Landsec Annual Report 2024
Creating
valuable
places
This year, the work we have done to build
our organisational capability, and our efforts
to shape best-in-class assets in the markets
with the highest growth potential, mean we are
well-placed to capitalise on future opportunities.
We enter the coming year with a renewed sense
of clarity and purpose.
In 2024, we celebrate 40 years of the FTSE 100,
with Landsec the only real estate business
to retain its position within it for all that time.
We also celebrate 80 years of Landsec, with
a common theme that has run throughout
our heritage, which is the ability to create value
for people through places. From 80 years ago,
helping rebuild cities damaged by war, to today’s
need to create sustainable places where people
live, eat, shop, work or enjoy their leisure time.
Through our ability to continually adapt – to shape
the places that meet the needs of people and
business in a changing world – we are well placed
to thrive, now and in the future. There is real
excitement within our business and among
our partners about the opportunities ahead,
and the impact we can have.
CONTENTS
STRATEGIC REPORT
01
Our portfolio
02 Chief Executive’s statement
06 Market context
07 Our business model
08 Our strategy
10
Our KPIs
11
Operating and portfolio review
16
Financial review
22 Our stakeholders
25 Our people and culture
28 Our approach to sustainability
33 TCFD statement
38 Managing risk
41
Principal risks and uncertainties
46 Going concern and viability
48 Non-financial and sustainability
information statement
GOVERNANCE
50 Introduction from the Chair
51
Board of Directors
55 Executive Leadership Team
56 Governance report
60 Introduction from the Chair of the
Nomination Committee
61
Report of the Nomination Committee
62 Introduction from the Chair of the
Audit Committee
64 Report of the Audit Committee
70 Directors’ Remuneration Report –
Chairman’s Annual Statement
72 Annual Report on Remuneration
83 Directors’ Remuneration Policy
92 Directors’ Report
FINANCIAL STATEMENTS
95 Statement of Directors’ Responsibilities
96 Independent Auditor’s Report
105 Income statement
105 Statement of comprehensive income
106 Balance sheets
107 Statements of changes in equity
108 Statements of cash flows
109 Notes to the financial statements
ADDITIONAL INFORMATION
162 Business analysis – EPRA disclosures
168 Business analysis – Group
170 Sustainability performance
173 Alternative performance measures
174 Combined Portfolio analysis
176 Reconciliation of segmental information
note to statutory reporting
177 Ten year summary
179 Subsidiaries, joint ventures and associates
184 Shareholder information
186 Key contacts and advisers
187 Glossary
IBC Cautionary statement
HOW TO NAVIGATE
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01
STRATEGIC REPORT
LANDSEC ANNUAL REPORT 2024
OUR PORTFOLIO
READ HOW WE CREATE VALUE FOR PEOPLE THROUGH PLACES
ON PAGES 07-09
VALUATION
£6.2bn
VALUATION
£1.8bn
VALUATION
£0.7bn
WHO WE ARE
We are one of the leading real estate
companies in the UK. We create places that
make a lasting positive contribution to our
communities and our planet. We bring
people together, forming connections with
each other and the spaces we create.
OUR PURPOSE
Sustainable places. Connecting communities.
Realising potential. Three principles to live
by, they articulate what we want to achieve,
and the benefits and experiences we will
create for our stakeholders, now and in
the future.
OUR PERFORMANCE
2024
2023
VALUATION (£bn)
10.0
10.2
EPRA EARNINGS (£m)
371
393*
DIVIDEND PER SHARE (pence)
39.6
38.6
*Underlying EPRA earnings excluding the benefit of increased surrender
premiums during 2022/23 was £371m.
Mixed-use
urban
Retail
Central
London
LANDSEC ANNUAL REPORT 2024
STRATEGIC REPORT
CHIEF EXECUTIVE’S STATEMENT
SUCCESSFUL EXECUTION
ON STRATEGY. FOCUS
ON DRIVING GROWTH
Over the last three years, our focus has
been two-fold: firstly, on increasing our
investments in best-in-class assets where
our competitive advantages can drive
long-term growth, and secondly on preserving
balance sheet strength. The success of this is
reflected in our continued like-for-like income
growth and rising occupancy, significantly
outperforming market averages. And despite
the adjustment in property values over the
past two years following the sharp rise in
global interest rates, our proactive capital
recycling means that pro-forma for our
recent hotels disposal, our 32.3% LTV is now
lower than it was two years ago, and our net
debt is down £1.1bn, creating balance sheet
capacity to grow.
Owning the right real estate has never been
more important, as the normalisation in cost
of capital means value drivers in real estate
have fundamentally changed compared to
much of the 2010s decade, when ultra-cheap
money and sector themes were key drivers
of performance. Irrespective of sector, there
is now a growing distinction between those
assets that really fulfil customers’ future
expectations and hence deliver like-for-like
income growth and those that do not. This
means future performance across the entire
sector will be much more driven by asset
quality than generic themes.
The successful execution of our strategy over
the last few years means Landsec is well
positioned in this context. Customer demand
for our high-quality product has remained
robust despite the unsettled political/economic
backdrop, concerns about hybrid working
and cost of living pressures for consumers.
In London, our £6.2bn West End-focused
portfolio is almost full, with occupancy up to
97.3%, so rents are rising. In retail, our £1.8bn
portfolio of nine major destinations has seen
occupancy rise to 95.4% and we have started
to drive positive reversionary uplifts on lettings
and renewals. As a result, our like-for-like net
rental income increased by 2.8% last year and,
following a period of interest rate-driven asset
repricing, the valuation of c. 60% of our
portfolio was effectively stable in the second
half of last year.
Looking forward, we expect high demand for
best-in-class space to persist and, as supply
of this space remains limited, this will
continue to drive like-for-like income growth.
Meanwhile, as the interest rate outlook today
appears more balanced than at any point
in the last couple of years, yields and values
for the best assets are starting to stabilise.
Having sold early when values were higher,
“After a period of proactive
asset recycling, we have
meaningful capacity
to reinvest proceeds in
acquiring high-quality
assets at an attractive
point in the cycle.”
MARK ALLAN, CHIEF EXECUTIVE
02
STRATEGIC REPORT
LANDSEC ANNUAL REPORT 2024
03
we now have balance sheet capacity to
invest at an attractive point in time. As a
result, Landsec is well-placed for growth.
CONTINUED STRENGTH IN
OPERATIONAL PERFORMANCE
Our financial results reflect the quality of our
portfolio, the strong operational performance
of our platform and our resilient capital base.
Our FY23 earnings included the benefit of a
£22m increase in surrender premiums, which
we adjusted for in our 50.1 pence underlying
EPRA EPS. Our EPRA EPS last year was stable
vs this underlying level, in line with our
guidance, as the 2.8% growth in like-for-like
income we delivered, and the completion of
our successful developments fully offset the
impact of our significant disposals during the
past two years and a rise in finance costs.
Our dividend for the year is up 2.6% to
39.6 pence per share, again in line with our
guidance, reflecting a healthy dividend cover
of 1.27 times.
During the first half of the year, the marked
rise in interest rates across the globe resulted
in upwards pressure on valuation yields, but
this eased in the second half and throughout
the year the impact of this has been partly
offset by our 3.2% ERV growth. This meant
that our portfolio value was down 6.0%, or
£625m, for the year, driving a £341m loss and
an 8.2% reduction in EPRA NTA per share for
the year. However, the impact of this was
weighted towards the first half, as yields
remained stable in the final quarter and our
total return on equity for the year improved
to -4.0% from -8.3% in the prior year.
HIGHLIGHTS
TABLE 1
Mar 2024
Mar 2023
Change %
EPRA earnings (£m)1,2
371
393
(5.6)
Loss before tax (£m)
(341)
(622)
(45.2)
Total return on equity (%)
(4.0)
(8.3)
(51.8)
Basic loss per share (pence)
(43.0)
(83.6)
(48.6)
EPRA earnings per share (pence)1,2
50.1
53.1
(5.6)
Underlying EPRA earnings per share (pence)1,2
50.1
50.1
–
Dividend per share (pence)
39.6
38.6
2.6
Combined portfolio (£m)1
9,963
10,239
(2.7)
IFRS net assets (£m)
6,447
7,072
(8.8)
EPRA Net Tangible Assets per share (pence)1
859
936
(8.2)
Adjusted net debt (£m)1
3,517
3,287
7.0
Group LTV ratio (%)1
35.0
31.7
10.4
Proportion of portfolio rated EPC A-B (%)
49
36
Average upfront embodied carbon reduction
development pipeline (%)
40
36
Energy intensity reduction vs 2020 (%)
18
17
1. Including our proportionate share of subsidiaries and joint ventures, as explained in the Presentation of financial
information in the Financial Review.
2. FY23 EPRA earnings and EPRA EPS include the benefit of £22m increase in surrender premiums; underlying EPRA EPS
excludes this.
OUR STRATEGY
Since we launched our strategy in late 2020,
our focus has consistently been on our two
key principles of sustainable value creation:
focusing our resources on where we have
a genuine competitive advantage and
maintaining a strong balance sheet. We have
increased our investment in best-in-class
assets where our skillset allows us to enhance
returns and drive long-term growth. This has
supported our like-for-like income growth and
operational outperformance thus far and
should continue to do so in the future. At the
same time, our proactive capital recycling
means that, despite the rise in interest rates
and adjustment in property values, pro-forma
for our recent disposals, our 32.3% LTV and
7.0x net debt/EBITDA are low.
For much of the decade leading up to 2022,
creating value in real estate was often about
leveraging up a spread between rental yields
and ultra-low borrowing costs or picking
high-level sector themes. The significant rise
in cost of capital across the globe has not
only changed the former but also the latter,
as shown by the challenges faced by
low-margin online retail models and the shift
back to physical retail. As such, irrespective
of sector, quality has become a much more
important driver of future performance,
which means it can be misleading to look
at market averages. Indeed, even though
market-wide vacancy is elevated, with
London offices at 8.8%, retail at 15% and
even logistics at 7.8% now, the best assets
in each of these sectors have little vacancy
and so continue to show good rental growth.
The successful execution of our strategy
means we are well placed to benefit from
this. Since late 2020, we have sold around
40 standalone assets, including the 21 hotels
we sold since the year-end. We reinvested
principally in our key places, be it through
development in Victoria, at Piccadilly Lights
and in Southwark, or by buying out JV
partners in our retail destinations at
Bluewater and in Cardiff, such that c. 80%
of our portfolio is now invested in twelve
key locations with significant scarcity value.
We expect each of these unique, multi-let
places to drive superior income returns and
growth over time.
This provides a critical underpin for capital
values. The outlook for interest rates is more
balanced now than it has been for a couple
of years, but we remain of the view that it
is unlikely that rates will come down sharply
from current levels. In what will therefore
likely remain a higher nominal rate
environment, we think yields for assets which
have inherent income growth and therefore
provide a real income stream look attractive,
yet for most assets which lack this growth,
we think the risk to values remains down.
In today’s more normalised rate environment,
we continue to target to deliver a total return
on equity of 8-10% p.a. over time, comprising
a mix of income and capital returns, driven
by rental growth and selective development
upside. Short-term movements in valuation
yields are outside of our control and mean
our return on equity will not be exactly in this
range each individual year, as we have seen
over the past twelve months. However, with
an income return on our March 2024 NTA
of c. 5.7%, an expectation of further rental
growth and yields starting to stabilise, the
outlook for this is encouraging.
As part of this, it is important that we
operate efficiently. We reduced our overhead
costs by 9% during the year and expect
further savings over the next 2-3 years,
driven partly by our investments in data and
technology. Although our EPRA cost ratio has
remained stable at 25%, this solely reflects
the impact of capital allocation decisions:
since late 2020, we have sold £2.2bn of
LANDSEC ANNUAL REPORT 2024
STRATEGIC REPORT
CHIEF EXECUTIVE’S STATEMENT
CONTINUED
mature, low-yielding offices which incurred
minimal operating costs, but equally had
little room to add further value and a
mid-single digit forward IRR, whereas we
acquired more operational assets that
come with higher operating cost, but also
a materially higher net income return and
much higher forward IRR.
As borrowing costs and our cost of capital
have increased, it is also critical we continue
to think carefully about our capital allocation
decisions. Including our £400m of disposals
since the year-end, we have now sold £3.1bn
of assets since late 2020, which means most
of the c. £4bn disposal target we set out at
that time is done. Looking ahead, we have
three principal opportunities to invest in:
acquiring major retail; our Central London
pipeline; and our mixed-use pipeline. We also
have three main sources of funding: our
balance sheet headroom towards a slightly
higher LTV now that rates and values are
starting to stabilise; further capital recycling;
or attracting other, complementary sources
of capital which can enhance our overall
growth, capitalise on our platform value,
and grow our overall return on equity.
In terms of opportunities, the right major
retail destinations offer attractive high single
digit income returns with income now
starting to grow, as seen across our own
portfolio. Alongside our two committed
office developments in London, where the
yield on the overall capex we are investing
is high at c. 12%, this is our key focus for
investment at the moment and where we
plan to apply most of our existing balance
sheet capacity too. Following a period of
limited transaction activity in this sector, we
are now seeing signs of activity levels around
the work-out of broken ownership structures
starting to pick up. Further capital recycling
out of our residual retail parks will add to
our investment capacity in this space and,
overall, this is expected to enhance our
income growth and return on equity.
Given the significant size of our medium-term
London and mixed-use pipelines and our
desire to maintain a sustainable level of
development exposure, it is unlikely that we
will fund all of this on our own balance sheet.
Rents for highly sustainable, best-in-class
space continue to grow and construction
cost inflation has normalised, yet returns on
future commitments will of course have to
compensate for higher cost and higher
exit yields. We continue to optimise costs,
planning consents and delivery programmes
in London and mixed-use to ensure any
future commitments deliver an appropriate
return and risk premium vs the return on
any assets we choose to sell to fund our
investment in these. We will progress the
schemes that deliver this, adjust plans for
others, or sell those where the holding cost
of maintaining optionality does not outweigh
the future upside. Overall, this will enhance
our overall return on equity through
development upside and longer-term rental
growth, reflecting the quality of our pipeline.
CREATING VALUE THROUGH
OUR COMPETITIVE ADVANTAGES
In executing our strategy, we continue to focus
on our three key competitive advantages:
our high quality portfolio; the strength of
our customer relationships; and our ability
to unlock complex opportunities. Customer
demand continues to polarise, as demand
for modern, sustainable space in areas with
exciting amenities in London remains strong,
even though overall leasing across the market
was down during the year. In retail, brands
continue to focus on fewer, but bigger and
better stores in key locations. Supply of both
is constrained, which is driving income and
rental value growth across our assets.
In London, 77% of our portfolio is now
located in the vibrant West End and
Southwark markets, up from 58% in 2020.
Our recently completed schemes are 89%
let or in solicitors’ hands, up from 60%
a year ago, with rents 12% above initial
expectations. Office utilisation is up 18% for
the year and 81% of our lettings over the year
have seen customers grow or keep the same
space. Across our existing portfolio we signed
or are in solicitors’ hands on £35m of leases,
on average 6% above ERV, whilst occupancy
is up 140bps to 97.3%. With 15% uplifts on
relettings/renewals, our offices saw 1.4% LFL
rental income growth and overall ERVs were
up 5.0%, at the top end of our guidance of
low to mid single digit growth.
Across our major retail destinations, we
completed or are in solicitors’ hands on
£37m of lettings, on average 6% above ERV.
Reflecting the marked turnaround of the
best assets in this space, we have started to
capture positive reversionary potential during
the year, with relettings and renewals on
average 2% above previous passing rent,
whilst occupancy increased by a further
130bps to 95.4%. Combined with strong
turnover growth, this meant we delivered
6.9% growth in LFL net rental income.
Valuers’ assumed ERVs continue to trail
operational performance, up 1.4%, albeit
in line with our guided range.
Our strong operational performance is
supplemented by our ability to unlock
complex opportunities, such as in London,
where we completed three projects over
live Underground stations featuring highly
bespoke engineering solutions, combined
creating c. £238m of value, or in mixed-use,
04
STRATEGIC REPORT
LANDSEC ANNUAL REPORT 2024
05
where we secured planning consent for
our 1,800 homes-scheme at Finchley Road,
including detailed consent for the first phase.
This ability is expected to serve us well when it
comes to new opportunities in the year ahead.
DELIVERING SUSTAINABLY
We continue to make progress against our
carbon reduction targets, which are aligned
with the Science Based Targets initiative’s
(SBTi) Net-Zero Standard. Our near-term
target is to reduce our direct and indirect
greenhouse gas emissions by 47% by 2030
from a 2019/20 baseline and to reach net
zero by 2040 from the same baseline year.
So far, emissions have already reduced by
24% vs this baseline. During the year we
updated our target to reduce our energy
intensity by 52% by 2030 from a 2019/20
baseline, to align this with our carbon
reduction target. We are already tracking
an 18% reduction, having achieved an energy
intensity reduction across our portfolio of
3.7% during the year vs the prior year.
To make sure we meet our carbon reduction
target and stay ahead of the proposed
Minimum Energy Efficiency Standard
Regulations requiring a minimum EPC ‘B’
rating by 2030, we have continued to
progress our Net Zero Transition Investment
Plan. 49% of our overall portfolio is already
rated B or higher, up from 36% a year ago.
We have started air source heat pump
retrofits at two sites and expect to start
a further three this year, which will result
in improved EPC ratings from 2025 onwards
when these become operational. We also
continue to focus on reducing upfront
embodied carbon from our development
schemes and improving energy efficiency
across our operational assets, and have
been expanding the work with our largest
customers to help them identify ways to
save energy.
In its first year, our Landsec Futures fund,
which is aimed at improving social mobility
in the real estate industry and will see us
invest £20m over 2023-2033, has already
made a significant contribution to our target
to create £200m in social value and empower
30,000 people towards the world of work by
2030. Since 2019/20, we have now created
£54m of social value and empowered 10,249
people to work.
OUTLOOK
The UK macro outlook has improved over the
past year, with a sharp reduction in inflation
and a return to real wage growth for
consumers, even though economic growth
is expected to remain modest in the short
term. Combined with the more normalised
interest rate environment, this means it has
never been more important to own the very
best assets in the right locations that cater
for customers’ future needs and can therefore
deliver positive like-for-like income growth.
In late 2022, we said that we expected
property values would continue to adjust
for some time after a decade of ultra-low
interest rates. This has proven to be the
case but there are increasingly signs that
this is now coming to an end. The relative
stabilisation of long-term rates is a clear
positive and reflecting the historically
attractive pricing of good quality income in
London and major retail, we are starting to
see interest emerge from investors who have
not been active in these markets for some
time. As such, we expect activity levels to
pick up from here. The refinancing of cheap
debt issued before 2022 remains a challenge
for parts of the sector, yet absent any further
macro shocks, we think the value of high-
quality assets has largely bottomed out
and will start to grow in the foreseeable
future as rents rise.
Against this backdrop, our actions over the
past three years leave us well placed:
• we increased our focus on high-quality
places where customer demand is
demonstrably strong;
• we preserved our balance sheet strength,
providing room to grow at an attractive
time in the cycle;
• we have a built pipeline of attractive
opportunities with flexibility on future
commitments.
As customer demand for the best space
remains robust, we expect our Central
London and major retail assets to again
see ERVs grow by a low to mid single digit
percentage this year. We are now capturing
positive leasing reversion across all main
parts of our portfolio, which delivered 2.8%
growth in like-for-like net rental income
last year, and we expect like-for-like growth
to be similar for the year ahead.
Determining how this continued operational
growth will then translate into EPS growth
will depend on the quantum and timing of
net investment from here, where we remain
disciplined on quality and price. We have
created meaningful balance sheet capacity
through our significant asset disposals
but our recent sales activity does reduce
annualised earnings by c. 4%, all else equal.
This means that, before reflecting the impact
of any reinvestment of these sales proceeds,
EPS for the year to March 2025 would likely
be slightly below the 50.1 pence for 2024.
For March 2026, we currently expect EPS
to be slightly above this level, reflecting the
combined effect of continued like-for-like
income growth and accretive capital
recycling. As a result, we continue to expect
our dividend to grow by a low single digit
percentage this year, as our dividend cover
remains towards the high end of our 1.2-1.3x
target range.
As macro-economic signals look more
encouraging than they have for a while,
with long-term interest rates stabilising
and customer demand for the best assets
remaining robust, the outlook for capital
values of the best assets and, as a result,
our overall return on equity is positive.
With capacity to grow at an attractive point
in time, we are positive about the future.
MARK ALLAN, CHIEF EXECUTIVE
LANDSEC ANNUAL REPORT 2024
STRATEGIC REPORT
MARKET CONTEXT
The Landsec property portfolio is invested in a number of
sectors within the UK. We own high-quality offices in London,
six regional shopping centres, three retail outlet centres and
a portfolio of mixed-use urban development opportunities
in London, Manchester and Glasgow. In all of these markets,
asset quality is key, and the way we shape, curate and sustain
these places has never been more important that it is today.
MARKET AT A GLANCE
CENTRAL LONDON OFFICES
The central London office market is adapting
as businesses and employees establish the
most appropriate ways of working in a
post-pandemic world. Inevitably, flexible
working practices will reduce the overall
demand for office space, but the impact
will be mostly in large HQ buildings and
locations lacking the right amenities.
Demand for the best space has proven to
be resilient as businesses look to provide
a high-quality environment to attract and
retain their talent.
The best office space has the following three
characteristics:
´ A GREAT LOCATION – CLOSE PROXIMITY
TO TRANSPORT HUBS, PARTICULARLY
OVERGROUND TRAIN STATIONS
´ A VIBRANT MIX OF LOCAL AMENITIES
– INCLUDING FOOD, BEVERAGE,
RETAIL AND LEISURE FACILITIES
TOGETHER WITH GREEN SPACE
´ COMPELLING SUSTAINABILITY
CHARACTERISTICS – FROM NET ZERO
CONSTRUCTION TO MINIMISING
OPERATIONAL CARBON EMISSIONS
The quality and location of office buildings
is now critical in driving occupier demand.
Research undertaken by JLL for Landsec in
2024 showed that almost 40% of all vacant
space in central London offices resided in just
1% of buildings and 90% of vacant space was
in 10% of buildings. 86% of central London
offices had no material vacancies at all.
The investment market remained subdued
due to the rapid rise in interest rates.
Transaction volumes in the year to March 24
were just £4.6bn, 64% below the ten-year
average. As a result, prime yields softened by
125bps in the City and 25bps in the West End
and have now increased by 200bps and 75bps
respectively since June 2022. The stark
difference in the strength of the occupational
and investment markets has resulted in an
unprecedented market position – asset values
have seen a material re-pricing (down 25%
since August 2022) but rental values have
continued to grow and have hit record levels
in most of the sub-markets of Central London.
MAJOR RETAIL DESTINATIONS
As consumers continue to shift back from
online to physical sales, the best retail space
in the UK is thriving. There is clear consumer
demand for shopping centres with an
attractive mix of retail, leisure, and
hospitality, but all these elements must
be present for shopping centres to thrive.
And brand partners with omnichannel
strategies are looking for the right space
to support their online businesses.
Despite significant pressures on consumers’
disposable income over the last year, retailer
sales in the best locations have remained
resilient. Retail sales in our portfolio were
up 4.1% and footfall rose by 3.9%. Brand
partners are increasingly focused on ‘fewer,
bigger, better’ stores in the best locations in
order to provide the best customer service
and offer to their customers. As a result,
demand for space in our shopping centres
has been strong and our occupancy levels
are now at pre-Covid levels. This demand has
also benefited rental income: the rental levels
we have achieved in our letting activity this
year have been above both market levels and
the previous passing rent.
Transactions in the shopping centre
investment market remain subdued due
to the higher interest rate environment
affecting most property sectors. However,
shopping centre property values have been
broadly stable. The combination of a high
income return and strong operational
performance make this sector an attractive
investment opportunity.
236m sq ft
OF OFFICE SPACE IN CENTRAL LONDON
8.8%
VACANCY RATE IN CENTRAL
LONDON OFFICES
£4.6bn
OF INVESTMENT TRANSACTIONS
IN CENTRAL LONDON IN YEAR
TO MARCH 2024
25.4%
ONLINE SALES AS A
PERCENTAGE OF ALL RETAIL
SALES (AS AT MARCH 2024)
2023: 7.8%
2023: £7.3bn
2023: 26.1%
06
OUR BUSINESS MODEL
Our business is increasingly focused on
a portfolio of high-quality places with real
scarcity value. Our role is to identify and
then shape, curate and sustain these places
to create value for all our stakeholders.
OUR BUSINESS MODEL
TWO PRINCIPLES OF SUSTAINABLE VALUE CREATION
MAINTAIN
A STRONG
FINANCIAL POSITION
FOCUS RESOURCES
WHERE WE HAVE A TRUE
COMPETITIVE ADVANTAGE
PORTFOLIO OF HIGH QUALITY PLACES
WITH REAL SCARCITY VALUE
Strong
customer
relationships
Ability to
unlock complex
opportunities
Focus on opportunities
to create value while
managing risks
DELIVERING FOR OUR
CUSTOMERS & PARTNERS
Appropriate
leverage
Healthy
liquidity
Flexible pipeline
optionality
Disciplined capital
allocation
ATTRACTIVE INCOME-LED RETURNS
8-10% RETURN ON EQUITY PER ANNUM THROUGH THE CYCLE
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07
STRATEGIC REPORT
LANDSEC ANNUAL REPORT 2024
LANDSEC ANNUAL REPORT 2024
STRATEGIC REPORT
OUR STRATEGY
Landsec focuses on three areas of the UK real
estate market where we can apply our unique
competitive advantages and can maximise
the value from our portfolio and our talent in
shaping and sustaining places: Central London
offices; Major retail destinations; and Mixed-use
urban neighbourhoods.
What binds these three areas together
is the importance of a sense of place
to their enduring success, and to that
of their surrounding areas. We strive to
create, curate, and activate places that
inspire people, generating value for all
our stakeholders.
The environment we operate in has changed
markedly since we launched our strategy
over three years ago, yet our strategy
remains the right one. That strategy is
underpinned by two key principles of
sustainable value creation: focusing
our resources on where we have genuine
competitive advantage and preserving
a strong balance sheet. To achieve this
strategy, we need a clear sense of purpose
and a culture that supports, respects, and
motivates our people. The three – strategy,
purpose, culture – are inextricably linked.
In executing our strategy, we continue to
be led by three things: working sustainably,
meeting the needs of our customers, and
being disciplined with our capital. It is vital
we make healthy, sustainable returns to
enable our business to grow over time.
We are a total-return business, and we
continue to target a return on equity of
8-10% p.a. over time, comprising a mix of
income and capital returns, driven by rental
growth and selective development upside.
Inevitably, short-term valuation movements,
that are outside of our control, may
adversely affect our returns in the short term,
but our current income return on NTA of
c. 5.7% and the prospect of stabilising yields
means the outlook is encouraging.
LANDSEC
STRATEGY
Two key
principles
of sustainable
value creation.
FOCUS ON COMPETITIVE
ADVANTAGE
´ HIGH-QUALITY PORTFOLIO
´ STRONG CUSTOMER
RELATIONSHIPS
´ UNLOCKING COMPLEX
OPPORTUNITIES
PRESERVING BALANCE
SHEET STRENGTH
´ DISCIPLINED CAPITAL
RECYCLING
´ MANAGING LTV
´ PRESERVING OPTIONALITY
1
2
08
09
STRATEGIC REPORT
LANDSEC ANNUAL REPORT 2024
The surge in inflation and interest rates since
early 2022 has had a material impact on
asset values globally, be it for real estate,
equities or bonds. Positively, inflation has
come down markedly from its highs in 2023,
but interest rates are likely to fall more slowly.
Importantly, the strategy we set out in late
2020 was not based on a continuing low-rate
environment, and we have delivered on this
strategy. We have now sold £3.1bn of the
c. £4bn assets we identified for sale. This
enables us to focus this year on investing
in higher-return acquisition opportunities
in major retail and selective development
opportunities within our business.
In London, we will likely balance any potential
opportunities to invest more in our key
clusters with recycling capital out of mature
or standalone assets. We will always apply
our judgement and expertise in assessing
the timing and nature of developments to
ensure we maximise the value from our
capital investments.
Our strategic focus is on sustainable value
creation in three key areas, central London
offices, major retail destinations and mixed-
use urban neighbourhoods. Customer demand
in each area remains resilient, underpinned
by the strength of our customer relationships
and high-quality portfolio.
The built environment accounts for 40% of
carbon emissions globally, so everything we
do needs to have sustainability at its heart.
This year, in line with our updated carbon
reduction targets, we have continued to
execute on our Net Zero Transition
Investment Plan reducing operational
emissions alongside driving down upfront
embodied carbon from our development
pipeline ensuring our actions align with the
latest climate science. To recognise real
estate’s role in, and respond to, the growing
biodiversity crisis and to maintain our
position as a leading sustainable business,
we also launched our first nature strategy.
We also launched our principal community
investment programme, Landsec Futures,
committing to invest £20m over the next
decade to enhance social mobility in our
workplace and wider industry.
At the heart of our philosophy is a belief that
we can only be successful if our customers
are successful. We look to build positive and
lasting relationships with them, to understand
their businesses better, and determine
what we can do better or differently to help
them succeed.
We think constantly and very carefully about
where to invest, focusing in particular on
projected returns and the associated risks.
With visibility and expertise across three
distinct focus areas, we have a unique
perspective on relative risk and returns,
which enables us to be clear and decisive
in our capital allocation decisions.
It has never been more important to own
the very best assets in the right locations
that cater for customers’ future needs.
Our portfolio is built on high-quality places
with real scarcity value. Through the careful
curation and stewardship of these places,
they can deliver positive like-for-like income
growth. In addition, the best quality assets
with rental growth look attractive in a higher
cost of capital world, and we are already
seeing increasing investor interest for assets
with these characteristics. In contrast,
secondary asset values will almost certainly
have further to fall.
CENTRAL LONDON
We create workplaces designed
for life – not just the 9 to 5 –
from a net zero office space
in Southwark to a 2.5m sq ft
cluster of high-quality buildings
in Victoria.
RETAIL
We own and operate some of the UK’s
most renowned retail and hospitality
destinations that connect brands with
people and partners to create brilliant
experiences for customers.
MIXED-USE URBAN
Working closely with communities
and local authorities around the UK,
we regenerate urban spaces into
thriving places to live, work and play.
Creating value for people
through places
LANDSEC ANNUAL REPORT 2024
STRATEGIC REPORT
OUR KPIs
We set KPIs in line with our strategy.
They provide direction for our people,
and offer clear links to remuneration.
As well as the performance measures below,
everyone has personal objectives to achieve
for the year. For our Executive Directors, these
focus on strategic development and execution,
performance, and culture and values.
In addition to the annual bonus KPIs below,
we set KPIs for LTIP awards in line with our
remuneration policy.
FURTHER INFORMATION ON REMUNERATION
ON PAGES 72-82 AND DETAILS OF OUR
PROPOSED NEW REMUNERATION POLICY
ON PAGES 83-91
EPRA EARNINGS
HOW WE MEASURE IT
We set targets for EPRA earnings and LFL EPRA earnings
in line with our five-year strategic plan.
LINK TO REMUNERATION
30% of annual bonus performance is linked to this KPI.
OUR PERFORMANCE IN 2023/24
EPRA earnings of £371m were ahead of the £369m
target. LFL EPRA earnings of £335m were ahead of the
£331m target.
TOTAL RETURN ON EQUITY
HOW WE MEASURE IT
The cash dividends per share paid in the year plus the
change in EPRA net tangible assets (NTA) per share.
LINK TO REMUNERATION
30% of annual bonus performance is linked to this KPI.
OUR PERFORMANCE IN 2023/24
Total return on equity was -4.0%, compared with the
target of +4.7%, as our return from income, ERV growth
and developments was more than offset by outward
movement in valuation yields.
ESG TARGETS
HOW WE MEASURE IT
We have two action-oriented targets: (1) driving energy
intensity reduction across all our assets (four actions);
and (2) driving embodied carbon reduction across our
developments (four actions).
LINK TO REMUNERATION
20% of annual bonus performance is linked to this KPI.
OUR PERFORMANCE IN 2023/24
3/4 actions relating to energy were delivered; 4/4 actions
relating to developments were delivered.
ACHIEVED
ACHIEVED
NOT ACHIEVED
THE MEASURES AND THEIR WEIGHTINGS ARE
EPRA earnings
30%
Total return on equity
30%
ESG targets
20%
Personal targets
20%
10
STRATEGIC REPORT
LANDSEC ANNUAL REPORT 2024
11
OPERATING AND PORTFOLIO REVIEW
Our combined portfolio was valued at £10.0bn
as of March, comprising the following segments:
INVESTMENT ACTIVITY
During the financial year we sold £225m
of assets, including our two smallest retail
outlets, a retail park in Romford, and two
small leisure assets and two mixed-use
development assets in London, on average
at a 1% discount to March 2023 book value.
Since the year-end we have sold our hotel
portfolio for £400m, slightly ahead of the
March 2023 book value. This crystallised
the strong recovery in performance post
Covid yet as the income on this portfolio
was 100% turnover linked on long-term
leases to Accor, there was no opportunity
for us to influence or enhance its future
operational performance.
During the year we made £136m of
acquisitions and spent £220m on development
capex. We acquired an 89,000 sq ft office
in Kings Cross for £90m which we plan to
reposition to Myo for an opening in 2025, with
an expected IRR in the mid-teens. In addition,
we bought a £30m site adjacent to our Timber
Square development for an implied price
of c. £100 per sq ft. This could almost double
the size of the combined site and create a
significant c. 670,000 sq ft estate across four
buildings. We also spent £16m on a small
number of site amalgamation opportunities
adjacent to existing assets. Whilst these
acquisitions do not produce income in the
short term and therefore create a c. £6m
earnings drag in the current year because
of finance costs, they unlock substantial
near-term upside potential at a low in-price.
With the sale of our hotel portfolio, we have
now sold £3.1bn of the c. £4bn assets we said
we intended to sell over a period of c. 6 years
when we launched our updated strategy
in late 2020. We will continue to recycle
capital where assets do not meet our return
requirements or fit our strategic focus, but
this means we are now through the vast
majority of our disposal programme. As such,
our focus for the rest of the year is now
on acquisitions, as we aim to recycle the
proceeds of our hotels disposal into additional
opportunities in major retail. In London and
mixed-use, our own investment in new
development commitments is likely to be
funded principally through future disposals
of mature or standalone assets, alongside
other, complementary sources of capital.
PORTFOLIO VALUATION
The marked increase in interest rates during
the first half of the year meant that
transaction activity across global property
markets has been subdued. As a result,
valuation yields softened so despite the fact
that our successful leasing delivered 3.2%
ERV growth, our portfolio value reduced by
6.0%. The impact of rising rates principally
affected the first half of the year, as yields
remained flat in the final quarter and c. 60%
of our portfolio was effectively stable in value
in the second half.
Our Central London portfolio was down 6.9%
for the year, as upside from 5.0% ERV growth
was offset by a 46bps increase in yields to
5.4%. The value of our West End office
(-3.6%) and retail and other assets (-4.7%),
which make up 77% of our London investment
portfolio following our significant City
disposals over the last three years, again
proved more resilient than City values
(-13.9%). This reflects strong ERV growth,
driven by our successful leasing in Victoria,
which means West End office values were
stable in the second half. Development
values were down 9.9% given the early stage
these projects are in, but we are confident
these will deliver attractive returns once
these are completed and let.
Major retail valuations were virtually stable
for the year, down just 1.1%, following a
minor increase in the second half (+0.2%),
reflecting their high income return and
improving operational performance, with LFL
net income up 6.9%. Valuers’ assumed ERVs
continue to trail operational performance
and leasing, up just 1.4%, but despite this,
major retail again was the best performing
part of our core portfolio with a 7.1% total
return over the year, ahead of Central
London (-2.9%) and mixed-use (-8.9%).
63%
CENTRAL LONDON
Our well-connected,
high-quality office
(84%) and retail and
other commercial
space (16%), located
in the West End (69%),
City (23%) and
Southwark (8%).
18%
MAJOR RETAIL
DESTINATIONS
Our focused
investments in six
shopping centres and
three retail outlets,
which are amongst
the highest selling
locations for retailers
in the UK.
7%
MIXED-USE URBAN
NEIGHBOURHOODS
Our investments in
mixed-use urban
places in London and
a small number of
other major growth
cities, with medium-
term repositioning or
development potential.
12%
SUBSCALE
Assets in sectors
where we have limited
scale or competitive
advantage and which
we therefore plan
to divest over time,
split broadly equally
between retail parks,
leisure and hotels, the
last of which we have
sold since the year-end.
18%
LANDSEC ANNUAL REPORT 2024
STRATEGIC REPORT
OPERATING AND PORTFOLIO REVIEW
CONTINUED
In mixed-use, values were down 14.0%,
mostly driven by outward yield shift at
MediaCity and a softening of yields and
a reduction in income at our three existing
retail assets in Glasgow and London, as these
have so far been managed for short-term
income to maximise flexibility for future
development.
Across our subscale portfolio, the value of
our hotels was up slightly (0.6%), whilst retail
park values were relatively resilient (-1.8%).
The value of our leisure assets was down
8.2% as investor sentiment towards cinemas
remains subdued, even though our largest
leisure customer, Cineworld, successfully
recapitalised during the year and operational
performance and ERV growth remains
positive.
VALUATION ANALYSIS
TABLE 2
Market
value
31 March
2024
£m
(Deficit)/
Surplus
£m
FY
valuation
change
%
H2
valuation
change
%
LFL rental
value
change1
%
Net initial
yield
%
Topped up
net initial
yield
%
Equivalent
yield
%
LFL
equivalent
yield
change
bps
West End offices
3,109
(111)
(3.6)
(0.5)
6.9
4.2
5.5
5.3
37
City offices
1,192
(188)
(13.9)
(4.6)
1.3
3.9
5.4
6.0
78
Retail and other
991
(48)
(4.7)
(3.3)
5.0
4.6
4.8
4.9
30
Developments
926
(102)
(9.9)
(4.1)
n/a
0.0
0.1
5.4
n/a
Total Central London
6,218
(449)
(6.9)
(2.4)
5.0
4.22
5.32
5.4
46
Shopping centres
1,226
1
0.1
–
1.5
8.1
8.7
8.1
23
Outlets
605
(21)
(3.3)
0.5
1.3
6.3
6.5
7.0
17
Total Major retail
1,831
(20)
(1.1)
0.2
1.4
7.5
8.0
7.8
22
London
191
(23)
(10.3)
(8.7)
2.0
4.2
4.2
6.6
22
Major regional cities
510
(93)
(15.3)
(6.6)
(1.2)
6.7
6.7
7.7
106
Total Mixed-use urban3
701
(116)
(14.0)
(7.8)
(0.3)
6.12
6.12
7.3
85
Leisure
423
(35)
(8.2)
(5.5)
1.5
8.7
8.9
8.8
26
Hotels
400
2
0.6
(1.1)
5.7
7.3
7.3
7.2
54
Retail parks
390
(7)
(1.8)
(1.2)
1.4
6.0
6.8
6.8
38
Total Subscale sectors
1,213
(40)
(3.2)
(2.6)
2.7
7.4
7.7
7.6
38
Total Combined Portfolio
9,963
(625)
(6.0)
(2.4)
3.2
5.42
6.22
6.2
45
1. Rental value change excludes units materially altered during the period.
2. Excluding developments/land.
3. Previous Mixed-use urban sub-segments have been changed to a classification based on geographical location, which is better aligned to how these assets are managed internally
and our revised approach to a number of assets.
Looking ahead, we expect that the relative
stability in long-term rates and improvement
in availability and pricing of credit will
support a pick-up in investment activity.
We are seeing investor interest emerge in
London and shopping centres from parties
who have not been active in these markets
for years, but who are now attracted by
historically attractive yields and clear
evidence of rental growth for best-in-class
assets. The refinancing of cheap debt issued
pre-2022 remains a challenge for parts of
the sector, yet the risk of disorderly sales
substantially driving down the value of
high-quality assets seems low. Markets
remain sensitive to rates, yet values for the
best assets have begun to stabilise, even
though secondary likely has further to fall.
Whilst we are principally focused on driving
like-for-like income, we expect ERVs for our
London and major retail assets to grow by
a low to mid single digit percentage this year.
LEASING AND OPERATIONAL
PERFORMANCE
CENTRAL LONDON
Customer demand remains firmly focused
on buildings with the best sustainability
credentials, transport connectivity and local
amenities. The amount of space which meets
these criteria remains limited, so pricing
of this continues to go up, whereas space
which does not meet these criteria is at risk
of becoming obsolete, almost regardless
of price. We continue to see the evidence
of this strong demand across our portfolio,
for example in the new record rents we
achieved in Victoria.
Reflecting the appeal of our buildings and
locations to people, we have seen an
increase in daily turnstile tap-ins of 18%,
significantly ahead of the growth in TFL
public transport data. Across our leasing
deals, we have also seen customers plan for,
on average, c. 30% more square foot per
person than they did before the pandemic in
2019, to create more space for collaboration,
focus work or wellbeing. As such, of our
£40m of office lettings over the past year,
47% saw customers increasing floor space,
whilst only 19% reflected customers
downsizing. This is in line with market data
which shows that only one-fifth of active
tenant requirements is for less space.
We have consistently said that we felt that
large HQ space and areas which lack the
amenities to make people want to spend
time there are most at risk as a result of
more flexible ways of working. Virtually all
of the £2.2bn offices we sold since late 2020
were large, single-let HQ buildings where
our ability to add further value was limited,
whilst we increased our focus on multi-let
clusters in the lively, well-connected West
End and Southbank markets. These now
make up 77% of our London portfolio vs 58%
in 2020.
12
STRATEGIC REPORT
LANDSEC ANNUAL REPORT 2024
13
In a world where demand is concentrated in
the best part of the market, market averages
become rather meaningless. This is illustrated
by the fact that, whereas overall office
vacancy in London is elevated, at 8.8%,
90% of all vacant space sits in 10% of all
buildings and close to 40% of vacant space
sits in just 1% of all offices in London. This
shows vacancy is mostly a building issue, not
a market-wide issue. It also shows offices are
different than retail 5+ years ago, as in retail
even the best locations saw vacancy rise
and, as a result, rents fall, whereas in offices
Grade A availability remains low, so rents
continue to rise.
Even though take-up across the overall
London market slowed, demand for space
across our standing portfolio remained
resilient. We signed lettings during the year
totalling £30m of rent, on average 5% above
valuers’ assumptions, with a further £5m in
solicitors’ hands, 9% above valuers’ estimates.
Overall, relettings and renewals reflected
a 15% uplift vs previous passing rent and
occupancy increased 140bps to 97.3% –
substantially outperforming the Central
London market, where occupancy fell by
100bps. Our two existing Myo locations saw
average occupancy for the year rise to 93%,
up from 86%.
MAJOR RETAIL DESTINATIONS
We have continued to see a further shift
back from online to physical sales, with
negative online non-food sales growth for
the last two years. The exact split between
online and offline is becoming less of a factor
for the best locations as for most major
brands online and physical channels are
firmly interconnected. The increase in cost
of capital and cost of doing business online
is keeping pressure on low-margin online
sales. This principally affects pure-play online
models, which in response have shifted their
focus to improving profitability rather than
growing market share, increasing the cost for
consumers to buy online.
Reflecting this, we continue to see growing
demand from brands for physical space in the
best locations. There is a clear focus on ‘fewer,
bigger, better’ stores, as leading brands
such as Inditex and H&M have announced
significant investments in their best stores,
even though they often continue to close the
tail ends of their portfolio. Supported by the
fact that for many key brands, including JD,
Zara, Boots and Next sales growth in our
centres is outperforming their overall sales
growth, this explains the strong demand for
our space. Across our portfolio, total sales
grew 4.1% and like-for-like sales were up 1.5%.
Footfall increased 3.9% and is now at c. 93%
of pre-pandemic levels.
On the back of this, we delivered 6.9%
like-for-like income growth and a 130bps
increase in occupancy to 95.4% – effectively
back to pre-pandemic levels. As a result,
we are seeing improved pricing tension and
selective competition for space. A year ago
we said we expected the last large over-
rented leases to reset during the year, which
has happened. Despite this, for the first time
in years we have started capturing positive
uplifts on renewals and relettings. This was
still modest at 1% for the year, but is up to
6% for deals in solicitors’ hands. In total, we
completed 219 lettings totalling £27m of rent,
on average 5% ahead of ERV, with a further
£10m in solicitors’ hands, 7% above ERV.
MIXED-USE URBAN
NEIGHBOURHOODS & SUBSCALE
SECTORS
In mixed-use, the increase in vacancy
partly reflects the fact that we have so far
managed part of the existing income for
maximum development flexibility. We expect
this to reverse with our revised approach
to these assets, which involves retaining more
of the existing built stock to reduce embodied
carbon and build on the existing income,
rather than working towards a wholesale
redevelopment in one go. The operational
performance of our retail parks and leisure
remains strong, with £7m of lettings on
average 5% ahead of valuers’ assumptions
plus a further £3m in solicitors’ hands at a 3%
premium, whilst occupancy was up 30bps to
98.0%. We agreed a restructure of a number
of leases with Cineworld following its
recapitalisation during the first half resulting
in an annual rent reduction of less than £1m,
but all our units continue to trade. Our hotels,
which are fully let to Accor, saw occupancy
rise from 94% to 98% of pre-Covid levels,
driving an increase in RevPAR, which
supported our disposal post the year-end.
DEVELOPMENT PIPELINE
CENTRAL LONDON
We continue to see good demand for the
high-quality space we develop. During the
year, we completed our n2 development in
Victoria and Lucent behind Piccadilly Lights,
both of which were effectively fully let within
four months post completion, with rents on
average 14% ahead of initial assumptions.
At The Forge in Southwark, Myo opened in
the Phosphor building just before Christmas,
whilst the Bronze building is 42% let or in
solicitors’ hands. We also completed the
development of 21 Moorfields, which we sold
in September 2022 for £809m, crystallising
a 25% profit on cost.
Aside from The Forge, we also opened two
Myo locations at One New Change and New
Street Square just before Christmas and in
February, combined making up 138,000 sq ft,
so all three of these are currently in lease-up.
OPERATIONAL PERFORMANCE ANALYSIS
TABLE 3
Annualised
rental
income
£m
Net
estimated
rental value
£m
EPRA
occupancy1
%
LFL
occupancy
change1
ppt
WAULT1
Years
West End offices
160
186
99.6
0.1
6.5
City offices
70
93
93.7
3.2
7.8
Retail and other
43
55
97.2
1.9
5.7
Developments
8
93
n/a
n/a
n/a
Total Central London
281
427
97.3
1.4
6.8
Shopping centres
121
122
95.1
1.0
4.3
Outlets
48
49
96.0
2.0
3.0
Total Major retail
169
171
95.4
1.3
3.9
London
11
16
90.2
(3.5)
9.0
Major regional cities
37
38
93.5
(4.1)
6.8
Total Mixed-use urban2
48
54
92.6
(4.0)
7.2
Leisure
46
42
96.9
1.6
10.2
Hotels
35
29
n/a
n/a
7.1
Retail parks
27
29
97.5
(1.1)
5.9
Total Subscale sectors
108
100
98.0
0.3
8.0
Total Combined Portfolio
606
752
96.5
0.8
6.2
1. Excluding developments.
2. Previous Mixed-use urban sub-segments have been changed to a classification based on geographical location,
which is better aligned to how these assets are managed internally and our revised approach to a number of assets.
LANDSEC ANNUAL REPORT 2024
STRATEGIC REPORT
OPERATING AND PORTFOLIO REVIEW
CONTINUED
We are opening a new Myo at Lucent shortly
and plan to open a seventh location in Kings
Cross in 2025, which will bring our total Myo
space to c. 300,000 sq ft. Rents are broadly
in line with our underwriting assumptions,
representing net margins of c. 20% over
standard office space.
Whilst the sharp increase in interest rates over
the past two years has naturally impacted
property values, the flipside is that it is
limiting new supply. Compared to a year ago,
total space under construction has increased
from 12m to 13m sq ft yet 42% of this is
already pre-let. This means that speculative
office space under construction which is
expected to complete over 2024-26 is roughly
half of the long-term average new-build
office take-up in London. As demand remains
focused on the best, most sustainable space,
we expect this will drive further rental growth
for the best quality assets.
As such, during the year we started
the major refurbishment of Thirty High
(formerly Portland House) in Victoria and the
development of Timber Square in Southwark.
Reflecting our positive outlook for rental
values, we expect these to deliver a gross
yield on cost of 7.2% and be highly earnings
accretive, with an expected ERV of £59m
once fully let vs £434m residual cost to
complete.
COMMITTED PIPELINE
TABLE 4
Property
Sector
Size
sq ft
‘000
Estimated
completion
date
Net income/
ERV
£m
Market
value
£m
Costs to
complete
£m
TDC
£m
Gross yield
on TDC
%
Thirty High, SW1
Office
299
Aug-25
30
238
183
412
7.3%
Timber Square, SE1
Office
381
Dec-25
29
137
251
411
7.1%
Total
680
59
375
434
823
7.2%
FUTURE CENTRAL LONDON DEVELOPMENT PIPELINE
TABLE 5
Property
Sector
Proposed
sq ft
‘000
Indicative
TDC
£m
Indicative
ERV
£m
Gross yield
on TDC
%
Potential
start
date
Planning status
Near-term
Red Lion Court, SE1
Office
250
335
24
7.2
H2 2024
Consented
Liberty of Southwark, SE1
Office/residential
225
260
17
7.41
H1 2025
Consented
Total near-term
475
595
41
7.3
Medium-term
Old Broad Street, EC2
Office
285
2025
Consented
Hill House, EC4
Office
380
2026
Consented
Nova Place, SW1
Office
60
2025
Design
Southwark Bridge Road, SE1
Office
150
2025
Design
Timber Square Phase 2, SE1
Office
290
2026
Design
Total medium-term
1,165
Total future pipeline
1,640
1. Gross yield on cost adjusted for residential TDC.
In terms of future pipeline, we have started
the deconstruction of the existing building at
Red Lion Court to prepare this for a potential
start late this year. We also secured planning
consents for the development of 55 Old Broad
Street and Hill House, at our New Street
Square estate, and a significant increase
in scale of our planning consent at Liberty
of Southwark. Combined, this brings our
consented pipeline to 1.1m sq ft. We also
acquired a site adjacent to Timber Square for
a low implied land value of c. £100 per sq ft,
which unlocks the opportunity to create
a significant c. 670,000 sq ft estate across
two phases, with significant public realm
incorporating the site’s historic Victorian
railway arches.
MIXED-USE URBAN
NEIGHBOURHOODS
Landsec has a long history of creating
thriving urban places, such as in Victoria,
Oxford, Leeds or Cardiff. These places are
scarce and their enduring attraction
underpins their longer-term growth, even
though the exact mix of uses of space differs
by location. As consumer expectations on
how we live, work and spend our leisure time
continue to change, we have a number of
opportunities in some of the fastest growing
areas in the UK to create and curate the next
generation of such places.
At Finchley Road, in zone two London,
we received unconditional planning consent
for our 1,800 homes masterplan including
detailed consent for the first 600 homes
during the year. We have started offsite
utility upgrades with site preparatory and
enabling works to follow in autumn this year.
We anticipate spending c. £10m on these
works over the next 18 months. This will put
us in a position where we can commit to the
development of the first 600 homes by late
2025. The investment for this would be
roughly £300m, with a target IRR in the low
double-digits. At the same time, we will look
to rebuild the income in the existing retail
asset ahead of its potential longer-term
redevelopment.
14
STRATEGIC REPORT
LANDSEC ANNUAL REPORT 2024
15
At Mayfield, adjacent to Manchester’s main
train station, we have been working with our
JV partners on optimising the development
strategy for this site. Building on the
successful place we have created with the
new 6-acre park, we have the option to start
the first c. £140m office block late this year,
which would then also unlock the future
residential phases of this new mixed-use
neighbourhood.
At Lewisham, south-east London, and
Glasgow we are evolving our plans to focus
more on masterplans that can be delivered
in discrete incremental phases. Alongside
this we will seek to embrace opportunities to
retain and reinvent existing buildings in our
ambition to reduce embodied carbon. This
new approach will improve overall returns by
retaining more of the existing income and
growing this, alongside discrete development
interventions. We are still finalising our plans,
but this will likely result in less embodied
carbon, lower risk and less capital intensive
routes to realising the potential of these
mixed-use estates.
Rents for the highly sustainable, best-in-class
space we can deliver in London and across
our mixed-use pipeline continue to grow and
construction cost inflation has normalised,
although returns on any future commitments
will need to compensate for higher costs and
higher exit yields. We will therefore continue
to optimise designs, planning and delivery
programmes to ensure our future
developments deliver an attractive return
and sufficient risk premium vs the return
on assets we sell to fund our investment in
these. The significant size of our medium-
term London and mixed-use pipelines means
it is unlikely that we will fund all of this on
our own balance sheet, so we will explore
opportunities to access other, complementary
sources of capital to help accelerate the
delivery of these opportunities.
DELIVERING IN A SUSTAINABLE WAY
Aligned to the Science Based Targets
initiative’s (SBTi) new Net-Zero Standard, we
have committed to a target to reduce direct
and indirect greenhouse gas emissions by
47% by 2030 vs a 2019/20 base year and to
reach net zero by 2040 from the same base
year. This includes emissions from all sources,
including all of our reported Scope 3 emissions
such as the emissions from our development
pipeline, supply chain and customers. So far,
our emissions have already reduced by 24%
compared to this baseline. To align with our
revised carbon reduction target, we have
updated our energy intensity target to reduce
energy intensity by 52% by 2030 from a
2019/20 baseline. We are currently tracking
an 18% reduction, having achieved an energy
intensity reduction across our portfolio of
3.7% vs the prior year.
We continue to progress our Net Zero
Transition Investment Plan, which will ensure
we deliver our near-term science-based
target and meet the proposed Minimum
Energy Efficiency Standard of EPC ‘B’ by
2030. The expected cost to deliver this plan
is already reflected in our current portfolio
valuation. 49% of our portfolio is already
rated ‘B’ or higher, including 44% of our
office portfolio, up from 36% a year ago.
We expect this to increase from 2025
onwards, as the benefits from our net zero
investments come through.
We have now started the retrofit of air
source heat pumps at two office locations.
We expect to start a further three retrofit
projects in the current year and are
progressing detailed designs for another one.
During the year, we have expanded the
work with our customers on energy audits
from 25 to 38 of our largest customers.
These cover 56% of the energy used by our
customers in our office portfolio and so far
this work has identified potential annual
carbon and energy savings of 10-40% for
the majority of customers.
With respect to our target to reduce
upfront embodied carbon by 50% vs a
typical development by 2030, to below
500kgCO2e/sqm for offices and
400kgCO2e/sqm for residential, our future
pipeline is currently tracking at an average
40% reduction. The two schemes we started
this year are already close to, or ahead of our
2030 reduction target. At Timber Square, we
achieved a reduction to 522kgCO2e/sqm due
to retention of part of the existing structure,
a highly optimised design and the use of low
carbon cross laminated timber, whilst at
Thirty High, retaining the original structure
and upgrading the existing façade resulted
in an upfront embodied carbon intensity of
just 347kgCO2e/sqm.
In March, we launched our new nature
strategy, Let Nature In, which recognises
the interdependency between the climate
and biodiversity crises and aims to
consistently enhance nature across our
portfolio to improve biodiversity in the built
environment; promote health, wellbeing,
and community engagement; and create
nature-based solutions to mitigate and
adapt to climate change.
Our Landsec Futures fund, which will see
us invest £20m over 2023-2033, aimed at
improving social mobility in real estate and
tackling issues local to our assets, continues
to support the delivery of our 2030 target to
create £200m of social value and empower
30,000 people towards the world of work.
From our 2019/20 baseline, we have so far
created £54m of social value and empowered
10,249 people.
MIXED-USE URBAN NEIGHBOURHOODS PIPELINE
TABLE 6
Property
Landsec
share
%
Proposed
sq ft
‘000
Earliest
start
on site
Number
of blocks
Estimated first/
total scheme
completion
Indicative
TDC
£m
Target yield
on cost
%
Planning status
Near-term
Mayfield, Manchester
50-100
2,500
2024
18
2027/2034
800-950
7-8
Consented
Finchley Road, NW3
100
1,400
2025
10
2028/2035
950-1,050
6-7
Consented
Medium-term
MediaCity, Greater Manchester
75
2026
Consented
Buchanan Galleries, Glasgow
100
2026
Design
Lewisham, SE13
100
2026
Design
LANDSEC ANNUAL REPORT 2024
STRATEGIC REPORT
FINANCIAL REVIEW
HIGHLIGHTS
£371m
EPRA earnings1
(2023: £393m2)
£(341)m
(Loss)/profit before tax
(2023: £(622)m)
50.1p
EPRA earnings
per share1
(2023: 53.1p3)
(43.0)p
Basic (loss)/earnings
per share
(2023: (83.6)p)
£9,963m
Combined portfolio1
(2023: £10,239m)
£6,447m
IFRS net assets
(2023: £7,072m)
(4.0)%
Total return on equity1
(2023: (8.3)%)
39.6p
Dividend per share
(2023: 38.6p)
35.0%
Group LTV ratio1
(2023: 31.7%)
£3,517m
Adjusted net debt1
(2023: £3,287m)
859p
EPRA Net Tangible
Assets per share1
(2023: 936p)
1. Including our proportionate share of subsidiaries
and joint ventures, as explained in the Presentation
of financial information in the Financial Review.
2. Underlying EPRA earnings of £371m, excluding
£22m year-on-year increase in surrender premiums.
3. Underlying EPRA EPS of 50.1p, excluding £22m
year-on-year increase in surrender premiums.
PRESENTATION OF FINANCIAL
INFORMATION
The condensed consolidated preliminary
financial information is prepared under
UK adopted international accounting
standards (IFRSs and IFRICs) where
the Group’s interests in joint ventures
are shown collectively in the income
statement and balance sheet, and all
subsidiaries are consolidated at 100%.
Internally, management reviews the
Group’s results on a basis that adjusts
for these forms of ownership to present
a proportionate share. The Combined
Portfolio, with assets totalling £10.0bn, is
an example of this approach, reflecting
our economic interest in our properties
regardless of our ownership structure.
Our key measure of underlying earnings
performance is EPRA earnings, which
represents the underlying financial
performance of the Group’s property
rental business, which is our core
operating activity. A full definition of
EPRA earnings is given in the Glossary.
This measure is based on the Best
Practices Recommendations of the
European Public Real Estate Association
(EPRA) which are metrics widely used
across the industry to aid comparability
and includes our proportionate share of
joint ventures’ earnings. Similarly, EPRA
Net Tangible Assets per share is our
primary measure of net asset value.
Measures presented on a proportionate
basis are alternative performance
measures as they are not defined
under IFRS. This presentation provides
additional information to stakeholders
on the activities and performance of
the Group, as it aggregates the results
of all the Group’s property interests
which under IFRS are required to be
presented across a number of line items
in the statutory financial statements.
For further details see table 57 in the
Business analysis section.
OVERVIEW
External market conditions improved as
the year progressed. The relative stability
in interest rates of late, after the significant
rise in the first half of the year, material
reduction in inflation and return to real wage
growth for consumers are all supportive
for the outlook. Even though we do not
anticipate a sharp reduction in rates, our
high-quality portfolio, strong operational
performance and robust capital base provide
an attractive base for future growth.
Reflecting the continued strength in
customer demand, like-for-like gross rental
income was up 3.0%, or 2.8% on a net rental
income basis, driven by a further increase in
occupancy, positive uplifts on relettings and
renewals, and growth in turnover income.
Combined with a reduction in overhead
costs, this offset the impact of higher
finance costs and disposals. As a result,
our EPRA earnings were in line with the prior
year’s underlying level of £371m and, in line
with our guidance, EPRA EPS was stable
at 50.1 pence. Our total dividend for the
year of 39.6 pence is up 2.6%, in line with
our guidance of low single digit percentage
growth. Our dividend cover of 1.27x remains
comfortably within our target range of
1.2-1.3x on an annual basis.
Our successful leasing activity increased
overall occupancy and drove 3.2% growth
in ERVs but as investment volumes across
the wider market remained subdued, the
valuation of our portfolio was down £625m,
or 6.0%. This was driven by an increase in
valuation yields in the first half of the year
in particular, as c. 60% of our portfolio was
stable in value in the second half. This yield
movement primarily drove an overall IFRS loss
before tax of £341m and basic EPS of -43.0
pence, compared with a loss of £622m for
the prior year, and a reduction in EPRA NTA
per share of 8.2% to 859 pence. Including
dividends paid, our total return on equity
was -4.0%, reflecting a 5.3% income return
and 4.2% upside from ERV growth and
developments, offset by -13.5% on account
of yield shift.
Our balance sheet remains strong and
comfortably within our operating guidelines.
Net debt increased slightly by £0.2bn to
£3.5bn during the year, which combined
with the valuation movement of our portfolio
resulted in an LTV of 35.0% at the end of
16
STRATEGIC REPORT
LANDSEC ANNUAL REPORT 2024
17
March. More importantly, at a time when
investment activity is low and the approach
to valuations varies widely in different
markets, as a cash measure, our net debt/
EBITDA at the year-end remained low at 7.4x
vs 7.0x a year ago, in line with our target to
keep this below 8x. Moreover, pro-forma for
our £0.4bn of disposals since the year-end,
our net debt/EBITDA is down to 7.0x whilst
our 32.3% LTV is lower than it was in March
2022, before the correction in values, and net
debt is £1.1bn down since then. Combined
with our average debt maturity of 9.5 years
and £1.9bn of cash and undrawn facilities,
this provides substantial capacity to invest
in growth.
