Interim Results. Part 3

Land Securities Group Plc 17 November 2004 PART 3 Business Analysis 6 months ended 30 September 2004 P&L basis: P&L basis: P&L basis: Open Open Open Gross Gross Gross Market Market Market Valuation Valuation Rental Rental Rental Value (6) Value (6) Value (6) Surplus Surplus Income Income Income 30-Sep-04 31-Mar-04 30-Sep-03 Surp/(def) Surp/(def) 30-Sep-04 31-Mar-04 30-Sep-03 PORTFOLIO ANALYSIS Â£m Â£m Â£m Â£m % Â£m Â£m Â£m The like-for-like portfolio (1) Shopping centres & shops Regional shopping centres 1,129.3 1,062.8 1,055.3 65.2 6.2% 35.6 37.0 35.2 Central London shops 646.6 625.5 599.7 20.7 3.3% 20.2 19.6 19.0 Other in-town shops 470.9 436.3 413.6 25.9 5.8% 13.7 14.6 14.1 _______ _______ _______ _______ _______ _______ _______ _______ 2,246.8 2,124.6 2,068.6 111.8 5.3% 69.5 71.2 68.3 _______ _______ _______ _______ _______ _______ _______ _______ Retail warehouses Retail parks 1,110.2 987.6 922.9 75.1 7.3% 25.4 24.6 23.2 Other 212.8 241.1 219.2 9.0 4.4% 7.0 6.7 6.9 _______ _______ _______ _______ _______ _______ _______ _______ 1,323.0 1,228.7 1,142.1 84.1 6.8% 32.4 31.3 30.1 _______ _______ _______ _______ _______ _______ _______ _______ _______ _______ _______ _______ _______ _______ _______ _______ Total retail 3,569.8 3,353.3 3,210.7 195.9 5.8% 101.9 102.5 98.4 _______ _______ _______ _______ _______ _______ _______ _______ Offices West End 1,335.3 1,301.4 1,253.8 47.7 3.7% 44.0 44.1 45.3 City 785.9 756.1 759.4 29.0 3.8% 36.1 37.3 37.0 Midtown 238.0 222.5 214.5 15.4 6.9% 9.5 9.8 10.5 Inner London 75.2 75.3 55.9 (4.3) (5.4)% 2.1 2.4 2.1 _______ _______ _______ _______ _______ _______ _______ _______ Central London offices 2,434.4 2,355.3 2,283.6 87.8 3.7% 91.7 93.6 94.9 Rest of UK 51.2 48.1 46.0 2.0 4.1% 2.1 2.6 2.9 _______ _______ _______ _______ _______ _______ _______ _______ Total offices 2,485.6 2,403.4 2,329.6 89.8 3.8% 93.8 96.2 97.8 _______ _______ _______ _______ _______ _______ _______ _______ Industrial properties South-east 284.6 257.5 240.3 26.7 10.4% 8.5 8.6 8.3 Other 11.4 11.1 11.3 0.3 2.7% 0.5 0.9 0.8 _______ _______ _______ _______ _______ _______ _______ _______ 296.0 268.6 251.6 27.0 10.1% 9.0 9.5 9.1 _______ _______ _______ _______ _______ _______ _______ _______ Other 93.2 88.9 90.0 3.3 3.7% 2.9 3.5 3.2 _______ _______ _______ _______ _______ _______ _______ _______ Like-for-like portfolio 6,444.6 6,114.2 5,881.9 316.0 5.2% 207.6 211.7 208.5 Completed developments (2) 636.0 567.0 539.1 71.4 12.8% 11.9 13.0 6.5 _______ _______ _______ _______ _______ _______ _______ _______ Total 7,080.6 6,681.2 6,421.0 387.4 5.8% 219.5 224.7 215.0 Acquisitions (3) 577.6 243.3 94.3 5.9 1.0% 11.7 6.3 2.8 Sales and restructured (4) - 248.9 841.1 - - 4.0 21.0 35.4 interests Total development programme (Including Kent Thameside) (5) 834.4 733.3 639.7 33.8 4.2% 8.8 5.3 4.0 _______ _______ _______ _______ _______ _______ _______ _______ Total portfolio excluding joint ventures 8,492.6 7,906.7 7,996.1 427.1 5.3% 244.0 257.3 257.2 Joint ventures 404.3 243.5 - 18.6 4.8% 8.2 0.6 - _______ _______ _______ _______ _______ _______ _______ _______ Total portfolio 8,896.9 8,150.2 7,996.1 445.7 5.3% 252.2 257.9 257.2 _______ _______ _______ _______ _______ _______ _______ _______ Total portfolio analysis Shopping centres & shops Regional shopping centres 1,957.4 1,786.7 1,594.7 113.4 6.2% 57.0 55.4 47.4 Central London shops 836.3 819.7 780.6 24.6 3.0% 23.7 24.2 23.3 Other in-town shops 593.5 584.9 601.1 29.9 5.3% 18.7 19.8 20.0 _______ _______ _______ _______ _______ _______ _______ _______ 3,387.2 3,191.3 2,976.4 167.9 5.2% 99.4 99.4 90.7 _______ _______ _______ _______ _______ _______ _______ _______ Retail warehouses Retail parks 1,193.0 1,051.7 995.3 86.7 7.9% 26.6 25.9 24.3 Other 212.8 241.1 229.9 9.0 4.4% 7.0 7.1 7.4 _______ _______ _______ _______ _______ _______ _______ _______ 1,405.8 1,292.8 1,225.2 95.7 7.3% 33.6 33.0 31.7 _______ _______ _______ _______ _______ _______ _______ _______ _______ _______ _______ _______ _______ _______ _______ _______ Total retail 4,793.0 4,484.1 4,201.6 263.6 5.8% 133.0 132.4 122.4 _______ _______ _______ _______ _______ _______ _______ _______ Offices West End 1,674.0 1,557.3 1,456.5 68.3 4.3% 48.7 48.6 50.1 City 984.8 958.4 975.2 24.9 2.6% 38.4 39.2 38.5 Midtown 332.3 234.2 355.1 14.5 4.6% 10.0 12.3 19.2 Inner London 336.6 221.8 268.2 31.1 10.2% 4.6 4.3 5.4 _______ _______ _______ _______ _______ _______ _______ _______ Central London offices 3,327.7 2,971.7 3,055.0 138.8 4.4% 101.7 104.4 113.2 Rest of UK 71.6 61.6 63.2 3.2 4.7% 2.7 3.4 3.8 _______ _______ _______ _______ _______ _______ _______ _______ Total offices 3,399.3 3,033.3 3,118.2 142.0 4.4% 104.4 107.8 117.0 _______ _______ _______ _______ _______ _______ _______ _______ Industrial properties South-east 384.0 352.2 376.9 31.3 8.9% 9.9 11.2 11.1 Other 11.4 11.1 39.1 0.3 2.7% 0.5 1.5 1.7 _______ _______ _______ _______ _______ _______ _______ _______ 395.4 363.3 416.0 31.6 8.7% 10.4 12.7 12.8 _______ _______ _______ _______ _______ _______ _______ _______ Other 309.2 269.5 260.3 8.5 2.9% 4.4 5.0 5.0 _______ _______ _______ _______ _______ _______ _______ _______ Total portfolio 8,896.9 8,150.2 7,996.1 445.7 5.3% 252.2 257.9 257.2 _______ _______ _______ _______ _______ _______ _______ _______ 6 months ended 30 September 2004 (continued) Annual Annual Annual Annual Annual Annual Annual Annual Annual Net Net Yield Yield Gross Gross Gross net net Estimated Estimated on on Estimated Estimated Estimated rent rent Rental Rental Present Present Rental Rental Rental (7) (7) Value (8) Value (8) Income Income Value (9) Value (9) Value (9) 30-Sep-04 31-Mar-04 30-Sep-04 31-Mar-04 30-Sep-04 31-Mar-04 30-Sep-04 31-Mar-04 30-Sep-03 Â£m Â£m Â£m Â£m % % Â£m Â£m Â£m The like-for-like portfolio Shopping centres & shops Regional shopping centres 66.3 64.8 72.3 71.7 5.9% 6.1% 79.3 78.7 75.9 Central London shops 39.3 38.6 42.4 42.2 6.1% 6.2% 43.3 43.0 43.1 Other in-town shops 25.8 25.4 30.4 29.7 5.5% 5.8% 32.7 32.1 31.4 _______ _______ _______ _______ _______ _______ _______ _______ _______ 131.4 128.8 145.1 143.6 5.8% 6.1% 155.3 153.8 150.4 _______ _______ _______ _______ _______ _______ _______ _______ _______ Retail warehouses Retail parks 51.0 49.8 62.1 57.4 4.6% 5.0% 62.1 57.4 57.5 Other 14.3 13.6 16.3 16.1 6.7% 5.6% 16.3 16.1 14.8 _______ _______ _______ _______ _______ _______ _______ _______ _______ 65.3 63.4 78.4 73.5 4.9% 5.2% 78.4 73.5 72.3 _______ _______ _______ _______ _______ _______ _______ _______ _______ _______ _______ _______ _______ _______ _______ _______ _______ _______ Total retail 196.7 192.2 223.5 217.1 5.5% 5.7% 233.7 227.3 222.7 _______ _______ _______ _______ _______ _______ _______ _______ _______ Offices West End 85.2 85.8 92.7 90.2 6.4% 6.6% 94.2 91.7 90.9 City 69.4 70.1 59.4 58.8 8.8% 9.3% 60.1 59.5 59.0 Midtown 13.3 18.6 19.0 18.9 5.6% 8.4% 19.7 19.6 19.8 Inner London 4.6 4.7 5.7 5.6 6.1% 6.2% 5.7 5.6 5.4 _______ _______ _______ _______ _______ _______ _______ _______ _______ Central London offices 172.5 179.2 176.8 173.5 7.1% 7.6% 179.7 176.4 175.1 Rest of UK 4.7 4.7 5.6 5.2 9.2% 9.8% 5.7 5.3 4.8 _______ _______ _______ _______ _______ _______ _______ _______ _______ Total offices 177.2 183.9 182.4 178.7 7.1% 7.7% 185.4 181.7 179.9 _______ _______ _______ _______ _______ _______ _______ _______ _______ Industrial properties South-east 16.7 16.9 19.9 19.4 5.9% 6.6% 19.9 19.4 19.3 Other 1.2 1.1 1.0 1.0 10.5% 9.9% 1.0 1.0 0.8 _______ _______ _______ _______ _______ _______ _______ _______ _______ 17.9 18.0 20.9 20.4 6.0% 6.7% 20.9 20.4 20.1 _______ _______ _______ _______ _______ _______ _______ _______ _______ Other 5.9 5.9 6.1 5.7 6.3% 6.6% 6.2 5.8 5.6 _______ _______ _______ _______ _______ _______ _______ _______ _______ Like-for-like portfolio 397.7 400.0 432.9 421.9 6.2% 6.5% 446.2 435.2 428.3 Completed developments 27.3 22.1 40.6 39.2 4.3% 3.9% 40.6 39.2 38.7 _______ _______ _______ _______ _______ _______ _______ _______ _______ Total 425.0 422.1 473.5 461.1 6.0% 6.3% 486.8 474.4 467.0 Acquisitions 36.8 15.7 38.0 14.2 6.4% 6.5% 38.1 14.3 5.6 Sales and restructured n/a n/a n/a n/a n/a n/a n/a n/a n/a interests Total development Programme (Including Kent Thameside) n/a n/a n/a n/a n/a n/a n/a n/a n/a _______ _______ _______ _______ _______ _______ _______ _______ _______ Total portfolio excluding joint ventures n/a n/a n/a n/a n/a n/a n/a n/a n/a Joint ventures n/a n/a n/a n/a n/a n/a n/a n/a n/a _______ _______ _______ _______ _______ _______ _______ _______ _______ Total portfolio n/a n/a n/a n/a n/a n/a n/a n/a n/a _______ _______ _______ _______ _______ _______ _______ _______ _______ Total portfolio analysis Shopping centres & shops Regional shopping centres 110.9 98.2 134.2 120.6 5.7% 5.5% Central London shops 46.6 47.1 56.9 63.6 5.6% 5.7% Other in-town shops 32.1 34.4 39.5 40.7 5.4% 5.9% _______ _______ _______ _______ _______ _______ 189.6 179.7 230.6 224.9 5.6% 5.6% _______ _______ _______ _______ _______ _______ Retail warehouses Retail parks 53.4 51.6 67.3 61.6 4.5% 4.9% Other 14.3 13.9 16.3 16.4 6.7% 5.8% _______ _______ _______ _______ _______ _______ 67.7 65.5 83.6 78.0 4.8% 5.1% _______ _______ _______ _______ _______ _______ _______ _______ _______ _______ _______ _______ Total retail 257.3 245.2 314.2 302.9 5.4% 5.5% _______ _______ _______ _______ _______ _______ Offices West End 93.9 94.3 129.0 123.3 5.6% 6.1% City 79.0 73.5 82.1 76.6 8.0% 7.7% Midtown 13.3 19.5 19.0 19.7 4.0% 8.3% Inner London 13.8 6.5 25.4 18.9 4.1% 2.9% _______ _______ _______ _______ _______ _______ Central London offices 200.0 193.8 255.5 238.5 6.0% 6.5% Rest of UK 6.8 6.5 7.5 7.3 9.5% 10.6% _______ _______ _______ _______ _______ _______ Total offices 206.8 200.3 263.0 245.8 6.1% 6.6% _______ _______ _______ _______ _______ _______ Industrial properties South-east 20.1 19.2 27.4 26.6 5.2% 5.5% Other 1.2 1.1 1.0 1.0 10.5% 9.9% _______ _______ _______ _______ _______ _______ 21.3 20.3 28.4 27.6 5.4% 5.6% _______ _______ _______ _______ _______ _______ Other 11.5 10.0 14.4 12.6 3.7% 3.7% _______ _______ _______ _______ _______ _______ Total portfolio 496.9 475.8 620.0 588.9 5.6% 5.8% _______ _______ _______ _______ _______ _______ 6 months ended 30 September 2004 (continued) Lease Lease Length Length Voids Voids Voids as at as at (by ERV) (by ERV) (by ERV) 30th Sept 30th Sept (10) (10) (10) 2004 (11) 2004 (11) 30-Sep-04 31-Mar-04 30-Sep-03 Median Mean % % % Years (i) Years (ii) The like-for-like portfolio Shopping centres & shops Regional shopping centres 1.3% 1.0% 1.1% 9.3 9.8 Central London shops 0.7% - 1.4% 7.3 8.9 Other in-town shops 4.3% 4.4% 3.8% 7.5 10.0 _______ _______ _______ _______ _______ 1.7% 1.4% 1.7% 8.0 9.6 _______ _______ _______ _______ _______ Retail warehouses Retail parks 2.4% 2.1% 3.3% 16.8 15.0 Other 1.2% 1.9% - 14.5 12.6 _______ _______ _______ _______ _______ 2.2% 2.0% 2.6% 16.3 14.5 _______ _______ _______ _______ _______ _______ _______ _______ _______ _______ Total retail 1.9% 1.6% 2.0% 10.0 11.1 _______ _______ _______ _______ _______ Offices West End 2.3% 2.5% 1.2% 7.0 9.7 City 3.0% 3.0% 3.6% 3.0 9.1 Midtown 35.5% 6.6% 4.5% 4.8 5.9 Inner London - - - 1.8 2.9 Central London offices _______ _______ _______ _______ _______ 6.1% 3.1% 2.3% 4.8 9.0 Rest of UK 10.5% 9.4% 10.4% 1.0 5.5 _______ _______ _______ _______ _______ Total offices 6.3% 3.2% 2.6% 4.8 8.9 _______ _______ _______ _______ _______ Industrial properties South-east 6.5% 10.8% 9.3% 5.8 5.6 Other - 10.0% - 14.3 18.1 _______ _______ _______ _______ _______ 6.2% 10.8% 9.0% 6.0 6.4 _______ _______ _______ _______ _______ Other 1.6% 1.7% 1.8% 7.8 21.0 _______ _______ _______ _______ _______ Like-for-like portfolio 3.9% 2.7% 2.6% 7.0 10.1 Completed developments 1.2% 30.1% 37.5% 11.8 10.9 _______ _______ _______ _______ _______ Total 3.7% 5.0% 5.5% 7.3 10.1 Acquisitions 0.8% 0.7% - 8.5 12.5 Sales and restructured interests n/a n/a n/a n/a