Land Secs to hand £500m to investors

LAND Securities today unveiled plans to return £500m of capital to shareholders as full-year, pre-tax profits jumped by 11.9% to £363.5m. The boost was assisted by the first full-year contribution from property management arm Land Securities Trillium. Including its share in the joint venture Telereal, Trillium generated 40% of the group's gross property income and 12% of profit before interest and tax.

Chief executive Ian Henderson said Trillium would account for 25% of Land Securities' profits in five years' time, with development activities producing a further 25% and the traditional portfolio management business reduced to providing just half of total profits.

The total value of the group's properties fell by 1.3% to £7.8bn. The Midtown portfolio suffered the worst drop in value, down 6.2% at £590.7m. The City properties dropped 2.5% in value to £1.157bn. The biggest cluster of buildings, in the West End, was worth 4.3% less than last year at £1.45bn.

Land Securities Trillium won two major contracts in the year, to manage property needs for the BBC and BT. Henderson said: 'We have made good progress in our objective of growing the business. At the beginning of the year, we were a single-contract operation with 600 staff, and now we have 1,330 staff.'

Land Securities expects to spend £1bn developing new business for Trillium over the next five years. Henderson added: 'There is a quite compelling business case for some companies which simply don't know what they own or what it is worth.' He said that in the current low inflationary environment, the new direction would generate better earnings.

Following a review of its capital structure, Land Securities has decided it has much more cash floating around than is considered fashionable. Although it has not settled on the method to be used, it promised to return £500m to shareholders in a structured transaction by autumn. It may also try to buy back up to £250m of bonds in the open market if it can get them for a good price.

Adjusted earnings per share for the year ended 31 March are 51.61p, up 13.7%, while adjusted diluted net assets per share were steady at 1155p. The final dividend of 24.95p raises the full payout to 34p, an increase of 4.6%.