RNS Number:2305S
Land Securities Group Plc
19 November 2003





For immediate release

19 November 2003



LAND SECURITIES GROUP PLC ("Land Securities" / "Group" / "Company")



Interim results for the period 30 September 2003



HIGHLIGHTS



*         Adjusted diluted net asset value increased 4.0% to 1264p (31 March
          2003: 1215p)

*         Investment portfolio valuation uplift of 2.0% (31 March 2003: 0.4%)

*         Adjusted earnings per share increased by 9.7% to 26.65p (30 September
          2002: 24.29p)

*         Pre-tax revenue profit down 3.3% to #168.7m (30 September 2002:
          #174.5m)

*         Profit before tax increased by 15.7% to #181.7m (30 September 2002:
          #157.1m)

*         High level of investment portfolio activity demonstrated by

          * #254.6m of investment property sales including FRS3 profits of 
            #11.7m

          * #243.6m investment on property acquisitions, development and other
            capital expenditure

          * 149 rent review settlements completed at an average of 5.9% above 
            our valuers' ERVs

*         Land Securities Trillium agrees extension to the DWP contract for an
          additional 828,000 sq m

*         Continued strong performance in retail portfolio substantially offset
          impact of weak Central London office market

*         Three completed developments at Bullring, Dundee and Portman House
          showing an average profit on cost of 25%

*         Interim dividend increased by 4.2% to 9.9p (30 September 2002: 9.5p)



Peter G Birch, Chairman, commented: "We have made good progress across all areas
of our business in the period under review.  Our asset and property management
activities have resulted in a 2.0% increase in value of the total investment
portfolio; the Bullring, Birmingham opened amid much fanfare; we delivered the
first phase of White City to the BBC and we agreed terms with the Department for
Work and Pensions for the extension to our existing contract to include the
former Employment Services estate.  These are notable successes in difficult
market conditions."



For further information:


Ian Henderson/Andrew Macfarlane/Emma Denne        Steve Jacobs/Stephanie Highett
Land Securities Group PLC                         Financial Dynamics
020 7413 9000                                     020 7831 3113











FINANCIAL HIGHLIGHTS
                                                     Six months to        Six months to                       Year to
                                                      30 September         30 September                      31 March
                                                              2003                 2002     % Change             2003
                                                       -----------          -----------  -----------      -----------

    Gross property income
                                                       -----------          -----------  -----------      -----------
       Property investment and trading                     #304.7m              #285.4m         6.8%          #579.3m
       Total property outsourcing
       (including 50% share of joint venture)              #342.1m              #296.4m        15.4%          #660.2m
                                                       -----------          -----------  -----------      -----------


    Total                                                  #646.8m              #581.8m        11.2%        #1,239.5m
                                                       -----------          -----------  -----------      -----------

    Operating profit (total)                               #279.8m              #277.4m         0.9%          #550.2m

                                                       -----------          -----------  -----------      -----------
    Pre-tax profit                                         #181.7m              #157.1m        15.7%          #319.6m

    Add back: profit on fixed asset property
    sales, bid costs and exceptional items
    (pre-tax)                                             (#13.0)m               #17.4m                        #21.3m
                                                       -----------          -----------  -----------      -----------


1   Revenue profit (pre-tax)                               #168.7m              #174.5m        -3.3%          #340.9m
                                                       -----------          -----------  -----------      -----------

    Effective tax rate                                       27.9%                28.0%                         28.1%

2   Adjusted diluted earnings per share                     26.65p               24.29p         9.7%           50.36p


    Earnings per share (basic)                              28.10p               21.69p        29.6%           46.46p

    Dividends per share                                       9.9p                 9.5p         4.2%           35.50p

3   Interest cover (times)                                    2.15                 2.50                          2.42
                                                       -----------          -----------  -----------      -----------




                                                              30 September              31 March
                                                                      2003                  2003      % Change
                                                               -----------           -----------   -----------

4    Adjusted diluted net assets per share                           1264p                 1215p          4.0%

     Diluted net assets per share                                    1238p                 1188p          4.2%

5    Carrying value of investment properties                     #7,976.8m             #7,823.9m

     Net debt                                                    #2,647.4m             #2,589.3m

     Equity shareholders' funds                                  #5,767.4m             #5,532.7m

6    Gearing (net)                                                   46.1%                 47.3%
                                                               -----------           -----------   -----------



1  Excludes results of fixed asset property sales, bid costs and exceptional
items (deficit on purchase and redemption of convertible bonds, cost of
cancellation of interest rate swaps and the costs of reorganising the Group)



2  Excludes results of fixed asset property sales, bid costs, exceptional items
and deferred tax arising from capital allowances on investment properties



3  Number of times gross interest payable (i.e. pre-capitalisation) is covered
by operating profit and interest receivable but excluding the activities of
Telereal and exceptional finance costs incurred in the six months to 30
September 2002



4  Excludes the additional deferred tax arising from capital allowances on
investment properties



5  Market value less UITF28 adjustment



6  Net debt (borrowings less short term deposits and cash), at book value, plus
non-equity B shares as a percentage of equity shareholders' funds











Corporate overview



We have made good progress across all areas of our business in the period under
review.  Our asset and property management activities have resulted in a 2.0%
increase in value of the total investment portfolio; the Bullring, Birmingham
opened amid much fanfare; we delivered the first phase of White City to the BBC
and we agreed terms with the Department for Work and Pensions for the extension
to our existing contract to include the former Employment Services estate.
These are notable successes in difficult market conditions.



Total shareholder returns


                                        % return for twelve months to           % return for period since

                                                    30 September 2003                       31 March 2000
Land Securities                                                  19.0                                31.5
FTSE 100                                                         14.0                              (30.8)
FTSE Real Estate                                                 18.9                                32.0

Source: Datastream



The strong appeal of commercial property as an investment remains undiminished.
This, we believe, is being increasingly recognised by Government and we
understand that it is examining the potential for creating a UK real estate
investment trust.  We see this as a positive step since it would provide a
liquid, tax transparent vehicle for property investment, accessible to both
private and institutional investors.  However, we still remain cautious about
how and when the Government might introduce such a vehicle and do not expect an
announcement earlier than the budget in 2005.



Results



During the six months to 30 September 2003, revenue profits were marginally down
at #168.7m (30.9.2002: #174.5m).  The pre-tax profits were up 15.7% to #181.7m.
Adjusted diluted earnings per share rose by 9.7% to 26.65p (30.9.2002: 24.29p)
and adjusted diluted net assets per share have increased since 31 March 2003 by
4.0% to 1264p per share.



The Group realised a profit of #11.8m from property disposals and received
distributions of #25.5m from Telereal.  It expended #343.6m on property
acquisitions, development and other capital expenditure.



The Board has declared an interim dividend of 9.9p per share, an increase of
4.2%, which will be paid on 5 January 2004 to shareholders on the register at 5
December 2003.



Board appointments and Corporate Governance



We were pleased to announce that Stuart Rose joined the Board as a non-executive
Director on 21 May 2003.  Previously he was Chief Executive of Arcadia Group
plc, the owner of several well-known high street retailers including Dorothy
Perkins, Evans, Miss Selfridge, Top Shop and Top Man.  Stuart brings to the
Board substantial retail experience and an excellent understanding of retailers
and their customers' needs.



At the year-end the Board said it was assessing the impact of the Higgs and
Smith recommendations on corporate governance.  As a result, in light of the
Combined Code on Corporate Governance issued in July 2003, David Rough, who
joined the Board as a non-executive director in January 2002, has been appointed
to the role of senior independent director.  In due course the Board will seek
to appoint two further non-executive directors.



At the same time the board has reviewed the composition and terms of reference
of its Nominations and Audit Committees.  Minor amendments have been made to the
terms of reference of the Audit Committee.



In the past the entire board of Land Securities formed the Nominations
Committee.  In future this will be an ad-hoc committee, comprising a mixture of
executive and non-executive directors, with, typically, non-executive directors
as a majority.  The Chairman will be the chairman of the Nominations Committee,
unless the Committee is considering the appointment of the Chairman or Group
Chief Executive, in which case the Nominations Committee will be chaired by the
senior independent director.


Valuation



Total investment portfolio



The total investment portfolio covers four principal sectors of the UK
commercial property market and benefits from inherent diversification in terms
of both occupier covenant and business sector risk.   It comprises 248 assets,
more than 4,500 tenancies and over 2,000 occupiers.  The average lot size is
#32.2m.



On 30 September 2003 Knight Frank valued the total investment portfolio at just
under #8.0bn.  A detailed analysis of the portfolio is included in the schedule
at the end of the Corporate Review.  The six months to 30 September 2003 saw
continued strong investor demand from both international and domestic
institutions, as well as leveraged investors taking advantage of the debt
markets.



