Awards 2005: Blue Chip FD – Andrew Macfarlane

The winner of our Blue Chip Finance Director of the Year is Andrew Macfarlane
for his modernising work at Land Securities Group.

Although he left the firm for Rentokil Initial earlier this year, Land
Securities nominated him for the dynamic changes he made to the business, which
helped the company lose its reputation for being safe but unexciting.

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When Macfarlane joined Land Securities in 2001, he and his team faced three
specific challenges. The firm had a legacy of high-coupon debt, an old-fashioned
approach to financial reporting, and lacked good communications with key
financial audiences.

As FD of the UK’s largest property company, his progress was closely watched.

The most significant decision he took was to implement a £3.2bn debt
restructuring to take advantage of the security offered by the group’s
high-quality investment portfolio.

The historical higher coupon debt was equitably replaced for all bond and
shareholders, lowering the group’s future borrowing costs. The firm essentially
replaced £1.8bn of secured and unsecured bond debt, at an average interest rate
of 8.5%, with £2.3bn of secured debt at an average interest rate of 5.35%.

This move saved approximately £25m in annual interest costs, more than
offsetting the cost of the transaction, and gave the firm improved flexibility
to make the most of its £6.2bn asset base in the future.

The firm now has a lower future cost of financing on all debt raised. As well
as giving Land Securities more freedom than a traditional securitisation, the
move also resulted in the upgrading of the firm’s credit rating to AA.

Macfarlane made efforts to improve the firm’s communications. This year, Land
Securities’ annual report and accounts have won awards from the likes of EPRA

and BDO Stoy Hayward, while analysts have praised the firm’s presentational

The newfound openness shown by the firm has also impressed investors. There
is a greater flow of news and announcements to the stock exchange, and the firm
now leads the sector in terms of disclosure. Land Securities was recognised as
having the leading investor relations team in 2005 by Extel.

Macfarlane was instrumental in the firm’s adoption of international financial
reporting standards, which were applied for the first time this year. He held
seminars for investors and analysts, and demonstrated leadership by working to
develop overall standards for IFRS for the sector.

During his tenure, Macfarlane established a reputation for integrity and
intellect. His entrepreneurial approach to finance earned him the respect of
peers and rivals alike and helped develop the firm strategically.

‘He demonstrated a leadership role, steadied the ship and struck a good
balance between internal and external demands,’ said our judges. ‘He developed a
good team and injected dynamism into a large company.’

Macfarlane resigned in June 2005 to take up the role of chief financial
officer at Rentokil Initial, fulfilling his wish to take on a more international

He departs having breathed new life into Land Securities and leaves the firm
well-positioned for the future.

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