Registered number:
05193511
LAND SECURITIES CAPITAL MARKETS PLC
FINANCIAL STATEMENTS
FOR THE YEAR ENDED
31 MARCH 2023
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LAND SECURITIES CAPITAL MARKETS PLC
STRATEGIC REPORT
FOR THE YEAR ENDED 31 MARCH 2023
The
directors
of Land Securities Capital Markets PLC (the 'Company') present their
Strategic Report
and Directors' Report with the
financial statements
for the
year
ended
31 March 2023
.
Results for the year
The results are set out in the
Statement of Comprehensive Income
on page
9
.
Review of the business
The Company is a subsidiary of Land Securities Group PLC, which together with all of its subsidiaries is referred to as the 'Group'. The
Company has £4.7bn (2022: £4.3bn) of secured medium-term notes (MTNs) in issue under the Multicurrency Programme for the issuance
of notes. During the year, the Company issued a further £0.4bn (2022: £Nil) of MTNs. The MTNs are secured on a fixed and floating pool
of assets held by Group companies (the ‘Security Group’) giving debt investors security over a pool of investment properties valued at
£9.6bn at 31 March 2023 (2022: £11.2bn).
During the year, the Group purchased none (2022: £Nil) of its MTNs.
Key performance indicators
The directors assess the performance of the Company by reference to successfully raising external debt capital.
Principal risks and uncertainties
The principal risk facing the Company is that of credit risk whereby the intercompany loans issued to the Land Securities Group become
irrecoverable. The solvency of the Land Securities Group is considered strong and therefore credit risk is deemed to be low.
Financial risk management
The Company’s debt financing exposes it to a variety of financial risks that include the effects of changes in debt market prices, liquidity
and interest rates.
The Company’s principal financial assets are cash, loans due from Group undertakings and trade and other receivables and are deemed
to have low credit risk.
The Company has negligible interest rate risk as all notes have fixed interest.
The Company actively maintains a mixture of notes with final maturities between 2025 and 2059. Any short-term liquidity requirement is
minimal and funding requirements can be covered by committed facilities held by other Group companies.
The fair value of the Company’s borrowings varies according to changes in the market cost of borrowing.
Further discussion of these risks and uncertainties, in the context of the Group as a whole, is provided in the Group’s Annual Report, which
does not form part of this report.
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LAND SECURITIES CAPITAL MARKETS PLC
STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2023
Section 172(1) statement
The Company’s ultimate parent company is Land Securities Group PLC which indirectly holds 100% of the ordinary share capital of the
Company (refer note 14). The Company’s framework in respect of requirements under section 172(1) of the Companies Act is applied
through the Land Securities Group’s processes and policies, which place stakeholders at the forefront of the directors’ decision making.
Details of the Group’s framework with respect to interests of customers, communities, employees, partners, suppliers and investors can be
found in the consolidated financial statements of Land Securities Group PLC for the year ended 31 March 2023, available on the Group’s
website, www.landsec.com.
At a Company level, the directors take the interests of stakeholders, namely the Group as the Company’s customer and investor and the
community in which the Company operates, into account when making relevant decisions, ensuring regular and clear lines of
communication between the Company and the Group. The relevance of each stakeholder group may increase or decrease by reference to
the issue in question, so the directors seek to understand the needs and priorities of each group during its discussions. This, together with
the combination of the consideration of long-term consequences of decisions and the maintenance of the Group’s reputation for high
standards of business conduct, is integral to the way the directors operate. The Company Secretary plays a key role in ensuring that
stakeholders’ interests are fully considered and addressed during the course of the directors’ discussions.
Registered Office
100 Victoria Street
London
SW1E 5JL
This report was approved by the Board and signed on its behalf.
L McCaveny
Company Secretary
20 July 2023
Registered and domiciled in England and Wales
Registered number: 05193511
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LAND SECURITIES CAPITAL MARKETS PLC
DIRECTORS' REPORT
FOR THE YEAR ENDED 31 MARCH 2023
The
directors
of Land Securities Capital Markets PLC (the 'Company')
present
their
report and the
financial statements
for the
year
ended
31 March 2023
.
Directors' responsibilities statement
The
directors
are responsible for preparing
the
Strategic Report, the Directors' Report and the
financial statements
in accordance with
applicable UK law and regulations
.
Company law
requires
the
directors
to prepare
financial statements
for each financial
year
. Under that law the directors have elected to
prepare the financial statements in accordance with applicable law and United Kingdom Accounting Standards (United Kingdom Generally
Accepted Accounting Practice), including Financial Reporting Standard 101 ‘Reduced Disclosure Framework’ ('FRS 101'). Under company
law the directors must not approve the financial statements unless they are satisfied that they give
a true and fair view of the state of
affairs of the
Company
and of the
profit or loss
of the
Company
for that period.
In preparing these financial statements, the directors are
required to:
select suitable
accounting policies
and then apply them consistently;
make judgements and accounting estimates that are reasonable and prudent;
state whether applicable
United Kingdom Accounting Standards
have been followed, subject to any material departures disclosed
and explained in the financial statements; and
prepare the
financial statements
on the going concern basis
unless it is inappropriate to presume that the Company will continue
in business
.
The
directors
are
responsible for keeping
adequate
accounting records that are sufficient to show and explain the Company's transactions
and
disclose with reasonable accuracy at any time the financial position of the
Company
and to enable
them
to ensure that the
financial
statements
comply with the Companies Act 2006
.
