Caseware UK (AP4) 2022.0.179 2022.0.179 2023-03-312022-05-252022-05-252023-03-31truetruetruetruetruetruetruetruetruetrue2022-04-01false00true 04166047 2022-04-01 2023-03-31 04166047 2021-04-01 2022-03-31 04166047 2023-03-31 04166047 2022-03-31 04166047 2021-04-01 04166047 c:Exceptional 2022-04-01 2023-03-31 04166047 c:Exceptional 2021-04-01 2022-03-31 04166047 d:CompanySecretary1 2022-04-01 2023-03-31 04166047 d:Director1 2022-04-01 2023-03-31 04166047 d:Director2 2022-04-01 2023-03-31 04166047 d:Director5 2022-04-01 2023-03-31 04166047 d:Director5 2023-03-31 04166047 d:Director6 2022-04-01 2023-03-31 04166047 d:Director6 2023-03-31 04166047 c:UKTax 2022-04-01 2023-03-31 04166047 c:UKTax 2021-04-01 2022-03-31 04166047 c:ShareCapital 2023-03-31 04166047 c:ShareCapital 2022-03-31 04166047 c:ShareCapital 2021-04-01 04166047 c:RetainedEarningsAccumulatedLosses 2022-04-01 2023-03-31 04166047 c:RetainedEarningsAccumulatedLosses 2023-03-31 04166047 c:RetainedEarningsAccumulatedLosses 2021-04-01 2022-03-31 04166047 c:RetainedEarningsAccumulatedLosses 2022-03-31 04166047 c:RetainedEarningsAccumulatedLosses 2021-04-01 04166047 d:FRS101 2022-04-01 2023-03-31 04166047 d:Audited 2022-04-01 2023-03-31 04166047 d:FullAccounts 2022-04-01 2023-03-31 04166047 d:PrivateLimitedCompanyLtd 2022-04-01 2023-03-31 04166047 c:FinanceLeases c:WithinOneYear 2023-03-31 04166047 c:FinanceLeases c:WithinOneYear 2022-03-31 04166047 c:FinanceLeases c:BetweenOneFiveYears 2023-03-31 04166047 c:FinanceLeases c:BetweenOneFiveYears 2022-03-31 04166047 c:FinanceLeases c:MoreThanFiveYears 2023-03-31 04166047 c:FinanceLeases c:MoreThanFiveYears 2022-03-31 04166047 c:FinanceLeases 2023-03-31 04166047 c:FinanceLeases 2022-03-31 iso4217:GBP xbrli:pure

Registered number: 04166047










LS GALLERIA LIMITED










FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 MARCH 2023

 
LS GALLERIA LIMITED
 
 
DIRECTORS' REPORT
FOR THE YEAR ENDED 31 MARCH 2023

The directors of LS Galleria Limited (the 'Company') present their report and the audited financial statements for the year ended 31 March 2023.

Directors' responsibilities statement

The directors are responsible for preparing the Directors' Report and the audited financial statements in accordance with applicable law and regulations.
 
Company law requires the directors to prepare audited financial statements for each financial year. Under that law the directors have elected to prepare the audited 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’. Under company law the directors must not approve the audited 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 audited financial statements, the directors are required to:

select suitable accounting policies and then apply them consistently;

make judgments and accounting estimates that are reasonable and prudent;

state whether applicable UK Accounting Standards have been followed, subject to any material departures disclosed and explained in the financial statements; and

prepare the audited 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 audited financial statements comply with the Companies Act 2006They 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.

Principal activity, review of the business and future developments

The Company has continued its business of property investment in the United Kingdom. No changes in the Company’s principal activity are anticipated in the foreseeable future.