The valuation change over the period was 2.0% demonstrating the benefits of a
diversified portfolio.  Retail and retail warehouse assets, which now represent
52.3% of our total investment portfolio, produced a 5.9% uplift in value and
this performance more than outweighed the negative performance of 2.9% for our
central London offices which represents 38.4% of our portfolio.



The valuation improvement can partly be accounted for by 54 assets that
benefited from Disadvantaged Areas status and Stamp Duty relief resulting in an
uplift of #68m, 0.85% of the total value change.  The current legislation is in
place only until 2006 and therefore the benefit is temporary and only
crystallised on sale.





Like-for-like portfolio



In order to improve the clarity of our reporting about the total investment
portfolio we are providing a more detailed analysis about the like-for-like
performance of our properties.  This is included in the analysis at the end of
the Corporate Review.  The like-for-like portfolio comprises investment
properties which have been in the portfolio throughout the current and prior
financial year and which have not been part of the development programme during
that time.  It also excludes sales and purchases.



This portfolio was valued at #6.42bn and showed a 2.3% increase in value since
31 March 2003.  The annual rent roll, net of ground rent, of the like-for-like
portfolio was #440.2m.



In the like-for-like portfolio, retail assets have shown good growth with a 5.2%
uplift in value as a result of both strong investment demand and rental growth.
Retail warehouses have shown the best performance, with a 6.3% increase over the
period.  In central London offices, values overall have experienced a small
decline of 1.1%.  This softening varied considerably depending on the market
sub-sectors.



Investment activity



In the six months under review we purchased #62.7m of assets.  The largest of
these was 120 Cheapside, a property in the City of London, which produces a 9.4%
yield and provides medium term development opportunities.  As we have
demonstrated in the past, we can benefit from adverse market conditions to make
opportunistic acquisitions for future value creation and will continue to do so
as opportunities arise.



Investor appetite for property shows no signs of diminishing and we have taken
advantage of this by selling a further 13 investment properties for #254.6m, the
largest of which was Grand Buildings, London WC2 which realised #136.8m.  From
the sales completed this year, we have generated FRS3 profits of #11.7m, 4.8%
ahead of value.



We have continued to sell mature assets over the last 18 months, taking
advantage of the buoyant market for investment properties.  The capital released
is partly being recycled into other areas of the business as the keen pricing of
investment assets currently makes the sourcing of suitable properties more
difficult.  However, through our development pipeline we are able to create new
assets for the portfolio, as exemplified at Bullring Birmingham, which we are
confident will continue to show strong performance on top of the value already
created by development.



The strategy for our investment portfolio remains to focus on core sectors of
the UK property market that we believe will benefit from long-term constraints
in the supply of land.  We continue to be active managers of our portfolio, and
since the year-end we have concluded 149 rent reviews at an average of 5.9%
above estimated rental value and negotiated 39 lease renewals at an average 5.3%
above estimated rental value.



Central London offices



Market overview - total investment portfolio



Demand for well-let investment property in central London continues to be strong
but occupier demand remains subdued.  We are becoming increasingly optimistic
about certain sub-sectors of this market, particularly the West End, which
represents 48% of our Central London portfolio, and which we believe could show
signs of improvement as early as next year.  However, in the short term, the
outlook continues to be difficult for the City.  The office vacancy rate in the
central London market is currently running at 13.2% of total stock, although
much of this space is surplus to occupiers' requirements rather than landlord
supply.  During the period there has been an improvement in take-up of
accommodation and we are beginning to see some cases of this surplus occupiers'
space being withdrawn from the market.



With more positive signs on the horizon, we believe that the steps we have taken
to restructure the Central London portfolio and position our development
pipeline leave us well placed to benefit as market conditions improve.



It was recently announced that the Chancellor of the Exchequer has commissioned
Sir Michael Lyons to undertake a review of the potential for decentralising some
Civil Service jobs from London and the south east.  The interim report has now
been produced and identifies the potential for relocation of 20,000 jobs or more
out of a total of 230,000 in London and the south east.  The report recognises
that support teams or more specialist or technical departments such as the
Highway Agency may be best suited for relocation.  Policy related jobs in the
large Ministries, however, are less likely to be relocated.  As our government
let office buildings are predominantly in Victoria within the 'division bell'
area for Parliament, we consider it unlikely they will be at greatest risk from
this initiative.  The initiative may also generate some opportunities for the
Group in terms of property outsourcing.



Portfolio management



The like-for-like decrease in value of our central London office portfolio was
1.1%, representing a much slower rate of decline than the prior six months.  Our
West End portfolio held up well showing a nominal valuation decline of only 0.1%
over the six-month period.  This is partly attributable to the preponderance of
holdings in Victoria, where our void rate is 0.7% as compared to a market
vacancy rate of around 6.0%.  In addition, as described below, our West End
portfolio has also benefited in performance terms from lease restructurings on
properties in Victoria.  Partly due to a change in the way we calculate our
voids to include certain pre-development properties, as explained in the notes
accompanying the total investment portfolio analysis, voids in the central
London office portfolio have increased to 3.1%.



The average weighted lease length for this portfolio is 9.3 years.  There are
10.7 years remaining on our West End portfolio, with 9.0 years remaining on our
City portfolio.  This has decreased slightly over the last three years as a
result of our strategy of selling properties with medium-term income and low
growth prospects and reinvesting into properties with shorter term income and
opportunities to create value.  The running yield on this portfolio is 7.8%.



We continue to work closely with the Government to meet its various occupational
needs.  During the half year, we concluded a lease extension at the current Home
Office building, Queen Anne's Mansions, 50 Queen Anne's Gate, London SW1, a
28,310 sq m office block which we have owned since 1977.  This is to be
refurbished as the future headquarters of the Department for Constitutional
Affairs (formerly the Lord Chancellor's Department), and the new lease
arrangement will give a clear 20-year term with an indexed rent throughout the
lease.



Landflex



Landflex has met with a positive response from occupiers and we are very pleased
that 7 Soho Square is 85% let, with only one floor remaining.  Soho Square was
launched in May this year and the speed at which it has let and the terms we
have achieved confirm our view that providing customers with greater flexibility
and price certainty successfully differentiates our product.



The contracts that are currently agreed range from one to three years in length.
Rents are at or slightly above market rates for conventional leases, but we
have agreed significantly shorter rent free periods, which result in a better
contribution to our profit and loss account.  Our customers include Expedia and
the Metropolitan Police.



We also completed and launched Empress State, SW6, in the summer and we are
pleased with the response we have had to date.  We currently have interest from
potential customers for a total of 18 floors or approximately 28,000 sq m of
accommodation, representing just over 70% of the building.



Development



We have progressed well with our plans for the central London development
pipeline.  Our strategy has been to position the pipeline so that we are able to
respond to any major occupier that has a requirement for new accommodation
between now and 2008.  In addition to schemes already under construction, we
have planning consents for approximately 150,000 sq m of office-led development
that can be delivered in stages over the next six years, depending on occupier
demand.



We are pleased with the progress made on lettings and letting enquiries over the
last six months.  Of our completed schemes, Portman House and 190 High Holborn
are now fully let and, as stated above, 7 Soho Square is now 85% let.  The
letting at 190 High Holborn at approximately 8,500 sq m is reported to have been
the largest to date in the West End and Mid-Town markets during 2003.  The
agreement with Pearson plc was finalised shortly after our 30 September
reporting date and is for a 20-year lease without break clauses.  A substantial
rent-free period was agreed to secure the long lease duration.



Since 1 April this year, we have let 12,500 sq m of offices within our London
development programme and we are in discussions on over 56,000 sq m of
accommodation at Empress State and 30 Gresham Street in the City.  The property
at 30 Gresham Street is due for completion in December this year and will
provide 35,150 sq m of offices with ancillary retail accommodation.  In
addition, we are in discussions on over 55,000 sq m of potential pre-lettings
for our sites in New Street Square, EC4 and Bankside 123, SE1.



We submitted a revised planning application for the New Fetter Lane site in
order to broaden the scheme's appeal to occupiers and to increase the overall
office accommodation by offering a range of building sizes.  The revised scheme
brings increased access and street life to the location and is centred round a
new London square, to be called New Street Square.  Our proposals include a
variety of uses at ground level and office buildings of various sizes ranging
from 3,600 sq m to 21,400 sq m with a total office floor area of 62,500 sq m.



At Bankside 123 on Southwark Street, SE1, where we have planning consent for
75,300 sq m of offices and 10,000 sq m of ancillary uses, we are demolishing the
existing building and preparing the site so that we can start work promptly when
a pre-let is secured.



Construction continues at Cardinal Place, Victoria, SW1, which will provide
50,750 sq m of offices in two buildings and 9,250 sq m of retail accommodation,
with the majority completing in mid-2005.  With the low current vacancy rate in
Victoria, and the anticipation of a shortage of new buildings across the West
End market as a whole, we consider that the completion date will be well timed.