INCOME STATEMENT
Our strong leasing performance continues
to underpin the growth of our high-quality
income. Our proactive disposals over the
past two years have created room for future
growth, even though this came at a modest
cost to income during the year. Finance costs
increased due to a rise in interest rates and
lower capitalised interest following our recent
development completions, but this has
been offset by our positive like-for-like
income growth, income from our
successful developments and a reduction
in administrative expenses.
Headline EPRA earnings in the prior year
benefited from a £22m year-on-year increase
in surrender premiums received, which we
adjusted for in the underlying earnings we
reported a year ago. As such, EPRA earnings
of £371m are in line with the prior year’s
underlying level.
INCOME STATEMENT1
TABLE 7
Year ended 31 March 2024
Year ended 31 March 2023
Central
London
£m
Major
retail
£m
Mixed-
use
urban
£m
Subscale
sectors
£m
Total
£m
Central
London
£m
Major
retail
£m
Mixed-
use
urban
£m
Subscale
sectors
£m
Total
£m
Change
£m
Gross rental income2
291
181
57
112
641
310
171
57
109
647
(6)
Net service charge expense
(4)
(7)
(3)
(2)
(16)
(1)
(8)
(2)
(1)
(12)
(4)
Net direct property expenditure
(24)
(23)
(12)
(16)
(75)
(20)
(31)
(10)
(13)
(74)
(1)
Segment net rental income
263
151
42
94
550
289
132
45
95
561
(11)
Net administrative expenses
(77)
(84)
7
EPRA earnings before interest
473
477
(4)
Net finance expense
(102)
(84)
(18)
EPRA earnings
371
3933
(22)
Capital/other items
Valuation deficit
(625)
(848)
223
Loss on changes in finance leases
–
(6)
6
Loss on disposals
(16)
(144)
128
Impairment charges
(12)
(24)
12
Fair value movement on interest rate swaps
(17)
22
(39)
Other
(20)
(12)
(8)
Loss before tax attributable to shareholders
of the parent
(319)
(619)
300
Non-controlling interests
(22)
(3)
(19)
Loss before tax
(341)
(622)
281
1. Including our proportionate share of subsidiaries and joint ventures, as explained in the Presentation of financial information above.
2. Includes finance lease interest, after rents payable.
3. Underlying EPRA earnings of £371m excluding £22m year-on-year increase in surrender premiums.
NET RENTAL INCOME
Reported gross rental income was down
£6m to £641m, but up £16m adjusted for the
aforementioned £22m year-on-year increase
in surrender premiums in the prior year and
up 3.0% on a like-for-like basis excluding the
impact of these movements. Surrender
premiums over the last twelve months were
£2m higher than the underlying level over the
previous two years, at £18m, part of which
relates to income foregone during the year.
We expect surrender receipts going forward
to be lower than the levels in recent years, as
a result of lower levels of customer rightsizing
or repurposing activity across our portfolio.
Net rental income was up £11m on an
underlying basis. Direct property costs
increased by £1m and net service charge
expenses were up £4m, primarily driven by
the costs associated with the initial lease-up
phase of our recent London office
developments. The impact from the
repurposing of conventional office space
to introduce two Myos reduced net rental
income by £2m, but given the c. 20%
premium on Myo rent we achieve, we expect
this to more than reverse as we lease up
this space. Investment activity reduced
income by £9m, reflecting our significant
deleveraging. On a like-for-like basis, our
net rental income was up £13m, or 2.8%.
Reflecting continued demand for our space,
we expect like-for-like growth for the current
year to be broadly similar.
In line with our guidance, our gross to net
margin for the year reduced slightly to 85.8%
from 86.7% in the prior year due to the
start-up costs of opening three new Myo
locations and our completed developments.
The sale of our hotel portfolio will reduce
our overall margin but on a like-for-like
basis we expect our gross to net margin
to improve so we expect our overall margin
to be broadly stable this year. Overall,
insolvencies remain low, with rent from
customers in administration at 0.4%, in line
with the prior year.
LANDSEC ANNUAL REPORT 2024
STRATEGIC REPORT
FINANCIAL REVIEW
CONTINUED
NET RENTAL INCOME1 (£m)
CHART 8
Net rental income for the
year ended 31 March 2024
Net rental income for the
year ended 31 March 2023
Increase in variable and
turnover-based rents
Acquisitions since
1 April 20222
Disposals since
1 April 20222
Like-for-like net service
charge expense
Like-for-like net direct
property expenditure
Decrease in surrender
premiums received
Gross rental income
like-for-like movement
in the period2
Other movements
Developments2
561
8
8
0
(3)
(20)
5
12
(21)
550
600
550
500
450
400
350
300
1. Including our proportionate share of subsidiaries and joint ventures, as explained in the Presentation of financial information above.
2. Gross rental income on a like-for-like basis and the impact of developments, acquisitions and disposals exclude surrender premiums received.
NET ADMINISTRATIVE EXPENSES
Net administrative expenses were down
£7m to £77m, as the cost savings from the
organisational review we undertook in late
2022 and our continued focus on ensuring
our cost base is efficient more than offset
inflation. For the current year, we expect
continued efficiency improvements to offset
inflation and we anticipate further savings
from our investments in data and technology
over time.
Our EPRA cost ratio was virtually stable
at 25.0% vs 25.2% in the prior year, which
reflects our capital allocation decisions.
Naturally, assets with long leases to a single
tenant often have lower operating costs than
more operational sectors such as flexible
office, shopping centres, or for example
residential, yet this does not mean they
generate a better overall return. Illustrating
this, over the last three years we have sold
£2.2bn of virtually triple-net offices with a
17-year lease term where our ability to add
further value was limited and which had an
expected mid-single digit forward IRR. We
invested in more operational assets with a
higher net income yield and much higher IRR,
which clearly improved our overall returns,
even though the combined impact of
this increased our EPRA cost ratio by
almost 3ppt.
NET FINANCE EXPENSES
Net interest costs increased by £18m to
£102m, which reflected an increase in our
weighted average cost of debt and a
reduction in capitalised interest following
the completion of our recent London
developments, partly offset by our
deleveraging through disposals. All else
equal, we expect net interest costs for this
year to be up slightly, as the reduction in
debt following our recent disposals is offset
by an increase in average borrowing costs
reflecting our recent £300m bond issue and
the higher average floating rate compared
to last year, with 94% of our debt fixed or
hedged at the end of March.
Non-cash finance income, which includes
the fair value movements on derivatives,
caps and hedging and which is not included
in EPRA earnings, decreased from a net
income of £23m during the prior year to a
net expense of £24m. This is predominantly
due to the fair value movements of our
interest-rate swaps as a result of the increase
in interest rates over the period.
VALUATION OF INVESTMENT
PROPERTIES
The independent external valuation of our
Combined Portfolio showed a reduction in
value of £625m. Our strong leasing activity
resulted in 3.2% ERV growth, yet the upside
of this was more than offset by a 45bps
increase in valuation yields driven by the
sharp increase in bond yields during the first
half of the year. This upwards pressure on
yields reduced during the second half, as our
valuers indicated yields were broadly stable
in the final quarter of the year.
IFRS LOSS AFTER TAX
Substantially all our activity during the year
was covered by UK REIT legislation, which
means our tax charge for the period
remained minimal. The IFRS loss after tax
primarily as a result of the above fair value
adjustment of our investment portfolio
moderated to £341m, compared to £622m
for the prior year.
18
STRATEGIC REPORT
LANDSEC ANNUAL REPORT 2024
19
NET ASSETS AND RETURN ON EQUITY
Our total return on equity for the year was
-4.0%, compared with -8.3% for the prior
year. Our income return on NTA is an
attractive 5.3%, whilst ERV growth and
development upside drove a capital return
of 4.2%. The combination of these two
factors therefore yielded a return of 9.5%,
with the remaining negative impact driven
by an increase in valuations yields. As yields
for the best assets begin to stabilise, this
shows we are inherently well placed to
deliver the 8-10% return on equity we target
over time.
After the £291m of dividends paid, EPRA Net
Tangible Assets, which reflects the value of
our Combined Portfolio less adjusted net
debt, reduced to £6,398m, or 859 pence
per share. This represents an 8.2% reduction
versus the prior year, half of which was made
up for by dividends.
BALANCE SHEET1
TABLE 9
31 March
2024
£m
31 March
2023
£m
Combined Portfolio
9,963
10,239
Adjusted net debt
(3,517)
(3,287)
Other net assets
(48)
15
EPRA Net Tangible Assets
6,398
6,967
Shortfall of fair value over net investment in finance leases book value
5
6
Other intangible asset
2
2
Excess of fair value over trading properties book value
(25)
(12)
Fair value of interest-rate swaps
22
42
Net assets, excluding amounts due to non-controlling interests
6,402
7,005
Net assets per share
863p
945p
EPRA Net Tangible Assets per share (diluted)
859p
936p
1. Including our proportionate share of subsidiaries and joint ventures, as explained in the Presentation of financial information above.
MOVEMENT IN EPRA NET TANGIBLE ASSETS1 (£m)
CHART 10
Like-for-like
valuation movement
Development
valuation movement
Impact of
acquisitions/disposals
EPRA Net Tangible Assets
at 31 March 2024
EPRA Net Tangible Assets
at 31 March 2023
EPRA earnings
Dividends
Loss on disposals
Other
Total valuation deficit £625m
6,967
371
(460)
(102)
(63)
(291)
(16)
6,398
(8)
8,000
7,000
6,000
5,000
4,000
936
50
(62)
(14)
(8)
(39)
(3)
(1)
859
Diluted per share (pence)
1. Including our proportionate share of subsidiaries and joint ventures, as explained in the Presentation of financial information above.
LANDSEC ANNUAL REPORT 2024
STRATEGIC REPORT
FINANCIAL REVIEW
CONTINUED
NET DEBT AND LEVERAGE
Adjusted net debt, which includes our share
of JV borrowings, increased by £230m to
£3,517m during the year. We spent £137m on
acquisitions and invested £328m in capex,
largely on London office developments,
the preparation of future developments and
the investment in our existing assets. This
was partly offset by the sale of investment
properties generating receipts of £176m
during the period.
Since the year-end we have sold £400m
of assets, which would reduce adjusted
net debt to £3,117m on a pro-forma basis.
Following the completion of our recent
London pipeline, we have £399m committed
capex to spend over the next two years
on our two new projects in Victoria and
Southbank.
The other key elements behind the decrease
in net debt are set out in our statement
of cash flows and note 13 to the financial
statements, with the main movements
in adjusted net debt shown below.
A reconciliation between net debt and
adjusted net debt is shown in note 21
of the financial statements.
MOVEMENT IN ADJUSTED NET DEBT1 (£m)
CHART 11
Adjusted net debt
at 31 March 2024
Adjusted net debt
at 31 March 2023
Adjusted net cash inflow
from operating activities
Dividends paid
Capital expenditure
Acquisitions
Disposals
Other
3,287
(353)
291
328
137
(176)
3
3,517
4,000
3,500
3,000
2,500
2,000
1. Including our proportionate share of subsidiaries and joint ventures, as explained in the Presentation of financial information above.
Due to the modest increase in borrowings,
net debt/EBITDA increased slightly to 7.4x
based on our net debt at the end of March
2024, or 7.3x based on our weighted-average
net debt for the period. We target net debt/
EBITDA to remain below 8x over time. Group
LTV which includes our share of JVs,
increased from 31.7% to 35.0%. This reduces
to 32.3% pro-forma for the hotels disposal
post the year-end, which is 2.1ppt lower than
it was in March 2022, before the sharp rise
in interest rates and resulting correction
in property values. We expect our LTV to
increase slightly from this level as we will look
to invest at an attractive point in the cycle,
but to remain within our target range of
25% to 40%.
NET DEBT AND LEVERAGE
TABLE 12
31 March
2024
31 March
2023
Net debt
£3,594m
£3,348m
Adjusted net debt1
£3,517m
£3,287m
Interest cover ratio
3.9x
4.5x
Net debt/EBITDA (period-end)
7.4x
7.0x
Net debt/EBITDA (weighted average)
7.3x
8.0x
Group LTV1
35.0%
31.7%
Security Group LTV
37.0%
33.0%
1. Including our proportionate share of subsidiaries and joint ventures, as explained in the Presentation of financial
information above.
20
STRATEGIC REPORT
LANDSEC ANNUAL REPORT 2024
21
FINANCING
Our gross borrowings of £3,703m are
diversified across various sources, including
£2,607m of Medium Term Notes (MTNs),
£415m of syndicated and bilateral bank loans
and £681m of commercial paper. Our MTNs
and the majority of bank loans form part of
our Security Group, which provides security
on a floating pool of assets valued at £9.2bn.
This structure provides flexibility to include
or exclude assets, and an attractive cost of
funding, with our MTNs currently rated AA
and AA- with a stable outlook respectively
by S&P and Fitch.
Our Security Group has a number of tiered
covenants, yet below 65% LTV and above
1.45x ICR, these involve very limited
operational restrictions. A default only
occurs when LTV is more than 100% or the
ICR falls below 1.0x. Our portfolio could
withstand a c. 43% fall in value before we
reach the 65% LTV threshold and c. 63%
before reaching 100% LTV, whilst our EBITDA
could fall by c. 63% before we reach the
1.45x ICR threshold and c. 74% before
reaching 1.0x ICR.
We had £1.9bn of cash and undrawn
facilities at the end of March 2024, providing
substantial flexibility. As expected, the
percentage of borrowings which is fixed or
hedged reduced slightly to 94%, reflecting
our net investment in the year. Across the
year we redeemed £427m of MTNs on their
expected maturity dates. In March, we issued
a £300m bond with a maturity of 7.5 years
at 4.75%, representing a spread of 103bps
over the reference gilt rate. This spread shows
the strength of our credit profile, and ensured
our overall debt maturity remains long,
at 9.5 years, providing clear visibility and
underpinning the resilience of our attractive
earnings profile. Our average cost of debt
rose to 3.3% compared with 2.7% in the prior
year. Reflecting our strong financial position,
we expect this to increase only slightly during
the year ahead. At the end of March 2024,
we had a limited £306m of debt maturing
in the next two years.
AVAILABLE FACILITIES1
TABLE 13
31 March
2024
£m
31 March
2023
£m
Medium Term Notes
2,607
2,736
Drawn bank debt
415
383
Outstanding commercial paper
681
312
Cash and available undrawn facilities
1,889
2,353
Total committed credit facilities
2,907
3,007
Weighted average maturity of debt
9.5 years
10.3 years
Percentage of borrowings fixed or hedged1
94%
98%
Weighted average cost of debt2
3.3%
2.7%
1. Calculated as fixed rate debt and hedges over gross debt based on the nominal values of debt and hedges.
2. Including amortisation and commitment fees; excluding this the weighted average cost of debt is 3.2% at 31 March 2024.
OUTLOOK
Looking ahead, our high-quality portfolio,
strong operational performance actions and
strong capital base mean that, with an LTV
and net debt position which is lower than
it was two years ago, we are well placed
to invest at an attractive point in the cycle.
We maintain our target to deliver an 8-10%
annual return on equity over time, comprising
a mix of income and capital returns, driven
by rental growth and selective development
upside. Short-term movements in valuation
yields are outside of our control, and mean
our return on equity will not be exactly in this
range each individual year, as we have seen
over the past twelve months. However,
with an income return on NTA of c. 5.7%,
an expectation of further low-to-mid single
digit ERV growth in London and Major Retail
this year and yields starting to stabilise,
the outlook for this is encouraging.
We are now capturing positive leasing
reversion, which supported 2.8% growth in
like-for-like net rental income over the past
year and we expect growth for the current
year to be similar. How this will translate into
EPS growth depends on the quantum and
timing of net investment from here. We have
meaningful balance sheet capacity following
our significant disposals yet our recent sales
will reduce annualised earnings by c. 4%, all
else equal. This means that, before reflecting
the impact of any reinvestment of these
sales proceeds, EPS for the year to March
2025 would likely be slightly below the 50.1
pence for 2024. For March 2026, we currently
expect EPS to be slightly above this level,
reflecting the combined effect of continued
like-for-like income growth and accretive
capital recycling. As a result, we continue to
expect our dividend to grow by a low single
digit percentage this year, as our dividend
cover remains towards the high end of our
1.2-1.3x target range.
VANESSA SIMMS, CHIEF FINANCIAL OFFICER
LANDSEC ANNUAL REPORT 2024
STRATEGIC REPORT
Our purpose – sustainable places, connecting communities,
realising potential – puts all our stakeholders at the forefront
of the Board’s decision making.
This is our Section 172 Statement.
The Board is pleased to provide a
statement that supports Section 172(1)
of the Companies Act 2006. This requires
that Directors promote the success of the
Company for the benefit of the members,
having regard to the interest of stakeholders
in their decision making. In this section, we
provide examples of how the Board engages
with stakeholders and takes into account
their interests when making decisions.
STAKEHOLDERS AND BOARD
DECISION MAKING
Our stakeholders’ interests and priorities
continue to change, and affect the way
we work, shop and engage with each
other. Effective communication with our
stakeholders is critical to keeping pace with
their evolving needs, which is so important
for our long-term success. The Board’s
engagement with stakeholders is both
direct and by management reporting
to the Board on stakeholder engagement,
the importance of which is embedded
throughout our business.
OUR CUSTOMERS
During the year, the Board received a
detailed briefing on our retail, office and
mixed-use strategies including customer
insights, as well as regular updates on
customers as part of the business update at
every meeting. The following Board activities
took place in 2023/24: (a) in June 2023,
a Retail business review alongside a tour
of our Gunwharf Quay site with a focus on
future plans for that site and across the retail
business; (b) in July 2023, the Board received
a detailed Workplace update; (c) in February
2024 the Board visited our new Myo facility at
New Street Square; and (d) in January 2024,
the Board held a strategy day and covered
mixed-use developments in detail.
OUR FIVE KEY
STAKEHOLDERS
C
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S
T
O
M
E
R
S
C
O
M
M
U
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I
TI
E
S
P
A
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T
N
E
R
S
I
N
V
E
S
T
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S
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M
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S
OUR STAKEHOLDERS
22
STRATEGIC REPORT
LANDSEC ANNUAL REPORT 2024
23
In 2022, we restructured our governance
framework to better reflect our customer
base, creating the Workplace and Lifestyle
Boards and Executive Committees (see
pages 56-57). In 2023, we created Shadow
Boards to add more diverse perspectives to
decision making in those areas (see page 57).
Throughout this year we have operated
under this new structure which has provided
enhanced focus on our customers and
associated strategies for those business areas.
OUR COMMUNITIES
In April 2023, we launched Landsec Futures,
a fund designed to maximise the potential
of people, places and communities by
enhancing social mobility and creating
pathways into our industry for people from
under-represented backgrounds.
We’ve committed to investing £20m into
Landsec Futures over ten years, which will
enable us to meet our corporate commitment
to help 30,000 people facing barriers towards
the world of work, creating £200m in social
value for our communities.
To understand in more detail some of the
communities our assets are located within,
the Board has reviewed in detail the Mayfield,
O2 Finchley Road, Lewisham, Buchanan
Galleries, Glasgow, St David’s Cardiff,
Cambridge Leisure and Hartree projects.
The importance of engaging with local
communities as part of our work on these
and other projects was emphasised.
YOU CAN READ MORE ABOUT OUR
COMMUNITY WORK ON PAGE 31
OUR PARTNERS
We have strong relationships with our
suppliers and are signatories of the
Prompt Payment Code. In 2022 we
launched our Supply Chain Commitment.
More information on our relationships
with our suppliers and associated processes
is available on our website.
In 2023, we undertook a significant re-tender
of our facilities management providers across
our Workplace and Lifestyle businesses. Our
Future of Facilities Programme explored the
latest innovations in facilities management,
helping us to identify the best service
partners in the market, and enabling us to
design the best operating model for us to
achieve sustainable operational excellence,
best-in-class customer experience, and a safe
and secure environment in a post-Covid
world. The programme was a significant
effort, with collaboration across the business,
and has now completed with new service
partners onboarded. The Board approved
the Future of Facilities Programme in
November 2023.
The Board was also updated regularly during
the year by our Managing Director, Corporate
Affairs & Sustainability, on changes in the
political landscape in the UK.
OUR EMPLOYEES
During the year, the Board appointed Manjiry
Tamhane as the Non-executive Director
responsible for Employee Engagement
and Whistleblowing. This role builds on the
work the Board has been doing in overseeing
employee engagement and culture.
A successful programme of engagement
activities was undertaken during the year by
Manjiry and other Non-executive Directors.
Manjiry Tamhane attended an affinity
network introductory event and separately
met our Landsec Futures interns. The intern
group enjoyed working for Landsec and
experiencing the culture of the business.
There were a number of suggested
improvements for the next cohort.
During the year there were also three
engagement events run with two Non-
executive Directors and a cross section of
up to 15 employees. During these sessions
it was highlighted that there was a lot of
enthusiasm for Landsec generally, and for
engaging with the Board in an informal
manner. Topics discussed included specific
business topics, delegation of authority,
diversity and inclusion, the culture, hybrid
working and the refresh of the headquarters
office. There was a meet the Board event
in July with a group of around 70 employees
and the whole Board which was very
well received.
In August 2023, we introduced Shadow
Boards who shadow our Workplace and
Lifestyle Boards (see page 57 for more
details). The Shadow Board members met
with James Bowling and Madeleine Cosgrave
to discuss their experiences and feedback.
Overall the feedback was very positive and
it was clear that the shadow boards had a
positive impact from a personal development
perspective.
Our Employee Forum represents our
employee voice. They meet monthly, with
four quarterly meetings with our CEO and
Chief People Officer to answer any questions
and get insights into issues of importance
to employees. Manjiry also met the Employee
Forum twice this year, where the discussion
covered the performance and reward culture
(including salary and benefits) at Landsec.
The Board received a full briefing on the
employee engagement survey which was
undertaken in summer 2023 and a summary
of our Pulse survey in the autumn, which
provided them with good insights into
employee sentiment (see page 25 for more
on our engagement survey).
Finally, a number of our Non-executive
Directors attended our annual spotlight
awards event in March 2024, celebrating
individual and team achievements that
had taken place during the prior year.
LANDSEC ANNUAL REPORT 2024
STRATEGIC REPORT
OUR STAKEHOLDERS
CONTINUED
Our investors
We want to create sustainable value for our three types of investors: institutional, private and debt. It is important to us that our
investors understand our strategy and our equity story so they can support the execution of our strategy and our capital recycling.
NO. OF EQUITY INVESTORS
8,489
INSTITUTIONAL INVESTORS
During the year, our Chair wrote to our larger shareholders
offering introductory meetings, and as a result he met with some
of those shareholders to discuss governance and the overall
strategy of the Group. Christophe Evain also led a consultation
with our largest shareholders on proposed amendments to our
Directors’ Remuneration Policy and the way it operates (see
page 83 for more details).
Our Executive Directors continue to hold meetings with investors
representing more than half the share register by value.
We managed a comprehensive investor relations programme
for institutional investors, consisting of post-results roadshows,
industry conferences, private-client broker roadshows and
property tours.
In June 2023, we held a Capital Markets Day at Gunwharf Quays
in Portsmouth, for institutional investors and sell-side analysts.
This event provided an overview of the shopping centre and retail
outlet markets in the UK, and a detailed update on our portfolio
and the potential for us to make accretive investment in it.
The event also included a panel session, comprising a number
of retailers who provided views on their respective markets and
how Landsec is supporting their retail strategies.
In September 2023, we held a Capital Markets Event to show
institutional investors and sell-side analysts our recently-
completed n2 and Lucent office developments in central London.
The event included tours of the two buildings, as well as
presentations from our team explaining the challenges of
completing developments during the Covid restrictions, and the
subsequent success of our leasing strategy for the two schemes.
We actively engaged with investors throughout the year on
all aspects of environmental, social and governance matters.
In March 2024, we conducted a sustainability roadshow in the
Netherlands, meeting fund managers and sustainability analysts
from major institutional investors.
INDUSTRY CONFERENCES
Attending industry conferences provides our Executive Directors
with a chance to meet a large number of institutional investors
on a formal and informal basis. Conferences attended this year
include the UBS Global Property conference in London, the
Kempen conferences in Amsterdam and New York, the Bank of
America conference in New York, the Citi conference in Florida,
Barclays’ real estate conference in London, and Morgan
Stanley’s real estate conference in London.
INSTITUTIONAL INVESTORS
1,290
99.01%
OF SHARES
PRIVATE INVESTORS
Our private investors are encouraged to give feedback and
communicate with the Directors via the Company Secretary
throughout the year.
2023 ANNUAL GENERAL MEETING
We held our AGM as a physical meeting in 2023. We invited
shareholders to ask questions and vote on the resolutions.
All resolutions put to the meeting received overwhelming
support of investors.
THE RESULTS OF THE VOTING AT ALL GENERAL
MEETINGS ARE PUBLISHED ON OUR WEBSITE:
LANDSEC.COM/INVESTORS/REGULATORY-NEWS.
FIVE-YEAR PRIVATE INVESTOR PLAN
We have a rolling five-year private investor plan, the intention
of which is to maintain an efficient share register, limited paper
distributions, effective communications and the provision of
best-in-class service to our investors.
PRIVATE INVESTORS QUERIES
We work closely with our registrar Equiniti to address all
queries that we receive from our private shareholders
throughout the year.
PRIVATE INVESTORS
7,199
0.99%
OF SHARES
DEBT STAKEHOLDERS
FIXED INCOME INVESTORS
In March 2023, we held a series of virtual and in-person meetings
with our fixed income investors as part of the Green bond
issuance. On our most recent bond issuance, in March 2024,
we followed up this engagement with a pre-recorded update.
Going forward, we plan to engage with our fixed income
investors on at least an annual basis, updating them on our
results and key developments.
BANKS
An active dialogue is maintained with all of our key relationship
banks, including regular engagement with our treasury team at
a relationship level and frequent interaction to discuss support
and opportunities.
CREDIT RATING AGENCIES
We work closely with each of Standard & Poor’s, Fitch Ratings
and Moody’s, in their capacity as credit rating agencies and
debt stakeholders, to provide them with business and financial
updates and understand any evolution in their credit rating
assessments and methodologies.
FURTHER INFORMATION FOR OUR DEBT
INVESTORS CAN BE FOUND ON OUR
WEBSITE: LANDSEC.COM/INVESTORS.
NO. OF LISTED BONDS
10
24
STRATEGIC REPORT
LANDSEC ANNUAL REPORT 2024
25
OUR PEOPLE AND CULTURE
At Landsec, our purpose sits at the heart of
everything we do; building sustainable places,
connecting communities, and realising potential.
Our circa 600 employees play a fundamental
role in delivering this and driving our success.
Our focus in the People team is to create
an inclusive environment for growth where
everyone can thrive, whilst moving our
culture forward. Evolving our culture is central
to our ability to deliver against our purpose.
We are an organisation full of talented
people and we are taking Landsec to the
next level by adopting high performance in
everything we do. To raise the bar, we are
focusing on developing our people through
curated training and development for all and
targeted talent development programmes,
strengthening our ability to attract and
retain our people, and continuing to enhance
diversity and inclusion.
EMPLOYEE ENGAGEMENT
We recognise the vital input of our employees
in fostering a high performance culture.
By actively seeking feedback, we gain
valuable insights into our progress towards
our objectives and areas for enhancement.
Our People Survey serves as a cornerstone in
measuring our advancement and pinpointing
areas necessitating action. This year,
we implemented a bi-annual approach,
introducing a Pulse Survey in October 2023,
complementing the comprehensive survey
conducted in June 2023. We actively
benchmark against industry peers, those in
similar sized organisations and the highest
performing companies, shedding light
on engagement levels, company-wide
initiatives, and inclusivity. Achieving an
89% response rate, our engagement rating
increased from 84% in June 2023 to exceed
the high-performance benchmark (87%)
achieving 89% in October 2023.
This compares to an engagement score
of 77% in 2022. Our comprehensive survey
in June 2023 highlighted three main areas
of opportunity: career development,
internal communication and rewards and
recognition. We have focused on these areas
of employee engagement through both
targeted actions and our ongoing plans.
Actions included:
• continuing the integration of our Annual
Performance Planning (APP) and Annual
Bonus Plan (ABP) approaches, which
closely align and link individual
contributions to company and business
unit/enabling function performance
• introducing our all employee Share
Incentive Plan, MySIP, achieving a
significant participation of just under
40% within three months, further
aligning our employees’ interests with
the company’s success
• conducting a benefits review through
engagement with employees, to refine our
future benefits package ensuring we offer
the most value for our people and holding
two Benefits Expos to increase awareness
of our benefits offerings
• enhanced internal communication
channels, streamlining, and expanding
digital platforms to foster dialogue
throughout the organisation
• implementation of an office refresh to
create a collaborative, productive and
enjoyable workspace
• a purpose-built Urban Inspiration Day to
connect all employees with our purpose
• a series of live events covering diverse
topics led by internal and external experts
to broaden knowledge across various
disciplines and business areas
• launching Spotlight Rewards, our ‘always
on’ recognition platform, empowering all
employees to recognise, appreciate, and
celebrate each other’s achievements.
DIVERSITY AND INCLUSION
This year we refreshed our Diversity &
Inclusion (D&I) strategy ‘Diverse Talent,
Inclusive Culture, Inclusive Places’.
LANDSEC ANNUAL REPORT 2024
STRATEGIC REPORT
OUR PEOPLE AND CULTURE
CONTINUED
DIVERSE TALENT
We set out to better reflect the diversity
of the communities we work in at all levels
of our organisation and support future
diverse talent into the industry. Our key
achievements include:
• welcoming seven interns and committing
nine bursaries to real estate students
through our social mobility programme
Landsec Futures
• hosting another cohort of our female
career development programme ‘Thrive’
– having seen an increase from 26% female
representation at Leadership to 37% since
we started it in 2020
INCLUSIVE CULTURE
An inclusive culture enables diverse talent
to thrive through inclusive leadership,
training and employee engagement. Our key
achievements include:
• our Executive Leadership Team were paired
with colleagues for D&I focused reverse
mentoring to support inclusive leadership
• we introduced improved benefits to
support working parents:
— increased partners leave from 2 weeks
full pay to 6 weeks full pay
— introduced up to 4 weeks paid leave for
those undergoing fertility treatment
— introduced better support to help those
returning from 26 weeks or more family-
related leave including entitlement to
back-to-work coaching and the option
to phase return over 6 months, working
80% of the time for 100% of pay
• our Affinity Networks made a difference,
from hosting ‘World of Work Days’ to
encourage students from underrepresented
backgrounds into real estate, to educating
colleagues on LGBT+ Allyship and
Neurodiversity inclusion. The networks,
Landsec Women (Gender), Hand in Hand
(Disability, Neurodiversity and Mental
Health), Landsec Pride (LGBT+) and
Diaspora (race, ethnicity and culture)
were also supported to develop with new
executive sponsors, training for network
co-chairs and a new Affinity network
Playbook – a ‘how to guide’ to running
effective networks
• a new Inclusion Index was added to our
employee engagement survey to measure
progress in creating an inclusive culture –
87% of colleagues believe we are making
progress on creating a more diverse and
inclusive place to work
INCLUSIVE PLACES
We are shaping inclusive place through the
way we design, develop and manage our
places, and by working in partnership with
our supply chain. Key achievements include:
• achieving the WELL Equity Rating across
our London managed office portfolio
(See Sustainability page 31 for more details)
• making D&I criteria part of our
procurement process, from introducing
requirements for disability training for
customer-facing staff to building the latest
guidance for neurodiversity-inclusive design
into new signage
• rolling out stoma-facilities across our
retail portfolio and celebrating the diversity
of our communities through events for
Pride, Eid, Purple Tuesday and Black
History Month
Further details on our strategy are available
on our D&I strategy page on landsec.com
with progress against targets reported
annually on our D&I targets and performance
scorecard.
PAY GAP
During the year we reported on our 2023
ethnicity and gender pay gaps for the
Landsec Group* with full details available
on our website.
• our mean gender pay gap reduced from
30.8% in 2022 to 29.1% in 2023
• our median gender pay gap reduced from
28.7% to 27.6% over the same period
The improvement seen in our mean and
median gender pay gaps was driven by small
shifts in the distribution of women across
our pay quartiles with increased female
representation in the two upper pay quartiles
and slight decreases in the two lower pay
quartiles. This is due to an increase in female
representation at executive level with two
new female executives, and small increases
in female representation within our Senior
Leader and Leader populations.
• our mean ethnicity pay gap increased from
36.5% in 2022 to 43.0% in 2023
• our median ethnicity pay gap increased
from 37.6% to 39.4% in the same period
Disappointingly, we saw an increase in our
ethnicity pay gaps. This was driven by a high
number of ethnic minority hires into our
more junior professional and support roles
over the preceding 12 months. Over the same
time period, we also had a few of our most
senior ethnic minority employees leave us.
As a business that is relatively small by
headcount, even a small number of changes
in representation at our most senior levels
can have a significant impact on our pay
gap data.
*After welcoming mixed-use regeneration business U+I
into the Landsec Group, we have chosen to voluntarily
publish pay gap data for all of our employees who are
on one PAYE reference. This includes both Landsec
Securities Properties Ltd, and U and I Group Ltd and we
refer to it as ‘Landsec Group’ in our pay gap reporting.
26
STRATEGIC REPORT
LANDSEC ANNUAL REPORT 2024
27
TALENT MANAGEMENT AND
SUCCESSION PLANNING
With our focus on high performance, our
approach to talent and development has
evolved to reflect this. As a result, we have
been building on our previous general
leadership development programme
strategy, to introduce a more targeted talent
development approach coupled with curated
learning pathways for all.
We have introduced a bi-annual Group
Talent Review cadence, to provide the data
to inform the targeted development tools.
The approach is aimed at enhancing our
talent management strategy and driving
organisational effectiveness. Outputs of
this approach are:
• succession plans for all our Executive
Leadership Team and Senior Leadership
Team roles
• development of a targeted talent
development programme for our emergent
leaders called Landsec Builds: next level
leadership
• a further targeted talent programme
with a D&I lens, called Enrich
To equip our Senior Leadership population
to shape and drive the high-performance
methodology and ethos through the
organisation we have launched a high-
performance leadership masterclass for
senior leaders.
To empower and develop our colleagues, we
have introduced Shadow Boards, giving
members the opportunity to join our Lifestyle
and Workplace Boards. The objective is to
drive diverse thinking across our business
through encouraging a range of voices and
backgrounds and experiences to be involved
in our decision making.
Our ‘Next Level’ learning platform has been
introduced to enhance the skills, knowledge
and behaviour of all of our people, and sets
out the approach and the mindset that we
need to achieve our high-performance
culture ambition. Next Level provides the
backdrop, alongside curated learning
pathways, against which all of our Talent
& Development offerings are built and
delivered, and includes:
• knowledge: where we have come from,
what we have learnt and where we
are going
• skills: increasing capability through skills
acquisition and development, aligned
to our five differentiators, to deliver
competitive advantage
• behaviour: developing our high-performance
culture through the promotion and support
of complementary behaviours
We are proud that our people are committed
to their personal and professional
development with each person completing
an average of 7 hours and 35 minutes of
learning this year. Next Level allows us to
enhance the development experience with
a refined training offer, ensuring that the
training content is most pertinent, irrespective
of role or level. By investing in our employees’
growth and skills development, we are not
only boosting their individual capabilities but
also strengthening Landsec overall.
RECRUITMENT AND RETENTION
Employee turnover has decreased compared
with the last financial year. For voluntary
turnover, this correlates with the improvement
in engagement scores and suggests potential
improvements in employee satisfaction.
Involuntary turnover rates have also shown
a slight decrease this year.
Regrettable turnover, which typically involves
the loss of high-performing or critical
employees, shows a variable pattern across
quarters. Despite fluctuations, there’s a slight
downward trend in regrettable turnover
rates, indicating the actions detailed above
are having an impact. Average headcount
in the rolling 12-month period remains
relatively stable.
A key initiative to improve recruitment
practices was the introduction of a new
approach to leadership hiring – including
removing bias from job descriptions, using
employee interview panels and setting
gender and ethnic diversity targets for
recruiter shortlists.
We have also continued to focus on
developing our own internal pipeline of talent
with great skills, behaviours and capabilities.
This has resulted in 43 internal promotions,
25 of whom were female appointments.
GENDER BY MANAGEMENT LEVEL
CHART 14
Executive
Senior leader
Leader
Manager
Professional
Support
Whole organisation
40
60
38
62
64
36
52
48
42
58
24
76
49
51
Male
Female
Overall, as a business, we remain roughly gender balanced with 51% female representation and 49% male
representation. Over the past 12 months, progress has been made towards achieving our 2030 gender
diversity targets, with good levels of growth in female representation at Senior Leader level from 31% to 38%
and Executive level from 33% to 40%.
ETHNICITY GROUP BY MANAGEMENT LEVEL
CHART 15
Executive
Senior leader
Leader
Manager
Professional
Support
Whole organisation
90
100
10
89
4 211 3
81
8 3 3 2 3
73
11
9
4 12
53
13
27
6 1
78
8
7 3 2 2
White
Asian
Black
Mixed
Other
Prefer not say
20% of our staff are from ethnic minority backgrounds, up from 18% last year. We have continued to
grow ethnic diversity in our junior populations and at Board and Executive level but have unfortunately
not seen growth in ethnic minority representation in our leadership populations – a key focus of our D&I
plans for the upcoming year.
LANDSEC ANNUAL REPORT 2024
STRATEGIC REPORT
OUR APPROACH TO SUSTAINABILITY
We design, develop and manage buildings
in ways that will enhance the health of our
environment and improve quality of life for
our people, customers and communities,
now and for future generations.
The connection between climate change
and nature is becoming increasingly evident.
During the year we have seen biodiversity
growing in importance to corporate
sustainability, and an alignment between
companies’ nature and climate strategies.
The launch of the Taskforce on Nature-
related Financial Disclosures (TNFD), and
nature being a key theme at COP28, further
reflects the interdependence between the
two themes.
Demand for climate-adapted real estate
is growing1 as office occupiers and retailers
continue to consider the role of physical
space in their business model, and set
increasingly ambitious sustainability targets.
The belief that businesses should take the
lead in tackling key societal and environmental
issues is also mounting, with 82%2 of the
public now expecting CEOs to take a public
stand on climate change.
As such, we recognise that maintaining
strong sustainability performance remains
key to the value of our business. Our
sustainability strategy – Build well, Live well,
Act well – continues to focus our work on
the ESG issues where we know we can have
the biggest impact.
DECARBONISING
OUR PORTFOLIO
ALIGNING OUR TARGETS
TO CLIMATE SCIENCE
In March 2023, we updated our science-based
carbon reduction targets to align with the
Science Based Targets initiative’s (SBTi) Net-
Zero Standard, committing to reducing all our
direct and indirect emissions by 47% by 2030,
from a 2019/20 baseline. This target will build
towards a long-term goal of reaching net
zero by 2040, achieving a 90% reduction in
absolute emissions from a 2019/20 baseline.
We have also updated our energy target,
committing to reducing energy intensity
by 52% by 2030, from a 2019/20 baseline.
In 2023/24, we achieved an energy intensity
reduction of 18%.
PROGRESSING OUR NET ZERO
TRANSITION INVESTMENT PLAN
Since launching our £135m Net Zero
Transition Investment Plan (NZTIP) in 2021,
we have invested £8.2m to ensure we
meet our near-term carbon reduction
target. Since launch we have progressed
the following activities:
´ AIR SOURCE HEAT PUMP RETROFIT
We started replacement works at 16 Palace
Street and Dashwood House, and plan
to start installation at a further three
buildings over the coming year.
´ BUILDING MANAGEMENT SYSTEM
(BMS) OPTIMISATION
We completed BMS reviews and
implemented recommended optimisations
at 11 operational London assets, with
expected energy savings of between 5%
and 15% per building.
´ AI TRIAL
We ran a 12-month trial with Brainbox
AI at 80–100 Victoria Street, where the
technology controls heating and cooling.
An additional 5% energy savings
is expected.
´ SOLAR PV PANEL INSTALLATION
We began construction to install solar PV
at Gunwharf Quays in March 2024 and
completed feasibility studies for additional
on-site renewable capacity at Braintree
Village and Trinity Leeds.
1. RICS Sustainability Report 2023.
2. Edelman’s Trust Barometer 2023.
OUR 2023/24 HIGHLIGHTS
´Reducing our operational
emissions through our
Net Zero Transition
Investment Plan
SEE MORE ON PAGES 28-29
´Reducing emissions
from our construction
activities
SEE MORE ON PAGE 29
´Launching our
nature strategy
SEE MORE ON PAGE 30
´Supporting our local
communities to thrive,
launching award-winning
Landsec Futures.
SEE MORE ON PAGE 31
24%
REDUCTION IN ABSOLUTE
CARBON EMISSIONS SINCE 2019/20
28
STRATEGIC REPORT
LANDSEC ANNUAL REPORT 2024
29
´ CUSTOMER ENGAGEMENT
Since 2021/22 we have completed 38
energy audits for our highest energy-
consuming office occupiers, accounting
for 56% of our total tenant consumption
across our office portfolio. We identified
potential annual carbon and energy
savings of 10-40% for the majority of
customers. Of the first 18 occupiers
participating in the customer engagement
programme, overall they have achieved
a 20% electricity reduction compared to
2019/20. The impact of this programme
was reflected in our 2023 customer-
satisfaction survey, with 79% of office
customers saying we are doing a good
job of supporting them in achieving
their sustainability goals.
This year, we have conducted net zero audits,
heat pump feasibility studies and BMS
optimisation reviews across our retail
assets to understand what we need to
do to decarbonise and improve the energy
efficiency of landlord controlled areas.
These initiatives will support our NZTIP
to meet our near-term carbon reduction
target, and accelerate progress towards
our ambition to become net zero by 2040.
CLIMATE TRANSITION PLAN
AND OFFSETTING STRATEGY
Following the publication of the Transition
Plan Task Force (TPT) Disclosure Framework
in October 2023, we have been developing
a Climate Transition Plan. This plan will
articulate our strategic ambition and
targets, outlining key steps we are taking
to decarbonise our business and reach net
zero across our value chain by 2040.
In addition to reducing our emissions, we
also aim to support ‘beyond value chain
mitigation’ (BVCM). This includes activities
that avoid, reduce, or remove and store
carbon emissions, also known as carbon
offsets. This year, we have enhanced our
offsetting strategy, developing rigorous
due-diligence criteria and a process in line
with UKGBC recommendations.
EPC RATINGS
Our portfolio is 100% compliant with the
2023 MEES of EPC E or above. In addition,
49% of our portfolio – 44% of offices and
55% of retail – already meets the proposed
MEES of EPC B. As we progress our NZTIP,
we expect that half our office portfolio will
reach EPC B by 2025 and all of our portfolio
will meet the proposed MEES by 2030.
REDUCING EMISSIONS FROM OUR
CONSTRUCTION ACTIVITIES
We have made considerable progress in
reducing upfront embodied carbon across
our development pipeline, achieving a 40%
reduction compared to a typical building.
We monitor embodied carbon from the
outset of each scheme, and collaborate
with our supply partners to reduce
emissions through:
• Structural retention and material reuse
– at Hill House, we are retaining 58%
of the existing structure, resulting in
significant carbon savings.
• Designing-out material – we have
challenged our teams to use less material
and remove redundant capacity from our
structural solutions, such as designing-out
raised-access floor tiles and removing
heating, ventilation, and air conditioning
(HVAC) systems through natural ventilation.
At the Republic in Manchester, we have
reduced the size of our structural grid,
leading to around a 10% reduction in
concrete required.
• Changing our specifications to low-carbon
materials alternatives – at Timber Square,
we have sourced 115 tonnes of reused steel.
This year we refined our Sustainable
Development Toolkit to align with our
refurbishment projects, reflecting the fact
that refurbishments need a case-by-case
approach, with project-specific targets.
2023/24 EPC RATING (BY ERV)
CHART 16
Landsec
Office
Retail
34%
22%
44%
25%
3%
23%
49%
5%
24%
16%
55%
EPC data excludes spaces that are not required to have EPCs, spaces designated for development, spaces with
registered EPC exemptions or spaces not covered by MEES regulations such as assets located in Scotland.
A-B
C
D
E
To encourage innovation, in September 2023,
our development team hosted a full-day
event for almost 90 Landsec colleagues.
They showcased each of our live projects,
focusing on sustainability targets and
performance, and received valuable
knowledge and lessons in return. This
included the costed pathway for achieving
our carbon reduction targets across our
developments, and presenting a business
case for low-carbon innovations to support
achieving our targets.
REDUCING
CARBON AT
TIMBER SQUARE
At Timber Square, SE1, we have
retained 80% of the existing structure,
while using a lightweight, hybrid steel
and cross-laminated timber (CLT)
structure. This has resulted in Timber
Square being around 20% lower in
weight than if built with traditional
building materials. By sourcing 115
tonnes of reused steel, we have saved
approximately 276 tonnes of carbon
while helping the circular economy,
which has dramatically reduced the
project’s upfront embodied carbon
intensity. Timber Square remains on
track to achieve an upfront embodied
carbon intensity of around 50% less
than a typical office building.
Once completed, the development
will be the UK’s first Design for
Performance project to complete
its Independent Design Review with
a targeted 5* NABERS UK energy
rating. This means it will be net zero
in accordance with UK Green Building
Council guidelines and powered
by renewable energy sources.
The scheme has been recognised
as a model case study by the World
Green Building Council (WGBC) and
New London Architecture (NLA).
LANDSEC ANNUAL REPORT 2024
STRATEGIC REPORT
USING RESOURCES
EFFICIENTLY
MATERIALS
On our development schemes, we continue
to work closely with our supply chain,
including carbon consultants in the design
team, from the very start, to guide decisions
on the most carbon-efficient solutions.
This year, we updated our Materials Brief
to align with the current industry standards,
while also establishing an approach to
material selection and specification for our
new developments. This will help us to
further: reduce embodied and whole-life
carbon; promote reuse and circular economy
principles; align to green building certification
requirements and strengthen our approach
to tackling modern slavery.
WASTE
In 2023/24 we continued to divert 100%
of waste from landfill, and recycled 66% of
operational waste (2022/23: 68%). We are
also embedding circular-economy principles
across our developments, to minimise waste,
and have achieved a 99.5% recycling rate
for new developments.
WATER
We strive to use water efficiently. Across our
developments, at design stage, we follow
our Sustainable Development Toolkit to
incorporate water efficiency, and explore
the use of water-recycling strategies.
For operational assets under our control,
the water-management assessments
undertaken last year continue to help shape
our water strategy for both our office and
retail portfolios. Initiatives include installing
automatic meter reading across our
portfolio, testing technology to obtain more
detail of where water is consumed in our
buildings and to identify potential leaks, and
developing a water standard for the taps,
toilets and showers in our facilities.
ENHANCING NATURE
AND GREEN SPACES
We believe that more nature leads to
better, more desirable places which,
in turn, contributes to shaping sustainable
cities. Therefore, we want to use our
places as a catalyst to improve nature
in the urban environment.
LAUNCHING ‘LET NATURE IN’
In March 2024, we launched a new strategy
for enhancing nature at our operational
assets and developments. The strategy
centres on three principles that will guide
our approach to designing, developing
and managing our places to benefit nature
and the people that live, work and play
in our spaces:
IMPROVE BIODIVERSITY IN
THE BUILT ENVIRONMENT
PROMOTE HEALTH, WELL-
BEING AND COMMUNITY
ENGAGEMENT
CREATE NATURE-BASED
SOLUTIONS TO TACKLE
CLIMATE CHANGE
How we apply these principles, and what
this means in practice for our developments
and operational sites, is detailed in our
new ‘Let Nature In’ strategy available at
landsec.com.
Following the publication of the TNFD
recommendations in September 2023, we
have signed up as an Adopter, committing
to start disclosing nature-related information
in line with the recommendations.
READ OUR TNFD DISCLOSURE IN OUR
2024 SUSTAINABILITY PERFORMANCE
AND DATA REPORT
OUR APPROACH TO SUSTAINABILITY
CONTINUED
ENHANCING
BIODIVERSITY
IN MANCHESTER
At Mayfield, Manchester, we have
redeveloped 6.5 acres of brownfield land to
create an urban park – the first in the centre
of Manchester in 100 years. We have allowed
the River Medlock to regain its natural path
and enhanced it with diverse planting and
landscaping. As a direct result of having
their habitat restored, fish species including
brown trout, bullhead, minnow and
stickleback were officially recorded in May
2023 by the Environment Agency for the
first time in this stretch of the Medlock.
6.5ac
OF BROWNFIELD LAND TO
CREATE AN URBAN PARK
30
STRATEGIC REPORT
LANDSEC ANNUAL REPORT 2024
31
CREATING OPPORTUNITIES
AND TACKLING LOCAL
ISSUES
We continue to create opportunities and
inclusive places to change lives and help
our communities thrive. We are committed
to the following:
´ DELIVERING £200M OF SOCIAL VALUE
BY 2030
´ EMPOWERING AT LEAST 30,000 PEOPLE
FROM UNDERREPRESENTED SOCIO-
ECONOMIC BACKGROUNDS TOWARDS
LONG-TERM EMPLOYMENT BY 2030
´ INVESTING £20M TO ENHANCE SOCIAL
MOBILITY IN REAL ESTATE BY 2033
We are making strong progress towards our
social value targets, creating £54m of social
value and empowering over 10,000 people
towards employment since 2019/20.
ENHANCING SOCIAL MOBILITY
IN REAL ESTATE
Our £20m social mobility fund, Landsec
Futures, is already having a significant
impact – highlighting a critical issue in UK
society and helping people meet their
potential, in collaboration with our industry
and beyond. Since Landsec Futures launched
in April 2023 we have:
• supported 3,182 people in moving towards
the world of work, through employability
programmes, bursaries and internships
• invested over £860k in 25 employability
partners at 18 locations
• committed £200k of community grants,
supporting over 120 community groups
and charities in 19 locations
• helped raise awareness of real estate
opportunities for young people, improved
employability skills, and provided
training opportunities and pathways
into real estate jobs for adults facing
significant barriers
• helped our charity partners expand
their reach and impact through in-kind
donations of space in our buildings.
Landsec Futures was recognised at the
2023 Social Mobility Awards where we
won Organisation of the Year. This award
celebrates businesses making an outstanding
commitment to social mobility issues,
making a tangible difference to the life
chances of others.
INCLUSIVE PLACES
We recognise that employing a diverse mix
of people makes us a stronger and more
sustainable business, and one that reflects
the diverse society around us. Landsec
Futures and our new Diversity and Inclusion
strategy, both launched last year, are playing
an important role in helping us increase
diversity both in our business and within the
wider industry. See more on our approach
to diversity and inclusion in the People and
Culture section on pages 25-27.
ENHANCING WELLBEING
This year, to support the wellbeing of those
that use our spaces, we have continued
to roll out the International WELL Building
Institute’s (IWBI) WELL Portfolio programme
across our operational assets. This year, we
achieved WELL Core Platinum on eight assets
(80-100 Victoria Street, Dashwood House,
4 & 6 New Street Square, One New Change,
16 Palace Street, 123 Victoria Street,
62 Buckingham Gate and Nova) and
WELL Core Gold on The Zig Zag Building.
Additionally, we were awarded WELL
Equity Rating and WELL H&S Rating at
16 of our assets.
TO FIND OUT MORE ABOUT OUR APPROACH
TO CREATING INCLUSIVE PLACES AND HOW
WE ARE SUPPORTING OUR COLLEAGUES’
WELLBEING, PLEASE SEE PAGE 26
2,553
HOURS VOLUNTEERED BY LANDSEC
EMPLOYEES, HELPING CREATE £28M
OF SOCIAL VALUE IN 2023/24
LANDSEC
INTERNSHIPS
Our six-month paid internships
support people, who meet social
mobility criteria, in building their
skills, confidence and work experience
at the start of their careers. Since
April 2023, we have welcomed nine
interns, with several continuing their
careers at Landsec.
Rosa completed a Landsec Futures
Internship in 2023 in our retail team,
where she worked on community
events and marketing campaigns.
She has since secured a role at
Landsec in the People team.
“The opportunity to be part
of spaces that I didn’t know
existed or were open to me has
helped me greatly. The support
I’ve been given has made me
feel welcome and capable in
these spaces. I think this leads
into what can be changed in
the industry, which is genuine
inclusion and opportunities
for growth.”
LANDSEC ANNUAL REPORT 2024
STRATEGIC REPORT
BUSINESS ETHICS
This year, we have refreshed our employee
code of conduct, updating our policies and
content on harassment and bullying, inside
information, buying and selling Landsec
shares, staying cyber-secure and speaking up.
300+
SUPPLIERS SIGNED UP TO OUR SUPPLY CHAIN
COMMITMENT, WHICH INCLUDES ALMOST
80% OF OUR STRATEGIC SUPPLIERS
EMBEDDING SUSTAINABILITY
ENHANCING OUR SUSTAINABILITY
TRAINING
Building on our existing sustainability
training modules, this year we enhanced
sustainability training across our business,
further upskilling our colleagues on relevant
ESG themes. In addition to our mandatory
modern slavery e-learning, in September
2023, we introduced mandatory climate
change training through the Supply Chain
Sustainability School (SCSS). This has already
been completed by 60% of colleagues.
DOING THE BASICS
BRILLIANTLY
SUSTAINABLE PROCUREMENT
We continue to work with our suppliers to
achieve our sustainability commitments and
support positive change beyond our own
business. Since publishing Our Supply Chain
Commitment in 2022, over 300 suppliers
have signed up. Our Sustainable Procurement
Guide is helping our employees make the
right decisions when buying consumables
or business services, and to spend money
wisely and effectively while supporting our
corporate and sustainability commitments.
TACKLING MODERN SLAVERY
In addition to rolling out our mandatory
modern slavery training to our employees,
this year we ran a modern slavery workshop
through the SCSS focused on training our
development supply partners. For more
information on our approach to modern
slavery, see our Modern Slavery Statement
at landsec.com.
CREATING HEALTHY,
SAFE AND SECURE SPACES
This year we maintained our ISO 45001
certification, having undergone a full
certification re-assessment by independent
auditors. We continued to focus our safety
improvements on areas where we can
have the biggest impact, including reducing
the risk of significant occupational-safety
hazards, such as working at height, asbestos
management, and the permit to work
process. We undertook a project during
the year to identify whether reinforced
autoclaved aerated concrete (RAAC) was
present in our portfolio. It was found in
two assets and action was taken to mitigate
the risk. We continue to work with other
companies in our sector to establish
consistency in measuring and reporting
health and safety data, to enable
performance benchmarking with our
peer group.
Fire safety remains one of our priority focus
areas, and we have continued our work to
ensure we meet new government initiatives
and legislation. We have also maintained
our fire-safety management-system
certification to the BS 9997 standard.
All high-rise residential buildings above
11 metres in our portfolio have been
examined by independent fire engineers
to ensure they remain safe for occupation,
and meet stringent new building regulations.
OUR APPROACH TO SUSTAINABILITY
CONTINUED
32
STRATEGIC REPORT
LANDSEC ANNUAL REPORT 2024
33
Landsec has a strong record of leadership on
climate action and reporting, where we recognise
the risks and opportunities posed by climate
change in our business model and strategy.
In 2017, we were one of the first companies
to report our approach to the recommended
disclosures of the TCFD, and we introduced
climate change as a principal risk in 2020.
Over the past year, we have continued
to evolve our approach to identifying,
assessing and managing climate-related
risks, and we are developing our transition
plan in line with the Transition Plan Task Force
Disclosure Framework.
We continue to progress our Net Zero
Transition Investment Plan (NZTIP), and are
on track with what we need to do to meet
our science-based carbon reduction target,
and have incorporated this into our financial
statement, as described within the Notes to
the financial statements on page 111.
This statement is consistent with the
requirements of the London Stock Exchange
(LSE) Listing Rule 9.8.6 R and all 11 TCFD
Recommendations and Recommended
Disclosures, and we can confirm we have
made climate-related financial disclosures
for the year ended 31 March 2024 in relation
to governance, strategy, risk management,
and metrics and targets.
GOVERNANCE
KEY ACTIVITIES IN THE YEAR
Decision-making: Remuneration
Committee approved recommendations for
ESG metrics in remuneration as part of new
Remuneration Policy, which is to be approved
by shareholders at 2024 AGM. Board approved
our revised approach to nature, Let Nature
In, which we launched in March 2024.
Training: Board received training on recent
and upcoming sustainability reporting
requirements. Sustainability Forum has
received training on various ESG topics
throughout the year, including biodiversity
crisis, occupier and investor interest in ESG
risks, and ESG benchmark recommendations.
Reporting: ELT and Sustainability Forum
receive quarterly ESG reports showing
progress towards our sustainability targets.
TASK FORCE ON CLIMATE-RELATED FINANCIAL
DISCLOSURES (TCFD) STATEMENT
BOARD OF DIRECTORS
Responsible for overseeing our approach to
climate-related risks and opportunities affecting the
business, with our CEO having overall responsibility.
Receives updates on sustainability and climate-
related performance twice a year, and this year has
focused on the progress of our sustainability strategy
and targets, approach to reducing embodied carbon
across our developments, progress of our NZTIP,
reviewing our approach to procurement of renewable
electricity and our approach to green spaces and
nature. These sessions also help to increase their
knowledge on relevant climate-related risk.
As climate change is a principal risk, the Board
considers the impact of climate risks when discussing
Landsec’s strategy and long-term success, including
significant investment decisions. This includes
discussion of new acquisitions’ exposure to climate
risks and impact to portfolio.
Board oversight
AUDIT COMMITTEE
Supports the Board in managing risk, and
is responsible for reviewing our principal
risk register, and the effectiveness of our
risk management and internal control
processes. Reviews and approves our
TCFD statement.
REMUNERATION COMMITTEE
Sets and monitors climate-related targets
linked to Executive remuneration.
The Long-Term Incentive Plan (LTIP)
for Executive Directors and senior
management includes an operational
carbon reduction target aligned with
our science-based target.
Annual Bonus Plan for Executive Directors
and all employees includes energy efficiency
and embodied carbon targets.
CEO
Overall responsibility and management for all elements of strategy, including climate-related risks.
Chairs the Executive Leadership Team (ELT).
ELT
Responsible for setting and monitoring the progress of the sustainability strategy to ensure it addresses
our relevant environmental, social and governance (ESG) risks and opportunities, including those
pertaining to climate change.
Discusses sustainability and climate risks quarterly, or more often if required.
SUSTAINABILITY FORUM
Supports the ELT in executing our sustainability strategy and mitigating climate risks.
Senior representatives responsible for programmes of work that contribute to meeting our
sustainability targets, and for mitigating climate risks across our business.
SUSTAINABILITY TEAM
Recommends approach to sustainability, including addressing climate risks.
Co-ordinates the sustainability strategy and climate risks, collaborating with all areas of the business to
ensure appropriate mitigation and adaptation plans are in place.
Reports on progress towards our targets.
Management roles, responsibilities and accountability
LANDSEC GOVERNANCE STRUCTURE
IS FURTHER DISCUSSED ON PAGES 56-59
AND ON OUR WEBSITE GOVERNANCE
AND POLICIES | LANDSEC
LANDSEC ANNUAL REPORT 2024
STRATEGIC REPORT
TASK FORCE ON CLIMATE-RELATED FINANCIAL
DISCLOSURES (TCFD) STATEMENT CONTINUED
STRATEGY
IDENTIFYING AND ASSESSING CLIMATE-
RELATED RISKS AND OPPORTUNITIES
In accordance with the TCFD
recommendations, we have identified
climate change risks and opportunities for
(1) transition risks related to the transition
to a low-carbon economy and (2) physical
risks related to the physical impacts of
climate change. We have considered these
over the short (<1 year), medium (until 2030)
and long term (beyond 2030) for two
science-based scenarios – below 2oC (aligned
with Shared Socioeconomic Pathways (SSPs)
SSP1-2.6) and exceeding 4oC (aligned with
SSP5-8.5).
We continue using MSCI’s Climate Value
at Risk (VaR) methodology to assess our
portfolio exposure to climate risks. We assess
physical risks based on the location of assets
and their exposure to individual hazards as
a consequence of climate change. The VaR
represents the combined discounted physical
risks costs (extreme cold, extreme heat,
flooding, windstorms, tropical cyclones
and wildfire) based on probable change
in physical climate risks to the year 2100
expressed as a percentage of the
portfolio’s value.
We assess transition risks based on alignment
of assets to relevant regulations (e.g. Minimum
Energy Efficiency Standards (MEES)) and
market demand.
Based on the risks identified in our scenario
analysis, and following our Group risk
management framework and methodology,
we have assessed these for:
Likelihood
Low: <10%
High: >20%
Financial impact
Low: <£5m P&L / <£150m Capital
High: >£15m P&L / >£500m Capital
Reputational impact
Low: minor reputational impact
High: significant impact leading to loss
of trust in the company
We have identified and assessed risks
across all areas of our business, including
investments, divestments, development
and operations. Mitigation of these risks
is discussed in the section below.
Our assessment concluded that our current
portfolio is not highly exposed to physical
risks given the location of our assets, and the
impact of physical risks to our portfolio will
only become more relevant in the long term,
under a >4ºC scenario. Conversely, transition
risks are material in the short and medium
term as we expect increasing mitigation
to reduce emissions, such as policy and
regulation changes. Alongside this, there
is an opportunity for us to benefit from
increasing customer and investor demand
for green, low-carbon buildings.