Going concern

The directors have determined that preparing the financial statements on the going concern basis is appropriate due to the continued financial support of the ultimate parent company, Land Securities Group PLC 'together with its subsidiaries referred to as the ‘Group’. The directors’ going concern assessment covers the period to 30 November 2024 and confirmation has been received that Land Securities Group PLC will support the Company until this date, so long as the Company remains a subsidiary of Land Securities PLC. If the company was sold within the next 12 months from 30 November 2023, confirmation has been received that Land Securities Group PLC would ensure the Company remains in a position to continue as a going concern at the point of sale. The Company’s ability to meet its future liabilities is therefore dependent on the financial performance, position and liquidity of the Group as a whole. 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 30 November 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 financial statements for the year ended 31 March 2023.
In preparing the financial statements on a going concern basis, the directors have relied on a letter of support from the ultimate parent company, Land Securities Group PLC, so long as the company remains its subsidiary. After the reporting date it is expected that the parent company will accept a bid for the ownership of 100% of LS Galleria Limited’s share capital. Management expect the business to continue as a going concern, however, under new ownership have no control over the strategic direction of the company. Based on this the directors believe that it is appropriate to prepare the financial statements on a going concern basis. However, these circumstances represent a material uncertainty that may cast significant doubt on the company’s ability to continue as a going concern and, therefore, to continue realising its assets and discharging its liabilities in the normal course of business.
 
Results for the year and dividend

The results are set out in the Statement of Comprehensive Income on page 5.
The directors do not recommend the payment of a dividend for the year ended 31 March 2023 (2022: £Nil).

Directors

The directors who served during the year and up to the date of this report unless otherwise stated were:

Land Securities Management Services Limited 
LS Director Limited 
L McCaveny (appointed 25 May 2022)
E Miles (resigned 25 May 2022)

Page 1

 
LS GALLERIA LIMITED 
 

DIRECTORS' REPORT (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 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.

Small companies exemption

The Directors' Report has been prepared in accordance with the special provisions relating to small companies within Part 15 of the Companies Act 2006.

Strategic report

The Company has taken advantage of the exemption under s414B of the Companies Act 2006 not to prepare a Strategic Report. 

Statement of disclosure of information to auditor

Each of the persons who are directors at the time when this Directors' Report is approved has confirmed that:

so far as the director is aware, there is no relevant audit information of which the Company's auditor is unaware, and
the director has taken all the steps that ought to have been taken as a director in order to be 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, for and on behalf of LS Company Secretaries Limited  
Company Secretary

Date: 10 November 2023

Registered and domiciled in England and Wales
Registered number: 04166047
Page 2

 

 
 
INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF LS GALLERIA LIMITED
 

Disclaimer of opinion
 
We were engaged to audit the financial statements of LS Galleria Limited (the ‘Company’) for the year ended 31 March 2023 which comprise the 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).
We do not express an opinion on the accompanying financial statements of the company. Because of the significance of the matter described in the basis for disclaimer of opinion section of our report, we have not been able to obtain sufficient appropriate audit evidence to provide a basis for an audit opinion on these financial statements.
Basis for disclaimer of opinion

In preparing the financial statements on a going concern basis, the Directors have not prepared the cash flow forecast for the entire going concern period and have solely relied on a letter of support from the ultimate parent company, Land Securities Group PLC. A condition of that letter is the company remains a subsidiary, as described in note 1 to the financial statements. The Directors are in process of negotiating a potential sale of the company to external party. The Directors believe that any new owner would continue to be able to run the company’s business as a going concern over the period to 30 November 2024. However, we have not been able to obtain sufficient appropriate audit evidence to support the company’s ability to continue as a going concern if a sale of the company occurs and therefore we are unable to form a conclusion on whether the going concern basis of preparation for the financial statements is appropriate. 

Opinions on other matters prescribed by the Companies Act 2006

Because of the significance of the matter described in the basis for disclaimer of opinion section of our report, we have been unable to form an opinion, whether based on the work undertaken in the course of the audit:

the information given in the Directors’ Report for the financial year for which the financial statements are prepared is consistent with the financial statements; and 
the Directors’ report has been prepared in accordance with applicable legal requirements.

Matters on which we are required to report by exception

Notwithstanding our disclaimer of an opinion on the financial statements, in the light of the knowledge and understanding of the company and its environment obtained in the course of the audit performed subject to the pervasive limitation described above, we have not identified material misstatements in the Directors’ report. Arising from the limitation of our work referred to above: 
• we have not obtained all the information and explanations that we considered necessary for the purpose of our audit; and 
• we were unable to determine whether adequate accounting records have been kept.
 
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:

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; or
the directors were not entitled to prepare the financial statements in accordance with the small companies’ regime and take advantage of the small companies’ exemptions in preparing the directors’ report and from the requirement to prepare a Strategic Report.