n/a Total development programme (Including Kent Thameside) n/a n/a n/a n/a n/a _______ _______ _______ _______ _______ Total portfolio excluding joint ventures n/a n/a n/a n/a n/a Joint ventures n/a n/a n/a n/a n/a _______ _______ _______ _______ _______ Total portfolio n/a n/a n/a n/a n/a _______ _______ _______ _______ _______ Notes (1) The like-for-like portfolio includes all properties which have been in the portfolio since 1 April 2003 but excluding those which were acquired, sold or included in the development programme at any time during that period. Capital expenditure on refurbishments, acquisition of headleases and similar capital expenditure has been allocated to the like-for-like portfolio in preparing this table. Changes in valuation from period to period reflect this capital expenditure as well as the disclosed valuation surpluses. (2) Completed developments represent those properties, previously included in the development programme, which have been completed, let and removed from the development programme in the period since 1 April 2003. (3) Includes all properties acquired in the period since 1 April 2003. (4) Includes all properties sold (other than directly out of the development programme), or where the ownership interest has been restructured, in the period since 1 April 2003. (5) Ongoing developments are properties in the development programme and Kent Thameside. They exclude completed developments as defined in note (2) above. (6) The open market value figures include the group share of the various joint ventures and exclude properties owned by Land Securities Trillium and Telereal. (7) Annual net rent is annual rents in payment at 30 September 2004 after deduction of ground rents. It excludes the value of voids and current rent free periods. (8) Annual net estimated rental value includes vacant space, rent-frees and future estimated rental values for properties in the development programme and is calculated after deducting expected ground rents. (9) Annual gross estimated rental value is calculated in the same way as net estimated rental value before the deduction of ground rents. (10) Voids represent all unlet space in the properties, including voids where refurbishment work is being carried out and voids in respect of pre-development properties. Voids are calculated based on their gross estimated rental value as defined in (9) above. (11) The definition for the figures in each column is: (i) Mean is rent-weighted average remaining term on leases subject to lease expiry/break clauses. (ii) Median is the number of years until half of income is subject to lease expiry/break clauses. Business Analysis Investment portfolio valuation Total investment portfolio analysis Current gross rent roll % _________ 1 Central Government 9.34 2 Allen & Overy 2.83 3 Dresdner Bank AG 2.22 4 DSG Retail (Currys/Dixons /PC World) 2.18 5 J Sainsbury PLC 1.68 6 Argos and Homebase 1.54 7 Metropolitan Police Authority 1.39 8 Arcadia Group 1.21 9 Deloitte & Touche 1.03 10 The Boots Company PLC 1.01 11 The Institute of London Underwriters 0.97 12 MFI 0.97 __________ Total 26.37 Portfolio value by location % figures calculated by reference to the portfolio value of Â£8,896.9m Shopping centres Retail Offices and shops Warehouse Industrial Other Total % % % % % % Central and Inner London 37.4 9.9 - 0.1 0.9 48.3 Rest of south-east and eastern 0.4 5.4 4.6 4.1 1.8 16.3 Midlands 0.1 5.2 2.4 - - 7.7 Wales and south-west 0.2 5.2 1.4 - - 6.8 North, north-west, Yorkshire and Humberside 0.1 7.3 5.3 0.1 0.7 13.5 Scotland and Northern Ireland 0.1 5.1 2.1 - 0.1 7.4 _______ _______ _______ _______ _______ _______ Total 38.3 38.1 15.8 4.3 3.5 100.0 ====== ====== ====== ====== ====== ====== Average rents excludes properties in the development programme and voids Average Average rent ERV Â£/sq m Â£/sq m Offices Central and Inner London 358 321 Rest of UK 105 99 Retail Shopping centres and shops n/a n/a Retail warehouses (including supermarkets) 