They are
also responsible for safeguarding the assets of the
Company
and hence for
taking reasonable steps for the prevention and detection of fraud and other irregularities.
Director's engagement statement
Details of how directors have engaged with key stakeholders of the Company have been disclosed in the Strategic Report.
Principal activity and future business developments
The Company operates primarily as a funding vehicle for the Land Securities Group. It does this by issuing debt in the market and lending
the proceeds to the Group’s subsidiaries. No changes in the Company’s principal activity are anticipated in the foreseeable future.
Review of the business and future developments are disclosed in the Strategic Report.
Results for the year and dividend
Results for the year are disclosed in the Strategic Report.
The directors do not recommend the payment of a dividend for the year ended 31 March 2023 (2022: £Nil).
Corporate governance
The Company’s ultimate parent company is Land Securities Group PLC which indirectly holds 100% of the ordinary share capital of the
Company (refer note 14). The Company’s risk management framework is applied through the Land Securities Group’s Risk Management
Process, which covers the risk management and internal control system. Details of the Process can be found in the consolidated financial
statements for the year ended 31 March 2023, available on the Group’s website.
The directors are responsible for implementing and monitoring the effectiveness of the Company's internal controls and risk management
systems. Procedures have been designed for safeguarding assets against unauthorised use or disposition, for maintaining proper
accounting records and for reliability and usefulness of financial information used within the business or for publication. Such procedures
are designed to manage rather than eliminate the risk of failure to achieve business objectives and can only provide reasonable and not
absolute assurance against material misstatements, errors, losses or fraud. Further details are discussed in Principal Risks and
Uncertainties in the Strategic Report and in notes to the financial statements. The directors are responsible for appointment of an
independent statutory auditor, regularly evaluating the independence of the appointed auditor and monitoring the statutory audit of the
annual accounts. The internal procedures allow the Company to comply with their regulatory obligations.
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LAND SECURITIES CAPITAL MARKETS PLC
DIRECTORS' REPORT (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2023
Going concern
The directors have determined that preparing the accounts on the going concern basis is appropriate due to a net current asset and net
asset position as at 31 March 2023. Given the Company’s operating model in which it issues external debt and lends the debt to other
subsidiary companies of Land Securities Group PLC, the Company’s future viability is ultimately dependent on the performance of the
Group and its ability to make interest and principal repayments on the amounts due to the Company. The directors have carried out a
review as part of their going concern assessment for the period ending 31 July 2024 which indicates that the Company will have adequate
resources to continue to trade for the foreseeable future based on the ongoing liquidity of the Group. At the Group level, considerations
included potential risks and uncertainties in the business, credit, market, property valuation and liquidity risks, including the availability and
repayment profile of bank facilities, as well as forecast covenant compliance. Stress testing has been carried out to ensure the Group has
sufficient cash resources to continue in operation for the period to 31 July 2024. This stress testing modelled a scenario with materially
reduced levels of cash receipts over the next 12 months. Based on these considerations, together with available market information and
the directors’ knowledge and experience of the Company, the directors continue to adopt the going concern basis in preparing the
accounts for the year ended 31 March 2023.
Directors
The
directors
who held office during the
year
and up to the date of this report,
unless otherwise stated
,
were:
L L Sellars
M R Worthington
R C Futter
(resigned
5 August 2022
)
D E Stanley
(appointed
5 August 2022
, resigned
13 December 2022
)
C Mairs
V K Simms
E A Gillbe
(appointed
9 May 2023
)
Indemnity
The
Company
has made qualifying third party indemnity provisions for the benefit of the respective
directors
which were in place
throughout the
year
and which remain in place at the date of this report.
Financial risk management
The financial risk management objective and policies are disclosed in the Strategic Report and in note 12.
Disclosure of information to auditor
Each of the persons who are directors at the date the Director' Report is approved has confirmed that:
so far as
they
are aware, there is no relevant audit information of which the
Company
's auditor
is
unaware, and
they
have taken all the steps that they ought to have taken as a
director
in order to make themselves aware of any relevant audit
information and to establish that the
Company
's auditor
is
aware of that information.
Registered Office
100 Victoria Street
London
SW1E 5JL
This report was approved by the Board and signed on its behalf.
L McCaveny
Company Secretary
20 July 2023
Registered and domiciled in England and Wales
Registered number: 05193511
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INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF
LAND SECURITIES CAPITAL MARKETS PLC
Opinion
We have audited the financial statements of Land Securities Capital Markets PLC for the year ended 31 March 2023 which comprise
Statement of Comprehensive Income, the Balance Sheet, the Statement of Changes in Equity and the related notes 1 to 14, including a
summary of significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law
and United Kingdom Accounting Standards including FRS 101 “Reduced Disclosure Framework” (United Kingdom Generally Accepted
Accounting Practice).
In
our
opinion,
the financial statements
:
give a true and fair view of the
Company
's affairs as at
31 March 2023
and of its
profit
for the
year
then ended;
have been properly prepared in accordance with
United Kingdom
Generally Accepted Accounting Practice; and
have been prepared in accordance with the requirements of the Companies Act 2006.
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities
under those standards are further described in the Auditor’s responsibilities for the audit of the financial statements section of our report.
