Interim Results. Part 2
Land Securities Group Plc
17 November 2004
PART 2
Consolidated profit and loss account for the six months ended 30 September 2004
Six months Six months Year
ended ended ended
30 Sept 2004 30 Sept 2003 31 March 2004
Notes Unaudited Unaudited audited
£m £m £m
Gross property income - Group 2 845.7 561.0 1,285.8
Plus share of joint ventures 2, 10 120.2 85.8 195.3
--------- --------- ---------
Gross property income - Total 2 965.9 646.8 1,481.1
====== ====== ======
Operating profit - Group (pre-exceptional costs) 2 247.6 231.0 464.7
Exceptional costs 2 (5.2) - -
--------- --------- ---------
Operating profit - Group (post-exceptional costs) 2 242.4 231.0 464.7
Share of operating profits of joint ventures 2, 10 74.3 48.8 101.1
--------- --------- ---------
Operating profit 2, 10 316.7 279.8 565.8
Profit on sales of fixed asset properties (including share of
joint ventures) 12.5 14.7 63.9
--------- --------- ---------
Profit on ordinary activities before interest and taxation 2 329.2 294.5 629.7
Net interest payable by Group 3 (98.1) (77.5) (174.4)
Net interest payable by joint ventures 3 (34.5) (35.3) (82.2)
--------- --------- ---------
Profit on ordinary activities before taxation 196.6 181.7 373.1
Taxation 5 (60.6) (50.7) (84.8)
--------- --------- ---------
Profit on ordinary activities after taxation 136.0 131.0 288.3
Dividends 6 (48.8) (46.3) (173.2)
--------- --------- ---------
Retained profit for the financial period 16 87.2 84.7 115.1
====== ====== ======
Earnings per share
Basic earnings per share 7 29.14p 28.10p 61.84p
Diluted earnings per share 7 29.05p 28.09p 61.76p
Adjusted earnings per share* 7 28.65p 25.56p 47.86p
Adjusted diluted earnings per share* 7 28.56p 25.55p 47.80p
Dividends per share 6 10.40p 9.90p 37.10p
All income was derived from within the United Kingdom from continuing
operations. No operations were discontinued during the period.
* the comparatives for the six months ended 30 September 2003 have been restated
as set out in Note 7
Statement of total recognised gains and losses for the six months ended 30
September 2004
Six months Six months Year
ended ended ended
30 Sept 2004 30 Sept 2003 31 March 2004
Notes Unaudited Unaudited audited
£m £m £m
Profit on ordinary activities after taxation 136.0 131.0 288.3
Unrealised surplus on revaluation of investment properties 427.1 153.0 400.7
Unrealised surplus on revaluation of joint venture's 18.6 - 6.2
investment properties
Unrealised profits on disposal of investment properties to 0.9 - -
joint venture
Taxation on revaluation surpluses realised on sales of
investment properties (2.2) (3.6) (27.3)
--------- --------- ---------
Total gains and losses recognised since the last financial 580.4 280.4 667.9
statements
====== ====== ======
Balance sheet at 30 September 2004
Six months Six months Year
ended ended ended
30 Sept 2004 30 Sept 2003 31 March 2004
Notes Unaudited £m Unaudited £m audited £m
Fixed assets
Intangible asset
Goodwill 33.1 35.6 34.3
Tangible assets
Investment properties 9 8,465.5 7,976.8 7,880.9
Operating properties 9 766.9 652.0 769.2
--------- ---------- ---------
Total properties 9 9,232.4 8,628.8 8,650.1
Other tangible fixed assets 56.6 46.4 51.0
9,289.0 8,675.2 8,701.1
Investment in joint ventures
Share of gross assets of joint ventures 10 414.2 1,136.0 257.2
Share of gross liabilities of joint ventures 10 (117.8) (1,047.0) (5.1)
--------- ---------- ---------
296.4 89.0 252.1
--------- ---------- ---------
9,618.5 8,799.8 8,987.5
====== ====== ======
Current assets
Stock 11 108.9 52.7 85.0
Debtors falling due within one year 12 394.7 248.9 339.7
Debtors falling due after one year 12 63.3 13.5 20.4
Investments: short term deposits 114.0 103.8 219.0
Cash at bank and in hand 13.8 65.9 22.8
--------- --------- ---------
694.7 484.8 686.9
Creditors falling due within one year 13 (676.3) (988.5) (1,371.2)
--------- --------- ----------
Net current assets / (liabilities) 18.4 (503.7) (684.3)
====== ====== ======
Total assets less current liabilities 9,636.9 8,296.1 8,303.2
====== ====== ======
Creditors falling due after one year
Debentures, bonds and loans 14 (2,774.1) (2,309.1) (1,995.9)
Other creditors (38.4) (20.9) (35.9)
Provision for liabilities and charges 15 (194.9) (187.1) (185.0)
Investment in joint ventures (Telereal)
Share of gross assets of joint venture 10 1,101.5 - 1,108.0
Share of gross liabilities of joint venture 10 (1,154.1) - (1,155.9)
--------- --------- ----------
(52.6) - (47.9)
--------- --------- ---------
6,576.9 5,779.0 6,038.5
====== ====== ======
Capital and reserves
Called up share capital 16 53.4 58.1 55.0
Share premium account 16 24.3 13.9 15.9
Capital redemption reserve 16 23.8 18.9 22.1
Revaluation reserve 16 3,553.8 3,097.1 3,112.8
Profit and loss account 16 2,921.6 2,591.0 2,832.7
--------- --------- ---------
Shareholders' funds (including non-equity 16 6,576.9 5,779.0 6,038.5
interests)
====== ====== ======
Net assets per share (basic) 8 1407p 1239p 1294p
Adjusted net assets per share (diluted)* 8 1443p 1264p 1331p
* the comparative in respect of the 30 September 2003 above has been restated as
set out in Note 8
Consolidated cash flow statement for the six months ended 30 September 2004
Six months ended Six months ended Year ended
30 Sept 2004 30 Sept 2003 31 March 2004
Unaudited £m Unaudited £m audited £m
Net cash inflow from operating activities 182.4 226.9 456.4
Distributions received from joint venture 176.2 25.5 51.0
Interest (paid) / received from joint venture (0.3) 4.0 7.6
Returns on investments and servicing of finance
Interest received 5.4 3.5 16.1
Interest paid (97.9) (103.1) (221.1)
Cost of debt refinancing (4.9) - (21.1)
--------- --------- ---------
Net cash outflow from investments and servicing of finance (97.4) (99.6) (226.1)
Taxation (Corporation tax received / (paid)) 4.4 (28.5) (37.1)
--------- --------- ---------
Net cash inflow from operating activities and investments 265.3 128.3 251.8
after finance charges
Capital expenditure
Development programme expenditure (71.4) (102.0) (190.2)