Responsibilities of directors
As explained more fully in the directors’ responsibilities statement set out on page 1, 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 responsibility is to conduct an audit of the company’s financial statements in accordance with International Standards on Auditing (UK) and to issue an auditor’s report. 
However, because of the matter described in the basis for disclaimer of opinion section of our report, we were not able to obtain sufficient appropriate audit evidence to provide a basis for an audit opinion on these financial statements. 
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, and we have fulfilled our other ethical responsibilities in accordance with these requirements.
 
Page 3

 

 

INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF LS GALLERIA LIMITED (CONTINUED)

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, subject to the limitation set out in the basis for disclaimer of opinion paragraph, is detailed below. However, because of the matters described in the Basis for Disclaimer of Opinion section of our report, we were not able to obtain sufficient appropriate audit evidence to provide a basis for an audit opinion on the financial statements. The primary responsibility for the prevention and detection of fraud rests with both those charged with governance of the entity and management.

We obtained an understanding of the legal and regulatory frameworks that are applicable to the company and determined that the most significant are directly relevant to specific assertions in the financial statements are those that relate to the reporting framework (FRS 101 and the Companies Act 2006) and the relevant tax regulations in the United Kingdom, including the UK REIT regulations.
We understood how the Company is complying with those frameworks through enquiry with the Company and 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 Land Securities Group risk register and through enquiry with the Company’s Management during the planning and execution phases of the audit. Where the risk was considered to be higher we performed audit procedures to address each identified fraud risk, specifically the risk over valuation of investment properties and revenue recognition, including the timing of the revenue recognition and treatment of lease incentives.
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 of the Company regarding their knowledge of any non-compliance or potential non-compliance with laws and regulations that could affect the financial statements;
°Reading minutes of meetings of those charged with governance;
°Obtaining and reading correspondence from legal and regulatory bodies, including HMRC; and
°Journal entry testing, with a  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


10 November 2023



Page 4

 
LS GALLERIA LIMITED
 
 

STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 MARCH 2023

2023
2022
Notes
£000
£000

  

Revenue
       4
8,171
8,545

Costs - movement in bad and doubtful debts provision
       4
(64)
758

Costs - other
       4
(5,347)
(6,055)

Gross profit
        
2,760
3,248

Other income
 11 
20,000
-

Property management and administrative expenses
       5
(264)
(329)

Net deficit on revaluation of investment properties
       8
(10,143)
(10,167)

Operating profit/(loss)
  
12,353
(7,248)

Interest expense
       6
(1,665)
(1,524)

Profit/(loss) before tax
  
10,688
(8,772)

Taxation
 7 
-
-

  

Profit/(loss) and total comprehensive income/(loss) for the year
  
10,688
(8,772)

There were no recognised gains and losses for 2023 or 2022 other than those included in the Statement of Comprehensive Income.

All amounts are derived from continuing activities.
Page 5

 
LS GALLERIA LIMITED
REGISTERED NUMBER:04166047

BALANCE SHEET
AS AT 31 MARCH 2023

2023
2022
Notes
£000
£000

Non-current assets
  

Investment properties
      8 
22,225
32,216

  
22,225
32,216

Current assets
  

Trade and other receivables
      9
853
929

  
853
929

Provisions for liabilities
  

Trade and other payables
     10
(1,766)
(1,857)

Amounts owed to Group undertakings
     11
(19,744)
(40,408)

  
(21,510)
(42,265)

Net assets/(liabilities)
  
1,568
(9,120)


Capital and reserves
  

Called up share capital 
     12 
35,000
35,000

Retained loss
  
(33,432)
(44,120)

Total equity
  
1,568
(9,120)


The financial statements on pages 5 to 15 were approved by the Board of directors and were signed on its behalf by:




A Peeke, for and on behalf of LS Director Limited
Director

Date: 10 November 2023

Page 6

 
LS GALLERIA LIMITED
 
 

STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 MARCH 2023


Share capital
Retained loss
Total equity

£000
£000
£000


At 1 April 2021
35,000
(35,348)
(348)



Total comprehensive loss for the financial year
-
(8,772)
(8,772)



At 31 March 2022
35,000
(44,120)
(9,120)



Total comprehensive income for the financial year
-
10,688
10,688


At 31 March 2023
35,000
(33,432)
1,568
Page 7

 
LS GALLERIA LIMITED
 
 
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 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 modified to include the revaluation of investment properties.