We are independent of the Company in accordance with the ethical requirements that are relevant to our audit of the financial statements
in the UK, including the FRC’s Ethical Standard as applied to listed public interest entities, and we have fulfilled our other ethical
responsibilities in accordance with these requirements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Conclusions relating to going concern
In auditing the financial statements, we have concluded that the directors’ use of the going concern basis of accounting in the preparation
of the financial statements is appropriate. Our evaluation of the directors’ assessment of the Company’s ability to continue to adopt the
going concern basis of accounting included:
We assessed the risk around going concern in planning our audit and again during the execution phase.
We obtained Management’s going concern assessment and gained an understanding of the process followed by the Company to
prepare that assessment. The ability of the Company to continue as a going concern is dependent on it receiving interest and
principal payments on the amounts due from Group undertakings so that it can meet its external obligations. The ability of Land
Securities Group PLC and its subsidiaries (the “Group”) to make these payments is dependent on the Group’s available liquidity
and so in assessing the Company’s ability to continue as a going concern we therefore considered the Group’s going concern
assessment.
The following are the procedures we performed over that Group assessment which support the Company assessment to the
extent necessary to conclude on the Company’s ability to continue as a going concern:
confirming our understanding of the Group’s going concern assessment process and reviewing management’s related
Board papers;
assessing and challenging the appropriateness of the duration of the going concern review period to end of September
2024 and considering whether there are any known events or conditions that will occur in the short-term following the
going concern period which would impact our considerations;
challenging the modelled scenarios, which included challenging the key assumptions used by management by
comparing to corroborative evidence and searching out independent contradictory evidence. We assessed
management’s consideration of downside sensitivity analysis taking into account current events and market
conditions. We have also challenged the impact of the historic impact on events such as covid-19 on the performance
of the Group and the valuation of investment properties. We also applied further sensitivities on income and expense
cashflows and forecast valuation movements where appropriate to stress test the impact on both liquidity and
covenants. As part of our sensitivity testing, we considered the perspective of our Chartered Surveyors on forecast
valuation movements;
checking the integrity of the models developed by management for the base case cashflow and liquidity forecasts and
covenant calculations covering the going concern review period to September 2024 and the additional downside
scenarios;
checking that the terms and conditions of the debt agreements with lenders had been appropriately incorporated into
the going concern scenarios and modelling, including the maturity profile of the Group’s borrowings, the impact of the
Security Group structure and the tiered operating covenant regime;
performed testing to evaluate whether the covenant requirements of the debt facilities would be breached under either
the base case or the downside scenarios through the going concern period. We performed reverse stress testing on
key assumptions and considered the likelihood of outcomes including controllable mitigating actions over and above
the scenarios modelled;
further challenging the cashflow forecasts with reference to historical trends and assessing the outcome of
management’s previous forecasts; and
reviewing the disclosures in the financial statements relating to going concern with a view to confirming that they
appropriately disclose the risk, the impact on the Group’s operations and results and potential mitigating actions.
The results of the severe but plausible downside scenarios modelled by management indicate that the Group would maintain available
facility and covenant headroom to be able to withstand the impact of plausible downside sensitivities throughout the period of the going
concern assessment to 31 July 2024.
Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually
or collectively, may cast significant doubt on the Company’s ability to continue as a going concern for a period to 31 July 2024.
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INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF LAND SECURITIES CAPITAL MARKETS
PLC (CONTINUED)
Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant sections of this
report. However, because not all future events or conditions can be predicted, this statement is not a guarantee as to the Company’s
ability to continue as a going concern.
Overview of our audit approach
Key audit matters
Recoverability of loans due from Group undertakings.
Materiality
Overall materiality of £47.0m which represents 1% of total assets.
An overview of the scope of our audit
Tailoring the scope
Our assessment of audit risk, our evaluation of materiality and our allocation of performance materiality determine our audit scope for the
Company. This enables us to form an opinion on the financial statements. We take into account size, risk profile, the organisation of the
Company and effectiveness of controls, the potential impact of climate change and changes in the business environment when assessing
the level of work to be performed.
Key audit matters
Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the financial statements of
the current period and include the most significant assessed risks of material misstatement (whether or not due to fraud) that we identified.
These matters included those which had the greatest effect on: the overall audit strategy, the allocation of resources in the audit; and
directing the efforts of the engagement team. These matters were addressed in the context of our audit of the financial statements as a
whole, and in our opinion thereon, and we do not provide a separate opinion on these matters.
Risk Our response to the risk Key observations communicated to
those charged with governance
Recoverability of loans due from Group
undertakings
2023: £nil impairment recognised on total
balance of £4,683m (2022: £nil impairment
recognised on a total balance of £4,288m).
The ability of the Company to successfully
raise capital may be influenced by the
recoverability of loans advanced to fellow
Group undertakings. This may place
pressure on the Company to inappropriately
influence the assessment of impairment.
Further, the primary driver of recoverability of
these loans is the financial position and
performance of the wider Group. The ability
of the counterparty entities to make interest
and principal repayments as required is
dependent on the Group’s available liquidity,
including access to borrowing facilities, and
its ability to continue to operate within its
financial covenants.
Our audit procedures in respect of the
recoverability of loans due from Group
undertakings and the related impact on the going
concern basis include:
We assessed the financial viability of each loan
counterparty with reference to its net assets and
the intercompany agreements it has with the rest
of the Group which support the borrower’s ability
to repay its debt.
We compared the loan balance to the total
valuation of the properties within the Security
Group of companies which the external
borrowings, and in turn the loans due from Group
undertakings, are secured against.