Acquisition of investment properties (254.3) (62.7) (205.1)
Other investment property related expenditure (31.3) (48.2) (111.0)
Capital expenditure associated with property outsourcing (23.9) (103.3) (234.5)
--------- --------- ---------
Capital expenditure on properties (380.9) (316.2) (740.8)
Sale of fixed asset investment properties 67.3 279.5 698.2
Sale of fixed asset operating properties 17.0 0.4 2.0
--------- --------- ---------
Net expenditure on properties (296.6) (36.3) (40.6)
Net expenditure on non-property related fixed assets (5.6) (10.4) (8.2)
--------- --------- ---------
Net cash outflow from capital expenditure (302.2) (46.7) (48.8)
Acquisitions
(Loans made to) / repayment of loan capital by joint venture (74.9) - 121.0
Equity dividends paid (126.9) (121.7) (167.5)
--------- --------- ---------
Cash (outflow) / inflow before use of liquid resources (238.7) (40.1) 156.5
Management of liquid resources (Investments: short term 105.0 (100.4) (215.6)
deposits)
Financing
Issue of shares 8.5 0.6 2.7
Purchase of own share capital (1.7) (18.8) (22.0)
Increase in debt 117.9 145.4 22.0
Net cash inflow from financing 124.7 127.2 2.7
--------- --------- ---------
Decrease in cash in period (9.0) (13.3) (56.4)
====== ====== ======
Reconciliation of net cash flow to movements in net debt
Decrease in cash in period (9.0) (13.3) (56.4)
Cash (inflow) / outflow from (decrease) / increase in liquid (105.0) 100.4 215.6
resources
Cash inflow from increase in debt (117.9) (145.4) (22.0)
--------- --------- ---------
Change in net debt resulting from cash flow (231.9) (58.3) 137.2
Non-cash changes in debt 3.1 0.2 16.3
--------- --------- ---------
Movement in net debt in period (228.8) (58.1) 153.5
Net debt at 1 April (2,435.8) (2,589.3) (2,589.3)
--------- --------- ---------
Net debt at 30 September / 31 March (2,664.6) (2,647.4) (2,435.8)
====== ====== ======
Reconciliation of Group operating profit to net cash inflow
from operating activities
Operating profit - Group 242.4 231.0 464.7
Depreciation and amortisation 11.3 12.5 31.5
Decrease / (increase) in stock 6.1 0.6 (3.6)
Increase in debtors (83.5) (6.3) (91.9)
Increase / (decrease) in creditors 6.1 (10.9) 55.7
-------- -------- --------
Net cash inflow from operating activities 182.4 226.9 456.4
====== ====== ======
Notes to the interim results
for the six months ended 30 September 2004
1. Interim results
The Accounting Standards Board (ASB) has issued a non-mandatory statement '
Interim Reports', which seeks to codify best practice in the presentation of
interim results. These Interim Results, which incorporate a revaluation of
investment properties as at 30 September 2004, have been prepared having regard
to the guidance in the ASB statement and on the basis of the accounting policies
set out in the Group's audited financial statements for the year ended 31 March
2004.
The financial information for the year ended 31 March 2004 has been extracted
from the Land Securities Group PLC consolidated financial statements to that
date, which received an unqualified auditors' report and did not contain a
statement under Section 237(2) or (3) of the Companies Act 1985 and have been
filed with the Registrar of Companies.
The Interim Results for the six months ended 30 September 2004 were approved by
the Directors on 17 November 2004.
2. Segmental information
An analysis of turnover, profit before interest and taxation, and net assets by
business sector is set out below. The business sectors consist of property
investment (which comprises the investment portfolio and development activities)
and property outsourcing.
(i) Profit and loss Six Six Six Six Six Six Year Year Year
account months months months months months months ended ended ended
ended 30 ended 30 ended 30 ended 30 ended 30 ended 30 31 March 31 March 31 March
Sept 2004 Sept 2004 Sept 2004 Sept 2003 Sept 2003 Sept 2003 2004 2004 2004
unaudited unaudited unaudited unaudited unaudited unaudited audited audited audited
Property Property Property Property Property Property
investment outsourcing Total investment outsourcing Total investment outsourcing Total
£m £m £m £m £m £m £m £m £m
Rental income (Note (a)) 252.2 - 252.2 257.2 - 257.2 515.1 - 515.1
Service charges and other
recoveries 36.9 - 36.9 29.2 - 29.2 65.6 - 65.6
Property services
income (Note (b)) - 472.1 472.1 - 338.5 338.5 - 802.0 802.0
Long term contract income 95.2 - 95.2 15.5 - 15.5 49.6 - 49.6
Proceeds of sales of
trading properties 0.1 109.4 109.5 2.8 3.6 6.4 19.9 28.9 48.8
Gross property income -
Group 370.0 475.7 845.7 304.7 256.3 561.0 649.6 636.2 1,285.8
Gross property income -
joint ventures 14.4 105.8 120.2 - 85.8 85.8 0.6 194.7 195.3
Gross property income -
Total 384.4 581.5 965.9 304.7 342.1 646.8 650.2 830.9 1,481.1
Rents payable (8.1) (104.3) (112.4) (6.8) (74.4) (81.2) (14.9) (164.7) (179.6)
Other direct property or
contract expenditure
(Note (c)) (46.4) (238.8) (285.2) (38.5) (171.0) (209.5) (87.1) (422.7) (509.8)
Indirect property or
contract expenditure (23.8) (9.0) (32.8) (20.8) (9.9) (30.7) (44.5) (30.4) (74.9)
Long term contract
expenditure (95.2) - (95.2) (15.5) - (15.5) (49.6) - (49.6)
Bid costs - (0.7) (0.7) - (1.7) (1.7) - (6.2) (6.2)
Costs of sales of trading
properties - (90.5) (90.5) (1.8) (1.8) (3.6) (18.2) (23.3) (41.5)
--------- --------- --------- --------- --------- --------- --------- --------- ---------
Operating profit before
depreciation and
amortisation 210.9 138.2 349.1 221.3 83.3 304.6 435.9 183.6 619.5
Depreciation (2.1) (19.9) (22.0) (2.0) (16.0) (18.0) (4.1) (36.4) (40.5)
Amortisation of goodwill - (1.2) (1.2) - (1.1) (1.1) - (2.4) (2.4)
Operating profit - Group* 200.2 51.4 251.6 219.3 17.4 236.7 431.3 44.2 475.5
Operating profit - joint
ventures* 8.6 65.7 74.3 - 48.8 48.8 0.5 100.6 101.1
Operating profit - Total* 208.8 117.1 325.9 219.3 66.2 285.5 431.8 144.8 576.6
Profit on sale of fixed
asset properties 1.7 10.8 12.5 11.7 3.0 14.7 52.1 11.8 63.9
--------- --------- --------- --------- --------- --------- --------- --------- ---------
