
INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF LAND SECURITIES CAPITAL MARKETS
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
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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