As described above we consider the ability of the
Group to continue as a going concern. This
includes an assessment of the Group’s liquidity
position which supports its ability to make interest
and principal payments due to the Company.
We assessed the adequacy of the disclosures in
the financial statements were made in accordance
with IFRS 9 Financial Instruments, IFRS 7
Financial Instruments: Disclosures, and IAS 31
Financial Instruments: Presentation.
Based on the audit procedures
performed, the wider Group has
sufficient liquidity and cash flows and
value in its investment property portfolio
to support the recoverability of the loans
due to the Company from Group
undertakings in accordance with IFRS 9
Financial Instruments, IFRS 7 Financial
Instruments: Disclosures, and IAS 31
Financial Instruments: Presentation.
We concluded there was no impairment
of loans due from Group undertakings.
There have been no changes in relation to key audit matters identified from the prior year.
Our application of materiality
We apply the concept of materiality in planning and performing the audit, in evaluating the effect of identified misstatements on the audit
and in forming our audit opinion.
Materiality
The magnitude of an omission or misstatement that, individually or in the aggregate, could reasonably be expected to influence the
economic decisions of the users of the financial statements. Materiality provides a basis for determining the nature and extent of our audit
procedures.
We determined materiality for the Company to be £47.0 million (2022: £43.0 million), which is 1% (2022: 1%) of total assets. We believe
that total assets provides us with the most appropriate basis for determining overall materiality given that the key users of the Company’s
financial statements are primarily focused on the recoverability of assets to support loan repayment, specifically the loans due from Group
undertakings which comprise around 99% of the Company’s total assets (2022: 99%).
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INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF LAND SECURITIES CAPITAL MARKETS
PLC (CONTINUED)
Performance materiality
The application of materiality at the individual account or balance level. It is set at an amount to reduce to an appropriately low level the
probability that the aggregate of uncorrected and undetected misstatements exceeds materiality.
On the basis of our risk assessments, together with our assessment of the Company’s overall control environment, our judgement was
that performance materiality was 75% (2022: 75%) of our planning materiality, namely £35.3m (2022: £32.2m). We have set performance
materiality at this percentage due to our past experience of the audit that indicates a lower risk of misstatements, both corrected and
uncorrected. Our objective in adopting this approach is to confirm that total detected and undetected audit differences do not exceed our
materiality for the financial statements as a whole.
Reporting threshold
An amount below which identified misstatements are considered as being clearly trivial.
We agreed with the Audit Committee that we would report to them all uncorrected audit differences in excess of £2.3m (2022: £2.2m),
which is set at 5% of planning materiality, as well as differences below that threshold that, in our view, warranted reporting on qualitative
grounds.
We evaluate any uncorrected misstatements against both the quantitative measures of materiality discussed above and in light of other
relevant qualitative considerations in forming our opinion.
Other information
The other information comprises the information included in the annual report, other than the financial statements and our auditor’s report
thereon. The directors are responsible for the other information contained with the annual report.
Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in this
report, we do not express any form of assurance conclusion thereon.
Our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with
the financial statements or our knowledge obtained in the course of the audit or otherwise appears to be materially misstated. If we identify
such material inconsistencies or apparent material misstatements, we are required to determine whether this gives rise to a material
misstatement in the financial statements themselves. If, based on the work we have performed, we conclude that there is a material
misstatement of the other information, we are required to report that fact.
We have nothing to report in this regard.
Opinions on other matters prescribed by the Companies Act 2006
In
our
opinion, based on the work undertaken in the course of the audit:
the information given in the
Strategic Report and the
Directors’ Report for the financial year for which the financial statements are
prepared is consistent with the financial statements; and
the
Strategic Report and the Directors' Report have
been prepared in accordance with applicable legal requirements.
Matters on which we are required to report by exception
In the light of the knowledge and understanding of the Company and its environment obtained in the course of the audit, we have not
identified material misstatements in the Strategic Report or Directors' Report.
We have nothing to report in respect of the following matters in relation to which the Companies Act 2006 requires us to report to you if, in
our opinion:
adequate accounting records have not been kept, or returns adequate for our audit have not been received from branches not visited
by us; or
the financial statements are not in agreement with the accounting records and returns; or
certain disclosures of directors' remuneration specified by law are not made; or
we have not received all the information and explanations we require for our audit.
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INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF LAND SECURITIES CAPITAL MARKETS
PLC (CONTINUED)
Responsibilities of Directors
As explained more fully in the directors’ responsibilities statement set out on page 3, the directors are responsible for the preparation of
the financial statements and for being satisfied that they give a true and fair view, and for such internal control as the directors determine is
necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.
In preparing the financial statements, the directors are responsible for assessing the Company’s ability to continue as a going concern,
disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either
intend to liquidate the Company or to cease operations, or have no realistic alternative but to do so.
Auditor’s responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement,
whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of
assurance, but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it
exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably
be expected to influence the economic decisions of users taken on the basis of these financial statements.
Explanation as to what extent the audit was considered capable of detecting irregularities, including fraud
Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our
responsibilities, outlined above, to detect irregularities, including fraud. The risk of not detecting a material misstatement due to fraud is
higher than the risk of not detecting one resulting from error, as fraud may involve deliberate concealment by, for example, forgery or
intentional misrepresentations, or through collusion. The extent to which our procedures are capable of detecting irregularities, including
fraud is detailed below.