Segment profit 210.5 127.9 338.4 231.0 69.2 300.2 483.9 156.6 640.5
====== ====== ====== ====== ====== ====== ====== ====== ======
Common costs (Note (d)) (4.0) (5.7) (10.8)
Exceptional costs of debt
restructuring (5.2) - -
--------- --------- ---------
Profit on ordinary
activities
before interest and
taxation 329.2 294.5 629.7
====== ====== ======
* pre-exceptional costs and common costs
Profit on ordinary activities before interest and taxation analysed between
Group and joint ventures
Joint Joint Joint
Group ventures Total Group ventures Total Group ventures Total
£m £m £m £m £m £m £m £m £m
Operating profits before
exceptional and common costs 251.6 74.3 325.9 236.7 48.8 285.5 475.5 101.1 576.6
Common costs (Note (d)) (4.0) - (4.0) (5.7) - (5.7) (10.8) - (10.8)
--------- --------- --------- --------- --------- --------- --------- --------- ---------
Operating profits
pre-exceptional costs 247.6 74.3 321.9 231.0 48.8 279.8 464.7 101.1 565.8
Exceptional costs of debt
restructuring (5.2) - (5.2) - - - - - -
--------- --------- --------- --------- --------- --------- --------- --------- ---------
Operating profits
post-exceptional costs 242.4 74.3 316.7 231.0 48.8 279.8 464.7 101.1 565.8
Profit on sale of fixed asset
properties 7.4 5.1 12.5 11.8 2.9 14.7 52.0 11.9 63.9
--------- --------- --------- --------- --------- --------- --------- --------- ---------
Profit on ordinary activities
before interest and taxation 249.8 79.4 329.2 242.8 51.7 294.5 516.7 113.0 629.7
===== ===== ===== ===== ===== ===== ===== ===== =====
Notes
(a) Rental income includes £4.0m (six months ended 30 September 2003: £1.7m;
year ended 31 March 2004: £9.3m) of rent receivable allocated to rent free
periods.
(b) Property services income for property outsourcing comprises £363.3m (six
months ended 30 September 2003: £181.8m; year ended 31 March 2004: £449.4m) in
respect of unitary charge and £108.8m (six months ended 30 September 2003:
£74.5m; year ended 31 March 2004: £186.8m) in respect of capital projects and
other reimbursable costs.
(c) Other direct property or contract expenditure includes pre-commitment costs
written off of £1.4m (six months ended 30 September 2003: £2.0m; year ended 31
March 2004: £2.4m).
(d) Common costs are costs associated with central Group management.
2. Segmental information (continued)
(i) Net assets Six Six Six Six Six Six Year Year Year
months months months months months months ended ended ended
ended 30 ended 30 ended 30 ended 30 ended 30 ended 30 31 March 31 March 31 March
Sept 2004 Sept 2004 Sept 2004 Sept 2003 Sept 2003 Sept 2003 2004 2004 2004
unaudited unaudited unaudited unaudited unaudited unaudited audited audited audited
Property Property Property Property Property Property
investment outsourcing Total investment outsourcing Total investment outsourcing Total
£m £m £m £m £m £m £m £m £m
Properties in development
programme
(Note 9) 766.5 - 766.5 706.8 - 706.8 732.2 - 732.2
Other investment
properties 7,699.0 - 7,699.0 7,270.0 - 7,270.0 7,148.7 - 7,148.7
Operating properties
relating to:
the PRIME/ ES contract - 469.9 469.9 - 378.4 378.4 - 480.4 480.4
the BBC contract - 286.0 286.0 - 273.6 273.6 - 288.8 288.8
the Aviva contract - 11.0 11.0 - - - - - -
Goodwill and other fixed 9.1 80.6 89.7 15.0 67.0 82.0 9.1 76.2 85.3
assets
--------- --------- --------- --------- --------- --------- --------- --------- ---------
Fixed assets 8,474.6 847.5 9,322.1 7,991.8 719.0 8,710.8 7,890.0 845.4 8,735.4
Investment in joint
ventures 296.4 (52.6) 243.8 - 89.0 89.0 252.1 (47.9) 204.2
Net current assets /
(liabilities) (105.4) 76.5 (28.9) (116.5) 27.7 (88.8) (139.0) 44.2 (94.8)
(excluding financing and
dividends)
--------- --------- --------- --------- --------- --------- --------- --------- ---------
8,665.6 871.4 9,537.0 7,875.3 835.7 8,711.0 8,003.1 841.7 8,844.8
====== ====== ====== ====== ====== ====== ====== ====== ======
Financing and dividends (2,726.8) (2,724.0) (2,585.4)
payable
Long term liabilities and (233.3) (208.0) (220.9)
provisions
--------- --------- ---------
Net assets 6,576.9 5,779.0 6,038.5
====== ====== ======
3. Net interest payable
Six Six Six Six Six Six Year Year Year
months months months months months months ended ended ended
ended 30 ended 30 ended 30 ended 30 ended 30 ended 30 31 March 31 March 31 March
Sept 2004 Sept 2004 Sept 2004 Sept 2003 Sept 2003 Sept 2003 2004 2004 2004
unaudited unaudited unaudited unaudited unaudited unaudited audited audited audited
Group Share of Share of Share of
Joint Joint Joint
ventures Total Group ventures Total Group ventures Total
£m £m £m £m £m £m £m £m £m
Interest payable
Borrowings not
wholly repayable
within five years (71.7) (35.9) (107.6) (76.7) (32.2) (108.9) (154.7) (76.9) (231.6)
Borrowings
wholly repayable
within five Years (36.1) - (36.1) (33.6) - (33.6) (70.4) - (70.4)
Other interest
payable (0.5) - (0.5) (0.7) - (0.7) (1.0) - (1.0)
Loans from joint
venture partners (0.3) - (0.3) - (4.0) (4.0) - (7.6) (7.6)
--------- --------- --------- --------- --------- --------- --------- --------- ---------
(108.6) (35.9) (144.5) (111.0) (36.2) (147.2) (226.1) (84.5) (310.6)
Interest capitalised
in relation
to properties
under development 5.1 - 5.1 26.1 - 26.1 35.6 - 35.6
(103.5) (35.9) (139.4) (84.9) (36.2) (121.1) (190.5) (84.5) (275.0)
Interest receivable
Short term deposits 3.9 1.2 5.1 1.9 0.9 2.8 5.7 2.3 8.0
Other interest
receivable 1.5 - 1.5 1.5 - 1.5 2.8 - 2.8
Loan to joint
venture - 0.2 0.2 4.0 - 4.0 7.6 - 7.6
--------- --------- --------- --------- --------- --------- --------- --------- ---------
Net interest payable (98.1) (34.5) (132.6) (77.5) (35.3) (112.8) (174.4) (82.2) (256.6)
====== ====== ====== ====== ====== ====== ====== ====== ======
Interest has been capitalised at the Group's pre-tax weighted average borrowing
rate for non-specific borrowings for the six months of 7.5% (six months ended 30
September 2003: 7.9%; year ended 31 March 2004: 7.7%). Non-specific borrowings
exclude certain bank debt which is specific to the PRIME and Employment Services
contracts.