LS Galleria Limited (the ‘Company’) is a private company limited by shares and is incorporated, domiciled and registered in England and Wales (Registered number: 04166047). The nature of the Company’s operations is set out in the Directors' 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) unless otherwise stated.

 
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 IFRS 7 Financial Instruments: Disclosures
the requirements of paragraphs 91-99 of IFRS 13 Fair Value Measurement
the requirement in paragraph 38 of IAS 1 'Presentation of Financial Statements' to present comparative information in respect of:
 - paragraph 79(a)(iv) of IAS 1;
 - paragraph 73(e) of IAS 16 Property, Plant and Equipment;
 - paragraph 118(e) of IAS 38 Intangible Assets;
 - paragraphs 76 and 79(d) of IAS 40 Investment Property; and
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 IAS 7 Statement of Cash Flows
the requirements of paragraphs 30 and 31 of IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors
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
the requirements of paragraphs 134(d)-134(f) and 135(c)-135(e) of IAS 36 Impairment of Assets.

The equivalent disclosures relating to IFRS 7, IFRS 13 & IAS 36 are included in the consolidated financial statements of Land Securities Group PLC, in which the entity is consolidated.

 
1.3

Investment properties

Investment properties are properties, either owned or leased by the Company, that are held either to earn rental income or for capital appreciation, or both. Investment properties are measured initially at cost including related transaction costs, and subsequently at fair value. Fair value is based on market value, as determined by a professional external valuer at each reporting date. The difference between the fair value of an investment property at the reporting date and its carrying amount prior to re-measurement is included in the Statement of Comprehensive Income as a valuation surplus or deficit. Investment properties are presented on the Balance Sheet within non-current assets.

Properties are treated as acquired when the Company assumes control of the property. Capital expenditure on properties consists of costs of a capital nature, including costs associated with developments and refurbishments. Where a property is being developed or undergoing major refurbishment, interest costs associated with direct expenditure on the property are capitalised. The interest capitalised is calculated using the Company’s weighted average cost of borrowings. Interest is capitalised from the commencement of the development work until the date of practical completion. Certain internal staff and associated costs directly attributable to the management of major schemes are also capitalised.  

When the Company begins to redevelop an existing investment property for continued future use as an investment property, the property continues to be held as an investment property. When the Company begins to redevelop an existing investment property with a view to sell, the property is transferred to trading properties and held as a current asset. The property is re-measured to fair value as at the date of the transfer with any gain or loss being taken to the Statement of Comprehensive Income. The re-measured amount becomes the deemed cost at which the property is then carried in trading properties.

Properties are treated as disposed when control of the property is transferred to the buyer. Typically, this will either occur on unconditional exchange or on completion. Where completion is expected to occur significantly after exchange, or where the Company continues to have significant outstanding obligations after exchange, the control will not usually transfer to the buyer until completion. 

The profit on disposal is determined as the difference between the sales proceeds and the carrying amount of the asset at the beginning of the accounting period plus capital expenditure to the date of disposal. The profit on disposal of investment properties is presented separately on the face of the Statement of Comprehensive Income. 

Page 8

 
LS GALLERIA LIMITED
 

NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2023

1.Accounting policies (continued)

 
1.4

Trade and other receivables

Trade and other receivables are recognised initially at fair value, subsequently 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 trade receivables. A provision for impairment is made for the lifetime expected credit losses on initial recognition of the receivable. If collection is expected in more than one year, the balance is presented within non-current assets.

In determining the expected credit losses, the Company takes into account any recent payment behaviours and future expectations of likely default events (i.e. not making payment on the due date) based on individual customer credit ratings, actual or expected insolvency filings or company voluntary arrangements, likely deferrals of payments due, rent concessions and market expectations and trends in the wider macro-economic environment in which our customers operate. Where a concession is agreed with a customer after the due date for the rent, this amount is recognised as an impairment of the related trade receivable. 
 
Trade and other receivables are written off once all avenues to recover the balances are exhausted and the lease has ended. Receivables written off are no longer subject to any enforcement activity.

  
1.5

Provisions

A provision is recognised in the Balance Sheet when the Company has a constructive or legal obligation as a result of a past event and it is probable that an outflow of economic benefits will be required to settle the obligation. Where relevant, provisions are determined by discounting the expected future cash flows at a pre-tax rate that reflects current market assessments of the time value of money and, where appropriate, the risks specific to the liability.
 
