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Land Securities Group Plc Land Securitiesgroup

Thursday, 20 May 2010

Financial results for the year ended 31 March 2010


"As the commercial property market moved from downturn to recovery in the year, so our actions moved to positioning the business to exploit the opportunities we see ahead. Our plans to drive shareholder value are clear and we are confident in our ability to deliver a substantial development pipeline into a supply constrained market in London while maintaining a strong focus on growing revenue profit across the Group."


Results summary



31 March 2010

31 March 2009


Valuation surplus / (deficit) (1)



Up 10.3%

Basic NAV per share



Up 17.4%

Adjusted diluted NAV per share (2)



Up 16.5%

Group LTV (loan to value) (1)



Down 6.1%

Net debt



Down £660.2m

Profit / (Loss) before tax




Revenue profit (1)



Down 20.0%

Basic EPS




Adjusted diluted EPS



Down 45.5%




Down 45.8%


(1) Including share of joint ventures

(2) Our key valuation measure



Market trends and performance

  • Sharp turnaround in the UK commercial property investment market as second half saw rapid recovery
  • Valuation surplus of 10.3%
  • Management of gearing contributing strongly to adjusted diluted NAV per share growth of 16.5%
  • Rental values bottoming out after 6.0% decline over the year
  • Portfolio returns broadly in line with IPD
  • Balance sheet strengthened with extended debt maturities and AA credit rating reaffirmed
  • £153.9m of acquisitions since year end



Pipeline of development opportunities for delivery into supply constrained market

  • Four central London developments underway producing 110,170 sq m for delivery between 2010 and 2013
  • 272,200 sq m of London development schemes with planning secured
  • 111,100 sq m of London development and refurbishment opportunities in design
  • In talks with potential partners for a joint venture (JV) on 20 Fenchurch Street
  • Good progress on pre-letting proposed 70,000 sq m shopping centre development at Leeds Trinity, Leeds
  • Planning consent achieved on three supermarket developments with J Sainsbury
  • Balance sheet driving competitive advantage in terms of cost and availability of finance for development


Focus on income

  • Achieved £58m of lettings in the year
  • One New Change retail now 90% let or in solicitors' hands
  • Units in administration in the like-for-like portfolio down at 1.0% (3.3% at 31 March 2009)
  • Voids in the like-for-like portfolio at 5.9% (5.0% at 31 March 2009). Within this, temporary lettings are occupying 1.2% of voids
  • Focus on growing revenue profit in medium term
    • Limited over-renting in portfolio
    • High yield on cost on projected or new developments
    • Revenue profit impact of making dormant development sites productive


Commenting on the results, Land Securities' Chief Executive Francis Salway said:


"During the year we stood back and tested our strategy. The review reaffirmed our confidence in the opportunities we see in the two largest segments of the UK commercial property market, London offices and retail.


"We have an unrivalled pipeline of potential projects in our London Porfolio, with over 110,000 sq m of developments already underway and up to a further 400,000 sq m of development and refurbishment opportunities. In retail we have plans aligned to the ongoing evolution in the sector and, through a focus on leasing and delivering occupier led developments, we will drive growth in capital values.


"We maintain our view that property values will rise over the next five years but, with the likelihood of volatility in consumer spending and business investment, the path may not always be smooth. We see any ripples in the trajectory as being likely to offer attractive buying opportunities. We believe strongly that, in our balance sheet, the skills of our people and our plans for our portfolio, we have the platform to create long-term value for our shareholders."