164 181 Industrial premises and warehouses London, south-east and eastern 72 74 Rest of UK n/a n/a Hotels, leisure, residential and other n/a n/a Note: Average rents and estimated rental values (ERVs) have not been provided where it is considered that the figures would be potentially misleading (i.e. where there is a combination of analysis of rents on an overall and Zone A basis in the retail sector; or where there is a combination of uses; or small sample sizes). This is not a like-for-like analysis with the previous year. It excludes properties in the development programme and voids. Like-for-like reversionary potential at 30 September 2004 Reversionary potential 30/09/04 31/03/03 (ignoring additional income % of rent roll % of rent roll from the letting of voids) Gross reversions 9.5 10.0 Over-rented 7.1 8.0 Net reversionary potential 2.4 2.0 Note: The reversion is calculated with reference to the gross secure rent roll and those properties which fall under the like-for-like definition as set out in the Notes to Portfolio Analysis in the Total Investment Portfolio Analysis above. Only 44.0% of the over-rented income is subject to a lease expiry or break clause in the next five years. % Portfolio by value and number of properties at 30 September 2004 No of Â£m Value % properties 0 - 9.99 3.7 72 10 - 24.99 8.7 46 25 - 49.99 20.4 50 50 - 99.99 19.3 24 Over 100 47.9 25 ------ ------ 100.0 217 ====== ====== Note: Excludes properties held through the Scottish Retail Limited Partnership and the Metro Shopping Fund Development Pipeline Schedule Planning - PR = planning received; AS = application submitted; MG = minded to grant; PI = planning inquiry; OPR = outline planning received Retail Estimated/ Actual Status Status completion Cost Property Description Size Planning Letting date Â£m Shopping Centres Developments Approved and in Progress Whitefriars, Canterbury Retail 37,160 sq m 60% July 2005 107 Residential 3,260 sq m Caxtongate Phase III, Retail 2,240 sq m 100% Jan 2005 5 New Street, Birmingham Summerland Gate, Exeter Retail 5,380 sq m 55% Mar 2005 12 Residential 1,390 sq m Rose Lane Canterbury (100%) - Retail 1,500 sq m 76% Nov 2004 3 a limited partnership Proposed Developments Broadmead, Bristol (100%) Retail 83,610 sq m PR 2008 The Bristol Alliance - a limited Leisure 9,000 sq m PR partnership with Hammerson plc Offices 28,000 sq m OPR Residential 18,740 sq m PR Princesshay, Exeter Retail 37,360 sq m PR 15% 2007 Residential 7,200 sq m St David's Cardiff (100%) Retail/ 70,000 sq m OPR 2008 leisure St David's Partnership - a Residential 39,750 sq m partnership with Capital Shopping Centres Retail Warehouse Developments Completed Kingsway Retail Park, Retail 8,650 sq m 55% May 2004 15 Dundee, Phase II Warehouses Developments Approved and in Progress Bexhill Retail Park, Extension Retail 3,110 sq m 100% June 2005 12 Warehouses Almondvale South, Livingston, Retail 5,300 sq m 100% Feb 2005 6 Phase ll a Warehouses Proposed Developments Almondvale South, Livingston, Retail 4,180 sq m PR 2005 Phase ll b Warehouses London Portfolio Estimated/ Actual Status Status completion Cost Property Description Size Planning Letting date Â£m Central London and Inner London properties Developments, let and transferred or sold Empress State Building, SW6 Offices 41,290 sq m 100% Jul 2003 103 Retail & leisure 2,040 sq m Developments Completed 30 Gresham Street, EC2 Offices 35,150 sq m Dec 2003 210 Retail 1,300 sq m Developments Approved and in Progress Cardinal Place, SW1 Offices 51,130 sq m 4% Aug 2005 254 Retail 9,420 sq m 40 Eastbourne Terrace, W2 Offices 7,640 sq m MG Oct 2005 12 120 Cheapside, EC2 Offices 15,020 sq m MG* Sep 2007 104 Retail 1,500 sq m Proposed Developments New Street Square, EC4 Offices 62,340 sq m MG 2008 Retail/Leisure 2,980 sq m Bankside 2&3, SE1 Offices 34,990 sq m PR 2007 Retail/Leisure 3,160 sq m Industrial Developments, let and transferred or sold Juniper Phase l, Basildon Industrial 21,820 sq m 100% Nov 2001 