We have also started to prepare development schemes for our holdings at One New
Change in EC4, Bankside Industrial Estate in SE1, Bowater House in SW1 and Park
House, Oxford Street, W1.  At this stage, these potential schemes are not yet
included in our formal Development Pipeline, but they represent development
opportunities for the second half of this decade totalling in excess of 150,000
sq m.



Shopping centres, shops and central London retail



Market overview - total investment portfolio



Investor demand continues to be strong for all types of retail property.
Capital growth has accelerated since the year-end, but as predicted the rate of
rental growth slowed.  With further interest rates rises possible this could
impact adversely on consumer spending, which in turn could result in occupier
demand softening in 2004/05.



The occupational market remains strong however for the best locations, as
demonstrated at the Bullring in Birmingham which opened in September virtually
fully let.



Portfolio management



The like-for-like increase in the value of our in-town retail portfolio was
4.7%, slightly ahead of the prior six months.  Voids remain low at 1.9% and we
continue to be proactive in the management of our shopping centre assets in
order to create opportunities that will both satisfy retailer demand and
establish market evidence in advance of rent reviews.  The average weighted
lease length for this portfolio is 10 years, with more than 8.9 years remaining
on our central London shops and 10.7 years on our shopping centres.  The running
yield is 6.4%.



We estimate that more than 400 million shoppers visit our retail assets every
year.  To ensure that we maximise this footfall, encourage dwell-time and
customer spend we continue to focus on effective management of the retail
environment, local promotion and marketing initiatives in order to assist
retailers to maximise their profitability.



We have been very active during the period as we continue our focus on the
customer.  Our achievements include relocating New Look in The Bridges,
Sunderland to a 1,700 sq m unit in a less prime position and re-letting their
previous unit to Warner Bros and French Connection, thereby adding to the number
and quality of fascias while giving all these retailers units that conform to
their preferred occupational requirement.



At White Rose Centre, Leeds, the surrender of the Mothercare unit has enabled us
to upgrade Clinton Cards to their optimum 1,010m sq m unit size, while splitting
their former unit to accommodate two new retailers to the centre.  Similarly in
Almondvale, Livingston, we have used the insolvency of What Everyone Wants to
reconfigure the unit and increase the rental value by 60%.



Development



We were delighted with the public recognition of the tremendous success of the
Bullring in Birmingham, which nearly five million people visited in its first
month of opening.  This 110,000 sq m scheme, which was developed in partnership
with Hammerson and Henderson Global Investors (The Birmingham Alliance), was 95%
let on opening and is now 97% let.  Our share of the annual rent roll income
exceeds #13.0m, which represents a material addition to Group rental income.
The Birmingham Alliance is now assessing options for a further phase of
retail-led, mixed-use development at Martineau Galleries.



Whitefriars in Canterbury, a 37,685 sq m retail scheme, is now 57% let or in
solicitors' hands to retailers including Marks & Spencer, Boots and Tesco.  The
first phase is due to open in Summer 2004 with the entire scheme due for
completion in Summer 2005.  In Exeter, we have planning consent for a 37,512 sq
m retail-led scheme comprising an anchor department store, four large stores and
50 new shops as well as leisure and residential accommodation.  We have started
preliminary enabling works and the main construction work is due to commence
early in 2005.



We continue to make progress with our retail developments in Bristol and
Cardiff.  In Bristol, working in conjunction with Hammerson and Morley Fund
Management, we have outline consent for a 125,700 sq m retail led development
together with 260 residential units and we are in discussions for the letting of
the anchor store.   In Cardiff, we are working in conjunction with Capital
Shopping Centres and have achieved an outline planning consent for approximately
70,000 sq m of retail accommodation and 39,750 sq m (gross) of hotel and
residential space.



We were disappointed to have received notification from the Office of the Deputy
Prime Minister that our proposals for a 27,000 sq m scheme at York had been
rejected.  The principle of development on this historically sensitive site was
established in the Inspector's Report and the decision letter.   However, we
have now removed this scheme from our development pipeline while we re-evaluate
the situation.  In the meantime, our current investment in the site is small at
under #10m and continues to generate an income return at or slightly in excess
of our weighted average cost of capital.  While disappointing, this decision
must be viewed in the context of our retail development programme where we have
planning consent to deliver a total of approximately 150,000 sq m of new retail
accommodation (based on our effective share of schemes being undertaken in
partnership) across the United Kingdom.



Retail warehouses



Market overview - total investment portfolio



The retail park market continues to be one of the most dynamic in the retail
sector.  While the traditional bulky goods retailers are becoming more cautious
in their expansion plans, new high street entrants continue to see opportunities
in this sector and overall occupier demand remains strong.  We believe that the
very strong rental and capital growth of prior years may slow but we still
expect this sector to show sustained good performance.



Portfolio management



The like-for-like increase in the value of our retail warehouse portfolio was
6.3%, demonstrating the strength of this market.  Voids remain relatively low at
2.2% and the running yield is 5.5%.  We are working with retailers to reposition
a number of our retail parks towards high street type shopping, taking advantage
of the high percentage of open A1 consents within the portfolio.



At West Thurrock we have taken back five stores that we are combining to form a
10,000 sq m Marks & Spencer Lifestore.  At Retail World in Gateshead, Boots is
joining Next, Holiday Hypermarket and TK Maxx.  Elsewhere in the portfolio we
have planning permission for a further 29,233 sq m of development, of which
8,650 sq m is currently under construction.



South east industrial premises



Market overview - total investment portfolio



As we have seen in central London, the relationship between the occupational and
investment sectors of the industrial property market remains disconnected.  It
is still difficult to purchase quality standing investments due to the
competitive investment market, but occupier demand remains muted.  However since
there is limited supply through new development we are still able to secure
satisfactory lease and rental terms.  With a development programme of over
100,000 sq m on prime sites around the south east, we are seeing satisfactory
occupier interest although it is taking longer for potential occupiers to
commit.  In response to this we will be holding back on further new construction
until late 2004 when we anticipate stronger tenant demand.



Portfolio management



The like-for-like increase in the value of our industrial portfolio was 2.1% and
the running yield is 7.3%.  Investment voids are 7.1% (#1.7m per annum by rental
value).  We continue to add to our portfolio through the development of new
stock with the completion of 35,750 sq m at Oxford, Croydon and Basildon, but
have also decided to take advantage of strong investor demand to sell a 106,000
sq m portfolio of industrial and warehouse properties, which no longer fulfill
our investment criteria.  At same time we will continue to acquire sites in the
South east, focusing on properties that are self-financing with future
opportunities for development.



Kent Thameside



We continue to progress well with our plans at Kent Thameside.  At Eastern
Quarry, we submitted an outline planning application for 7,250 residential units
and approximately 200,000 sq m of leisure, retail, office and community
accommodation in January this year.  At Ebbsfleet, where we already have outline
planning consent, we have now received approval for the Quarter Master Plan for
the first phase of office and residential development, which is the precursor to
our submitting detailed planning applications next year.  Where residential
development is already under way at Waterstone Park in partnership with
Copthorne Homes, a subsidiary of Countryside Properties, 91% of the units in the
first phase have now been sold.  Planning consent has been obtained for the
second phase of up to 450 units, subject to completion of a Section 106
Agreement.



Total property outsourcing



Market overview



We are seeing interest in Land Securities Trillium's property outsourcing
continuing to grow.  In the last six months we negotiated the transfer of a
further government portfolio in the form of the former Employment Services
estate and other new client opportunities are now in the public domain.



In the corporate sector, companies are seeking new ways of achieving property
cost reduction, capital release or reconfiguring their estates and are exploring
how the property outsourcing model can deliver on these objectives.  In
particular, Aviva plc has invited a number of companies to tender for the
acquisition and maintenance of a range of major properties in its UK occupied
property portfolio.  We expect to see further activity in this area before the
financial year-end.



In the public sector, our marketing activities with local authorities are now
generating opportunities and we are assessing how the property partnership model
can work for a number of local authorities.  Land Securities Trillium has been
short-listed by Bradford City Council for its Asset Management project.  They
are seeking a long-term agreement encompassing asset transfer, facilities
services delivery and strategic estate management and development.  On
completion of a successful procurement by Bradford, other local authorities
might follow the example.



Review of activity



Land Securities Trillium continues to perform strongly and is now making a
robust contribution to Group profits.  In the first six months, it generated
income of #342.1m, some 15% up on the equivalent period last year (30.09.02:
#296.4m).  This growth in revenue was generated from the existing Department for
Work and Pensions ("DWP") and BBC contracts and represents uplifts in both the
underlying accommodation charge and the provision of additional space and
capital expenditure projects.



As anticipated, vacations and lower disposal proceeds meant that our share of
revenue from Telereal (which operates the BT contract) fell to #82.2m from
#84.5m as compared to the same period last year.



