Making Property Work
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Land Securities PLC Report and Financial Statements 31 March 2002 Report Report and Financial Statements 31 March 2002 Land Securities PLC 5 Strand Telephone: 020 7413 9000 London e-mail:[email protected] making property work... WC2N 5AF http://www.landsecurities.com Land Securities provides an integrated approach to the commercial balanceInvestor sheetsinformation property and outsourcing needs of customers to create long-term 31 March 2002 and sustainable returns for shareholders. Registrar Corporate individual savings accounts (ISAs) Enquiries concerning holdings of ordinary shares, debentures or loan stocks in The company has arranged for a Corporate ISA to be managed by Lloyds TSB Land Securities PLC should be addressed to: Lloyds TSB Registrars,The Causeway, Registrars, who can be contacted at The Causeway,Worthing,West Sussex BN99 Worthing, West Sussex BN99 6DA.Telephone: 0870 600 3972. 6UY.Telephone: 0870 24 24 244. The Registrars provide an on-line service, enabling shareholders to access details Capital gains tax of their Land Securities shareholdings. Shareholders wishing to view this For the purpose of capital gains tax, the price of the company’s ordinary shares information, together with additional information such as indicative share at 31 March 1982, adjusted for the capitalisation issue in November 1983, was prices and information on recent dividends, should visit www.shareview.co.uk 205p. Holders of the company’s ordinary shares, debentures and loan stocks should Unclaimed Assets Register notify the Registrar promptly of any change of their address. The Company participates in the Unclaimed Assets Register, which provides a search facility for financial assets which may have been forgotten. For further Low cost share dealing facility information, contact:The Unclaimed Assets Register, Lloyds Chambers, The company operates with Cazenove & Co. Ltd a postal share dealing facility 1 Portsoken Street, London E1 8DF – Telephone: 0870 241 171; website which provides shareholders with a simple, low cost way of buying and selling www.uar.co.uk Land Securities PLC ordinary shares. For further information, or dealing forms, contact: Cazenove & Co Ltd, 12 Tokenhouse Yard, London EC2R 7AN.Telephone: Share price information 020 7606 1768. The latest information on the Land Securities PLC share price is available on the Financial Times Cityline Service: telephone: 0906 8433133 (calls charged at Dividend reinvestment plan (DRIP) 60p per minute). Share price information is also available on the company’s The company has introduced a DRIP to enable shareholders to use cash website (www.landsecurities.com) under investor relations/share price. dividends to purchase Land Securities shares in the market. For further details, contact: The Share Dividend Team, Lloyds TSB Registrars,The Causeway,Worthing, West Sussex BN99 6DA.Telephone: 01903 502541. Contents IFC Corporate Statement 2 Financial Highlights Registered office 4 Chairman’s Statement ANALYSIS OF EQUITY SHAREHOLDINGS 6 Corporate Review at 31 March 2002 5 Strand, London WC2N 5AF Number of Balance at Registered in England and Wales holdings% 31 March 02 % 8 Valuation No. 551412 10 Portfolio Management BY SIZE OF HOLDING 18 Development UP TO 500 11,794 34.00 3,402,081 0.65 Offices 26 Total Property Outsourcing 501 TO 1,000 9,903 28.55 7,537,109 1.44 32 Financial Review 5 Strand, London WC2N 5AF 1,001 TO 5,000 10,687 30.81 21,619,888 4.12 (Telephone: 020 7413 9000) 36 Property in Context – 5,001 TO 10,000 894 2.58 6,311,504 1.20 and at 140 London Wall EC2, Making property work Financial Calendar 10,001 TO 50,000 786 2.26 17,210,808 3.29 Glasgow and Leeds 38 Environment, Health and Safety 2002 22 May 50,001 TO 100,000 166 0.48 11,680,966 2.23 40 Human Resources Preliminary announcement 100,001 TO 500,000 290 0.84 66,496,244 12.68 42 Directors 500,001 TO 1,000,000 78 0.22 57,489,302 10.96 44 Corporate Governance 26 June 46 Remuneration Committee Ex-dividend date 1,000,001 and above 90 0.26 332,597,143 63.43 48 Directors’ Report 34,688 100.00 524,345,045 100.00 28 June 50 Directors’ Responsibilities and Record date for final dividend Auditors’ Report 52 Consolidated Profit and Loss Account 9 July 53 Balance Sheets Annual general meeting 54 Consolidated Cash Flow Statement 55 Other Primary Statements 22 July 56 Notes to the Financial Statements Final dividend payable 77 Ten Year Record November 78 Valuers’ report Announcement of interim results 79 Portfolio analysis (unaudited) Designed by SAS This report is printed on paper that meets 80 Major Property Holdings Board Photography by Chris Moyse international environmental standards, contains 84 Glossary of Terms 2003 January IBC Investor Information Interim dividend payable Location Photography Marcus Lyon elemental chlorine free (ECF) virgin