18 refurbishment Offices 3,660 sq m Developments Completed Juniper Phase ll, Basildon Industrial 11,150 sq m 47% Apr 2003 8 Zenith, Basildon Industrial 15,130 sq m 55% Jun 2002 12 Oxonian Park, Kidlington Industrial 11,800 sq m 13% Sept 2003 9 Cobbett Park, Guildford Industrial 11,440 sq m 47% Aug 2002 11 Commerce Way, Croydon Industrial 12,620 sq m 14% Oct 2003 12 Concorde Way, Industrial 11,620 sq m Jun 2004 9 Segensworth, Fareham Other Developments Completed The Gate, Newcastle upon Leisure 17,560 sq m 92% Nov 2002 65 Tyne *Minded to grant consent obtained after 30 September 2004 Cost (Â£m) refers to estimated capital expenditure including the cost of third party acquisitions and excluding finance costs. Letting % is measured by ERV and shows letting status at 30 September 2004. Trading Property development schemes and the Kent Thameside project are excluded from the development pipeline. Development pipeline - financial statistics Valuation Cumulative surplus/ valuation Book Capital Estimated Estimated (deficit) surplus / Net value expenditure total capital total 6 mth to (deficit) to Income/ at start to date Expenditure cost 30.09.04 Date (3) ERV (1) (1) (2) (4) Â£m Â£m Â£m Â£m Â£m Â£m Â£m ---------- ----------------- --------------- ------------- ------------- ----------------- --------- Project Completed, let and transferred out of Development programme or sold during the year ended 30.9.04 22 117 121 149 38 1 13 Active development programme (schemes in progress, completed but not let, committed and authorised) 163 619 877 1,091 33 (85) 85 Proposed schemes(5) 156 14 966 1,159 n/a n/a 88 Notes (1) Excludes capitalised interest. (2) Includes land costs / book value of land and capitalised interest, but excludes any allowances for rent free periods. Stated net of other receipts (eg sales of residential units). (3) Includes FRS3 profit realised on the disposal of property. (4) Net headline annual rental payable on let units plus net ERV at 30 September 2004 on unlet units. (5) The book value of the proposed schemes reflects the value as at 31 March 2004 which reflects any value attributable to expenditure prior to 31 March 2004. Therefore the capital expenditure shown in the 'capital expenditure to date' column represents only that expenditure incurred in the period to 30 September 2004. Property Outsourcing Unexpired contract term at 30 September 2004 years DWP - Prime 13.5 DWP - Employment services (ES) 13.5 BBC 27.0 Norwich Union (NU) 25.0 Telereal (BT) 27.0 Property under management Freehold Leasehold TOTAL 000 sq m 000 sq m 000 sq m Offices DWP - Prime 650 1,030 1,680 DWP - ES 226 590 816 BBC 82 - 82 NU 42 73 115 BT 883 609 1,492 Telephone Exchanges BT 3,528 97 3,625 ----- ----- ----- Total 5,411 2,399 7,810 ===== ===== ===== Under management but estate not transferred DWP - Prime 67 DWP - ES 40 BBC 290 NU BT ----- Total 8,207 ===== Regional breakdown by contract DWP - Prime DWP- ES BBC NU Telereal Total 000 sq m 000 sq m 000 sq m 000 sq m 000 sq m 000 sq m Northern Ireland - - - 112 112 London, south-east and West England 522 351 346 61 2,510 3,789 Northern England 693 241 - 32 1,014 1,980 Scotland 232 80 26 22 453 813 Midlands and Wales 301 184 - - 1,028 1,513 ----- ----- ---- ----- ----- ----- Total 1,747 856 372 115 5,117 8,207 ===== ===== ==== ===== ===== ===== Number of people by occupation Total Asset management 107 Call centre 152 Capital projects 331 Quality assurance 56 Facilities management 685 HR/finance/business development 171 ----- Total 1,502 ===== Note: These figures include all Telereal staff Property transactions concluded by contract DWP - Prime DWP - ES BBC NU Telereal TOTAL No of No of No of No of No of no of transactions transactions transactions transactions transactions transactions Sales 2 6 - 2 18 28 New Lettings 25 5 6 5 41 Rent Reviews 22 34 - 33 89 Lease Renewals 18 8 - 1 27 Freehold buy-ins 3 - - 2 - 5 Other 5 5 - - 10 --- --- ---- ---- ---- ---- TOTAL 75 58 6 4 57 200 === === ==== ==== ==== ==== Service partner agreements Proportion of service providers' Service Partner Service Element turnover Compass Catering <5% Dalkia Building maintenance 10 - 15% Group 4 Security 15 - 20% GS Hall Building maintenance 20 - 25% ISS Cleaning <5% MiB Furniture 15 - 20% MITIE Cleaning <5% Norland Facilities Management <5% OCS Cleaning <5% Securitas Security <5% Wilson James Security 20 - 25% Total Average contract length of above Service Partners: 10.8 yrs Average contract time remaining of above Service Partners: 8.5 yrs Average annual contract value of above Service Partners: 16.7 Â£m / pa LS Trillium Contract Analysis Six months to 30 September 2004 Contract Contract Contract Contract Contract Time DWP DWP Norwich Telereal Units period PRIME ES BBC Union (50%) Contract length Term Years 20 14.5 30 25 30 Expiry date Date Mar-18 Mar-18 Nov-31 Jun-29 Nov-31 _______ _______ _______ _______ _______ _______ _______ Floorspace Client occupied 1,613 736 81 107 4,891 Sublet 38 22 1 8 132 Vacant 29 57 0 0 94 Total All All 1,680 816 82 115 5,117 Freeholds/valuable Sq m at leasehold ('000) Sept 04 650 227 82 42 4,411 Leaseholds 1,031 589 - 73 706 Total 1,680 816 82 115 5,117 Estate managed but not transferred 67 40 290 - - _______ _______ _______ _______ _______ Income Unitary charge (inc sublet income) All All HY 163 96 58 3 82 Client discretionary projects Â£m Apr 04 53 - 16 - - Sales of trading to Sep 04 - - - 85 24 properties _______ _______ _______ _______ _______ Gross property income 216 96 74 88 106 _______ _______ _______ _______ _______ _______ _______ Costs Rent payable (51) (34) - (1) (18) Service partners (43) (26) (26) (1) - Client discretionary projects All All (51) - (14) - - Cost of sales of trading HY Apr to properties Â£m Sep 04 (81) (9) Other costs (43) (24) (24) (2) (13) _______ _______ _______ _______ _______ Bid costs (1) Operating profit 28 12 10 2 66 Profit on sale of fixed assets 1 5 5 _______ _______ _______ _______ _______ Segment profit 29 17 10 2 71 _______ _______ _______ _______ _______ _______ _______ _______ _______ _______ _______ _______ Capital sums Book value of investment in JV (53) _______ _______ Book value of operating Properties Â£m 30-Sep-04 470 470 286 11 1,026 _______ _______ _______ _______ _______ _______ _______ _______ _______ Vacation Allowance utilised to date 57,000 38,000 Â£2,404K Available allowance 173,000 62,000 Â£104K Future allowance 240,000 128,000 Â£13,242K _______ _______ _______ _______ _______ _______ _______ Notes General 1. Revenues and costs relate to our 50% share of Telereal Floorspace 1. Values relate to floorspace on 30 Sept 2004 2. Estate managed but not transferred for PRIME and Employment Services relates to DWP space occupied in other government departments 3. Estate managed but not transferred for BBC relates to the London and Scotland estate with the exception of White City which did transfer 4. All seven properties sold or to be sold under the Norwich Union contract have been shown as leaseholds Income 1. Client discretionary projects are non-contractual works conducted by LS Trillium or Telereal at the request of the client 2. Other income on Norwich Union contract relates to the onward sale of 6 properties with the completion of the final sale imminent Costs 1. Property costs excluding rent consists of fees, service charges, empty rates, insurance, etc. 2. Facilities management costs relate to all hard and soft services e.g. maintenance, cleaning, security, catering, etc. 3. Lifecycle capital replacement (LCR) accounting policy goes to the level of individual projects which are either capitalised or written-off as described below 4. Client discretionary projects are non-contractual works conducted by LS Trillium or Telereal at the request of the client 5. Overhead costs are based on full time equivalents working on each of the contracts. In addition, LS Trillium also incurs corporate overheads of approx. Â£3.0m relating to senior management, the