Re. IFRS Seminar
Land Securities Group Plc
07 February 2005
07 February 2005
LAND SECURITIES HOSTS INTERNATIONAL FINANCIAL REPORTING STANDARDS SEMINAR
Land Securities Group PLC ('Land Securities' / 'Group') announces that it is
today holding an International Financial Reporting Standards ('IFRS') seminar at
the London Stock Exchange, Paternoster Square, London, EC4M, which will provide
information on the qualitative effect of the move to IFRS on Land Securities
financial reports. Land Securities will first report under IFRS for the six
months to 30 September 2005. The Company intends to release restated financial
statements in June 2005 for the six months ended 30 September 2004 and the year
to 31 March 2005.
The seminar will be hosted by Andrew Macfarlane, Land Securities' Group Finance
Director and the other speakers will be David Holt, Director of Finance and
Robert Fryer, Technical Accounting Director. The presentations will cover the
following topics:-
• Overview of IFRS
• Investment portfolio effects
• Leases, LS Trillium and other issues
• Derivatives, debt and performance measures
The underlying performance, economics and strategy of the Group will remain
unaffected by the introduction of IFRS. However, the new standards will
represent a major change in accounting and reporting. The most significant
changes relate to the treatment of investment property valuation movements,
contingent tax on capital gains, the reclassification of certain transactions as
finance leases, accounting for the 2004 debt refinancing, interest rate hedges
and dividends payable.
Investment property valuation movements
Investment properties will continue to be revalued every six months, however
revaluation movements will in future go through the income statement rather than
directly to reserves.
Contingent tax on capital gains
Land Securities will make full provision on its balance sheet for the latent tax
on capital gains arising from the revaluation of its investment properties,
regardless of whether these liabilities are expected to crystallise. Any
movements in that provision will be taken through the income statement.
Finance Leases
Certain transactions with occupiers, and some leases where the Group is itself a
tenant, are likely to be treated as finance leases. In these cases the
commercial relationship will effectively be treated as a notional loan, with
rent or part of the unitary charge being treated instead as notional payments of
principal and interest.
Debt refinancing
The increase in the nominal value of the Group's bond debt following last year's
debt refinancing and the consequent reduction in coupon rates will result in an
exceptional non-cash loss and reduced interest expense in the Group's UK GAAP
accounts for the year ending 31 March 2005, as previously announced.
IAS39 will require the effective reversal of this accounting treatment and the
reinstatement of the old debt onto the balance sheet, even though legally it has
been extinguished. In addition, the old bonds will be amortised up to the
higher redemption amount of the new debt over the life of the new bonds by
charging the income statement. The tax treatment of the debt refinancing will
be unchanged.
Interest rate hedges
There will be new criteria to determine when hedge accounting can be applied.
Land Securities uses interest rate derivatives to manage its interest rate
exposure. Currently, under UK GAAP, these derivatives are treated as hedges and
the net interest payable or receivable is taken to the profit and loss account
as incurred.
Under IFRS it is likely that part of the hedging portfolio, while commercially
hedging interest rate exposures, will not qualify for hedge accounting
treatment. Any such derivatives will be marked to market through the income
statement, which may introduce an element of volatility to reported results.
Dividends payable
Currently dividends are charged against the profit and loss account when
proposed. In future dividends will only be recognised once they are a legal
obligation of the Group. Dividends, therefore, will effectively be accounted
for on a cash basis.
Other, less significant differences resulting from IFRS will be covered in the
seminar. A live audio webcast of the presentations will be available on the
Group's website at 16:15 (www.landsecurities.com/ifrsseminar). The presentation
slides, speaker notes and an archive video webcast will be available tomorrow
morning.
Important notice
The information contained in this press release and the seminar is based on our
current interpretation of IFRS.
-Ends-
For further information, please contact:
Land Securities
Andrew Macfarlane/Emma Denne/Jen van der Eem
Tel: +44(0) 20 7413 9000
Financial Dynamics
Stephanie Highett
Tel: +44(0) 20 7831 3113
Note to Editors
Land Securities is a FTSE 100 company, quoted on the London Stock Exchange. It
has been at the forefront of the UK's commercial property industry for 60 years.
Today, the Group maintains its market leading position as the UK's largest
quoted property company by providing commercial accommodation and property
services to a wide range of occupiers. The Group's objective is to create
attractive and sustainable returns for its shareholders through its activities,
which include property investment, development and property outsourcing.
Land Securities holds a market leading position in three areas of the UK
commercial property market:
• Retail
• Central London offices and
• Property outsourcing.
Its £8.9 billion investment portfolio includes more than 810,000 sq m of office
space in Central London and substantial retail holdings in Oxford Street,
Tottenham Court Road and Notting Hill Gate. In addition the Group owns 18
shopping centres and 25 retail parks located across the UK.
This information is provided by RNS
The company news service from the London Stock Exchange
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