Group interest payable on borrowings includes £1.8m (six months ended 30
September 2003: £1.3m; year ended 31 March 2004: £4.8m) in respect of the
amortisation of bond discounts and issue expenses.
4. Revenue profit
Six Six Six Six Six Six Year Year Year
months months months months months months ended ended ended
ended 30 ended 30 ended 30 ended 30 ended 30 ended 30 31 March 31 March 31 March
Sept 2004 Sept 2004 Sept 2004 Sept 2003 Sept 2003 Sept 2003 2004 2004 2004
unaudited unaudited unaudited unaudited unaudited unaudited audited audited audited
Group Share of Share of Share of
Joint Joint Joint
ventures Total Group ventures Total Group ventures Total
£m £m £m £m £m £m £m £m £m
Profit on ordinary
activities before
taxation 151.7 44.9 196.6 165.3 16.4 181.7 342.3 30.8 373.1
Exceptional costs of debt
restructuring 5.2 - 5.2 - - - - - -
Profit on sale of fixed
asset properties (7.4) (5.1) (12.5) (11.8) (2.9) (14.7) (52.0) (11.9) (63.9)
------- ------- ------- ------- ------- ------- ------- ------- -------
Revenue profit before
taxation 149.5 39.8 189.3 153.5 13.5 167.0 290.3 18.9 309.2
====== ====== ====== ====== ====== ====== ====== ====== ======
As bid costs have become a normal part of Trillium's business it is no longer
considered appropriate to eliminate them when calculating revenue profit. The
basis of the calculation of revenue profit was therefore revised at 31 March
2004, and the comparatives for 30 September 2003 have been restated in
accordance with this new definition of revenue profit. Revenue profits are now
defined as profits before taxation, adjusted to eliminate only profits on
disposal of fixed asset properties and the effect of exceptional items.
5. Taxation
Six months Six months Year ended
ended ended 31 March
30 Sept 2004 30 Sept 2003 2004
Unaudited £m Unaudited £m audited £m
Analysis of tax charge for the period
Corporation current tax on Group profit for the period at 30%
(six months ended 30 September 2003: 30%) 39.1 37.3 73.3
Adjustments to current tax in respect of prior periods 0.7 (1.3) (1.5)
Share of joint venture's tax
-current year 13.6 7.2 14.7
-prior periods 0.5 - -
--------- --------- ---------
Total current tax 53.9 43.2 86.5
--------- --------- ---------
Deferred tax on Group timing differences arising in the period 8.9 15.9 31.5
Deferred tax released in respect of property disposals in the period (2.8) (8.4) (31.6)
Share of joint venture's deferred tax 0.6 - (1.6)
--------- --------- ---------
Total deferred tax 6.7 7.5 (1.7)
--------- --------- ---------
Tax charge for the period 60.6 50.7 84.8
======= ======= =======
Included in the total tax charge is a net charge of £0.9m (six months ended 30
September 2003: credit of £6.9m; year ended 31 March 2004: credit of £18.3m)
attributable to property sales, including the release of deferred taxation. A
tax credit of £1.5m (six months ended 30 September 2003 and year ended 31 March
2004 £nil) is attributable to the exceptional item.
Factors affecting the current tax charge for the period.
The tax assessed for the year is lower than the standard rate of corporation tax
in the UK of 30% (2003: 30%). The differences are explained below:
Six months Six months Year
ended ended ended
30 Sept 2004 30 Sept 2003 31 March 2004
Unaudited £m Unaudited £m audited £m
Profit on ordinary activities before taxation 196.6 181.7 373.1
====== ====== ======
Tax at 30% 59.0 54.5 111.9
Effects of:
Capital allowances (10.8) (11.0) (26.8)
Depreciation of fixed assets qualifying for capital allowances 2.1 2.2 5.9
--------- --------- ---------
50.3 45.7 91.0
Tax relief on capitalised interest and other timing differences (1.5) (6.1) (8.4)
Reduced rate of tax on profit on disposal of assets - (2.9) (5.9)
Telereal depreciation and goodwill amortisation 2.4 2.2 4.7
Non-allowable expenses and non-taxable items 1.5 5.6 6.6
Prior year corporation tax adjustments 1.2 (1.3) (1.5)
--------- --------- ---------
Current tax 53.9 43.2 86.5
====== ====== ======
The Group's share of Telereal's tax charge is stated after disallowing
depreciation charges but without the availability of capital allowances which
were retained by British Telecom plc.
6. Dividends
Dividends Dividends Dividends Profit Profit Profit
per per per and loss and loss and loss
ordinary ordinary ordinary account account account
share share share
Six Six Six Six
months months Year months months Year
ended ended ended ended ended ended
30 Sept 30 Sept 31 March 30 Sept 30 Sept 31 March
2004 2003 2004 2004 2003 2004
unaudited unaudited audited unaudited unaudited audited
pence pence pence £m £m £m
Ordinary shares
- interim 10.40 9.90 9.90 48.6 46.1 46.1
- final - - 27.20 - - 126.8
B shares 0.1 0.2 0.3
Additional prior year dividends - ordinary 0.1 - -
shares
--------- --------- --------- --------- --------- ---------
10.40 9.90 37.10 48.8 46.3 173.2
====== ====== ====== ====== ====== ======
B shares carry the right to a dividend of 70% of six month LIBOR paid twice
yearly. The annualised dividend rates for the periods to 17 April 2003, 17
October 2003, 17 April 2004 and 15 October 2004 were 2.8%, 2.5%, 2.8% and 3.2%
respectively of the nominal value of the shares. Additional prior year
dividends relate to increases in share capital arising after the respective
prior period ends but before their corresponding dividend record dates.