In addition to our existing portfolio, Land Securities Trillium secured a
significant new contract since the period end.  We recently announced that we
had successfully concluded negotiations to acquire the former Employment
Services estate that is to be merged with our existing DWP portfolio and managed
under one expanded contract expiring in 2018.  This will add 828,000 sq m to our
holdings and generate additional revenue averaging #147m per annum over the
first five years.  Approximately 30% of the new properties are freehold and we
will make a transfer payment to DWP of #100m.  The contract effectively mirrors
the terms of the existing contract and gives the DWP the ability to vacate
228,000 sq m of the former Employment Services estate over three years.



We anticipate that the contract will be completed in December so that we will be
fully operational next year, with the new contract starting to contribute to
profits from 2005.



Further business growth has been achieved on the BBC contract where, in
conjunction with Land Securities Development, Land Securities Trillium has
extended its existing relationship with the BBC to include redevelopment of the
landmark 50,000 sq m Broadcasting House in the West End of London.



Department for Work and Pensions



As we continue to work with the DWP to finalise contract terms for the
Employment Services estate, we are preparing to mobilise the expanded contract
by the end of the year.  This mobilisation is being planned jointly with DWP and
the process is well underway and on programme.  On the existing estate continued
good progress has been made in supporting the DWP's ongoing modernisation
programme with the completion in September 2003 of the Pensions Service roll-out
which encompassed 32,000 sq m of accommodation.



Following the successful delivery of year one of the Jobcentre Plus roll out, we
are now well underway with year two which includes Land Securities Trillium
managing 124 major capital refurbishment schemes with a value of circa #115m,
with another 500 schemes due in years three and four.  Elsewhere, the contract
has performed well in terms of both earnings and customer feedback.  A recent
customer satisfaction census recorded an overall satisfaction level of 90%
across the PRIME estate with a 99% rating being achieved for the performance of
our Customer Service Call centre.



BBC



In addition to the project management of Broadcasting House in London, our
national relationship with the BBC continues to evolve.   We are working with
the BBC to plan and support its development programme, notably on Pacific Quay,
the BBC's new Broadcasting Centre facility in Glasgow, and on the development of
proposals for a possible new broadcasting facility in Manchester.



The BBC's new media village at White City in London, developed and fully
serviced by Land Securities Trillium, is nearing completion.  The BBC will
occupy the building in phases and the site is expected to be fully operational
by mid May 2004.



In the first year of operation, the facilities management services which we
provide to the BBC have generated a significant increase in customer
satisfaction levels.  We were also delighted to receive ISO 9001 accreditation
in October 2003.



Telereal



Telereal, our joint venture with the Pears Group, made a #16.4m contribution to
half-year pre-tax profits, including #2.9m from property sales.  In addition
Telereal has exchanged contracts (conditional on BT vacation) to sell on three
central London telephone exchanges.  These have a floor area of 10,000 sq m and
should realise some #42m.  Such opportunities are created by the Telereal
corporate real estate team which works closely with BT to reconfigure its
occupational portfolio.  This helps reduce costs for BT while realising profits
for Telereal in which BT also shares.



Our People



We have made excellent progress in the past six months, under Ian Henderson's
continued leadership, and we are on track to meet the Group's objectives.  We
would like to thank all our colleagues for their contribution to our success to
date.



Group Objectives and Outlook



At the year-end, we set certain objectives for the business as follows:



*         To maximise returns from the investment portfolio

*         To complete and let the development programme

*         To grow total property outsourcing

*         To focus on customers with products that meet their needs

*         To build and retain the best team in the property industry; and

*         To focus on earnings generation from our capital investment to drive
          total returns.



We are very pleased with the results for the first half of the year, which
demonstrate that we are making good progress towards achieving these objectives.
We believe that we have positioned our business units well, to benefit from
their respective market conditions.




Peter G Birch                                                  Ian Henderson
Chairman                                               Group Chief Executive
                                                            19 November 2003








Financial Review



Headline profits before tax for the six months to 30 September 2003 increased by
15.7% to #181.7m (30.09.02: #157.1m).  Last year's figures were, however,
distorted by various exceptional costs incurred in redeeming our convertible
bonds and preparing for the return of capital to shareholders.



Revenue profits, which exclude the distortions caused by exceptional items and
certain potentially non-recurring costs and revenues were #168.7m for the
period, as compared to #174.5m last year.  However, we returned #511m of capital
to shareholders in September 2002 and subsequent results reflect the full
interest cost of financing that outlay.  If this factor is also taken into
consideration, underlying revenue profits in the first six months were some 3.2%
higher than the same period last year.  Our business is not seasonal and the
comparison of revenue profits in the first half of this year with the
immediately preceding six months to 31 March 2003 shows growth of 1.4%.



Headline earnings per share were up by 29.6% reflecting the increase in profits
before tax and the accretive impact of last year's return of capital.  Adjusted
diluted earnings per share, which are based on revenue profits rose by 9.7%, and
were significantly influenced by the return of capital.



The revaluation surplus on our investment properties has increased by #153.0m
since last year-end, representing a 2.0% increase across the portfolio.  This
includes a one-time benefit of #68m arising from the new Stamp Duty regime for
property in Disadvantaged Areas.  Together with retained profits of #84.7m
(30.09.02: #67.4m) this has resulted in a 4.0% increase in adjusted diluted net
assets per share, which have risen to 1264p compared with 1215p at 31 March
2003.



Total investment portfolio



Rental income in the first half decreased by 0.5% from #258.5 to #257.2m, but by
1.5% when compared with the second half of last year.



As previously outlined we are disclosing more detailed information about the
like-for-like performance of our properties.  The table below analyses the
reasons for the changes in rental income over the last three six month periods.






Gross rental income for                 30.09.03      30.09.03      31 03.03      31 03.03      30.09.02

the 6 months ended
                                                             %                           %

                                              #m        change            #m        change            #m
Like-for-like portfolio:
Offices                                    105.4          -2.0         107.5          +3.4         104.0
Retail                                     110.2          +2.0         108.0          +3.6         104.2
Industrial & other                          15.0          -5.7          15.9          +9.7          14.5
                                       ---------     ---------     ---------     ---------     ---------
Total like-for-like portfolio              230.6          -0.3         231.4          +3.9         222.7
Property purchases                           3.2                         0.4                         0.0
Property sales                               6.4                        12.5                        22.1
Developments                                17.0                        16.9                        13.7
                                       ---------     ---------     ---------     ---------     ---------
Total investment portfolio                 257.2          -1.5         261.2          +1.0         258.5
                                          ======        ======        ======        ======        ======




The like-for-like properties have shown modest rental income growth over the
last eighteen months, principally on the retail part of the portfolio.  The
office portfolio has shown very little income growth due to the difficult
conditions in the London office market.  While we have achieved some increases
in rent from reviews, this has been offset partly by voids and partly by the
loss of some income on certain office properties that are being prepared for
development.  Voids in the like-for-like portfolio, which are actively managed,
have increased from 2.5% at September 2002 to 2.9% at September 2003.



We also continue to control tenant receivables carefully, and the cost of bad
and doubtful debts during the six months to 30 September 2003 was some #1.2m,
equivalent to approximately 0.2% of the net rent roll (30.09.02: 0.2%).



As the table shows, new rents from property acquisitions and developments have
offset the loss of rent from disposals.  The main contributors to development
rents in the year to 31 March 2003 were:



  * Designer Outlet Mall, Livingston;
  * Lakeside Retail Park West Thurrock;
  * Racecourse Retail Park, Liverpool;
  * Juniper Site, Basildon;
  * The Gate, Newcastle upon Tyne.



In the current period, we have also completed and let The Bullring in
Birmingham, Portman House in W1 and Phase I of the Kingsway West Retail Park in
Dundee.



Since September 2002, the net reversionary potential of the like-for-like
portfolio has fallen from 10.4% to 2.2%.  However, within the portfolio, retail
remains reversionary overall whereas the London office portfolio, and in
particular the City, is increasingly over rented.  The mean weighted unexpired
lease term for the total portfolio is 10.6 years (30.09.02: 11.6 years) on the
assumption that all lease breaks and expiries occur.



During the period, we sold investment properties with a book value of #242.9m
(30.09.02: #294.1m) at an average rental yield of 7.2%.  We realised profits on
sales of #11.7m and crystallised #94.8m of previous valuation surpluses.



Development



Projects that comprise the current development programme are listed in the
pipeline schedule above.  To be included in the programme, a project must have,
or be close to obtaining, final approval to proceed.  For reporting purposes, we
retain properties in the development programme until they are 95% let, when we
transfer responsibility to the Portfolio Management business unit.