  
1.6

Share capital

Ordinary shares are classified as equity.

 
1.7

Going concern

The directors have determined that preparing the financial statements on the going concern basis is appropriate due to the continued financial support of the ultimate parent company, Land Securities Group PLC 'together with its subsidiaries referred to as the ‘Group’. The directors’ going concern assessment covers the period to 30 November 2024 and confirmation has been received that Land Securities Group PLC will support the Company until this date, so long as the Company remains a subsidiary of Land Securities PLC. If the Company was sold within the next 12 months from 30 November 2023, confirmation has been received that Land Securities Group PLC would ensure the Company remains in a position to continue as a going concern at the point of sale. The Company’s ability to meet its future liabilities is therefore dependent on the financial performance, position and liquidity of the Group as a whole. 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 30 November 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 financial statements for the year ended 31 March 2023.
In preparing the financial statements on a going concern basis, the directors have relied on a letter of support from the ultimate parent company, Land Securities Group PLC, so long as the company remains its subsidiary. After the reporting date it is expected that the parent company will accept a bid for the ownership of 100% of LS Galleria Limited’s share capital. Management expect the business to continue as a going concern, however, under new ownership have no control over the strategic direction of the company. Based on this the directors believe that it is appropriate to prepare the financial statements on a going concern basis. However, these circumstances represent a material uncertainty that may cast significant doubt on the company’s ability to continue as a going concern and, therefore, to continue realising its assets and discharging its liabilities in the normal course of business.

Page 9

 
LS GALLERIA LIMITED
 

NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2023

1.Accounting policies (continued)

 
1.8

Revenue

Rental income, including fixed rental uplifts, is recognised in the Statement of Comprehensive Income on a straight-line basis over the term of the lease. Lease incentives being offered to occupiers to enter into a lease, such as an initial rent-free period or a cash contribution to fit out or similar costs, are an integral part of the net consideration for the use of the property and are therefore recognised on the same straight-line basis. Where the total consideration due under a lease is modified, for example, where a concession is granted to a tenant prior to the date the conceded rent falls due, the revised total amount due under the lease is recognised on a straight-line basis over the remaining term of the lease.

Contingent rents, being lease payments that are not fixed at the inception of a lease, for example turnover rents, are variable consideration and are recorded as income in the year in which they are earned. Where a single payment is received from a tenant to cover both rent and service charge, the service charge component is separated and reported as service charge income.

The Company’s revenue from contracts with customers, as defined in IFRS 15 includes service charge income and other property related income.

Service charge income and management fees are recorded as income over time in the year in which the services are rendered. Revenue is recognised over time because the tenants benefit from the services as soon as they are rendered by the Company. The actual service provided during each reporting period is determined using cost incurred as the input method.

Other property related income includes development and asset management fees. These fees are recognised over time, using time elapsed as the input method which measures the benefit simultaneously received and consumed by the customer, over the period the development or asset management services are provided.

  
1.9

Expenses

Property and contract expenditure is expensed as incurred.

  
1.10

Income taxation

Income tax on the profit or loss for the year comprises current and deferred tax. Current tax is the tax payable on the taxable income for the year and any adjustment in respect of previous years. Deferred tax is provided in full using the Balance Sheet liability method on temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. Deferred tax is determined using tax rates that have been enacted or substantively enacted by the reporting date and are expected to apply when the asset is realised, or the liability is settled.
No provision is made for temporary differences (i) arising on the initial recognition of assets or liabilities, other than on a business combination, that affect neither accounting nor taxable profit and (ii) relating to investments in subsidiaries to the extent that they will not reverse in the foreseeable future.

 
1.11

Leases

The determination of whether an arrangement is (or contains) a lease is based on the substance of the arrangement at the inception date. The arrangement is assessed for whether fulfilment of the arrangement is dependent on the use of a specific asset or assets or the arrangement conveys a right to use the asset or assets, even if that right is not explicitly specified in an arrangement.

Company is lessor

Operating lease – properties leased out to tenants under operating leases are included in investment properties in the Balance Sheet.

Lease income is recognised over the period of the lease reflecting a constant rate of return. Where only the buildings element of a property lease is classified as a finance lease, the land element is shown within operating leases.
 