7. Earnings per share
30 Sept 2004 30 Sept 2003 31 March 2004
Earnings Unaudited £m Unaudited £m Audited £m
Profit after taxation 136.0 131.0 288.3
B share dividends (0.1) (0.2) (0.3)
--------- --------- ---------
Earnings 135.9 130.8 288.0
Exceptional costs of debt restructuring (costs and interest) 3.7 - -
Fixed asset property disposals after current and deferred tax (11.6) (21.6) (82.2)
Deferred tax arising from capital allowances on investment 4.1 4.8 8.3
properties
Deferred tax arising from capitalised interest on investment 1.5 5.0 8.8
properties
--------- --------- ---------
Adjusted earnings 133.6 119.0 222.9
====== ====== ======
Weighted average number of ordinary shares No. m No. m No. m
Weighted average number of ordinary shares 466.3 465.6 465.7
Effect of dilutive share options 1.5 0.2 0.6
--------- --------- ---------
Weighted average number of ordinary shares adjusted for 467.8 465.8 466.3
dilutive instruments
====== ====== ======
Earnings per share pence pence pence
Basic earnings per share 29.14 28.10 61.84
Diluted earnings per share 29.05 28.09 61.76
Adjusted earnings per share* 28.65 25.56 47.86
Diluted adjusted earnings per share* 28.56 25.55 47.80
====== ====== ======
* Adjusted earnings per share is based on revenue profits. In calculating the
tax charge on revenue profits, the deferred tax arising on capital allowances in
respect of investment properties has been eliminated because experience has
shown that these allowances are not in practice repayable. Because capitalised
interest on the development programme is becoming increasingly significant, and
it is a permanent timing difference, the deferred taxation arising on
capitalised interest is also now eliminated when calculating adjusted earnings
per share.
The change in treatment of capitalised interest was implemented for the year
ended 31 March 2004 and the comparative figures for the six months ended 30
September 2003 have been restated accordingly.
8. Net assets per share
30 Sept 2004 30 Sept 2003 31 March 2004
Equity shareholders' funds Unaudited Unaudited Audited
£m £m £m
Net assets 6,576.9 5,779.0 6,038.5
Non-equity B-shares (6.7) (11.6) (8.4)
--------- --------- ---------
Net assets attributable to equity shareholders 6,570.2 5,767.4 6,030.1
Deferred tax arising from capital allowances on investment 104.4 121.1 101.4
properties
Deferred tax arising from capitalised interest on investment 29.6 27.0 30.0
properties
Negative investment in Telereal 52.6 - 47.9
--------- --------- ---------
Adjusted net assets 6,756.8 5,915.5 6,209.4
====== ====== ======
Number of ordinary shares No. m No. m No. m
Number of ordinary shares 466.9 465.7 465.9
Exercise of outstanding share options 1.5 0.4 0.6
--------- --------- ---------
Number of ordinary shares adjusted for dilutive instruments 468.4 466.1 466.5
====== ====== ======
Net assets per share pence pence pence
Net assets per share 1407 1238 1294
Diluted net assets per share 1403 1237 1293
Adjusted net assets per share 1447 1270 1333
Diluted adjusted net assets per share 1443 1269 1331
====== ====== ======
The additional deferred tax liability arising from capital allowances on
investment properties is excluded from the calculation of the adjusted net
assets as the Group's experience is that deferred tax on capital allowances in
relation to such properties is unlikely to crystallise in practice. In
addition, the deferred tax on capitalised interest on these properties is added
back as this is a permanent timing difference. This change was made at 31 March
2004 and the comparative figures for 30 September 2003 have been restated
accordingly.
9. Properties
Investment Investment Investment
properties properties properties
Portfolio Development Operating
management programme Total properties Total
£m £m £m £m £m
Market value at 1 April 2004 7,172.6 734.1 7,906.7
Less amount included in prepayments in respect of UITF28
adjustments (23.9) (1.9) (25.8)
--------- --------- --------- --------- ---------
Net book value at 1 April 2004 7,148.7 732.2 7,880.9 769.2 8,650.1
Properties transferred from portfolio management
into the development programme
during the year (at 1 April 2004 valuation) (52.1) 52.1 - - -
Developments completed, let and transferred from
the development programme into
portfolio management during the period 154.5 (154.5) - - -
Property acquisitions 254.3 - 254.3 23.9 278.2
Capital expenditure 31.3 63.2 94.5 - 94.5
Capitalised interest - 5.1 5.1 - 5.1
Sales (42.5) (2.1) (44.6) (17.0) (61.6)
Transfer to stock and surrender premiums received (48.3) - (48.3) - (48.3)
Net properties contributed to the
Metro Retail Limited Partnership and the Bristol Alliance (102.6) - (102.6) - (102.6)
--------- --------- --------- --------- ---------
7,343.3 696.0 8,039.3 776.1 8,815.4
Depreciation (0.9) - (0.9) (9.2) (10.1)
Unrealised surplus on revaluation 356.6 70.5 427.1 - 427.1
--------- --------- --------- --------- ---------
Net book value at 30 September 2004 7,699.0 766.5 8,465.5 766.9 9,232.4
Plus amount included in prepayments in respect of UITF28 24.5 2.6 27.1
adjustments
--------- --------- ---------
Market value at 30 September 2004 (Group) 7,723.5 769.1 8,492.6
====== ====== ======
Market value at 30 September 2004 (Group and share of
joint venture) 8,127.8 769.1 8,896.9
====== ====== ======
Fixed asset properties include capitalised interest of £116.0m (31 March 2004:
£111.0m; 30 September 2003: £105.6m). Operating properties are carried at
depreciated cost and are not revalued. Proposed developments are excluded from
the development programme as experience has shown that these schemes can be
subject to substantial revision. In addition to the development programme,
investment properties include properties to the value of £174.7m (31 March 2004:
£179.3m; 30 September 2003: £137.5m) in respect of proposed developments.
Developments are transferred out of the development programme when physically
complete and 95% let. Schemes completed during the period were Empress State
(London SW6) and Juniper (Basildon). The total development profit earned over
the life of the schemes completed in the period was £1.0m (year ended 31 March
2004: £82.7m).