However, the primary responsibility for the prevention and detection of fraud rests with both those charged with governance of the
Company and management.
We obtained an understanding of the legal and regulatory frameworks that are applicable to the Company and determined that the
most significant which are directly relevant to specific assertions in the financial statements are those that relate to the reporting
framework (FRS 101, the Companies Act 2006 and the Irish Stock exchange listing rules).
We understood how Land Securities Capital Markets PLC is complying with those frameworks by identifying the Company’s
policies and procedures regarding compliance with laws and regulations. We also identified those members of the Company who
have the primary responsibility for ensuring compliance with laws and regulations, and for reporting any known instances of non-
compliance to those charged with governance.
We assessed the susceptibility of the Company’s financial statements to material misstatement, including how fraud might occur
by reviewing the Group risk register and through enquiry with the Company’s Management during the planning and execution
phases of the audit.
Based on this understanding we designed our audit procedures to identify non-compliance with such laws and regulations. Our
procedures involved:
Enquiry of Management, and when appropriate, those charged with governance regarding their knowledge of any
non-compliance or potential non-compliance with laws and regulations that could impact the financial statements.
Reading minutes of the meetings of those charged with governance.
Obtaining electronic confirmations from the Group’s banking providers to vouch the existence of cash balance and
completeness of loans and borrowings.
Obtaining and reading correspondences from legal and regulatory bodies, including the FRC and HMRC; and
Journal entry testing, with focus on manual journals and journals indicating large or unusual transactions based on
our understanding the business.
A further description of our responsibilities for the audit of the financial statements is located on the Financial Reporting Council’s website
at https://www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor’s report.
Use of our report
This report is made solely to the Company’s members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006.
Our audit work has been undertaken so that we might state to the Company’s members those matters we are required to state to them in
an auditor’s report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone
other than the Company and the Company’s members as a body, for our audit work, for this report, or for the opinions we have formed.
Graeme Downes
(Senior statutory auditor)
For and on behalf of
Ernst & Young LLP, Statutory Auditor
London
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20 July 2023
LAND SECURITIES CAPITAL MARKETS PLC
STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED
31 MARCH 2023
2023
2022
Notes
£000
£000
Administrative expenses
-
(97)
Operating loss
-
(97)
Interest income
5
171,568
170,589
Interest expense
5
(171,447)
(170,158)
Profit before tax
121
334
Tax on profit
6
(23)
(63)
Profit and total comprehensive income for the financial year
98 271
There were no recognised gains or losses for
2023
or
2022
other than those included in the Statement of Comprehensive Income.
All amounts are derived from continuing activities.
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LAND SECURITIES CAPITAL MARKETS PLC
REGISTERED NUMBER:
05193511
BALANCE SHEET
AS AT
31 MARCH 2023
2023
2022
Notes
£000
£000
Non-current assets
Loans due from Group undertakings
7
4,683,464
4,287,642
4,683,464
4,287,642
Current assets
Trade and other receivables
8
12,593
11,526
Cash at bank and in hand
1,209
764
13,802
12,290
Current liabilities
Trade and other payables
9
(12,546)
(11,142)
(12,546)
(11,142)
Non-current liabilities
Borrowings
10
(2,736,733)
(2,340,901)
Loans due to Group undertakings
10
(1,946,741)
(1,946,741)
(4,683,474)
(4,287,642)
Net assets 1,246 1,148
Capital and reserves
Share capital
11
50
50
Retained earnings
1,196
1,098
Total equity 1,246 1,148
The
financial statements
on pages 9 to 18 were approved by the
Board
of
Directors
and were signed on
its
behalf by
:
E A Gillbe
Director
20 July 2023
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LAND SECURITIES CAPITAL MARKETS PLC
STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED
31 MARCH 2023
Share capital
Retained
earnings
Total equity
£000
£000
£000
At 1 April 2021
50
827
877
Total comprehensive income for the financial year
-
271
271
At 31 March 2022
50
1,098
1,148
Total comprehensive income for the financial year
-
98
98
At 31 March 2023 50 1,196 1,246
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LAND SECURITIES CAPITAL MARKETS PLC
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2023
1
.
Accounting policies
1.1
Basis of preparation
The
financial statements
have been prepared on a going concern basis (refer to note 1.7) and in accordance with
Financial Reporting
Standard 101 'Reduced Disclosure Framework' ('FRS 101')
and the
Companies Act 2006
. The
financial statements
are prepared under the
historical cost convention.
Land Securities Capital Markets PLC
(the ‘
Company
’) is a public company limited by shares and is incorporated, domiciled and registered
in England and Wales (
Registered number:
05193511
). The nature of the Company’s operations is set out in the
Strategic Report
on page
1. The results of the
Company
are included in the consolidated
financial statements
of
Land Securities Group PLC
which are available
from the
Company
's registered office at
100 Victoria Street, London, SW1E 5JL
.
The accounting policies which follow set out those policies which apply in preparing the
financial statements
for the
year
ended
31 March
2023
. The
financial statements
are prepared in Pounds Sterling (£) and are rounded to the nearest
thousand pounds (£000)
.