  
1.12

Amounts owed to Group undertakings

Amounts owed to Group undertakings are recognised initially at fair value less attributable transaction costs. Subsequent to initial recognition, amounts 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.

 
1.13

Trade and other payables

Trade and other payables with no stated interest rate and payable within one year are recorded at transaction price. Trade and other payables after one year are discounted based on the amortised cost method using the effective interest rate.

Page 10

 
LS GALLERIA LIMITED
 

NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2023

1.Accounting policies (continued)

  
1.14

Dividends

Final dividend distributions to the Company’s shareholders are recognised as a liability in the Company’s financial statements in the period in which the dividends are approved by the Company’s shareholders. 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

(a) Investment property valuation

The valuation of the Company’s property portfolio has been undertaken by independent valuers in accordance with the Royal Institution of Chartered Surveyors (RICS) Valuation – Global Standards and UK Supplement (together the “Red Book”).  Real estate by its nature is a complex asset class with value determined by a range of factors overlaid by interpretation and judgemental assessment of market data; as such it is classified as ‘Level 3 asset’ within IFRS.  Factors affecting valuation are on an individual property level and include the property type, location, tenure and tenancy characteristics, quality of the asset and prospects for future rental revenue.  

The Company’s investment property valuation has been undertaken by valuers interpreting market evidence as available in reaching their conclusions on Fair Value, reflecting asset specific data provided by Management, making assumptions that tenure, tenancies, town planning and condition of buildings are as provided. As a result, the valuations the Company places on its property portfolio are subject to a degree of uncertainty and are made on the basis of assumptions which may not prove to be accurate, particularly in periods of volatility or low transaction volume in the property market.

If the assumptions upon which the external valuer has based its valuations prove to be inaccurate, this may have an impact on the value of the Company’s investment and trading properties, which could in turn have an effect on the Company’s financial position and results. 

(b) Trade and other receivables

The Company is required to judge when there is sufficient objective evidence to require the impairment of individual trade receivables. It does this by assessing on a forward-looking basis, the expected credit losses associated with its trade receivables. A provision for impairment is made for the lifetime expected credit losses on initial recognition of the receivable. In determining the expected credit losses, the Company takes into account any recent payment behaviours and future expectations of likely default events (i.e. not making payment on the due date) based on individual customer credit ratings, actual or expected insolvency filings or company voluntary arrangements, likely deferrals of payments due, rent concessions and market expectations and trends in the wider macro-economic environment in which our customers operate. These assessments are made on a customer by customer basis.
 
The Company’s assessment of expected credit losses is inherently subjective due to the forward-looking nature of the assessments, in particular, the assessment of expected insolvency filings or company voluntary arrangements, likely deferrals of payments due and rent concessions. As a result, the value of the provisions for impairment of the Company’s trade receivables are subject to a degree of uncertainty and are made on the basis of assumptions which may not prove to be accurate.

Page 11

 
LS GALLERIA LIMITED
 
 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2023

4.


Revenue and costs

2023
2022
£000
£000



Rental income (excluding lease incentives)
5,427
5,498

Adjustment for lease incentives
(4)
(31)

Rental income
5,423
5,467



Service charge income
2,846
2,909

Other property related income
(98)
169

8,171
8,545

Costs


Movement in bad and doubtful debts provision
(64)
758

Other direct property or contract expenditure
(5,347)
(6,055)

Gross profit
2,760
3,248

Other direct property or contract expenditure are costs incurred in the direct maintenance and upkeep of investment properties. Void costs, which include costs relating to empty properties pending redevelopment and refurbishment, costs of investigating potential development schemes which do not proceed, and costs in respect of housekeepers and outside staff directly responsible for property services, are also included.

5.


Property management and administrative expenses

Property management and administrative expenses consist of all costs of managing the property, together with the costs of rent reviews and renewals, re-lettings of the property and management services as explained in note (a) below. No staff costs or overheads are capitalised. 

(a) Management services

The Company had no employees during the year (2022: None). Management services were provided to the Company throughout the year by Land Securities Properties Limited, a fellow subsidiary undertaking, charges for which amount to £264,000 (2022: £329,000).

(b) Directors’ remuneration

The Group's directors’ emoluments are borne by Land Securities Properties Limited. The directors 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 £1,286 (2022: £2,630). The auditor received no remuneration for non-audit services provided to the Company during the year (2022: None).