10. Investment in joint ventures
Six Six Six Six Six Six Year Year Year
months months months months months months ended ended ended
ended 30 ended 30 ended 30 ended 30 ended 30 ended 30 31 March 31 March 31 March
Sept 2004 Sept 2004 Sept 2004 Sept 2003 Sept 2003 Sept 2003 2004 2004 2004
unaudited unaudited unaudited unaudited unaudited unaudited audited audited audited
Scottish Scottish
Retail Metro Retail
Property Retail Property
Limited Limited Limited
Summary financial Telereal Partnership Partnership Total Telereal Total Telereal Partnership Total
information of
Group's share of joint
ventures
£m £m £m £m £m £m £m £m £m
Profit and loss account
Property services and
rental income 81.6 11.2 3.2 96.0 82.1 82.1 165.8 0.6 166.4
Proceeds of sales of
trading
properties 24.2 - - 24.2 3.7 3.7 28.9 - 28.9
--------- --------- --------- --------- --------- --------- -------- --------- ---------
Gross property income 105.8 11.2 3.2 120.2 85.8 85.8 194.7 0.6 195.3
Rents payable (18.2) (0.9) - (19.1) (22.8) (22.8) (39.9) - (39.9)
Other direct property
expenditure - (3.5) (1.2) (4.7) - - - - -
Indirect property or
contract expenditure (6.6) (0.2) - (6.8) (4.9) (4.9) (18.0) (0.1) (18.1)
Costs of sales of trading
properties (8.7) - - (8.7) (1.8) (1.8) (23.3) - (23.3)
Depreciation (6.6) - - (6.6) (7.5) (7.5) (12.9) - (12.9)
--------- --------- --------- --------- --------- --------- -------- --------- ---------
Operating profit 65.7 6.6 2.0 74.3 48.8 48.8 100.6 0.5 101.1
Profit on sale of fixed
asset properties 5.1 - - 5.1 2.9 2.9 11.9 - 11.9
--------- --------- --------- --------- --------- --------- --------- --------- ---------
Profit before interest and
taxation 70.8 6.6 2.0 79.4 51.7 51.7 112.5 0.5 113.0
Net interest payable (33.1) - (1.4) (34.5) (35.3) (35.3) (82.2) - (82.2)
--------- --------- --------- --------- --------- --------- --------- --------- ---------
Profit before taxation 37.7 6.6 0.6 44.9 16.4 16.4 30.3 0.5 30.8
Taxation (12.5) (2.0) (0.2) (14.7) (7.2) (7.2) (13.0) (0.1) (13.1)
--------- --------- --------- --------- --------- --------- --------- --------- ---------
Profit after taxation 25.2 4.6 0.4 30.2 9.2 9.2 17.3 0.4 17.7
====== ====== ====== ====== ====== ====== ====== ====== ======
Balance sheet
Fixed assets
- Investment properties - 262.7 141.6 - - 243.5
- Operating properties 1,025.5 - - 1,049.5 1,033.5 -
Current assets 76.0 5.4 4.5 86.5 74.5 13.7
--------- --------- --------- --------- --------- -------- -------- ---------
1,101.5 268.1 146.1 1,136.0 1,108.0 257.2
Liabilities due within
one year (65.2) (9.5) (3.3) (60.6) (56.1) (5.1)
Liabilities due after
one year (1,088.9) - (105.0) (986.4) (1,099.8) -
--------- --------- --------- --------- --------- ---------
(1,154.1) (9.5) (108.3) (1,047.0) (1,155.9) (5.1)
====== ====== ====== ====== ====== ======
Net investment in joint
ventures (52.6) 258.6 37.8 89.0 (47.9) 252.1
====== ====== ====== ====== ====== ======
Net debt within joint
ventures (1,054.9) - (100.6) (956.5) (1,073.0) -
====== ====== ====== ====== ====== ======
The debt in Telereal and the Metro Retail Limited Partnership is secured on the
assets of those joint ventures and is non-recourse to the Group.
Scottish
Retail Metro
Property Retail
Limited Limited
Telereal Partnership Partnership Total
Net investment in joint ventures £m £m £m £m
At 1 April 2004 (47.9) 252.1 - 204.2
Properties contributed - - 92.1 92.1
Cash contributed - - 87.2 87.2
Share of post tax profits 25.2 4.6 0.4 30.2
Distributions (29.9) - (146.3) (176.2)
Loan repayments - (11.8) (86.7) (98.5)
Additional Loans - - 86.2 86.2
Unrealised surplus on revaluation - 13.7 4.9 18.6
--------- --------- --------- ---------
At 30 September 2004 (52.6) 258.6 37.8 243.8
====== ====== ====== ======
The Group has three joint ventures, all of which are 50% owned and draw up
accounts to 31 March, as follows:
• Telereal is a joint venture between Land Securities Trillium and the
Pears Group, which acquired the majority of the properties of British
Telecommunications ('BT') on 13 December 2001. Telereal is responsible for
providing accommodation and estate management services to BT in return for
a total availability and service charge under a 30-year contract.
• The Scottish Retail Property Limited Partnership is a joint venture
between Land Securities Properties Limited and British Land Property
Management Limited, which manages shopping centres in Aberdeen and East
Kilbride. The partnership was created on the 16 March 2004.
• The Metro Retail Limited Partnership is a joint venture between Land
Securities Properties Limited and Delancey, which manages a portfolio of
shopping centres in London. The partnership was created on the 8 June
2004.
11. Stock
30 Sept 30 Sept 31 March
2004 2003 2004
unaudited unaudited audited
£m £m £m
Trading properties 90.5 52.7 85.0
Amounts recoverable under contracts, at net cost less payments on account 18.4 - -
--------- --------- ---------
108.9 52.7 85.0
====== ====== ======
12. Debtors
30 Sept 30 Sept 31 March
2004 2003 2004
unaudited unaudited audited
£m £m £m
Falling due within one year
Trade debtors - property investment 28.9 24.5 29.5
Trade debtors - property outsourcing 117.0 70.4 147.2
Property sales debtors 17.8 0.7 3.4
Other debtors 87.9 61.0 54.4
Prepayments and accrued income 143.1 92.3 105.2
--------- --------- ---------
394.7 248.9 339.7
====== ====== ======
Falling due after one year
Amounts receivable under finance lease 36.0 - -
Other debtors 27.3 13.5 20.4
--------- --------- ---------
63.3 13.5 20.4
====== ====== ======
13. Creditors falling due within one year
30 Sept 30 Sept 31 March
2004 2003 2004
unaudited unaudited audited
£m £m £m
Debentures, bonds and loans (Note 14) 18.3 508.0 681.7
Trade creditors 47.6 74.6 80.8
Taxation and social security 130.2 21.0 85.1
Proposed dividend 48.7 46.2 126.8
Capital creditors 84.4 96.1 92.6
Other creditors 39.5 12.7 22.7
Accruals and deferred income 307.6 229.9 281.5
--------- --------- ---------
676.3 988.5 1,371.2
====== ====== ======
Capital creditors represent amounts due under contracts to purchase properties,
which were unconditionally exchanged at the year end, and for work completed on
investment properties but not paid for at the financial year end. Deferred
income principally relates to rents received in advance.