The carrying value of development programme assets (which excludes the BBC
construction project at White City, trading properties, proposed developments
and the project at Kent Thameside) was #706.8m (31.03.03:  #967.4m).  During the
period, we spent #119m on the development programme and capitalised associated
finance costs of #16.9m.  The estimated future cash spend required to complete
the development programme, excluding interest, is approximately #326m.  Proposed
developments (excluding Kent Thameside) have a current carrying value of #137.5m
and the estimated future cash spend required to complete these schemes, if we
proceed with them, is approximately #840m, excluding interest.



During the period, we completed and let our schemes at The Bullring in
Birmingham (where we have a one-third share), Portman House on Oxford Street,
W1, and Phase I of Kingsway West retail park in Dundee.  At 30 September 2003,
these schemes had an aggregate value of #393.7m and generated development
profits of #78.8m over the lives of the projects.  On a profit and loss basis,
we recognised rental income from these schemes of #5.3m in the six months to 30
September 2003.  They will contribute some #24.0m of gross rental income
annually.



Total property outsourcing



Land Securities Trillium, including our share of Telereal, generated 52.9% of
the Group's gross property income in the period (30.09.02: 50.9%).  This
business unit continues to make good progress towards its target of representing
25% of our operating profit in the medium term, having contributed 13.1% in the
current period.  Excluding Telereal, Land Securities Trillium's underlying
profits were #19.1m for the first half, similar to 2002.  At the contract level,
PRIME and BBC have both continued to perform in line with expectations.



In the first six months of this year, Land Securities Trillium incurred costs of
some #2m, in addition to bid costs, in preparation for the Employment Services
extension to the PRIME contract.  We expect to assume responsibility for this
estate around the end of the calendar year and anticipate that it will reduce
pre-tax profits this year by #15-20m in total.  However, we expect that
Employment Services will generate up to #5m of pre-tax profits in the next
financial year, although it is likely to be loss making in the first half.



We completed construction at White City II on 4 October 2003 and our unitary
charge on that project will increase by #24m per annum with effect from 1
October 2003.    We continue to expect that the BBC contract will broadly break
even for 2003/04 as a whole.  During the period, we incurred a further #82m on
the White City II building, including interest.  Our investment in White City II
at 30 September 2003 was #237m, (including interest) with estimated cash costs
of #25m still to be incurred.



Telereal continues to make a good contribution to earnings, despite a small
reduction in the unitary charge reflecting the sale of investment properties
during last year.  Telereal produced revenue profits in the first half in excess
of those for the whole of last year as a result of lower contract costs, partly
attributable to property sales last year.  Telereal has continued to be cash
positive allowing it to make distributions to the Group and our joint venture
partners.  As a result, our investment in Telereal has reduced and was #89.0m at
30 September 2003 (30.09.02: #131.7m) and #106.8m at 31 March 2003.  Telereal is
generating very attractive leveraged returns for the Group.



Taxation



The requirement in FRS 19 (Deferred Tax) to make full provision for timing
differences means that, in profit and loss account terms, our reported tax rate
for the period was 27.9% (30.09.02:  28.0%).  The factors causing this are
explained in note 4 to the Accounts.  We estimate that our current tax charge
for the period was 23.8% (30.09.02:  24.3%) of profit on ordinary activities and
this reflects the benefit of capital allowances from developments,
refurbishments and acquisitions, and financing transactions during the year.  We
also benefit from a lower tax rate payable on profits on properties that we have
sold.  The full year current tax charge last year was 12.1% of profit on
ordinary activities and, as indicated last year-end, was influenced by
particular factors that are unlikely to recur.  We estimate that the current tax
rate for the year as a whole will be in the range of 25.0 to 30.0%.



Following the latest property valuation and, on the hypothetical assumption that
all properties are sold at their revalued amounts without any tax mitigation,
the Group has an estimated potential capital gains tax liability in the region
of #490m (30.09.02: #450m).  However, it is unlikely that such an amount would
be payable even in the event of a sale of all investment property assets.  In
particular, the sale of certain property portfolios by means of the disposal of
various asset-owning companies could reduce this liability significantly.



Cash flow and debt



Our operating cash inflow after interest, tax and distributions from Telereal,
was #128.3m, compared with #63.4m for the corresponding period last year.  The
increase over last year is due to the phasing of #46m of interest payments due
around 31 March 2002, and to the exceptional costs incurred last year.  We spent
#316.2m (30.09.02:  #277.3m) on additions to properties including capital
expenditure on developments.  This was offset by receipts of #279.9m (30.09.02:
#221.0m) from the sale of properties so that we had net capital expenditure of
#46.7m for this period compared with net expenditure of #62.3m for the
corresponding period last year.



After payment of equity dividends of #121.7m in the first half (which was the
final dividend for last year) and the loan repayments received from Telereal,
the Group had a cash outflow (before financing) of #40.1m for the first half
compared with #106.0m for the corresponding period last year.  This cash
outflow, together with the payment of #18.8m to redeem B shares earlier this
year, accounts for the increase in net debt from #2,589.3m at 31 March 2003 to
#2,647.4m at 30 September 2003.



Although net debt has increased by only #58.1m since 31 March 2003, gross debt
has increased by #145.2m because we had #169.7m (31.03.03: #82.6m) of cash and
short-term deposits at the period end.  This includes cash deposited with
debenture trustees as security in lieu of mortgaged properties that had been
sold close to the period end.  This deposit has now been released.



At 30 September 2003 the fair values of the Group's financial liabilities
exceeded book value by #685.0m (31.03.03: #598.5m) reflecting the reduction in
long term interest rates since the Group's fixed rate borrowings and interest
rate hedges were taken out.  However, the increase in the size of this liability
since 31 March 2003 reflects the recent improvement in the credit spreads on our
bonds which has more than offset the favourable impact of rising long-term
interest rates.



During the period, the Group launched a Euro Commercial Paper ("ECP") programme
to reduce the cost of short-term borrowing.  At 30 September 2003 total
outstandings under the ECP programme were #236.8m.  It is our policy to maintain
a level of undrawn committed bank facilities at least equal to, and with a
maturity no shorter than, our ECP outstandings.



International Financial Reporting Standards ("IFRS")



All quoted companies in the United Kingdom will be required to adopt IFRS for
accounting periods ending on or after 31 December 2005 as part of an
international drive to harmonise financial reporting.  We will continue to apply
UK Accounting Standards up to and including our year ending 31 March 2005, but
will adopt IFRS for the year to 31 March 2006.  We will also restate information
for the year to March 2005 to the new basis, to aid comparison.



The International Accounting Standards Board intends to finalise the accounting
standards that must be adopted from 2005 by next spring.  If these new standards
are substantially in line with the exposure drafts that are currently being
discussed, they are likely to have a significant impact on our financial
statements.  We are following developments closely and have an active project to
manage the transition. We will provide more information about the impact of the
changes on our accounts as the deadline for transition approaches.



Going concern



After reviewing detailed cash flow projections and taking into account available
bank facilities and making such further enquiries as they consider appropriate,
the directors are satisfied that the Group has adequate resources to continue to
operate for the foreseeable future.  For this reason, we have continued to adopt
the going concern basis when preparing these interim financial statements.



Andrew Macfarlane

Group Finance Director





TOTAL INVESTMENT PORTFOLIO ANALYSIS


                                                                                     P & L     P & L    P & L  
                                                                                     basis     basis    basis           
                                                                                     Gross     Gross    Gross          
                                        Open     Open     Open                      Rental    Rental   Rental           
                                      Market   Market   Market Valuation Valuation  Income    Income   Income   Annual 
                                       Value    Value    Value  Surplus  Surplus  6 months  6 months 6 months      Net
                                         (6)      (6)      (6)                          to        to       to   rent(7)
                                      -------  -------  -------  -------  -------  -------  -------  -------  --------
                                      30-Sep   31-Mar   30-Sep   30-Sep   30-Sep    30-Sep    31-Mar  30-Sep    30-Sep
                                         -03      -03      -02      -03      -03       -03       -03     -02       -03 
  The like-for-like portfolio     (1)     #m       #m       #m       #m        %        #m        #m      #m        #m 
                                                                                                                     
  ------------------------------                                                                                      

  London offices                                                                                                      
  West end                            1278.2   1267.3   1262.9    (0.8)   (0.1)%     46.8     45.0     45.3      89.4 
  City                                 764.6    792.2    894.0   (27.7)   (3.5)%     37.9     39.1     37.6      71.3 
  Midtown                              323.7    320.8    349.6      2.9     0.9%     14.0     14.2     14.0      26.6 
  Inner London                         133.6    126.0    184.8    (3.3)   (2.4)%      3.7      6.9      4.2       7.0 
                                      -------  -------  -------  -------  -------  -------  -------  -------  --------
                                                                                                                     