1.2
Financial reporting standard 101 - reduced disclosure exemptions
The Company has taken advantage of the following disclosure exemptions under FRS 101:
the requirements of IAS 7 Statement of Cash Flows;
the requirements of paragraphs 10(d), 10(f), 16, 38A, 38B, 38C, 38D, 40A, 40B, 40C, 40D, 111 and 134-136 of IAS 1 Presentation
of Financial Statements
the requirements of paragraphs 30 and 31 of IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors; and
the requirements in IAS 24 Related Party Disclosures to disclose related party transactions entered into between two or more
members of a group, provided that any subsidiary which is a party to the transaction is wholly owned by such a member.
1.3
Cash and cash equivalents
Cash and cash equivalents comprise cash balances, deposits held at call with banks and other short-term highly liquid investments with
original maturities of three months or fewer.
1.4
Borrowings
Borrowings are recognised initially at fair value less attributable transaction costs. Subsequent to initial recognition, borrowings are stated
at amortised cost with any difference between the amount initially recognised and redemption value being recognised in the Statement of
Comprehensive Income account over the period of the borrowings, using the effective interest method.
1.5
Intercompany loans
Loans due to Group undertakings
Loans owed to Group undertakings are recognised initially at fair value less attributable transaction costs. Subsequent to initial recognition,
loans owed to Group undertakings are stated at amortised cost with any difference between the amount initially recognised and
redemption value being recognised in the Statement of Comprehensive Income over the period of the loan, using the effective interest
method.
Loans due from Group undertakings
Loans due from Group undertakings are recognised initially at fair value plus attributable transaction costs. Subsequent to initial
recognition, loans due from Group undertakings are stated at amortised cost and, where relevant, adjusted for the time value of money.
The Company assesses on a forward-looking basis, the expected credit losses associated with its loans due from Group undertakings.
The Company applies the general impairment approach, either a 12-month expected credit loss or lifetime expected credit loss depending
on the existence of indicators of significant deterioration in credit risk for all loans due from Group undertakings. If collection is expected in
more than one year, the balance is presented within non-current assets.
1.6
Share capital
Ordinary shares are classified as equity.
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LAND SECURITIES CAPITAL MARKETS PLC
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2023
1
.
Accounting policies (continued)
1.7
Going concern
The directors have determined that preparing the accounts on the going concern basis is appropriate due to a net current asset and net
asset position as at 31 March 2023. Given the Company’s operating model in which it issues external debt and lends the debt to other
subsidiary companies of Land Securities Group PLC, the Company’s future viability is ultimately dependent on the performance of the
Group and its ability to make interest and principal repayments on the amounts due to the Company. The directors have carried out a
review as part of their going concern assessment for the period ending 31 July 2024 which indicates that the Company will have adequate
resources to continue to trade for the foreseeable future based on the ongoing liquidity of the Group. At the Group level, considerations
included potential risks and uncertainties in the business, credit, market, property valuation and liquidity risks, including the availability and
repayment profile of bank facilities, as well as forecast covenant compliance. Stress testing has been carried out to ensure the Group has
sufficient cash resources to continue in operation for the period to 31 July 2024. This stress testing modelled a scenario with materially
reduced levels of cash receipts over the next 12 months. Based on these considerations, together with available market information and
the directors’ knowledge and experience of the Company, the directors continue to adopt the going concern basis in preparing the
accounts for the year ended 31 March 2023.
1.8
Interest receivable and interest payable
Interest payable is recognised on an accruals basis by applying the effective interest rate which takes account of the amortisation of
finance costs over the term of the loan notes.
Intercompany interest receivable and interest payable are recognised on an accruals basis on the corresponding intercompany loan by
applying the effective interest rate which takes account of the amortisation of finance income or finance costs over the term of the loans to
which they relate.
1.9
Income taxation
Income tax on the profit or loss for the year comprises current tax. Current tax is the tax payable on the taxable income for the year based
on tax rates and laws that are enacted or substantively enacted by the balance sheet date and any adjustment in respect of previous
years.
1.10
Dividend distribution
Final dividend distributions to the Company’s shareholder are recognised as a liability in the Company’s financial statements in the period
in which the dividends are approved by the Company’s shareholder. Interim dividends are recognised when paid.
2
.
Changes in accounting policies and standards
The accounting policies used in these financial statements are consistent with those applied in the last annual financial statements, as
amended where relevant to reflect the adoption of new standards, amendments and interpretations which became effective in the year.
There have been no new accounting standards, amendments or interpretations during the year that have a material impact on the financial
statements of the Company.
Amendments to accounting standards
A number of new standards, amendments to standards and interpretations have been issued but are not yet effective for the Company,
none of which are expected to have a material impact on the financial statements of the Company.
3
.
Significant accounting judgements and estimates
The
Company
’s significant accounting policies are stated in note
1
above. Not all of these significant accounting policies require
management to make difficult, subjective or complex judgements or estimates. The following is intended to provide an understanding of
the policies that management consider critical because of the level of complexity, judgement or estimation involved in their application and
their impact on the
financial statements
. These estimates involve assumptions or judgements in respect of future events. Actual results
may differ from these estimates.
Estimates
Loans and amounts due from Group undertakings
The Company is required to estimate the impairment of loans and amounts due from Group undertakings. It does this by assessing on a
forward-looking basis, the expected credit losses associated with its loans and amounts due from Group undertakings. In determining the
expected credit losses, the Company takes into account any future expectations of likely default events based on the level of capitalisation
of the counterparty, which is a fellow subsidiary undertaking of Land Securities Group PLC. As a result, the value of any provision for
impairment is subject to a degree of uncertainty and is made on the basis of assumptions which may not prove to be accurate.