14. Debentures, bonds and loans
30 Sept 30 Sept 31 March
2004 2003 2004
unaudited unaudited audited
£m £m £m
Unsecured
10.75 per cent Exchange Bonds due 2004 - 21.2 21.2
9.5 per cent Bonds due 2007 200.0 200.0 200.0
5 7/8 per cent Bonds due 2013 394.9 394.3 394.6
9 per cent Bonds due 2020 197.1 196.9 197.0
6 3/8 per cent Bonds due 2024 198.0 197.9 198.0
Syndicated bank debt 700.6 527.0 287.6
Commercial paper - 236.8 358.1
--------- --------- ---------
1,690.6 1,774.1 1,656.5
Secured
7.75 per cent Mortgage 2008 5.4 5.5 5.4
6 3/8 per cent First Mortgage Debenture Stock 2008/13 32.3 32.3 32.3
10 per cent First Mortgage Debenture Stock 2025 400.0 400.0 400.0
10 per cent First Mortgage Debenture Stock 2027 200.0 200.0 200.0
10 per cent First Mortgage Debenture Stock 2030 200.0 200.0 200.0
Bank loan 264.1 205.2 183.4
--------- --------- ---------
1,101.8 1,043.0 1,021.1
--------- --------- ---------
2,792.4 2,817.1 2,677.6
Falling due within one year (Note 13) (18.3) (508.0) (681.7)
--------- --------- ---------
Falling due after one year 2,774.1 2,309.1 1,995.9
====== ====== ======
On 3 November 2004 a debt refinancing was completed resulting in the Group
exchanging all of its outstanding bond and debenture debt for new bonds. This
is explained in greater detail in Note 21 and in the operating and financial
review.
15. Provision for liabilities and charges
Deferred
Dilapidations taxation Total
£m £m £m
At 1 April 2004 11.7 173.3 185.0
Net charge for the period 3.8 8.9 12.7
Released in respect of property disposals during the period - (2.8) (2.8)
--------- --------- ---------
At 30 September 2004 15.5 179.4 194.9
====== ====== ======
30 Sept 30 Sept 31 March
2004 2003 2004
unaudited unaudited audited
Deferred tax is provided as follows £m £m £m
Excess of capital allowances over depreciation - investment properties 104.4 121.1 101.4
Excess of capital allowances over depreciation - operating properties 36.1 27.3 34.8
Capitalised interest - investment properties 29.6 27.0 30.0
Capitalised interest - operating properties 4.2 0.2 4.4
Other timing differences 5.1 5.3 2.7
--------- --------- ---------
179.4 180.9 173.3
====== ====== ======
30 Sept 30 Sept 31 March
2004 2003 2004
unaudited unaudited audited
£m £m £m
Tax on capital gains that would become payable by the Group,
if it were to dispose of all of its investment
properties at the amount stated in the balance sheet 570.0 490.0 490.0
Potential reduction in tax on contingent capital gains if properties
were sold within their owning companies (73.0) (93.0) (75.0)
--------- --------- ---------
Tax on contingent capital gains assuming no further mitigation 497.0 397.0 415.0
====== ====== ======
The deferred taxation provision that would be released in the event of sales of
investment properties, on the assumption that the proceeds of qualifying assets
equate for tax purposes to the tax written down value, would be £104.4m (31
March 2004: £101.4m; 30 September 2003: £121.1m), and a further £29.6m (31 March
2004: £30.0m; 30 September 2003: £27.0m) would be released in respect of
capitalised interest.
16. Shareholders' funds
Share Capital Profit and
Ordinary Non-equity premium redemption Revaluation loss
shares B shares account reserve reserve account Total
£m £m £m £m £m £m £m
At 1 April 2004 46.6 8.4 15.9 22.1 3,112.8 2,832.7 6,038.5
Repayment of B shares - (1.7) - 1.7 - (1.7) (1.7)
Exercise of options 0.1 - 8.4 - - - 8.5
Unrealised surplus on revaluation of
investment properties - - - - 427.1 - 427.1
Unrealised surplus on revaluation of
investment properties within joint venture - - - - 18.6 - 18.6
Unrealised profits on disposal of investment
properties to joint venture 0.9 - 0.9
Realised on disposals of investment
properties - - - - (5.6) 5.6 -
Taxation on revaluation surpluses realised
on disposals of investment properties - - - - - (2.2) (2.2)
Retained profit for the financial period - - - - - 87.2 87.2
--------- --------- --------- --------- --------- --------- ---------
At 30 September 2004 46.7 6.7 24.3 23.8 3,553.8 2,921.6 6,576.9
====== ====== ====== ====== ====== ====== ======
On 13 September 2004, the company gave notice that it would redeem all
outstanding B shares on 15 October 2004.
17. Analysis of net debt
Movements Movements Movements Movements
during year during year during year during year
Amortisation Cost of
At 1 of discount raising At 30
April Cash and issue additional Sept
2004 Transfers Flow costs debt 2004
£m £m £m £m £m £m
Net bank balance 22.8 - (9.0) - - 13.8
Liquid resources 219.0 - (105.0) - - 114.0
Debt due within one year (681.7) 176.6 486.8 - - (18.3)
Debt due after one year (1,995.9) (176.6) (604.7) (1.8) 4.9 (2,774.1)
--------- --------- --------- --------- --------- ---------
Net debt (2,435.8) - (231.9) (1.8) 4.9 (2,664.6)
====== ====== ====== ====== ====== ======
18. Financial assets and liabilities
The Group's financial assets and liabilities and their fair values are:
Excess of Excess of Excess of
fair value fair value fair value
Book Book Book Fair Fair Fair overbook overbook overbook
value value value value value value value value value
30 Sept 30 Sept 31 March 30 Sept 30 Sept 31 March 30 Sept 30 Sept 31 March
2004 2003 2004 2004 2003 2004 2004 2003 2004
unaudited unaudited audited unaudited unaudited audited unaudited unaudited audited
£m £m £m £m £m £m £m £m £m
Financial assets
Short term investments and cash* 127.8 170.7 241.8 127.8 170.7 241.8 - - -
Financial liabilities
Debentures, bonds, other loans
and overdrafts (2,792.5) (2,817.1) (2,677.6) (3,382.5) (3,432.6) (3,249.1) (590.0) (615.5) (571.5)
Non-equity B shares (6.7) (11.5) (8.4) (6.7) (11.5) (8.4) - - -
Financial instruments
Interest rate swaps - - - (37.8) (69.5) (44.5) (37.8) (69.5) (44.5)
--------- --------- --------- --------- --------- --------- --------- --------- ---------
(2,671.4) (2,657.9) (2,444.2) (3,299.2) (3,342.9) (3,060.2) (627.8) (685.0) (616.0)
====== ====== ====== ====== ====== ====== ====== ====== ======
* short term investments and cash include £nil (31 March 2004: £154.0m; 30
September 2003: £75.3m) of short term deposits charged as temporary security for
borrowings as disclosed in Note 14.