IMPACT OF CLIMATE-RELATED RISKS AND
OPPORTUNITIES ON OUR STRATEGY
We are addressing these risks and
opportunities through three priorities,
all critical elements of our approach to
sustainability – Build well, Live well, Act well:
´ Decarbonising our portfolio
´ Developing net zero carbon buildings
´ Building resilience to a changing climate
Decarbonising our portfolio
We will achieve net zero carbon across our
value chain by 2040. This commitment has
been approved by the Science Based Targets
initiative (SBTi) and includes a near-term
target to reduce our absolute Scope 1, 2 and
3 emissions by 47% by 2030 from a 2019/20
baseline, and a long-term target to reduce
our absolute emissions by 90% by 2040 from
a 2019/20 baseline.
Through our £135m Net Zero Transition
Investment Plan (NZTIP), launched in 2021,
we are ensuring we meet our near-term
science-based target and stay ahead of
impending 2030 MEES requirements of
minimum EPC B. To date we have committed
£8.2m of expenditure. We will recover a
portion of this investment through the
service charge as part of the normal process
of life-cycle replacement. We also expect to
derive energy efficiency benefits and related
cost savings as a result. We provide further
details on the progress of our NZTIP and
science-based target on pages 28-29.
We continue to operate our buildings in
accordance with our company-wide
environmental and energy management
system, which is certified to ISO 14001 and ISO
50001, having energy reduction plans (ERPs)
and action plans for all our assets, which
outline how we will reduce the energy use and
carbon emissions of each asset effectively.
The ERPs form part of the operational
financial planning for each asset.
As we continue to build relationships with
our suppliers, the climate-related information
they provide (such as carbon emissions,
energy consumption and relevant climate-
related targets) allows us to better
understand their operations and prioritise
future engagement activity.
POTENTIAL FINANCIAL IMPACT
Income statement
Research shows buildings that have high
sustainability credentials attract higher average
rents, improving leasing and occupancy rates.
Improved energy efficiency should also improve
service charges payable by tenants.
Conversely, older, less sustainable assets will
ultimately see longer voids for retrofits and a
loss of rental income where they do not meet
the minimum EPC requirements.
Balance sheet
Through our £135m NZTIP, we are electrifying
heating and improving energy efficiency across
the portfolio, improving the capital value of the
affected assets, which have shown more
resilience to yield pressures than assets without
a clear ESG strategy. This is demonstrated by
the CBRE Sustainability Index, which shows a
more resilient total property return for energy
efficient assets, including a 90bps gap in ERV
growth compared with inefficient ones.
The NZTIP is considered in our asset valuations,
alongside expected uplift in ERVs. The cost of
our NZTIP will fluctuate over the next 6 years
as we account for changes in inflation and
portfolio composition with the expenditure
profile weighted to 2024/25 and 2025/26.
FOR FURTHER INFORMATION ON HOW
WE ARE DECARBONISING OUR PORTFOLIO
VISIT OUR WEBSITE
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LANDSEC ANNUAL REPORT 2024
35
<2ºC SCENARIO
Proactive and sustained action to halve emissions by 2030 and reach net zero
by 2050 – strong policy and regulatory responses; rapid investment
and adoption of low-carbon technology, and sustainable business and
lifestyle practices.
UK climate is marginally higher temperatures all year round, lower
precipitation in summer; flooding and windstorms within current variability.
>4oC SCENARIO
Limited action taken to mitigate climate change – there
is a push for economic and social development coupled
with continuing exploitation of fossil fuels.
UK climate will experience an increase in severe weather
events (flash-flooding); increased summer and winter
temperatures; drier summers and wetter winters.
Short-term (<1 year)
Our immediate
business planning and
budgeting occurs
annually, so it is
important we identify
appropriate resources
for mitigating and
adapting to climate
change each year and
include these in annual
budgets.
Low physical risks as only a small proportion of our portfolio (1.3% VaR) is
exposed to aggregated physical risks (extreme cold, extreme heat, flooding,
windstorms and wildfire). The most significant physical risk to our portfolio
is from coastal flooding (0.9% VaR). These risks are constantly monitored and
we ensure all assets have appropriate mitigation plans in place.
Medium transition risks associated with:
• Existing regulations, such as current MEES requiring all non-domestic
properties to have a minimum EPC E. Risk is considered low, as all our assets
already comply. We continue monitoring this risk to ensure all spaces have
a valid EPC.
• Local planning requirements favouring low embodied carbon development
schemes. Risk is considered medium, as costs to meet embodied carbon
targets are highly dependent on design and nature of developments.
Opportunity associated with:
• Increasing occupier and investor interest in assets with high sustainability
credentials, including BREEAM and EPC, presents a medium opportunity
for us as our portfolio transitions to net zero and we continue to complete
net zero carbon buildings. 61% of portfolio is BREEAM-certified and 49%
is EPC A-B.
Low physical risks as only a small proportion of our
portfolio (4.5% VaR) is exposed to aggregated physical
risk. The most significant physical risk to our portfolio
is from coastal flooding (3.5% VaR). We monitor these
risks constantly and ensure all assets have appropriate
mitigation plans in place.
Medium transition risks, as current risks are the same
as under <2oC scenario.
Medium (until 2030)
We are taking action
now until 2030 to meet
our near-term
science-based carbon
reduction target.
Physical risks remain the same as the short term.
High transition risks associated with:
• Emerging regulations, such as proposed MEES requiring all non-domestic
properties to meet a minimum of EPC B by 2030. Risk is considered high,
affecting 51% of our current portfolio that has an EPC below B.
• More stringent planning requirements, including operational and embodied
carbon obligations. For instance, Greater London Authority requires
projected operational energy emission shortfalls to be offset,
recommending a price of £95/tCO2e. Risk is considered high, potentially
affecting all our new developments.
Opportunity associated with:
• Continued increase in occupier and investor demand for assets with high
sustainability credentials. As these stakeholders set net zero commitments
and are required to report on the sustainability outcomes of their
investments, there is growing demand for green building certifications
(e.g. BREEAM) and high energy efficiency determined by EPC ratings.
JLL suggests that BREEAM certified buildings benefit from 20.6% capital
value premium and 11.6% rent premium, and single step EPC improvement
contributes to 3.7% capital value premium and 4.2% rent premium. This
presents a high opportunity for us as our portfolio transitions to net zero,
and we continue to complete net zero carbon buildings.
Physical and transition risks remain the same as the
short term.
Long (beyond 2030)
Many of our assets
have a design lifespan
of over 60 years –
therefore, identifying
long-term risks beyond
2030 is important for
our investment and
development decisions,
to ensure our portfolio
remains resilient in the
long term.
Slight increase in physical risks, but no significant change to overall
portfolio exposure to climate risks. For instance, slightly warmer summers
are expected but these don’t pose significant risk of heat stress.
Transition risks remain high as further mitigation actions and legislative
changes are expected to continue reducing carbon emissions, including:
• Carbon tax – potential for the built environment to be included in the UK
Emissions Trading Scheme. Risk is considered high, due to high degree of
uncertainty at this stage. We keep monitoring emerging discussions on this
topic, while reducing carbon emissions across our portfolio to minimise
potential impact to our business.
• Achieving our science-based net zero commitment by 2040. Risk is considered
high, as significant reduction beyond achievement of 2030 near-term target
will be required, demanding capital expenditure and investment in new
technologies, and innovative low-carbon materials and processes.
Significant increase in physical risks from hotter,
drier summers; warmer, wetter winters and more
frequent severe weather events. Sea-level rise puts
additional strain on the Thames Barrier and increase in
river peak flows has potential for flood-defence failures
across the UK, leading to higher portfolio exposure.
According to Swiss Re, climate risk could worsen
weather-related insured catastrophe losses, such
as floods and wildfires. Property insurance premiums
will reflect this augmented risk from climate change,
potentially increasing by 33-41% by 2040.
Significant increase in transition risks as adaptation
measures are adopted to cope with changes in climate
and associated physical risks.
LANDSEC ANNUAL REPORT 2024
STRATEGIC REPORT
TASK FORCE ON CLIMATE-RELATED FINANCIAL
DISCLOSURES (TCFD) STATEMENT CONTINUED
Developing net zero carbon buildings
We design and build net zero carbon
buildings in accordance with the UKGBC Net
Zero Carbon Buildings framework definition,
ensuring low upfront embodied carbon
emissions, low operational emissions and
fossil fuel free assets powered by renewable
electricity. This commitment forms a key
part of our Sustainable Development
Toolkit – a comprehensive guide for our
development teams and external partners
to ensure they consider sustainability
throughout the life-cycle of our schemes,
and that it is a key consideration in our
gateway approval process.
For each development, we aim to reduce
emissions associated with construction by
exploring structural retention and material
reuse, adopting efficient design and modern
methods of construction, and specifying
low-carbon materials, ensuring we balance
upfront carbon with whole-life carbon, to
ensure our design decisions do not negatively
affect the longer-term operational and
maintenance carbon emissions of our assets.
We set energy-use intensity (EUI) targets
for each development, modelling the design
to optimise operational energy efficiency.
Developments are also designed to be 100%
electric and target maximum use of on-site
renewables as possible.
POTENTIAL FINANCIAL IMPACT
Income statement
Strong and increasing market demand for net
zero properties, especially in the office market,
is outstripping supply, which is likely to lead to
rent and value premiums for these assets.
Balance sheet
Increased demand for low-carbon materials,
many of which are still nascent markets, could
increase the construction costs of our
development pipeline.
The cost of reducing upfront embodied carbon
on developments is highly dependent on the
strategy adopted. We are modelling this across
our live developments and are finding that
retention on one project saves 2.8% on Total
Development Cost (TDC) whereas relying on
low-carbon materials increases TDC by 1.8%
on a different project.
We issued a £400m Green Bond in March 2023
to fund the development of green buildings
as detailed below.
Building resilience to a changing climate
Although we assessed that our current
portfolio is not highly exposed to physical
risks given the location of our assets, we
still act to mitigate these risks through
physical measures, insurance and business-
continuity planning.
In our development pipeline, we are
designing and constructing high-quality
buildings and spaces capable of achieving
operational resilience over their lifetime,
considering how the UK’s climate will change
in the coming decades. We manage the
impact of physical risks, such as higher
cooling costs and lower heating demand, by
adapting building services design, reducing
heating capacity and maintaining summer
cooling capacity to cope with heatwaves.
The performance of our façade and fabric
materials is designed to address the expected
higher temperatures by minimising energy
demand, as well as to withstand extreme
temperatures and increased wind speeds,
to avoid maintenance issues or damage to
buildings in future. We target operational
energy intensities in line with industry net
zero carbon benchmarks, wherever available.
Our drainage strategies are designed to
mitigate foreseen rain levels and flood risks
using physical and nature-based solutions.
As detailed in our nature strategy, Let Nature
In, we consider nature-based solutions for
reducing energy use and adapting to future
climate scenarios such as façade and rooftop
greening, sustainable urban drainage and
permeable surfaces.
Across our operational portfolio, assets in
areas highly exposed to physical risks have
developed plans to ensure they have
adequate protection and mitigation,
including business-continuity and emergency-
response plans. These mitigation actions and
our appropriate risk management practices
also help us to reduce the risk of increase in
insurance premiums related to climate risks.
Our Responsible Property Investment Policy
details how we assess climate risks during the
sale and acquisition of assets. We conduct
thorough due diligence, understanding the
asset’s performance metrics, including
energy consumption, EPCs and other
sustainability credentials, and assessing flood
risk and embodied carbon, and we work with
MSCI to use their Climate Risk Due Diligence
Analysis platform for acquisitions.
POTENTIAL FINANCIAL IMPACT
Income statement
The changing environment has direct cost
implications, especially for assets located in high-
risk flood zones (4.5% VaR at >4oC scenario)
due to potential cost of repairs, cost of business
interruption and increased insurance costs.
Additionally, there may be cost implications for
the built environment to be included in the UK
Emissions Trading Scheme resulting in carbon
taxes and increased energy costs to counteract
more extreme seasonal trends.
Balance sheet
Increased capital investment to maintain
compliance with legal requirements, such as
improving EPC ratings across the portfolio,
and also to protect our assets at risk from
physical climate change. Failure to do so
would negatively affect the long-term capital
values of these assets.
To support our strategy, in March 2023 we
published our updated Green Financing
Framework and issued our inaugural £400m
Green Bond, due 2034. All net proceeds from
this bond have been fully allocated to four
eligible green projects, within the category
Green Buildings – Construction of new
developments, including The Forge, n2,
Lucent and Timber Square. Further
information on the allocation of proceeds
and climate-related impact of these projects
are available within the Green Bond Report.
RESILIENCE OF OUR STRATEGY
AND BUSINESS MODEL
We are confident our strategy to decarbonise
our portfolio, develop net zero carbon
buildings and build resilience to a changing
climate will support the transition to a
low-carbon economy, while managing
the impact of climate-related risks to our
portfolio. This is consistent with the Group’s
going concern and viability assessment.
We recognise our strategy and adaptation
measures may need to evolve in the long term,
particularly under a >4oC scenario. In this
scenario, changes to our strategy and financial
planning are likely to be required, including
divestment of assets that are less resilient to
extreme heat and rainfall, or investment in
infrastructure to limit the impact of flooding
and coastal surge. This scenario could also
result in changes to our customers’ and supply
chain partners’ businesses, including business
failures, or supply chain disruption. We would
need increased due diligence in supply chain
selection, particularly considering the sourcing
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LANDSEC ANNUAL REPORT 2024
37
of construction materials that may be
processed or manufactured in countries
where the effects of climate change are
more extreme.
RISK MANAGEMENT
Climate change is identified as one of
Landsec’s ten principal risks, and is therefore
governed and managed in line with our risk
management and control framework. We
identify, assess and manage climate-related
risks through the framework – with the risks
clearly defined and owned. We score risks on
a gross and net basis, following evaluation of
the mitigating controls in place, as described
in the Managing Risk section on pages 38-40.
Furthermore, Landsec has defined its appetite
for each risk, including climate-related risks,
and this is overlaid when considering any
residual risks.
As part of its overall responsibility for risk,
the Board undertakes an annual assessment,
taking account of risks that would threaten
our business model, future performance,
solvency or liquidity, as well as the Group’s
strategic objectives. We use scenario-
modelling, including the climate scenario
analysis described above, to better
understand the impact of these risks on our
business model when placed under varying
degrees of stress, enabling us to consider
interdependencies and test plausible
mitigation plans.
The primary responsibility for, and
management of, each risk is assigned
to a specific member of the ELT, who is
accountable for ensuring the operating
effectiveness of the internal control systems
and for implementing key risk mitigation
plans. Risks are also assigned a secondary
owner – usually a Senior Leader – who is
responsible for ensuring we mitigate the
risk appropriately.
The primary responsibility for climate risk sits
with our Managing Director, Corporate Affairs
& Sustainability, with the Head of ESG and
Sustainability having secondary responsibility.
Our climate change principal risk includes
both transition and physical climate risks as
detailed above, and is monitored quarterly
using a series of key risk indicators as detailed
in the metrics and targets section.
OUR RISK MANAGEMENT PROCESS TO ADDRESS
OUR PRINCIPAL RISKS AND UNCERTAINTIES,
INCLUDING CLIMATE CHANGE, IS DETAILED
FURTHER ON PAGES 38-45
METRICS AND TARGETS
TARGETS
To address climate change risks, we have set ambitious climate-related targets – the headlines
of which are summarised below:
DECARBONISING OUR PORTFOLIO
Achieve net zero greenhouse gas (GHG) emissions across the value chain by 2040 from
a 2019/20 baseline
Near-term target: Reduce absolute Scope 1, 2 and 3 GHG emissions by 47% by 2030 from
a 2019/20 baseline
Long-term target: Reduce absolute Scope 1, 2 and 3 GHG emissions by 90% by 2040 from
a 2019/20 baseline1
Reduce energy intensity by 52% by 2030 from a 2019/20 baseline
Source 85% of total energy (electricity, gas, heating and cooling) consumption from
renewable sources by 2030
DEVELOPING NET ZERO CARBON BUILDINGS
Reduce upfront embodied carbon across our developments by 50% compared with a typical
building2, by 2030
BUILDING RESILIENCE TO A CHANGING CLIMATE
Ensure all assets in areas highly exposed to climate risks have adaption measures in place
1. Residual 10% emissions that cannot be reduced by 2040 will be offset through permanent emissions removals in line
with SBTi guidance.
2. Typical buildings from GLA Whole Life Carbon Guidance – Typical offices: 1,000kgCO2e/m2 GIA and typical residential:
850kgCO2e/m2 GIA.
METRICS
In addition to targets, we also monitor a number of climate-related metrics that support our
risk assessment, as provided below:
Metrics
2023/24
2022/23
Reduction in energy intensity from 2019/20 baseline
18%
18%
Total energy from renewable sources
68%
68%
Percentage of portfolio that is BREEAM-certified (by value)3
61%
55%
Percentage of portfolio that is already EPC B or above (by ERV)
49%
36%
Percentage of portfolio that is EPC E or above (by ERV)
100%
100%
Investment in energy-efficiency measures implemented in the year
£5.9m
£2.2m
Estimated annual savings from energy initiatives implemented in the year
£0.5m
£0.7m
Portfolio Climate Value at Risk (VaR) based on aggregated physical risks4
4.5%
5.4%
3. 2022/23 BREEAM figure has been restated. Further information in our Sustainability Performance and Data Report.
4. The VaR represents the combined discounted physical risks costs (extreme cold, extreme heat, flooding, windstorms,
tropical cyclones and wildfire) based on probable change in physical climate risks to the year 2100 expressed as a
percentage of the portfolio’s value in a 5°C scenario.
Methodology and performance against Metrics and Targets are detailed in our Sustainability
Performance and Data Report. Additionally, our Streamlined Energy and Carbon Reporting
(SECR) on pages 170-172 provides details of our energy consumption and carbon emissions.
LANDSEC ANNUAL REPORT 2024
STRATEGIC REPORT
RISK MANAGEMENT FRAMEWORK
AND GOVERNANCE
Landsec operates a Group-wide risk
management framework in order to
support the identification, evaluation and
management of our principal risks. Whilst
our approach is well-established, we are
continuously reviewing our risk management
procedures to ensure that they are fit for
purpose, as our business, and the environment
we operate in, evolve. Working to further
embed our risk management practices has
therefore been a key priority during 2023/24,
and it will continue to be a priority as we
move into 2024/25 and beyond.
The key components and stakeholders of
our risk management framework are:
• The Board: accountable and have overall
responsibility for overseeing risk and
ensuring that a robust risk management
and internal control system is in place
and operating
• The Audit Committee: responsible for
reviewing the effectiveness of the risk
management and internal control system
during the year
• The Executive Leadership Team:
responsible for day-to-day monitoring
and management of the Group-wide
principal risks, ensuring that a consolidated
view of the key risks is formed to inform
their prioritisation
• Workplace and Lifestyle Boards and Excos:
monitoring and managing the specific risks
relevant to their business areas, as well as
ensuring there is appropriate reporting
upwards on the status and implications
of key risks
• Risk owners: accountable for the day-to-
day management, tracking and reporting
of the individual risks within their
respective areas
• Risk Champions: Individuals with
responsibility to advocate effective risk
management practices within each of
their respective business areas and to
support risk owners
• The Head of Risk and Controls: A central
role to manage the framework itself,
providing support to risk owners, Risk
Champions and others throughout the
business, and to act as coordinator and
interface between the top-down and
bottom-up approaches
RISK APPETITE
Taking risk is an essential and inherent part
of operating any business. As such, Landsec’s
risk management strategy is not to eliminate
all risk but to ensure that appropriate
strategies are in place to identify, evaluate
and manage the key risks we face. It is
therefore essential that our appetite for risk
is appropriately considered across each of
our risk categories, so that we understand
the level or risk we are willing to take, in the
drive to reap the associated rewards.
The Board is responsible for defining the
risk appetite of the Group, and ensuring it
remains in line with our strategy. Landsec’s
risk appetite differs for each risk, however
‘rule of thumb’ principles apply, with a
minimalist appetite for legal and compliance
related risks, a cautious appetite for
operational risks and a flexible appetite
for strategic risks. The risk appetite reflects
Landsec’s risk management philosophy
and determines the extent to which risk
is managed or monitored for changes.
To embed risk appetite effectively in the
business we have established key risk
indicators associated with each risk and
set limits that are aligned to our appetite.
Scenario planning also assists in setting
these thresholds.
The existence of an embedded risk management
framework is at the heart of how we look to manage
our business and our assets, to support sustainable
growth and to deliver on our strategic aims.
MANAGING RISK
OUR KEY SUCCESSES
IN 2023/24
• Work programme initiated to
further embed risk management
within the business
• Key to this has been the integration
of the risk management process
within the Group’s Strategic and
Business Planning processes
• Development of a decentralised
risk management approach, with
the allocation of Risk Champions,
to support risk management
considerations within day-to-day
activities
• Enhancements to Principal Risk
Register, with recategorisation
and alignment of strategic and
operational risks, as well as risk
appetite considerations
OUR KEY PRIORITIES
IN 2024/25
• Continued embedding of the
decentralised risk management
framework, and in particular,
strengthening the interactions
between the ‘top down’ and ‘bottom
up’ risk management processes
• Further integration of Key Risk
Indicators (KRIs) into Management
Reporting
• Further training and development
of Risk Champions, including
development of a Risk Champion
community
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LANDSEC ANNUAL REPORT 2024
39
RISK MANAGEMENT FRAMEWORK
TOP-DOWN
Oversight,
identification,
assessment and
mitigation of risk
at a Group level
RISK
GOVERNANCE
BOARD
• Set strategy and objectives
• Set the risk culture
• Monitor risk exposure
(including emerging risks)
• Define and approve risk appetite
AUDIT COMMITTEE
• Support the Board in monitoring
risk exposure
• Review the effectiveness of our
risk management and internal
control system
1ST LINE OF DEFENCE
2ND LINE OF DEFENCE
3RD LINE OF DEFENCE
RISK
MANAGEMENT
ELT AND BUSINESS
AREA LEADERSHIP
TEAMS
• Define the risk appetite
• Identify the principal
and emerging risks
• Evaluate response
strategies against risk
appetite
• Design, implement
and evaluate the risk
management and
internal control system
RISK MANAGEMENT
• Create a common risk
framework and
language and provide
direction on applying
• Assist with the
identification and
assessment of principal
and emerging risks
• Monitor risks and risk
response plans against
risk appetite
• Aggregate risk
information
• Provide guidance and
training
• Facilitate risk
escalations and
acceptance
INTERNAL AUDIT
• Provide independent
assurance on the risk
programme, testing
of key controls and risk
response plans for
significant risks
BOTTOM-UP
Identification,
assessment and
mitigation of risk at
business unit and
functional level
RISK
OWNERSHIP
BUSINESS UNITS
• Identify and assess risks
• Respond to risks
• Monitor risks and risk
response
• Ensure operating
effectiveness of key
controls
SUPPORT FUNCTIONS
• Provide guidance/
support to the Risk
team and business units
LANDSEC ANNUAL REPORT 2024
STRATEGIC REPORT
IDENTIFYING AND EVALUATING RISKS
Landsec operates annual Strategic Planning
and Business Planning processes. During
these processes, the Board undertakes an
assessment of risks that would threaten
our business model, future performance,
solvency or liquidity, or the Group’s strategic
objectives. We use scenario-modelling to
better understand the impact of these risks
on our business model when it is placed
under varying degrees of stress, enabling
us to consider interdependencies and
test plausible mitigation plans. Senior
management, teams and stakeholders
across the business input into these
processes, supported by the Head of Risk
and Controls, to identify the strategic,
operational, and legal and compliance risks
facing each area of our business, alongside
the required mitigations.
Each of the key risks are scored using a risk
scoring matrix, which rates risk according to
the likelihood of the risk materialising, as well
as its potential impact. When we evaluate
risk, we first consider the inherent risk
(before any mitigating action), followed
by the residual risk (after mitigating actions
and controls). The difference between the
inherent risk and residual risk score gives
us visibility as to the extent to which we
are able to control the risk. From the ratings,
we identify principal risks (current risks
with relatively high impact and probability).
We also track emerging risks (risks where
the extent and implications are not yet fully
understood or are increasing over time).
We track these risks by monitoring the
velocity of change in the risk score.
The risk waterfall on page 41 outlines the
principal risks faced by Landsec, also showing
the appetite for these risks, as well as the
inherent and residual risk ratings. However,
Landsec also maintains a number of risk
registers, including the Group Risk Register,
which includes Landsec’s Principal Risks.
The Audit Committee reviews our Principal
Risks at least twice a year, before presenting
them to the Board for review and inclusion
within external reporting.
MANAGEMENT AND ASSURANCE
OF RISKS
Landsec operates a Three Lines of Defence
(“3LoD”) risk model in respect of structuring
risk management and assurance activities.
The First Line of Defence are the risk and
control owners, who are responsible for the
day-to-day ownership and management of
their respective risks. These individuals are
also responsible for ensuring any control
mechanisms they have in place to manage
risks are operating effectively. For the
Principal Risks, each of the risks are assigned
to individual members of the Executive
Leadership Team.
The Second Line of Defence includes the risk
and compliance functions at Landsec, which
set the policies and standards to be met by
the business in relation to risk management,
as well as the internal assurance systems
designed to challenge the business to ensure
that risks are effectively being managed. This
includes forums such as Executive Leadership
Team meetings, Workplace and Lifestyle
Boards and Excos and other management
teams. The principal operational risks,
including health and security, and information
security and cyber threat are managed by
dedicated second-line functions that define
and implement policy and mitigating
controls, and undertake assurance activities.
In addition, the Head of Risk and Controls
manages Landsec’s Key Controls Toolkit.
The Toolkit is a set of clearly defined controls
that are self-certified by control owners
within the business, to provide ongoing
assurance and coverage of key risk areas.
The Audit Committee monitors the results of
this process. This supports the Committee’s
evaluation of the control environment and
the adequacy of assurance activity. The
Committee also receives a summary report
at each meeting, describing key second and
third-line assurance activities, including
internal audits, actions agreed and the
status of open risk mitigation actions.
Landsec’s Third Line of Defence is
predominantly delivered through the
provision of Internal Audit, which provides
independent assurance over key controls and
processes to management and the Audit
Committee. An annual planning exercise is
carried out to identify the areas for inclusion
on a risk basis, including the areas where
the impact of controls is greatest i.e. where
there is a relatively high inherent risk and
relatively low residual risk. This helps to focus
the work of Internal Audit and other
assurance providers.
FOR MORE INFORMATION REFER TO THE
AUDIT COMMITTEE REPORT ON PAGES 62-69
MANAGING RISK
CONTINUED
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LANDSEC ANNUAL REPORT 2024
41
Our principal risks consist of the ten most
significant group risks. During the year, we
have reviewed the ten principal risks and
re-categorised them according to their
current strategic and operational focus.
As a result, we have five strategic and five
operational risks. The strategic risks relate
to the macro-economic environment; our
key markets – office and retail; capital
allocation; and development. The operational
risks are cyber threat; change projects;
health and safety; people and skills; and
climate change.
Our principal risks are reflected in the risk
waterfall below. The risk waterfall allows
us to show the gross risk score (without
mitigations applied) alongside the net risk
scores (the rating following consideration
of the mitigations in place). These scores for
both gross and net risk score are calculated
as a function of impact and likelihood.
The box on each risk reflects the Group’s risk
appetite for these risks. The appetite range
is a view which outlines the desired risk the
Group wishes to take in respect of each risk.
Appetite ranges are: ‘Open’ (where we are
focused on maximising opportunities);
‘Flexible’ (willing to consider all options);
‘Cautious’ (where we are willing to tolerate
a degree of risk); ‘Minimalist’ (preferring
options with low inherent risk); and ‘Averse’
(where we avoid risk and uncertainty).
Where the net risk sits within the appetite
box, the risk is considered to be managed
within appetite. At year end, there are no
net risks currently above appetite, though
some are below. The tables on the following
pages describe each principal risk in detail,
including mitigating controls, KRIs and
changes in the year.
PRINCIPAL RISKS AND UNCERTAINTIES
Our Principal Risks and Uncertainties are
monitored throughout the year, to assess
our changing risk landscape and so that
the Board can make informed decisions.
PRINCIPAL RISKS
MINOR
MODERATE
SIGNIFICANT
CRITICAL
OPEN
FLEXIBLE
CAUTIOUS
MINIMALIST
AVERSE
Macroeconomic
outlook
Office occupier
market
Retail and
hospitality
occupier market
Information
security and
cyber threat
Capital
allocation
Change projects
fail to deliver
Development
strategy
Health and
safety
People and skills
Climate change
transition
Gross risk
Net risk
Appetite range
Strategic risk
Operational risk
LANDSEC ANNUAL REPORT 2024
STRATEGIC REPORT
PRINCIPAL RISKS AND UNCERTAINTIES
CONTINUED
1
MACROECONOMIC OUTLOOK
EXECUTIVE RESPONSIBLE | MARK ALLAN
APPETITE: FLEXIBLE
Changes in the macroeconomic environment
result in reduction in demand for space or
deferral of decisions by retail and office
occupiers. Due to the length of build projects,
the prevailing economic climate at initiation
may be vastly different from that at
completion.
EXAMPLE KRIs
• UK Gross Domestic Product
• UK household spending levels
• Inflation rate
• Interest rates
• Business confidence
• Employment intentions
MITIGATION
• Key risk indicators monitored
• Scenario-based modelling of plausible
economic trajectories
• Our Research team prepares a report for ELT
and Area Boards on macroeconomic and
internal risk metrics
• Twice-yearly Market Monitor produced,
analysing macroeconomic, political and
market-risk factors – which is also used for
budget and forecasting assumptions
• Business portfolios prepare quarterly reporting
to review sector and market risks
CHANGE IN YEAR | DECREASING
The UK economy has continued to be challenging
during 2023/24, with interest rates remaining high
and high inflation also having an impact through
much of the period.
Whilst the operating environment is still affected
by the implications of the recent economic
environment, the outlook is considered to be
positive, with interest rates expected to start
falling during 2024/25. As such, the risk score has
been reduced during the period. The risk remains
within appetite.
2
OFFICE OCCUPIER MARKET
EXECUTIVE RESPONSIBLE | MARCUS GEDDES
APPETITE: FLEXIBLE
Structural changes in customer expectations
leading to changes in demand for office space
and the consequent impact on income and
asset values. Further, the risk encompasses
the inability to identify or adapt to changing
markets in a timely manner.
EXAMPLE KRIs
• Office usage percentages
• Percentage of lease expiries over our
five-year plan
• Void rates across our portfolio
• Like-for-like rental income metrics
• Customer and space churn
MITIGATION
• Customer relationship management monitor
our customer base
• Office leadership team review KRIs monthly
• Management accounts monitoring key risk
indicators
• ESG programme to decarbonise office portfolio
and strengthen prime property portfolio by
meeting changing occupier needs
• Customer satisfaction measured regularly
• Forward-looking market intelligence reviewed
regularly
• Market-led demand and customer expectations
for environmentally sustainable office space are
closely monitored
• Strict credit policy and process and review of
customers at risk
• Future of Work forum hosted by our Insight
team, examining disruption themes and
megatrends in ways of working
CHANGE IN YEAR | NO CHANGE
The outlook in respect of the office occupancy
market is positive, with increased demand and
social appetite for office working continuing to
strengthen.
Whilst the current macroeconomic environment
is also looking positive, it currently continues to
apply pressure in respect of the buoyancy of the
market meaning this risk is considered to have
remained stable over the period.
The residual risk at year end was below our
‘flexible’ appetite however over the course of our
Strategic Plan we expect this risk to be brought
into appetite through opportunities for stronger
leasing terms.
3
RETAIL AND HOSPITALITY OCCUPIER MARKET
EXECUTIVE RESPONSIBLE | BRUCE FINDLAY
APPETITE: FLEXIBLE
Structural changes in customer expectations
leading to changes in demand for retail or
hospitality space and the consequent impact
on income and asset values.
EXAMPLE KRIs
• Asset guest numbers
• UK net retail openings and asset-vacancy rates
• Portfolio void rates
• Percentage of lease expiries over five years
• Customer credit risk and tenant
counterparty risk
MITIGATION
• Monitoring of key risk indicators by retail
leadership
• Management accounts monitoring key risk
indicators
• Customer relationship management monitors
customer base performance
• Data-led development of asset and sector
strategies, promoting proactive leasing
• Brand Account, Asset Management and Guest
Experiences teams established
• Customer satisfaction surveys
• Credit policy and process defines acceptable
level of credit risk
• Finance reviews customers at risk and agrees
the best plan of action
CHANGE IN YEAR | NO CHANGE
Similar to the office occupier market, the outlook
in respect of the retail and hospitality occupier
market is positive but this risk is currently
considered to have remained stable throughout
the period as the economic environment
continues to have had an impact.
Our Strategic Plan and Business Plans outline
initiatives to further commercialise the use of our
assets, expand customer experience and raise
awareness of our retail centres. Whilst diversifying
the offerings to our customers acts as a risk
mitigation, the risk to be taken in respect of
potential yields for these initiatives, and the
onboarding of customers, will increase the overall
risk, bringing these risks into appetite.
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LANDSEC ANNUAL REPORT 2024
43
4
CAPITAL ALLOCATION
EXECUTIVE RESPONSIBLE | MARK ALLAN
APPETITE: FLEXIBLE
Capital allocated to specific assets, sectors or
locations does not yield the expected returns
i.e. we are not effective in placing capital or
recycling.
SPECIFICALLY:
• Mixed-use urban neighbourhood developments
do not yield expected returns
• Development of assets not matched to
expected demand
• Retaining assets with low yields that should
be recycled
EXAMPLE KRIs
• Committed development pipeline
• Portfolio liquidity
• Loan to value
• Headroom over development capital
expenditure
• Speculative development, pre-development
and trading property risk exposure
• Group hedging
• Net debt
MITIGATION
• Monthly monitoring of capital disciplines and
KRIs by Workplace and Lifestyle Boards, ELT
and PLC Board
• Detailed market and product analysis to enable
optimal investment decisions
• Rigorous and established governance and
approval processes through the business
boards, ELT and PLC Board
• Investment Appraisal Guidelines define the
key investment criteria, the risk-assessment
process, key stakeholders and the delegations
of authority
• Stress-testing of scenarios as part of decision-
making
CHANGE IN YEAR | INCREASING
In line with our Strategic and Business Plans,
we are anticipating increased development
exposure leading to this risk to have increased.
Our strategy remains to introduce third-party
capital into a number of our projects however
we continue to have flexibility to seek to resize
our development to be appropriate for our own
balance sheet as required.
5
DEVELOPMENT STRATEGY
EXECUTIVE RESPONSIBLE | MIKE HOOD
APPETITE: FLEXIBLE
We may be unable to generate expected
returns as a result of changes in the occupier
market for a given asset during the course of
the development, or cost or time overruns on
the scheme.
EXAMPLE KRIs
• Take-up level for offices
• Tender-price inflation
• Monitor build-to-sell and build-to-rent ratios
to determine phasing
MITIGATION
• Development strategy addresses risks that
could adversely affect underlying income and
capital performance
• A detailed appraisal is undertaken by business-
area boards and PLC Board before committing
to a scheme
• Financial modelling and scenario-planning
to determine expected yields
• Tested project-management approach and
highly experienced development team
• Control processes over key risk areas including:
project organisation and reporting; financial
management; quality; schedule; change; risk
and contingency management; health and
safety; and project objectives
• Each project is supported by internal
stakeholders in Operations, Sustainability and
Tech, as evidenced through key monitoring
reviews and gateway sign-offs
• Strong community involvement in the design
process for our developments
• Early engagement and strong relationships
with planning authorities
CHANGE IN YEAR | INCREASING
The external factors that influence this risk,
such as market conditions and inflation, have
remained stable over the year.
However, we are expecting to invest in a number
of new developments during the upcoming year
which will increase this risk to be closer to our
flexible appetite.
LANDSEC ANNUAL REPORT 2024
STRATEGIC REPORT
PRINCIPAL RISKS AND UNCERTAINTIES
CONTINUED
6
INFORMATION SECURITY AND CYBER THREAT
EXECUTIVE RESPONSIBLE | NISHA MANAKTALA
APPETITE: CAUTIOUS
Data loss or disruption to business processes,
corporate systems or building-management
systems resulting in a negative reputational,
operational, regulatory or financial impact.
EXAMPLE KRIs
• Speed of threat and vulnerability detection
(against agreed penetration testing/external
assurance schedule)
• Speed of threat and vulnerability resolution
• Number of major cyber incidents or data-loss
events
• Incident Response and Recovery Plan reviewed
and tested
• Completion rates on cyber security and
data-protection training
• Number of critical, strategic or infosec partners
without current cyber-security diligence
MITIGATION
• IT security policies set out our standards for
security and penetration testing, vulnerability
and patch management, data disposal and
access control
• Quarterly assessment of key IT controls
• Monitored mandatory cyber security and GDPR
training
• Third-party IT providers subject to information-
security vendor assessment
• Close working with IT service partners to
manage risk and improve technical standards
• Defined technical IT standards for all building
systems
• Extensive use of cloud-based systems
• Business continuity, crisis management and IT
disaster-recovery plans in place for all assets,
including regular testing
• Established penetration testing and
vulnerability-management across our IT estate
CHANGE IN YEAR | NO CHANGE
Significant investment and operational
strengthening has been made over recent years,
most recently including the onboarding of a new
Chief Data & Technology Officer during the year.
The emphasis is now focused on continuous
improvement of the processes and controls.
The current position of this risk remains within
the overall Cautious risk appetite alignment for
operational risks.
7
CHANGE PROJECTS
EXECUTIVE RESPONSIBLE | ELT
APPETITE: CAUTIOUS
Landsec is engaging in a number of important
internal change programmes. These projects
aim to deliver important benefits, both
operationally and culturally. There is a risk
that these projects fail to deliver the benefits
identified in a timely manner and to budget.
EXAMPLE KRIs
• Key project milestones missed
• Number of projects operating without
appropriate governance
• Number of success criteria achieved at
post-implementation reviews and audits
MITIGATION
• Board and ELT oversight
• Project governance methodology
• Qualified project managers used on all large
projects
• Benefits cases documented and agreed
• Company-wide communication of Project
Major supported by regular town halls and
Senior Leadership Team engagement.
• Regular reporting of project progress to
project boards
• Alignment of Finance and UK Governance
regime workstreams
CHANGE IN YEAR | NO CHANGE
Landsec has various technology and operational
change programmes underway, such as the
upgrade and improvement of the ERP system.
Whilst cultural change programmes are
drawing to a close, we continue to get deeper
into the operational change programmes.
As such, the overall risk has remained stable.
The current position of this risk, remains within
the overall Cautious risk appetite alignment for
operational risks.
8
HEALTH AND SAFETY
EXECUTIVE RESPONSIBLE | MARINA THOMAS
APPETITE: CAUTIOUS/MINIMALIST
Failure to identify, mitigate or react effectively
to major health or safety incidents, leading to:
• Serious injury, illness or loss of life
• Criminal or civil proceedings
• Loss of stakeholder confidence
• Delays to building projects and access
restrictions to our properties, resulting in loss
of income
• Inadequate response to regulatory changes
• Reputational impact
EXAMPLE KRIs
• Number of reportable health and safety
incidents
• Health and safety training completion
• Control reviews and follow up to completion
MITIGATION
• Regular reviews by the Board, ELT and Health,
Safety and Security Committee (chaired by
the CEO)
• Health and safety management system
accredited to ISO 45001 standard
• Fire-safety management system accredited
to the BS 9997 standard
• Task force of internal experts and independent
fire-engineering firm progressing cladding
project quickly
• Audits by Internal Audit, plus annual
programme of data-led and second-line audits
by the Health and Safety team
• Legal and best practice compliance monitored
in real time
• Strict standards applied to the selection of
key service and construction partners; assessed
by KPIs and regular reviews
CHANGE IN YEAR | NO CHANGE
During the period, the risks associated with the
use of reinforced autoclaved aerated concrete
(RAAC) have been assessed, with action plans
in place where necessary, however the overall
implications on our health and safety
environment are considered immaterial.
The likelihood of a major health, safety or
security incident has remained constant
throughout the year and within appetite.
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LANDSEC ANNUAL REPORT 2024
45
9
PEOPLE AND SKILLS
EXECUTIVE RESPONSIBLE | KATE SELLER
APPETITE: CAUTIOUS
Inability to attract, retain and develop the
right people and skills to meet our strategic
objectives, grow enterprise value and meet
shareholder expectations.
EXAMPLE KRIs
• Employee turnover levels
• High-potential employee turnover
• Employee engagement score
• Succession planning up to date
• Time to hire
MITIGATION
• Executive remuneration and long-term
incentive plans in place, which are
benchmarked, overseen by the Remuneration
Committee and aligned to the Group and
individual performance
• Regular review of succession plans for senior
and critical roles
• Remuneration plans for other key roles are
benchmarked annually
• The talent-management programme identifies
high-potential individuals
• Clear employee objectives and development
plans
• Health and Wellbeing Statement of Practice
• Regular employee engagement surveys
CHANGE IN YEAR | NO CHANGE
In recent years, this risk had increased due to
a combination of attrition due t o ongoing
transformation programmes as well as the
buoyant employment market at the time.
However, these pressures have now stabilised
leading to this risk remaining unchanged overall
and within appetite over the period.
10
CLIMATE CHANGE TRANSITION
EXECUTIVE RESPONSIBLE | CHRIS HOGWOOD
APPETITE: CAUTIOUS
Climate change risk has two elements:
➊ Our near and long-term science-based
carbon reduction targets by 2030 and 2040
are not met in time or are achieved at a
significantly higher cost than expected,
leading to regulatory, reputational and
commercial impact.
➋ Failure to ensure all new developments are
net zero in construction and operation, as
defined by the emerging net zero standard
for assets, leads to an inability to service
market demand for high-quality assets
that meet the highest environmental and
wellbeing standards.
EXAMPLE KRIs
• Energy intensity
• Renewable electricity
• EPC ratings
• Operational carbon emissions
• Embodied carbon for new developments
• Portfolio natural-disaster risk
MITIGATION
• Climate risks and opportunities for potential
acquisitions assessed by our Responsible
Property Investment Policy and ESG acquisition
appraisal framework
• Developments designed to be resilient to
climate change and net zero both in
construction and operation
• All properties comply with ISO 14001 and
ISO 50001 Environmental and Energy
Management System
• Continued monitoring of portfolio exposure to
physical climate risks, and we review mitigation
actions for sites located in high-risk areas
• Early engagement with supply chain for
procurement of air-source heat pumps and
solar PVs ensuring appropriate due diligence
CHANGE IN YEAR | NO CHANGE
Operational and supply chain issues are
impacting the availability and cost of sustainable
resources, which are key to meeting the business’s
embodied carbon targets. This is under regular
review, however the overall risk position is
considered to have remained stable over the year,
currently sitting just below the Cautious risk
appetite target.
LANDSEC ANNUAL REPORT 2024
STRATEGIC REPORT
The impact of international and domestic
political and economic events over the course
of the year has resulted in the UK facing
a prolonged period of high inflation, rising
interest rates and minimal GDP growth.
Therefore, the Directors have continued to
place additional focus on the appropriateness
of adopting the going concern assumption
in preparing the financial statements for the
year ended 31 March 2024. The Group’s going
concern assessment considers changes in
the Group’s principal risks (see pages 41-45)
and is dependent on a number of factors,
including our financial performance and
continued access to borrowing facilities.
Access to our borrowing facilities is
dependent on our ability to continue to
operate the Group’s secured debt structure
within its financial covenants, which are
described in note 22.
In order to satisfy themselves that the Group
has adequate resources to continue as a
going concern for the foreseeable future, the
Directors have reviewed base case, downside
and reverse stress test models, as well as a
cash flow model which considers the impact
of pessimistic assumptions on the Group’s
operating environment (the ‘mitigated
downside scenario’). This mitigated downside
scenario reflects unfavourable macro-
economic conditions, and a deterioration
in our ability to collect rent and service
charge from our customers and removes
uncommitted capital expenditure,
acquisitions, disposals and developments.
The Group’s key metrics from the mitigated
downside scenario as at the end of the going
concern assessment period, which covers
the 16 months to 30 September 2025, are
shown below alongside the actual position
at 31 March 2024.
KEY METRICS
TABLE 17
31 March 2024
Mitigated
downside
scenario
30 September
2025
Security Group LTV
37.0%
42.8%
Adjusted net debt
£3,517m
£3,885m
EPRA net tangible
assets
£6,398m
£5,559m
Available financial
headroom
£1.9bn
£0.9bn
In our mitigated downside scenario, the
Group has sufficient cash reserves, with
our Security Group LTV ratio remaining less
than 65% and interest cover above 1.45x,
for a period of 16 months from the date of
authorisation of these financial statements.
Under this scenario, the Security Group’s
asset values would need to fall by a further
34% from the sensitised values forecasted at
30 September 2025 to be non-compliant with
the LTV covenant. This equates to a 43% fall
in the value of the Security Group’s assets
from the 31 March 2024 values for the LTV
to reach 65%. The Directors consider the
likelihood of this occurring over the going
concern assessment period to be remote.
The Security Group also requires earnings
before interest of at least £198m in the full year
ending 31 March 2025 and at least £232m in
the full year ending 31 March 2026 for interest
cover to remain above 1.45x in the mitigated
downside scenario, which would ensure
compliance with the Group’s covenant
through to the end of the going concern
assessment period. Security Group earnings
post year end 31 March 2024 are above the
level required to meet the interest cover
covenant for the year ended 31 March 2025.
The Directors do not anticipate a reduction in
Security Group earnings over the period ending
30 September 2025 to a level that would result
in a breach of the interest cover covenant.
The Directors have also considered a reverse
stress-test scenario which assumes no
further rent will be received, to determine
when our available cash resources would be
exhausted. Even under this extreme scenario,
although breaching the interest cover
covenant, the Group continues to have
sufficient cash reserves to continue in
operation throughout the going concern
assessment period.
Based on these considerations, together
with available market information and the
Directors’ knowledge and experience of
the Group’s property portfolio and markets,
the Directors have adopted the going
concern basis in preparing the financial
statements of the Group and parent for
the year ended 31 March 2024.
VIABILITY STATEMENT
THE VIABILITY ASSESSMENT PERIOD
The Directors have assessed the viability of
the Group over a five-year period to March
2029, taking account of the Group’s current
financial position and the potential impact
of our principal risks.
PROCESS
Our financial planning process comprises
a budget for two financial years and the
strategic plan. Generally, the budget has
a greater level of certainty and is used to
set near-term targets across the Group. The
strategic plan is less certain than the budget
but provides a longer-term outlook against
which strategic decisions can be made.
The financial planning process considers the
Group’s profitability, capital values, gearing,
cash flows and other key financial metrics
reflecting conservative adjustments to the
strategic plan over the plan period. These
metrics are subject to sensitivity analysis,
in which a number of the main underlying
assumptions are flexed and tested to consider
alternative macro-economic environments.
Additionally, the Group also considers the
impact of potential structural changes to
the business in light of varying economic
conditions, such as significant additional
sales and acquisitions or refinancing. These
assumptions are then adapted further to
GOING CONCERN AND VIABILITY
The Directors outline their assessment of the
Group’s ability to operate as a going concern
and its long-term viability, taking into account
the impact of the Group’s principal risks.
46
STRATEGIC REPORT
LANDSEC ANNUAL REPORT 2024
47
assess the impact of considerably worse
macro-economic conditions than are
currently expected, which forms the basis
of the Group’s ‘Viability scenario’.
Given the recent unfavourable macro-
economic conditions in which the Group
has been operating, additional stress-testing
has been carried out on the Group’s ability
to continue in operation under extremely
unfavourable operating conditions. While
the assumptions we have applied in these
scenarios are possible, they do not represent
our view of the likely outturn. The Directors
have also considered reverse stress-test
scenarios including one in which we are
unable to collect any rent for an extended
period of time. The results of these tests help
to inform the Director’s assessment of the
viability of the Group.
KEY RISKS
The table below sets out those of the
Group’s principal risks (see pages 41-45
for full details of the Group’s principal risks)
that could impact its ability to remain in
operation and meet its liabilities as they
fall due and how we have taken these into
consideration when making our assessment
of the Group’s viability.
PRINCIPAL RISK
VIABILITY SCENARIO ASSUMPTION
Macroeconomic outlook
Changes in the macroeconomic environment
result in reduction in demand for space or deferral
of decisions by retail and office occupiers.
Due to the length of build projects, the prevailing
economic climate at initiation may be vastly
different from that at completion.
• Declines in capital values and outward yield
movements across all assets within the portfolio
• Additional impact of a higher inflationary
market captured within costs
• No issuance of additional fixed term bonds
through the assessment period
• Additional impact of increased interest rates
on servicing debt
Office occupier market
Structural changes in customer expectations leading
to changes in demand for office space and the
consequent impact on income and asset values.
Further, the risk encompasses the inability to identify
or adapt to changing markets in a timely manner.
• Reduced demand leads to increased void
periods, negative valuation movements and
downward pressure on rental values over the
whole assessment period
Retail and hospitality occupier market
Structural changes in customer expectations leading
to changes in demand for retail or hospitality
space and the consequent impact on income
and asset values.
• Increased customer failures lead to increased
void periods, negative valuation movements
and downward pressure on rental values over
the period
Capital allocation
Capital allocated to specific assets, sectors or
locations does not yield the expected returns i.e.
we are not effective in placing capital or recycling.
• Capital that is accretive to the portfolio but not
essential has been removed
• Any uncommitted budgeted acquisitions,
disposals and developments do not take place
due to reduced liquidity
Development strategy
We may be unable to generate expected returns
as a result of changes in the occupier market for
a given asset during the course of the development,
or cost or time overruns on the scheme.
• A reduction in recognised development profits
for committed schemes that will continue to be
advanced over the viability assessment period
We considered our other Principal Risks, including climate change transition, and their possible
impact on our assessment of the Group’s viability. We concurred that as we have fully costed
and committed to invest £135m to achieve our science-based target by 2030, this mitigated
the climate change transition risk sufficiently.
IMPACT ON KEY METRICS
We have assessed the impact of these
assumptions on the Group’s key financial
metrics over the assessment period, including
profitability, net debt, loan-to-value ratios
and available financial headroom.
The viability scenario represents a
contraction in the size of the business over
the five-year period considered, with the
Security Group LTV at 49.5% in March 2029,
its highest point in the assessment period.
The Group maintains a positive financial
headroom from March 2024 through to
September 2025 and the Group will only be
required to secure new funding from March
2026. The Directors expect the Group to be
able to secure new funding, given the strong
relationships and engagement the Group
has with its existing banking group and on
the basis of the recent bond issuances in
March 2023 and March 2024 that were well
supported by investors.
KEY METRICS
TABLE 18
Actuals
31 March 2024
Mitigated
downside
scenario
31 March 2029
Security Group LTV
37.0%
49.5%
Adjusted net debt
£3,517m
£4,016m
EPRA net tangible
assets per share
859p
655p
Available financial
headroom
£1.9bn
(£2.3bn)
CONFIRMATION OF VIABILITY
Based on this assessment the Directors have
a reasonable expectation that the Group will
continue in operation and meet its liabilities
as they fall due over the period to March 2029.
LANDSEC ANNUAL REPORT 2024
STRATEGIC REPORT
NON-FINANCIAL AND SUSTAINABILITY
INFORMATION STATEMENT
TOPIC
OUR POLICIES AND STANDARDS THAT GOVERN OUR APPROACH
WHERE INFORMATION CAN
BE FOUND IN THIS REPORT
ENVIRONMENTAL
MATTERS AND
CLIMATE-RELATED
FINANCIAL
DISCLOSURE
REQUIREMENTS
• Sustainability policy: sets out our sustainability vision and associated commitments
as detailed in our Build well, Live well, Act well strategy
• Environment and energy policy: how we manage our business activities with minimal
impact on the natural environment and strive to reduce our climate change impact
• Materials brief: sets out the materials we prohibit use of in our construction activities
based on health impacts, responsible sourcing, embodied carbon impact and
resource efficiency considerations
• Responsible property investment policy: our commitment and approach to
managing aspects of sustainability throughout the acquisition and disposal of assets
• Sustainable Development Toolkit: translates our sustainability vision into a guide to
ensure that we design and develop our new schemes and refurbishments sustainably
• Nature strategy: details our approach to incorporating nature and green spaces
into our business activities as a real estate company who creates value by buying,
developing, managing and selling properties
• Build well, Live well, Act well site action plans: plans that guide our site teams to
operate and manage our standing assets sustainably
— BUILD WELL ON PAGES 28-30
— TCFD STATEMENT ON PAGES 33-37
— SECR REPORTING ON PAGES 170-172
EMPLOYEES
• Employee Code of Conduct: sets out how we behave internally and externally, in line
with our purpose, values and behaviours
• Equal opportunities policy: how we treat our employees, based on merit and ability,
in a fair and transparent way, building a diverse and inclusive workplace
• Harassment and bullying policy and procedure: our commitment to stop and prevent
behaviour that causes offence or distress in the workplace
• Health and safety policy: how we manage health and safety throughout our
operations and assets
• Health and wellbeing policy: investing in improving the health and wellbeing of our
employees, encouraging a healthy work-life balance
• Mental health first aider policy: sets out how we manage our trained mental health
support network
— OUR PEOPLE AND CULTURE ON
PAGES 25-27
— ACT WELL ON PAGE 32
RESPECT FOR
HUMAN RIGHTS
• Human rights policy: our commitment and core principles to respect the human
rights of all those who work for Landsec and on our behalf
• Modern Slavery Statement: we are committed to ensuring that all work in our supply
chain associated with our projects and contracts is voluntary and fair and that the
health, safety and security of all workers is a priority
• Supply Chain Commitment: our commitment to build long-lasting partnerships
with suppliers who uphold the same ethical principles as us and work together for
a sustainable future for all
• Right to work policy: provides best practice guidance to those assigned responsibility
for performing right to work checks across our supply chain
— DIRECTORS’ REPORT ON
PAGES 92‑94
— ACT WELL ON PAGE 32
This section of our Strategic Report constitutes Landsec’s
Non-financial Information Statement. This is intended to
help stakeholders understand our position on these key
non-financial matters. The table below highlights our
policies and standards and where you can find more
information in this report.
YOU CAN FIND OUR POLICIES ON OUR
WEBSITE: LANDSEC.COM/SUSTAINABILITY/
GOVERNANCE-POLICIES, LANDSEC.COM/
ABOUT/CORPORATE-GOVERNANCE
48
STRATEGIC REPORT
LANDSEC ANNUAL REPORT 2024
49
TOPIC
OUR POLICIES AND STANDARDS THAT GOVERN OUR APPROACH
WHERE INFORMATION CAN
BE FOUND IN THIS REPORT
SOCIAL MATTERS
• Diversity and inclusion: our D&I strategy, Diverse Talent, Inclusive Culture and
Inclusive Places sets out our vision to design, develop and manage more inclusive,
commercially successful places through attracting and nurturing diverse talent
within a culture that enables everyone to reach their full potential
• Board Diversity Policy: sets out the specific responsibilities of the Board in relation to
the diversity of its membership and its role in setting a culture of inclusive leadership
from the top
• Community Charter: our commitment to engage our communities throughout the
development process and beyond
• Stakeholder Engagement policy: outlines our commitment and approach to inclusive
stakeholder engagement
— OUR PEOPLE AND CULTURE ON
PAGES 25-27
— GOVERNANCE REPORT – BOARD
DIVERSITY ON PAGE 58
— OUR STAKEHOLDERS ON
PAGES 22‑24
— LIVE WELL ON PAGE 31
ANTI-BRIBERY
AND CORRUPTION
• Anti-Bribery Gifts and Hospitality Policy: we have a zero tolerance for any form
of bribery or corruption
• Conflicts of interest and anti-competitive behaviours: our employees must act
in the best interests of the Company and not make decisions for personal gain
• Speak Up Policy: how we encourage those who work for Landsec and on our behalf
to ask questions, raise concerns or report incidents of any impropriety or wrongdoing
• Sustainable Procurement Guidance: sets out six procurement principles to ensure
that we procure goods and services responsibly, securely, timely, smartly, ethically
and positively in accordance with the law and in compliance with relevant legislation
• Tax strategy: we act with integrity and excellence when dealing with taxes and
engage with government for a fair taxation system
— ACT WELL ON PAGE 32
— REPORT OF THE AUDIT COMMITTEE
ON PAGES 62-69
DESCRIPTION OF
PRINCIPAL RISKS
AND IMPACT OF
BUSINESS
ACTIVITY
• We consider both external and internal risks, evaluate them, assess the impact
and put in place mitigating actions and controls
— MANAGING RISK ON PAGES 38-40
— PRINCIPAL RISKS AND
UNCERTAINTIES ON PAGES 41-45
— REPORT OF THE AUDIT COMMITTEE
ON PAGES 62-69
DESCRIPTION OF
BUSINESS MODEL
• To create value, we buy, develop, manage and sell property, drawing on a range
of financial, physical and social resources
— OUR BUSINESS MODEL ON PAGE 7
NON-FINANCIAL
KEY
PERFORMANCE
INDICATORS
• In addition to our financial performance metrics, we set ourselves a range of KPIs
for the year including sustainability targets
— KEY PERFORMANCE INDICATORS
ON PAGE 10
This Strategic Report was approved by the Board of Directors on 16 May 2024 and signed on its behalf by:
MARK ALLAN, CHIEF EXECUTIVE
LANDSEC ANNUAL REPORT 2024
GOVERNANCE
INTRODUCTION TO THE CORPORATE
GOVERNANCE REPORT FROM THE CHAIR
As Chair of Landsec, I’m pleased to
present our Corporate Governance Report.
During the year our Board has continued
to advance the long-term, sustainable
success of the Company. Our effective
governance processes underpin Board
activities and ensure we effectively consider
the risks, uncertainties and opportunities
the business faces.
THE YEAR IN REVIEW
In 2023/24, the Board continued to address
challenges arising from macroeconomic and
geopolitical conditions, including the effects
of increased inflation and interest rates on
property values. The increased cost of capital
and capital allocation more broadly was
a significant consideration. These external
factors continued to shape our discussions
throughout the year, guiding decisions that
sought to prioritise the Company’s best
interests in both the short and long term.
Despite these challenges, we achieved
another year of robust operational
performance. This success is a result of
the focus on our three key competitive
advantages: our high quality portfolio; the
strength of our customer relationships; and
our ability to unlock complex opportunities.
BOARD SUCCESSION AND DIVERSITY
The Board and Nomination Committee have
continued to focus on succession planning
and Board composition.
During the year, as well the retirement of
Cressida Hogg, and my transition to Chair
on 16 May 2023, we announced other
changes to the Board. Nicholas Cadbury,
our Audit Committee Chair, left the Board
on 31 December 2023, and Edward Bonham
Carter, our Senior Independent Director
announced that he would leave the Board
at our AGM on 11 July 2024. As a result,
we have welcomed James Bowling as our
new Audit Committee Chair in September
2023 and Moni Mannings who joined the
Board in December 2023 and became
Senior Independent Director in April 2024.
We continue to review and evolve our skills
matrix to ensure we have the skills needed
on our Board.
We remain committed to having a Board
that is diverse in all respects. As at the date
of this report we comply with the Listing
Rules requirements relating to diversity:
(i) 40% of our Board are women, (also
meeting the FTSE Women Leaders target);
(ii) two of our senior Board roles are held by
women (CFO and SID); and (iii) we have two
directors on the Board from minority ethnic
backgrounds (also meeting Parker Review
targets). During the year we approved
a Board Diversity Policy. Importantly, across
the wider business, we made progress against
our diversity targets (see pages 26-27), but
in order that diversity and inclusion remains
a key priority we are going to include it in
our executive incentive programmes from
2024/25 onwards (see page 71).
STAKEHOLDER ENGAGEMENT
Landsec’s success is dependent on the
Board taking decisions for the benefit of our
shareholders and in doing so having regard
to all our stakeholders.
Each year we write to our larger shareholders,
offering them the opportunity to meet
privately and discuss their thoughts on the
Company and the wider market with the
Chair or the Senior Independent Director.
Since this was my first year as Chair I had
a number of these meetings and valuable
feedback from those meetings was discussed
by the Board. Our stakeholder engagement
activity is described in more detail on
pages 22-24.
CULTURE
The Board understands the importance
of culture and setting the tone of the
organisation from the top and embedding
it throughout Landsec. Our culture is a key
component for continuing to make progress
with our strategic plans. The aim of our
people strategy is to create a high-performing
and inclusive culture. During the year the
Board has monitored our culture with regular
updates from our Chief People Officer on
our people, our culture, talent and succession
planning, diversity and inclusion activities
and engagement survey, and direct
engagement activities with the workforce.
BOARD EVALUATION
This year our Board evaluation was carried
out internally. The Board was satisfied
with its own performance, with all Board
members rating performance as good or
excellent. For more detail see page 61.
UK CORPORATE GOVERNANCE CODE
In respect of the year ended 31 March 2024
Landsec was subject to the UK Corporate
Governance Code 2018 (the ‘Code’, available
from frc.org.uk). The Board is pleased
to confirm that Landsec applied the principles
and complied with all the provisions of the
Code throughout the year. We are also
preparing for the changes required under
the UK Corporate Governance Code 2024.
CONCLUSION
I would like to take this opportunity to
recognise the hard work and commitment
of all our people during the year and to thank
them for their continued efforts to ensure
the future success of the business. I would
also like to conclude by thanking members
of the Board for their continued support and
commitment over the past year.