business development team, etc. 6. Other costs for DWP, BBC and Telereal include estates capital expenditure, dilapidations, bad debts, profit/loss on sales, other billable costs, etc. 7. Depreciation relates to fixed assets on the balance sheet. Capital sums 1. Book value of operating properties for Prime and ES have been combined. Vacation 1. Vacation allowances on the DWP contract are linked to floorspace while those on the BT contract are linked to income 2. Vacation on the DWP contract will release a mixture of freeholds and leaseholds. It may be assumed for forecasting purposes that the tenure split for vacation is similar to the split shown above 3. Vacation allowances shown above for Telereal relate to freeholds and valuable leaseholds. In addition, BT have the ability to vacate properties on pre-specified dates: a. vacation dates on leaseholds coincide with lease expiry dates b. BT has vacated most freeholds with pre-specified dates 4. Land Securities Trillium's strategy is to sell the freeholds and sublet the leaseholds to lease expiry Accounting 1. Freeholds are held on the balance sheet and depreciated over a period of 50 years 2. Between 50% to 60% of LCR works are capitalised Depreciation periods range from 15 to 25 years is further limited to the end of the lease or contract if works relate to leaseholds Review report by the auditors Independent review report to Land Securities Group PLC Introduction We have been instructed by the Company to review the financial information set out in the Group accounts and the Notes to the accounts. We have read the other information contained in the interim report and considered whether it contains any apparent misstatements or material inconsistencies with the financial information. Directors' responsibilities The interim report, including the financial information contained therein, is the responsibility of, and has been approved by, the directors. The directors are responsible for preparing the interim report in accordance with the Listing Rules of the Financial Services Authority which require that the accounting policies and presentation applied to the interim figures should be consistent with those applied in preparing the preceding annual accounts except where any changes, and the reasons for them, are disclosed. Review work performed We conducted our review in accordance with guidance contained in Bulletin 1999/4 issued by the Auditing Practices Board for use in the United Kingdom. A review consists principally of making enquiries of group management and applying analytical procedures to the financial information and underlying financial data and, based thereon, assessing whether the accounting policies and presentation have been consistently applied unless otherwise disclosed. A review excludes audit procedures such as tests of controls and verification of assets, liabilities and transactions. It is substantially less in scope than an audit performed in accordance with Auditing Standards and therefore provides a lower level of assurance than an audit. Accordingly we do not express an audit opinion on the financial information. This report, including the conclusion, has been prepared for and only for the Company for the purpose of the Listing Rules of the Financial Services Authority and for no other purpose. We do not, in producing this report, accept or assume responsibility for any other purpose or to any other person to whom this report is shown or into whose hands it may come save where expressly agreed by our prior consent in writing. Review conclusion On the basis of our review we are not aware of any material modifications that should be made to the financial information as presented for the six months ended 30 September 2004. PricewaterhouseCoopers LLP Chartered Accountants London 17 November 2004 This information is provided by RNS The company news service from the London Stock Exchange KKDD

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