pulp, Typeset by Asset Graphics obtained from sustainably managed forests. Printed by St Ives Westerham Press 10|11 assets 12|13 space 14|15 acquisitions 16|17 resources 18|19 regeneration 20|21 innovation 22|23 projects making property work 24|25 development 26|27 relationships 28|29 accommodation 30|31 outsourcing 36|37 property 38|39 sustainability 40|41 values Land Securities Highlights • Adjusted earnings per share increased by 13.7% to 51.61p (2001 45.38p) • Pre-tax profit up to £363.5m, an 11.9% increase (2001 £324.7m) • Adjusted diluted net asset value steady at 1155p (2001 1152p) • High level of activity demonstrated by: – £0.5bn of property sales – £0.5bn investment in development and investment property activities – £146m investment in Telereal – £70m investment in Kent Thameside • Portfolio rationalisation substantially complete • Development progressing well with 87,030m2 completed this year and 260,160m2 under development • Land Securities Trillium secured two major new contracts during the year • Proposed £500m return of capital to shareholders • 10m m2 of commercial property owned or under management. financial highlights... REVENUE PROFIT (PRE-TAX) £m ADJUSTED EARNINGS PER SHARE (PENCE) 1998 265.9 1998 37.07 1999 292.7 1999 39.11 2000 301.7 2000 40.86 2001 (restated) 323.4 2001 (restated) 45.38 2002 364.8 2002 51.61 2|3 31 March 2001 31 March 2002 (restated) Change % Gross property income £1,025.6m £650.4)m +57.7 Operating profit £516.8m £450.6m +14.7 * Revenue profit (pre-tax) £364.8m £323.4)m +12.8 Pre-tax profit £363.5m £324.7)m +11.9 ** Adjusted earnings per share (basic) 51.61p 45.38)p +13.7 Earnings per share (basic) 50.27p 44.87)p +12.0 Dividends per share 34.00p 32.50)p +4.6 ** Adjusted dividend cover (times) 1.52 1.39 Dividend cover (times) 1.48 1.38 † Interest cover (times) 2.98 3.03 # Adjusted diluted net assets per share 1155p 1152)p +0.3 Diluted net assets per share 1132p 1130p +0.2 Book value of properties sold £510.4m £424.9m Capital expenditure on properties, developments and acquisitions £776.5m £758.3m ø Valuation of investment properties £7,800.0m £7,899.1)m Net borrowings £1,942.1m £1,727.8)m Equity shareholders’ funds £6,036.6m £6,017.8m † Gearing (net) 32.2% 28.7)% The comparative figures for the year ended 31 March 2001 have been restated to reflect the changes in accounting policies described on page 32 and in Note 1 to the financial statements. Trillium was acquired in November 2000. Results for the year ended 31 March 2001 therefore include four months’ trading for that business. * Excludes results of property sales and bid costs. ** Excludes results of property sales, bid costs and additional deferred tax arising on adoption of FRS19. # Excludes the effects of additional deferred tax arising from adoption of FRS19. ø After adjusting for the effect of adopting UITF28. † See glossary (page 84). DIVIDENDS PER SHARE (PENCE) DILUTED NET ASSETS PER SHARE (PENCE) 1998 28.00 1998 910 1999 29.50 1999 975 2000 31.00 2000 1090 2001 32.50 2001 (restated) 1130 2002 34.00 2002 1132 Land Securities Over two years ago we set out a clear strategy aimed at securing enhanced returns from property. Since that time, the Group has made significant progress towards implementing this strategy by refocusing the investment portfolio, expanding the development programme and winning new property outsourcing contracts. The Group’s sound performance over a number of years is compelling evidence of the value of a long-term approach to property. Our dividends have grown by an average of 4.5% per annum since 1992, compared to inflation of 2.6% per annum. Over the same period, our net assets per Peter G Birch share have increased by 7.6% per annum. These figures have underpinned Chairman our average total shareholder return of 13.8% over this period. chairman’s statement... The recent fall-out from the technology sector and other high-profile corporate The Group has been particularly active and has sold over £0.5bn of failures has brought into sharp relief the benefits of concentrating on sustainable properties, invested £0.5bn in its portfolio and development activities, growth over the long term.The Board has long recognised this and while £146.4m in the Telereal joint venture and £70.0m in Kent Thameside. restructuring the business it has been mindful not to compromise the Group’s reputation for dependability and its enviable financial position. The Board recommends a final dividend of 24.95p per share, making a total distribution for the year of 34.0p, an increase of 4.6%.The dividends paid Nevertheless, the performance of asset-backed businesses like ours is and proposed will be covered 1.52 times after excluding the effect of property inextricably linked to the Group’s capital structure and we have been reviewing sales, bid costs and additional deferred tax arising on adoption of FRS19.