SIR IAN CHESHIRE, CHAIR
DEAR SHAREHOLDER
I am pleased to introduce
the governance section for
the year ended 31 March 2024
50
LANDSEC ANNUAL REPORT 2024
51
GOVERNANCE
BOARD OF DIRECTORS
SIR IAN CHESHIRE, CHAIR*
MONI MANNINGS OBE, NON-EXECUTIVE DIRECTOR
AND SENIOR INDEPENDENT DIRECTOR*
EDWARD BONHAM CARTER,
NON-EXECUTIVE DIRECTOR*
BOARD TENURE
One year
Sir Ian joined the Landsec Board as Non-executive
Director and Chair Designate on 23 March 2023
and assumed the role of Chair on 16 May 2023.
COMMITTEES
Nomination Committee (Chair),
Remuneration Committee
ROLE
Leads the Board, responsible for governance, major
shareholder and other stakeholder engagement.
SKILLS AND EXPERIENCE
Sir Ian brings extensive general management and
board experience in customer-facing organisations
across a range of sectors. His executive roles
include senior leadership and commercial roles
in customer-focused businesses, latterly as Group
Chief Executive of Kingfisher plc from 2008 to 2015.
He previously held FTSE 100 Non-executive Director
roles at Barclays Plc (and as Chairman of Barclays
Bank UK), Whitbread Plc, where he was Senior
Independent Director and BT Group Plc where
he was Chair of the Remuneration Committee,
Debenhams and Maison Du Monde. He was lead
Non-executive Director at the UK Cabinet Office
and Department for Work and Pensions. He was
also Chairman of the British Retail Consortium,
Chairman of the Prince of Wales Corporate Leaders
Group on Climate Change, President of the Business
Disability Forum President’s Group and chaired the
Ecosystem Markets Task Force and GR Task Force.
Sir Ian was knighted in the 2014 New Year Honours
for services to Business, Sustainability and the
Environment and is a Chevalier of the Ordre
National du Mérite of France.
OTHER CURRENT APPOINTMENTS
Chair of Channel 4 and Spire Healthcare Group
plc. Non-executive Director of Menhaden Resource
Efficiency Plc. Chair of the King Charles III
Charitable Fund and We Mean Business Coalition.
BOARD TENURE
6 months
Moni joined the Board in December 2023 and
became Senior Independent Director in April 2024.
COMMITTEES
Nomination Committee, Remuneration Committee
ROLE
A sounding board for the Chair and a trusted
intermediary for other Directors and shareholders.
SKILLS AND EXPERIENCE
From 2000 until 2016, Moni was a Partner and
Head of the International Banking and Finance
Division of Olswang LLP, before which she held
senior positions in other leading law firms.
Until 2017, Moni was Chief Operating Officer of
Aistemos Limited. Previous Non-executive Director
positions include Polypipe Group plc, Dairy Crest
Group plc, Breedon Group plc, Investec Bank plc
and Cazoo Group Ltd.
OTHER CURRENT APPOINTMENTS
Independent Non-executive Director of
Hargreaves Lansdown plc, Non-executive Director
and Chair of the Remuneration Committee of
easyJet plc, Non-executive Director and Senior
Independent Director of Co-operative Group.
A Member of the Takeover Panel. Moni also
founded EPOC, a not-for-profit network that
seeks to increase the number of people of colour
on boards and is a member of the Parker Review
Committee and a trustee on the Board of the
St Marks Hospital Foundation charity.
BOARD TENURE
Ten years
Edward is retiring from the Board at the AGM
in July 2024.
COMMITTEES
Nomination Committee, Remuneration
Committee
SKILLS AND EXPERIENCE
Edward has significant experience of general
management as a former CEO of a private equity
backed and listed company. Having been a fund
manager for many years, he has a comprehensive
understanding of global stock markets and
investor expectations which is beneficial to
the Company when it considers its engagement
with investors.
OTHER CURRENT APPOINTMENTS
Senior Independent Director, ITV plc. Trustee and
Chair of Investment Committee, Esmée Fairbairn
Foundation. Non-executive Chairman, Netwealth
Investments Ltd.
R
N
R
N
R
N
COMMITTEES
A Audit Committee
N Nomination Committee
R Remuneration Committee
*Independent as per the UK Corporate
Governance Code.
LANDSEC ANNUAL REPORT 2024
GOVERNANCE
BOARD OF DIRECTORS
CONTINUED
JAMES BOWLING, NON-EXECUTIVE DIRECTOR*
MADELEINE COSGRAVE, NON-EXECUTIVE DIRECTOR*
CHRISTOPHE EVAIN, NON-EXECUTIVE DIRECTOR*
BOARD TENURE
9 months
James joined the Board in September 2023.
COMMITTEES
Audit Committee (Chair)
SKILLS AND EXPERIENCE
James was Chief Financial Officer of Severn
Trent Plc from 2015 until retirement in July 2023,
and remained on the Seven Trent Plc Executive
Committee until December 2023 as a Senior
Advisor. James has relevant financial experience
as a Fellow of the Institute of Chartered
Accountants in England and Wales and as an
experienced listed company CFO who has
successfully applied his skills across a number
of sectors. He has broad experience in financial
reporting, enterprise risk management, long-term
capital investment models and a range of
corporate activity, including M&A.
OTHER CURRENT APPOINTMENTS
Non-independent Non-executive Director of Water
Plus Group Ltd. Chair of Audit Committee and
Non-executive Director at Porterbrook Leasing
Company Limited.
BOARD TENURE
Five years
COMMITTEES
Audit Committee
SKILLS AND EXPERIENCE
Madeleine has extensive experience in the
property industry; she is a member of the Royal
Institution of Chartered Surveyors and former
chair of the INREV Investor Platform. She is an
independent member of the CBRE IM EMEA
Investment Committee, senior advisor to ICG Real
Estate and has mentoring roles with IntoUniversity
and GAIN (Girls Are Investors). Madeleine was
previously Managing Director and Regional Head,
Europe at GIC Real Estate, Singapore’s Sovereign
Wealth Fund. She held this position from 2016
until she stepped down in June 2021 and was
responsible for the investment strategy, portfolio
and team. She led the GIC real estate business
in Europe and was a voting member of GIC RE’s
Global Investment Committee.
Madeleine is a chartered surveyor and started
her career in 1989 with JLL as a graduate trainee.
She went on to hold roles in valuation, fund
management, leasing and development in both
London and Sydney, before joining GIC in 1999.
OTHER CURRENT APPOINTMENTS
Independent Member of CBRE IM EMEA
Investment Committee. Senior Advisor to ICG
Real Estate.
BOARD TENURE
Five years
COMMITTEES
Remuneration Committee (Chair), Nomination
Committee
SKILLS AND EXPERIENCE
Christophe has extensive investment experience
in private equity, debt and other alternative
asset classes. As the former CEO of a UK listed
company, he also has management and
leadership strengths, having successfully led the
transformation of Intermediate Capital Group PLC
(ICG) from a principal investment business into a
diversified alternative asset management group.
Christophe’s broad experience, both as a business
leader and an investor, is a valuable asset to the
Board. Having started his career in banking,
holding various positions at NatWest and Banque
de Gestion Privée, he joined ICG in 1994 as an
investment professional, became CEO in 2010
and stepped down from that position in 2017.
During this time he held various investment
and management roles, founded the Group’s
businesses in Paris, the Asia-Pacific region and
North America, and was instrumental in adding
various additional businesses, including a UK
property lending business.
OTHER CURRENT APPOINTMENTS
Chair, Bridges Fund Management. Non-executive
Director, Quilvest Capital Partners.
A
N
R
A
52
LANDSEC ANNUAL REPORT 2024
53
GOVERNANCE
MILES ROBERTS, NON-EXECUTIVE DIRECTOR*
MANJIRY TAMHANE, NON-EXECUTIVE DIRECTOR*
BOARD TENURE
18 months
COMMITTEES
Audit Committee
SKILLS AND EXPERIENCE
Miles is currently Group Chief Executive of
DS Smith Plc, the international packaging group,
and has held this position since 2010. It has been
announced that Miles will step down from the
Board of DS Smith Plc by 30 November 2025.
Prior to his role at DS Smith Plc, he was Chief
Executive at McBride plc from 2005 to 2010.
Miles brings a wide level of Board experience,
together with specific experience of large,
long-term capital projects, alongside a particular
focus on sustainability. Miles is a qualified
chartered accountant.
OTHER CURRENT APPOINTMENTS
Chief Executive, DS Smith Plc.
BOARD TENURE
Three years
COMMITTEES
Remuneration Committee
SKILLS AND EXPERIENCE
Manjiry brings over 20 years of client and agency
side experience in the data, technology and
advanced analytics industry gained from working
in marketing, customer insight and strategy roles.
She is Global Chief Executive Officer of Gain
Theory, a global foresight consultancy, a subsidiary
of WPP plc. Manjiry was part of a team which
founded Gain Theory in 2015, having previously
been Managing Director of another of WPP’s
consultancies also focused on data and analytics,
Ohal Ltd. Prior to that, Manjiry spent the first part
of her career in the retail sector, latterly as Head
of Customer Insight and Strategy at Debenhams.
In 2017, Manjiry was named as one of the top 20
Women in Data & Technology, led by The Female
Lead and Women in Data.
OTHER CURRENT APPOINTMENTS
Chief Executive Officer, Gain Theory, a subsidiary
of WPP plc. Advisory Board member, Saracens
Women’s Rugby.
THE ROLE OF OUR NON‑EXECUTIVE
DIRECTORS
Our Non-executive Directors are
responsible for bringing an external
perspective, sound judgement and
objectivity to the Board’s deliberations
and decision making. They support and
constructively challenge the Executive
Directors using their broad range of
experience and expertise and monitor
the delivery of the agreed strategy
within the risk management
framework set by the Board.
Our Non-executive Directors have
a diverse skill set and background
including property, investment, asset
management, retail and hospitality,
and data and analytics. This expertise
enables the Board to constructively
challenge management and encourages
diversity of thought in the decision
making process.
COMPANY SECRETARY
Marina Thomas is our Company
Secretary. Marina provides advice and
support to the Board, its Committees
and the Chair, is responsible for
governance and compliance across
the Group, and is a member of our
Executive Leadership Team.
The appointment and removal of
the Company Secretary is a matter
for the Board.
A
R
LANDSEC ANNUAL REPORT 2024
GOVERNANCE
BOARD OF DIRECTORS
CONTINUED
CURRENT GENDER DIVERSITY
OF BOARD (ALL DIRECTORS)
CHART 19
Male
60%
Female
40%
CURRENT BOARD TENURE
(NON-EXECUTIVE DIRECTORS
INCLUDING CHAIR)
CHART 20
6 years
12%
3+ to
6 years
38%
0 to
3 years
50%
MARK ALLAN,
CHIEF EXECUTIVE, EXECUTIVE DIRECTOR
VANESSA SIMMS,
CHIEF FINANCIAL OFFICER, EXECUTIVE DIRECTOR
BOARD TENURE
Four years
ROLE
Responsible for the leadership of the Group,
development and implementation of strategy,
managing overall business performance and
leading the Executive Leadership Team.
SKILLS AND EXPERIENCE
Mark brings extensive knowledge and experience
of the property sector combined with strong
operational leadership and financial and strategic
management skills to the Board. Prior to joining
Landsec, Mark was Chief Executive of St. Modwen
Properties PLC for three years. Prior to that he was
Chief Executive of The Unite Group plc from 2006
until 2016. He moved to Unite in 1999 from KPMG
and held a number of financial and commercial
roles in the business, including Chief Financial
Officer from 2003 to 2006. A qualified Chartered
Accountant, Mark is also a member of the Royal
Institution of Chartered Surveyors.
OTHER CURRENT APPOINTMENTS
Mark is President of the British Property
Federation and an Independent Trustee at
the University of Bristol.
MANAGEMENT COMMITTEES
Chair of the Group’s Executive Leadership Team.
Mark is invited to attend the Audit, Remuneration
and Nomination Committees at the invitation
of the Chairs.
BOARD TENURE
Three years
ROLE
Works closely with the Chief Executive in
developing and implementing vision and strategy.
Responsible for Group financial performance,
financial planning, management of risk and
assurance, group legal and group procurement.
SKILLS AND EXPERIENCE
Vanessa brings extensive experience to Landsec
from the property sector in the UK. She has over
25 years of experience in finance and extensive
knowledge of UK real estate holding a number of
senior positions at other UK property companies.
Vanessa has a valuable combination of expertise
and experience in leading and implementing
strategic change in businesses and substantial
experience in senior finance leadership roles in
a listed environment.
Prior to joining Landsec in June 2021, Vanessa was
CFO of Grainger plc, a role she held since February
2016, and immediately prior to joining Grainger
held a number of senior positions within The Unite
Group plc, including Deputy Chief Financial
Officer. Prior to that Vanessa was UK finance
director at SEGRO plc. Vanessa is a Chartered
Certified Accountant (FCCA) and has an executive
MBA (EMBA) from Ashridge Business School.
OTHER CURRENT APPOINTMENTS
Vanessa has resigned from the Board of Drax
Group Plc (where she is Audit Chair and Non-
executive Director) effective 18 June 2024 and will
join the Board of Rotork plc as a Non-executive
Director on 21 June 2024.
MANAGEMENT COMMITTEES
A member of the Group’s Executive Leadership
Team and chairs our Disclosure Committee.
Vanessa attends Audit Committee meetings
at the invitation of the Committee Chair.
54
LANDSEC ANNUAL REPORT 2024
55
GOVERNANCE
Our Executive Leadership Team is made
up of our Executive Directors and our
business unit and enabling function leaders
and is chaired by the Chief Executive.
EXECUTIVE LEADERSHIP TEAM
REMCO SIMON,
CHIEF STRATEGY & INVESTMENT OFFICER
MARCUS GEDDES,
MANAGING DIRECTOR, WORKPLACE
MARINA THOMAS, HEAD OF GOVERNANCE
AND COMPANY SECRETARY
NISHA MANAKTALA,
CHIEF DATA & TECHNOLOGY OFFICER
KATE SELLER, CHIEF PEOPLE OFFICER
BRUCE FINDLAY, MANAGING DIRECTOR, RETAIL
MIKE HOOD, CEO OF LANDSEC U+I
CHRIS HOGWOOD, MANAGING DIRECTOR,
CORPORATE AFFAIRS & SUSTAINABILITY
BIOGRAPHIES FOR THE
ELT CAN BE FOUND ON
OUR WEBSITE
LANDSEC ANNUAL REPORT 2024
GOVERNANCE
GOVERNANCE REPORT
*We also operate a Disclosure Committee, chaired by the CFO, which oversees compliance with market abuse requirements and manages inside information.
BOARD OF DIRECTORS
Responsible for the
long-term success
of the Group
Provides leadership and
direction to the Group
on its culture, values
and ethics
Sets strategy
and oversees
its implementation
Agrees risk appetite
and is responsible
for risk oversight
Responsible for
corporate governance
Responsible for the
overall financial
performance of
the Group
Appointment of
Executive Directors
Approves property
and investment decisions
and other commitments
above £150m
CHIEF EXECUTIVE
Leads the Group
Articulates vision,
values and purpose
Develops and
implements strategy
Responsible for
overall performance
of the business
Manages the Executive
Leadership Team
AUDIT COMMITTEE
Responsible for oversight
of the Group’s financial
and narrative
reporting processes
Responsible for the integrity
of financial statements
and internal control
Supports the Board
in risk identification
and management
Ensures transparency
and financial governance
REMUNERATION
COMMITTEE
Recommends to the Board
the Directors’
Remuneration Policy
Determines remuneration
packages of the Executive
Directors and the Executive
Leadership Team
Oversight of remuneration
practices for all employees
NOMINATION COMMITTEE
Reviews structure, size and
composition of the Board
and its Committees
Oversees succession planning
of Directors and the
Executive Leadership Team
Leads Board
appointment processes
Recommends appointments
to the Board
Board committees*
BUSINESS UNIT (WORKPLACE, RETAIL, LANDSEC U+I)
EXECUTIVE COMMITTEES
EXECUTIVE
LEADERSHIP TEAM
Management committees
Management committees
Management committees
Approve
property
investment
decisions
£10m to
£150m
Develop
and oversee
the delivery
of strategic
plans
Focus on
external
perspectives
and trends
Assess
and
manage
strategic
risks
Shadow
Boards were
introduced
in 2023
and are
described in
more detail
on page 57
WORKPLACE AND LIFESTYLE BOARDS
AND THEIR SHADOW BOARDS
Monitor
performance and
organisational
health
Develop and oversee
the Group’s people
and culture strategy
Oversight of
sustainability and
data strategies, risk
and compliance
Develop
and execute
business plans
Assess and
manage
operational risks
Deliver
financial
performance
Talent
development
OUR GOVERNANCE STRUCTURE
56
LANDSEC ANNUAL REPORT 2024
57
GOVERNANCE
OUR GOVERNANCE STRUCTURE
The Board and Committees continue to
oversee governance and assurance. They are
supported by our Executive Leadership Team,
which is responsible for oversight of strategy,
organisational health and the Group’s people
agenda. Our governance model is centred
around our two different business areas:
(i) our Workplace Board and Executive
Committee cover our office activity; and (ii)
our Lifestyle Board together with the Retail
and Landsec U+I Executive Committees cover
the retail and mixed-use business areas.
Decisions that can only be made by the
Board, together with the terms of reference
for our Board Committees are on our
website. Our Delegation of Authorities
framework sets out levels of authority for
decision making throughout the business.
Decision-making on investments and
commercial agreements, including the
acquisition, disposal and development of
assets, is delegated according to financial
values. Our investment appraisal guidelines
include the principles in Section 172 of the
Companies Act requiring consideration of
all stakeholders.
ATTENDANCE
There were seven scheduled meetings this
year. All Board members attended those
meetings. The Chair held meetings with
the Non-executive Directors without the
Executive Directors present at the end of
every scheduled Board meeting.
BOARD ACTIVITIES
Our Board is responsible for the overall
leadership of the Group and throughout
the year, Board activities and discussion
have continued to focus on the Company’s
strategic priorities. The Board oversees the
Company’s strategic direction and supports
the ELT with its delivery of the strategy
within a transparent governance framework.
Alongside the strategic priorities and business
financial and operational performance,
the Board has considered topics including
executive succession, diversity and inclusion,
data and technology, compliance and
governance. Further detail on these topics
is set out on page 59.
KEY STAKEHOLDERS ARE CONSIDERED IN
DECISION MAKING IN ACCORDANCE WITH
SECTION 172 OF THE COMPANIES ACT 2006
(SEE PAGES 22-24)
STRATEGY DAY
The Board strategy day which took place
in January 2024 was focused on mixed-use
developments and included a tour of the
successful Kings Cross mixed-use project,
presentations on mixed-use market themes
and dynamics and specific discussions on
Landsec’s mixed-use portfolio.
TRAINING AND DEVELOPMENT
Directors received regular market updates
in their Board papers, facilitating greater
awareness and understanding of the
context of the Group’s business and strategy.
The Board also received a detailed briefing
on the Group’s new nature strategy which
was launched during the year. Details of all
of the activities undertaken by the Board are
in the table on page 59.
INDUCTION
Our induction plan is delivered on appointment
and aims to enable a new Director to assume
their responsibilities as quickly as possible and
feel able to contribute to business and strategy
discussions, with sufficient knowledge to
provide effective challenge.
OUR NEW SHADOW BOARDS
In 2023, we established two Shadow
Boards, which shadow our Workplace and
Lifestyle Boards. These Shadow Boards are
made up of employees who participate in
shadow board meetings and then formal
Workplace and Lifestyle Board meetings to
provide new perspectives and ideas and to
gain experience in board procedures and
board level decision-making. The Shadow
Boards do not have formal authority inside
the organisation.
We established our Shadow Boards to help
us make better decisions by broadening our
current community of decision-makers to
ensure wider diversity of thought, and to
create impactful career-development
opportunities to help our future industry
leaders realise their potential. This builds
new skill-sets for the members, and provides
a forum to challenge the status quo and
consider diverse perspectives. This will help
ensure the long-term quality and success of
our business, so we can continue to lead the
industry in making sure we best represent
the customers and places we serve.
Applications for the Shadow Board positions
were open to all Landsec colleagues, from
any business area or enabling function,
no matter what stage of their career.
Nearly 80 Landsec colleagues applied for
these roles, using a written application
form. An interview with a selection panel
followed for those shortlisted. The panel
was formed of ELT, People team and
Affinity network members. The main
considerations for the selection panel were
to ensure candidates had a clear interest
in matters of strategic significance to
Landsec and the wider real estate industry,
as well as the desire to contribute to
decision-making at Board level and the
capacity to take on the role.
Of the applicants, we selected ten for their
attitude, skill-set, experience and potential
– five for the Lifestyle Board and five for
the Workplace Board. As a result the
Shadow Boards comprise colleagues
from diverse areas including operations,
communications, finance, development,
leasing, procurement and project
management. The members underwent
formal training involving mentoring,
meeting management, personal impact
and technical training on how to read and
understand financial information.
The process also revealed many candidates
who demonstrated potential, allowing us
to put some others forward for alternative
opportunities, or help guide and mentor
their career ambitions.
The Shadow Boards meet formally six
times a year, in advance of the respective
Lifestyle and Workplace Board meetings,
to review, discuss and agree papers and
recommendations. They receive the same
board papers as the Boards they shadow,
and are supported by the MDs of Landsec
U+I, Retail and Workplace. They discuss
matters amongst themselves before
appointing two representatives to attend
the Board meetings, in rotation, to
represent each Shadow Board’s collective
perspectives.
The Shadow Boards have also met
separately in early 2024 with two Non-
executive Directors to provide their
feedback on the Shadow Board experience
and gain insights from our Non-executives
on working at PLC Board level. At both
sessions feedback provided was
overwhelmingly positive.
LANDSEC ANNUAL REPORT 2024
GOVERNANCE
GOVERNANCE REPORT
CONTINUED
An induction plan was put in place for Sir Ian
Cheshire upon joining as a Non-executive
Director in January 2023, and this continued
throughout 2023. James Bowling and Moni
Mannings are currently going through their
induction schedules.
Our induction programmes for Ian, James
and Moni were designed to:
• support their understanding of Landsec’s
business and financial position, strategy,
culture, risks and opportunities
• enable a good understanding of our Board
processes and dynamics
• help them form relationships with the
Board, the ELT and other key individuals
at Landsec and key external advisers
• help the Directors learn about our business
first hand, by site visits across our retail,
workplace and mixed-use portfolio. Ian,
Moni and James have all visited or are due
to visit our sites in Manchester, Bluewater,
Gunwharf Quays, Victoria, Southwark,
O2 and Lewisham.
In our 2023/24 Board evaluation, our
Directors rated our in-depth induction
programme highly.
CONFLICTS OF INTEREST AND
EXTERNAL APPOINTMENTS
The Board has a policy to identify and
manage Directors’ conflicts or potential
conflicts of interest and will (i) approve any
such disclosed conflicts, and (ii) determine
any mitigating actions deemed appropriate
to ensure that all Board meetings and
decisions are conducted solely with a view
to promoting the success of Landsec.
Directors’ conflicts of interest are reviewed by
the Board annually, with new conflicts arising
between meetings dealt with by the Chair
and Company Secretary.
Details of Non-executive Directors’ other
appointments are included on pages 51-53.
Non-executive Directors’ letters of
appointment set out the time commitments
expected from them. Following consideration,
the Nomination Committee has concluded
that all the Non-executive Directors continue
to devote sufficient time to discharging their
duties to the required high standard.
We generally adhere to the Institutional
Shareholder Services (ISS) proxy voting
guidelines on overboarding and accordingly
deem all of our Non-executive Directors to
be within these guidelines.
Our policy is to allow Executive Directors
to take one non-executive directorship at
another FTSE company, subject to Board
approval. During the year, Vanessa Simms
disclosed that she had resigned from Drax
Group plc and would take on a non-executive
role at Rotork plc, with both changes being
effective from June 2024. The Board
considered this change and was satisfied
that Vanessa’s time commitment to her role
would not be impacted.
BOARD DIVERSITY
During the year the Board formally adopted
a Board Diversity Policy (available on our
website). This Policy sets out the specific
responsibilities of the Board in relation to
the diversity of its membership and its role
in setting a culture of inclusive leadership
from the top.
Our latest gender and ethnic diversity data
at Board level and below as required under
the Listing Rules is detailed below. Further
diversity data for the wider workforce is
on pages 26-27 and in our Sustainability
Performance and Data Report.
Landsec was pleased to be ranked 16th in
the FTSE Women Leaders Review published
in 2024. The Board acknowledges the need
to make more progress on ethnic diversity
below Board level and has set a target of
9% ethnic diversity in our senior leadership
population by 2027 as required under the
Parker Review. We have 2030 targets for
gender and ethnic diversity which are
available on our website. To ensure the
Group is working towards these targets,
diversity and inclusion measures are being
included in our executive bonus and long-
term incentive plans for the first time this
year (see page 71).
BOARD AND EXECUTIVE LEADERSHIP DIVERSITY1
TABLE 21
Number of
Board
members
Percentage
of the
Board
Number of
senior
positions on
the Board
(CEO, CFO, SID
and Chair)
Number in
Executive
Leadership
Team
Percentage
of Executive
Leadership
Team
Gender diversity
Men
6
60%
2
6
60%
Women
4
40%
2
4
40%
Not specified/prefer not to say
–
–
–
–
–
Ethnic diversity
White British or other White (including minority-white groups)
8
80%
3
9
90%
Mixed/Multiple Ethnic Groups
–
–
–
–
–
Asian/Asian British
2
20%
1
1
10%
Black/African/Caribbean/Black British
–
–
–
–
–
Other ethnic group, including Arab
–
–
–
–
–
Not specified/prefer not to say
–
–
–
–
-
1. Data disclosed as at the date of this report. The data is collected from individuals when joining the Company. Individuals are asked to select from a series of options on both gender
and ethnic diversity. Gender and ethnicity data is shared with the Executive Leadership Team and the Board regularly.
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LANDSEC ANNUAL REPORT 2024
59
GOVERNANCE
STRATEGY
• Retail, Workplace and Landsec U+I business reviews
• Acquisitions and disposals
• Defence overview, valuations and market reviews
• Mixed-use strategy day held in Kings Cross
• Optimum capital recycling and capital allocation
• Review and approval of treasury strategies
• Gunwharf Quays site visit and presentation on future plans
for the asset and across the wider retail portfolio
• Tour of Myo New Street Square offices and review of wider
area plans
• Approval of the Group strategic plan (five-year view)
with integrated view of risk management
• Approval of Group business plan for FY25
• Capital Markets Day held at our London office
developments, Lucent at Piccadilly Circus and n2 in Victoria
• Approval of the sale of the hotel portfolio
• Disposals of other non-core assets
• Discussed mixed-use development strategy and
priority projects
• Discussion of Myo expansion plans and later purchase
of Regents Quarter in Kings Cross for the Myo portfolio
FINANCIAL
• Capital allocation
• Macroeconomic environment consideration in higher
interest rate and development cost environment
• Budgets
• Key business targets
• Dividends, results and reports
• Going concern and viability statement
• Portfolio valuation
• Source of funding and gearing levels
• Third Party Capital fund updates
• Finance systems transformation
• Preliminary results, Annual Report and half-year
results approved
• Dividends approved and paid
• New bond issuance in March 2024
• Annual Tax Strategy approved and published
• Regular updates on financial systems
transformation project
OPERATIONAL
• Development pipeline and pre-let activity
• Market and sector trends
• Acquisitions and disposals
• Sustainability progress updates and nature strategy
• Corporate affairs updates
• Health and safety including fire safety and RAAC,
physical security
• Data and technology
• Board’s continued focus on the use of data and technology
throughout the business to make informed decisions on
customer and market trends and to provide the best
service to customers
• Update on net zero transition plan progress
• Progress across the Build well, Live well, Act well strategy
and towards 2030 targets
• Introduction of core nature requirements for new
developments and nature action plans for existing sites
• Cyber security updates and presentation of new data and
technology strategy, including impacts of AI
PEOPLE AND
ORGANISATION
• Succession planning
• Talent management
• Diversity and inclusion
• Culture, talent and engagement
• Employee engagement
• Appointment of two additional Non-executive Directors
• Refreshed approach to talent and succession planning,
focused on a high-performance culture journey and new
development programmes
• Approval of Landsec Board Diversity Policy
• Set up of Shadow Boards
• Spotlight Awards to celebrate employee achievements
• Embedding of diversity and inclusion strategy
• Reverse mentoring commencement for ELT members
• Gender and Ethnicity Pay Gap Reports
• Office refreshed with more collaborative space
GOVERNANCE
• Risk identification, management and internal control
• Meeting reports from Chairs of Audit, Remuneration and
Nomination Committees
• Modern slavery
• Board and Committee effectiveness
• Legal and litigation updates
• Whistleblowing
• Share register analysis
• Board employee engagement plan
• FTSE Women Leaders Review and Parker Review on Ethnic
Diversity
• Corporate broker review
• Risk appetite
• Internal Board and Committee evaluation and actions
• Annual General Meeting
• Approval of Modern Slavery Statement
• Remuneration Committee Chair meeting with
Employee Forum on executive remuneration
• Regular meetings between employees and
Non‑executive Directors
• Appointment of two new corporate brokers to join
the existing broker
BOARD DISCUSSIONS DURING THE YEAR
TOPICS/ACTIVITIES
OUTCOMES
LANDSEC ANNUAL REPORT 2024
GOVERNANCE
INTRODUCTION FROM THE
CHAIR OF THE NOMINATION COMMITTEE
COMMITTEE MEMBERS
Sir Ian Cheshire (Chair)
Edward Bonham Carter
James Bowling
(from 11 December 2023)
Christophe Evain
Moni Mannings
(from 11 December 2023)
HIGHLIGHTS
• Appointment of new
Non‑executive Directors
KEY RESPONSIBILITIES
• Skills matrix and composition
of the Board and Committees
• Succession planning
• Board appointment processes
MEETINGS
• Three scheduled meetings and
one unscheduled
• All members of the Committee
attended all meetings during
their membership
DEAR SHAREHOLDER
I am pleased to present the
report from the Nomination
Committee for the year.
The Committee has continued to assess
the composition, succession plan and skills
of the Board and its Committees and
promote diversity.
BOARD AND COMMITTEE CHANGES
At the start of the financial year the role
of Chair transitioned from Cressida Hogg
to myself (and this selection process
was described in the last Annual Report).
This year, we announced the retirement
of our Audit Committee Chair and Senior
Independent Director. As a result, the
Committee has run two selection processes
for new Non-executive Directors, which are
described further below.
BOARD EVOLUTION AND DIVERSITY
IN BOARD APPOINTMENTS
A balanced and diverse Board with a mix
of skills, expertise, background, and tenure
is critical to the success of the Company.
The composition of the Board underpins
the quality of debate and challenge
during discussions.
The process for Board appointments is led
by the Nomination Committee which makes
recommendations to the Board for its
approval. It is the Nomination Committee’s
responsibility to keep Board composition
under review, including reviewing director
independence and tenure. During the year
the Committee continued to review the
composition and skills of the Board and
its plan for Board succession.
The Nomination Committee works with
executive search consultants to ensure they
support our approach to diversity in providing
a diverse selection of candidates for Board
appointments and the selection can then
be based upon merit and objective criteria.
The Board believes that diversity at Board
level sets the tone for diversity throughout
the business. We promote diversity in the
broadest sense, not just gender or ethnicity
but also experience, skills, professional
background and tenure. During the year,
a Board Diversity Policy was approved and
this is available on our website.
The Nomination Committee monitors our
talent pipeline to ensure we have a diverse
pool of talent being developed at all levels of
the business. Maintaining a diverse workforce
is as important as diverse recruitment and
we continue to assess and promote this.
FURTHER INFORMATION ON DIVERSITY AT
LANDSEC CAN BE FOUND ON PAGES 26-27
INTERNAL BOARD EVALUATION
We follow the standard three-yearly cycle
for Board evaluations. Our last externally
facilitated evaluation was in 2021/22 and the
next one will be 2024/25. The evaluations for
last year and the current year were therefore
undertaken internally, overseen by myself
and our Senior Independent Director, using
questionnaires and follow up discussion.
The process went well and the outcomes
are described in more detail in this report.
This Committee’s effectiveness was also
assessed as part of the internal review.
The Committee was satisfied with its own
effectiveness as a whole and was pleased
with the outcome of the Non-executive
succession processes.
The review identified that the skills matrix
should continue to be reviewed to ensure
we have the right Board composition for the
needs of the Company and recent changes
to the Board.
SIR IAN CHESHIRE, CHAIR
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LANDSEC ANNUAL REPORT 2024
61
GOVERNANCE
REPORT OF THE
NOMINATION COMMITTEE
NON-EXECUTIVE DIRECTOR
CHANGES
During the year, Cressida Hogg retired on
16 May 2023 (and Sir Ian Cheshire became
Chair on the same date). Nicholas Cadbury
and Edward Bonham Carter announced
their intention to retire on 31 December 2023
and at our AGM on 11 July 2024 respectively.
The Committee appointed an independent
search firm, the Lygon Group (‘Lygon’), to
recruit additional non-executive directors
with Audit Committee and Senior Independent
Director experience. Both processes were
run by Lygon, who have no other connection
to Landsec.
The first recruitment process involved a long
list and then short list of diverse candidates
being considered to replace our Audit
Committee Chair. As a result of this robust
selection process, James Bowling was
appointed on 7 September 2023. James, a
Chartered Accountant, was Chief Financial
Officer of Severn Trent Plc from 2015 until
recently retiring from this role. Prior to that,
James held senior financial roles at Shire plc.
James is a highly experienced FTSE Chief
Financial Officer who has successfully
transferred his skills across sectors and has
broad experience overseeing long-term
capital investment models. James succeeded
Nicholas as Audit Committee Chair on
18 September 2023 and joined the
Nomination Committee on 11 December 2023.
The second recruitment process which also
involved a long and short list of diverse
candidates was for a non-executive director
to replace our longstanding Senior
Independent Director, Edward Bonham
Carter. As a result of this selection process,
Moni Mannings OBE was appointed to the
Board on 11 December 2023, joining this
Committee and the Remuneration
Committee on the same day and becoming
Senior Independent Director on 1 April 2024.
Moni is currently an Independent Non-
executive Director of Hargreaves Lansdown
plc, Non-executive Director and Chair of the
Remuneration Committee of easyJet plc,
Non-executive Director and Senior
Independent Director of Co-operative Group
and a Member of the Takeover Panel. Moni
also founded EPOC, a not-for-profit network
that seeks to increase the number of people
of colour on boards and is a member of the
Parker Review Committee. From 2000 until
2016, Moni was a Partner and Head of the
International Banking and Finance Division
of Olswang LLP, before which she held senior
positions in other leading law firms. Moni
has previously held a number of other
non-executive director roles and is a highly
experienced and respected City lawyer with
extensive property financing experience.
She also brings her experience of being a
Senior Independent Director and committee
chair from other non-executive roles.
INDEPENDENCE AND RE-ELECTION
TO THE BOARD
The independence, effectiveness, and
commitment of each of the Non-executive
Directors has been reviewed by the
Committee. The Committee is satisfied
with the contributions and time commitment
of all the Non-executive Directors during
the year.
The Committee will always discuss the
additional commitments of all directors
(including the Chair) before recommending
their approval to the Board. It also considers
potential conflict issues as part of that
assessment.
James Bowling and Moni Mannings are
standing for initial election by shareholders
at the AGM in July 2024, with all other
Directors standing for re-election with the
support of the Board, with the exception
of Edward Bonham Carter who is stepping
down from the Board at that time.
BOARD EVALUATION
BOARD EVALUATION PROCESS 2023/24
Our Board evaluation provides the Board
and its Committees with an opportunity to
reflect on effectiveness and performance.
We carried out the review of the Board’s
effectiveness internally via questionnaire.
The questions focused on key themes and
topics which had arisen during the year and
areas of focus identified from the evaluation
last year.
OUTCOMES
Overall, the Board was satisfied with its
performance during the year. The following
areas were highlighted:
• The Chair had undertaken an extensive
induction programme and had been well
supported by the Board in getting to know
the business during the year
• There had been good non-executive hires
during the year and the induction
programmes for new non-executives were
highly rated
• Executive succession planning and talent
management was considered to have
advanced significantly under the leadership
of the Chief People Officer
• The employee engagement programme
for non-executives was viewed positively
• Board papers had improved
• Support from the executive and Company
Secretary was valued
• The Board felt it had performed well in the
areas of strategy and risk
• Board culture and relationships between
executives and non-executives were
viewed positively
Key areas of focus as a result of the
evaluation were as follows:
• The Board had an excellent employee
engagement programme but would
benefit from spending additional time
with ELT and senior leaders
• Themes identified as a priority for the
coming year were: capital allocation
in a higher cost of capital environment,
strategy execution, unlocking further
growth opportunities and succession
planning, talent and diversity
The Board Committees also reviewed and
were satisfied with their own effectiveness.
The Audit and Remuneration Committee
Reports contain a summary of their
own reviews.
LANDSEC ANNUAL REPORT 2024
GOVERNANCE
INTRODUCTION FROM THE
CHAIR OF THE AUDIT COMMITTEE
COMMITTEE MEMBERS
James Bowling
(from 7 September 2023 and
Chair from 18 September 2023)
Nicholas Cadbury
(Chair until 18 September 2023
and member until 31 December
2023)
Madeleine Cosgrave
Miles Roberts
HIGHLIGHTS
• Integrity of reporting process
• Effectiveness of the risk
management and internal
controls process
• Cyber and information security
• Financial systems transformation
• Accounting treatment of various
financial matters
• Impact of the changes to the
governance regime
• Financial impact of Health and
Safety matters
• Climate related governance
KEY RESPONSIBILITIES
• Reliability of the financial
statements and internal controls
• Effective risk identification and
management
• Overall transparency and
financial governance
NUMBER OF MEETINGS
AND ATTENDANCE
• Four scheduled meetings
• 100% attendance from all
members during their
membership
DEAR SHAREHOLDER
Having succeeded Nicholas
Cadbury as the Chair of
the Audit Committee in
September 2023 I am pleased
to present my first report of
the Audit Committee.
During the financial year the Committee
has continued to play a key oversight role for
the Board on the reliability of the financial
statements, the integrity of the reporting
process and the Company’s system of
internal controls, risk identification and
management, audit and valuation processes,
effective compliance with laws, regulations
and ethical codes of practice, and overall
financial governance.
RISK FOCUS
As the Committee plays an important role
for the Board in risk management and
identification, there has been focus on the
Group risk management framework to ensure
that this continues to be fit for purpose and
well embedded into day-to-day operations.
Whilst considering these improvements the
Committee has maintained its monitoring
of risks throughout the year.
The ten principal risks have been re-categorised
during the year into strategic and operational
risks and reflected in a risk waterfall.
Information security and cyber threat,
change projects failing to deliver and health
and safety are the most significant
operational risks. The Committee has had
regular oversight of the significant work
undertaken to mitigate these risks and
will continue to consider updates and
monitor progress.
Although its risk score has decreased
during the year, the macroeconomic outlook
remains the most significant strategic risk.
The risk management strategy in place to
mitigate against this risk includes the regular
monitoring of key risk indicators, scenario-
based modelling of plausible economic
trajectories and extensive research and review
of sector and market risks. No emerging
risks have been identified through the risk
management process.
CLIMATE RELATED GOVERNANCE
The Committee has continued to receive
updates from the sustainability team and
advisers on the requirements of the Task
Force on Climate-related Financial Disclosure
(TCFD) as well as the Task Force on Nature-
related Financial Disclosure (TNFD), the
evolving reporting landscape for climate
governance and our approach to climate
risk identification, assessment and strategy.
Our disclosures remain consistent with
the TCFD recommendations. We are also
considering our readiness and response to
TNFD recommendations and will continue
to monitor these. Our TCFD disclosures can
be found on pages 33-37.
HEALTH AND SAFETY
Health and safety is a key priority of the
Board and the Committee continues to
support the Board by reviewing the impacts
of health and safety measures including the
Building Safety Act 2022 and the presence
of reinforced autoclaved aerated concrete
(RAAC). The Committee is regularly updated
on work to assess our liability for any
remediation works required and the wider
financial impact arising from such issues
and how this is disclosed.
FINANCIAL STATEMENTS
The Group’s financial statements are of
critical importance to investors and wider
stakeholders and the Committee monitors
the integrity of the Group’s reporting process
and financial management. It scrutinises
the full and half-yearly financial statements
before proposing them to the Board for
approval. The Committee reviews in detail
the work of the external auditor and
external valuers and any significant financial
judgements and estimates made by
management to ensure that it is satisfied
with the outcome.
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LANDSEC ANNUAL REPORT 2024
63
GOVERNANCE
ASSET VALUATION
The valuation of our assets is a significant
constituent of our financial results and
measurement of our performance. This is the
second year that we have used two valuers,
CBRE and JLL, to value the office and retail
portfolios respectively (with some small
exceptions). Both CBRE and JLL are industry-
leading agencies with extensive expertise
and appropriate knowledge who provide us
with an external valuation of our portfolio
twice a year, in accordance with the relevant
industry standards. The Committee will be
considering in the forthcoming year the Royal
Institute of Chartered Surveyors Red Book
UK Supplement which includes a mandatory
rotation policy for valuers.
The valuation process requires the valuers
to evaluate the likely future financial
performance of each individual asset and
apply recent and relevant transactional
evidence to determine an appropriate value
at the period end. The Committee analyses,
challenges and debates the valuations
prepared by the valuers who attend
Committee meetings for this purpose at the
half and full year-end. The external valuation
process and the values ascribed to specific
assets are also reviewed independently by
our auditor, EY, as part of its audit scope.
ACQUISITIONS, DISPOSALS
AND DEVELOPMENT
Landsec remains on track with its strategy
to accelerate growth through recycling
capital into higher return opportunities,
even though the investment market activity
has remained subdued throughout the year.
A number of non-core assets have been
sold, and Regents Quarter at Kings Cross
was acquired. The Committee considered
the accounting treatment and disclosures
of these transactions and concluded that
they were appropriate.
PROVISIONS FOR BAD DEBT
The Committee has continued to closely
monitor the cash collections of rents across
the whole portfolio together with required
provisions. The rent collection statistics are
strong at pre-Covid levels. The bad debt
provisions have decreased from last year.
INTERNAL AUDIT
KPMG have completed their first full year
as internal auditor and have successfully
completed audits on IT Applications,
Retail Centre Management, Workforce
Planning, The Forge Handover, ESG,
Treasury and Cash Management along with
monitoring that teams have closed out audit
actions from previous reports. This is in line
with their Internal Audit Plan for 2022-2024.
The Audit Committee has agreed KPMG’s
proposed Internal Audit Plan for the year
ended 31 March 2025 which will include
amongst others, internal audits for Data
Privacy, Business Continuity Planning and
Mayfield Development.
FAIR, BALANCED AND
UNDERSTANDABLE
The Committee considered the Company’s
2024 Annual Report in the round and
concluded and recommended to the Board
that, taken as a whole, the 2024 Annual
Report is fair, balanced and understandable.
GOING CONCERN AND
VIABILITY STATEMENT
The Committee considers the appropriateness
of adopting the going concern assumption
in preparing the financial statements and
the going concern statement is set out on
pages 46 and 47, along with the viability
statement and the rationale behind the
chosen five-year time horizon.
CORPORATE GOVERNANCE
CODE AND GUIDANCE
The Committee considered its compliance
with the 2018 UK Corporate Governance
Code (the ‘Code’) and the FRC Guidance on
Audit Committees and continues to believe
that we have addressed both the spirit and
the requirements of each. In addition, the
Committee continues to regularly monitor
the changes to the new corporate
governance regime, and despite the delays
to the introduction of the new regime, is well
advanced in preparing for its implementation,
including financial and IT controls reviews
and an assurance mapping exercise.
COMMITTEE CHANGES
AND EFFECTIVENESS
The internal Board evaluation undertaken
during the year indicated that the Committee
continues to operate effectively. I would like
to take the opportunity to continue to
improve the high standards of the Committee
set by Nicholas Cadbury during his time as
Audit Chair. Myself and the Committee
would like to thank Nicholas for his
commitment, valued perspective and
leadership of the Committee.
I would also like to say thank you for the
warm welcome and support from the other
members of the Audit Committee,
management and the key advisers EY, KPMG,
CBRE and JLL during my first six months as
a member and Chair of the Committee.
JAMES BOWLING, CHAIR
LANDSEC ANNUAL REPORT 2024
GOVERNANCE
REPORT OF THE AUDIT COMMITTEE
STRUCTURE AND OPERATIONS
The Audit Committee’s structure and
operations are governed by terms of
reference, which are reviewed annually and
approved by the Board. These were last
approved in March 2023 and will be reviewed
again when the changes to the corporate
governance regime are closer to
implementation later in the year.
THE TERMS OF REFERENCE ARE AVAILABLE
ON OUR WEBSITE: LANDSEC.COM/
ABOUTCORPORATE-GOVERNANCE/
BOARD-COMMITTEES
The table on the left sets out Committee
members as well as those who regularly
attend Audit Committee meetings. Their
attendance at the meetings ensures that
effective communication between all
relevant parties is maintained regularly
and that the Committee is fully supported
by relevant experts.
The Committee members are all
independent non-executive directors and
collectively have a broad range of financial,
commercial and property sector expertise
that enables them to provide oversight of
both financial and risk matters, and to advise
the Board accordingly. The Board determined
that both Nicholas Cadbury and James
Bowling, during their times as Chair of the
Committee, have recent and relevant
financial experience for the purposes of
satisfying the Code. Details of the experience
of all members of the Committee can be
found on pages 52 and 53.
The Audit Committee continued to focus this
year on the framework and monitoring of
risk assessment and management, internal
controls and financial reporting processes,
together with additional focus on cyber
security and financial systems.
AUDIT COMMITTEE MEETINGS
ATTENDEES AT
MEETINGS TO
SUPPORT THE
COMMITTEE
• Chair of the Board
• Chief Executive
• Chief Financial
Officer
• Head of
Governance and
Company
Secretary
• Deputy Company
Secretary
• Head of Risk and
Controls
• Members of the
senior finance
team
• Representatives of
the EY external
audit team
• Representatives of
the KPMG internal
audit team
PROPERTY
VALUATION
PRESENTATIONS
• All Directors are
invited to attend
meetings when
CBRE and JLL
property valuation
presentations
are made
COMMITTEE
PRIVATE SESSIONS
• CBRE valuation
team
• JLL valuation team
• EY external
audit team
• KPMG internal
audit team
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LANDSEC ANNUAL REPORT 2024
65
GOVERNANCE
The Committee works to a structured
programme of activities and meetings
to coincide with key events around our
financial calendar and, on behalf of the
Board, provides oversight of the Group’s
risk management process. Following each
meeting, the Committee Chair reports
on the main discussion points and findings
to the Board.
RISK MANAGEMENT
The Board is accountable and has overall
responsibility for overseeing risk and
ensuring that a robust risk management
and internal control system is in place and
operating effectively.
An overview of Landsec’s risk management
framework and governance, risk appetite,
identification of risks, management and
assurance of risks, as well as the principal
risks and uncertainties are included on
pages 38-45. The risk management
framework is operated on a Group-wide
basis and includes:
• the Board’s overall responsibility for a
robust risk management and internal
control system
• the Committee’s review of the
effectiveness of that system
• the Executive Leadership Team’s day-to-
day monitoring and management of the
Group-wide principal risks
• embedding of the management of risks
throughout the Group via the Workplace
and Lifestyle Boards and Executive
Committees, and risk owners and
champions.
A risk waterfall uses indicators to highlight
whether each risk is within our appetite. This
allows the Committee to consider whether
principal risks are changing and whether the
risk appetite remains appropriate.
Primary responsibility for the operation
of the Company’s internal control and risk
management systems, which extend to
include financial, operational and compliance
controls and accord with the FRC’s 2014
‘Guidance on Risk Management, Internal
Control and Related Financial and Business
Reporting’, has been delegated to
management and risk and control owners.
They are responsible for the management
of their respective risks and the associated
control mechanisms.
These risk management and internal control
systems have been designed to ensure
that appropriate strategies are in place to
identify, evaluate and manage, rather than
eliminate risk.
RISK ASSURANCE AND
INTERNAL CONTROL
As part of the Three Lines of Defence Risk
Model (as outlined on pages 39-40), the
Committee monitors the results of the
key controls process, evaluates the control
environment and considers the adequacy
of assurance activity. The risk model also
includes independent assurance over key
controls and processes to management
and the Committee via internal audits.
Internal audits are carried out by KPMG in
accordance with an agreed annual assurance
plan and reviewed by the Committee
throughout the year.
KPMG have provided assurance to the
Committee on key controls and programme
assurance and identified improvements in
key financial processes.
The key elements of the Group’s risk
management and internal control systems
are as follows:
• an embedded decentralised risk
management framework supported
by Risk Champions
• a Head of Risk & Controls to manage
the risk framework and to provide
support on risk and controls matters
throughout Landsec
• an established organisational structure
with clear lines of responsibility, approval
levels and delegated authorities
• a disciplined internal governance structure
which facilitates regular performance
review and decision making
• a comprehensive strategic and business
planning review
• a robust budgeting, forecasting and
financial reporting process
• various policies, procedures and guidelines
underpinning the development, asset
management and financing operations
of the business
• a compliance certification process
conducted in relation to the half-yearly
and full-year results, and business
activities generally
• a quarterly key controls self-certification
by management
• a focused post-acquisition review and
integration programme to ensure the
Group’s governance, procedures, standards
and control environment are implemented
effectively and on time
• a financial and property information
management system
• a whistleblowing process that enables
concerns to be reported confidentially
and on an anonymous basis and for
those concerns to be investigated.
Additionally, the Committee discusses on
a regular basis:
• the Group’s significant and emerging
risks, and how exposures and appetite
have changed during the period, and
reviews the principal risks for external
reporting purposes
• the effectiveness of internal processes
at mitigating those risks
• internal audit reports, summary reports
of findings and recommendations from
completion of the internal audit plan
• progress against completion of agreed
actions from the internal audit reports.
The Committee was satisfied that the
system of risk management and internal
controls has been effective throughout
the year.
EXTERNAL AUDITOR
EY is Landsec’s external auditor and is
engaged to conduct a statutory audit
and express an opinion on the Company’s
and the Group’s financial statements.
A competitive tender was last carried out
in 2022 (as EY were approaching being in
office for ten years having performed their
first audit for Landsec for the year end
31 March 2014). Shareholders confirmed
the appointment of EY at our 2023 Annual
General Meeting following this competitive
tender process.
LANDSEC ANNUAL REPORT 2024
GOVERNANCE
REPORT OF THE AUDIT COMMITTEE
CONTINUED
Its audit scope includes a review of the
property valuation process and methodology
using its own chartered surveyors (more
details below), to the extent necessary to
express an audit opinion.
When carrying out its statutory audit work,
EY also has access to a broader range of
employees and different parts of the
business. If it picks up any information as
part of this process, it would report to the
Audit Committee anything that it believes
the Committee should know in order to fulfil
its duties and responsibilities. As audit
partner, Julie Carlyle is authorised to contact
the Committee Chair directly at any time
to raise any matter of concern.
In addition to considering the effectiveness
of the Committee, the internal Board
evaluation also considered the effectiveness
of the external audit with the results and
recommendations reported to the
Committee. This is supported by regular
meetings between EY and the CFO and
senior finance team members which have
driven continuous improvements to the
external audit process.
AUDIT PLAN
EY presented its proposed audit plan as
reviewed by senior management to the
Committee for discussion. The audit scope
and approach was appropriate with
consideration as to the Group’s structure
and strategy.
The Committee is keen to ensure that its
auditor feels able to challenge management,
to provide observations or recommendations
to management and the Audit Committee.
These matters may be financial or non-
financial and may be based on fact or
opinion (including any concern over culture
or behaviour).
EY attends each Committee meeting,
supported by other meetings held during the
year with the Committee or the Committee
Chair without management being present.
EY can raise any matter of concern to the
Committee Chair at any time without going
through management. These regular
discussions were useful to the Committee
but no matters of concern emerged.
INDEPENDENCE AND OBJECTIVITY
The Committee is responsible for monitoring
and reviewing the objectivity and
independence of the external auditor.
In undertaking its annual assessment,
the Committee took into account the
UK Ethical Independence Standards.
The Committee reviewed:
• the confirmation from EY that it maintains
appropriate internal safeguards in line
with applicable professional standards,
together with an explanation of the due
diligence process followed to provide such
a confirmation
• the mitigation actions taken in seeking
to safeguard EY’s independent status,
including the operation of policies designed
to regulate the amount of non-audit
services provided by EY and the
employment of former EY employees
• the tenure of the audit engagement
partner (not being greater than five years);
Julie Carlyle was appointed as EY audit
partner to the Group in July 2022
• the internal performance and effectiveness
review of EY referred to above.
No Committee member has any connection
with the current auditor.
Taking the above review into account, the
Committee concluded that EY remained
objective and independent in its role as
external auditor.
EY will be appointed for the 31 March 2025
financial year at this year’s Annual General
Meeting, subject to shareholder approval.
The Company has complied with the
Statutory Audit Services Order 2014 for
the year under review.
AUDIT FEE
The audit fees payable to EY for 2023/24
(including the audit of the statutory
accounts and the Group’s joint ventures)
are £2.6m (2022/23: £1.8m). This fee includes
£0.5m of fees paid which relate to the audit
for the years ended 31 March 2022 and
31 March 2023.
NON-AUDIT SERVICES
To help safeguard EY’s objectivity and
independence, we operate a non-audit
services policy that sets out the
circumstances and financial limits within
which EY may be permitted to provide
certain non-audit services.
AUDIT VS. NON-AUDIT FEES 2023/24
(INCLUDING THE AUDIT OF THE GROUP’S JOINT VENTURES
13.8% non-audit fees as a ratio to Group audit fee (excluding the audit of the Group’s joint ventures).
CHART 22
Non-audit
13.3%
Audit
86.7%
66
LANDSEC ANNUAL REPORT 2024
67
GOVERNANCE
The Committee monitors compliance with
the policy, including the prior approvals
required for non-audit services, and approval
levels are as follows:
TABLE 23
Per
assignment
(£)
Aggregate
during the year
(£)
Chief
Financial
Officer
0–25,000
<100,000
Audit
Committee
Chair
25,000–
100,000
100,000–
900,000*
Committee
>100,000
>900,000*
*50% of the prior year audit fee.
All approvals are noted at the Audit
Committee meetings.
EY was engaged during the year to provide
non-audit services to the Group relating
to the Company’s half-yearly review, the
assurance statement on sustainability
reporting review, non-statutory audit of
the Security Group, work in relation to
the update of the bond programme
documentation and reporting on the Green
bond. The Committee decided that it would
be in the interest of the Company to use
EY for these services, recognising that the
use of audit firms for non-audit work should
generally be kept to a minimum and the
services were not considered to impact EY’s
independence and objectivity. Total fees for
non-audit services amounted to £419,500.
Details of the fees charged by EY during
the year can be found in note 8 to the
financial statements.
No non-audit fees were approved or paid
on a contingent basis.
EXTERNAL VALUATIONS AND
VALUERS
The valuation of the Group’s property
portfolio, including properties held within
the development programme and in joint
arrangements, is undertaken by external
valuers. The Group provides input, such as
source data, and support to the valuation
process. CBRE has been the Company’s
principal valuer since 2015 and Jones Lang
LaSalle Limited (JLL) was appointed in 2022
as joint valuer to undertake the valuation
of a large part of the retail and mixed-use
urban portfolio whilst CBRE value the office
portfolio and some of the retail portfolio.
The valuation helps to determine a significant
part of the Group’s total property return and
net asset value, which have consequential
implications for the Group’s reported
performance and the level of variable
remuneration received by senior management
through bonus and long-term incentive
schemes. Accordingly, the scrutiny of each
valuation and the valuer’s objectivity and
effectiveness represent an important part
of the Committee’s work.
Valuations for the half-year results and
full-year results were presented to the
Committee by CBRE and JLL. These were
reviewed and challenged by the Committee,
with reference to each valuer’s approach,
methodology, valuation basis and underlying
property and market assumptions. Other
Non-executive Directors attended the full
and half-year presentations. The Committee
Chair and other members of the Committee
also had separate meetings with the
valuers’ as part of this process to provide
an opportunity to test and challenge the
valuation outcomes and the principles and
evidence used in the determination.
Additionally, CBRE and JLL met with EY
and exchanged information independently
of management as part of EY’s review of
the valuations. EY has experienced chartered
surveyors on its team who consider the
valuer’s qualifications and assess and
challenge the valuation approach,
assumptions and judgements made by
them. Their audit procedures are targeted
at addressing the risks in respect of the
valuations and the potential for any undue
management influence in arriving at them.
This year 37 properties (77% of the portfolio)
were identified for substantive review by its
valuation experts primarily on the basis of
their value, type, risk profile, commitments
to ESG and location. The Committee
reviewed the auditor’s findings.
An internal evaluation of the valuers’
performance and effectiveness was
conducted as part of the Committee’s
internal valuation with the results
and recommendations reported to
the Committee.
The Committee was updated on the Royal
Institute of Chartered Surveyors Red Book
UK Supplement which implements a
mandatory rotation policy for valuers and
will consider a proposal to comply with this
in the coming months.
The Committee has considered the
independence of CBRE and JLL. Both valuers
have appropriate systems in place to check
for conflicts of interest and must seek
approval for non-valuation activities. Their
valuation departments operate separately
from other advisory activity, and their
valuation remuneration is not linked to other
non-valuation work that they undertake.
A fixed-fee arrangement (subject to
adjustment for acquisitions and disposals)
is in place with the valuers for the valuation
of the Group’s properties and, given the
importance of their work, we have disclosed
the fees paid to them in note 9 to the
financial statements. These fees reflect the
valuers’ work on the year-end and half-yearly
valuations as well as other work on agency
services including investment activity. The
total valuation fees paid by the Company
to CBRE and JLL during the year represented
less than 5% of their total fee income from
all clients for the year.
SIGNIFICANT FINANCIAL MATTERS
The Committee reviewed two significant
financial matters in connection with the
financial statements, namely the valuation
of the Group’s property portfolio and
revenue recognition.
FURTHER DETAILS ARE SET OUT IN THE TABLE
ON PAGE 69
These items were considered to be
significant, taking into account the level
of materiality and the degree of judgement
exercised by management and, in respect
of the valuation, the external valuers.
LANDSEC ANNUAL REPORT 2024
GOVERNANCE
REPORT OF THE AUDIT COMMITTEE
CONTINUED
In addition, the Committee considered,
and made onward recommendations to the
Board, as appropriate, in respect of other key
matters including acquisitions and disposals,
impairment of trade receivables (including
lease incentive balances and loans to joint
ventures), provisions, development contracts,
pensions, maintenance of the Group’s REIT
status, financial systems transformation
(including controls, processes and system
upgrades and improvements), going concern,
provisions for health & safety remediation,
contingent liabilities, accounting for non-
current assets held for sale and other specific
areas of individual property and audit focus.
The Committee was satisfied that all issues
had been fully and adequately addressed
and that the judgements made were
reasonable and appropriate and had been
reviewed and debated with the external
auditor who concurred with the approach
taken by management.
NON-FINANCIAL MATTERS
The Committee understands the level of
reliance that is placed by shareholders on
the statutory audit and the report of the
external auditor.
We report on alternative performance
measures on page 173. The Committee
debated and discussed these measures
and agreed that they were appropriate
for the business.
FAIR, BALANCED AND
UNDERSTANDABLE
The Committee applied the same due
diligence approach adopted in previous years
in order to assess whether the Annual Report
is fair, balanced and understandable, one of
the key Code requirements. The Committee
received assurance from the verification
process carried out on the content of the
Annual Report to ensure consistent reporting
and the existence of appropriate links
between key messages and relevant sections
of the Annual Report.
Taking the above into account, together with
the views expressed by EY, the Committee
recommended, and in turn the Board
confirmed, that the 2024 Annual Report,
taken as a whole, is fair, balanced and
understandable and provides the necessary
information for shareholders to assess the
Company’s position, performance, business
model and strategy.
WHISTLEBLOWING POLICY
The Audit Committee provides a regular
whistleblowing update to the Board, which
has overall responsibility for whistleblowing.
The Audit Committee reviews the Group’s
Speak Up policy which allows employees
and third parties to report concerns about
suspected impropriety or wrongdoing
(whether financial or otherwise) on a
confidential basis, and anonymously if
preferred. This includes an independent
third-party reporting facility comprising a
telephone hotline and an alternative online
process. Any matters reported are initially
investigated by the Head of Governance
and Company Secretary and reported to
the Audit Committee Chair and Manjiry
Tamhane, the Non-executive Director who
became responsible for whistleblowing
during the year and escalated to the
Committee and Board, as appropriate.
During the year two whistleblowing incidents
were reported. Both matters were investigated
and no concerns or action were required
following conclusion of the investigation.
The matter which was reported close to
the last year-end was fully investigated and
resulted in some positive recommendations
on cyber security and websites which have
now been implemented.
We monitor whistleblowing awareness and
remind employees that a dedicated hotline
exists should they ever need to ‘blow the
whistle’. The arrangements also form part
of the induction programme for new
employees. Details of the whistleblowing
hotline are included in our Supply Chain
Commitment, Sustainable Development
Toolkit, procurement tender documentation,
on our website, and at our assets and
development sites.
68
LANDSEC ANNUAL REPORT 2024
69
GOVERNANCE
SIGNIFICANT FINANCIAL MATTERS
SIGNIFICANT FINANCIAL MATTERS – WHAT IS THE RISK?
HOW THE COMMITTEE ADDRESSED THE MATTERS
Valuation of the Group’s property portfolio
(including investment properties, investment
properties held in joint ventures)
The valuation of the Group’s property portfolio is a
major determinant of the Group’s performance and
drives an element of the variable remuneration for
senior management. Although the portfolio valuation is
conducted by an external valuer, valuation estimates are
inherently subjective and require significant judgements
to be made by management and valuers.