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LAND SECURITIES CAPITAL MARKETS PLC
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2023
4
.
Management and administrative expenses
(a)
Management services
The
Company
had no employees during the year (
2022
: None).
(b)
Directors’ remuneration
The Group's
directors
' emoluments are borne by fellow Group subsidiary,
Land Securities Properties Limited
. The directors of the
Company
, who are key management personnel of the Company, received no emoluments from
Land Securities Properties Limited
for their services to the
Company
(
2022
: £Nil).
(c)
Auditor remuneration
The Group auditor’s remuneration is borne by
Land Securities Properties Limited
. The proportion of the remuneration which
relates to the
Company
amounts to
£
65,000
(
2022
: £
20,000
). No non-audit services were provided to the
Company
during the
year
(
2022
: £
Nil
).
5
.
Net interest income
2023
2022
£000
£000
Interest expense
Bond and debenture debt
(68,959)
(67,703)
Interest payable on loans due to Group undertakings
(102,488)
(102,455)
(171,447)
(170,158)
Interest income
Interest receivable on loans due from Group undertakings
171,568
170,589
171,568
170,589
Net interest income 121 431
6
.
Income tax
2023
2022
£000
£000
Corporation tax
Income tax on profit for the year
23
63
Total income tax charge in the Statement of Comprehensive Income 23 63
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LAND SECURITIES CAPITAL MARKETS PLC
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2023
6
.
Income tax (continued)
Factors affecting tax charge for the year
The tax assessed for the
year
is
the same as
(2022 - the same as)
the standard rate of corporation tax
in the UK of
19
%
(2022 -
19
%
)
as set out below:
2023
2022
£000
£000
Profit before tax 121 334
Profit before tax multiplied by UK corporation tax rate
23
63
Total income tax charge in the Statement of Comprehensive Income (as above) 23 63
Land Securities Group PLC
is a Real Estate Investment Trust (REIT). As a result the
Company
does not pay UK corporation tax
on the profits and gains from qualifying rental business in the UK provided it meets certain conditions. Non-qualifying profits and
gains of the
Company
continue to be subject to corporation tax as normal.
7
.
Loans due from Group undertakings
2023
2022
£000
£000
Loans due from Group undertakings - fellow subsidiary
4,683,464
4,287,642
Total loans due from Group undertakings 4,683,464 4,287,642
The Company has a right to demand immediate repayment of the unsecured loans due from Group undertakings however, the
Company expects the loans to be repayable when the note it relates to is repaid. The terms and conditions of loans due from
Group undertakings are the same as the non-current loans due to Group undertakings and medium-term notes with the exception
of a slight difference in terms of interest that are considered to be insignificant (i.e. an additional 0.01%).
Therefore, it is considered that the fair value of loans due from Group undertakings,
£4,335.5m
(2022: £4,706.8m), is the same as
the fair value of non-current loans and medium-term notes (note 10).
8
.
Trade and other receivables
2023
2022
£000
£000
Accrued interest on loans due from Group undertakings - fellow subsidiary
11,996
11,142
Amounts due from Group undertakings - fellow subsidiary
597
365
VAT receivable
-
19
Total trade and other receivables 12,593 11,526
The unsecured loans due from Group undertakings are expected to be repayable when the note it relates to is repaid. Interest is
charged at the interest rate on the related note plus 0.01%. The amounts due from Group undertakings are interest free, repayable
on demand with no fixed repayment date.
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LAND SECURITIES CAPITAL MARKETS PLC
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2023
9
.
Trade and other payables
2023
2022
£000
£000
Accrued interest on non-current loans due to Group undertakings - fellow subsidiary
7,132
7,133
Accrued interest on non-current borrowings
4,864
4,009
Other accruals
550
-
Total trade and other payables 12,546 11,142
10
.
Borrowings
2023 2022
Effective
Nominal/
Fair value
Book value
Nominal/
Fair value
Book value
interest rate
notional value
notional value
%
£000
£000
£000
£000
£000
£000
Non-current borrowings
A10 4.875% MTN due 2025
5.0
9,862
9,857
9,857
9,862
10,256
9,847
A12 1.974% MTN due 2026
2.0
400,000
389,144
399,848
400,000
398,824
399,669
A4 5.391% MTN due 2026
5.4
17,046
17,108
17,040
17,046
18,010
17,033
A5 5.391% MTN due 2027
5.4
86,572
86,698
86,500
86,572
93,397
86,467
A16 2.375% MTN due 2027
2.5
350,000
317,065
348,362
350,000
350,861
347,978
A6 5.376% MTN due 2029
5.4
65,162
65,991
65,043
65,162
73,627
65,020
A13 2.399% MTN due 2031
2.4
300,000
263,052
299,448
300,000
299,436
299,361
A7 5.396% MTN due 2032
5.4
77,389
79,349
77,137
77,389
107,067
77,134
A17 4.875% MTN due 2034
5.0
400,000
406,376
394,704
-
-
-
A11 5.125% MTN due 2036
5.1
50,014
49,878
49,222
50,014
67,624
49,213
A14 2.625% MTN due 2039
2.6
500,000
377,845
494,402
500,000
490,525
494,091
A15 2.750% MTN due 2059
2.7
500,000
312,155
495,170
500,000 497,295 495,088
Total borrowings
2,756,045 2,374,518 2,736,733 2,356,045 2,406,922 2,340,901
Non-current loans due to
Group undertakings –
fellow subsidiary
A10 4.875% MTN due 2025
5.0
290,138
290,002
289,266
290,138
301,720
289,266
A4 5.391% MTN due 2026
5.4
193,629
194,338
193,341
193,629
204,577
193,341
A5 5.391% MTN due 2027
5.4
521,351
522,107
520,356
521,351
562,449
520,356
A6 5.376% MTN due 2029
5.4
252,064
255,270
251,354
252,064
284,810
251,354
A7 5.396% MTN due 2032
5.4
244,238
250,495
243,286
244,238
337,903
243,286
A11 5.125% MTN due 2036
5.1
449,986
448,767
449,138
449,986 608,426 449,138
Total non-current loans
due to Group undertakings
1,951,406 1,960,979 1,946,741 1,951,406 2,299,885 1,946,741
The Company has the option to repay any of the Notes at par in the two years prior to the stated maturity date.