Fair value has been calculated by taking the market value, for those instruments
which have a listing, or where one is not available, the fair value is
calculated using a discounted cash flow approach.
On 3 November 2004 a debt refinancing was completed resulting in the Group
exchanging all of its outstanding bond and debenture debt for new bonds. This
is explained in greater detail in Note 21 and in the operating and financial
review.
19. Principal Group and associated undertakings
During the six months, the Group has been a member of the following limited
partnerships, all of which are registered in England. The 100% results of the
partnerships are set out below:
Gross Gross Gross Gross Gross Gross Profit/ Profit/ Profit/
(loss) (loss) (loss)
assets assets assets liabilities liabilities liabilities before before before
tax tax tax
30 Sept 30 Sept 31 March 30 Sept 30 Sept 31 March 30 Sept 30 Sept 31 March
Group 2004 2003 2004 2004 2003 2004 2004 2003 2004
share unaudited unaudited audited unaudited unaudited audited unaudited unaudited audited
% £m £m £m £m £m £m £m £m £m
Martineau Limited 33.3 24.8 132.7 116.8 (1.2) (3.2) (4.5) (0.9) 2.7 5.0
Partnership*
Martineau Galleries
Limited
Partnership* 33.3 114.1 112.6 112.4 (1.3) (2.3) (1.3) 1.7 1.9 3.5
Bullring Limited
Partnership* 33.3 745.8 427.6 747.9 (295.9) (277.1) (316.1) 18.9 0.4 18.4
Gunwharf Quays Limited
Partnership** 50 - 149.5 - - (1.9) - - 4.8 -
Bristol Alliance 50 148.8 - - - - - 1.8 - -
Ebbsfleet Limited
Partnership 50 41.1 30.1 39.1 (0.1) (0.1) (0.1) - - -
*forming the Birmingham Alliance
**on 30 November 2003 Land Securities Group PLC acquired the 50% interest in the
Gunwharf Quays Limited Partnership it did not already own
The gross liabilities of these partnerships consist generally of capital and
revenue accruals and also, in the case of Bullring Limited Partnership, £283.7m
(31 March 2004: £290.3m; 30 September 2003: £249.2m) of loans from partners; at
30 September 2004 there was no third party debt in these partnerships (31 March
2004: £nil; 30 September 2003: £nil).
20. Contingent liabilities
The Group has a contingent liability arising from a performance guarantee that
Land Securities PLC, as the then parent company of Land Securities Trillium
Limited, has given, severally with its Telereal joint venture partner, for the
performance by Telereal Services Limited of its service obligations to BT
together with a guarantee related to transaction issues associated with the BT
outsourcing contract. The Group's maximum liability under the guarantee is £50m
plus a further amount which is capped by reference to amounts either distributed
or available for distribution to each shareholder by certain of the Telereal
companies up to a further £50.7m. The transaction element of the guarantee is
capped at £10m. The maximum potential liability which the company could be
exposed to under such arrangements is capped at £110.7m. The total maximum
liability of £110.7m will, however, amortise over time in accordance with a
contractual formula included and defined in the agreement with BT. At 30
September 2004, the estimated amount of the Group's exposure to the guarantee
was approximately £100.7m.
21. Post balance sheet events
a) On 15 October 2004, the Group redeemed its outstanding B share capital for a
total consideration of £6.7m.
b) On 3 November 2004, the Group exchanged all of its outstanding bond and
debenture debt for new bonds, (secured on a portfolio of assets) and £144.2m in
cash. The nominal amounts and coupon rates of the new bonds are as follows:
Exceptional
loss to be New
Old bonds Cash Early taken in the bonds
nominal redemption submission second half nominal
value amounts payments year value Coupon
£m £m £m £m £m %
9.5 per cent Bonds due 2007 200.0 (38.3) (0.8) 20.8 181.7 5.016
5 7/8 per cent Bonds due 2013 400.0 (16.3) (3.9) 13.5 393.3 5.292
9 per cent Bonds due 2020 200.0 (9.7) (2.8) 69.8 257.3 5.425
6 3/8 per cent Bonds due 2024 200.0 (3.6) (3.2) 17.5 210.7 5.391
10 per cent First Mortgage Debenture
Stock 2025 400.0 (7.8) (7.9) 229.6 613.9 5.391
10 per cent First Mortgage Debenture
Stock 2027 200.0 (0.4) (4.3) 122.7 318.0 5.376
10 per cent First Mortgage Debenture
Stock 2030 200.0 (1.1) (4.6) 129.1 323.4 5.396
--------- --------- --------- --------- ---------
1,800.0 (77.2) (27.5) 603.0 2,298.3
======= ======= ======= ======= =======
The Group has redeemed £37.7m nominal value of private debentures due in 2008
and 2008/13 for cash and made early submission payments to qualifying debt
holders for total cash costs of £67.0m. The estimated costs of the transaction
are anticipated to be £25.0m, of which £3.4m was recognised in the accounts for
the year to 31 March 2004 and £5.2m in the six months to 30 September 2004.
As a result of this exchange, the increase in the nominal amount of the debt and
the cash payments to ineligible holders, together with the early submission
payments and most of the fees will be recognised as a charge of some £673m in
the profit and loss account for the second half year to 31 March 2005. However,
the average interest rate payable on this debt (weighted by nominal value only)
will fall from 8.5% to 5.35%. Further details of this transaction are set out
in the operating and financial review.
As part of the debt restructuring, the committed bank facilities have been
renewed. The £1.55bn of committed bank facilities which would have expired in
the normal course of business in 2005 and 2006 were replaced by a new £1.5bn
committed five year facility.
c) On 15 November 2004, the Group exchanged contracts with Slough Estates to
sell 23 industrial properties and acquire four retail assets.
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