Significant assumptions and judgements made by the
valuer in determining valuations may include the
appropriate yield (based on recent market evidence),
changes to market rents (ERVs), what will occur at the
end of each lease, the level of non-recoverable costs and
alternative uses. Development valuations also include
assumptions around costs to complete the development,
the level of letting at completion, incentives, lease terms
and the length of time the space remains void.
The Audit Committee adopts a formal approach by which the
valuation process, methodology, assumptions and outcomes are
reviewed and robustly challenged. This includes separate review and
scrutiny by management, the Committee Chair and the Committee
itself. The Group uses CBRE and JLL, both leading firms in the UK
property market, as its principal valuers. It also involves EY as the
external auditor which is assisted by its own specialist team of
chartered surveyors who are familiar with the valuation approach
and the UK property market.
EY met with the valuers separately from management and has noted,
as part of their procedures, no undue influence being exerted by
management in relation to the valuers arriving at their valuations.
CBRE and JLL submit their valuation reports to the Committee as part
of the half-yearly and full-year results process. Both valuers were asked
to attend and present their reports to the Board and to highlight any
significant judgements made or disagreements which existed between
them and management. There were no disagreements identified and
the valuations were accepted for reporting purposes.
Based on the degree of oversight and challenge applied to the
valuation process, the Committee concluded that the valuations had
each been conducted appropriately, objectively and in accordance with
the valuer’s professional standards.
Revenue recognition (including the timing of revenue
recognition and the treatment of lease incentives)
Certain transactions require management to make
judgements as to whether and to what extent they
should be recognised as revenue in the year. Market
expectations and EPRA earnings targets may place
pressure on management to distort revenue recognition.
This may result in overstatement or deferral of revenues
to assist in meeting current or future targets or
expectations, including through incorrect treatment
of lease incentives.
The Committee and EY considered the main areas of judgement
exercised by management in accounting for matters related to revenue
recognition, including timing and treatment of rents, incentives,
surrender premiums and other property-related revenue.
In its assessment, the Committee considered all relevant facts,
challenged the recoverability of occupier incentives, the options that
management had in terms of accounting treatment and the
appropriateness of the judgements made by management. These
matters had themselves been the subject of prior discussion between
EY and management.
The Committee, having considered the views of EY, concurred with the
judgements made by management and was satisfied that the revenue
reported for the year had been appropriately recognised.
The above description of the significant financial matters should be read in conjunction with the Independent Auditor’s Report on pages 96-104
and the significant accounting policies disclosed in the notes to the financial statements.
LANDSEC ANNUAL REPORT 2024
GOVERNANCE
DEAR SHAREHOLDER
I am pleased to present,
on behalf of the Board,
the Directors’ Remuneration
Report for the year ended
31 March 2024.
This report is split into three sections being:
(i) this Annual Statement; (ii) the Annual
Report on Remuneration; and (iii) our
Directors’ Remuneration Policy for which
shareholder support will be sought at the
2024 AGM.
ACTIVITIES DURING THE YEAR
During the course of 2023/24, the
Committee was engaged in a number
of key matters including:
• reviewing the Directors’ Remuneration
Policy and undertaking an extensive
shareholder consultation exercise
• reviewing salaries for Executive Directors
and the Executive Leadership Team and
taking into account salary rises across the
wider workforce
• setting, reviewing and finalising targets
and outcomes of bonus plans and long-
term incentives and reviewing variable
pay arrangements below Executive
Director level
• consideration of the cascade of incentive
schemes across senior management levels
and agreeing award levels for bonus plans
and long-term incentives
• monitoring compliance with shareholding
requirements applicable to directors
• monitoring market developments and
shareholder sentiment on remuneration
• oversight of gender and ethnicity pay
gap reporting
• oversight of share plans activity including
SAYE awards, the launch of the new Share
Incentive Plan for Landsec employees
(including Executive Directors and
Executive Leadership Team) and the
proposed new Land Securities Omnibus
Share Plan
DIRECTORS’ REMUNERATION POLICY
We have continued to operate under the
Remuneration Policy approved by shareholders
at our 2021 AGM. As the Committee considers
that the existing approach to Directors’
remuneration remains appropriate for
Landsec, only one minor change is proposed
to the Policy in respect of Non-executive
Directors at the 2024 AGM. However, a
number of changes to the implementation
of the Policy for the Executive Directors have
been implemented, to ensure remuneration
remains closely aligned to Landsec’s strategy
and reflects shareholder feedback received
since the current Policy was approved at
the 2021 AGM and these are explained on
pages 78-79. We consulted with our top 15
shareholders and leading proxy advisers
between November 2023 and January 2024
and the conclusions of the Policy review are
included in this report. Overall, shareholders
were supportive of our proposals.
PERFORMANCE FOR THE 2023/24
FINANCIAL YEAR
Overall, our results which are reported
in more detail in this Annual Report,
demonstrate Landsec’s continued
operational strength as values for the best
assets begin to stabilise. For the full year,
EPRA earnings remained stable at £371m
with like-for-like earnings growth offsetting
the impact of material disposals in the prior
year, and TRE improved to (4.0%) (2022/23:
(8.3%)) with the outlook for return on equity
turning more positive. Balance sheet
strength has been preserved at 7.4x net
debt/EBITDA and, pro-forma for disposals
post year-end, a 32.3% Group LTV.
These results are considered by the Committee
to be reflected in the variable pay awarded to
the Executive Directors described below.
ANNUAL BONUS
Annual bonus for 2023/24 was awarded at
47% of the maximum for the Chief Executive
(CEO) and 49% of the maximum for the
Chief Financial Officer (CFO).
This equates to around 70% of salary for
the CEO and around 73% of salary for the
CFO. As set out in detail in the Annual
Report on Remuneration, both of the EPRA
earnings targets were between target and
maximum, TRE was below threshold and
good progress was made against the ESG
and personal targets.
DIRECTORS’ REMUNERATION REPORT –
CHAIRMAN’S ANNUAL STATEMENT
COMMITTEE MEMBERS
Christophe Evain
(Committee Chair)
Edward Bonham Carter
Moni Mannings (from
11 December 2023)
Manjiry Tamhane
Sir Ian Cheshire
KEY RESPONSIBILITIES
• Reviewing the link between
reward and the Group’s purpose
and strategy
• Oversight of the Directors’
Remuneration Policy and reward
matters across the Group
• Maintaining a strong connection
between returns to shareholders
and reward for executives
MEETINGS AND ADVISERS
• Four scheduled and one
unscheduled meetings with full
attendance from members
at all meetings
• Meetings are normally also
attended by the Chief Executive,
Chief People Officer and Group
Reward Manager
• FIT Remuneration Consultants
LLP provide advice to the
Committee
70
LANDSEC ANNUAL REPORT 2024
71
GOVERNANCE
EMPLOYEE VOICE
In March 2024, I took the opportunity to
meet with members of our Employee Forum
(representing the wider Landsec workforce).
This is an important activity and I was pleased
to answer a number of questions posed by
the forum on remuneration quantum and
structure (including the new Directors’
Remuneration Policy) for the Executive
Directors, the scope of the Committee and
the benchmarks it uses, ESG in bonus and
LTIP plans, TRE and retention and succession.
COMMITTEE EFFECTIVENESS
At the end of the year as part of the Board
evaluation process which was run internally
using questionnaires, the Committee
reviewed its effectiveness. The outcomes
were positive, and there was good feedback
on the Policy review process. The Committee
also reviewed its adviser, FIT, and confirmed
it continued to be satisfied with its
performance.
CONCLUSION
I am grateful for the engagement and
support provided by our shareholders and
welcome your feedback.
Unless otherwise stated in this report,
narrative and tables are unaudited.
CHRISTOPHE EVAIN,
CHAIR, REMUNERATION COMMITTEE
operate as follows: (a) relative TSR targets
measured against our FTSE 350 sector peers
(weighting unchanged at 40%); (b) TRE
(percentage change in EPRA Net Tangible
Assets per share plus dividends) (weighting
decreased slightly from 40% to 35%); (c) ESG
measures at 25% including carbon reduction
targets (15%) and newly introduced diversity
and inclusion targets (10%). The rationale for
these changes is explained on page 79).
Any awards which vest will be subject to
a two-year post-vesting holding period.
REMUNERATION ADVICE
The Committee received advice on
remuneration and ancillary share plan
matters from FIT. FIT is a member of the
Remuneration Consultants Group and is
a signatory to its Code of Conduct, which
requires their advice to be impartial. The
Committee is satisfied that their advice
is independent and objective. Aside from
some support on senior leader remuneration
matters, FIT has no other connection with
the Group. For the financial year under
review, FIT received fees of £126,028 for
advisory services to the Committee
(2022/23: £75,676).
LAND SECURITIES OMNIBUS
SHARE PLAN
The Company’s existing Long Term Incentive
Plan 2015 is due to expire next year, when it
comes to the end of its ten-year life. As a
result shareholders will be asked to approve
a replacement arrangement, the Land
Securities Group Omnibus Share Plan 2024,
at the 2024 AGM. A summary of the terms
of the Omnibus Plan is set out in the Notice
of the 2024 AGM, which can be found on
our website: landsec.com/agm.
REMUNERATION ACROSS
THE COMPANY
The Committee oversees all remuneration
policies and practices across the organisation,
and is regularly briefed by the Chief People
Officer. The Committee takes account of
the interests of all internal and external
stakeholders when making any decisions
on remuneration matters. During the
year ended 31 March 2024, we continued
to grant LTIP awards to our senior leaders
below the Executive Leadership Team,
more closely aligning those who execute our
strategy on a daily basis with the interests
of our shareholders.
LONG-TERM INCENTIVE PLAN
Vesting of the 2021 LTIP in 2024 is based
on performance against relative TSR versus
the FTSE 350 Real Estate Sector, TRE and
performance against environmental targets.
On the basis of performance over the three
years to 31 March 2024, these awards will
vest at 60%.
DISCRETION
No discretion was exercised in the year
ended 31 March 2024 in respect of the
Executive Directors.
EXECUTIVE REMUNERATION 2024/25
1. BASE SALARY
From 1 June 2024, Executive Director salaries
will increase by 3%. Pay rises across the wider
workforce will generally be in the range of
3.25% and 3.75%.
2. PENSION AND BENEFITS
Executive Director pension contributions will
continue to be aligned to the wider workforce
at 10.5% of salary. No changes will be made
to benefit provision.
3. ANNUAL BONUS
For the year ending 31 March 2025,
Executive Directors will continue to be
eligible for an annual bonus of up to 150%
of salary. Alongside our Policy consultation
we discussed changes to the measures
and weightings in our annual bonus with
shareholders and the feedback was generally
positive. On this basis our 2024/25 bonus
scheme is amended as follows (a) the
weighting on financial performance
(previously 60% of potential) has been
increased to 70% of bonus potential; (b) the
70% has been split equally between EPRA
earnings and like-for-like Net Rental Income
Growth (which replaces TRE); (c) the
remaining 30% has been based on strategic
targets which will always include ESG
targets. The rationale for these changes
is set out on pages 78-79).
4. LONG-TERM INCENTIVE PLAN
We intend to grant awards under the
LTIP in June 2024 which will be subject
to performance conditions measured
over a three-year performance period.
Alongside our Policy consultation we
discussed minor changes to the weightings
and measures in our LTIP with shareholders
and their feedback was generally positive.
On this basis our 2024 LTIP award will
LANDSEC ANNUAL REPORT 2024
GOVERNANCE
The Annual Report on Remuneration describes how the Directors’ Remuneration Policy has been applied in the financial year ended 31 March
2024 and how the Policy will operate in the financial year ending 31 March 2025.
1. REMUNERATION OUTCOMES FOR DIRECTORS DURING THE YEAR
1.1 DIRECTORS’ EMOLUMENTS (AUDITED)
SINGLE FIGURE OF REMUNERATION FOR EACH EXECUTIVE DIRECTOR (£K)
TABLE 24
Base
salary1
Benefits2
Pension
allowance3
Annual
bonus
paid in
cash4
Annual
bonus
deferred
into shares4
LTIPs5
Other6
Total
Total
fixed
pay
Total
variable
pay
Executive Directors
Mark Allan
2023/24
851
15
89
426
174
1,345
–
2,900
955
1945
2022/23
820
30
86
410
205
1,077
–
2,628
936
1,692
Vanessa Simms6,8
2023/24
522
82
55
261
122
824
1,866
659
1,207
2022/23
502
31
53
251
126
–
372
1,335
586
749
Former Directors
Colette O’Shea7
2023/24
–
–
–
–
–
–
–
–
–
–
2022/23
245
9
26
184
–
539
–
1,003
280
723
1. Base salary earned during the year ended 31 March 2024 (with prior year comparatives).
2. The benefits consisted of a car/travel allowance and private medical insurance.
3. The pension contribution for Mark Allan, Vanessa Simms and Colette O’Shea was a cash allowance of 10.5% of base salary.
4. Further details of the bonus awards are set out in section 1.3 below.
5. Further details of the estimated LTIP vesting values in respect of the 2021 LTIP Awards are set out in section 1.4 below. LTIP values in respect of the prior year have been updated
to reflect actual values at vesting rather than the estimates presented last year. Calculation based on a closing share price of £6.518 on the 24 July 2023 vesting date.
6. Vanessa Simms joined Landsec’s Board as CFO designate on 4 May 2021, taking up the post of CFO on 1 June 2021. The ‘Other’ column relates to the vesting value of the 2021
buyout award granted to Vanessa Simms based on two years of performance to 31 March 2023 (see last year’s Annual Report for further details). Calculation based on a closing
share price of £5.634 on the 25 June 2023 vesting date.
7. Colette O’Shea left the Board on 30 September 2022.
8. In addition to the above, Vanessa Simms participated in the Sharesave at the maximum monthly savings limit (£500) and participated in the Share Incentive Plan from February 2024.
SINGLE FIGURE OF REMUNERATION FOR EACH NON-EXECUTIVE DIRECTOR (£K)
TABLE 25
Fees1
Benefits
Pension
allowance
Annual
bonus
LTIPs
Total
Total
fixed
pay
Total
variable
pay
Non-executive Directors
Sir Ian Cheshire2
2023/24
375
–
–
–
–
375
375
–
2022/23
10
–
–
–
–
10
10
–
Moni Mannings2
2023/24
22
–
–
–
–
22
22
–
Edward Bonham Carter
2023/24
87
–
–
–
–
87
87
–
2022/23
85
–
–
–
–
85
85
–
James Bowling2
2023/24
52
–
–
–
–
52
52
–
Madeleine Cosgrave
2023/24
72
–
–
–
–
72
72
–
2022/23
70
–
–
–
–
70
70
–
Christophe Evain
2023/24
92
–
–
–
–
92
92
–
2022/23
90
-
–
–
–
90
90
–
Miles Roberts
2023/24
72
–
–
–
–
72
72
–
2022/23
38
-
–
–
–
38
38
–
Manjiry Tamhane
2023/24
72
–
–
–
–
72
72
–
2022/23
70
–
–
–
–
70
70
–
Nicholas Cadbury3
2023/24
63
–
–
–
–
63
63
–
2022/23
90
–
–
–
–
90
90
–
Cressida Hogg3
2023/24
49
–
–
–
–
49
49
–
2022/23
375
–
–
–
–
375
375
–
1. Fees paid to Directors during the year ended 31 March 2024 (with prior year comparatives).
2. Sir Ian Cheshire joined the Board on 23 March 2023. Moni Mannings joined the Board on 11 December 2023. James Bowling joined the Board on 7 September 2023.
3. Nicolas Cadbury left the Board on 31 December 2023. Cressida Hogg left the Board on 16 May 2023.
ANNUAL REPORT ON REMUNERATION
72
LANDSEC ANNUAL REPORT 2024
73
GOVERNANCE
1.2 PAYMENTS TO FORMER DIRECTORS
As announced on 9 September 2022, Colette O’Shea ceased to be a director of the Company on 30 September 2022, stepped down from her role
as Chief Operating Officer on 31 March 2023 and continued to be an employee until the end of her 12-month notice period on 8 September 2023.
Other than as set out on page 102 of the Annual Report 2023 and as per page 72 of this Annual Report in respect of updating the single figure
table for the actual rather than estimated value of her 2020 LTIP awards which vested in 2023, no further payments have been made in respect
of the period from 1 April 2023 to cessation of employment.
1.3 ANNUAL BONUS OUTTURN
In the year under review, Executive Directors had the potential to receive a maximum annual bonus of up to 150% of base salary. Of this, 120%
of salary was dependent on meeting Group targets and 30% of salary was dependent on meeting personal objectives. All targets were set at
the beginning of the year. The following table confirms the targets and their respective outcomes.
ANNUAL BONUS PERFORMANCE SUMMARY FOR 2023/24
TABLE 26
Measure
Weighting
Description
Performance outcome
Threshold
Target
Maximum
Actual
Outturn
(% of target)
Outturn
(% of max)
EPRA
15%
Actual EPRA earnings targets
£360m
£369m
£387m
£371m
113.9%
56.9%
LFL EPRA
15%
LFL EPRA earnings targets
£326m
£331m
£339m
£335m
152.5%
76.2%
TRE
30%
Delivery of EPRA NTA (adjusted for
dividends) through proactive asset
management.
0%
4.7%
8%
(4.0%)
0%
0%
ESG
20%
Milestone carbon reduction targets
relating to Energy and Developments
(10% each).
25%
2 targets
50%
3 targets
100%
4 targets
Between
target and
maximum
75%
Personal objectives
20%
A mix of individual goals set at the
beginning of the year.
Between
target and
maximum
60 to 70%
Total annual bonus
100%
25%
50%
100%
46.98 to
48.98%
The EPRA target ranges were set at the start of the financial year in light of the budgeted performance and, reflecting Landsec’s commitment to be a net seller in the market, were
considered to be appropriately challenging at threshold, target and maximum when disposals are factored in.
ESG – ENERGY (10%)
TABLE 27
Target
Detail
Committee assessment
Outturn
(% of max)
Energy
reduction
3% like-for-like energy reduction compared with
previous year 2022/23.
Objective met. Achieved a 3.7% energy intensity
reduction through energy efficiencies measures.
Achieved
ASHP
Installation of ASHPs is started at two assets, detailed
design (stage 3) is started for two assets and
feasibility study is completed for one additional asset.
Objective met.
Achieved
Customer
engagement
Progress customer engagement programme,
engaging a total of 30 customers by year end,
including follow-up with 20 customers from previous
year’s programme.
Objective met. 38 customers have been engaged,
including follow-ups with customers from previous
year’s programme.
Achieved
On-site
Solar Power
Commence on-site installation of additional solar PV
at two retail assets and complete enabling feasibility
study for further two assets.
Objective not met. On-site solar PV installation has
commenced at one retail asset. Installation has been
delayed at the other asset, due to JV ownership
consolidation. Enabling feasibility studies have been
completed for additional two assets.
Not achieved
Total
50%
Threshold (25%): at least two outcomes are achieved/Target (50%): at least three outcomes are achieved/Maximum (100%): all four outcomes are achieved.
LANDSEC ANNUAL REPORT 2024
GOVERNANCE
ESG – DEVELOPMENTS (10%)
TABLE 28
Target
Detail
Committee assessment
Outturn
(% of max)
Embodied
carbon
reduction
All new developments not already on site (design stage) to target average portfolio
embodied carbon reduction of 40% from typical buildings1, striving for 600kgCO2e/m2
for office and 500 kgCO2e/m2 for residential.
Objective met.
Achieved
Low carbon
solutions
All new developments in pre-RIBA Stage 4 to investigate the use of at least one
innovative low carbon process or material.
Objective met.
Achieved
Circular
economy in
developments
and
refurbishments
All new developments and major refurbishments to undertake a pre-deconstruction/
pre-refurbishment materials audit by the end of RIBA Stage 2, setting project
specific targets on material reused, repurposed and material directed back into
the supply chain.
Objective met.
Achieved
NABERS/
BREEAM/WELL
or other relevant
certification
All new developments to target: NABERS 5 stars or above (45kWh/m2 energy intensity
for residential); BREEAM Outstanding and/or WELL Core Gold or above for offices/
BREEAM Excellent or above for retail/Home Quality Mark or equivalent for residential.
Objective met.
Achieved
Total
100%
Threshold (25%): at least two outcomes are achieved/Target (50%): at least three outcomes are achieved/Maximum (100%): all four outcomes are achieved.
1. Reduction compared with typical buildings from GLA Whole Life Carbon Guidance (office: 1,000 kgCO2e/m2 GIA and residential: 850kgCO2e/m2 GIA).
SUMMARY OF PERSONAL OBJECTIVES (20%)
TABLE 29
Target
Detail
Committee assessment
Business
performance
and strategy
delivery
Oversee successful delivery of the Group business plan, budget
and KPIs
Above target. Strong first year of business plan and
scorecards drove performance.
Milestones for longer-term projects met in line with plan
Above target. Good progress on milestone planning and
mixed-use strategy.
Maintain portfolio recycling momentum
Partially met. Good progress with acquisition and disposal
targets in a difficult investment market.
Deliver refreshed strategic plan to the Board for approval
On target. Approved by the Board.
Review long-term financing and capital structure strategy
On target. Review undertaken and proposals approved
by the Board.
Identify, and if appropriate pursue, M&A opportunities that help
accelerate strategy delivery
On target. Numerous opportunities evaluated by
the Board.
Organisation
and culture
Support introduction of new Annual Performance Planning
framework as a foundation for a high performing culture
On target. Annual Performance Planning framework
rolled out and high performance programme launched.
Maintain positive levels of employee engagement through ongoing
cultural change work
Above target. Latest engagement score increased by
+12 points.
Support the successful introduction of a refreshed people plan,
embraced by the business
On target. Talent framework progressed and presented
to the Board.
Champion the new D&I strategy such that it is embedded in the
business with clear progress against KPIs
On target. Refreshed strategy launched and embedded.
Champion a data and tech enabled culture with targeted
interventions
On target. Major programmes on track.
Total
CEO: 12 out of 20. CFO: 14 out of 20
The personal objectives were considered by the Committee to have been largely met. On assessment, they delivered an outcome of 12% out
of 20% against the CEO’s personal and shared targets and 14% out of 20% against the CFO’s personal and shared targets. These results are
consistent with the Group’s performance delivered in 2023/24.
ANNUAL REPORT ON REMUNERATION
CONTINUED
74
LANDSEC ANNUAL REPORT 2024
75
GOVERNANCE
TOTAL ANNUAL BONUS ACHIEVEMENT
TABLE 30
Director
EPRA
earnings
(15%)
EPRA
earnings LFL
(15%)
TRE
(30%)
ESG
Energy
(10%)
ESG
Developments
(10%)
Personal
(20%)
Total % of max
(% of salary)
Total
£k
Mark Allan
56.9%
of max
76.2%
of max
0%
of max
50%
of max
100%
of max
60% of max
46.98% of max
(70.47% of salary)
£600
Vanessa Simms
70% of max
48.98% of max
(73.47% of salary)
£383
In line with our Policy, any bonus between 50% and 100% of salary will be deferred into shares for one year.
1.4 LONG-TERM INCENTIVE PLAN OUTTURNS
The table below summarises how we have assessed performance in respect of the 2021 LTIP awards granted on 25 June 2021 to Executive
Directors over the three years to 31 March 2024.
TABLE 31
Measure
Weighting
Description
Performance outcome
Outturn
(% of max)
Total Shareholder
Return (TSR)
40%
TSR relative to the constituents of the FTSE 350 Real
Estate Index, measured over a three-year period, from
1 April 2021
Threshold
(8%)
Median
Maximum
(40%)
Upper
Quartile
Actual
Above
maximum
(+9% TSR)
100%
Total Return on
Equity (TRE)
40%
Growth in EPRA NTA per share over the performance
period as adjusted for dividends
Threshold
(8%)
4% p.a.
Maximum
(40%)
10% p.a.
Actual
Below
threshold
(-0.6% TRE)
0%
ESG
20%
Reduction of carbon emissions over the performance
period aligned to 2030 science-based targets
Threshold
(4%)
15%
Maximum
(20%)
20% p.a.
Actual
Above
maximum
(26% carbon
reduction)
100%
Total
100%
20%
100%
60%
The value of these awards shown in the single figure table for Mark Allan and Vanessa Simms as follows:
TABLE 32
Shares granted1
Number of shares
that will lapse
Number of shares
that will vest
Estimated value of
shares vesting2,5
(£k)
Face value of shares
expected to vest3
(£k)
Impact of share
price at vesting4
(£k)
Mark Allan
345,125
138,050
207,075
1,345
1,439
-94
Vanessa Simms
211,389
84,556
126,833
824
881
-57
1. 2021 LTIP award granted on 25 June 2021.
2. Based on the average three-month share price to 31 March 2024 (649.6 pence).
3. Based on the prevailing share price at the relevant grant date (695 pence).
4. The difference between the value of the shares under awards vesting and the value of the shares at grant.
5. Dividend equivalents accrue on 2021 LTIP awards during the vesting and during the holding period (or to the date of exercise if sooner). These will be included in the actual value
of the LTIPs at the vesting date which will be presented in next year’s Annual Report on Remuneration.
The Committee reviewed the estimated LTIP vesting values set out above and concluded that the vesting values do not represent unjustified
windfall gains, noting Landsec’s strong operational performance over the three years to 31 March 2024, proactive execution of the strategy
(which includes a number of material asset disposals) notwithstanding challenging market conditions, balance sheet strength (one of the
strongest in the sector) and strong relative share price performance over the three years to 31 March 2024. Therefore no discretion was applied
to amend the formulaic outcome.
LANDSEC ANNUAL REPORT 2024
GOVERNANCE
2. DIRECTORS’ INTERESTS
2.1 TOTAL SHAREHOLDING (AUDITED)
Details of the Directors’ interests, including those of their immediate families and connected persons, in the issued share capital of the Company
at the beginning and end of the year, together with confirmation of whether the required shareholding has been met or whether a director is still
building their holding, are set out in the table below.
Executive Directors are expected to meet the minimum shareholding requirements within five years of appointment to the Board. Where the
minimum level is not met, the Executive Director is expected to retain 100% of the shares acquired, net of tax, under any share plan awarded
by the Company. The current Policy requires Non-executive Directors to meet minimum shareholding requirements within three years of
appointment to the Board. As detailed in the Remuneration Policy Section, an amendment to the Non-executive Directors shareholding
requirement in our Policy is being proposed at the 2024 AGM.
DIRECTORS’ SHARES
TABLE 33
Name
Salary/
base fee at
31 March 2024
(£)
Minimum
shareholding
requirements
(% of salary/
base fee)4
Required
holding
value
(£)
Holding
(ordinary
shares)
1 April 2023
Holding
(ordinary
shares)
31 March 2024
Deferred
bonus shares
under holding
period
Value of
holding
(£)1
Met requirement
or building2
Mark Allan
856,960
300%
2,570,880
229,203
348,528
100,826
2,605,919
Met
Vanessa Simms
524,888
200%
1,049,776
51,400
108,1505
53,143
876,242
Building
Edward Bonham Carter
81,100
100%
70,000
9,375
9,375
–
61,706
Met4
Sir Ian Cheshire3
375,000
100%
375,000
–
14,840
–
97,677
Building
Madeleine Cosgrave
72,100
100%
70,000
10,535
10,535
–
69,341
Met4
Christophe Evain
92,100
100%
70,000
8,000
8,000
–
52,656
Met4
James Bowling3
92,100
100%
92,100
–
4,557
–
29,994
Building
Moni Mannings3
72,100
100%
72,100
–
–
–
–
Building
Miles Roberts
72,100
100%
70,000
–
3,645
–
23,991
Building
Manjiry Tamhane
72,100
100%
70,000
4,473
4,473
–
29,441
Building
1. Using the closing share price of 658.2p on 28 March 2024 and including the value of any deferred bonus shares, net of notional tax and employee NIC.
2. A Policy amendment is being proposed at the 2024 AGM which requires Non-executive Directors to own shares within one year of appointment.
3. Sir Ian Cheshire joined the Board on 23 March 2023. James Bowling joined the Board on 7 September 2023. Moni Mannings joined the Board on 11 December 2023.
4. Once the minimum shareholding requirement has been met, the number of shares is frozen with subsequent share price movements disregarded.
5. Figure includes partnership and matching shares under SIP.
2.2 OUTSTANDING SHARE AWARDS HELD BY EXECUTIVE DIRECTORS (AUDITED)
The table below shows share awards granted and vested during the year, together with the outstanding and unvested awards at the year end.
LTIP awards are granted in the form of nil cost options, which may be exercised from the third anniversary of the date of grant, until their expiry
on the tenth anniversary of the date of grant.
OUTSTANDING SHARE AWARDS AND THOSE WHICH VESTED DURING THE YEAR
TABLE 34
Award date
Market price
at award date
(p)
Options
awarded
Options
vested
Market price at
date of vesting
(p)
Vesting date
Mark Allan
LTIP
24/07/2020
547.2
438,596
165,307
656.15
24/07/2023
25/06/20211
695.4
345,125
25/06/2024
24/06/2022
694.3
356,042
24/06/2025
08/06/2023
625.2
411,209
08/06/2026
Deferred bonus
25/06/2021
695.4
26,959
25/06/2024
24/06/2022
694.3
57,611
57,611
560.08
24/06/2023
24/06/2022
694.3
41,008
24/06/2024
08/06/2023
625.2
32,859
08/06/2024
Vanessa Simms
Buyout
18/05/2021
526.2
110,160
66,096
560.08
25/06/2023
LTIP
25/06/20211
695.4
211,389
25/06/2024
24/06/2022
694.3
218,075
24/06/2025
08/06/2023
625.2
251,865
08/06/2026
Deferred bonus
25/05/2021
713.4
10,122
25/05/2024
24/06/2022
694.3
32,165
32,165
560.08
24/06/2023
24/06/2022
694.3
22,895
24/06/2024
08/06/2023
625.2
20,126
08/06/2024
1. See section 1.4 in respect of the vesting of the 2021 LTIP awards over three-year performance to 31 March 2024.
ANNUAL REPORT ON REMUNERATION
CONTINUED
76
LANDSEC ANNUAL REPORT 2024
77
GOVERNANCE
2.3 SHARE AWARDS GRANTED IN THE YEAR ENDED 31 MARCH 2024
Awards were granted under the LTIP in June 2023, subject to three performance conditions measured over a three-year performance period.
Awards may normally be exercised between 8 June 2026 and 8 June 2033 and a two-year post-vesting holding period applies.
TABLE 35
Number of awards
Share price (p)1
Face value
Mark Allan
411,209
625.2
£2,570,879
Vanessa Simms
251,865
625.2
£1,574,660
1. Face value of awards has been determined based on the closing share price on the trading day immediately prior to the date of grant.
The performance targets attached to the 2023 LTIP awards were as follows:
LTIP 2023-2026: AWARDS CAPPED AT 300% OF SALARY
TABLE 36
Measure
Weighting
Description
Performance range1
TSR
40%
TSR relative to the constituents of the FTSE 350 Real Estate Index,
measured over a three-year period, from 1 April 2023.
Threshold (8%)
Median
Maximum (40%)
Upper quartile
TRE
40%
Growth in EPRA NTA per share over the three-year
performance period as adjusted for dividends.
Threshold (0%)
2% p.a.
Maximum (40%)
10% p.a.
ESG2
20%
Reduction of carbon emissions over the three-year
performance period.
Threshold (4%)
28.6%
Maximum (20%)
35.0%
1. Vesting takes place on a straight-line basis between threshold and maximum values.
2. Following the publication of the Annual Report 2022/23, the carbon emissions targets were increased from the proposed targets set out on page 109 of last year’s Annual Report
on Remuneration.
Awards were granted under the Deferred Share Bonus Plan in June 2023. Awards may normally be exercised between 8 June 2024 and
8 June 2028.
TABLE 37
Number of awards
Vesting date
Share price (p)1
Total face value
Mark Allan
32,859
08/06/2024
625.2
£205,434
Vanessa Simms
20,126
08/06/2024
625.2
£125,828
1. Face value of awards has been determined based on the closing share price on the trading day immediately prior to the date of grant.
2.4 DIRECTORS’ OPTIONS OVER ORDINARY SHARES (AUDITED)
The options over shares set out below relate to the Land Securities Group PLC Sharesave scheme (Sharesave).
OUTSTANDING GRANTS AND THOSE WHICH WERE EXERCISED DURING THE YEAR
TABLE 38
Number of
options at
1 April 2023
Exercise price
per share1
(p)
Number of
options granted
in year to
31 March 2024
Number
options
exercised/
lapsed
Market price
at exercise
(p)
Number of
options at
31 March 2024
Exercisable dates
Vanessa Simms
3,082
584
–
–
–
3,082
08/2024-02/2025
1. The exercise price for the Sharesave awards was determined based on a three-day average mid-market share price prior to the invitation date of the scheme, discounted by 20%.
2.5 DIRECTORS’ SERVICE CONTRACTS AND LETTERS OF APPOINTMENT
DATES OF APPOINTMENT FOR DIRECTORS
TABLE 39
Name
Date of appointment
Date of contract/Letter of
Appointment
Executive Directors
Mark Allan
14 April 2020
21 November 2019
Vanessa Simms
4 May 2021
27 October 2020
Non-executive Directors
Sir Ian Cheshire
23 March 2023
19 January 2023
Moni Mannings
11 December 2023
8 December 2023
Edward Bonham Carter
1 January 2014
13 May 2015
James Bowling
7 September 2023
26 July 2023
Madeleine Cosgrave
1 January 2019
22 November 2018
Christophe Evain
1 April 2019
14 March 2019
Miles Roberts
19 September 2022
1 August 2022
Manjiry Tamhane
1 March 2021
29 January 2021
LANDSEC ANNUAL REPORT 2024
GOVERNANCE
3. APPLICATION OF POLICY FOR 2024/25
3.1 EXECUTIVE DIRECTORS’ BASE SALARIES
TABLE 40
Name
Current salary
(£k)
New salary1
(£k)
Percentage
increase
Mark Allan
857
883
3%
Vanessa Simms
525
541
3%
1. From 1 June 2024.
From 1 June 2024, Executive Director salaries will increase by 3%. Pay rises across the wider workforce will generally be in the range of 3.25%
and 3.75%.
3.2 NON-EXECUTIVE DIRECTORS’ FEES
The fees for the Chair and the Non-executive Directors for 2024/25 are presented below. Base fees for the Chair and the Non-executive Directors
will increase from 1 June 2024 by 3% (aligned to the level of increase for Executive Directors and below the level of the wider workforce). In line with
the Committee’s Terms of Reference, no individual was involved in the decisions relating to their own remuneration.
TABLE 41
Current
Base fee
(£k)
New
Base fee1
(£k)
Percentage
increase
Chair
375
386
3%
Non-executive Director
72
74
3%
Additional fees
Audit/Remuneration Committee Chair
20
20
0%
Senior Independent Director
15
15
0%
1. From 1 June 2024.
3.3 PERFORMANCE TARGETS FOR THE COMING YEAR
Performance metrics and weightings in respect of the annual bonus are set out below.
Following the Policy review, the weighting on financial performance (currently 60% of potential) was increased to 70% of bonus potential to
ensure a greater focus on our key financial performance metrics.
The 70% was split equally between EPRA Earnings (as currently operated for 30% of bonus potential) which remains a key performance
indicator for Landsec; and LFL Net Rental Income Growth, which replaces the Total Return on Equity (previously referred to as Total Accounting
Return) metric used for 30% of last year’s bonus potential. This change reflects both the importance of delivering like-for-like operational
performance in the context of a higher for longer interest rate environment and shareholder feedback around the risk of double counting
given that Total Return on Equity was used for both the 2023/24 annual bonus (30%) and the 2021 to 2023 long-term incentive awards (40%).
The remaining 30% is based on strategic targets rather than last year’s approach whereby non-financial targets were split equally between
ESG (20% of potential) and personal objectives (20% of potential). This change simplifies target setting, assessment and communication.
The number of strategic objectives will normally be limited to no more than seven objectives (albeit six will operate for 2024/25), with at least
three relating to Landsec’s ESG agenda (delivering on our environmental and D&I strategies) with the remaining objectives relating to other
aspects of Landsec’s balanced scorecard.
ANNUAL REPORT ON REMUNERATION
CONTINUED
78
LANDSEC ANNUAL REPORT 2024
79
GOVERNANCE
Challenging sliding scale targets will operate and the Remuneration Committee will retain discretion to ensure any payouts against the targets
reflect the underlying performance of the Company. Performance targets are considered to be commercially sensitive although will be disclosed
in full, together with the performance and the resulting bonus awards, in next year’s Directors’ Remuneration Report.
ANNUAL BONUS 2024/25 PERFORMANCE CRITERIA: AWARDS CAPPED AT 150% OF SALARY
TABLE 42
Measure
Weighting
Description
EPRA earnings
35%
EPRA earnings performance versus budgeted performance
LFL net rental income
35%
LFL net rental income percentage growth targets
Strategic objectives
30%
Six individual objectives including two covering environmental targets and one on diversity and inclusion
The approach for the 2024 LTIP awards reflects both Landsec’s focus on delivering returns to shareholders combined with our approach
to sustainability and our ambition to be a net zero carbon business. Reflecting Landsec’s:
• continued focus on delivering returns to shareholders through the cycle we will continue to operate: (i) relative Total Shareholder Return
targets against FTSE 350 sector peers albeit agencies will be excluded from the group from 2024 onwards (with the weighting unchanged
at 40%), and (ii) Total Return on Equity, being the percentage change in EPRA Net Tangible Assets per share plus dividends, targets albeit
with the weighting decreased slightly from 40% to 35% from the prior year
• industry-leading approach to ESG, carbon reduction targets will continue to operate based on our ambitious, science-based, plans to
transition to net zero across the value chain by 2040, albeit with the weighting decreased slightly from 20% to 15% from the prior year;
and D&I targets will be introduced for 10% of awards. Targets will be aligned to Landsec’s recently refreshed D&I strategy, which focuses
our business not only on building a diverse and inclusive workforce, but also on our teams creating truly inclusive places for our customers
and local communities, and are based on our Board approved 2030 gender and ethnicity targets.
LTIP 2024-2027 PERFORMANCE CRITERIA: AWARDS CAPPED AT 300% OF SALARY
TABLE 43
Measure
Weighting
Description
Performance range1
TSR (%)
40%
TSR relative to the selected constituents of the FTSE 350 Real Estate
Index (excluding agencies), measured over a three-year period, from
1 April 2024.
Threshold (8%)
Median
Maximum (40%)
Upper quartile
TRE (%)
35%
Growth in EPRA NTA per share over the three-year performance
period as adjusted for dividends.
Threshold (7%)
4% p.a.
Maximum (35%)
11% p.a.
ESG – Carbon
Emissions
15%
Reduction of carbon emissions over the three-year performance
period aligned to achieve our updated science-based target by 2030.
Threshold (3%)
18.6%
Maximum (15%)
25%
ESG – D&I
5%
Delivery of our refreshed D&I strategy based on our Board approved
2030 gender targets – female representation at Leader level in 2027.
Threshold (1%)
38%
Maximum (5%)
43%
5%
Delivery of our refreshed D&I strategy based on our Board approved
2030 ethnicity targets – ethnic minority representation at Leader level
in 2027.
Threshold (1%)
9%
Maximum (5%)
16%
Total LTIP
100%
1. Vesting takes place on a straight-line basis between threshold and maximum values.
4. TOTAL SHAREHOLDER RETURN AND CHIEF EXECUTIVE PAY
The following graph illustrates the performance of the Company measured by TSR (share price growth plus dividends paid) against a
‘broad equity market index’. As the Company is a constituent of the FTSE 350 Real Estate Index, this is considered to be the most appropriate
benchmark for the purposes of the graph. An additional line to illustrate the Company’s performance compared with the FTSE 100 Index over
the previous ten years is also included.
This graph shows the value, by 31 March 2024, of £100 invested in Landsec on 31 March 2014, compared with the value of £100 invested in the
FTSE 100 and FTSE 350 Real Estate Indices on the same date.
LANDSEC ANNUAL REPORT 2024
GOVERNANCE
TOTAL SHAREHOLDER RETURN
CHART 44
Land Securities Group PLC
FTSE 100
FTSE 350 Real Estate
50
100
150
200
Mar-14
Mar-15
Mar-16
Mar-17
Mar-18
Mar-19
Mar-20
Mar-22
Mar-24
Mar-23
Mar-21
Value (£) (rebased)
106.3
100.7
124.3
124.5
134.1
109.4
133.4
154.9
163.2
176.9
126.3
114.1
113.0
104.8
107.9
68.5
87.2
103.8
87.0
98.3
122.8
115.0
114.6
123.6
123.3
105.4
124.7
106.5
116.5
150.7
The following table shows remuneration for the Chief Executive over a period of ten years.
CHIEF EXECUTIVE REMUNERATION OVER TEN YEARS
TABLE 45
Year
Chief Executive
Single figure
of total
remuneration
(£k)
Annual bonus
payment
(% of maximum)
Long-term
incentive vesting
(% of maximum)
2024
Mark Allan
2,900
47.0
60.0
2023
Mark Allan
2,6281
50.0
37.7
2022
Mark Allan
2,000
90.4
0.0
2021
Mark Allan
2,9202
16.2
n/a
2020
Robert Noel
1,569
43.8
0.0
2019
Robert Noel
1,624
50.5
0.0
2018
Robert Noel
1,693
58.8
0.0
2017
Robert Noel
2,692
58.8
50.0
2016
Robert Noel
2,011
67.5
13.1
2015
Robert Noel
4,776
94.5
84.7
1. LTIP values in respect of the prior year have been updated to reflect actual values at vesting rather than the estimates presented last year. Calculation based on a closing share
price of £6.518 on the 24 July 2023 vesting date.
2. Includes £1,692,042 in relation to buyout awards made on appointment.
5. THE CONTEXT OF PAY AT LANDSEC
5.1 PAY ACROSS THE GROUP
A. SENIOR MANAGEMENT
For the year under review, bonus payments to our 37 most senior employees (excluding the Executive Directors) ranged from 22% to 69%
of salary (2022/23: 27% to 72%), equating to 84% to 124% of target. The average bonus was 38% of salary (2022/23: 33.9%), equating to 101%
of target.
B. ALL OTHER EMPLOYEES
From 1 June 2023, Executive Director salaries increased by 4%. The pay rise across the wider workforce was 6.75% (5% of which was accelerated
and paid on 1 January 2023 to assist employees with the cost of living crisis), the remainder of which was paid on 1 June 2023. Pay rises across
the wider workforce will generally be in the range of 3.25% and 3.75%.
As at 31 March 2024, the ratio of the base salary of the Chief Executive to the average base salary across the Group (excluding Executive
Directors) was 11:1 (£856,960:£80,479).
ANNUAL REPORT ON REMUNERATION
CONTINUED
80
LANDSEC ANNUAL REPORT 2024
81
GOVERNANCE
C. PERCENTAGE CHANGE IN REMUNERATION BETWEEN DIRECTORS AND EMPLOYEES
The table below shows the year-on-year percentage change in salary, benefits and annual bonus earned for all current Directors compared
to all employees.
TABLE 46
2020/21
2021/22
2022/23
2023/24
Salary/
fee
change
(%)
Benefits
change
(%)
Bonus
change
(%)
Salary/
fee
change
(%)
Benefits
change
(%)
Bonus
change
(%)
Salary/
fee
change
(%)
Benefits
change
(%)
Bonus
change
(%)
Salary/
fee
change6
(%)
Benefits
change
(%)
Bonus
change
(%)
EXECUTIVE DIRECTORS
Mark Allan
–
–
–
9
(75)
479
3
(3)
(43)
4
(50)
(3)
Vanessa Simms1
–
–
–
–
–
–
13
24
(38)
4
161
2
Colette O’Shea2
3
(3)
(65)
5
0
389
(49)
(50)
(71)
–
–
–
NON-EXECUTIVE DIRECTORS
Sir Ian Cheshire3
–
–
–
–
–
–
–
–
–
–
–
–
Cressida Hogg4
(5)
–
–
5
–
–
0
–
–
–
–
–
Moni Mannings3
–
–
–
–
–
–
–
–
–
–
–
–
Edward Bonham Carter
(15)
–
–
3
–
–
0
–
–
2
–
–
James Bowling3
–
–
–
–
–
–
–
–
–
–
–
–
Nicholas Cadbury4
(5)
–
–
5
–
–
0
–
–
–
–
–
Madeleine Cosgrave
(5)
–
–
5
–
–
0
–
–
3
–
–
Christophe Evain
16
–
–
7
–
–
0
–
–
2
–
–
Miles Roberts
–
–
–
–
–
–
0
–
–
–
–
–
Manjiry Tamhane
–
–
–
–
–
–
0
–
–
3
–
–
AVERAGE EMPLOYEE
7
6
(49)
(1)
2
219
15
25
(12)
6
(5)
2
1. Vanessa Simms joined the Board during 2021/22.
2. Colette O’Shea stepped down from the Board on 30 September 2022 therefore comparing part-year (2022/23) with full year prior (2021/22).
3. Sir Ian Cheshire joined the Board on 23 March 2023. James Bowling joined the Board on 7 September 2023. Moni Mannings joined the Board on 11 December 2023.
4. Cressida Hogg left the Board on 16 May 2023. Nicholas Cadbury left the Board on 31 December 2023.
5. The benefits change % for 2022/23 has been updated as it was incorrectly stated in the prior year’s report.
6. Reflects the increase to base fees for Non-executive Directors awarded in 2023 for those serving in the full year 2022/23 and 2023/24.
D. CEO PAY RATIO
The tables below show how pay for the CEO compares to employees at the lower, median and upper quartiles (calculated on a full-time
equivalent basis). The ratios have been calculated in accordance with Option A of The Companies (Miscellaneous Reporting) Regulations 2018,
which uses the total pay and benefits for all employees, and is the same methodology that is used to calculate the CEO’s single figure of
remuneration table on page 72. Figures are calculated by reference to 31 March 2024 using actual pay data from April 2023 to March 2024.
Excluded from our analysis are joiners, leavers and long-term absentees from the Company during the year. As the CEO has a larger proportion
of his total remuneration linked to business performance than other employees in the UK workforce, the ratio has increased versus last year
primarily as a result of the 2021 LTIP vesting at 60% of the maximum compared to the 2020 LTIP which vested at 38% of the maximum. This
more than offset the reduction in the bonus award (47% of maximum compared to 50% of maximum for the prior year). Given the alignment
of incentive arrangements which are cascaded below Board level, the Remuneration Committee believes the pay ratios are consistent with the
pay, reward and progression policies for the Group’s UK employees taken as a whole.
TABLE 47
Year
Method
25th percentile pay ratio
Median pay ratio
75th percentile pay ratio
2023/24
Option A
51:1
32:1
21:1
2022/231
Option A
47:1
29:1
18:1
2021/22
Option A
40:1
25:1
16:1
2020/21
Option A
22:1
14:1
10:1
2019/20
Option A
36:1
23:1
15:1
CEO pay
P25 pay
P50 pay
P75 pay
Salary
£851,467
£42,832
£67,235
£99,259
Total pay2
£2,901,303
£57,313
£90,810
£135,816
1. The CEO pay ratios for 2022/23 have been updated to reflect the actual value at vesting for the CEO as detailed in section 1.1.
2. Employees may now participate in our Share Incentive Plan, however this has not been included in the calculations above.
LANDSEC ANNUAL REPORT 2024
GOVERNANCE
ANNUAL REPORT ON REMUNERATION
CONTINUED
E. TOTAL PAY AND BENEFITS
TABLE 48
Lower quartile (25th percentile)
Median
Upper quartile (75th percentile)
Year
Method
Total Pay
and Benefits
Total
Salary
Total Pay
and Benefits
Total
Salary
Total Pay
and Benefits
Total
Salary
2023/24
A
£57,313
£42,832
£90,810
£67,235
£135,816
£99,259
2022/23
A
£55,502
£43,811
£89,395
£64,851
£147,119
£104,813
2021/22
A
£50,620
£38,038
£79,746
£58,083
£122,832
£77,600
2020/21
A
£45,752
£39,000
£73,212
£55,776
£105,848
£77,000
2019/20
A
£44,140
£29,785
£69,393
£58,565
£104,438
£79,203
5.2 THE RELATIVE IMPORTANCE OF SPEND ON PAY
The table below shows the total spend on pay for all Landsec employees, compared with our returns to shareholders in the form of dividends.
TABLE 49
March 2024
(£m)
March 2023
(£m)
%
change
Spend on pay1
71
65
9
Dividend paid2
291
288
1
1. Including base salaries for all employees, bonuses and share-based payments.
2. Dividend paid represents dividends declared for the year. See note 11 to the financial statements.
6. DILUTION
Awards granted under the Company’s long-term incentive arrangements (LTIP, Deferred Share Bonus Plan, Restricted Share Plan and the ESOP)
are satisfied through the funding of an Employee Benefit Trust (administered by an external trustee) which acquires existing Land Securities
Group PLC shares in the market. The Employee Benefit Trust held 3,119,107 ordinary shares at 31 March 2024 (2022/23: 3,831,399). The exercise
of share options under the Land Securities Group PLC Sharesave, which is open to all employees who have completed more than one month’s
service with the Group, can be satisfied by the allotment of newly issued shares. At 31 March 2024, the total number of shares which could be
allotted under this Scheme was 538,608 shares (2022/23: 565,439), which represents less than 0.07% (2022/23: 0.08%) of the issued share
capital of the Company.
7. SHAREHOLDER VOTING
TABLE 50
% of votes
For
% of votes
Against
Number of votes
withheld1
Directors’ Remuneration Policy (2021 AGM)
96.4
3.6
286,920
Annual Report on Remuneration (2023 AGM)
92.2
7.8
3,555,938
1. A vote withheld is not a vote in law.
The Directors’ Remuneration Report was approved by the Board on 16 May 2024 and signed on its behalf by:
CHRISTOPHE EVAIN, CHAIR, REMUNERATION COMMITTEE
82
LANDSEC ANNUAL REPORT 2024
83
GOVERNANCE
OUR NEW POLICY
In approaching the renewal of the Directors’
Remuneration Policy (the Policy), the
Remuneration Committee (the Committee)
thought carefully about the behaviours
and outcomes it wishes to see and how the
remuneration structure will support them.
When setting the pay policy for Executive
Directors, the Committee also considered
pay practices and policies of the wider
workforce in order to ensure the revised
policy is proportionate and aligned with
Landsec’s culture. The review was
approached with the following main aims:
• remuneration should be clearly linked
to the Group’s purpose of creating
Sustainable places, Connecting
communities, Realising potential
• remuneration should reward and drive
the right behaviours and outcomes
and reflect strategic, personal and
financial achievements
• remuneration should be designed in a
manner that is clear for all stakeholders
and reflects their expectations
• remuneration should be easy to explain
and be viewed as fair
• remuneration should be based on
a pay‑for-performance model
REMUNERATION PRINCIPLES
Our remuneration principles, which we also
aim to cascade throughout the business,
underpin our Policy. These principles are
that our remuneration should:
• support the long-term success of the
business and sustainable long-term
shareholder value
• materially differentiate reward according
to performance
• be relevant, stretching and aligned to
the business strategy and achievement
of planned business goals
• be compatible with Landsec’s risk
policies and systems, with malus and
clawback provisions in place for all
forms of variable pay
• provide a balance between attracting,
retaining and motivating talented people
as well as supporting equal opportunity
and diversity of talent
• ensure that performance-related pay
constitutes a proportion of the overall
package appropriate to each level of
the organisation
• be clear and explainable to appropriate
stakeholders, avoiding paying more than
the Committee considers necessary
CONSIDERATION OF
SHAREHOLDER VIEWS
The Committee values the views of Landsec’s
shareholders and guidance from the main
shareholder representative bodies. As such,
the Committee proactively consults with
our major shareholders to ensure that their
views are represented in discussions on
remuneration matters. As part of the process
for renewing the Policy, the Committee
consulted with Landsec’s top 15 shareholders
as well as the major shareholder representative
bodies on a set of draft proposals. Reflecting
the feedback received from major investors
and representative bodies during the course
of the engagement process, which was
generally very positive, no changes were
made to the original proposals.
PROPOSED POLICY CHANGES
On the basis that our strategy remains
unchanged, no changes are proposed in
respect of the Remuneration Policy for
Executive Directors. We are however
proposing one minor change to the Policy
for Non-executive Directors.
The current Remuneration Policy states
that Non-executive Directors are expected
to meet a minimum shareholding guideline
of 100% of their relevant annual fee within
three years of appointment. However, going
forward, while the purchase and retention of
Landsec’s shares by Non-executive Directors
will continue to be expected, we are
proposing to remove the 100% of fee within
three years expectation as this is currently
considered to be overly restrictive in respect
of appointing new Non-executive Directors
from more diverse backgrounds. As such,
in this proposed Policy, Non-executive
Directors will not be subject to a minimum
shareholding expectation but will be
required to have made a purchase of a
number of Landsec shares within one year
of appointment.
DIRECTORS’ REMUNERATION POLICY
LANDSEC ANNUAL REPORT 2024
GOVERNANCE
DIRECTORS’ REMUNERATION POLICY
CONTINUED
As part of its review of the Policy, the Committee has considered the factors set out in provision 40 of the UK Corporate Governance Code.
In the Committee’s view, the proposed Policy addresses those factors as set out below:
FACTOR
DESCRIPTION
APPROACH
Clarity
Remuneration arrangements should be
transparent and promote effective
engagement with shareholders and the
workforce and link to strategy
• The Policy and arrangements are clearly disclosed in the Annual Report
• The Committee proactively seeks engagement with shareholders on remuneration matters
• The Committee is regularly updated on Landsec’s workforce pay and benefits
• The Committee regularly receives updates on the key performance indicators of
the business
• The Committee Chairman proactively seeks engagement with Landsec’s Employee Forum
on remuneration matters
Simplicity
Remuneration structures should avoid
complexity and their rationale and operation
should be easy to understand
• Our remuneration structure comprises fixed and variable remuneration, with the
performance conditions for variable elements clearly communicated to, and understood
by, participants
• Remuneration principles are published and clearly linked to strategy
Risk
Remuneration arrangements should ensure
reputational and other risks from excessive
rewards, and behavioural risks that can arise
from target-based incentive plans, are
identified and mitigated
• The rules of the remuneration plans provide discretion to the Committee to reduce award
levels (see page 91)
• Awards are subject to malus and clawback provisions (see pages 87-88)
• The Committee has overriding discretion to reduce awards to mitigate against
any reputational or other risk from such awards being considered excessive
Predictability
The range of possible reward values to
individual directors and any other limits or
discretions should be identified and
explained at the time of approving the policy
• See scenario charts on page 87
• Maximum award levels and discretions are set out in the Policy Table on pages 85-86
Proportionality
The link between individual awards, the
delivery of strategy and the long-term
performance of the company should be
clear. Outcomes should not reward poor
performance
• As shown in the scenario charts on page 87, variable performance related elements
represent a significant proportion of the total remuneration opportunity for our
Executive Directors
• The Committee considers the appropriate financial and personal performance measures
each year to ensure that there is a clear link to strategy
• Discretions available to the Committee ensure that awards can be reduced if necessary
to ensure that outcomes do not reward poor performance
Alignment
to culture
Incentive schemes should drive behaviours
consistent with company purpose, values
and strategy
• The Committee seeks to ensure that personal performance measures under the annual
bonus plan incentivise behaviours consistent with Landsec’s culture, purpose and values
• Long-term incentives will align Executive Director interests with those of shareholders by
ensuring a focus on delivering against strategy and purpose to generate long-term value
for shareholders
The Committee will operate within the prevailing Remuneration Policy. It will also operate the various incentive plans and schemes according to their respective
rules and consistent with normal market practice, the UK Corporate Governance Code and, as applicable, the Listing Rules. Within the Policy, the Committee
will retain the discretion to look at performance ‘in the round’, including withholding or deferring payments in certain circumstances where the outcomes for
Directors are not considered to be aligned with the outcomes for shareholders. Any specific circumstances which necessitate the use of discretion will be explained
clearly in the relevant Directors’ Remuneration Report.
84
LANDSEC ANNUAL REPORT 2024
85
GOVERNANCE
PROPOSED REMUNERATION POLICY
1. EXECUTIVE DIRECTORS
BASE SALARY
Purpose and link
to strategy
• To aid the recruitment, retention and motivation of high performing Executive Directors
• To reflect the value of their experience, skills and knowledge, and importance to the business
Operation
Normally reviewed annually, with effect from 1 June, and reflects:
• Increases throughout the rest of the business
• Market benchmarking exercises undertaken periodically to ensure salaries are set at around the median of the market competitive
level for people in comparable roles with similar levels of experience, performance and contribution
• Changes in the scope of an Executive Director’s role
Opportunity
The maximum annual salary increase will not normally exceed the average increase across the rest of the workforce. Higher increases
will be exceptional, and may be made in specific circumstances, including:
• Where there is an increase in responsibilities or scope of the role
• To apply salary progression for a newly appointed Executive Director
• Where the Executive Director’s salary has fallen below the market positioning
Performance measures
• Individual and Company performance is taken into account when determining appropriate salary increases
BENEFITS
Purpose and link
to strategy
• To provide protection and market competitive benefits to aid recruitment and retention of high performing
Executive Directors
Operation
Typical benefits include, but are not limited to:
• Car allowance
• Private medical insurance
• Life assurance
• Ill health income protection
• Holiday and sick pay
• Eligibility to participate in all-employee share incentive plans
• Professional advice in connection with their directorship
• Travel, subsistence and accommodation as necessary
• Occasional gifts, for example appropriate long service or leaving gifts
Opportunity
• The value of benefits may vary from year to year depending on the cost to the Company
Performance measures
• n/a
PENSION
Purpose and link
to strategy
• To help recruit and retain high performing Executive Directors
• To reward continued contribution to the business by enabling Executive Directors to build retirement benefits
Operation
• Participation in a defined contribution pension scheme or cash equivalent
Opportunity
• 10.5% of salary, in line with the maximum employer contribution for all employees in the Company’s Group Personal Pension Plan
Performance measures
• n/a
LANDSEC ANNUAL REPORT 2024
GOVERNANCE
DIRECTORS’ REMUNERATION POLICY
CONTINUED
ANNUAL BONUS
Purpose and link
to strategy
• Incentivises Executive Directors and senior management to achieve specific, predetermined goals during a one-year period,
or less Rewards financial and individual performance linked to the Company’s strategy
• Deferred proportion of bonus, awarded in shares, provides a retention element and additional alignment of interest
with shareholders
Operation
• The annual bonus operates by reference to financial and personal performance measures normally set and assessed over one year
• Any bonus payment is determined by the Committee after the year end, based on performance against challenging targets which
are reviewed annually
• The achievement of on-target performance should normally result in a payment of up to 50% of the maximum opportunity
• Bonuses up to 50% of salary are normally paid in cash. Any amounts in excess of 50% of salary are normally deferred into shares
for one year. Any amounts in excess of 100% of salary are normally deferred into shares for two years
• Deferred shares are potentially forfeitable if the individual leaves prior to the share release date
• Dividend equivalents may be awarded on deferred shares between grant and vesting to the extent that awards vest
• Bonus payments are not pensionable
• Malus and clawback provisions apply
• The level of payout at threshold performance for each performance measure is set annually, but will typically be no more than 25%
of maximum
• The Committee retains discretion to amend the payout level (up or down) where it considers it to be appropriate, but not so as
to exceed the maximum bonus potential and will fully disclose the exercise of any discretion in the relevant Directors’
Remuneration Report
Opportunity
• 150% of salary
Performance measures
• The performance measures applied may be financial, non-financial, or individual, and in such proportions as the Remuneration
Committee considers appropriate, although individual measures will form a minority of the potential
• Performance measures will be aligned to the Company’s strategy. The Committee reserves the right to change measures
(and their weightings) for each financial year to ensure the metrics chosen are appropriate means of assessing the performance
of the Executive Directors
• Once set, performance measures and targets will generally remain unchanged for the year, exceptionally targets may be adjusted
by the Committee to take account of significant transactions such as acquisitions and/or disposals or in other exceptional
circumstances such as timing of transactions that have a material impact on the business plan
LONG-TERM INCENTIVE
Purpose and link
to strategy
• Incentivises value creation over the long-term
• Rewards execution of our strategy
• Aligns the long-term interests of Executive Directors and shareholders
• Promotes retention
Operation
• The Committee may make an annual award of shares under the LTIP
• Vesting is determined on the basis of the Group’s achievements against stretching performance targets, normally over a three‑year
period and continued employment
• The Committee reviews the measures, their relative weightings and targets prior to each award
• For each measure, no awards vest for performance below threshold
• Up to 20% of an award may vest for threshold performance
• Each measure is capped at 100% vesting, which represents a stretching target
• Executive Directors are required to hold vested awards (net of tax/NI where relevant) for a further two years
(including post‑cessation) following vesting
• Dividend equivalents may be awarded between grant and the expiry of any holding period to the extent that the award vests
• Malus and clawback provisions apply
Opportunity
• 300% of salary
Performance measures
• The performance measures applied may be share price related, financial, non-financial, corporate or strategic and in such
proportions as the Remuneration Committee considers appropriate
• The measures may be based on a mixture of relative and absolute financial performance as well as one or more measures to
recognise the Company’s broader strategic ESG commitment
86
LANDSEC ANNUAL REPORT 2024
87
GOVERNANCE
NOTES TO POLICY TABLE:
PERFORMANCE MEASURES AND
TARGET SETTING
Full details of the performance conditions
and targets applying for each award will be
disclosed in the relevant Annual Report on
Remuneration. Where targets are considered
to be too sensitive to disclose in advance for
commercial reasons, full disclosure of the
original targets, and the extent to which they
have been achieved, will be provided on a
retrospective basis at the end of the relevant
performance period.