                                      2500.1   2506.3   2691.3   (28.9)   (1.1)%    102.4    105.2    101.1     194.3 
  Regional offices                      64.3     66.4     68.1    (2.6)   (3.9)%      3.0      2.3      2.9       6.0 
                                      -------  -------  -------  -------  -------  -------  -------  -------  --------
                                                                                                                      
                                      2564.4   2572.7   2759.4   (31.5)   (1.2)%    105.4    107.5    104.0     200.3 
                                      =======  =======  =======  =======  =======  =======  =======  =======  ========

  Shops and shopping centres                                                                                          
  Shopping centres                    1229.2   1172.1   1102.0     54.9     4.7%     44.5     42.4     41.3      79.1 
  London shops                         671.6    641.4    615.4     29.6     4.6%     21.3     21.2     20.3      42.1 
  Other in-town shops                  585.4    554.7    536.9     28.0     5.0%     19.1     19.6     19.2      36.7 
                                      -------  -------  -------  -------  -------  -------  -------  -------  --------
                                                                                                                      
                                      2486.2   2368.2   2254.3    112.5     4.7%     84.9     83.2     80.8     157.9 
                                      =======  =======  =======  =======  =======  =======  =======  =======  ========

  Retail warehouses                                                                                                   
  Retail parks                         735.9    682.1    638.1     43.0     6.2%     18.0     18.1     17.0      37.3 
  Other                                208.2    195.0    169.5     13.0     6.7%      7.3      6.7      6.4      14.9 
                                      -------  -------  -------  -------  -------  -------  -------  -------  --------
                                                                                                                      
                                       944.1    877.1    807.6     56.0     6.3%     25.3     24.8     23.4      52.2 
                                      =======  =======  =======  =======  =======  =======  =======  =======  ========

  Industrial                                                                                                          
  South east                           263.1    258.6    254.6      3.5     1.3%      9.4     10.1      8.9      18.8 
  Other                                 34.9     32.4     31.9      2.5     7.7%      1.5      1.4      1.3       3.1 
                                      -------  -------  -------  -------  -------  -------  -------  -------  --------
                                                                                                                      
                                       298.0    291.0    286.5      6.0     2.1%     10.9     11.5     10.2      21.9 
                                      =======  =======  =======  =======  =======  =======  =======  =======  ========

  Other                                130.8    137.5    136.2      1.4     1.1%      4.1      4.4      4.3       7.9 
                                      -------  -------  -------  -------  -------  -------  -------  -------  --------

                                                                                                                      
  Like-for-like portfolio             6423.5   6246.5   6244.0    144.4     2.3%    230.6    231.4    222.7     440.2 
                                                                                                                      
  Completed developments         (2)   687.5    587.4    516.5     52.6     8.3%     13.1     12.7      8.9      25.2 
                                                                                                                     
                                      -------  -------  -------  -------  -------  -------  -------  -------  --------
                                                                                                                      
  Total                               7111.0   6833.9   6760.5    197.0     2.8%    243.7    244.1    231.6     465.4 
                                                                                                                      
  Purchases                      (3)   124.8     65.5      9.2    (9.5)   (7.1)%      3.2      0.4      0.0       9.4 
                                                                                                                     
                                                                                                                      
  Sales and restructured         (4)     0.0    241.7    350.9    (0.2)  (100.0)%     6.4     12.5     22.1        NA 
  interests                                                                                                         
                                                                                                                      
  Ongoing developments           (5)   760.3    702.9    622.5   (34.3)   (4.3)%      3.9      4.2      4.8        NA 
  (including Kent Thameside)                                                                                          
                                      -------  -------  -------  -------  -------  -------  -------  -------  --------
                                                                                                                      
  Total Portfolio                     7996.1   7844.0   7743.1    153.0     2.0%    257.2    261.2    258.5        NA 
  ---------------------                                                                                               
  Total investment portfolio                                                                                          
  analysis                                                                                                            
  ------------------------------                                                                                      

  London offices                                                                                                      
  West end                            1470.5   1481.8   1434.1   (14.3)   (1.0)%     50.2     49.2     49.0      94.4 
  City                                 975.2    945.7   1031.9   (41.5)   (4.1)%     38.5     39.3     41.6      74.9 
  Midtown                              355.0    542.8    582.1    (8.4)   (2.3)%     19.2     21.8     20.7      27.5 
  Inner London                         268.2    264.3    294.4   (26.0)   (8.8)%      5.4      7.1      4.0      10.8 
                                      -------  -------  -------  -------  -------  -------  -------  -------  --------
                                                                                                                      
                                      3068.9   3234.6   3342.5   (90.2)   (2.9)%    113.3    117.4    115.3     207.6 
  Regional offices                      73.2     77.9     81.2    (3.0)   (3.9)%      4.1      3.3      4.4       6.9 
                                      -------  -------  -------  -------  -------  -------  -------  -------  --------
                                                                                                                      
                                      3142.1   3312.5   3423.7   (93.2)   (2.9)%    117.4    120.7    119.7     214.5 
                                      =======  =======  =======  =======  =======  =======  =======  =======  ========
  Shops and shopping centres                                                                                          
  Shopping centres                    1594.7   1455.7   1366.9     77.3     5.1%     47.4     45.8     46.6      84.6 
  London shops                         766.7    732.4    696.8     36.2     5.0%     23.3     23.3     23.1      44.1 
  Other in-town shops                  601.1    589.1    576.3     30.2     5.3%     19.9     20.9     20.9      37.3 
                                      -------  -------  -------  -------  -------  -------  -------  -------  --------
                                                                                                                      
                                      2962.5   2777.2   2640.0    143.7     5.1%     90.6     90.0     90.6     166.0 
                                      =======  =======  =======  =======  =======  =======  =======  =======  ========

  Retail warehouses                                                                                                   
  Retail parks                         995.3    901.2    845.5     73.8     8.0%     24.3     24.1     21.9      51.3 
  Other                                230.5    215.6    207.6     14.6     6.8%      7.3      7.2      6.9      14.9 
                                      -------  -------  -------  -------  -------  -------  -------  -------  --------
                                                                                                                      
                                      1225.8   1116.8   1053.1     88.4     7.8%     31.6     31.3     28.8      66.2 
                                      =======  =======  =======  =======  =======  =======  =======  =======  ========
  Industrial                                                                                                          
  South east                           367.0    350.2    339.0      6.6     1.8%     10.9     11.7     10.2      22.3 
  Other                                 38.4     35.7     46.8      2.7     7.6%      1.7      2.1      2.0       3.4 
                                      -------  -------  -------  -------  -------  -------  -------  -------  --------
                                                                                                                      
                                       405.4    385.9    385.8      9.3     2.3%     12.6     13.8     12.2      25.7 
                                      =======  =======  =======  =======  =======  =======  =======  =======  ========
  Other                                260.3    251.6    240.5      4.8     1.9%      5.0      5.4      7.2       9.7 
                                      -------  -------  -------  -------  -------  -------  -------  -------  --------
                                                                                                                      
  Total portfolio                     7996.1   7844.0   7743.1    153.0     2.0%    257.2    261.2    258.5     482.1 



                                                          Annual    Annual    Annual                  Lease      Lease  
                                  Annual net    Annual     Gross     Gross     Gross       Voids     Length     Length  
                                   Estimated  Yield on Estimated Estimated Estimated          By      As at      As at 
                                      Rental   Present    Rental    Rental    Rental         ERV  30-Sep-03  30-Sep-03
                                   Value (8)    Income Value (9) Value (9) Value (9)        (10)       (11)       (11) 
                                     --------  --------  --------  --------  --------  ---------  ---------  ---------
                                      30-Sep    30-Sep    30-Sep    31-Mar    30-Sep      30-Sep       Mean     Median 
                                         -03       -03       -03       -03       -02         -03      Years      Years
  The like-for-like portfolio    (1)      #m         %        #m        #m        #m          %         (i)       (ii)
                                                                                                       
  -----------------------------                                                                                       
  London offices                                                                                                      
  West end                              92.9      7.0%      94.4     102.1     109.3       1.2%       10.7        7.0 
  City                                  59.6      9.3%      60.7      67.0      77.0       6.6%        9.0        3.3 
  Midtown                               26.4      8.2%      27.1      29.8      32.9       3.0%        6.2        5.8 
  Inner London                           8.2      5.2%       8.5       9.1      15.6          -        6.5       10.0 
                                     --------  --------  --------  --------  --------  ---------  ---------  ---------
                                       187.1      7.8%     190.7     208.0     234.8       3.1%        9.3        6.0 
  Regional offices                       6.0      9.3%       6.1       6.0       6.4      19.7%        3.7        2.0 
                                     --------  --------  --------  --------  --------  ---------  ---------  ---------
                                       193.1      7.8%     196.8     214.0     241.2       3.6%        9.2        5.8 
                                     ========  ========  ========  ========  ========   ========   ========   ========
                                                                                                                      
