7th Feb 2005 12:00
Land Securities Group Plc07 February 2005 07 February 2005 LAND SECURITIES HOSTS INTERNATIONAL FINANCIAL REPORTING STANDARDS SEMINAR Land Securities Group PLC ("Land Securities" / "Group") announces that it istoday holding an International Financial Reporting Standards ("IFRS") seminar atthe London Stock Exchange, Paternoster Square, London, EC4M, which will provideinformation on the qualitative effect of the move to IFRS on Land Securitiesfinancial reports. Land Securities will first report under IFRS for the sixmonths to 30 September 2005. The Company intends to release restated financialstatements in June 2005 for the six months ended 30 September 2004 and the yearto 31 March 2005. The seminar will be hosted by Andrew Macfarlane, Land Securities' Group FinanceDirector and the other speakers will be David Holt, Director of Finance andRobert Fryer, Technical Accounting Director. The presentations will cover thefollowing topics:- • Overview of IFRS • Investment portfolio effects • Leases, LS Trillium and other issues • Derivatives, debt and performance measures The underlying performance, economics and strategy of the Group will remainunaffected by the introduction of IFRS. However, the new standards willrepresent a major change in accounting and reporting. The most significantchanges relate to the treatment of investment property valuation movements,contingent tax on capital gains, the reclassification of certain transactions asfinance leases, accounting for the 2004 debt refinancing, interest rate hedgesand dividends payable. Investment property valuation movements Investment properties will continue to be revalued every six months, howeverrevaluation movements will in future go through the income statement rather thandirectly to reserves. Contingent tax on capital gains Land Securities will make full provision on its balance sheet for the latent taxon capital gains arising from the revaluation of its investment properties,regardless of whether these liabilities are expected to crystallise. Anymovements in that provision will be taken through the income statement. Finance Leases Certain transactions with occupiers, and some leases where the Group is itself atenant, are likely to be treated as finance leases. In these cases thecommercial relationship will effectively be treated as a notional loan, withrent or part of the unitary charge being treated instead as notional payments ofprincipal and interest. Debt refinancing The increase in the nominal value of the Group's bond debt following last year'sdebt refinancing and the consequent reduction in coupon rates will result in anexceptional non-cash loss and reduced interest expense in the Group's UK GAAPaccounts for the year ending 31 March 2005, as previously announced. IAS39 will require the effective reversal of this accounting treatment and thereinstatement of the old debt onto the balance sheet, even though legally it hasbeen extinguished. In addition, the old bonds will be amortised up to thehigher redemption amount of the new debt over the life of the new bonds bycharging the income statement. The tax treatment of the debt refinancing willbe unchanged. Interest rate hedges There will be new criteria to determine when hedge accounting can be applied.Land Securities uses interest rate derivatives to manage its interest rateexposure. Currently, under UK GAAP, these derivatives are treated as hedges andthe net interest payable or receivable is taken to the profit and loss accountas incurred. Under IFRS it is likely that part of the hedging portfolio, while commerciallyhedging interest rate exposures, will not qualify for hedge accountingtreatment. Any such derivatives will be marked to market through the incomestatement, which may introduce an element of volatility to reported results. Dividends payable Currently dividends are charged against the profit and loss account whenproposed. In future dividends will only be recognised once they are a legalobligation of the Group. Dividends, therefore, will effectively be accountedfor on a cash basis. Other, less significant differences resulting from IFRS will be covered in theseminar. A live audio webcast of the presentations will be available on theGroup's website at 16:15 (www.landsecurities.com/ifrsseminar). The presentationslides, speaker notes and an archive video webcast will be available tomorrowmorning. Important notice The information contained in this press release and the seminar is based on ourcurrent interpretation of IFRS. -Ends- For further information, please contact: Land Securities Andrew Macfarlane/Emma Denne/Jen van der Eem Tel: +44(0) 20 7413 9000 Financial Dynamics Stephanie Highett Tel: +44(0) 20 7831 3113 Note to Editors Land Securities is a FTSE 100 company, quoted on the London Stock Exchange. Ithas been at the forefront of the UK's commercial property industry for 60 years.Today, the Group maintains its market leading position as the UK's largestquoted property company by providing commercial accommodation and propertyservices to a wide range of occupiers. The Group's objective is to createattractive and sustainable returns for its shareholders through its activities,which include property investment, development and property outsourcing. Land Securities holds a market leading position in three areas of the UKcommercial property market: • Retail • Central London offices and • Property outsourcing. Its £8.9 billion investment portfolio includes more than 810,000 sq m of officespace in Central London and substantial retail holdings in Oxford Street,Tottenham Court Road and Notting Hill Gate. In addition the Group owns 18shopping centres and 25 retail parks located across the UK. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
Land Securities