PRIOR POLICY ARRANGEMENTS
In approving the Policy, authority is given to
the Company to honour any commitments
entered into with current or former
Directors that have been disclosed previously
to shareholders.
REWARD SCENARIOS FOR THE CEO AND CFO (£000)
TABLE 51
Mark Allan
Chief Executive
Vanessa Simms
Chief Financial Officer
1,000
5,000
4,000
3,000
6,000
7,000
2,000
0
1,006
Minimum
Target
Maximum
Max+
34%
22%
44%
2,992
20%
27%
53%
4,978
16%
21%
42%
21%
6,302
Minimum
Target
Maximum
Max+
683
36%
21%
43%
1,900
22%
26%
52%
3,116
16%
21%
42%
21%
3,927
Element of pay
Minimum
(£000)
Target
(£000)
Maximum
(£000)
Max+
(£000)
Minimum
(£000)
Target
(£000)
Maximum
(£000)
Max+
(£000)
Fixed pay
1,006
1,006
1,006
1,006
683
683
683
683
Annual bonus
–
662
1,324
1,324
–
406
811
811
LTIP
–
1,324
2,648
2,648
–
811
1,622
1,622
Share price appreciation
–
–
–
1,324
–
–
–
811
Total remuneration
1,006
2,992
4,978
6,302
683
1,900
3,116
3,927
Assumptions used in determining the level of
payout under given scenarios are as follows:
• Minimum remuneration comprises base
salary at 1 June 2024, estimated annual
benefits and 10.5% of salary pension
contribution (fixed pay)
• Target remuneration comprises fixed pay,
50% of the 2024/25 annual bonus and 50%
vesting of the 2024 LTIP awards
• Maximum remuneration comprises fixed
pay, 100% of the 2024/25 annual bonus
and 100% vesting of the 2024 LTIP award
based on a face value of 300% of salary
• Maximum+ comprises maximum pay
plus 50% share price appreciation on
LTIP awards
2. STATEMENT OF CONSIDERATION
OF EMPLOYMENT CONDITIONS
ELSEWHERE IN THE COMPANY
The proposed 2024 Policy is designed in line
with the remuneration principles outlined on
page 83 above. In setting the remuneration
of the Executive Directors, the Committee
takes into account the overall approach
to reward for employees in the Group.
Landsec operates in a number of different
environments and has many employees who
carry out diverse roles across a number of
locations. All employees, including Directors,
are paid by reference to the market rate
and base salary levels are reviewed regularly.
When considering salary increases for
Executive Directors, the Company pays close
attention to pay and employment conditions
across the wider workforce. The Chief People
Officer regularly updates the Committee on
pay and conditions applying to the wider
workforce. During 2023/24, the Committee
received specific updates on Gender Pay
Reporting and pay ratios. The Committee
does not formally consult with employees on
the executive remuneration policy, although
the Committee Chair met with the Employee
Forum to discuss the proposed Policy
changes. The Company also holds regular
forums with employee groups and conducts
regular employee engagement surveys, the
results of which are presented to the Board.
Remuneration arrangements for employees
below Board level reflect the seniority of
the role.
3. MALUS AND CLAWBACK
PROVISIONS
All incentive scheme rules contain malus
and/or clawback provisions that allow the
Committee to reduce or retrieve a payment
or an award.
LANDSEC ANNUAL REPORT 2024
GOVERNANCE
DIRECTORS’ REMUNERATION POLICY
CONTINUED
MALUS
Malus is the adjustment of annual bonus
payments or unvested share awards
because of the occurrence of one or more
circumstances listed below. The adjustment
may result in the value being reduced to nil.
CLAWBACK
Clawback is the recovery of payments
made under the annual bonus plan or vested
share awards as a result of the occurrence
of one or more circumstances listed below.
Clawback may apply to all or part of an
Executive Director’s payment/award and
may be effected, among other means, by
requiring the transfer of shares, payment
of cash or reduction of awards or bonuses.
The Remuneration Committee may apply
malus/clawback when there are exceptional
circumstances. Such exceptional
circumstances include (without limitation):
• a material mis-statement in the published
results of the Group or one of its members
• an error in assessing any applicable
performance condition or the number
of shares subject to an award
• misconduct on the part of the Executive
Director concerned
• where, as a result of an appropriate
review of accountability, the Remuneration
Committee determines that the Executive
Director has caused wholly or in part a
material loss for the Group as a result of
(i) reckless, negligent or wilful actions or
omissions; or (ii) inappropriate behaviour
• where, as a result of an appropriate
review of accountability, the Remuneration
Committee determines that the Executive
Director has caused wholly or in part
a corporate failure of the Group or one
of its members
• a Group member being censured by
a regulatory body
• events or behaviour on the part of the
Executive Director leading to significant
reputational damage to the Group
• any other events that the Remuneration
Committee considers specifically relevant
to Landsec, e.g. a serious health and safety
event or an exceptional negative event
4. NON-EXECUTIVE DIRECTORS
BASE FEE
Purpose and
link to strategy
• To aid the recruitment, retention and motivation of Non-executive Directors of appropriate calibre and experience
• To reflect the time commitment given by Non‑executive Directors to the business
Operation
• The Chairman is paid a single fee for all Board duties and the other Non-executive Directors receive a basic Board fee, with supplementary
fees payable for additional responsibilities
• Non-executive Director fees are reviewed (but not necessarily changed) annually by the Board, having regard to independent advice and
published surveys
• The Chairman’s fee is reviewed (but not necessarily changed) annually by the Remuneration Committee without the Chairman present
Opportunity
• Any increases reflect relevant benchmark data for Non-executive Directors in companies of a similar size and complexity, and the time
commitment required
ADDITIONAL FEES
Purpose and
link to strategy
• To reflect the additional time commitment required from Non-executive Directors in chairing various Board sub-committees or becoming
the Board’s Senior Independent Director
• Occasionally awarded to a Non-executive Director who completes a specific additional piece of work on behalf of the Board
Operation
• Reviewed (but not necessarily changed) annually by the Board, having regard to independent advice and published surveys
Opportunity
• The opportunity depends on which, if any, additional roles are assumed by an individual Non-executive Director over the course of
their tenure
• Any increases reflect relevant benchmark data for Non-executive Directors in companies of a similar size and complexity, and the time
commitment required
OTHER INCENTIVES AND BENEFITS
Operation
• Expenses in relation to Company business will be reimbursed (including any tax thereon, where applicable)
• If deemed necessary, and in the performance of their duties, Non-executive Directors may take independent professional advice at
the Company’s expense
• Non-executive Directors do not receive any other remuneration or benefits beyond the fees noted above
Opportunity
• n/a
88
LANDSEC ANNUAL REPORT 2024
89
GOVERNANCE
5. SHARE OWNERSHIP GUIDELINES
SHARE OWNERSHIP DURING
EMPLOYMENT
The Executive Directors are expected to
accumulate and maintain a holding in
ordinary shares in the Company equivalent
to no less than 300% of base salary for the
CEO and 200% for other Executive Directors.
Executive Directors are normally expected
to meet the minimum shareholding
requirements within five years of appointment
to the Board. Where the minimum level is not
met, or where the value of shareholding falls
below the required level due to movements
in the share price, the Executive Director
is expected to retain 100% of the shares
acquired, net of tax, under any share plan
awarded by the Company.
An annual calculation as a percentage of
salary is made against the guidelines for
each Executive Director as at 31 March each
year based on the closing middle market
quotation of the share price on the last
business day in March.
SHARE OWNERSHIP POST CESSATION
On leaving the Board, Executive Directors
are expected to maintain a shareholding
equivalent to their in-employment
shareholding requirement for a period
of two years from the date of cessation.
Shares acquired by the Executive are
excluded from this calculation.
NON-EXECUTIVE DIRECTOR
SHARE OWNERSHIP
Non-executive Directors are expected
to acquire shares within one year of
appointment to the Board.
6. DIRECTORS’ SERVICE AGREEMENTS
AND LETTERS OF APPOINTMENT
EXECUTIVE DIRECTORS’ LETTERS
OF APPOINTMENT
The Executive Directors have Service
Agreements with the Company which
normally continue until the Director’s agreed
retirement date or such other date as the
parties agree. In line with Group policy, the
Executive Directors’ employment can be
terminated at any time by either party on
giving 12 months’ prior written notice.
The Company allows Executive Directors to
hold external non-executive directorships,
subject to the prior approval of the Board,
and to retain fees from these roles.
CHAIRMAN AND NON-EXECUTIVE
DIRECTORS’ LETTERS OF APPOINTMENT
The Chairman and the Non-executive
Directors do not have Service Agreements
with the Company. Instead, each of them
has a Letter of Appointment which sets out
the terms of their appointment, including the
three months’ prior written notice on which
their appointment can be terminated by
either party at any time. The dates of the
current Letters of Appointment are shown
in the Annual Report on Remuneration and
these, together with the Executive Directors’
Service Agreements, are available for
inspection at the Company’s registered office.
On appointment, the fee arrangements
for a new Non-executive Director are
set in accordance with the approved
remuneration policy in force at that time.
Full details of the terms of appointment
of each Director can be found on page 77
of the Remuneration Report.
7. TERMINATION PROVISIONS
FOR EXECUTIVE DIRECTORS
The Company’s policy is for Executive
Directors’ Service Agreements to be
terminable on 12 months’ notice by either
party. Service Agreements contain non-
compete and non-solicit clauses with key
suppliers and employees. In the event of early
termination, any payment in lieu of notice
would be limited to 12 months’ basic salary,
normally payable on a phased basis and
subject to mitigation.
In addition to the scenarios below, an
Executive Director’s Service Agreement may
be terminated without notice and without
further payment or compensation, except for
sums earned up to the date of termination,
on the occurrence of certain events such as
gross misconduct.
The Committee retains discretion to determine
the exact termination arrangements of any
Executive Director, having regard to all the
relevant facts and circumstances available to
them at the time.
The table on page 90 sets out the general
position and range of approaches in respect
of incentive arrangements. In accordance
with the terms of the relevant incentive plan
rules, based on the circumstances of any
departure, the Committee has discretion
to determine how an Executive Director
should be categorised for each element and
determine payout/vesting levels accordingly
based on the range as shown.
LANDSEC ANNUAL REPORT 2024
GOVERNANCE
Provision
Default leaver
Good leaver
Salary
• 12 months’ basic salary normally payable in instalments and
subject to mitigation
• 12 months’ basic salary normally payable in instalments and subject
to mitigation
Benefits
• Cease upon termination of employment contract
• No compensation for loss of benefits
• Cease upon termination of employment contract
• No compensation for loss of benefits
Pension allowance
• Ceases upon termination of employment contract
• The Company does not make any arrangements that
guarantee pensions with limited or no abatement on severance
or early retirement
• Ceases upon termination of employment contract
• The Company does not make any arrangements that guarantee
pensions with limited or no abatement on severance or early
retirement
Annual bonus
• No entitlement following date notice served
• Unvested deferred bonus shares lapse on cessation
• Bonus may be payable subject to performance
• Bonus is normally pro-rated based on the period worked during the
financial year
• Payment usually occurs following the financial year end, in line with
the wider workforce
• Deferred share awards normally vest on the scheduled date, unless
the Committee determines that awards should vest earlier
LTIP
• Awards lapse in full
• Unvested awards normally vest at the normal time subject to
performance unless the Committee determines otherwise
• Awards are normally pro-rated by reference to the proportion of the
performance period that has elapsed up to cessation, unless the
Committee determines otherwise
• Awards remain subject to any applicable retention period
All-employee
share schemes
• Operate in line with HMRC rules
• Operate in line with HMRC rules
Termination
support
• None
• One-off payments in respect of legal fees and/or outplacement
assistance may be payable
Compensation for
loss of office
• None
• None
Consistent with market practice, the
Company may pay reasonable legal fees
(and any associated tax costs) on behalf
of the Executive Director for entering into
a statutory settlement agreement and,
additionally, may make a reasonable
contribution towards fees for outplacement
services as part of a negotiated settlement.
In the case of a corporate transaction,
the Company may agree to pay reasonable
legal fees (and any associated tax costs)
on behalf of the Executive Director for advice
on the effect of the corporate transaction on
the Executive Director’s personal position as
a director (including, where appropriate, as
to the terms of their employment). The
Company may agree to pay reasonable legal
fees (and any associated tax costs) on behalf
of the Executive Director for advice related to
any proposed changes to their terms and
conditions of employment during their period
of employment.
8. CHANGE OF CONTROL
PROVISIONS
On a change of control, unvested LTIP
awards will normally vest subject to
performance and time pro-rating (although
the Committee may allow a greater number
of shares to vest than if pro-rating is applied
where appropriate) and unvested deferred
bonus shares vest in full. The contracts of
the Executive Directors do not provide for
any enhanced payments in the event of a
change of control of the Company or for
liquidated damages.
9. REMUNERATION OF NEWLY
APPOINTED EXECUTIVE DIRECTORS
The remuneration package for a new
externally appointed Executive Director will
be set in accordance with the terms of the
Company’s approved Policy in force at the
time of appointment.
FIXED PAY
• The Committee has the flexibility to set
the base salary of a new hire at the market
level or at a discount to the market level
initially, with a series of planned increases
implemented over the following few years
(subject to performance in the role) to
bring the salary to the desired positioning
• In exceptional circumstances the salary of
a newly appointed Executive Director may
exceed the market median benchmark for
the role
VARIABLE PAY
• The annual bonus will operate in
accordance with the terms of the approved
Policy, with the opportunity pro-rated for
the period of employment in the first year
• Depending on the timing and
responsibilities of the appointment, it may
be necessary to set revised performance
measures and targets initially
• The LTIP will also operate in accordance
with the approved Policy
DIRECTORS’ REMUNERATION POLICY
CONTINUED
90
LANDSEC ANNUAL REPORT 2024
91
GOVERNANCE
The maximum level of variable pay that may
be offered to a new Executive Director is an
aggregate maximum of 450% of salary, but
it may be lower. This limit does not include
the value of any buy-out arrangements
(as described below) deemed appropriate.
In addition to the elements of the
remuneration package covered by the policy,
the Committee may ‘buy out’ certain
existing remuneration arrangements of an
incoming Executive Director through the
offer of either additional cash and/or
share-based elements when it considers
these to be in the best interests of the
Company. Any such payments will be based
solely on remuneration lost when leaving the
former employer and will take into account
the existing delivery mechanism (i.e. cash,
shares, options), time horizons and
performance conditions.
In the case of an internally appointed
Executive Director, any variable pay element
awarded in respect of the prior role would
be paid out according to its terms, adjusted
as relevant to take into account the
appointment. In addition, any other ongoing
remuneration obligations existing prior to
appointment will continue, provided that
they are put to shareholders for approval at
the earliest opportunity.
RELOCATION ALLOWANCE
For external and internal appointments, the
Committee may agree that the Company
will meet certain relocation expenses, for
a limited period only, as appropriate.
Where a Director is recruited from overseas,
flexibility is retained to provide benefits that
take account of market practice in their
country of residence. The Company may
offer a cash amount on recruitment,
payment of which may be staggered over
a period of up to two years, to reflect the
value of benefits a new recruit may have
received from a former employer.
LEGAL FEES
On recruitment of an Executive Director,
the Company may make a contribution
towards legal fees in connection with
agreeing employment terms and drawing
up a service contract.
Shareholders will normally be informed
of the remuneration package and all
additional payments to newly-appointed
Executive Directors at the time of their
appointment.
10. DISCRETIONS RETAINED
BY THE COMMITTEE
The Committee operates the Group’s various
incentive plans according to their respective
rules and in accordance with HMRC
regulations where relevant. To ensure the
efficient administration and appropriate
governance of all remuneration
arrangements the Committee may apply
certain operational discretions, within the
limits of the Directors’ Remuneration Policy
and relevant plan rules. These include, but
are not limited to, the following:
• selecting the participants in the plans
• determining the timing of awards and/or
payments
• determining the quantum of awards and/
or payments
• selecting appropriate performance criteria
and determining weightings, and adjusting
these if necessary
• setting performance targets for the various
criteria, and adjusting these if necessary
• adjusting the constituents of the
comparator groups in respect of relative
performance measures, if necessary
• determining the extent of payment/vesting
based on the assessment of performance
• determining ‘good leaver’ status and the
extent of payment/vesting in the case of
the bonus and share-based plans
• determining the treatment of awards
under share-based plans in the event of
a change of control
• making the appropriate adjustments
required in certain circumstances
(e.g. rights issues, corporate restructuring
events, variation of capital, special
dividends etc.)
In all cases, the Committee retains its
absolute discretion to override formulaic
outcomes in the bonus, LTIP and any other
remuneration arrangements should the
payouts not reflect underlying Company
performance.
LANDSEC ANNUAL REPORT 2024
GOVERNANCE
DIRECTORS’ REPORT
The Directors present their report for the year
ended 31 March 2024.
ADDITIONAL DISCLOSURES
Other information that is relevant to this
report, and which is also incorporated by
reference, including information required
in accordance with the Companies Act
2006 and Listing Rule 9.8.4R, can be located
as follows:
TABLE 52
Pages
Likely future developments in
the business
2-5
Employee engagement
25-27
Going concern and viability
statement
46-47
Governance
50-94
Capitalised interest
17-18
Financial instruments
144
Credit, market and liquidity risks
145-149
Related party transactions
160-161
Energy and carbon reporting
170-172
Workforce engagement
23
Stakeholders
22-24
Section 172 Statement
22-24
UK CORPORATE GOVERNANCE CODE
The Company has complied throughout the
year with all relevant provisions of the 2018
UK Corporate Governance Code (the Code).
The Code can be found on the FRC’s website:
frc.org.uk
COMPANY STATUS
Land Securities Group PLC is a public limited
liability company incorporated under UK law.
It has a premium listing on the London Stock
Exchange main market for listed securities
(LSE:LAND) and is a constituent member
of the FTSE 100 Index.
Landsec is a Real Estate Investment Trust
(REIT). It is expected that the Company,
which has no branches, will continue
to operate as the holding company of
the Group.
DIVIDENDS
The results for the year are set out in the financial statements on pages 105-161.
The Company has paid three interim dividends to shareholders for the year under review.
The first interim dividend of 9.0 pence was paid to shareholders in October 2023, a second
interim dividend of 9.2 pence was paid to shareholders in January 2024; and a third interim
dividend of 9.3 pence per share was paid to shareholders in April 2024. A final dividend of
12.1 pence per share is being put to shareholders for approval at the AGM in July 2024.
TABLE 53
1st Interim
2023/24
2nd Interim
2023/24
3rd Interim
2023/24
Final 2023/24
(proposed)
Property Income
Distribution (PID)/
Non-PID
9.0 pence (PID)
9.2 pence (PID)
9.3 pence (PID)
12.1 pence
(PID)
Record date
25 August 2023
24 November 2023
23 February 2024
14 June 2024
Payment date
6 October 2023
2 January 2024
12 April 2024
26 July 2024
A Dividend Reinvestment Plan (DRIP)
election is currently available in respect
of all dividends paid by Landsec.
EVENTS AFTER THE
REPORTING PERIOD
The following matters are disclosed in note
42 to the Financial Statements as events
occurring after the reporting period.
On 8 May 2024, the Group sold its interest
in LS Hotels Limited for a headline price of
£400m. No other significant events occurred
after the reporting period but before the
financial statements were authorised for
issue. See note 42.
DIRECTORS
The names and biographical details of the
current Directors and the Board Committees
of which they are members are set out on
pages 51-54.
All the Directors proposed for election
and re‑election held office during the year.
The Service Agreements for our Executive
Directors and the Letters of Appointment
for our Non-executive Directors are available
for inspection at Landsec’s registered office.
A SUMMARY OF THESE DOCUMENTS IS
ALSO INCLUDED IN THE DIRECTORS’
REMUNERATION POLICY ON PAGES 83-91
APPOINTMENT AND REMOVAL
OF DIRECTORS
The appointment and replacement of
Directors is governed by Landsec’s Articles
of Association (Articles), the Code, the
Companies Act 2006 (Act) and related
legislation.
The Board may appoint a Director either to
fill a vacancy or as an addition to the Board
so long as the total number of Directors
does not exceed the limit prescribed in the
Articles. An appointed Director must retire
and seek election to office at the next
Landsec AGM. In addition to any power of
removal conferred by the Act, Landsec may
by ordinary resolution remove any Director
before the expiry of their period of office and
may, subject to the Articles, by ordinary
resolution appoint another person who is
willing to act as a Director in their place.
In line with the Code it is the Board’s policy
that all Directors are required to stand for
re-election at each AGM.
92
LANDSEC ANNUAL REPORT 2024
93
GOVERNANCE
DIRECTORS’ POWERS
The Board manages the business of Landsec
under the powers set out in the Articles.
These powers include the Directors’ ability
to issue or buy back shares.
Shareholders’ authority to empower the
Directors to make market purchases of
up to 10% of the Company’s own ordinary
shares is sought at the AGM each year.
The Articles can only be amended, or new
Articles adopted, by a resolution passed by
shareholders in general meeting and being
approved by at least three quarters of the
votes cast.
DIRECTORS’ INTERESTS
Save as disclosed in the Directors’
Remuneration Report, none of the Directors,
nor any person connected with them, has
any interest in the share or loan capital of
Landsec or any of its subsidiaries. At no time
during the year ended 31 March 2024 did
any Director hold a material interest, directly
or indirectly, in any contract of significance
with Landsec or any subsidiary other than
the Executive Directors in relation to their
Service Agreements.
DIRECTORS’ INDEMNITIES
AND INSURANCE
Landsec has agreed to indemnify each
Director against any liability incurred in
relation to acts or omissions arising in the
ordinary course of their duties. The indemnity
applies only to the extent permitted by law.
A copy of the deed of indemnity is available
for inspection at Landsec’s registered office.
Landsec has appropriate Directors’ & Officers’
Liability insurance cover in respect of
potential legal action against its Directors.
SHARE CAPITAL
Landsec has a single class of share capital
which is divided into ordinary shares of
nominal value 102/3p each ranking pari passu.
No other securities have been issued by the
Company. At 31 March 2024, there were
751,676,657 ordinary shares in issue and fully
paid. As at 31 March 2024 the number of
shares held by the Company in Treasury
is 6,789,236. The voting rights and dividend
entitlements have been waived for the
shares held by Treasury and the Employee
Benefit Trust.
No shares were bought back during the year.
Further details relating to share capital,
including movements during the year, are set
out in note 37 to the financial statements.
At the Company’s AGM held on 6 July 2023,
shareholders authorised the Company to
make market purchases of ordinary shares
representing up to 10% of its issued share
capital at that time and to allot shares
within certain limits approved by shareholders.
These authorities will expire at the 2024
AGM and a renewal of that authority will
be sought.
The Company received no other DTR
notifications by way of change to the
information in the substantial shareholders
table during the period from 1 April to 16 May
2024, being the period from the year end
through to the date on which this report has
been signed. Information provided to the
Company under the DTR is publicly available
to view via the Investor section on the
Company’s website.
EMPLOYEE BENEFIT TRUST
Equiniti Trust (Jersey) Limited continues
as trustee (Trustee) of Landsec’s Employee
Benefit Trust (EBT). The EBT is used to
purchase Land Securities Group PLC ordinary
shares in the market from time to time for
the benefit of employees, including to satisfy
outstanding awards under Landsec’s various
employee share plans.
The EBT did not purchase any shares in the
market during the year (2023: nil). The EBT
released 712,292 shares during the year to
satisfy vested share plan awards. At 31 March
2024 the EBT held 3,119,107 ordinary shares.
A dividend waiver is in place from the Trustee
in respect of all dividends payable by Landsec
on shares which the EBT holds. Further details
regarding the EBT, and of shares issued
pursuant to Landsec’s various employee
share plans during the year, are set out in
notes 36-38 to the financial statements.
SUBSTANTIAL SHAREHOLDERS
As at 31 March 2024, the Company had been notified under the Disclosure and Transparency
Rules (DTR 5) of the following holdings of voting rights in its issued share capital:
SHAREHOLDERS HOLDING 3% OR MORE OF THE COMPANY’S ISSUED SHARE CAPITAL
TABLE 54
Shareholder name
Number of
ordinary shares
Percentage of total voting rights
attaching to issued share capital1
BlackRock, Inc.
93,919,579
12.61
The Vanguard Group, Inc.
37,455,092
5.03
State Street Corporation
33,635,535
4.52
Government of Norway
33,505,630
4.50
Schroders Plc
32,166,591
4.32
Legal & General Group
31,311,786
4.20
Jupiter Investment Management Holdings
26,039,105
3.50
1. Total number of voting rights attaching to the issued share capital of the Company on 31 March 2024 was
744,887,421.
LANDSEC ANNUAL REPORT 2024
GOVERNANCE
DIRECTORS’ REPORT
CONTINUED
SHAREHOLDER VOTING RIGHTS
AND RESTRICTIONS ON TRANSFER
OF SHARES
All the issued and outstanding ordinary
shares of Landsec have equal voting rights
with one vote per share. There are no special
control rights attached to them save that
the control rights of ordinary shares held in
the EBT can be directed by the Company to
satisfy the vesting of outstanding awards
under its various employee share plans.
In relation to the EBT, the Trustee has agreed
not to vote any shares held in the EBT at any
general meeting. If any offer is made to all
shareholders to acquire their shares in
Landsec, the Trustee will not be obliged to
accept or reject the offer in respect of any
shares which are at the time subject to
subsisting awards, but will have regard to the
interests of the award holders and will have
power to consult them to obtain their views
on the offer. Subject to the above, the
Trustee may take such action with respect
to an offer as it thinks fit.
Landsec is not aware of any agreements or
control rights between existing shareholders
that may result in restrictions on the transfer
of securities or on voting rights. The rights,
including full details relating to voting of
shareholders and any restrictions on transfer
relating to Landsec’s ordinary shares, are set
out in the Articles and in the explanatory
notes that accompany the Notice of the
2024 AGM. These documents are available
on Landsec’s website at: landsec.com/agm.
CHANGE OF CONTROL
There are a number of agreements that take
effect, alter or terminate upon a change of
control of the Company following a takeover.
None of these are considered significant.
The Company’s share plans contain provisions
that take effect in such an event but do not
entitle participants to a greater interest in
the shares of the Company than created by
the initial grant or award under the relevant
plan. There are no agreements between the
Company and its Directors or employees
providing for compensation for loss of office
or employment or otherwise that occurs
specifically because of a takeover.
HUMAN RIGHTS AND EQUAL
OPPORTUNITIES
Landsec operates a Human Rights Policy
which aims to recognise and safeguard the
human rights of all citizens in the business
areas under our control. We support the
principles set out within both the UN
Universal Declaration of Human Rights and
the International Labour Organization’s
Declaration on Fundamental Principles and
Rights at Work. Our Policy is built on these
foundations including, without limitation, the
principles of equal opportunities, collective
bargaining, freedom of association and
protection from forced or child labour.
The Policy takes account of the Modern
Slavery Act that came into force in October
2015 and requires Landsec to report annually
on its workforce and supply chain, specifically
to confirm that workers are not enslaved or
trafficked. Landsec’s Modern Slavery
Statement was last approved by the Board
in July 2023 and is available on our website.
Landsec is an equal opportunities employer
and our range of employment policies and
guidelines reflects legal and employment
requirements in the UK and safeguards the
interests of employees, potential employees
and other workers. We do not condone unfair
treatment of any kind and offer equal
opportunities in all aspects of employment
and advancement regardless of race,
nationality, gender, age, marital status,
sexual orientation, disability, religious or
political beliefs.
Landsec recognises that it has clear
obligations towards all its employees and the
community at large to ensure that disabled
people are afforded equal opportunities to
enter employment and progress. Landsec
has therefore established procedures
designed to provide fair consideration and
selection of disabled applicants and to
satisfy their training and career development
needs. If an employee becomes disabled,
wherever possible Landsec takes steps to
provide reasonable adjustments to their
existing employment arrangements, or by
redeployment and providing appropriate
retraining to enable continued employment
in the Group. Further information can be
found on pages 25-27.
POLITICAL DONATIONS
The Company did not make any political
donations or expenditure in the year that
require disclosure (2023: nil).
AUDITOR AND DISCLOSURE OF
INFORMATION TO THE AUDITOR
So far as the Directors are aware, there is no
relevant audit information that has not been
brought to the attention of the Company’s
auditor. Each Director has taken all
reasonable steps to make himself or herself
aware of any relevant audit information and
to establish that such information was
provided to the auditor.
A resolution to confirm the reappointment
of Ernst & Young LLP (EY) as auditor of the
Company will be proposed at the 2024 AGM.
The reappointment has been recommended
to the Board by the Audit Committee and
EY has indicated its willingness to remain
in office.
2024 ANNUAL GENERAL MEETING
This year’s AGM is scheduled to be held
at 2.30 pm on Thursday, 11 July 2024 at
80 Victoria Street, London SW1E 5JL.
A separate circular, comprising a letter
from the Chair, Notice of Meeting and
explanatory notes in respect of the
resolutions proposed, can be found on
our website: landsec.com/agm.
DISCLAIMER
The purpose of this Annual Report is to
provide information to the members of the
Company and it has been prepared for, and
only for, the members of the Company as a
body, and no other persons. The Company,
its Directors and employees, agents and
advisers do not accept or assume
responsibility to any other person to whom
this document is shown or into whose hands
it may come and any such responsibility or
liability is expressly disclaimed.
A cautionary statement in respect of
forward-looking statements contained in this
Annual Report appears on the inside back
cover of this document.
The Directors’ Report was approved by the
Board on 16 May 2024.
By Order of the Board.
MARINA THOMAS, COMPANY SECRETARY
Land Securities Group PLC
Company number 4369054
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LANDSEC ANNUAL REPORT 2024
95
FINANCIAL STATEMENTS
The Directors are responsible for preparing
the Annual Report and the financial
statements in accordance with applicable
law and regulations.
Company law requires the Directors to
prepare financial statements for each
financial year. Under that law the Directors
have prepared the Group and the Company
financial statements in accordance with the
requirements of the Companies Act 2006.
Under the Financial Conduct Authority’s
Disclosure Guidance and Transparency
Rules and company law, group financial
statements are required to be prepared in
accordance with UK adopted international
accounting standards (IFRSs and IFRICs).
Directors must not approve the financial
statements unless they are satisfied that
they give a true and fair view of the state
of affairs of the Group and the Company
and of the profit and loss of the Group and
the Company for that period.
In preparing these financial statements,
the Directors are required to:
• select suitable accounting policies in
accordance with IAS 8 ‘Accounting Policies,
Changes in Accounting Estimates and
Errors’ and then apply them consistently;
• make judgements and accounting
estimates that are reasonable and
prudent;
• present information, including accounting
policies, in a manner that provides
relevant, reliable, comparable and
understandable information;
• in respect of the Group financial
statements, state whether international
accounting standards in conformity with
the requirements of the Companies Act
2006 (and UK adopted international
accounting standards) have been followed,
subject to any material departures
disclosed and explained in the financial
statements;
• in respect of the Company financial
statements, state whether international
accounting standards in conformity with
the requirements of the Companies Act
2006 have been followed, subject to
any material departures disclosed and
explained in the financial statements;
• provide additional disclosures when
compliance with the specific requirements
of UK adopted international accounting
standards is insufficient to enable users
to understand the impact of particular
transactions, other events and conditions
on the Group’s and Company’s financial
position and performance; and
• prepare the Group’s and Company’s
financial statements on a going concern
basis, unless it is inappropriate to do so.
The Directors are responsible for keeping
adequate accounting records that are
sufficient to show and explain the Group’s
and Company’s transactions and disclose
with reasonable accuracy at any time the
financial position of the Group and the
Company, and to enable them to ensure
that the Annual Report complies with the
Companies Act 2006 and as regards the
Group financial statements, Article 4 of
the IAS regulation. They are also responsible
for safeguarding the assets of the Group
and the Company and hence for taking
reasonable steps for the prevention and
detection of fraud and other irregularities.
DIRECTORS’ RESPONSIBILITY
STATEMENT UNDER THE DISCLOSURE
AND TRANSPARENCY RULES
Each of the Directors, whose names and
functions appear below, confirm to the best
of their knowledge:
• the Group financial statements, which
have been prepared in accordance with
international accounting standards in
conformity with the requirements of the
Companies Act 2006 (and UK adopted
international accounting standards);
• give a true and fair view of the assets,
liabilities, financial position, performance
and cash flows of the Company and
Group as a whole; and
• the Strategic Report contained in the
Annual Report includes a fair review of
the development and performance of the
business and the position of the Group and
the Company, together with a description
of the principal risks and uncertainties
faced by the Group and Company.
DIRECTORS’ STATEMENT UNDER THE
UK CORPORATE GOVERNANCE CODE
Each of the Directors confirm that to the
best of their knowledge the Annual Report
taken as a whole is fair, balanced and
understandable and provides the information
necessary for shareholders to assess the
Group’s and Company’s position,
performance, business model and strategy.
A copy of the financial statements of the
Group is placed on the Company’s website.
The Directors are responsible for the
maintenance and integrity of statutory
and audited information on the Company’s
website at landsec.com. Information
published on the internet is accessible
in many countries with different legal
requirements. Legislation in the United
Kingdom governing the preparation and
dissemination of financial statements may
differ from legislation in other jurisdictions.
The Directors of Land Securities Group PLC
as at the date of this announcement are as
set out below:
• Sir Ian Cheshire, Chairman*
• Mark Allan, Chief Executive
• Vanessa Simms, Chief Financial Officer
• Edward Bonham Carter, Senior
Independent Director*
• James Bowling*
• Madeleine Cosgrave*
• Christophe Evain*
• Moni Mannings*
• Miles Roberts*
• Manjiry Tamhane*
*Non-executive Directors
The Statement of Directors’ Responsibilities
was approved by the Board of Directors on
16 May 2024 and is signed on its behalf by:
MARK ALLAN,
CHIEF EXECUTIVE
VANESSA SIMMS,
CHIEF FINANCIAL OFFICER
STATEMENT OF DIRECTORS’ RESPONSIBILITIES
LANDSEC ANNUAL REPORT 2024
FINANCIAL STATEMENTS
OPINION
In our opinion:
• Land Securities Group PLC’s Group financial statements and Parent Company financial statements (the “financial statements”) give a
true and fair view of the state of the Group’s and of the Parent Company’s affairs as at 31 March 2024 and of the group’s loss for the year
then ended;
• the Group financial statements have been properly prepared in accordance with UK adopted international accounting standards;
• the Parent Company financial statements have been properly prepared in accordance with UK adopted international accounting standards
as applied in accordance with section 408 of the Companies Act 2006; and
• the financial statements have been prepared in accordance with the requirements of the Companies Act 2006.
We have audited the financial statements of Land Securities Group PLC (the ‘Parent Company’) and its subsidiaries (the ‘Group’) for the year
ended 31 March 2024 which comprise:
Group
Parent Company
Consolidated balance sheet as at 31 March 2024
Balance sheet as at 31 March 2024
Consolidated income statement for the year then ended
Statement of changes in equity for the year then ended
Consolidated statement of comprehensive income for the year then ended
Statement of cash flows for the year then ended
Consolidated statement of changes in equity for the year then ended
Related notes 1 to 42 to the financial statements including material
accounting policy information
Consolidated statement of cash flows for the year then ended
Related notes 1 to 42 to the financial statements, including material
accounting policy information.
The financial reporting framework that has been applied in the preparation of the Group financial statements is applicable law and UK adopted
international accounting standards and as regards the Parent Company financial statements, as applied in accordance with section 408 of the
Companies Act 2006.
BASIS FOR OPINION
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under
those standards are further described in the Auditor’s responsibilities for the audit of the financial statements section of our report. We believe
that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
INDEPENDENCE
We are independent of the Group and Parent in accordance with the ethical requirements that are relevant to our audit of the financial
statements in the UK, including the FRC’s Ethical Standard as applied to listed public interest entities, and we have fulfilled our other ethical
responsibilities in accordance with these requirements.
The Non-Audit services prohibited by the FRC’s Ethical Standard were not provided to the Group or the Parent Company and we remain
independent of the Group and the Parent Company in conducting the audit.
CONCLUSIONS RELATING TO GOING CONCERN
In auditing the financial statements, we have concluded that the Directors’ use of the going concern basis of accounting in the preparation
of the financial statements is appropriate. Our evaluation of the Directors’ assessment of the Group and Parent Company’s ability to continue
to adopt the going concern basis of accounting included:
• assessing the risk around going concern in planning our audit, at the interim and again at the year-end phase.
• confirming our understanding of the Group’s going concern assessment process and reviewing management’s related Board papers.
• assessing and challenging the appropriateness of the duration of the going concern review period to the end of September 2025 and
considering whether there are any known events or conditions that will occur in the short-term following the going concern period which
would impact our considerations.
• challenging the key assumptions and inputs used by management within the base case and downside scenarios modelled by management
by comparing to corroborative evidence and searching out independent contradictory evidence.
• challenging whether sustainability costs identified by management associated with the Net Zero Transition Investment Plan have been
appropriately considered within the base case and downside scenarios modelled by management.
• assessing and challenging management’s consideration of downside sensitivities taking into account current events and market
conditions. We have applied further sensitivities on income, inflation and interest assumptions where appropriate to stress test the impact
on both liquidity and covenants. As part of our sensitivity testing, we considered the perspective of our chartered surveyors on forecast
valuation movements.
INDEPENDENT AUDITOR’S REPORT
TO THE MEMBERS OF LAND SECURITIES GROUP PLC
96
LANDSEC ANNUAL REPORT 2024
97
FINANCIAL STATEMENTS
• checking the integrity of the models developed by management for the base case cash flow, liquidity forecasts and covenant calculations
covering the going concern review period to September 2025 and the additional downside scenarios. This has included re-performing
calculations and testing the formulas being applied throughout.
• checking that the terms and conditions of the debt agreements with lenders had been appropriately incorporated into the going concern
scenarios and modelling, including the maturity profile of the Group’s borrowings, the impact of the Security Group structure (as defined
in the Glossary on page 188) and the tiered operating covenant regime.
• performing testing to evaluate whether the covenant requirements of the debt facilities would be breached under either the base case or
the downside scenarios through the going concern period.
• challenging the conclusions that both the levels of decline required to breach the covenants and the reverse stress test prepared can be
considered as remote by obtaining external market outlooks in relation to future valuations and reviewing previous declines observed in results.
• testing on key assumptions and considered the likelihood of outcomes including controllable mitigating actions, which include uncommitted
capital expenditure, acquisitions, disposals and developments, over and above the scenarios modelled.
• further challenging the cash flow forecasts with reference to historical trends and assessing the outcome of management’s previous forecasts.
• reviewing the disclosures in the financial statements relating to going concern with a view to confirming that they appropriately disclose the
risk, the impact on the Group’s operations and results and potential mitigating actions.
The results of the severe but plausible downside scenarios modelled by management indicate that the Group would maintain available facility
and covenant headroom to be able to withstand the impact of plausible downside sensitivities throughout the period of the going concern
assessment to 30 September 2025.
Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually
or collectively, may cast significant doubt on the Group and Parent Company’s ability to continue as a going concern for a period to
30 September 2025.
In relation to the Group and Parent Company’s reporting on how they have applied the UK Corporate Governance Code, we have nothing
material to add or draw attention to in relation to the Directors’ statement in the financial statements about whether the Directors considered
it appropriate to adopt the going concern basis of accounting.
Our responsibilities and the responsibilities of the Directors with respect to going concern are described in the relevant sections of this report.
However, because not all future events or conditions can be predicted, this statement is not a guarantee as to the Group’s ability to continue as
a going concern.
OVERVIEW OF OUR AUDIT APPROACH
Audit scope
• The Group operates in the United Kingdom through four segments: Central London, Major retail, Mixed-use urban and Subscale sectors.
• We have identified the Group as one component and perform full scope procedures across the entire Group. The Group audit team also
performed audit procedures on joint venture balances included within the Group financial statements.
Key audit
matters
• The valuation of property, including investment properties and investment properties held in joint ventures.
• Revenue recognition, including service charge income and the treatment of lease incentives.
Materiality
• Overall Group materiality of £96m which represents 0.9% of total assets in the Group balance sheet at 31 March 2024. Overall
materiality is applied to account balances related to investment properties and trading properties (either wholly owned or within the
Joint Venture) and loans and borrowings (excluding the related finance expense).
• Specific materiality of £19m, which represents 5% of EPRA Earnings before tax. Specific materiality is applied to account balances which
are not account balances related to investment properties, trading properties (either wholly owned or within the Joint Venture) and
loans and borrowings.
• Parent Company materiality of £51m, which represents 0.9% of total assets in the Parent Company balance sheet. Parent Company
materiality is applied to all balances within the Parent Company.
LANDSEC ANNUAL REPORT 2024
FINANCIAL STATEMENTS
AN OVERVIEW OF THE SCOPE OF THE PARENT COMPANY AND GROUP AUDITS
TAILORING THE SCOPE
Our assessment of audit risk, our evaluation of materiality and our allocation of performance materiality determine our audit scope for each
company within the Group. Taken together, this enables us to form an opinion on the consolidated financial statements. We take into account
size, risk profile, the organisation of the Group and effectiveness of Group-wide controls, changes in the business environment, the potential
impact of climate change and other factors such as recent Internal audit results when assessing the level of work to be performed at each
company.
CLIMATE CHANGE
Stakeholders are increasingly interested in how climate change will impact Land Securities Group PLC. The Group has determined that the most
significant future impacts from climate change on their operations will be from failure to meet their 2040 science-based net zero target leading
to regulatory, reputational and commercial impact and failure to mitigate physical impact on the Group’s assets. These are explained in the
required Task Force On Climate Related Financial Disclosures and on pages 41 to 45 in the principal risks and uncertainties. They have also
explained their climate commitments on pages 28-32. All of these disclosures form part of the “Other information,” rather than the audited
financial statements. Our procedures on these unaudited disclosures therefore consisted solely of considering whether they are materially
inconsistent with the financial statements or our knowledge obtained in the course of the audit or otherwise appear to be materially misstated,
in line with our responsibilities on “Other information”.
In planning and performing our audit we assessed the potential impacts of climate change on the Group’s business and any consequential
material impact on its financial statements.
The Group has explained in the basis of preparation note within the financial statements how they have reflected the impact of climate change
in their financial statements including how this aligns with their commitment to achieve net zero emissions by 2040. The impact of climate
change on significant judgements and estimates are included in note 2.
Our audit effort in considering the impact of climate change on the financial statements was focused on evaluating management’s
assessment of the impact of climate risk, physical and transition, their climate commitments, the effects of material climate risks disclosed on
pages 41 to 45 and the significant judgements and estimates disclosed in note 2 and whether these have been appropriately reflected in the
valuation of the investment properties, investment properties held in joint ventures and trading properties or have any other material impact
on the financial statements. As part of this evaluation, we performed our own risk assessment, supported by our climate change internal
specialists, to determine the risks of material misstatement in the financial statements from climate change which needed to be considered in
our audit.
We also challenged the Directors’ considerations of climate change risks in their assessment of going concern and viability and associated
disclosures. Where considerations of climate change were relevant to our assessment of going concern, these are described above.
Based on our work, whilst we have not identified the impact of climate change on the financial statements to be a standalone key audit
matter, we have considered the impact on the valuation of property, including investment properties and investment properties held in joint
ventures key audit matter. Details of the impact, our procedures and findings are included in our explanation of key audit matter below.
KEY AUDIT MATTERS
Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the financial statements of
the current period and include the most significant assessed risks of material misstatement (whether or not due to fraud) that we identified.
These matters included those which had the greatest effect on: the overall audit strategy, the allocation of resources in the audit; and directing
the efforts of the engagement team. These matters were addressed in the context of our audit of the financial statements as a whole, and in
our opinion thereon, and we do not provide a separate opinion on these matters.
INDEPENDENT AUDITOR’S REPORT
CONTINUED
98
LANDSEC ANNUAL REPORT 2024
99
FINANCIAL STATEMENTS
Risk
Our response to the risk
Key observations
communicated to the
Audit Committee
The valuation of property,
including investment properties
and investment properties held
in joint ventures
2024: £9,330m in investment
properties and £585m (the Group’s
share) in investment properties
held in joint ventures (2023:
£9,658m in investment properties
and £601m (the Group’s share)
in investment properties held in
joint ventures)
Refer to the Report of the Audit
Committee (pages 64-69);
Accounting policies (page 125-126);
Note 14 & 16 of the Financial
statements (pages 127-136).
The valuation of property,
including investment properties,
development properties and
investment properties held in
joint ventures, requires significant
judgement and estimation by
Management and their external
valuers. Inaccuracies in inputs
or unreasonable bases used in
these judgements (including the
estimated rental value, yield profile
applied and development costs
to complete) could result in a
material misstatement of the
income statement and balance
sheet. There is also a risk that
management could inappropriately
influence the input data and/or
the significant judgements and
estimates in respect of property
valuations in order to meet market
expectations or bonus targets.
Our audit procedures over the valuation of property included:
We obtained an understanding of the Group’s processes and controls around the
valuation of properties.
We evaluated the competence of the Group’s external valuers, CBRE and JLL which
included consideration of their qualifications and expertise.
We attended meetings between management and CBRE and management and
JLL to assess for evidence of undue management influence and we obtained
confirmation from CBRE and JLL that they had not been subject to undue influence
from management.
We met with CBRE and JLL to challenge their valuation approach and the judgements
they made in assessing the property valuation. Such judgements included the
estimated rental value, yield profile and other significant assumptions that impact
the value.
We selected a sample of investment properties based on a number of factors including
size, risk (including climate), representation across asset classes and segments. Our
sample includes selections not testing in prior years. Our sample comprised 77% of the
market value of investment properties (including investment properties held in joint
ventures). For this sample of properties, we tested source documentation provided by
the Group to CBRE and JLL. This included agreeing a sample back to underlying lease
data and vouching costs incurred to date in respect of development properties.
We assessed and challenged the judgements made by CBRE and JLL, including
through inspection of comparable market evidence.
We included chartered surveyors on our audit team who reviewed and challenged the
valuation approach and assumptions for the same sample of properties. Our chartered
surveyors compared the yields applied to each property to an expected range of yields
taking into account available market data and asset specific considerations. They
challenged whether the other assumptions applied by the external valuers, such as the
estimated rental values, voids, tenant incentives and development costs to complete
were supported by available data. They also challenged whether other market
transactions contradict the assumptions used in the valuation.
Together with our chartered surveyors, we met with the external valuers to further
discuss the findings from our audit work described above and to seek further
explanations as required.
We challenged whether sustainability costs identified by management as part of the
Net Zero Investment Plan have been appropriately considered within the valuation.
As part of this, we assessed and challenged judgements made by CBRE and JLL for
costs associated with climate change.
We performed analytical procedures on the properties not included in the sample
reviewed in detail by our chartered surveyors by comparing assumptions and the value
of those properties by reference to our understanding of the UK real estate market,
external market data and asset specific considerations to evaluate the appropriateness
of the valuations adopted by the Group. Where values or assumptions were not in line
with our expectations, we challenged these further by discussing with management,
CBRE, JLL and our chartered surveyors and, where appropriate, obtaining further
evidence to support the movement in values.
We performed 7 site visits. Where properties are under development, this enabled us
to test existence of the property and challenge whether the status of the development
was consistent with what we were told by management. We challenged development
directors and project managers for major properties in the development programme
on the project costs, progress of development and leasing status. We challenged the
reasonableness of forecast costs to complete included in the valuations as well as
the identified contingencies and the exposure to remaining risks, by comparing the
total forecast costs to contractual arrangements and other supporting evidence.
We challenged forecast cost and cost to complete for evidence of overruns through
risks identified during our development meetings, review of meeting minutes and other
supporting information. We challenged the information provided by the development
directors and the project managers through our review of cost analysis as well as the
valuation outcome.
We assessed the adequacy of the disclosures of estimates and valuation assumptions
in note 14 including those required by IFRS 13 – Fair Value Measurement.
Scope of our procedures
We performed full scope audit procedures over the valuation of properties, including
investment properties and investment properties held in joint ventures.
We have tested the
inputs, assumptions
and methodology
used by CBRE and JLL.
We have concluded
that the methodology
applied is reasonable
and that the external
valuations are a
reasonable assessment
of the market value of
investment properties
at 31 March 2024.
We concluded that
the sample of
properties reviewed
by our chartered
surveyors was
within the reasonable
range of values as
assessed by them.
We concluded that
climate change has
been appropriately
considered within
the valuations where
appropriate.
We consider that
management provided
an appropriate level of
review and challenge
over the valuations,
and we did not
identify evidence of
undue management
influence.
We have reviewed
the disclosures in the
financial statements
including the
significant accounting
estimates and
sensitivities and
consider them to
be appropriate.
LANDSEC ANNUAL REPORT 2024
FINANCIAL STATEMENTS
Risk
Our response to the risk
Key observations
communicated to the
Audit Committee
Revenue recognition, including
service charge income and the
treatment of lease incentives.
2024: £622m rental income
(2023: £612m rental income)
2024: £117m service charge
income (2023: £91m service
charge income)
Refer to the Report of the Audit
Committee (pages 64-69);
Accounting policies (pages
116-117); Note 6 of the Financial
statements (pages 116-117).
Market expectations and EPRA
earnings-based targets (which
include management
compensation) may place pressure
on management to distort revenue
recognition. This may result in
overstatement or understatement
of rental income and service
charge income to assist in meeting
current or future targets or
expectations, including through
the manipulation of timing of
revenue recognition of lease
incentives (straight line rent),
inappropriate income recovered
through the service charge and
fictitious revenues being recorded
via topside journals.
Our audit procedures over revenue recognition included:
We selected a sample of new, existing and amended lease agreements in the year
and agreed the key lease terms to Group’s property information management system
(PIMS), including lease incentive clauses.
We tested certain manual controls governing approvals and changes to lease terms
and the upload of this information to PIMS. We also performed testing of certain
manual controls over the billings process.
We performed data analytics procedures to set an expectation of rental income across
the whole population of leases in the Group’s portfolio; this also covers the straight-
lining rent adjustment for lease incentives.
We obtained the schedules used to calculate straight-lining of revenue in accordance
with IFRS 16 Leases. We tested the arithmetical accuracy of these schedules and that
the straight lining was calculated in accordance with the guidance. For a sample of
leases we agreed the lease information per the schedules back to lease agreements.
We performed additional substantive testing procedures over a sample of variable
turnover rents by recalculating the expected turnover revenue based on evidence
received from tenants and PIMS. We further agreed invoices issued to cash collections
received for each of these samples.
We have performed testing in relation to service charge income. This has included
vouching a sample of income recognised to both invoice and cash collection, and
performing an analytical review to challenge unexpected or unusual variances.
We have also performed testing on the service charge expense in the year, including
the accrual at year end to test cut-off.
We performed audit procedures specifically designed to address the risk of management
override of controls including topside consolidation adjustments and journal entries
which impact revenue.
Scope of our procedures
The Group was subject to full scope audit procedures over revenue.
Based upon the
audit procedures
performed, we
concluded that
revenue has been
recognised on an
appropriate basis
in the year.
OUR APPLICATION OF MATERIALITY
We apply the concept of materiality in planning and performing the audit, in evaluating the effect of identified misstatements on the audit and
in forming our audit opinion.
MATERIALITY
The magnitude of an omission or misstatement that, individually or in the aggregate, could reasonably be expected to influence the economic
decisions of the users of the financial statements. Materiality provides a basis for determining the nature and extent of our audit procedures.
The table below sets out the materiality, performance materiality and threshold for reporting audit differences applied on our audit:
Basis
Materiality
Performance materiality
Audit differences
Overall – all account balances related
to investment properties and trading
properties (either wholly owned or
within the Joint Venture) and loans
and borrowings (excluding the related
finance expense)
0.9% of total assets
(2023: 0.9% of total assets)
£96m
(2023: £99m)
£72m
(2023: £74m)
£5m
(2023: £5m)
Specific – all account balances which
are not account balances related to
investment properties, trading
properties (either wholly owned or
within the Joint Venture) and loans
and borrowings
5% of EPRA Earnings before tax
(2023: 5% EPRA Earnings
before tax)
£19m
(2023: £19m)
£14m
(2023: £14m)
£1m
(2024: £1m)
Parent Company
0.9% of total assets
(2023: 0.9% of total assets)
£51m
(2023: £56m)
£38m
(2023: £42m)
£3m
(2023: £3m)
INDEPENDENT AUDITOR’S REPORT
CONTINUED
100
LANDSEC ANNUAL REPORT 2024
101
FINANCIAL STATEMENTS
When establishing our overall audit strategy, we determined a magnitude of uncorrected misstatements that we judged would be material
for the financial statements as a whole. We determined that an asset-based measure would be the most appropriate basis for determining
overall materiality given that key users of the Group’s financial statements are primarily focused on the valuation of the Group’s assets.
Based on this, we determined that it is appropriate to set the overall materiality at 0.9% of total assets (2023: 0.9% of total assets).
We applied overall materiality to the investment properties and trading properties balances (either wholly owned or within the Joint Venture)
and loans and borrowings (excluding the related finance expense) as the value of loans and borrowings which are secured against the Group’s
investment properties.
This provided a basis for determining the nature, timing and extent of risk assessment procedures, identifying and assessing the risk of material
misstatement and determining the nature, timing and extent of further audit procedures.
We determined that for other account balances not related to investment properties, trading properties (either wholly owned or held within
joint ventures) or loans and borrowings, a misstatement of less than overall materiality for the financial statements as a whole could influence
the economic decisions of users. We believe that it is most appropriate to use a profit-based measure as profit is also a focus of users of the
financial statements.
We determined that materiality for these areas should be based upon 5% of EPRA earnings before tax. EPRA earnings is considered an
important performance metric and aligned with industry earnings measures.
During the course of our audit, we reassessed initial materiality which resulted in a reduction to our overall materiality as a result of total assets
having decreased from our initial materiality assessment.
PERFORMANCE MATERIALITY
The application of materiality at the individual account or balance level. It is set at an amount to reduce to an appropriately low level the
probability that the aggregate of uncorrected and undetected misstatements exceeds materiality.
On the basis of our risk assessments, together with our assessment of the Group’s overall control environment, our judgement was that
performance materiality was 75% (2023: 75%) of our planning materiality. We have set performance materiality at this percentage due
to our past experience of the audit that indicates a lower risk of misstatements, both corrected and uncorrected.
REPORTING THRESHOLD
An amount below which identified misstatements are considered as being clearly trivial.
We agreed with the Audit Committee that we would report to them all uncorrected audit differences in excess of £5m (2023: £5m), which is
set at 5% of planning materiality, as well as differences below that threshold that, in our view, warranted reporting on qualitative grounds.
We evaluate any uncorrected misstatements against both the quantitative measures of materiality discussed above and in light of other
relevant qualitative considerations in forming our opinion.
OTHER INFORMATION
The other information comprises the information included in the annual report, including the Strategic Report and Governance section set out
on pages 1-94, other than the financial statements and our auditor’s report thereon. The Directors are responsible for the other information
contained within the annual report.
Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in this report,
we do not express any form of assurance conclusion thereon.
Our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the
financial statements or our knowledge obtained in the course of the audit or otherwise appears to be materially misstated. If we identify such
material inconsistencies or apparent material misstatements, we are required to determine whether this gives rise to a material misstatement
in the financial statements themselves. If, based on the work we have performed, we conclude that there is a material misstatement of the
other information, we are required to report that fact.
We have nothing to report in this regard.
LANDSEC ANNUAL REPORT 2024
FINANCIAL STATEMENTS
OPINIONS ON OTHER MATTERS PRESCRIBED BY THE COMPANIES ACT 2006
In our opinion, the part of the Directors’ remuneration report to be audited has been properly prepared in accordance with the
Companies Act 2006.
In our opinion, based on the work undertaken in the course of the audit:
• the information given in the Strategic Report and the Directors’ Report for the financial year for which the financial statements are prepared
is consistent with the financial statements and those reports have been prepared in accordance with applicable legal requirements;
• the information about internal control and risk management systems in relation to financial reporting processes and about share capital
structures, given in compliance with rules 7.2.5 and 7.2.6 in the Disclosure Rules and Transparency Rules sourcebook made by the Financial
Conduct Authority (the FCA Rules), is consistent with the financial statements and has been prepared in accordance with applicable legal
requirements; and
• information about the Company’s corporate governance statement and practices and about its administrative, management and
supervisory bodies and their committees complies with rules 7.2.2, 7.2.3 and 7.2.7 of the FCA Rules.
MATTERS ON WHICH WE ARE REQUIRED TO REPORT BY EXCEPTION
In the light of the knowledge and understanding of the Group and the Parent Company and its environment obtained in the course of the
audit, we have not identified material misstatements in:
• the strategic report or the directors’ report; or
• the information about internal control and risk management systems in relation to financial reporting processes and about share capital
structures, given in compliance with rules 7.2.5 and 7.2.6 of the FCA Rules
We have nothing to report in respect of the following matters in relation to which the Companies Act 2006 requires us to report to you if,
in our opinion:
• adequate accounting records have not been kept by the Parent Company, or returns adequate for our audit have not been received from
branches not visited by us; or
• the parent company financial statements and the part of the Directors’ Remuneration Report to be audited are not in agreement with the
accounting records and returns; or
• certain disclosures of Directors’ remuneration specified by law are not made; or
• we have not received all the information and explanations we require for our audit; or
• a Corporate Governance Statement has not been prepared by the Company.
CORPORATE GOVERNANCE STATEMENT
We have reviewed the directors’ statement in relation to going concern, longer-term viability and that part of the Corporate Governance
Statement relating to the Group and Company’s compliance with the provisions of the UK Corporate Governance Code specified for our review
by the Listing Rules.
Based on the work undertaken as part of our audit, we have concluded that each of the following elements of the Corporate Governance
Statement is materially consistent with the financial statements or our knowledge obtained during the audit:
• Directors’ Statement with regards to the appropriateness of adopting the going concern basis of accounting and any material uncertainties
identified set out on pages 46-47 and 95;
• Directors’ explanation as to its assessment of the Company’s prospects, the period this assessment covers and why the period is appropriate
set out on pages 46-47;
• Director’s Statement on whether it has a reasonable expectation that the Group will be able to continue in operation and meets its liabilities
set out on page 95;
• Directors’ statement on fair, balanced and understandable set out on page 95;
• Board’s confirmation that it has carried out a robust assessment of the emerging and principal risks set out on pages 41-45;
• The section of the annual report that describes the review of effectiveness of risk management and internal control systems set out on
pages 38-45; and;
• The section describing the work of the Audit Committee set out on pages 62-69.
RESPONSIBILITIES OF DIRECTORS
As explained more fully in the Directors’ responsibilities statement set out on page 95, the directors are responsible for the preparation of the
financial statements and for being satisfied that they give a true and fair view, and for such internal control as the directors determine is
necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.
In preparing the financial statements, the directors are responsible for assessing the Group and Parent Company’s ability to continue as a going
concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either
intend to liquidate the Group or the Parent Company or to cease operations, or have no realistic alternative but to do so.
INDEPENDENT AUDITOR’S REPORT
CONTINUED
102
LANDSEC ANNUAL REPORT 2024
103
FINANCIAL STATEMENTS
AUDITOR’S RESPONSIBILITIES FOR THE AUDIT OF THE FINANCIAL STATEMENTS
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement,
whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance,
but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists.
Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected
to influence the economic decisions of users taken on the basis of these financial statements.
EXPLANATION AS TO WHAT EXTENT THE AUDIT WAS CONSIDERED CAPABLE OF DETECTING IRREGULARITIES,
INCLUDING FRAUD
Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our responsibilities,
outlined above, to detect irregularities, including fraud. The risk of not detecting a material misstatement due to fraud is higher than the risk of
not detecting one resulting from error, as fraud may involve deliberate concealment by, for example, forgery or intentional misrepresentations,
or through collusion. The extent to which our procedures are capable of detecting irregularities, including fraud is detailed below.
However, the primary responsibility for the prevention and detection of fraud rests with both those charged with governance of the Company
and management.
• We obtained an understanding of the legal and regulatory frameworks that are applicable to the Group and determined that the most
significant are those that relate to the reporting framework (UK adopted international accounting standards, the Companies Act 2006 and
UK Corporate Governance Code), Listing Rules, the relevant tax regulations in the United Kingdom, including the UK REIT regulations, the UK
General Data Protection Regulation (GDPR), Health & Safety Regulations, Building Safety Act and the Bribery Act. There are no significant
industry specific laws or regulations that we considered in determining our approach.
• We understood how Land Securities Group PLC is complying with those frameworks through enquiry with management, and by identifying
the Group’s policies and procedures regarding compliance with laws and regulations. We also identified those members of management who
have the primary responsibility for ensuring compliance with laws and regulations, and for reporting any known instances of non-compliance
to those charged with governance. We corroborated our enquiries through our review of board minutes and papers provided to the board
and the Audit Committee, as well as consideration of the results of our audit procedures across the Group to either corroborate or provide
contrary evidence which was then followed up. Our assessment included the tone from the top and the emphasis on a culture of honest and
ethical behaviour.
• We assessed the susceptibility of the Group’s financial statements to material misstatement, including how fraud might occur by reviewing
the Company’s risk register and enquiry with management and the Audit Committee during the planning and execution phases of our audit.
We considered the programmes and controls that the Group has established to address risks identified, or that otherwise prevent, deter and
detect fraud; and how management monitors those programmes and controls.
• Based on this understanding we designed our audit procedures to identify non-compliance with such laws and regulations.