  Shops and shopping centres                                                                                          
  Shopping centres                      86.6      6.4%      93.5      92.8      90.3       1.4%       10.7        9.8 
  London shops                          47.9      6.3%      48.9      47.9      46.0       1.8%        8.9        7.8 
  Other in-town shops                   40.5      6.3%      43.1      42.9      42.9       3.0%        9.8        8.0 
                                     --------  --------  --------  --------  --------  ---------  ---------  ---------
                                       175.0      6.4%     185.5     183.6     179.2       1.9%       10.0        8.5 
                                     ========  ========  ========  ========  ========   ========   ========   ========
                                                                                                                      
  Retail warehouses                                                                                                   
  Retail parks                          42.6      5.1%      42.7      41.8      40.5       3.0%       14.7       16.8 
  Other                                 16.0      7.2%      16.0      15.6      14.3          -       14.5       16.5 
                                     --------  --------  --------  --------  --------  ---------  ---------  ---------
                                        58.6      5.5%      58.7      57.4      54.8       2.2%       14.7       16.8 
                                     ========  ========  ========  ========  ========   ========   ========   ========
                                                                                                                      
  Industrial                                                                                                          
  South east                            21.3      7.1%      21.3      21.1      21.3       8.0%        6.9        7.3 
  Other                                  2.8      8.9%       2.8       2.8       2.7          -       11.3        9.0 
                                     --------  --------  --------  --------  --------  ---------  ---------  ---------
                                        24.1      7.3%      24.1      23.9      24.0       7.1%        7.5        7.3 
                                     ========  ========  ========  ========  ========   ========   ========   ========
                                                                                                                      
  Other                                  8.2      6.0%       8.2       9.7       9.6       2.4%       27.0       11.8 
                                     --------  --------  --------  --------  --------  ---------  ---------  ---------
  Like-for-like portfolio              459.0      6.9%     473.3     488.6     508.8       2.9%       10.3        7.5 
                                                                                                                      
  Completed developments        (2)     43.9      3.7%      43.9      42.2      34.8       4.3%       13.9       14.3 
                                                                                                                     
                                     --------  --------  --------  --------  --------  ---------  ---------  ---------
  Total                                502.9      6.5%     517.2     530.8     543.6       3.0%       10.6        8.0 
                                                                                                                      
  Purchases                     (3)      9.8      7.5%      10.3       2.6       0.2      12.6%        5.7        7.0 
                                                                                                                     
                                                                                                                      
  Sales and restructured        (4)       NA        NA        NA        NA        NA         NA         NA         NA 
  interests                                                                                                          
                                                                                                                      
  Ongoing developments          (5)       NA        NA        NA        NA        NA         NA         NA         NA 
                                                                                                                     
  (including Kent Thameside)                                                                                          
                                     --------  --------  --------  --------  --------  ---------  ---------  ---------
  Total Portfolio                         NA        NA        NA        NA        NA         NA         NA         NA 
  ---------------------                                                                                               
 
 

                                                                                                                      
  Total investment portfolio                                                                                          
  analysis                                                                                                            
  ----------------------------------                                                                                  
  London offices                                                                                                      
  West end                             132.8      6.4%     134.3     143.2     125.5         
  City                                  79.2      7.7%      80.8      84.5      77.1         
  Midtown                               29.8      7.7%      30.6      45.9      46.2         
  Inner London                          24.1      4.0%      24.3      20.5      15.6         
                                     --------  --------  --------  --------  --------
                                       265.9      6.8%     270.0     294.1     264.4         
  Regional offices                       6.8      9.4%       6.9       7.0       7.5         
                                     --------  --------  --------  --------  --------
                                       272.7      6.8%     276.9     301.1     271.9         
                                     ========  ========  ========  ========  ========          
  Shops and shopping centres                                                                                          
  Shopping centres                     112.9      5.3%     119.8     119.1     114.2         
  London shops                          52.8      5.8%      53.8      52.6      55.2         
  Other in-town shops                   42.6      6.2%      45.2      46.6      46.6         
                                     --------  --------  --------  --------  --------
                                       208.3      5.6%     218.8     218.3     216.0         
                                     ========  ========  ========  ========  ========          
  Retail warehouses                                                                                                   
  Retail parks                          62.5      5.2%      62.5      59.9      57.0         
  Other                                 16.0      6.5%      16.0      15.6      15.2         
                                     --------  --------  --------  --------  --------
                                        78.5      5.4%      78.5      75.5      72.2         
                                     ========  ========  ========  ========  ========          
  Industrial                                                                                                          
  South east                            30.7      6.1%      30.7      30.5      27.8         
  Other                                  3.1      8.9%       3.1       3.0       4.3         
                                     --------  --------  --------  --------  -------- 
                                        33.8      6.3%      33.8      33.5      32.1         
                                     ========  ========  ========  ========  ========          
                                                                                                                      
  Other                                 11.8      3.7%      11.9      13.4      20.9         
                                                                                                                      
                                     --------  --------  --------  --------  -------- 
  Total portfolio                      605.1      6.0%     619.9     641.8     613.1         
                                     ========  ========  ========  ========  ========          


Notes


  (1)    The like-for-like portfolio includes all properties which have been in the portfolio since 1 April 2002 but
         excluding those which were acquired, sold or included in the development programme at any time during that  
         period. Capital expenditure on refurbishment, acquisition of head leases and similar capital expenditure has  
         been allocated to the like-for-like portfolio in preparing this table.  Changes in valuation from period to 
         period reflect this capital expenditure as well as the disclosed valuation of surpluses.

  (2)    Completed developments represent those properties, previously included in the development programme, which have
         been completed, let and removed from the development programme in the period since 1 April 2002.

  (3)    Includes all properties acquired  in the period since 1 April 2002.  Approximately #50m of purchases over the 
         18 month period have been included in the like-for-like analysis as they consist of superior interest 
         acquisitions or part acquisitions relating to existing holdings as explained in note (1). This also includes 
         site assembly acquisitions for pre-development schemes.

  (4)    Includes all properties sold (other than directly out of the development programme), or where the ownership
         interest has been restructured, in the period since 1 April 2002.

  (5)    Ongoing developments are properties in the development programme and Kent Thameside.  They exclude completed
         developments as defined in note (2) above.

  (6)    The open market value figures include the group share of the various joint ventures and exclude properties 
         owned by Land Securities Trillium and Telereal.

  (7)    Annual net rent is annual rents in payment at 30 September 2003 after deduction of ground rents.  It excludes 
         the value of voids and current rent free periods.

  (8)    Annual net estimated rental value includes vacant space, rent-frees and estimated future estimated rental 
         values for properties in the development programme and is calculated after deducting expected ground rents.

  (9)    Annual gross estimated rental value is calculated in the same way as net estimated rental value before the
         deduction of ground rents.

  (10)   Voids represent all unlet space in the properties, including voids where refurbishment work is being carried 
         out and voids in respect of pre-development properties.  Voids are calculated based on their gross estimated 
         rental value as defined in (9) above.

  (11)   The definition for the figures in each column is:
         (i)   Mean is rent-weighted average remaining term on leases subject to lease expiry/break clauses.
         (ii)  Median is the number of years until half of income is subject to lease expiry/break clauses.

  (12)   Differs from the value for total sales at book value as given in the financial statements at 30 September 2003 
         of #242.9 due to UITF 28 adjustments.

  (13)   Differs from the value for total sales per the financial statements due to disposals made directly out of the
         development programme.







Total investment portfolio analysis



% Portfolio by value and number of properties at 30 September 2003


#m                                    Value                 No of

                                          %            properties

0 - 9.99                               5.1%                    96
10 - 24.99                            10.7%                    53
25 - 49.99                            23.5%                    54
Over 50                               60.7%                    45
Total                                100.0%                   248



Top 10 properties by value

Total value #1.8 bn (22.8% of portfolio).  Values in excess of #125m.


1           White Rose Centre, Leeds
2           The Bullring, Birmingham
3           St David's Centre, Cardiff
4           Queen Anne's Mansions, London SW1
5           Almondvale Centre and Designer Outlet, Livingston
6           30 Gresham Street, London EC2
7           The Bridges, Sunderland
8           Eland House,London SW1
9           New Change, London EC4
10          Team Valley, Gateshead



Top 10 investment portfolio tenants


                                                                   Current rents

                                                                               %
1           Central Government                                               9.5
2           Allen & Overy                                                    2.9
3           Dresdner Bank                                                    2.3
4           Dixons Group                                                     2.1
5           J Sainsbury                                                      1.6
6           Metropolitan Police                                              1.4
7           Marks & Spencer                                                  1.2
8           Homebase Limited                                                 1.2
9           Institute of London Underwriters                                 1.0
10          Virgin Retail Limited                                            0.9
            Total                                                           24.1



Average Rents  - excludes properties in the development programme and voids


                                                                            Average        Average
                                                                               rent            ERV
                                                                             #/sq m         #/sq m
Offices
Central and inner London                                                        340            317
Rest of UK                                                                       99             95
Retail
Shopping centres                                                                n/a            n/a
Shops                                                                           n/a            n/a
Retail warehouses (including supermarkets)                                      145            167
Industrial premises and warehouses
London, south east and eastern                                                   65             68
Rest of UK                                                                      n/a            n/a
Hotels, leisure, residential and other                                          n/a            n/a



Note: Average rents and estimated rental values (ERVs) have not been provided
where it is considered that the figures would be potentially misleading (i.e.
where there is a combination of analysis of rents on an overall and Zone A basis
in the retail sector; or where there is a combination of uses; or small sample
sizes).