6.


Interest expense

2023
2022
£000
£000


Interest on amounts due to Group undertakings
1,665
1,524

Total interest expense
1,665
1,524

Page 12

 
LS GALLERIA LIMITED
 
 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2023

7.


Income tax


2023
2022
£000
£000

Corporation tax


Income tax on profit/(loss) for the year
-
-

Total income tax on profit/(loss) in the Statement of Comprehensive Income
-
-

Factors affecting tax charge for the year

The tax assessed for the year is lower than (2022 - higher than) the standard rate of corporation tax in the UK of 19% (2022: 19%). The differences are explained below:

2023
2022
£000
£000


Profit/(loss) before tax
10,688
(8,772)


Profit/(loss) before tax multiplied by UK corporation tax rate
2,031
(1,667)

Effects of:


Exempt property rental profits in the year
(3,958)
(265)

Exempt property revaluation deficit in the year
1,927
1,932

Total tax charge in the Statement of Comprehensive Income (as above)
-
-

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.


8.


Investment properties

2023
2022
£000
£000


Net book value at the beginning of the year
32,216
42,431

Capital expenditure
152
(48)

Deficit on revaluation of investment properties
(10,143)
(10,167)

Net book value at 31 March
22,225
32,216

The market value of the Company’s investment property, as determined by the Company’s external valuers, differs from the net book value presented in the balance sheet due to the Company presenting lease incentives separately. The following table reconciles the net book value of the investment property to the market value.

2023
2022
£000
£000



Market value
22,400
32,400

Less: tenant lease incentives
(175)
(184)

Net book value at 31 March
22,225
32,216

The historical cost of the investment properties is £134,026,000 (2022: £133,874,000). The difference between the carrying amount and historical cost is a deficit of £111,801,000 (2022: £101,658,000). The valuations are prepared by JLL, external valuers, in accordance with RICS valuation standards.

The above investment properties act as security against listed debt issued by a fellow Land Securities Group PLC subsidiary. 

Page 13

 
LS GALLERIA LIMITED
 
 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2023

9.


Trade and other receivables

2023
2022
£000
£000


Trade receivables
965
2,010

Less: allowance for doubtful accounts
(875)
(1,639)

Total trade receivables
90
371


Other receivables
4
-

Accrued income
238
287

Prepayments
521
271

Total trade and other receivables
853
929


10.


Trade and other payables

2023
2022
£000
£000


Capital payables
3
3

Accruals
288
810

Deferred income
1,088
899

Social security and other taxes
387
145

Total trade and other payables
1,766
1,857

Deferred income principally relates to rents received in advance. 


11.


Amounts owed to Group undertakings

2023
2022
£000
£000


Amounts owed to Group undertakings - fellow subsidiary
19,744
40,408

Total amounts owed to Group undertakings
19,744
40,408

The unsecured amounts owed to Group undertaking are repayable on demand with no fixed repayment date. Interest is charged at 4.3% per annum (2022: 3.7%). During the year, an amount of £20,000,000 was waived by Land Securities (Finance) Limited.


12.


Share capital



Authorised and issued
Allotted and fully paid


2023
2022
2023
2022


Number

Number
£000
£000

Ordinary shares of £1.00 each
 
35,000,00235,000,002
35,000,002
35,000,002
35,000
35,000
35,000
35,000

Page 14

 
LS GALLERIA LIMITED
 
 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2023

13.


Operating lease arrangements

The Company earns rental income by leasing its investment  properties to tenants under non-cancellable operating leases.

At 31 March, the Company had contracted with tenants to receive the following future minimum lease payments:


2023
2022
£000
£000


Not later than one year
2,475
2,366

Later than one year but not more than two years
2,057
1,854

Later than two years but not more than three years
1,786
1,431

Later than three years but not more than four years
1,612
1,113

Later than four years but not more than five years
1,232
922

More than five years
5,496
3,757

14,658
11,443

The total of contingent rents recognised as income during the year was £820,000 (2022: £631,000).
 

14.


Parent company

The immediate parent company is Land Securities Portfolio Management Limited.

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 of the ultimate parent company, 100 Victoria Street, London, SW1E 5JL and from the Group website at www.landsec.com. This is the largest and smallest Group to include these accounts in its consolidated financial statements.

Page 15