Our procedures involved:
— Enquiry of management, and when appropriate, those charged with governance regarding their knowledge of any non-compliance
or potential non-compliance with laws and regulations that could affect the financial statements;
— Understanding of management’s internal controls designed to prevent and detect irregularities;
— Designing audit procedures to incorporate unpredictability around the nature, timing and extent of our testing;
— Performing analytical procedures to identify any unusual or unexpected relationships that may indicate risks of material misstatement
due to fraud;
— Reading minutes of meetings of those charged with governance, including those of the Risk Committee and the Audit Committee;
— Reading of internal audit reports;
— Obtaining electronic confirmations from the Group’s banking providers to vouch the existence of cash balances and completeness of loans,
borrowings and other treasury positions such as derivatives;
— Obtaining and reading correspondence from legal and regulatory bodies, including the FRC and HMRC;
— Challenging assumptions and judgements made by management in their significant accounting estimates, in particular in relation to
the valuation of investment property and the fair value of the acquired assets and liabilities of Land Securities Group PLC (see key audit
matters set out earlier in this report); and
— Journal entry testing, with a focus on manual journals and journals indicating large or unusual transactions based on our understanding
the business.
A further description of our responsibilities for the audit of the financial statements is located on the Financial Reporting Council’s website at
frc.org.uk/auditorsresponsibilities. This description forms part of our auditor’s report.
LANDSEC ANNUAL REPORT 2024
FINANCIAL STATEMENTS
INDEPENDENT AUDITOR’S REPORT
CONTINUED
OTHER MATTERS WE ARE REQUIRED TO ADDRESS
• Following the recommendation from the Audit Committee we were appointed by the Company on 18 July 2013 to audit the financial
statements for the year ending 31 March 2014 and subsequent financial periods.
• Following the conclusion of a formal tender process led by the Audit Committee, we were appointed to continue as auditor for the financial
year ending 31 March 2024.
• The period of total uninterrupted engagement including previous renewals and reappointments is 11 years, covering the years ending 31 March
2014 to 31 March 2024.
• The audit opinion is consistent with the additional report to the Audit Committee.
USE OF OUR REPORT
This report is made solely to the Company’s members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006.
Our audit work has been undertaken so that we might state to the company’s members those matters we are required to state to them
in an auditor’s report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone
other than the Company and the Company’s members as a body, for our audit work, for this report, or for the opinions we have formed.
JULIE CARLYLE, SENIOR STATUTORY AUDITOR
for and on behalf of Ernst & Young LLP, Statutory Auditor
London
16 May 2024
104
LANDSEC ANNUAL REPORT 2024
105
FINANCIAL STATEMENTS
2024
2023
Notes
EPRA
earnings
£m
Capital
and other
items
£m
Total
£m
EPRA
earnings
£m
Capital
and other
items
£m
Total
£m
Revenue
6
766
58
824
726
65
791
Costs
7
(325)
(84)
(409)
(289)
(93)
(382)
441
(26)
415
437
(28)
409
Share of post-tax profit/(loss) from joint ventures
16
21
(19)
2
29
(30)
(1)
Loss on disposal of investment properties
–
(16)
(16)
–
(144)
(144)
Net deficit on revaluation of investment properties
14
–
(628)
(628)
–
(827)
(827)
Loss on changes in finance leases
–
–
–
–
(6)
(6)
Operating profit/(loss)
462
(689)
(227)
466
(1,035)
(569)
Finance income
10
11
1
12
11
23
34
Finance expense
10
(102)
(24)
(126)
(84)
(3)
(87)
Profit/(loss) before tax
371
(712)
(341)
393
(1,015)
(622)
Taxation
12
–
–
Loss for the year
(341)
(622)
Attributable to:
Shareholders of the parent
(319)
(619)
Non-controlling interests
(22)
(3)
(341)
(622)
Loss per share attributable to shareholders of the parent:
Basic (loss)/earnings per share
5
(43.0)p
(83.6)p
Diluted (loss)/earnings per share
5
(43.0)p
(83.6)p
STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 MARCH 2024
2024
2023
Notes
Total
£m
Total
£m
Loss for the year
(341)
(622)
Items that may be subsequently reclassified to the income statement:
Movement in cash flow hedges
(1)
(1)
Items that will not be subsequently reclassified to the income statement:
Net remeasurement loss on defined benefit pension scheme
35
(5)
(12)
Deferred tax credit on remeasurement above
12
4
3
Other comprehensive loss for the year
(2)
(10)
Total comprehensive loss for the year
(343)
(632)
Attributable to:
Shareholders of the parent
(321)
(629)
Non-controlling interests
(22)
(3)
(343)
(632)
INCOME STATEMENT
FOR THE YEAR ENDED 31 MARCH 2024
LANDSEC ANNUAL REPORT 2024
FINANCIAL STATEMENTS
Group
Company
Notes
2024
£m
2023
£m
2024
£m
2023
£m
Non-current assets
Investment properties
14
9,330
9,658
–
–
Intangible assets
20
3
6
–
–
Net investment in finance leases
19
21
21
–
–
Investments in joint ventures
16
529
533
–
–
Investments in associates
17
–
3
–
–
Investments in subsidiary undertakings
29
–
–
5,659
6,229
Trade and other receivables
27
159
146
–
–
Other non-current assets
30
48
67
–
–
Total non-current assets
10,090
10,434
5,659
6,229
Current assets
Trading properties
15
100
118
–
–
Trade and other receivables
27
379
365
–
–
Monies held in restricted accounts and deposits
23
6
4
–
–
Cash and cash equivalents
24
78
41
2
2
Other current assets
31
11
4
–
–
Total current assets
574
532
2
2
Total assets
10,664
10,966
5,661
6,231
Current liabilities
Borrowings
22
(975)
(315)
–
–
Trade and other payables
28
(348)
(306)
(2,251)
(2,821)
Provisions
34
(30)
–
–
–
Other current liabilities
32
–
(24)
–
–
Total current liabilities
(1,353)
(645)
(2,251)
(2,821)
Non-current liabilities
Borrowings
22
(2,805)
(3,223)
–
–
Trade and other payables
28
(4)
(17)
–
–
Provisions
34
(42)
–
–
–
Other non-current liabilities
33
(13)
(9)
–
–
Total non-current liabilities
(2,864)
(3,249)
–
–
Total liabilities
(4,217)
(3,894)
(2,251)
(2,821)
Net assets
6,447
7,072
3,410
3,410
Equity
Capital and reserves attributable to shareholders
Ordinary shares
37
80
80
80
80
Share premium
319
318
319
318
Other reserves
23
13
23
13
Merger reserve
–
–
374
374
Retained earnings
5,980
6,594
2,614
2,625
Equity attributable to shareholders of the parent
6,402
7,005
3,410
3,410
Equity attributable to non-controlling interests
45
67
Total equity
6,447
7,072
The profit for the year of the Company was £280m (2023: £381m).
The financial statements on pages 105 to 161 were approved by the Board of Directors on 16 May 2024 and were signed on its behalf by:
MARK ALLAN
DIRECTORS
VANESSA SIMMS
BALANCE SHEETS
AT 31 MARCH 2024
106
LANDSEC ANNUAL REPORT 2024
107
FINANCIAL STATEMENTS
STATEMENTS OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 MARCH 2024
Notes
Attributable to shareholders of the parent
Group
Ordinary
shares
£m
Share
premium
£m
Other
reserves
£m
Retained
earnings
£m
Total
£m
Non-
controlling
interests
£m
Total
equity
£m
At 1 April 2022
80
317
9
7,511
7,917
74
7,991
Total comprehensive loss for the financial year
–
–
–
(629)
(629)
(3)
(632)
Transactions with shareholders
of the parent:
Share-based payments
36
–
1
4
2
7
–
7
Dividends paid to shareholders of the parent
11
–
–
–
(290)
(290)
–
(290)
Total transactions with shareholders
of the parent
–
1
4
(288)
(283)
–
(283)
Dividends paid to non-controlling interests
–
–
–
–
–
(4)
(4)
Total transactions with shareholders
–
1
4
(288)
(283)
(4)
(287)
At 31 March 2023
80
318
13
6,594
7,005
67
7,072
Total comprehensive loss for the financial year
–
–
–
(321)
(321)
(22)
(343)
Transactions with shareholders
of the parent:
Share-based payments
36
–
1
10
(2)
9
–
9
Dividends paid to shareholders of the parent
11
–
–
–
(291)
(291)
–
(291)
Total transactions with shareholders
of the parent
–
1
10
(293)
(282)
–
(282)
At 31 March 2024
80
319
23
5,980
6,402
45
6,447
Attributable to shareholders
Company
Notes
Ordinary
shares
£m
Share
premium
£m
Other
reserves
£m
Merger
reserve
£m
Retained
earnings1
£m
Total
equity
£m
At 1 April 2022
80
317
9
374
2,532
3,312
Total comprehensive income for the financial year
–
–
–
–
381
381
Transactions with shareholders:
Share-based payments
36
–
1
4
–
2
7
Dividends paid to shareholders
11
–
–
–
–
(290)
(290)
Total transactions with shareholders
–
1
4
–
(288)
(283)
At 31 March 2023
80
318
13
374
2,625
3,410
Total comprehensive income for the financial year
–
–
–
–
280
280
Transactions with shareholders:
Share-based payments
36
–
1
10
–
–
11
Dividends paid to shareholders
11
–
–
–
–
(291)
(291)
Total transactions with shareholders
–
1
10
–
(291)
(280)
At 31 March 2024
80
319
23
374
2,614
3,410
1. Available for distribution.
LANDSEC ANNUAL REPORT 2024
FINANCIAL STATEMENTS
Group
Company
Notes
2024
£m
2023
£m
2024
£m
2023
£m
Cash flows from operating activities
Net cash generated from operations
13
429
356
–
–
Interest received
24
16
–
–
Interest paid
(101)
(92)
–
–
Rents paid
(14)
(13)
–
–
Capital expenditure on trading properties
(19)
(6)
–
–
Disposal of trading properties
18
18
–
–
Development income proceeds received
–
54
–
–
Other operating cash flows
1
9
–
–
Net cash inflow from operating activities
13
338
342
–
–
Cash flows from investing activities
Investment property development expenditure
(202)
(253)
–
–
Other investment property related expenditure
(126)
(102)
–
–
Acquisition of investment properties, net of cash acquired
(137)
(94)
–
–
Disposal of investment properties
176
1,269
–
–
Cash distributions from joint ventures
16
17
14
–
–
Net cash (outflow)/inflow from investing activities
(272)
834
–
–
–
–
Cash flows from financing activities
Net proceeds from new borrowings (net of finance fees)
22
708
394
–
–
Repayment of borrowings
22
(427)
(1,407)
–
–
Net cash (outflow)/inflow from derivative financial instruments
22
(18)
25
–
–
Dividends paid to shareholders of the parent
11
(291)
(289)
–
–
Dividends paid to non–controlling interests
–
(4)
–
–
Increase in monies held in restricted accounts and deposits
(2)
–
–
–
Other financing cash flows
1
–
–
–
Net cash outflow from financing activities
(29)
(1,281)
–
–
Increase/(decrease) in cash and cash equivalents for the year
37
(105)
–
–
Cash and cash equivalents at the beginning of the year
41
146
2
2
Cash and cash equivalents at the end of the year
24
78
41
2
2
STATEMENTS OF CASH FLOWS
FOR THE YEAR ENDED 31 MARCH 2024
108
LANDSEC ANNUAL REPORT 2024
109
FINANCIAL STATEMENTS
SECTION 1 – GENERAL
This section contains a description of the Group’s significant accounting policies that relate to the financial statements as a whole. A description
of accounting policies specific to individual areas (e.g. investment properties) is included within the relevant note to the financial statements.
This section also includes a summary of new accounting standards, amendments and interpretations that have been applied in the year and
those not yet adopted, and their actual or expected impact on the reported results of the Group.
1 › BASIS OF PREPARATION AND CONSOLIDATION
BASIS OF PREPARATION
These financial statements have been prepared on a going concern basis and in accordance with UK adopted international accounting
standards (IFRSs and IFRICs), and as regards the Parent Company financial statements, as applied in accordance with the provisions of
the Companies Act 2006. The financial statements have been prepared in Pounds Sterling (rounded to the nearest one million), which is the
presentation currency of the Group (Land Securities Group PLC and all its subsidiary undertakings), and under the historical cost convention
as modified by the revaluation of investment property, financial assets at fair value through profit or loss, derivative financial instruments and
pension assets. As applied by the Group and the Company, there are no material differences between UK adopted international accounting
standards and EU IFRS.
The preparation of financial statements in conformity with generally accepted accounting principles (GAAP) requires the use of estimates and
assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of
revenues and expenses during the reporting period. Although these estimates are based on management’s best knowledge of the amount,
event or actions, actual results ultimately may differ from those estimates.
Land Securities Group PLC (the Company) has not presented its own statement of comprehensive income (and separate income statement),
as permitted by Section 408 of Companies Act 2006. The Merger reserve arose on 6 September 2002 when the Company acquired 100% of
the issued share capital of Land Securities PLC. The Merger reserve represents the excess of the cost of acquisition over the nominal value
of the shares issued by the Company to acquire Land Securities PLC. The Merger reserve does not represent a realised or distributable profit.
Other reserves includes the Capital redemption reserve, which represents the nominal value of cancelled shares, the Share-based payment
reserve and Own shares held by the Group.
GOING CONCERN
The impact of international and domestic political and economic events over the course of the year has resulted in the UK facing a prolonged
period of high inflation, rising interest rates and minimal GDP growth. Therefore, the Directors have continued to place additional focus on
the appropriateness of adopting the going concern assumption in preparing the financial statements for the year ended 31 March 2024.
The Group’s going concern assessment considers changes in the Group’s principal risks (see pages 41-45) and is dependent on a number
of factors, including our financial performance and continued access to borrowing facilities. Access to our borrowing facilities is dependent
on our ability to continue to operate the Group’s secured debt structure within its financial covenants, which are described in note 22.
In order to satisfy themselves that the Group has adequate resources to continue as a going concern for the foreseeable future, the Directors
have reviewed base case, downside and reverse stress test models, as well as a cash flow model which considers the impact of pessimistic
assumptions on the Group’s operating environment (the ‘mitigated downside scenario’). This mitigated downside scenario reflects unfavourable
macroeconomic conditions, a deterioration in our ability to collect rent and service charge from our customers and removes uncommitted
capital expenditure, acquisitions, disposals and developments.
The Group’s key metrics from the mitigated downside scenario as at the end of the going concern assessment period, which covers the 16 months
to 30 September 2025, are shown below alongside the actual position at 31 March 2024.
Mitigated downside
scenario
Key metrics
31 March 2024
30 September 2025
Security Group LTV
37.0%
42.8%
Adjusted net debt
£3,517m
£3,885m
EPRA net tangible assets
£6,398m
£5,559m
Available financial headroom
£1.9bn
£0.9bn
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2024
LANDSEC ANNUAL REPORT 2024
FINANCIAL STATEMENTS
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2024 CONTINUED
In our mitigated downside scenario, the Group has sufficient cash reserves, with our Security Group LTV ratio remaining less than 65%
and interest cover above 1.45x, for a period of 16 months from the date of authorisation of these financial statements. Under this scenario,
the Security Group’s asset values would need to fall by a further 34% from the sensitised values forecasted at 30 September 2025 to be
non‑compliant with the LTV covenant. This equates to a 43% fall in the value of the Security Group’s assets from the 31 March 2024 values
for the LTV to reach 65%. The Directors consider the likelihood of this occurring over the going concern assessment period to be remote.
The Security Group also requires earnings before interest of at least £198m in the full year ending 31 March 2025 and at least £232m in the full
year ending 31 March 2026 for interest cover to remain above 1.45x in the mitigated downside scenario, which would ensure compliance with
the Group’s covenant through to the end of the going concern assessment period. Security Group earnings post year end 31 March 2024 are
above the level required to meet the interest cover covenant for the year ended 31 March 2025. The Directors do not anticipate a reduction
in Security Group earnings over the period ending 30 September 2025 to a level that would result in a breach of the interest cover covenant.
The Directors have also considered a reverse stress-test scenario which assumes no further rent will be received, to determine when our
available cash resources would be exhausted. Even under this extreme scenario, although breaching the interest cover covenant, the Group
continues to have sufficient cash reserves to continue in operation throughout the going concern assessment period.
Based on these considerations, together with available market information and the Directors’ knowledge and experience of the Group’s property
portfolio and markets, the Directors have adopted the going concern basis in preparing the financial statements of the Group and parent for the
year ended 31 March 2024.
BASIS OF CONSOLIDATION
The consolidated financial statements for the year ended 31 March 2024 incorporate the financial statements of the Company and all its
subsidiary undertakings. Subsidiary undertakings are those entities controlled by the Company. Control exists where an entity is exposed to
variable returns and has the ability to affect those returns through its power over the investee.
The results of subsidiaries and joint ventures acquired or disposed of during the year are included from the effective date of acquisition or to the
effective date of disposal. Accounting policies of subsidiaries and joint ventures which differ from Group accounting policies are adjusted on
consolidation.
Where instruments in a subsidiary held by third parties are redeemable at the option of the holder, these interests are classified as a financial
liability, called the redemption liability. The liability is carried at fair value; the value is reassessed at the balance sheet date and movements are
recognised in the income statement.
Where equity in a subsidiary is not attributable, directly or indirectly, to the shareholders of the parent, this is classified as a non-controlling
interest. Total comprehensive income or loss and the total equity of the Group are attributed to the shareholders of the parent and to the
non-controlling interests according to their respective ownership percentages.
Joint arrangements are those entities over whose activities the Group has joint control, established by contractual agreement. Interests in joint
arrangements are accounted for as either a joint venture or a joint operation. A joint arrangement is accounted for as a joint venture when the
Group, along with the other parties that have joint control of the arrangement, have rights to the net assets of the arrangement. Interests in
joint ventures are equity accounted. The equity method requires the Group’s share of the joint venture’s post-tax profit or loss for the year to be
presented separately in the income statement and the Group’s share of the joint venture’s net assets to be presented separately in the balance
sheet. A joint arrangement is accounted for as a joint operation when the Group, along with the parties that have joint control of the
arrangement, have rights to the assets and obligations for the liabilities relating to the arrangement. Joint operations are accounted for by
including the Group’s share of the assets, liabilities, income and expenses on a line-by-line basis.
Intra-group balances and any unrealised gains and losses arising from intra-group transactions are eliminated in preparing the consolidated
financial statements. Unrealised gains arising from transactions with joint ventures are eliminated to the extent of the Group’s interest in the
joint venture concerned. Unrealised losses are eliminated in the same way, but only to the extent that there is no evidence of impairment.
1 › BASIS OF PREPARATION AND CONSOLIDATION CONTINUED
110
LANDSEC ANNUAL REPORT 2024
111
FINANCIAL STATEMENTS
2 › SIGNIFICANT ACCOUNTING JUDGEMENTS AND ESTIMATES
The preparation of financial statements in conformity with IFRS requires management to exercise judgement in applying the Group’s
accounting policies. The areas where the Group considers the judgements to be most significant involve assumptions or key estimates in respect
of future events, where actual results may differ from these estimates. These key estimates are deemed to have a significant risk of causing a
material adjustment to the carrying amounts of assets and liabilities within the next financial year. Other sources of estimation uncertainties
identified below are estimates deemed to have a lower risk of causing a material adjustment to the carrying amounts of assets and liabilities
within the next financial year.
JUDGEMENTS
• Recognising revenue where property management activities are performed by a third party (note 6)
• Compliance with the Real Estate Investment Trust (REIT) taxation regime and the recognition of deferred tax assets and liabilities (note 12)
• Accounting for certain property acquisitions and disposals (note 14)
KEY ESTIMATES
• Valuation of investment properties (note 14)
OTHER SOURCES OF ESTIMATION UNCERTAINTIES
• Valuation of trading properties (note 15)
• Impairment of trade receivables (note 27)
• Estimation of provisions (note 34)
In preparing the financial statements, the Group has considered the impact of climate change, taking into account the relevant disclosures in
the Strategic Report, including those made in accordance with the recommendations of the Task Force on Climate-related Financial Disclosures.
These considerations included the limited exposure in terms of our investment properties, as we fully costed and committed to invest £135m
to achieve our science-based target by 2030 (note this cost will fluctuate year on year as we account for changes in inflation and portfolio
composition). Related capital expenditure and the expected impact on ERVs associated with this commitment have been factored within
property valuations. On this basis, the Group has concluded that climate change did not have a material impact on the financial reporting
judgements and estimates, consistent with the assessment that this is not expected to have a significant impact on the Group’s going concern
or viability assessment.
3 › CHANGES IN ACCOUNTING POLICIES AND STANDARDS
The accounting policies used in these financial statements are consistent with those applied in the last annual financial statements, as amended
where relevant to reflect the adoption of new standards, amendments and interpretations which became effective in the year as listed below:
• Amendments to IAS 1 and IFRS Practice Statement 2 – Disclosure of accounting policies
• Amendments to IAS 8 – Definition of Accounting Estimates
• Amendments to IAS 12 – Deferred tax related to assets and liabilities arising from a single transaction
• Amendments to IAS 12 – International tax reform – Pillar Two model rules
• IFRS 17 – Insurance Contracts
There has been no material impact on the financial statements of adopting any new standards, amendments and interpretations.
LANDSEC ANNUAL REPORT 2024
FINANCIAL STATEMENTS
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2024 CONTINUED
AMENDMENTS TO IFRS
A number of new standards, amendments to standards and interpretations have been issued but are not yet effective for the Group as listed below:
• Amendments to IAS 1 – Classification of liabilities as current or non-current
• Amendments to IAS 1 – Non-current Liabilities with Covenants
• Amendments to IAS 7 and IFRS 7 – Disclosures: Supplier finance arrangements
• Amendments to IFRS 10 and IAS 28 – Sale or contribution of assets between an investor and its associate or joint venture
• Amendments to IFRS 16 – Lease liability in a sale and leaseback
• Amendments to IAS 21 – Lack of exchangeability
• IFRS 18 – Presentation and Disclosure in Financial Statements
The Group has yet to assess the full outcome of these new standards, amendments and interpretations, however with the exception of IFRS 18
these other new standards, amendments and interpretations are not expected to have a significant impact on the Group’s financial statements.
SECTION 2 – PERFORMANCE
This section focuses on the performance of the Group for the year, including segmental information, earnings per share and net assets per
share, together with further details on specific components of the income statement and dividends paid.
Our property portfolio is a combination of properties that are wholly owned by the Group, part owned through joint arrangements and
properties owned by the Group but where a third party holds a non-controlling interest. Internally, management review the results of the Group
on a basis that adjusts for these different forms of ownership to present a proportionate share. The Combined Portfolio, with assets totalling
£10.0bn, is an example of this approach, reflecting the economic interest we have in our properties regardless of our ownership structure. The
Combined Portfolio comprises the investment properties of the Group’s subsidiaries, on a proportionately consolidated basis when not wholly
owned, together with our share of investment properties held in our joint ventures (see note 14). We consider this presentation provides further
understanding to stakeholders of the activities and performance of the Group, as it aggregates the results of all of the Group’s property
interests which under IFRS are required to be presented across a number of line items in the statutory financial statements.
The same principle is applied to many of the other measures we discuss and, accordingly, a number of our financial measures include the results
of our joint ventures and subsidiaries on a proportionate basis. Measures that are described as being presented on a proportionate basis include
the Group’s share of joint ventures on a line-by-line basis and are adjusted to exclude the non-owned elements of our subsidiaries. This is in
contrast to the Group’s statutory financial statements, where the Group’s interest in joint ventures is presented as one line on the income
statement and balance sheet, and all subsidiaries are consolidated at 100% with any non-owned element being adjusted as a non-controlling
interest or redemption liability, as appropriate. Our joint operations are presented on a proportionate basis in all financial measures.
EPRA earnings is an alternative performance measure and is the Group’s alternative measure of the underlying pre-tax profit of the property
rental business. EPRA earnings excludes all items of a capital nature, such as valuation movements and profits and losses on the disposal of
investment properties, as well as exceptional items. The Group believes that EPRA earnings provides additional understanding of the Group’s
operational performance to shareholders and other stakeholder groups. A full definition of EPRA earnings is given in the Glossary. The
components of EPRA earnings are presented on a proportionate basis in note 4.
Our income statement has two key components: the income we generate from leasing our investment properties net of associated costs
(including interest expense), which we refer to as EPRA earnings, and items not directly related to the underlying rental business, principally
valuation changes, profits or losses on the disposal of properties, refinancing activity and exceptional items, which we refer to as Capital and
other items. Our income statement is presented in a columnar format, split into those items that relate to EPRA earnings and Capital and other
items. The total column represents the Group’s results presented in accordance with IFRS; the other columns provide additional information.
We believe EPRA earnings provides further understanding of the results of the Group’s operational performance to stakeholders as it focuses
on the rental income performance of the business and excludes Capital and other items which can vary significantly from year to year.
3 › CHANGES IN ACCOUNTING POLICIES AND STANDARDS CONTINUED
112
LANDSEC ANNUAL REPORT 2024
113
FINANCIAL STATEMENTS
4 › SEGMENTAL INFORMATION
The Group’s operations are all in the UK and are managed across four operating segments, being Central London, Major retail destinations
(Major retail), Mixed-use urban neighbourhoods (Mixed-use urban) and Subscale sectors.
The Central London segment includes all assets geographically located within central London. Major retail destinations includes all regional
shopping centres and shops outside London and our outlets. The Mixed-use urban segment includes those assets where we see the most
potential for capital investment. Subscale sectors mainly includes assets that will not be a focus for capital investment and consists of leisure
and hotel assets and retail parks.
Management has determined the Group’s operating segments based on the information reviewed by Senior Management to make strategic
decisions. The chief operating decision maker is the Executive Leadership Team (ELT), comprising the Executive Directors and the Managing
Directors. The information presented to ELT includes reports from all functions of the business as well as strategy, financial planning, succession
planning, organisational development and Group-wide policies.
The Group’s primary measure of underlying profit before tax is EPRA earnings. However, Segment net rental income is the lowest level to
which the profit arising from the ongoing operations of the Group is analysed between the four segments. The administrative costs, which are
predominantly staff costs for centralised functions, are all treated as administrative expenses and are not allocated to individual segments.
The Group manages its financing structure, with the exception of joint ventures and non-wholly owned subsidiaries, on a pooled basis.
Individual joint ventures and non-wholly owned subsidiaries may have specific financing arrangements in place. Debt facilities and finance
expenses, including those of joint ventures, are managed centrally and are therefore not attributed to a particular segment. Unallocated
income and expenses are items incurred centrally which are not directly attributable to one of the segments.
All items in the segmental information note are presented on a proportionate basis.
SEGMENTAL RESULTS
EPRA EARNINGS
2024
20232
Central
London
£m
Major
retail
£m
Mixed-use
urban
£m
Subscale
sectors
£m
Total
£m
Central
London
£m
Major
retail
£m
Mixed-use
urban
£m
Subscale
sectors
£m
Total
£m
Rental income
294
188
58
112
652
313
179
58
107
657
Finance lease interest
–
–
–
1
1
–
–
–
2
2
Gross rental income
(before rents payable)
294
188
58
113
653
313
179
58
109
659
Rents payable1
(3)
(7)
(1)
(1)
(12)
(3)
(8)
(1)
–
(12)
Gross rental income
(after rents payable)
291
181
57
112
641
310
171
57
109
647
Service charge income
59
53
11
–
123
46
42
10
–
98
Service charge expense
(63)
(60)
(14)
(2)
(139)
(47)
(50)
(12)
(1)
(110)
Net service charge expense
(4)
(7)
(3)
(2)
(16)
(1)
(8)
(2)
(1)
(12)
Other property related income
20
11
4
3
38
15
10
3
3
31
Direct property expenditure
(43)
(42)
(16)
(18)
(119)
(34)
(44)
(14)
(16)
(108)
Movement in bad and doubtful debts
provision
(1)
8
–
(1)
6
(1)
3
1
–
3
Segment net rental income
263
151
42
94
550
289
132
45
95
561
Other income
1
3
Administrative expense
(74)
(82)
Depreciation
(4)
(5)
EPRA earnings before interest
473
477
Finance income
11
11
Finance expense
(102)
(84)
Joint venture net finance expense
(11)
(11)
EPRA earnings attributable to
shareholders of the parent
371
393
1. Included within rents payable is lease interest payable of £4m (2023: £4m) across the four segments.
2. A reconciliation from the Group income statement to the information presented in the segmental results table for the year ended 31 March 2023 is included in table 77.
LANDSEC ANNUAL REPORT 2024
FINANCIAL STATEMENTS
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2024 CONTINUED
The following table reconciles the Group’s income statement to the segmental results.
RECONCILIATION OF SEGMENTAL INFORMATION NOTE TO STATUTORY REPORTING
Year ended 31 March 2024
Group
income
statement
£m
Joint
ventures1
£m
Adjustment
for non-
wholly owned
subsidiaries2
£m
Total
£m
EPRA
earnings
£m
Capital
and other
items
£m
Rental income
622
38
(8)
652
652
–
Finance lease interest
1
–
–
1
1
–
Gross rental income (before rents payable)
623
38
(8)
653
653
–
Rents payable
(11)
(1)
–
(12)
(12)
–
Gross rental income (after rents payable)
612
37
(8)
641
641
–
Service charge income
117
8
(2)
123
123
–
Service charge expense
(133)
(9)
3
(139)
(139)
–
Net service charge expense
(16)
(1)
1
(16)
(16)
–
Other property related income
35
3
–
38
38
–
Direct property expenditure
(114)
(6)
1
(119)
(119)
–
Movement in bad and doubtful debts provision
6
–
–
6
6
–
Segment net rental income
523
33
(6)
550
550
–
Other income
1
–
–
1
1
–
Administrative expenses
(73)
(1)
–
(74)
(74)
–
Depreciation, including amortisation of software
(4)
–
–
(4)
(4)
–
EPRA earnings before interest
447
32
(6)
473
473
–
Share of post-tax profit/(loss) from joint ventures
2
(2)
–
–
–
–
Loss on disposal of investment properties3
(16)
–
–
(16)
–
(16)
Net deficit on revaluation of investment properties
(628)
(19)
22
(625)
–
(625)
Net development contract and transaction expenditure
(18)
–
–
(18)
–
(18)
Fair value gain on remeasurement of investment
3
–
–
3
–
3
Impairment of amounts due from joint ventures
(2)
–
–
(2)
–
(2)
Impairment of goodwill
(1)
–
–
(1)
–
(1)
Impairment of trading properties
(11)
–
–
(11)
–
(11)
Depreciation
(2)
–
–
(2)
–
(2)
Other costs
(1)
–
–
(1)
–
(1)
Operating (loss)/profit
(227)
11
16
(200)
473
(673)
Finance income
12
–
–
12
11
1
Finance expense
(126)
(11)
6
(131)
(113)
(18)
(Loss)/profit before tax
(341)
–
22
(319)
371
(690)
Taxation
–
–
–
–
(Loss)/profit for the year
(341)
–
22
(319)
1. Reallocation of the share of post-tax profit from joint ventures reported in the Group income statement to the individual line items reported in the segmental results table.
2. Removal of the non-wholly owned share of results of the Group’s subsidiaries. The non-wholly owned subsidiaries are consolidated at 100% in the Group’s income statement,
but only the Group’s share is included in EPRA earnings reported in the segmental results table. The non-owned element of the Group’s subsidiaries are included in the ‘Capital
and other items’ column presented in the Group’s income statement, together with items not directly related to the underlying rental business such as investment properties
valuation changes, profits or losses on the disposal of investment properties, the proceeds from, and costs of, the sale of trading properties, income from and costs associated
with development contracts, amortisation and impairment of intangibles, and other attributable costs, arising on business combinations.
3. Included in the loss on disposal of investment properties is a £2m charge (2023: £9m charge) related to the provision for fire safety remediation works on properties no longer
owned by the Group but for which the Group is responsible for remediating under the Building Safety Act 2022.
4 › SEGMENTAL INFORMATION CONTINUED
114
LANDSEC ANNUAL REPORT 2024
115
FINANCIAL STATEMENTS
5 › PERFORMANCE MEASURES
In the tables below, we present earnings per share attributable to shareholders of the parent, calculated in accordance with IFRS, and net
assets per share attributable to shareholders of the parent together with certain measures defined by the European Public Real Estate
Association (EPRA), which have been included to assist comparison between European property companies. Three of the Group’s key financial
performance measures are EPRA earnings per share, EPRA Net Tangible Assets per share and Total return on equity. Refer to table 57 in the
Business Analysis section for further details on these alternative performance measures.
EPRA earnings, which is a tax adjusted measure of underlying earnings, is the basis for the calculation of EPRA earnings per share. We believe
EPRA earnings and EPRA earnings per share provide further insight into the results of the Group’s operational performance to stakeholders as
they focus on the rental income performance of the business and exclude Capital and other items which can vary significantly from year to year.
EARNINGS PER SHARE
Year ended
31 March 2024
Year ended
31 March 2023
Loss for
the year
£m
EPRA
earnings
£m
Loss for
the year
£m
EPRA
earnings
£m
Loss attributable to shareholders of the parent
(319)
(319)
(619)
(619)
Valuation and loss on disposals
–
650
–
1,016
Net finance expense/(income) (excluded from EPRA earnings)
–
20
–
(21)
Impairment of goodwill
–
1
–
5
Other
–
19
–
12
(Loss)/profit used in per share calculation
(319)
371
(619)
393
IFRS
EPRA
IFRS
EPRA2
Basic (loss)/earnings per share
(43.0)p
50.1p
(83.6)p
53.1p
Diluted (loss)/earnings per share1
(43.0)p
50.1p
(83.6)p
53.1p
1. In the year ended 31 March 2024, share options are excluded from the weighted average diluted number of shares when calculating IFRS and EPRA diluted (loss)/earnings per share
because they are not dilutive.
2. Underlying EPRA EPS excluding the benefit of increased surrender premiums in the prior year was 50.1p.
NET ASSETS PER SHARE
31 March 2024
31 March 2023
Net assets
£m
EPRA NDV
£m
EPRA NTA
£m
Net assets
£m
EPRA NDV
£m
EPRA NTA
£m
Net assets attributable to shareholders of the parent
6,402
6,402
6,402
7,005
7,005
7,005
Shortfall of fair value over net investment in finance leases book value
–
(5)
(5)
–
(6)
(6)
Deferred tax liability on intangible asset
–
–
–
–
–
1
Goodwill on deferred tax liability
–
–
–
–
(1)
(1)
Other intangible asset
–
–
(2)
–
–
(2)
Fair value of interest-rate swaps
–
–
(22)
–
–
(42)
Excess of fair value of trading properties over book value
–
25
25
–
12
12
Shortfall of fair value of debt over book value (note 22)
–
313
–
–
324
–
Net assets used in per share calculation
6,402
6,735
6,398
7,005
7,334
6,967
IFRS
EPRA NDV
EPRA NTA
IFRS
EPRA NDV
EPRA NTA
Net assets per share
863p
n/a
n/a
945p
n/a
n/a
Diluted net assets per share
859p
904p
859p
942p
986p
936p
LANDSEC ANNUAL REPORT 2024
FINANCIAL STATEMENTS
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2024 CONTINUED
NUMBER OF SHARES
2024
2023
Weighted
average
million
31 March
million
Weighted
average
million
31 March
million
Ordinary shares
751
752
751
751
Treasury shares
(7)
(7)
(7)
(7)
Own shares
(3)
(3)
(4)
(3)
Number of shares – basic
741
742
740
741
Dilutive effect of share options
3
3
4
3
Number of shares – diluted
744
745
744
744
Total return on equity is calculated as the cash dividends per share paid in the year plus the change in EPRA NTA per share, divided by the opening
EPRA NTA per share. We consider this to be a useful measure for shareholders as it gives an indication of the total return on equity over the year.
TOTAL RETURN ON EQUITY BASED ON EPRA NTA
Year ended
31 March
2024
pence
Year ended
31 March
2023
pence
Decrease in EPRA NTA per share
(77)
(127)
Dividend paid per share in the year (note 11)
39
39
Total return (a)
(38)
(88)
EPRA NTA per share at the beginning of the year (b)
936
1,063
Total return on equity (a/b)
(4.0)%
(8.3)%
6 › REVENUE
A ACCOUNTING POLICY
Rental income, including fixed rental uplifts, is recognised in the income statement on a straight-line basis over the term of the lease. Lease
incentives being offered to occupiers to enter into a lease, such as an initial rent-free period or a cash contribution to fit out or similar costs, are
an integral part of the net consideration for the use of the property and are therefore recognised on the same straight-line basis. Where the
total consideration due under a lease is modified, for example, where a concession is granted to a tenant prior to the date the conceded rent
falls due, the revised total amount due under the lease is recognised on a straight-line basis over the remaining term of the lease.
Contingent rents, being lease payments that are not fixed at the inception of a lease, for example turnover rents as well as surrender premiums
net of dilapidations, are considered as variable consideration and are recorded as income in the year in which they are earned. Where a single
payment is received from a tenant to cover both rent and service charge, the service charge component is separated and reported as service
charge income.
The Group’s revenue from contracts with customers, as defined in IFRS 15, includes service charge income, other property related income,
trading property sales proceeds and development contract income.
Service charge income and management fees are recorded as income over time in the year in which the services are rendered. Revenue is
recognised over time because the tenants benefit from the services as soon as they are rendered by the Group. The actual service provided
during each reporting period is determined using cost incurred as the input method.
Other property related income includes development and asset management fees. These fees are recognised over time, using time elapsed
as the input method which measures the benefit simultaneously received and consumed by the customer, over the period the development
or asset management services are provided.
Proceeds received on the sale of trading properties are recognised when control of the property transfers to the buyer, i.e. the buyer has the
ability to direct the use of the property and the right to the cash inflows and outflows generated by it. This generally occurs on unconditional
exchange or on completion. If completion is expected to occur significantly after exchange or if the Group has significant outstanding
obligations between exchange and completion, the Group assesses whether there are multiple performance obligations in the contract and
recognises revenue as each performance obligation is satisfied.
5 › PERFORMANCE MEASURES CONTINUED
116
LANDSEC ANNUAL REPORT 2024
117
FINANCIAL STATEMENTS
When property is let under a finance lease, the Group recognises a receivable equal to the net investment in the lease at inception of the
lease. Rentals received are accounted for as repayments of principal and finance income as appropriate. Finance income is allocated to each
period during the lease term so as to produce a constant periodic rate of interest on the remaining net investment in the finance lease and
is recognised within revenue.
Revenue on development contracts is recognised over time over the period of the contract as the Group creates or enhances an asset that
the customer controls. Progress towards completion of the development, by reference to the value of work completed using the costs incurred
to date as a proportion of total costs expected to be incurred over the term of the contract is used as the input method.
S SIGNIFICANT ACCOUNTING JUDGEMENT
For those properties where the property management activities are performed by a third party, the Group considers the third party to be
the principal delivering the service. The key factors considered by the Group when making this judgement include the following responsibilities
of the third party:
• selecting suppliers and ensuring all services are delivered
• establishing prices and seeking efficiencies
• risk management and compliance
In addition, the residual rights residing with the Group are generally protective in nature.
All revenue is classified within the ‘EPRA earnings’ column of the income statement, with the exception of proceeds from the sale of trading
properties, income from development contracts or transactions and the non-owned element of the Group’s subsidiaries which are presented
in the ‘Capital and other items’ column.
2024
2023
EPRA
earnings
£m
Capital
and other
items
£m
Total
£m
EPRA
earnings
£m
Capital
and other
items
£m
Total
£m
Rental income (excluding adjustment for lease incentives)
598
8
606
606
8
614
Adjustment for lease incentives
16
–
16
(2)
–
(2)
Rental income
614
8
622
604
8
612
Service charge income
115
2
117
88
3
91
Trading property sales proceeds
–
26
26
–
22
22
Other property related income
35
–
35
29
–
29
Finance lease interest
1
–
1
2
–
2
Development contract and transaction income
–
22
22
–
32
32
Other income
1
–
1
3
–
3
Revenue per the income statement
766
58
824
726
65
791
The following table reconciles revenue per the income statement to the individual components of revenue presented in note 4.
2024
2023
Group
£m
Joint
ventures
£m
Adjustment
for non-
wholly owned
subsidiaries
£m
Total
£m
Group
£m
Joint
ventures
£m
Adjustment
for non-
wholly owned
subsidiaries
£m
Total
£m
Rental income
622
38
(8)
652
612
53
(8)
657
Service charge income
117
8
(2)
123
91
10
(3)
98
Other property related income
35
3
–
38
29
2
–
31
Finance lease interest
1
–
–
1
2
–
–
2
Other income
1
–
–
1
3
–
–
3
Revenue in the segmental
information note
776
49
(10)
815
737
65
(11)
791
Development contract and
transaction income
22
–
–
22
32
–
–
32
Trading property sales proceeds
26
–
–
26
22
–
–
22
Revenue including Capital and
other items
824
49
(10)
863
791
65
(11)
845
LANDSEC ANNUAL REPORT 2024
FINANCIAL STATEMENTS
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2024 CONTINUED
7 › COSTS
A ACCOUNTING POLICY
The carrying amounts of the Group’s non-financial assets, other than investment properties, are reviewed at each reporting date to determine
whether there is any indication of impairment. If any such indication exists, the asset’s recoverable amount is estimated. An impairment loss
is recognised in the income statement whenever the carrying amount of an asset exceeds its recoverable amount. The recoverable amount of
an asset is the greater of its fair value less costs to sell and its value in use. The value in use is determined as the net present value of the future
cash flows expected to be derived from the asset, discounted using a pre-tax discount rate that reflects current market assessments of the time
value of money and the risks specific to the asset. An impairment loss is reversed if there has been a change in the estimates used to determine
the recoverable amount. An impairment loss is reversed only to the extent that the asset’s carrying amount after the reversal does not exceed
the amount that would have been determined, net of applicable depreciation, if no impairment loss had been recognised.
Rents payable reflect amounts due under head leases. Where rents payable are variable, and do not depend on an index or rate, the payments
are recognised in the income statement as incurred. Where these rents are fixed, or in-substance fixed, at the inception of the agreement, or
become fixed or in-substance fixed at some point over the life of the agreement, an asset representing the right to use the underlying land and
a corresponding liability for the present value of the minimum future lease payments are recognised on the Group’s balance sheet within
Investment properties and borrowings respectively.
All costs are classified within the ‘EPRA earnings’ column of the income statement, with the exception of the cost of sale of trading properties,
costs arising on development contracts or transactions, amortisation and impairments of intangible assets, and other attributable costs, arising
on business combinations and the non-owned element of the Group’s subsidiaries which are presented in the ‘Capital and other items’ column.
2024
2023
EPRA
earnings
£m
Capital
and other
items
£m
Total
£m
EPRA
earnings
£m
Capital
and other
items
£m
Total
£m
Rents payable
11
–
11
10
–
10
Service charge expense
130
3
133
98
2
100
Direct property expenditure
113
1
114
98
2
100
Movement in bad and doubtful debts provision
(6)
–
(6)
(2)
–
(2)
Administrative expenses
73
–
73
80
–
80
Impairment of trading properties
–
11
11
–
19
19
Cost of trading property disposals
–
26
26
–
21
21
Development contract and transaction expenditure
–
40
40
–
41
41
Depreciation, including amortisation of software
4
2
6
5
3
8
Impairment of amounts due from joint ventures
–
2
2
–
–
–
Impairment of goodwill
–
1
1
–
5
5
Fair value gain on remeasurement of investment
–
(3)
(3)
–
–
–
Other costs
–
1
1
–
–
–
Total costs per the income statement
325
84
409
289
93
382
118
LANDSEC ANNUAL REPORT 2024
119
FINANCIAL STATEMENTS
The following table reconciles costs per the income statement to the individual components of costs presented in note 4.
2024
2023
Group
£m
Joint
ventures
£m
Adjustment
for non-
wholly owned
subsidiaries
£m
Total
£m
Group
£m
Joint
ventures
£m
Adjustment
for non-
wholly owned
subsidiaries
£m
Total
£m
Rents payable
11
1
–
12
10
2
–
12
Service charge expense
133
9
(3)
139
100
12
(2)
110
Direct property expenditure
114
6
(1)
119
100
10
(2)
108
Administrative expenses
73
1
–
74
80
2
–
82
Depreciation, including amortisation
of software
4
–
–
4
5
–
–
5
Movement in bad and doubtful debts
provision
(6)
–
–
(6)
(2)
(1)
–
(3)
Costs in the segmental information note
329
17
(4)
342
293
25
(4)
314
Impairment of trading properties
11
–
–
11
19
–
–
19
Cost of trading property disposals
26
–
–
26
21
–
–
21
Development contract and transaction
expenditure
40
–
–
40
41
–
–
41
Depreciation
2
–
–
2
3
–
–
3
Impairment of amounts due from joint
ventures
2
–
–
2
–
–
–
–
Impairment of goodwill
1
–
–
1
5
–
–
5
Fair value gain on remeasurement
of investment
(3)
–
–
(3)
–
–
–
–
Other costs
1
–
–
1
–
–
–
–
Costs including Capital and other items
409
17
(4)
422
382
25
(4)
403
The Group’s costs include employee costs for the year of £83m (2023: £76m), of which £7m (2023: £5m) is within service charge expense, £62m
(2023: £58m) is within administrative expenses and £14m (2023: £13m) is within direct property expenditure.
EMPLOYEE COSTS
2024
£m
2023
£m
Salaries and wages
63
59
Employer payroll taxes
8
7
Other pension costs (note 35)
4
4
Share-based payments (note 36)
8
6
83
76
2024
Number
2023
Number
The average monthly number of employees during the year was:
Indirect property or contract and administration
382
385
Direct property or contract services:
Full-time
204
180
Part-time
12
12
598
577
With the exception of the Executive Directors who are employed by Land Securities Group PLC, all employees are employed by subsidiaries of
the Group. The employee costs for Land Securities Group PLC are borne by another Group company.
During the year, none (2023: none) of the Executive Directors had retirement benefits accruing under the defined benefit scheme. Information
on Directors’ emoluments, share options and interests in the Company’s shares is given in the Directors’ Remuneration Report on pages 72 to 82.
Details of the employee costs associated with the Group’s key management personnel are included in note 40.
LANDSEC ANNUAL REPORT 2024
FINANCIAL STATEMENTS
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2024 CONTINUED
8 › AUDITOR REMUNERATION
2024
£m
2023
£m
Services provided by the Group’s auditor
Audit fees:
Audit of parent company and consolidated financial statements1
1.3
1.0
Audit of subsidiary undertakings1
1.2
0.6
Audit of joint ventures
0.1
0.2
2.6
1.8
Non-audit fees:
Other assurance services
0.4
0.4
3.0
2.2
1. The audit fee recognised in the year includes £0.5m of fees paid which relate to the audit for the years ended 31 March 2023 and 31 March 2022 (2023: £0.0m).
It is the Group’s policy to employ the Group’s auditor on assignments additional to their statutory duties where their expertise and experience
with the Group are important. Where appropriate the Group seeks tenders for services. If fees for an assignment are expected to be greater
than £25,000, they are pre-approved by the Audit Committee.
9 › EXTERNAL VALUERS REMUNERATION
2024
£m
2023
£m
Services provided by the Group’s external valuers
Year end and half-yearly valuations – Group
1.2
0.9
– Joint ventures
0.1
0.1
Other consultancy and agency services – CBRE
2.6
2.5
– JLL
0.8
0.7
4.7
4.2
CBRE Limited (CBRE) and Jones Lang LaSalle Limited (JLL) are the Group’s principal valuers. The fee arrangements with CBRE and JLL for the
valuation of the Group’s properties is fixed, subject to an adjustment for acquisitions and disposals. The fees of both CBRE and JLL have been
included in the table above. CBRE and JLL undertake other consultancy and agency work on behalf of the Group. CBRE and JLL have confirmed
to us that the total fees paid by the Group represented less than 5% of their total revenues from all clients in both the current and prior year.
120
LANDSEC ANNUAL REPORT 2024
121
FINANCIAL STATEMENTS
10 › NET FINANCE EXPENSE
2024
2023
EPRA
earnings
£m
Capital
and other
items
£m
Total
£m
EPRA
earnings
£m
Capital
and other
items
£m
Total
£m
Finance income
Interest receivable from joint ventures
11
–
11
11
–
11
Fair value movement on interest-rate swaps
–
–
–
–
23
23
Other interest receivable
–
1
1
–
–
–
11
1
12
11
23
34
Finance expense
Bond and debenture debt
(85)
–
(85)
(68)
–
(68)
Bank and other short-term borrowings
(35)
(2)
(37)
(38)
(2)
(40)
Fair value movement on interest-rate swaps
–
(22)
(22)
–
–
–
Other interest payable
(1)
–
(1)
–
(1)
(1)
(121)
(24)
(145)
(106)
(3)
(109)
Interest capitalised in relation to properties under development
19
–
19
22
–
22
(102)
(24)
(126)
(84)
(3)
(87)
Net finance (expense)/income
(91)
(23)
(114)
(73)
20
(53)
Joint venture net finance expense
(11)
(11)
Net finance expense included in EPRA earnings
(102)
(84)
Lease interest payable of £4m (2023: £4m) is included within rents payable as detailed in note 4.
11 › DIVIDENDS
A ACCOUNTING POLICY
Interim dividend distributions to shareholders are recognised in the financial statements when paid. Final dividend distributions are recognised
as a liability in the period in which they are approved by shareholders.
All significant cash payments for the parent company, including dividend payments, are made by the Group’s treasury function in accordance
with the Group’s financial risk management policy.
DIVIDENDS PAID
Pence per share
Year ended 31 March
Payment date
PID
Non-PID
Total
2024
£m
2023
£m
For the year ended 31 March 2022:
Third interim
7 April 2022
8.50
–
8.50
63
Final
22 July 2022
13.00
–
13.00
96
For the year ended 31 March 2023:
First interim
7 October 2022
8.60
–
8.60
64
Second interim
3 January 2023
9.00
–
9.00
67
Third interim
6 April 2023
9.00
–
9.00
67
Final
21 July 2023
12.00
–
12.00
89
For the year ended 31 March 2024:
First interim
6 October 2023
9.00
–
9.00
67
Second interim
2 January 2024
9.20
–
9.20
68
Gross dividends
291
290
Dividends in the statement of changes in equity
291
290
Timing difference on payment of withholding tax
–
(1)
Dividends in the statement of cash flows
291
289
LANDSEC ANNUAL REPORT 2024
FINANCIAL STATEMENTS
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2024 CONTINUED
The third quarterly interim dividend of 9.3p per ordinary share, or £69m in total (2023: 9.0p or £67m in total), was paid on 12 April 2024 as a
Property Income Distribution (PID). The Board has recommended a final dividend for the year ended 31 March 2024 of 12.1p per ordinary share
(2023: 12.0p) to be paid as a PID. This final dividend will result in a further estimated distribution of £90m (2023: £90m). Subject to shareholders’
approval at the Annual General Meeting, the final dividend will be paid on 26 July 2024 to shareholders registered at the close of business on
14 June 2024.
The total dividend paid and recommended in respect of the year ended 31 March 2024 is 39.6p per ordinary share (2023: 38.6p) resulting
in a total estimated distribution of £294m (2023: £288m).
The first quarterly dividend for the year ending 31 March 2025 will be paid in October 2024 and will be announced in due course.
A Dividend Reinvestment Plan (DRIP) has been available in respect of all dividends paid during the year. The last day for DRIP elections for
the final dividend is close of business on 28 June 2024.
12 › INCOME TAX
A ACCOUNTING POLICY
Income tax on the profit or loss for the year comprises current and deferred tax. Current tax is the tax payable on the taxable income for the
year and any adjustment in respect of previous years. Deferred tax is provided in full using the balance sheet liability method on temporary
differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes.
Deferred tax is determined using tax rates that have been enacted or substantively enacted by the reporting date and are expected to apply
when the asset is realised, or the liability is settled.
No provision is made for temporary differences (i) arising on the initial recognition of assets or liabilities, other than on a business combination,
that affect neither accounting nor taxable profit and (ii) relating to investments in subsidiaries to the extent that they will not reverse in the
foreseeable future.
S SIGNIFICANT ACCOUNTING JUDGEMENT
The Group is a Real Estate Investment Trust (REIT). As a result, the Group does not pay UK corporation tax on its profits and gains from the
qualifying rental business in the UK. Non-qualifying profits and gains of the Group continue to be subject to corporation tax as normal. In order
to maintain group REIT status, certain ongoing criteria must be met. The main criteria are as follows:
• at the start of each accounting period, the assets of the tax exempt business must be at least 75% of the total value of the Group’s assets;
• at least 75% of the Group’s total profits must arise from the tax exempt business; and
• at least 90% of the notional taxable profit of the property rental business must be distributed.
The Directors intend that the Group should continue as a REIT for the foreseeable future, with the result that deferred tax is no longer
recognised on temporary differences relating to the property rental business.
Deferred tax assets and liabilities require management judgement in determining the amounts, if any, to be recognised. In particular, judgement
is required when assessing the extent to which deferred tax assets should be recognised, taking into account the expected timing and level of
future taxable income. Deferred tax assets are only recognised when management believes it is probable that future taxable profits will be
available against which the deductible temporary differences can be utilised.
There is no income tax charge in the income statement (2023: none). There is a deferred tax credit of £4m (2023: £3m credit) included within
other comprehensive income.
11 › DIVIDENDS CONTINUED
122
LANDSEC ANNUAL REPORT 2024
123
FINANCIAL STATEMENTS
The tax for the year is lower than the standard rate of corporation tax in the UK of 25% (2023: 19%). The differences are explained in the table below.
2024
£m
2023
£m
Loss before tax
(341)
(622)
Loss before tax multiplied by the rate of corporation tax in the UK of 25% (2023: 19%)
(85)
(118)
Adjustment for exempt property rental losses and revaluations in the year
91
130
6
12
Effects of:
Timing difference on repurchase of medium term notes
(14)
(11)
Interest rate fair value movements and other temporary differences
4
(3)
Non-allowable expenses and non-taxable items
4
1
Movement in unrecognised tax losses
–
1
Total income tax charge in the income statement
–
–
2024
£m
2023
£m
The Group’s deferred tax liability is analysed as follows:
Arising on business combination
–
1
Arising on pension surplus
–
3
Total deferred tax liability
–
4
Deferred tax is calculated at the rate substantively enacted at the balance sheet date of 25% (2023: 25%). The movement in the deferred tax
liability arising on the remeasurement loss on the defined benefit pension scheme surplus is included within other comprehensive income in the
Statement of comprehensive income.
There are unrecognised deferred tax assets on the following items due to the high degree of uncertainty as to their future utilisation by non-REIT
qualifying activities.
2024
£m
2023
£m
Revenue losses
264
245
Capital losses
267
272
Other unrecognised temporary differences
7
239
Total unrecognised items
538
756
The other unrecognised temporary differences in the prior year relate primarily to the premium paid on the redemption of the Group’s medium
term notes. The premium paid was expensed in full in prior years, whereas a tax deduction is taken over the remaining term.
LANDSEC ANNUAL REPORT 2024
FINANCIAL STATEMENTS
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2024 CONTINUED
13 › NET CASH GENERATED FROM OPERATIONS
RECONCILIATION OF OPERATING LOSS TO NET CASH GENERATED FROM OPERATIONS
Group
Company
2024
£m
2023
£m
2024
£m
2023
£m
Operating loss
(227)
(569)
(605)
(26)
Adjustments for:
Net deficit on revaluation of investment properties
628
827
–
–
Loss on changes in finance leases
–
6
–
–
Profit on disposal of trading properties
–
(1)
–
–
Loss on disposal of investment properties
16
144
–
–
Share of (profit)/loss from joint ventures
(2)
1
–
–
Share-based payment charge
8
6
–
–
Impairment of goodwill
1
5
–
–
Impairment of amounts due from joint ventures
2
–
–
–
Fair value gain on remeasurement of investment
(3)
–
–
–
Non-cash development contract and transaction expenditure
26
–
–
–
Impairment/(reversal of impairment) of investment in subsidiary
–
–
578
(1)
Rents payable
11
10
–
–
Depreciation and amortisation
4
5
–
–
Impairment of trading properties
11
19
–
–
475
453
(27)
(27)
Changes in working capital:
Increase in receivables
(32)
(17)
–
–
(Decrease)/increase in payables and provisions
(14)
(80)
27
27
Net cash generated from operations
429
356
–
–
RECONCILIATION TO ADJUSTED NET CASH INFLOW FROM OPERATING ACTIVITIES
Group
Company
2024
£m
2023
£m
2024
£m
2023
£m
Net cash inflow from operating activities
338
342
–
–
Joint ventures net cash inflow from operating activities
15
17
–
–
Adjusted net cash inflow from operating activities1
353
359
–
–
1. Includes cash flows relating to the interest in MediaCity which is not owned by the Group but is consolidated in the Group numbers.
124
LANDSEC ANNUAL REPORT 2024
125
FINANCIAL STATEMENTS
SECTION 3 – PROPERTIES
This section focuses on the property assets which form the core of the Group’s business. It includes details of investment properties, investments
in joint ventures and trading properties.
Our property portfolio is a combination of properties that are wholly owned by the Group, part owned through joint arrangements and properties
owned by the Group but where a third party holds a non-controlling interest. In the Group’s IFRS balance sheet, wholly owned properties and
properties owned by the Group but where a third party holds a non-controlling interest are presented as either ‘Investment properties’ or
‘Trading properties’. The Group applies equity accounting to its investments in joint ventures, which requires the Group’s share of properties
held by joint ventures to be presented within ‘Investments in joint ventures’.
Internally, management review the results of the Group on a basis that adjusts for these forms of ownership to present a proportionate share.
The Combined Portfolio, with assets totalling £10.0bn, is an example of this proportionate share, reflecting the economic interest we have in
our properties regardless of our ownership structure. We consider this presentation provides further insight to stakeholders about the activities
and performance of the Group, as it aggregates the results of all of the Group’s property interests which under IFRS are required to be presented
across a number of line items in the statutory financial statements.
The Group’s investment properties are carried at fair value and trading properties are carried at the lower of cost and net realisable value.
Both of these values are determined by the Group’s external valuers. The combined value of the Group’s total investment property portfolio
(including the Group’s share of investment properties held through joint ventures) is shown as a reconciliation in note 14.
A ACCOUNTING POLICY
INVESTMENT PROPERTIES
Investment properties are properties, either owned or leased by the Group, that are held either to earn rental income or for capital appreciation,
or both. Investment properties are measured initially at cost including related transaction costs, and subsequently at fair value. Fair value is
based on market value, as determined by a professional external valuer at each reporting date. The difference between the fair value of an
investment property at the reporting date and its carrying amount prior to re-measurement is included in the income statement as a valuation
surplus or deficit. Investment properties are presented on the balance sheet within non-current assets.
Some of the Group’s investment properties are owned through long-leasehold arrangements, as opposed to the Group owning the freehold.
Where the Group is a lessee, a right-of-use asset is recognised at the commencement date of the lease and accounted for as investment
property. Initially, the cost of investment properties held under leases includes the amount of lease liabilities recognised, initial direct costs
incurred, and lease payments made at or before the commencement date less any lease incentives received. The investment properties held
under leases are subsequently carried at their fair value. A corresponding liability is recorded within borrowings. Each lease payment is allocated
between repayment of the liability and a finance charge to achieve a constant interest rate on the outstanding liability.
TRADING PROPERTIES
Trading properties are those properties held for sale, or those being developed with a view to sell. Trading properties are recorded at the lower
of cost and net realisable value. The net realisable value of a trading property is determined by a professional external valuer at each reporting
date. If the net realisable value of a trading property is lower than its carrying value, an impairment loss is recorded in the income statement.
If, in subsequent periods, the net realisable value of a trading property that was previously impaired increases above its carrying value, the
impairment is reversed to align the carrying value of the property with the net realisable value. Trading properties are presented on the balance
sheet within current assets.
ACQUISITION OF PROPERTIES
Properties are treated as acquired when the Group assumes control of the property.
CAPITAL EXPENDITURE AND CAPITALISATION OF BORROWING COSTS
Capital expenditure on properties consists of costs of a capital nature, including costs associated with developments and refurbishments.
Where a property is being developed or undergoing major refurbishment, interest costs associated with direct expenditure on the property are
capitalised. Where borrowings are specifically used to finance any capital expenditure on the properties, the actual borrowing costs incurred are
capitalised. However, where borrowings are used generally to finance the operations of the Group, the interest capitalised is calculated using the
Group’s weighted average cost of borrowings. Interest is capitalised from the commencement of the development work until the date of practical
completion. Certain internal staff and associated costs directly attributable to the management of major schemes are also capitalised. The total
staff and associated costs are capitalised based on the proportion of time spent on the relevant scheme. Internal staff costs are capitalised from
the date the Group determines it is probable that the development will progress until the date of practical completion.
LANDSEC ANNUAL REPORT 2024
FINANCIAL STATEMENTS
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2024 CONTINUED
TRANSFERS BETWEEN INVESTMENT PROPERTIES AND TRADING PROPERTIES
When the Group begins to redevelop an existing investment property for continued future use as an investment property, the property continues
to be held as an investment property. When the Group begins to redevelop an existing investment property with a view to sell, the property
is transferred to trading properties and held as a current asset. The property is remeasured to fair value as at the date of the transfer with any
gain or loss being taken to the income statement. The remeasured amount becomes the deemed cost at which the property is then carried
in trading properties.
DISPOSAL OF PROPERTIES
Properties are treated as disposed when control of the property is transferred to the buyer. Typically, this will either occur on unconditional
exchange or on completion. Where completion is expected to occur significantly after exchange, or where the Group continues to have
significant outstanding obligations after exchange, the control will not usually transfer to the buyer until completion.