The table below analyses the Company’s borrowings into relevant maturity groupings based on the remaining period at the balance sheet
date to the expected maturity date. The amounts disclosed in the table are the contractual undiscounted cash flows.
2023
2022
£000
£000
Within one year
1,089,808
169,073
One to five years
1,778,968
2,368,362
Over five years 3,336,147 3,251,925
6,204,923 5,789,360
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LAND SECURITIES CAPITAL MARKETS PLC
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2023
10. Borrowings (continued)
Medium-term notes (MTNs)
The MTNs are secured on the fixed and floating pool of assets of the Security Group. The Security Group includes investment properties,
development properties and the Group’s investment in Westgate Oxford Alliance Limited Partnership, Nova, Victoria and Southside
Limited Partnership, in total valued at £9.6bn at 31 March 2023 (2022: £11.2bn). The secured debt structure has a tiered operating
covenant regime which gives the Group substantial flexibility when the loan-to-value and interest cover in the Security Group are less than
65% and more than 1.45 times respectively. If these limits are exceeded, the operating environment becomes more restrictive with
provisions to encourage a reduction in gearing. The interest rate of each MTN is fixed until the expected maturity, being two years before
the legal maturity date of each MTN, whereupon the interest rate for the last two years may either become floating on a SONIA basis plus
an increased margin (relative to that at the time of issue), or subject to a fixed coupon uplift, depending on the terms and conditions of the
specific notes.
The effective interest rate is based on the coupon paid and includes the amortisation of issue costs. The MTNs are listed on the Irish
Stock Exchange and their fair values are based on their respective market prices.
During the year, Land Securities Group PLC and its subsidiaries purchased £Nil (2022: £Nil) of its MTNs.
Valuation hierarchy
The fair value of the MTNs is based on values using unadjusted quoted prices in active markets and therefore falls within level 1 of the
valuation hierarchy, as defined by IFRS 13. For all other financial instruments, the carrying value in the balance sheet approximate their
fair values.
11
.
Share capital
Authorised and issued
Allotted and fully paid
2023
2022
2023
2022
Number
Number
£000
£000
Ordinary shares of £1.00 each 50,000 50,000 50 50
50,000
50,000
50
50
12
.
Capital and financial risk management
Capital management
The Company considers its capital to constitute Shareholder’s capital and non-current loans and borrowings. The primary
objective of the Company’s capital management is to ensure that Company’s commitments in relation to its loans and borrowings
are met on a timely basis. For this purpose, the Company has entered into an agreement with another related party to ensure
sufficient funds are available to meet the external obligations when these arise.
Financial risk management
Financial risk factors
The Company’s debt financing exposes it to a variety of financial risks that include the effects of changes in debt market prices,
liquidity and interest rates.
Credit risk
The Company’s principal financial assets are cash, loans due from Group undertakings and trade and other receivables. The
solvency of the Land Securities Group is considered strong and therefore credit risk is deemed to be low.
Interest rate risk
The Company has negligible interest rate risk as all MTNs have fixed interest. Specific interest rate-hedges are also used by the
Company from time to time to fix the interest rate exposure on the Group’s debt.
Liquidity risk
The Company actively maintains a mixture of MTNs with final maturities between 2025 and 2059. Any short-term liquidity
requirement is minimal and funding requirements can be covered by committed facilities held by other Group companies. The
Company’s MTNs are listed on the Irish Stock Exchange.
Foreign currency risk
All assets and liabilities held by the Company are denominated in pound sterling therefore there is no exposure to foreign currency
risk at 31 March 2023 and 31 March 2022.
Sensitivity analysis
A sensitivity analysis has not been produced as the risks that the Company is exposed to are low.
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LAND SECURITIES CAPITAL MARKETS PLC
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2023
13
.
Related party transactions
The Company did not have any transactions with key management personnel during the year ended 31 March 2023 (2022: £Nil).
14
.
Parent company
The immediate parent company is
Land Securities PLC
.
The ultimate parent company and controlling party at
31 March 2023
was
Land Securities Group PLC
, which is registered in
England and Wales. This is the largest parent company of the Group to consolidate these financial statements.
Consolidated financial statements for the year ended
31 March 2023
for
Land Securities Group PLC
can be obtained from the
Company Secretary at the registered office address of the ultimate parent company,
100 Victoria Street, London, SW1E 5JL
, and
from the Group's website at www.landsec.com. This is the largest and smallest Group to include these accounts in its
consolidated financial statements.
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