This is not a like-for-like analysis with the previous year.



Like-for-like reversionary potential at 30.09.03



                                                                             30.09.03             30.09.02
                                                                       % of rent roll       % of rent roll
Reversionary potential
(Ignoring additional income from the letting of voids)
Gross reversions                                                                  9.7                 13.3
Over-rented                                                                       7.5                  2.9
Net reversionary potential                                                        2.2                 10.4



The reversion is calculated with reference to the gross secure rent roll and
those properties which fall under the like-for-like definition as set out in
note 1 in the Total Investment Portfolio Analysis above.



Only 41.3% of the over-rented income is subject to a lease expiry or break
clause in the next five years.





Development pipeline schedule



Central London

Planning - OPR = outline planning received, PR = planning received; AS =
application submitted; MG = minded to grant; PI = planning inquiry.


                                                                                                     Estimated/
                                                                  Size                      Status       actual    Cost
                                                                  Sq m         Status      letting   completion      #m
Property                                 Description          (Note 1)       planning     (Note 2)         date (Note 3)



Developments completed, let and removed from the development programme


Portman House, W1                            Offices             9,249                        100%     Oct 2001     44
                                              Retail             2,521



Developments completed


Empress State Building, SW6                   Offices           41,291
                                       Retail/Leisure            2,040                                July 2003    102
7 Soho Square, W1                             Offices            4,214                         85%     Mar 2003      9
                                               Retail            1,095
190 High Holborn, WC1                         Offices            8,560                       100%*     Sep 2002     41



Developments approved and in progress


30 Gresham Street, EC2                        Offices           35,147
                                               Retail            1,304                                 Dec 2003    208
Cardinal Place, SW1                           Offices           50,750
                                               Retail            9,250                                 Jun 2005    251



Proposed Developments


Old scheme
New Fetter Lane, EC4                          Offices           58,389             PR
                                       Retail/Leisure            8,400                                     2007
New scheme
New Street Square, EC4                        Offices           62,526
 (previously New Fetter Lane)          Retail/Leisure            2,783             AS                      2007
Bankside 123, SE1                             Offices           75,326             PR
                                               Retail            8,080                                     2006
                                              Leisure            1,957

*fully let since 30 September 2003



Shopping Centres and Retail


                                                                                                     Estimated/ 
                                                                  Size                      Status       actual    Cost
                                                                  Sq m         Status      letting   completion      #m
Property                                  Description         (Note 1)       planning     (Note 2)         date (Note 3)



Developments completed, let and removed from the development programme


Bullring Birmingham                            Retail          111,484                         97%     Sep 2003   141
The Birmingham Alliance
- a limited partnership
with Hammerson plc and
Henderson Global
Investors



Developments completed


Sidwell Street, Exeter                         Retail            2,420                         73%     Mar 2003      3



Developments approved and in progress


Whitefriars, Canterbury                        Retail           37,685                         30%     Apr 2005    103
                                        + Residential            2,614
Caxtongate Phase III,                          Retail            2,238                        100%     Nov 2004      5
New Street, Birmingham
Cheeke Street, Exeter                          Retail            5,359                         55%     Dec 2004     11
Rose Lane, Canterbury -                        Retail            1,638                         76%     Aug 2004      3
a limited partnership



Proposed developments


Broadmead, Bristol                             Retail           87,881            OPR                      2007


The Bristol Alliance - a                      Leisure            3,953
limited partnership                           Offices           24,585
with
Hammerson plc, and                      + Residential           18,196
Morley Fund Management
Princesshay, Exeter                            Retail           37,512             PR                      2007
                                        + Residential            7,432
St Davids, Cardiff                             Retail           70,000            OPR                      2008


St David's Partnership - a             + Residential/
partnership with                              Leisure           39,750
Capital Shopping
Centres



Retail warehouses


                                                                                                     Estimated/
                                                                  Size                      Status       actual    Cost
                                                                  Sq m         Status      letting   completion      #m
Property                                  Description         (Note 1)       planning     (Note 2)         date (Note 3)



Developments completed, let and removed from the development programme


Kingsway Retail Park,                     Retail                 9,893                        100%     Jan 2003      29
Dundee, Phase I                           Warehousing



Developments approved and in progress


Bexhill Retail Park                            Retail            3,112                                Sept 2004      11
                                          Warehousing
Kingsway Retail Park,                          Retail            8,649                         43%     May 2004      12
Dundee, Phase II                          Warehousing



Proposed Developments


Almondvale Retail Park,                        Retail            9,383             PR                     2004/
Livingston, Phase II                      Warehousing                                                      2005



Industrial



Developments completed


Juniper Phase I,                           Industrial           21,823                         84%     Nov 2001      18
Basildon
Refurbishment                                 Offices            3,660                        100%
Juniper Phase II,                          Industrial           11,148                         26%   April 2003       8
Basildon
Horizon Point, Hemel
Hempstead Phase I                          Industrial           10,384                                 Mar 2002      10
Zenith, Basildon                           Industrial           15,128                         30%     Jun 2002      12
Oxonian Park,                              Industrial           11,796                                 Sep 2003       9
Kidlington
Cobbett Park, Guildford                    Industrial           11,440                         41%     Aug 2002      12



Developments approved and in progress


Commerce Way, Croydon                      Industrial           12,617                                 Oct 2003      12
Concorde Way,                              Industrial           11,617                                 May 2004       9
Segensworth, Fareham



Other

Developments completed


The Gate, Newcastle                           Leisure           18,556                         79%     Nov 2002      64
upon Tyne



Note 1 The floor areas shown above represent the total areas of the
developments.  Our effective share of these areas are 33% for the Birmingham and
Bristol Partnerships and 50% for the Cardiff and Rose Lane, Canterbury
Partnerships.

Note 2 Letting % is measured by ERV and shows letting status at 30 September
2003

Note 3 Cost (#m) shows Land Securities share of costs and refers to estimated
capital expenditure including the cost of third party land acquisitions and
excluding finance costs.



Development pipeline - financial statistics

                                                                             Valuation         Cumulative             
                                                                               surplus/          valuation        Net 
                  Book           Capital         Estimated      Estimated    (deficit)           surplus /    income/ 
                  value       expenditure     total capital         total      6 mth to       (deficit) to        ERV 
               at start          to date        expenditure          cost      30.09.03               date            
                                      (1)               (1)           (2)                                         (3) 
  Project            #m                #m                #m            #m            #m                 #m         #m 
              ----------  ----------------  ----------------  ------------  ------------  -----------------  ---------
  Completed,                                                                                                          
  let and                                                                                                             
  transferred                                                                                                         
  out of                                                                                                            
  Development                                                                                                           
  programme                                                                                                           
  or sold                                                                                                             
  during                                                                                                              
  the year                                                                                                            
  ended              
  30.9.03            86               181               210           315            19                 79         24   
                                                                                              
                                                                                                                      
  Active                                                                                                              
  development                                                                                                          
  programme                                                                                                           
  (schemes                                                                                                            
  in                                                                                                                  
  progress,                                                                                                           
  completed                                                                                                           
  but not                                                                                                             
  let,                                                                                                                
  committed                                                                                                           
  and                                                                                                                 
  authorised)       188               626               923          1195          (34)              (166)         91 
                                                                                                                     
                                                                                                                      
  Proposed          147                19               921          1180           n/a                n/a         96 
  schemes (4)                                                                                                           
                                                                                                                   

Notes

(1)                 Excludes capitalised interest.

(2)                 Includes land costs / book value of land and capitalised
interest, but excludes any allowances for rent free periods.  Stated net of
other receipts (eg sales of residential units).

(3)                 Net headline annual rental payable on let units plus net
estimated rental value (ERV) at 30 September 2003 on unlet units.

(4)                 The book value of the proposed schemes is the value as at 31
March 2003 which reflects any value attributable to expenditure incurred prior
to 31 March 2003.  Therefore the capital expenditure shown in the to date column
represents only that expenditure incurred in the period from 1 April 2003.




                      This information is provided by RNS
            The company news service from the London Stock Exchange
END

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