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LAND SECURITIES CAPITAL MARKETS PLC
STRATEGIC REPORT
FOR THE YEAR ENDED 31 MARCH 2024
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 2024.
Results for the year
The results are set out in the Statement of Comprehensive Income on page 10.
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 £4.1bn (2023: £4.7bn) 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 £0.3bn (2023: £0.4bn) 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
£9.2bn at 31 March 2024 (2023: £9.6bn).
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 risks facing the Company are that of credit risk whereby the intercompany loans issued to the Land Securities Group become
irrecoverable, and liquidity risk whereby the Company has insufficient available funds for its operations and refinancing of upcoming MTNs.
The solvency of the Land Securities Group is considered strong and therefore credit risk is deemed to be low. The Company has a well
spread maturity profile and expected maturities between 2025 and 2057 and diversified shorter-term maturities in commercial paper and
committed bank facilities, therefore liquidity risk is considered 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. The solvency of
the Land Securities Group is considered strong and therefore credit risk is deemed to be low.
The Company has negligible interest rate risk as all MTNs have fixed interest.
The Company actively maintains a mixture of MTNs with final maturities between 2027 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.
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 2024 and 31 March 2023
A sensitivity analysis has not been produced as the risks that the Company is exposed to are low.
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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Section 172(1) statement
LAND SECURITIES CAPITAL MARKETS PLC
STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2024
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 2024, 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.
This report was approved by the Board and signed on its behalf.
�DocuSigned by:
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cc'aWn'y',Ff6r4and on behalf of LS Company Secretaries Limited
Company Secretary
Date:
July 30, 2024
Registered and domiciled in England and Wales
Registered number: 05193511
Registered Office
100 Victoria Street
London
SW1E 5JL
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Opinion
LAND SECURITIES CAPITAL MARKETS PLC
INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF
LAND SECURITIES CAPITAL MARKETS PLC
We have audited the financial statements of Land Securities Capital Markets PLC (the 'Company') for the year ended 31 March 2024
which comprise the Statement of Comprehensive Income, the Balance Sheet, the Statement of Changes in Equity and the related notes 1
to 14, including material accounting policy information. 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 2024 and of its profit or loss 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 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.
•
Land Securities Group pie has provided the Company with a letter of financial support to enable it to meet its liabilities as they fall
due. 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 Company has received a letter of financial support from its parent undertaking, Land Securities Group pie. We have challenged
Land Securities Group pie's ability to provide support by:
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 Group's going concern review period to end of September
2025 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 also applied further sensitivities on
income and expense cashflows and forecast property 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 2025 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.
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.
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Materiality
LAND SECURITIES CAPITAL MARKETS PLC
INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF
LAND SECURITIES CAPITAL MARKETS PLC
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 £41.1 m million (2023: £47.0 million), which is 1 % (2023: 1 %) of total assets. We believe
that total assets provide 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 (2023: 99%).
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% (2023: 75%) of our planning materiality, namely £30.8m (2023: £35.3m). 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 £2.1 m (2023: £2.3m),
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 set out on page 1, other than the financial statements and
our auditor's report thereon. The directors are responsible for the other information contained within 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 the part of the directors' remuneration report to be audited has been properly prepared in accordance with 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 directors' report have been prepared in accordance with applicable legal requirements.
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1.
Accounting policies
1.1 Basis of preparation
LAND SECURITIES CAPITAL MARKETS PLC
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2024
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. As applied by the Group and the Company, there are no material differences between UK adopted international
accounting standards and EU IFRS.
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 Directors' Report on page
3. As applied by the Group and the Company, there are no material differences between UK adopted international accounting standards
and EU IFRS. 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, SW1 E 5JL.
The accounting policies which follow set out those policies which apply in preparing the financial statements for the year ended 31 March
2024. 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 1 0(d), 1 0(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 lntercompany 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. 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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