1999 ------ ------ £m £m Additions to properties (386.3) (255.6) Sales of properties 196.1 126.0 Increase in other tangible assets (4.4) (5.8) ----- ----- (194.6) (135.4) ===== ===== NOTE 12 MANAGEMENT OF LIQUID RESOURCES 2000 1999 ------ ------ £m £m Net decrease in short term deposits 346.5 45.7 Sales of corporate bonds - 15.0 ----- ----- Net cash inflow from management of 346.5 60.7 liquid resources ===== ===== NOTE 13 CASH MOVEMENT IN DEBT 2000 1999 ------ ------ £m £m Due within one year - Repayments (1.6) (.7) - Unsecured bank loan 25.0 - Debt due after one year - Repayments (12.1) (.1) ----- ----- Increase/(decrease) in debt 11.3 (.8) ===== ===== NOTE 14 ANALYSIS OF NET DEBT Movements during year ----------------- 1 April 31 March 1999 Cash Non-cash 2000 flow £m £m £m £m ------ ------ ---- ------ Bank overdraft (.3) (.4) (.7) Liquid resources 486.6 (346.5) 140.1 Debt due within one year (1.6) (23.4) (.4) (25.4) Debt due after one year (1,567.4) 12.1 25.1 (1,530.2) ------- ----- ----- ------- Net debt (1,082.7) (358.2) 24.7 (1,416.2) ======= ===== ===== ======= GLOSSARY OF TERMS ADJUSTED FIGURES Reported amount adjusted to exclude the results of property sales ANCHOR STORES Major retailers occupying large stores which serve as a draw to other retailers and shoppers AVERAGE UNEXPIRED LEASE TERM Excludes short term lettings such as car parks and advertising hoardings, residential leases and long ground leases CPO Compulsory Purchase Order DILUTED FIGURES Reported amount adjusted to include the effects of potential shares issuable under Convertible Bonds or Employee Share Schemes EARNINGS PER SHARE Profit after taxation divided by the average number of shares in issue during the year ERV The estimated market rental value of lettable space as determined annually by the Company's valuers FORWARD DATED SWAP An agreement to pay a fixed rate of interest for a period beginning at a future date GEARING (NET) Total borrowings less short term deposits, corporate bonds and cash, as a percentage of shareholders' equity INTEREST COVER Number of times interest payable is covered by operating profit and interest receivable NET ASSETS PER SHARE Shareholders' funds divided by the number of shares in issue at the year end OPEN A1 NON-FOOD PLANNING PERMISSION Planning permission for the retail sale of any goods other than food OVER-RENTED Space that is let at a rent above its ERV PASSING RENT The annual rental income receivable which may be more or less than the ERV (see over-rented and reversionary) PRE-LET A lease signed with a tenant prior to completion of a development RETAIL PARK A scheme of 3 or more retail warehouse units aggregating over 4,650 sq m (50,000 sq ft) with shared parking RETURN ON SHAREHOLDERS' EQUITY Increase in net asset value together with dividends for the year (assuming no dividend tax credit) expressed as a percentage of shareholders' funds at the beginning of the year REVERSIONARY OR UNDER-RENTED Space where the passing rent is below the ERV TOTAL PROPERTY RETURN Valuation surplus, profit on property sales and net rental income expressed as a percentage of opening book value of property portfolio WEIGHTED AVERAGE COST OF CAPITAL Market cost of debt and cost of equity capital (equity capital cost calculated assuming equity risk premium of 4% and using London Business School beta factor), applied to fair value of debt and equity market capitalisation and then suitably weighted

Companies

Land Securities Group (LAND)
UK 100
FTSE quotes by TradingView

Latest directors dealings

All directors dealings today