The profit on disposal is determined as the difference between the sales proceeds and the carrying amount of the asset at the beginning of
the accounting period plus capital expenditure to the date of disposal. The profit on disposal of investment properties is presented separately
on the face of the income statement. Proceeds received on the sale of trading properties are recognised within Revenue, and the carrying value
at the date of disposal is recognised within Costs.
S SIGNIFICANT ACCOUNTING JUDGEMENT
ACQUISITION AND DISPOSAL OF PROPERTIES
Property transactions can be complex in nature and material to the financial statements. To determine when an acquisition or disposal should
be recognised, management consider whether the Group assumes or relinquishes control of the property, and the point at which this is
obtained or relinquished. Consideration is given to the terms of the acquisition or disposal contracts and any conditions that must be satisfied
before the contract is fulfilled. In the case of an acquisition, management must also consider whether the transaction represents an asset
acquisition or business combination.
KEY ACCOUNTING ESTIMATES AND OTHER SOURCES OF ESTIMATION UNCERTAINTY
VALUATION OF THE GROUP’S PROPERTIES
The valuation of the Group’s property portfolio has been undertaken by independent valuers in accordance with the Royal Institution of
Chartered Surveyors (RICS) Valuation – Global Standards and UK Supplement (together the “Red Book”). Real estate by its nature is a complex
asset class with value determined by a range of factors overlaid by interpretation and judgemental assessment of market data; as such it is
classified as a ‘Level 3 asset’ within IFRS. Factors affecting valuation are on an individual property level and include the property type, location,
tenure and tenancy characteristics, quality of the asset and prospects for future rental revenue.
The Group’s investment property valuation has been undertaken by valuers interpreting market evidence as available in reaching their
conclusions on Fair Value, reflecting asset specific data provided by Management, making assumptions that tenure, tenancies, town planning
and condition of buildings are as provided. As a result, the valuations the Group places on its property portfolio are subject to a degree of
uncertainty and are made on the basis of assumptions which may not prove to be accurate, particularly in periods of volatility or low
transaction volume in the property market.
The estimation of the net realisable value of the Group’s trading properties, in particular the development land and infrastructure programmes,
is inherently subjective due to a number of factors, including their complexity, unusually large size, the substantial expenditure required and
long timescales to completion. In addition, as a result of these timescales to completion, the plans associated with these programmes could
be subject to significant market variation over the course of development. As a result, and similar to the valuation of investment properties,
the net realisable values of the Group’s trading properties are subject to a degree of uncertainty and are determined on the basis of
assumptions which may not prove to be accurate.
If the assumptions upon which the external valuer has based its valuations prove to be inaccurate, this may have an impact on the value of the
Group’s investment and trading properties, which could in turn have an effect on the Group’s financial position and results.
126
LANDSEC ANNUAL REPORT 2024
127
FINANCIAL STATEMENTS
14 › INVESTMENT PROPERTIES
2024
£m
2023
£m
Net book value at the beginning of the year
9,658
11,207
Transfer from joint venture
–
23
Acquisitions of investment properties
144
218
Capital expenditure
374
356
Capitalised interest
19
22
Net movement in head leases capitalised1
(30)
(16)
Disposals2
(207)
(1,319)
Net deficit on revaluation of investment properties
(628)
(827)
Transfers to trading properties
–
(6)
Net book value at the end of the year
9,330
9,658
1. See note 22 for details of the amounts payable under head leases and note 4 for details of the rents payable in the income statement.
2. Includes impact of disposals of finance leases.
The market value of the Group’s investment properties, as determined by the Group’s external valuers, differs from the net book value
presented in the balance sheet due to the Group presenting tenant finance leases, head leases and lease incentives separately. The following
table reconciles the net book value of the investment properties to the market value.
2024
2023
Group
£m
Joint
ventures1
£m
Adjustment
for
non-wholly
owned
subsidiaries
£m
Combined
Portfolio
£m
Group
£m
Joint
ventures1
£m
Adjustment
for
non-wholly
owned
subsidiaries
£m
Combined
Portfolio
£m
Market value
9,465
616
(118)
9,963
9,743
635
(139)
10,239
Less: properties treated as finance leases
(18)
–
–
(18)
(17)
–
–
(17)
Plus: head leases capitalised
77
1
–
78
107
1
–
108
Less: tenant lease incentives
(194)
(32)
–
(226)
(175)
(35)
–
(210)
Net book value
9,330
585
(118)
9,797
9,658
601
(139)
10,120
Net deficit on revaluation of
investment properties
(628)
(19)
22
(625)
(827)
(30)
9
(848)
1. Refer to note 16 for a breakdown of this amount by entity.
The net book value of leasehold properties where head leases have been capitalised is £1,604m (2023: £1,723m).
Investment properties include capitalised interest of £290m (2023: £271m). The average rate of interest capitalisation for the year is 4.8%
(2023: 3.0%). The gross historical cost of investment properties is £8,502m (2023: £8,280m).
VALUATION PROCESS
The fair value of investment properties at 31 March 2024 was determined by the Group’s external valuers, CBRE and JLL. The valuations are
in accordance with RICS standards and were arrived at by reference to market evidence of transactions for similar properties. The valuations
performed by the valuers are reviewed internally by Senior Management and other relevant people within the business. This process includes
discussions of the assumptions used by the valuers, as well as a review of the resulting valuations. Discussions of the valuation process and
results are held between Senior Management, the Audit Committee and the valuers on a half-yearly basis.
The valuers’ opinion of fair value was primarily derived using comparable recent market transactions on arm’s length terms and using
appropriate valuation techniques. The fair value of investment properties is determined using the income capitalisation approach. Under this
approach, forecast net cash flows, based upon current market derived estimated rental values (market rents) together with estimated costs,
are discounted at market derived capitalisation rates to produce the valuers’ opinion of fair value. The average discount rate, which, if applied
to all cash flows would produce the fair value, is described as the equivalent yield.
LANDSEC ANNUAL REPORT 2024
FINANCIAL STATEMENTS
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2024 CONTINUED
Properties in the development programme are typically valued using a residual valuation method. Under this methodology, the valuer assesses
the completed development value using income and yield assumptions. Deductions are then made for estimated costs to complete, including
finance and developer’s profit, to arrive at the valuation. Costs include future estimated costs associated with refurbishment or development
(excluding finance costs), together with an estimate of cash incentives to be paid to tenants. As the development approaches completion,
the valuer may consider the income capitalisation approach to be more appropriate.
The Group considers all of its investment properties to fall within ‘Level 3’, as defined by IFRS 13 and as explained in Note 26(III). Accordingly,
there have been no transfers of properties within the fair value hierarchy in the financial year.
The table below summarises the key unobservable inputs used in the valuation of the Group’s wholly owned investment properties, and
properties owned by the Group but where a third party holds a non-controlling interest, at 31 March 2024:
2024
Market
value
£m
Estimated rental value
£ per sq ft
Equivalent yield
%
Costs
£ per sq ft
Low
Average
High
Low
Average
High
Low
Average1
High
Central London
West End offices
2,754
20
85
132
4.3%
5.3%
5.8%
–
51
151
City offices
1,192
56
80
96
5.8%
6.0%
7.5%
–
124
226
Retail and other
956
15
57
121
4.5%
5.0%
6.5%
–
28
113
Total Central London
4,902
15
78
132
4.3%
5.4%
7.5%
–
64
226
Major retail
Shopping centres
1,059
10
17
39
7.0%
7.9%
9.5%
–
5
12
Outlets
605
48
51
53
6.5%
7.0%
8.0%
14
16
17
Total Major retail
1,664
10
29
53
6.5%
7.6%
9.5%
–
9
17
Mixed-use urban
London
191
10
21
27
5.7%
6.6%
10.0%
–
2
2
Major regional cities
600
16
24
47
5.7%
7.7%
9.7%
–
3
13
Total Mixed-use urban
791
10
23
47
5.7%
7.5%
10.0%
–
3
13
Subscale sectors
Leisure
392
9
13
17
6.3%
8.9%
12.1%
–
3
29
Hotels
400
8
19
40
6.3%
7.2%
8.8%
–
–
–
Retail parks
390
13
18
26
6.0%
6.8%
8.5%
–
1
5
Total Subscale sectors
1,182
8
17
40
6.0%
7.6%
12.1%
–
1
29
Developments:
income capitalisation method
167
60
68
76
5.3%
5.7%
6.3%
–
–
–
Developments: residual method
759
73
89
103
5.0%
5.4%
6.2%
–
–
–
Development programme
926
60
85
103
5.0%
5.4%
6.3%
–
–
–
Market value at 31 March 2024 – Group
9,465
1. The calculation for average costs excludes those properties which are assumed by the Group’s external valuer to be substantially refurbished or redeveloped, but which do not yet
form part of the development programme.
14 › INVESTMENT PROPERTIES CONTINUED
128
LANDSEC ANNUAL REPORT 2024
129
FINANCIAL STATEMENTS
The sensitivities below illustrate the impact of changes in key unobservable inputs (in isolation) on the fair value of the Group’s properties:
SENSITIVITIES
2024
Market
value
£m
Impact on valuations
of 5% change in
estimated rental value
Impact on valuations
of 25 bps change in
equivalent yield
Impact on valuations
of 5% change
in costs
Increase
£m
Decrease
£m
Decrease
£m
Increase
£m
Decrease
£m
Increase
£m
Total Central London (excluding developments)
4,902
188
(188)
260
(238)
9
(23)
Total Major retail (excluding developments)
1,664
68
(68)
58
(55)
4
(4)
Total Mixed-use urban (excluding developments)
791
24
(22)
22
(20)
4
(3)
Total Subscale sectors (excluding developments)
1,182
47
(45)
82
(41)
–
–
Developments: income capitalisation method
167
13
(13)
15
(14)
4
(4)
Developments: residual method
759
94
(94)
106
(90)
54
(54)
Market value at 31 March 2024 – Group
9,465
434
(430)
543
(458)
75
(88)
The table below summarises the key unobservable inputs used in the valuation of the Group’s wholly owned investment properties, and
properties owned by the Group but where a third party holds a non-controlling interest, at 31 March 2023:
20231
Market
value
£m
Estimated rental value
£ per sq ft
Equivalent yield
%
Costs
£ per sq ft
Low
Average
High
Low
Average
High
Low
Average2
High
Central London
West End offices
2,288
20
64
156
4.0%
4.3%
5.6%
–
38
231
City offices
1,304
56
72
90
5.0%
5.2%
6.6%
–
114
152
Retail and other
1,058
8
49
82
3.5%
4.7%
6.5%
–
27
259
Total Central London
4,650
8
63
156
3.5%
4.7%
6.6%
–
57
259
Major retail
Shopping centres
1,026
12
25
31
6.5%
8.0%
9.2%
3
10
25
Outlets
684
15
47
52
6.4%
7.2%
10.6%
8
12
22
Total Major retail
1,710
12
34
52
6.4%
7.7%
10.6%
3
11
25
Mixed-use urban
London
221
10
21
27
5.6%
6.4%
11.4%
–
–
4
Major regional cities
707
16
22
47
5.5%
6.4%
9.0%
–
–
–
Total Mixed-use urban
928
10
21
47
5.5%
6.4%
11.4%
–
–
4
Subscale sectors
Leisure
439
9
13
19
6.6%
8.5%
10.5%
–
2
25
Hotels
408
8
18
36
5.6%
6.8%
8.2%
–
–
–
Retail parks
418
13
19
25
5.0%
6.4%
8.3%
–
4
18
Total Subscale sectors
1,265
8
17
36
5.0%
7.2%
10.5%
–
2
25
Developments:
income capitalisation method
167
52
58
80
4.8%
5.3%
5.5%
–
–
–
Developments: residual method
1,023
60
47
88
4.7%
4.8%
5.3%
–
–
–
Development programme
1,190
52
49
88
4.7%
4.9%
5.5%
–
–
–
Market value at 31 March 2023 – Group
9,743
1. Restated for changes in sub-segments.
2. The calculation for average costs excludes those properties which are assumed by the Group’s external valuer to be substantially refurbished or redeveloped, but which do not yet
form part of the development programme.
LANDSEC ANNUAL REPORT 2024
FINANCIAL STATEMENTS
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2024 CONTINUED
The sensitivities illustrate the impact of changes in key unobservable inputs (in isolation) on the fair value of the Group’s properties:
SENSITIVITIES
20231
Market
value
£m
Impact on valuations
of 5% change in
estimated rental value
Impact on valuations
of 25 bps change in
equivalent yield
Impact on valuations
of 5% change
in costs
Increase
£m
Decrease
£m
Decrease
£m
Increase
£m
Decrease
£m
Increase
£m
Total Central London (excluding developments)
4,650
178
(174)
262
(232)
14
(8)
Total Major retail (excluding developments)
1,710
71
(71)
61
(57)
4
(4)
Total Mixed-use urban (excluding developments)
928
30
(29)
33
(32)
1
(1)
Total Subscale sectors (excluding developments)
1,265
47
(46)
16
(13)
2
(2)
Developments: income capitalisation method
167
11
(12)
15
(14)
4
(4)
Developments: residual method
1,023
72
(87)
104
(107)
23
(40)
Market value at 31 March 2023 – Group
9,743
409
(419)
491
(455)
48
(59)
1. Restated for changes in sub-segments.
15 › TRADING PROPERTIES
Development
land and
infrastructure
£m
Residential
£m
Total
£m
At 1 April 2022
128
17
145
Transfer from investment properties
6
–
6
Capital expenditure
6
(3)
3
Disposals
(17)
–
(17)
(Impairment)/reversal of impairment
(25)
6
(19)
At 31 March 2023
98
20
118
Capital expenditure
6
7
13
Capitalised interest
–
1
1
Disposals
(21)
–
(21)
Impairment
(11)
–
(11)
At 31 March 2024
72
28
100
The cumulative impairment provision at 31 March 2024 in respect of Development land and infrastructure was £36m (2023: £25m);
and in respect of Residential was £nil (2023: £nil).
14 › INVESTMENT PROPERTIES CONTINUED
130
LANDSEC ANNUAL REPORT 2024
131
FINANCIAL STATEMENTS
16 › JOINT ARRANGEMENTS
A ACCOUNTING POLICY
Joint arrangements are those entities over whose activities the Group has joint control, established by contractual agreement. Interests in joint
arrangements are accounted for as either a joint venture or a joint operation. The treatment as either a joint venture or a joint operation will
depend on whether the Group has rights to the net assets, or a direct interest in the assets and liabilities of the arrangement.
A joint arrangement is accounted for as a joint venture when the Group, along with the other parties that have joint control of the arrangement,
has rights to the net assets of the arrangement. Interests in joint ventures are accounted for using the equity method of accounting. The equity
method requires the Group’s share of the joint venture’s post-tax profit or loss for the year to be presented separately in the income statement
and the Group’s share of the joint venture’s net assets to be presented separately in the balance sheet.
A joint arrangement is accounted for as a joint operation when the Group, along with the parties that have joint control of the arrangement,
has rights to the assets and obligations for the liabilities relating to the arrangement. The Group’s share of jointly controlled assets, related
liabilities, income and expenses are combined with the equivalent items in the financial statements on a line-by-line basis.
The Group’s principal joint arrangements are described below:
Joint ventures1
Percentage owned
& voting rights2
Business segment
Year end date3
Joint venture partner
Held at 31 March 2024
Nova, Victoria4
50%
Central London
31 March
Suntec Real Estate Investment Trust
Southside Limited Partnership
50%
Major retail
31 March
Invesco Real Estate European Fund
Westgate Oxford Alliance Limited Partnership
50%
Major retail,
Subscale sectors
31 March
The Crown Estate Commissioners
Harvest5
50%
Subscale sectors
31 March
J Sainsbury plc
The Ebbsfleet Limited Partnership7
50%
Subscale sectors
31 March
Ebbsfleet Property Limited
West India Quay Unit Trust7
50%
Subscale sectors
31 March
Schroder UK Real Estate Fund
Mayfield6,7
50%
Mixed-use urban
31 March
LCR Limited, Manchester City Council,
Transport for Greater Manchester
Curzon Park Limited7
50%
Subscale sectors
31 March
Derwent Developments (Curzon)
Limited
Plus X Holdings Limited7
50%
Subscale sectors
31 March
Paul David Rostas, Matthew Edmund
Hunter
Landmark Court Partnership Limited7
51%
Central London
31 March
TTL Landmark Court Properties Limited
Opportunities for Sittingbourne Limited7
50%
Mixed-use urban
31 March
Swale Borough Council
Cathedral (Movement, Greenwich) LLP7
52%
Mixed-use urban
31 March
Mr Richard Upton
Circus Street Developments Limited7
50%
Mixed-use urban
31 March
High Wire Brighton Limited
Joint operation
Ownership interest
Business segment
Year end date3
Joint operation partners
Held at 31 March 2024
Bluewater, Kent
48.75%
Major retail
31 March
M&G Real Estate and GIC
Royal London Asset Management
Aberdeen Standard Investments
1. Refer to Additional information pages 179-183 for the full list of the Group’s related undertakings.
2. Investments under joint arrangements are not always represented by an equal percentage holding by each partner. In a number of joint ventures that are not considered principal
joint ventures and therefore not included in the table above, the Group holds a majority shareholding but has joint control and therefore the arrangement is accounted for as a
joint venture.
3. The year end date shown is the accounting reference date of the joint arrangement. In all cases, the Group’s accounting is performed using financial information for the Group’s
own reporting year and reporting date.
4. Nova, Victoria includes the Nova Limited Partnership, Nova Residential Limited Partnership, Nova GP Limited, Nova Business Manager Limited, Nova Residential (GP) Limited,
Nova Residential Intermediate Limited, Nova Estate Management Company Limited, Nova Nominee 1 Limited and Nova Nominee 2 Limited.
5. Harvest includes Harvest 2 Limited Partnership, Harvest Development Management Limited, Harvest 2 Selly Oak Limited, Harvest 2 GP Limited and Harvest GP Limited.
6. Mayfield includes Mayfield Development Partnership LP and Mayfield Development (General Partner) Limited.
7. Included within Other in subsequent tables.
LANDSEC ANNUAL REPORT 2024
FINANCIAL STATEMENTS
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2024 CONTINUED
All of the Group’s joint arrangements listed above have their principal place of business in the United Kingdom. All of the Group’s principal joint
arrangements own and operate investment property, with the exception of:
• The Ebbsfleet Limited Partnership and Plus X Holdings Limited, which are holding companies;
• Harvest, which is engaged in long-term development contracts; and
• Curzon Park Limited, Landmark Court Partnership Limited, Opportunities for Sittingbourne Limited and Circus Street Developments Limited,
which are companies continuing their business of property development.
The activities of all the Group’s principal joint arrangements are therefore strategically important to the business activities of the Group.
All joint ventures listed above are registered in England and Wales with the exception of Southside Limited Partnership and West India Quay
Unit Trust which are registered in Jersey.
JOINT VENTURES
Year ended 31 March 2024
Comprehensive income statement
Nova,
Victoria
100%
£m
Southside
Limited
Partnership
100%
£m
Westgate
Oxford
Alliance
Partnership
100%
£m
Other
100%
£m
Total
100%
£m
Total
Group
share
£m
Revenue1
49
11
35
5
100
49
Gross rental income (after rents payable)
34
11
26
5
76
37
Net rental income
34
10
22
1
67
33
EPRA earnings before interest
32
9
21
1
63
32
Finance expense
(16)
(6)
–
–
(22)
(11)
Net finance expense
(16)
(6)
–
–
(22)
(11)
EPRA earnings
16
3
21
1
41
21
Capital and other items
Net deficit on revaluation of investment properties
(24)
(3)
(1)
(9)
(37)
(19)
(Loss)/profit before tax
(8)
–
20
(8)
4
2
Post-tax (loss)/profit
(8)
–
20
(8)
4
2
Total comprehensive (loss)/income
(8)
–
20
(8)
4
2
Group share of (loss)/profit before tax
(4)
–
10
(4)
2
Group share of post-tax (loss)/profit
(4)
–
10
(4)
2
Group share of total comprehensive (loss)/income
(4)
–
10
(4)
2
1. Revenue includes gross rental income (before rents payable), service charge income, other property related income, trading properties disposal proceeds and income from
long-term development contracts.
16 › JOINT ARRANGEMENTS CONTINUED
132
LANDSEC ANNUAL REPORT 2024
133
FINANCIAL STATEMENTS
JOINT VENTURES
Year ended 31 March 2023
Comprehensive income statement
Nova,
Victoria
100%
£m
Southside
Limited
Partnership
100%
£m
St. David’s
Limited
Partnership
100%
£m
Westgate
Oxford
Alliance
Partnership
100%
£m
Other
100%
£m
Total
100%
£m
Total
Group
share
£m
Revenue1
49
10
33
34
4
130
65
Gross rental income (after rents payable)
36
10
25
27
4
102
51
Net rental income
36
7
16
22
2
83
42
EPRA earnings before interest
35
6
15
22
2
80
40
Finance expense
(17)
(6)
–
–
–
(23)
(11)
Net finance expense
(17)
(6)
–
–
–
(23)
(11)
EPRA earnings
18
–
15
22
2
57
29
Capital and other items
Net (deficit)/surplus on revaluation of investment properties
(67)
1
6
(8)
8
(60)
(30)
(Loss)/profit before tax2
(49)
1
21
14
10
(3)
(1)
Post-tax (loss)/profit2
(49)
1
21
14
10
(3)
(1)
Total comprehensive (loss)/income2
(49)
1
21
14
10
(3)
(1)
Group share of (loss)/profit before tax2
(24)
–
10
7
6
(1)
Group share of post-tax (loss)/profit2
(24)
–
10
7
6
(1)
Group share of total comprehensive (loss)/income2
(24)
–
10
7
6
(1)
1. Revenue includes gross rental income (before rents payable), service charge income, other property related income, trading properties disposal proceeds and income from
long-term development contracts.
2. On 24 March 2023 the Group acquired the remaining 50% interest in St David’s Limited Partnership. Results from its operations prior to that date are included as share of profit
or loss from joint ventures.
LANDSEC ANNUAL REPORT 2024
FINANCIAL STATEMENTS
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2024 CONTINUED
JOINT VENTURES
31 March 2024
Balance sheet
Nova,
Victoria
100%
£m
Southside
Limited
Partnership
100%
£m
Westgate
Oxford
Alliance
Partnership
100%
£m
Other
100%
£m
Total
100%
£m
Total
Group
share
£m
Investment properties1
727
130
223
91
1,171
585
Non-current assets
727
130
223
91
1,171
585
Cash and cash equivalents
32
4
21
4
61
31
Other current assets
58
7
11
85
161
80
Current assets
90
11
32
89
222
111
Total assets
817
141
255
180
1,393
696
Trade and other payables and provisions
(23)
(6)
(16)
(35)
(80)
(40)
Current liabilities
(23)
(6)
(16)
(35)
(80)
(40)
Non-current liabilities
(104)
(147)
–
(19)
(270)
(135)
Non-current liabilities
(104)
(147)
–
(19)
(270)
(135)
Total liabilities
(127)
(153)
(16)
(54)
(350)
(175)
Net assets/(liabilities)
690
(12)
239
126
1,043
521
Comprised of:
Net assets
690
–
239
130
1,059
529
Accumulated losses recognised as net liabilities2
–
(12)
–
(4)
(16)
(8)
Market value of investment properties1
780
131
230
91
1,232
616
Net cash3
32
4
21
4
61
31
1. The difference between the book value and the market value of investment properties is the amount recognised in respect of lease incentives, head leases capitalised and
properties treated as finance leases, where applicable.
2. The Group’s share of accumulated losses of a joint venture interest are recognised as net liabilities (see note 33) where there is an obligation to provide for these losses.
3. Excludes funding provided by the Group and its joint venture partners.
16 › JOINT ARRANGEMENTS CONTINUED
134
LANDSEC ANNUAL REPORT 2024
135
FINANCIAL STATEMENTS
JOINT VENTURES
31 March 2023
Balance sheet
Nova,
Victoria
100%
£m
Southside
Limited
Partnership
100%
£m
St. David’s
Limited
Partnership
100%
£m
Westgate
Oxford
Alliance
Partnership
100%
£m
Other
100%
£m
Total
100%
£m
Total
Group
share
£m
Investment properties1
748
134
–
225
98
1,205
601
Non-current assets
748
134
–
225
98
1,205
601
Cash and cash equivalents
36
3
–
23
7
69
35
Other current assets
64
9
–
13
68
154
78
Current assets
100
12
–
36
75
223
113
Total assets
848
146
–
261
173
1,428
714
Trade and other payables and provisions
(22)
(10)
–
(14)
(48)
(94)
(48)
Current liabilities
(22)
(10)
–
(14)
(48)
(94)
(48)
Non-current liabilities
(131)
(145)
–
–
–
(276)
(138)
Non-current liabilities
(131)
(145)
–
–
–
(276)
(138)
Total liabilities
(153)
(155)
–
(14)
(48)
(370)
(186)
Net assets/(liabilities)
695
(9)
–
247
125
1,058
528
Comprised of:
Net assets
695
–
–
247
125
1,067
533
Accumulated losses recognised as net liabilities2
–
(9)
–
–
–
(9)
(5)
Market value of investment properties1
807
134
–
233
98
1,272
635
Net cash3
36
3
–
23
7
69
35
1. The difference between the book value and the market value of investment properties is the amount recognised in respect of lease incentives, head leases capitalised and
properties treated as finance leases, where applicable.
2. The Group’s share of accumulated losses of a joint venture interest are recognised as net liabilities (see note 33) where there is an obligation to provide for these losses.
3. Excludes funding provided by the Group and its joint venture partners.
LANDSEC ANNUAL REPORT 2024
FINANCIAL STATEMENTS
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2024 CONTINUED
JOINT VENTURES
Net investment
Nova,
Victoria
Group share
100%
£m
Southside
Limited
Partnership
Group share
100%
£m
St. David’s
Limited
Partnership
Group share
100%
£m
Westgate
Oxford
Alliance
Partnership
Group share
100%
£m
Other
Group share
£m
Total
Group share
£m
At 1 April 2022
372
(5)
113
125
90
695
Total comprehensive (loss)/income
(24)
–
10
7
6
(1)
Cash distributions
–
–
(4)
(8)
(2)
(14)
Other distributions
–
–
–
–
(7)
(7)
Disposals and transfers from joint arrangements
–
–
(119)
–
(25)
(144)
Other non-cash movements
–
–
–
–
(1)
(1)
At 31 March 2023
348
(5)
–
124
61
528
Total comprehensive (loss)/income
(4)
–
–
10
(3)
3
Cash and other distributions
–
–
–
(12)
(5)
(17)
Other non-cash movements
–
–
–
(1)
8
7
At 31 March 2024
344
(5)
–
121
61
521
Comprised of:
At 31 March 2023
Non-current assets
348
–
–
124
61
533
Non-current liabilities1
–
(5)
–
–
–
(5)
At 31 March 2024
Non-current assets
344
–
–
121
64
529
Non-current liabilities1
–
(5)
–
–
(3)
(8)
1. The Group’s share of accumulated losses of a joint venture interest are recognised as net liabilities (see note 33) where there is an obligation to provide for these losses.
16 › JOINT ARRANGEMENTS CONTINUED
136
LANDSEC ANNUAL REPORT 2024
137
FINANCIAL STATEMENTS
17 › INVESTMENTS IN ASSOCIATES
A ACCOUNTING POLICY
Associates are those entities over whose financial and operating policy decisions the Group has significant influence, established by contractual
agreement, but over which the Group does not have control or joint control over those policies. Interests in associates are accounted for using the
equity method of accounting. The equity method requires the Group’s share of the associate’s post-tax profit or loss for the year to be presented
separately in the income statement and the Group’s share of the associate’s net assets to be presented separately in the balance sheet.
The Group’s principal interests in associates are described below:
Associates1
Percentage owned and voting rights
Year end date
Business segment
CDSR Burlington House Developments Limited
20%
31 December
Subscale sectors
Northpoint Developments Limited
42%
31 December
Subscale sectors
1. Refer to Additional information pages 179-183 for the full list of the Group’s related undertakings.
During the year the Group’s investment in YC Shepherds Bush Limited reduced from 18.9% to 14.2% as a result of a dilution of shareholding
caused by capital calls throughout the year. The investment in associate was reclassified to Other Investments as the Group is no longer
considered to have significant control over the operations of the investment. The value of this investment at the time of reclassification was £3m.
Northpoint Developments Limited have their principal place of business in the United Kingdom and they are registered in England and Wales.
CDSR Burlington House Developments Limited operates in Ireland and they are registered in Ireland. The Group’s associates are engaged in
property development.
The investments in CDSR Burlington House Developments Limited and Northpoint Developments Limited were fully impaired on acquisition
of U+I Group PLC.
The Group’s share of profit or loss from its investments in associates was £nil (2023: £nil).
ASSOCIATES
Net investment
Total
Group share
£m
At 1 April 2022
4
Disposal
(1)
At 31 March 2023
3
Reclassification to other investments (see note 30)
(3)
At 31 March 2024
–
18 › CAPITAL COMMITMENTS
2024
£m
2023
£m
Contracted capital commitments at the end of the year in respect of:
Investment properties
353
153
Trading properties
10
21
Joint ventures (our share)
4
1
Total capital commitments
367
175
Capital commitments include contractually committed obligations to purchase goods or services used in the construction, development, repair,
maintenance or other enhancement of the Group’s properties.
LANDSEC ANNUAL REPORT 2024
FINANCIAL STATEMENTS
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2024 CONTINUED
19 › NET INVESTMENT IN FINANCE LEASES
A ACCOUNTING POLICY
Where the Group’s leases transfer the significant risks and rewards incidental to ownership of the underlying asset to the tenant, the lease is
accounted for as a finance lease. At the outset of the lease the fair value of the asset is de-recognised from investment property and recognised
as a finance lease receivable. The finance lease receivable is derecognised in the event that the lease is terminated. Lease income is recognised
over the period of the lease, reflecting a constant rate of return. The difference between the gross receivable and the present value of the
receivable is recognised as finance income within Revenue over the lease term.
2024
£m
2023
£m
Non-current
Finance leases – gross receivables
37
38
Unguaranteed residual value
3
3
Unearned finance income
(19)
(20)
21
21
Current1
Finance leases – gross receivables
2
2
Unearned finance income
(1)
(1)
1
1
Net investment in finance leases
22
22
Gross receivables from finance leases due:
No later than one year
2
2
One to two years
2
2
Two to three years
2
2
Three to four years
2
2
Four to five years
1
1
More than five years
30
31
39
40
Unguaranteed residual value
3
3
Unearned finance income
(20)
(21)
Net investment in finance leases
22
22
1. Included in Other Receivables in note 27.
The Group has leased out several investment properties under finance leases, which range from 20 to 125 years in duration from the inception
of the lease.
138
LANDSEC ANNUAL REPORT 2024
139
FINANCIAL STATEMENTS
20 › INTANGIBLE ASSETS
A ACCOUNTING POLICY
Intangible assets comprise goodwill and other intangible assets arising on business combinations and software used internally within the
business. Intangible assets arising on business combinations are initially recognised at fair value. Goodwill is not amortised but is tested at least
annually for impairment. Other intangible assets arising on business combinations are amortised to the income statement over their expected
useful lives. Software assets are stated at cost less accumulated amortisation and are amortised on a straight-line basis over their estimated
useful economic lives, normally three to five years.
Goodwill
£m
Software
£m
Other
intangible
asset
£m
Total
£m
At 1 April 2022
1
5
2
8
Additions
5
–
–
5
Amortisation
–
(2)
–
(2)
Impairment
(5)
–
–
(5)
At 31 March 2023
1
3
2
6
Amortisation
–
(2)
–
(2)
Impairment
(1)
–
–
(1)
At 31 March 2024
–
1
2
3
The other intangible asset relates to the Group’s acquisition of its interest in Bluewater, Kent in 2014 and represents the estimated fair value
of the management rights for the centre. The fair value at the date of acquisition was £30m and the asset is being amortised over a period
of 20 years. On recognition of the other intangible asset, the Group recognised a deferred tax liability of £6m, and corresponding goodwill of
the same amount. The deferred tax liability is being released to the income statement as the other intangible asset is amortised or impaired,
and the corresponding element of the goodwill is tested for impairment.
In the year ended 31 March 2024, the other intangible asset has been impaired by £nil (2023: £nil). The recoverable amount of the other
intangible asset has been based on its fair value less costs of disposal applying discounted cash flow projections, using a discount rate of 8.0%
with cash flows projected over a period of 10 years and a growth rate applied of 3.1%. In the prior year, the recoverable amount of the other
intangible asset was based on its value in use, using a discount rate of 7.0%.
LANDSEC ANNUAL REPORT 2024
FINANCIAL STATEMENTS
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2024 CONTINUED
SECTION 4 – CAPITAL STRUCTURE AND FINANCING
This section focuses on the Group’s financing structure, including borrowings and financial risk management. The total capital of the Group
consists of shareholders’ equity and net debt. The Group’s strategy is to maintain an appropriate net debt to total equity ratio (gearing) and
loan-to-value ratio (LTV) to ensure that asset level performance is translated into enhanced returns for shareholders while maintaining an
appropriate risk reward balance to accommodate changing financial and operating market cycles. The table in note 21 details a number of
the Group’s key metrics in relation to managing its capital structure.
A key element of the Group’s capital structure is that the majority of our borrowings are secured against a large pool of our assets (the Security
Group). This enables us to raise long-term debt in the bond market, as well as shorter-term flexible bank facilities, both at competitive rates.
In general, we follow a secured debt strategy as we believe this gives the Group better access to borrowings at a lower cost.
In addition, the Group holds a number of assets outside the Security Group structure (in the Non-restricted Group). By having both the Security
Group and the Non-restricted Group, and considerable flexibility to move assets between the two, we are able to raise the most appropriate
finance for each specific asset or joint venture.
21 › CAPITAL STRUCTURE
2024
2023
Group
£m
Joint
ventures
£m
Adjustment
for non-
wholly owned
subsidiaries
£m
Combined
£m
Group
£m
Joint
ventures
£m
Adjustment
for non-
wholly owned
subsidiaries
£m
Combined
£m
Property portfolio
Market value of investment properties
9,465
616
(118)
9,963
9,743
635
(139)
10,239
Trading properties and long-term contracts
100
–
–
100
118
–
–
118
Total property portfolio (a)
9,565
616
(118)
10,063
9,861
635
(139)
10,357
Net debt
Borrowings
3,703
–
(73)
3,630
3,431
–
(73)
3,358
Monies held in restricted accounts and
deposits
(6)
–
–
(6)
(4)
–
1
(3)
Cash and cash equivalents
(78)
(31)
4
(105)
(41)
(35)
2
(74)
Fair value of interest-rate swaps
(23)
–
2
(21)
(44)
–
2
(42)
Fair value of foreign exchange swaps and
forwards
(2)
–
–
(2)
6
–
–
6
Net debt (b)
3,594
(31)
(67)
3,496
3,348
(35)
(68)
3,245
Add/(less): Fair value of interest-rate swaps
23
–
(2)
21
44
–
(2)
42
Adjusted net debt (c)
3,617
(31)
(69)
3,517
3,392
(35)
(70)
3,287
Adjusted total equity
Total equity (d)
6,447
–
(45)
6,402
7,072
–
(67)
7,005
Fair value of interest-rate swaps
(23)
–
2
(21)
(44)
–
2
(42)
Adjusted total equity (e)
6,424
–
(43)
6,381
7,028
–
(65)
6,963
Gearing (b/d)
55.7%
54.6%
47.3%
46.3%
Adjusted gearing (c/e)
56.3%
55.1%
48.3%
47.2%
Group LTV (c/a)
37.8%
35.0%
34.4%
31.7%
EPRA LTV1
36.3%
33.2%
Security Group LTV
37.0%
33.0%
Weighted average cost of debt
3.3%
3.3%
2.7%
2.7%
1. EPRA LTV differs from Group LTV as it includes net payables and receivables, and includes trading properties at fair value and debt instruments at nominal value rather than
book value.
140
LANDSEC ANNUAL REPORT 2024
141
FINANCIAL STATEMENTS
22 › BORROWINGS
A ACCOUNTING POLICY
Borrowings, other than bank overdrafts, are recognised initially at fair value less attributable transaction costs. Subsequent to initial recognition,
borrowings are stated at amortised cost with any difference between the amount initially recognised and the redemption value being recognised
in the income statement over the period of the borrowings, using the effective interest method.
When debt refinancing exercises are carried out, existing liabilities will be treated as being extinguished when the new liability is substantially
different from the existing liability. In making this assessment, the Group will consider the transaction as a whole, taking into account both
qualitative and quantitative characteristics.
2024
2023
Secured/
unsecured
Fixed/
floating
Effective
interest rate
%
Nominal/
notional
value
£m
Fair
value
£m
Book
value
£m
Nominal/
notional
value
£m
Fair
value
£m
Book
value
£m
Current borrowings
Commercial paper
Sterling
Unsecured Floating
Various1
15
15
15
–
–
–
Euro
Unsecured Floating
Various1
518
518
518
167
167
167
US Dollar
Unsecured Floating
Various1
148
148
148
145
145
145
Syndicated and bilateral bank debt
Secured
Floating
SONIA + margin
292
292
292
–
–
–
Total current borrowings
973
973
973
312
312
312
Amounts payable under head leases
2
2
2
3
3
3
Total current borrowings including
amounts payable under head leases
975
975
975
315
315
315
Non-current borrowings
Medium term notes (MTN)
A10 4.875% MTN due 2025
Secured
Fixed
0.0
–
–
–
10
10
10
A12 1.974% MTN due 2026
Secured
Fixed
0.0
–
–
–
400
389
400
A4
5.391% MTN due 2026
Secured
Fixed
0.0
–
–
–
17
17
17
A5
5.391% MTN due 2027
Secured
Fixed
5.4
87
86
87
87
87
87
A16 2.375% MTN due 2027
Secured
Fixed
2.5
350
325
349
350
317
348
A6
5.376% MTN due 2029
Secured
Fixed
5.4
65
66
65
65
66
65
A13 2.399% MTN due 2031
Secured
Fixed
2.4
300
270
299
300
263
299
A18 4.750% MTN due 2031
Secured
Fixed
4.9
300
299
297
–
–
–
A7
5.396% MTN due 2032
Secured
Fixed
5.4
77
78
77
77
79
77
A17 4.875% MTN due 2034
Secured
Fixed
5.0
400
403
393
400
406
394
A11 5.125% MTN due 2036
Secured
Fixed
5.1
50
48
50
50
50
50
A14 2.625% MTN due 2039
Secured
Fixed
2.6
500
387
495
500
378
494
A15 2.750% MTN due 2059
Secured
Fixed
2.7
500
309
495
500
312
495
2,629
2,271
2,607
2,756
2,374
2,736
Syndicated and bilateral bank debt
Secured
Floating
SONIA + margin
123
123
123
383
383
383
Total non-current borrowings
2,752
2,394
2,730
3,139
2,757
3,119
Amounts payable under head leases
Unsecured Fixed
4.0
75
98
75
104
142
104
Total non-current borrowings
including amounts payable under
head leases
2,827
2,492
2,805
3,243
2,899
3,223
Total borrowings including amounts
payable under head leases
3,802
3,467
3,780
3,558
3,214
3,538
Total borrowings excluding amounts
payable under head leases
3,725
3,367
3,703
3,451
3,069
3,431
1. Non-Sterling commercial paper is immediately swapped into Sterling. The interest rate is fixed at the time of the issuance for the duration (1 to 3 months) and tracks SONIA swap rates.
LANDSEC ANNUAL REPORT 2024
FINANCIAL STATEMENTS
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2024 CONTINUED
RECONCILIATION OF THE MOVEMENT IN BORROWINGS
2024
£m
2023
£m
At the beginning of the year
3,538
4,553
Net proceeds from ECP issuance
378
–
Net proceeds from bank debt
33
–
Repayment of bank debt
–
(1,407)
Repayment of MTNs
(427)
–
Issue of MTNs (net of finance fees)
297
394
Foreign exchange movement on non-Sterling borrowings
(9)
14
Movement in amounts payable under head leases
(30)
(16)
At 31 March
3,780
3,538
RECONCILIATION OF MOVEMENTS IN LIABILITIES ARISING FROM FINANCING ACTIVITIES
2024
At the
beginning
of the
year
£m
Non-cash changes
Cash flows
£m
Foreign
exchange
movements
£m
Other
changes in
fair values
£m
Other
changes
£m
At the end
of the
year
£m
Borrowings
3,538
281
(9)
–
(30)
3,780
Derivative financial instruments
(38)
(18)
10
21
–
(25)
3,500
263
1
21
(30)
3,755
2023
Borrowings
4,553
(1,013)
14
–
(16)
3,538
Derivative financial instruments
(26)
25
(14)
(23)
–
(38)
4,527
(988)
–
(23)
(16)
3,500
MEDIUM TERM NOTES (MTNS)
The MTNs are secured on the fixed and floating pool of assets of the Security Group. The Security Group includes wholly owned investment
properties, development properties and a number of the Group’s investments in other assets, in total valued at £9.2bn at 31 March 2024
(31 March 2023: £9.6bn). The secured debt structure has a tiered operating covenant regime which gives the Group substantial flexibility when
the loan-to-value and interest cover in the Security Group are less than 65% and more than 1.45x respectively. If these limits are exceeded, the
operating environment becomes more restrictive with provisions to encourage a reduction in gearing. The interest rate of each MTN is fixed until
the expected maturity, being two years before the legal maturity date of the MTN. The interest rate for the last two years may either become
floating on a SONIA basis plus an increased margin (relative to that at the time of issue), or subject to a fixed coupon uplift, depending on the
terms and conditions of the specific notes.
The effective interest rate is based on the coupon paid and includes the amortisation of issue costs and discount to redemption value. The MTNs
are listed on the Irish Stock Exchange and their fair values are based on their respective market prices.
During the year, the Group purchased £nil of MTNs (2023: £nil) for a total premium of £nil (2023: £nil).
At 31 March 2024, the Group’s committed facilities totalled £2,907m (31 March 2023: £3,007m).
SYNDICATED AND BILATERAL BANK DEBT
Authorised
Drawn
Undrawn
Maturity as
at 31 March
2024
2024
£m
2023
£m
2024
£m
2023
£m
2024
£m
2023
£m
Syndicated debt
2024–27
2,682
2,782
415
383
2,267
2,399
Bilateral debt
2026
225
225
–
–
225
225
2,907
3,007
415
383
2,492
2,624
22 › BORROWINGS CONTINUED
142
LANDSEC ANNUAL REPORT 2024
143
FINANCIAL STATEMENTS
All syndicated and bilateral facilities are committed and secured on the assets of the Security Group, with the exception of facilities secured
on the assets at MediaCity (of which £292m was drawn at 31 March 2024 and £292m drawn at 31 March 2023). During the year ended 31 March
2024, the amounts drawn under the Group’s facilities decreased by £32m.
The terms of the Security Group funding arrangements require undrawn facilities to be reserved where syndicated and bilateral facilities mature
within one year, or when commercial paper is issued. Commercial paper in issuance at 31 March 2024 was £681m (31 March 2023: £312m).
The total amount of cash and available undrawn facilities, net of commercial paper, at 31 March 2024 was £1,889m (31 March 2023: £2,353m).
23 › MONIES HELD IN RESTRICTED ACCOUNTS AND DEPOSITS
A ACCOUNTING POLICY
Monies held in restricted accounts and deposits represent cash held by the Group in accounts with conditions that restrict the access of these
monies by the Group and, as such, do not meet the definition of cash and cash equivalents.
Group
Company
2024
£m
2023
£m
2024
£m
2023
£m
Short–term deposits
6
4
–
–
6
4
–
–
The credit quality of monies held in restricted accounts and deposits can be assessed by reference to external credit ratings of the counterparty
where the account or deposit is placed.
Group
Company
2024
£m
2023
£m
2024
£m
2023
£m
Counterparties with external credit ratings
A+
6
4
–
–
6
4
–
–
24 › CASH AND CASH EQUIVALENTS
A ACCOUNTING POLICY
Cash and cash equivalents comprise cash balances, deposits held at call with banks and other short-term highly liquid investments with original
maturities of three months or less. Monies that are restricted by use only, and not restricted by access, are classified as cash and cash equivalents.
Bank overdrafts that are repayable on demand and form an integral part of the Group’s cash management are deducted from cash and cash
equivalents for the purpose of the statement of cash flows.
Group
Company
2024
£m
2023
£m
2024
£m
2023
£m
Cash at bank and in hand
78
41
2
2
78
41
2
2
LANDSEC ANNUAL REPORT 2024
FINANCIAL STATEMENTS
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2024 CONTINUED
The credit quality of cash and cash equivalents can be assessed by reference to external credit ratings of the counterparty where the account
or deposit is placed.
Group
Company
2024
£m
2023
£m
2024
£m
2023
£m
Counterparties with external credit ratings
A+
78
34
–
–
A
–
6
2
2
A-
–
1
–
–
78
41
2
2
The Group’s cash and cash equivalents and bank overdrafts are subject to cash pooling arrangements. The following table provides details of
cash balances and bank overdrafts which are subject to offsetting agreements.
2024
2023
Gross
amounts of
financial
assets
£m
Gross
amounts of
financial
liabilities
£m
Net amounts
recognised in
the balance
sheet
£m
Gross
amounts of
financial
assets
£m
Gross
amounts of
financial
liabilities
£m
Net amounts
recognised in
the balance
sheet
£m
Cash and cash equivalents
230
(152)
78
101
(60)
41
230
(152)
78
101
(60)
41
25 › DERIVATIVE FINANCIAL INSTRUMENTS
A ACCOUNTING POLICY
The Group uses interest-rate and foreign exchange swaps and forwards to manage its market risk. In accordance with its treasury policy, the Group
does not hold or issue derivatives for trading purposes.
All derivatives are recognised on the balance sheet at fair value. The fair value of interest-rate and foreign exchange swaps is based on
counterparty or market quotes. Those quotes are tested for reasonableness by discounting estimated future cash flows based on the terms
and maturity of each contract and using market rates for similar instruments at the measurement date. The gain or loss on derivatives are
recognised immediately in the income statement, within net finance expense.
CARRYING VALUE OF DERIVATIVE FINANCIAL INSTRUMENTS
2024
£m
2023
£m
Current assets
8
3
Non-current assets
22
41
Current liabilities
–
(6)
Non-current liabilities
(5)
–
25
38
NOTIONAL AMOUNT
2024
£m
2023
£m
Interest-rate swaps1
1,484
1,559
Foreign exchange swaps
664
319
2,148
1,878
1. At 31 March 2024, the Group held forward starting pay-fixed and receive-floating rate interest-rate swaps with the accreting notional of up to £1,170m (2023: starting notional of
£940m, increasing to £1,940m) which are included in the notional amounts above.
24 › CASH AND CASH EQUIVALENTS CONTINUED
144
LANDSEC ANNUAL REPORT 2024
145
FINANCIAL STATEMENTS
26 › FINANCIAL RISK MANAGEMENT
INTRODUCTION
A review of the Group’s objectives, policies and processes for managing and monitoring risk is set out in ’Managing risk’ and ’Our principal risks
and uncertainties’ (pages 38 to 45). This note provides further detail on financial risk management and includes quantitative information
on specific financial risks.
The Group is exposed to a variety of financial risks: market risks (principally interest rate risk), credit risk and liquidity risk. The Group’s overall
risk management strategy seeks to minimise the potential adverse effects of these on the Group’s financial performance and includes the use
of derivative financial instruments to hedge certain risk exposures.
Financial risk management is carried out by the Group’s treasury function under policies approved by the Board of Directors, except where the
relevant arrangements have been put in place by an individual subsidiary or a joint venture level prior to acquisition.
The Group assesses whether it intends to hold its financial assets to collect the contractual cash flows, or whether it intends to sell them before
maturity and classifies its financial instruments into the appropriate categories. The following table summarises the Group’s financial assets
and liabilities into the categories required by IFRS 7 Financial Instruments: Disclosures:
Group
Company
2024
£m
2023
£m
2024
£m
2023
£m
Financial assets at amortised cost
455
450
–
–
Cash and cash equivalents
78
41
2
2
Financial liabilities at amortised cost
(4,003)
(3,750)
(2,820)
(2,821)
Financial instruments at fair value through profit or loss
32
38
–
–
(3,438)
(3,221)
(2,818)
(2,819)
FINANCIAL RISK FACTORS
(I) CREDIT RISK
The Group’s principal financial assets are cash and cash equivalents, trade and other receivables, net investment in finance leases and amounts
due from joint ventures. Further details concerning the credit risk of counterparties is provided in the note that specifically relates to each type
of asset.
BANK AND FINANCIAL INSTITUTIONS
The principal credit risks of the Group arise from financial derivative instruments and deposits with banks and financial institutions. In line with
the policy approved by the Board of Directors, where the Group manages the deposit, only independently rated banks and financial institutions
with a minimum rating of A- are accepted. For UK banks and financial institutions with which the Group has a committed lending relationship,
the minimum rating is lowered to BBB+. The Group’s treasury function currently performs regular reviews of the credit ratings of all financial
institution counterparties. Furthermore, the treasury function ensures that funds deposited with a single financial institution remain within the
Group’s policy limits.
TRADE RECEIVABLES
Trade receivables are presented in the balance sheet net of allowances for doubtful receivables. The Group assesses on a forward-looking basis
the expected credit losses associated with its trade receivables. A provision for impairment is made for the lifetime expected credit losses on
initial recognition of the receivable. In determining the expected credit losses the Group takes into account any recent payment behaviours and
future expectations of likely default events (i.e. not making payment on the due date) based on individual customer credit ratings, actual or
expected insolvency filings or company voluntary arrangements, likely deferrals of payments due, agreed rent concessions and market
expectations and trends in the wider macro-economic environment in which our customers operate. These assessments are made on a
customer by customer basis.
To limit the Group’s exposure to credit risk on trade receivables, a credit report is usually obtained from an independent rating agency prior to
the inception of a lease with a new counterparty. This report, alongside the Group’s internal assessment of credit risk, is used to determine the
size of the deposit that is required, if any, from the tenant at inception. In general, these deposits represent between three and six months’ rent.
LANDSEC ANNUAL REPORT 2024
FINANCIAL STATEMENTS
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2024 CONTINUED
NET INVESTMENT IN FINANCE LEASES
This balance relates to amounts receivable from tenants in respect of tenant finance leases. This is not considered a significant credit risk as the
tenants are generally of good financial standing.
(II) LIQUIDITY RISK
The Group has a well spread maturity profile with expected maturities on its MTNs between 2025 and 2057 and diversified shorter-term maturities
in commercial paper and committed bank facilities, that are designed to ensure that the Group has sufficient available funds for its operations,
committed capital expenditure programme and refinancing of upcoming MTNs.
Management monitors the Group’s available funds as follows:
2024
£m
2023
£m
Cash and cash equivalents
78
41
Commercial paper
(681)
(312)
Undrawn facilities
2,492
2,624
Cash and available undrawn facilities
1,889
2,353
As a proportion of drawn debt1
50.7%
68.2%
1. Based on nominal values, including MTNs and commercial paper.
The Group’s core financing structure is in the Security Group, although the Non-restricted Group may also secure independent funding.
SECURITY GROUP
The Group’s principal financing arrangements utilise the credit support of a ring-fenced group of assets (the Security Group) that comprises
the majority of the Group’s investment properties, development properties and a number of investments in other assets. These arrangements
operate in ‘tiers’ determined by LTV and interest cover ratio (ICR). This structure is most flexible at lower tiers (with a lower LTV and a higher
ICR) and allows property acquisitions, disposals and developments to occur with relative freedom. In higher tiers, the requirements become
more restrictive. No financial covenant default is triggered until the applicable LTV exceeds 100% or the ICR is less than 1.0x.
As at 31 March 2024, the reported LTV for the Security Group was 37.0% (2023: 33.0%), meaning that the Group was operating in Tier 1 and
benefited from maximum operational flexibility.
Management monitors the key covenants attached to the Security Group on a monthly basis or semi-annual basis, depending on the covenant,
including LTV, ICR, sector and regional concentration and disposals.
NON-RESTRICTED GROUP
The Non-restricted Group obtains funding when required from a combination of inter-company loans from the Security Group, equity and
external bank debt. Bespoke credit facilities are established with banks when required for the Non-restricted Group and joint ventures, usually
on a limited-recourse basis.
26 › FINANCIAL RISK MANAGEMENT CONTINUED
146
LANDSEC ANNUAL REPORT 2024
147
FINANCIAL STATEMENTS
The table below analyses the Group’s financial liabilities into relevant maturity groupings based on the remaining period at the balance sheet
date to the expected maturity date. The amounts disclosed in the table are the contractual undiscounted cash flows (inclusive of interest).
2024
Less than
1 year
£m
Between 1
and 2 years
£m
Between 2
and 5 years
£m
Over
5 years
£m
Total
£m
Borrowings (excluding lease liabilities)
1,161
217
951
2,444
4,773
Derivative financial instruments
–
–
5
–
5
Lease liabilities
4
4
11
441
460
Trade payables
56
–
–
–
56
Capital accruals
48
–
–
–
48
Accruals
90
–
–
–
90
Other payables
25
–
–
–
25
1,384
221
967
2,885
5,457
2023
Less than
1 year
£m
Between 1
and 2 years
£m
Between 2
and 5 years
£m
Over
5 years
£m
Total
£m
Borrowings (excluding lease liabilities)
837
463
717
2,476
4,493
Derivative financial instruments
6
–
–
–
6
Lease liabilities
6
6
17
474
503
Trade payables
14
–
–
–
14
Capital accruals
32
–
–
–
32
Accruals
88
–
–
–
88
Other payables
61
–
17
–
78
1,044
469
751
2,950
5,214
(III) MARKET RISK
The Group is exposed to market risk through interest rates, availability and price of credit and foreign exchange movements.
INTEREST RATES
The Group uses derivative products to manage its interest rate exposure and has a hedging policy that generally requires at least 70% of its
forecast debt from committed cash flows for the coming three years and at least 50% for years four and five. Due to a combination of factors,
including the degree of certainty required under IFRS 9 Financial instruments, the Group does not apply hedge accounting to hedging
instruments used in this context. Specific interest-rate hedges are also used from time to time to fix the interest rate exposure on our debt.
Where specific hedges are used to fix the interest exposure on floating rate debt, these may qualify for hedge accounting.
At 31 March 2024, the Group (including the Group’s share of joint ventures and non-wholly owned subsidiaries) had pay-fixed and receive-
floating interest-rate swaps in place with a nominal value of £864m (2023: £619m) and forward starting pay-fixed and receive-floating interest-
rate swaps with the accreting notional of up to £1,170m (2023: starting notional of £940m, increasing to £1,940m). The Group’s gross debt
(including the Group’s share of joint ventures and non-wholly owned subsidiaries) was 94.2% fixed (2023: 98.3%) and based on the Group’s
debt balances at 31 March 2024, a 1% increase/(decrease) in interest rates would increase/(decrease) the annual net finance expense in the
income statement and reduce/(increase) equity by £2m (2023: £1m). The sensitivity has been calculated by applying the interest rate change
to the floating rate components of borrowings, interest rate swaps as well as cash and cash equivalents.
LANDSEC ANNUAL REPORT 2024
FINANCIAL STATEMENTS
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2024 CONTINUED
FOREIGN EXCHANGE
Foreign exchange risk arises when future commercial transactions or recognised assets or liabilities are denominated in a currency that is not
the Group’s functional currency.
As the Group is UK based, foreign exchange exposure from operations is low. The majority of the Group’s foreign currency transactions relate
to foreign currency borrowing under the Group’s commercial paper programme. It is the Group’s policy to hedge 100% of this exposure.
At 31 March 2024, the Group had issued €607m (2023: €190m) and $185m (2023: $180m) of commercial paper, fully hedged through foreign
exchange swaps. A 10% weakening or strengthening of Sterling would therefore have £nil (2023: £nil) impact in the income statement and
equity arising from foreign currency borrowings.
Where additional foreign exchange risk is identified (not linked to borrowings), it is the Group’s policy to assess the likelihood of the risk
crystallising and if deemed appropriate use derivatives to hedge some or all of the risk. At 31 March 2024, the Group had no foreign
currency exposures (other than those linked to borrowings) being managed using foreign currency derivative contracts (2023: £nil exposure).
A 10% weakening or strengthening of Sterling would therefore have no impact on the loss before tax and/or total equity (2023: £nil impact).
FINANCIAL MATURITY ANALYSIS
The interest rate profile of the Group’s borrowings is set out below (based on notional values):
2024
2023
Fixed
rate
£m
Floating
rate
£m
Total
£m
Fixed
rate
£m
Floating
rate
£m
Total
£m
Sterling
2,706
431
3,137
2,863
383
3,246
Euro
–
519
519
–
167
167
US Dollar
–
147
147
–
145
145
2,706
1,097
3,803
2,863
695
3,558
The expected maturity profiles of the Group’s borrowings are as follows (based on notional values):
2024
2023
Fixed
rate
£m
Floating
rate
£m
Total
£m
Fixed
rate
£m
Floating
rate
£m
Total
£m
One year or less, or on demand
86
973
1,059
427
312
739
More than one year but not more than two years
–
123
123
87
292
379
More than two years but not more than five years
715
–
715
415
91
506
More than five years
1,904
–
1,904
1,934
–
1,934
Borrowings
2,705
1,096
3,801
2,863
695
3,558
Effect of hedging
864
(864)
–
619
(619)
–
Borrowings net of interest-rate swaps
3,569
232
3,801
3,482
76
3,558
26 › FINANCIAL RISK MANAGEMENT CONTINUED
148
LANDSEC ANNUAL REPORT 2024
149
FINANCIAL STATEMENTS
The expected maturity profiles of the Group’s derivative instruments are as follows (based on notional values):
2024
2023
Foreign
exchange
swaps
£m
Interest-
rate swaps
£m
Foreign
exchange
swaps
£m
Interest-
rate swaps
£m
One year or less, on demand
664
669
319
400
More than one year but not more than two years
–
–
–
494
More than two years but not more than five years
–
1,170
–
665
More than five years
–
–
–
–
664
1,839
319
1,559
VALUATION HIERARCHY
Derivative financial instruments and financial assets at fair value through profit and loss (other investments) are the only financial instruments
which are carried at fair value. For financial instruments other than borrowings disclosed in note 22, the carrying value in the balance sheet
approximates their fair values. The table below shows the aggregate assets and liabilities carried at fair value by valuation method:
2024
2023
Level 1
£m
Level 2
£m
Level 3
£m
Total
£m
Level 1
£m
Level 2
£m
Level 3
£m
Total
£m
Assets
–
30
7
37
–
44
–
44
Liabilities
–
(5)
–
(5)
–
(6)
–
(6)
Note:
Level 1: valued using unadjusted quoted prices in active markets for identical financial instruments.
Level 2: valued using techniques based on information that can be obtained from observable market data.
Level 3: valued using techniques incorporating information other than observable market data.
The fair value of the amounts payable under the Group’s lease obligations, using a discount rate of 3.3% (2023: 2.7%), is £100m (2023: £145m).
The fair value of the Group’s net investment in tenant finance leases, calculated by the Group’s external valuer by applying a weighted average
equivalent yield of 7.8% (2023: 7.9%), is £17m (2023: £16m).
The fair values of any floating rate financial liabilities are assumed to be equal to their nominal value. The fair values of the MTNs fall within
Level 1 of the fair value hierarchy, the syndicated and bilateral facilities, commercial paper, interest-rate swaps and foreign exchange swaps fall
within Level 2, and the amounts payable and receivable under leases fall within Level 3.
The fair values of the financial instruments have been determined by reference to relevant market prices, where available. The fair values of the
Group’s outstanding interest-rate swaps have been estimated by calculating the present value of future cash flows, using appropriate market
discount rates. These valuation techniques fall within Level 2.
The fair value of the other investments is calculated by reference to the net assets of the underlying entity. The valuation is not based on
observable market data and therefore the other investments are considered to fall within Level 3.
LANDSEC ANNUAL REPORT 2024
FINANCIAL STATEMENTS
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2024 CONTINUED
SECTION 5 – WORKING CAPITAL
This section focuses on our working capital balances, including trade and other receivables and trade and other payables.
27 › TRADE AND OTHER RECEIVABLES
A ACCOUNTING POLICY
Trade and other receivables are recognised initially at fair value, subsequently at amortised cost and, where relevant, adjusted for the time
value of money. The Group assesses on a forward-looking basis the expected credit losses associated with its trade receivables. A provision for
impairment is made for the lifetime expected credit losses on initial recognition of the receivable. If collection is expected in more than one year,
the balance is presented within non-current assets.
In determining the expected credit losses, the Group takes into account any recent payment behaviours and future expectations of likely default
events (i.e. not making payment on the due date) based on individual customer credit ratings, actual or expected insolvency filings or company
voluntary arrangements and market expectations and trends in the wider macro-economic environment in which our customers operate.
Where a concession is agreed with a customer after the due date for the rent, this amount is recognised as an impairment of the related
trade receivable.
Trade and other receivables are written off once all avenues to recover the balances are exhausted and the lease has ended. Receivables written
off are no longer subject to any enforcement activity.
S SOURCE OF ESTIMATION UNCERTAINTY
IMPAIRMENT OF TRADE RECEIVABLES
The Group’s assessment of expected credit losses is inherently subjective due to the forward-looking nature of the assessments. As a result,
the value of the provisions for impairment of the Group’s trade receivables are subject to a degree of uncertainty and are made on the basis
of assumptions which may not prove to be accurate. See note 26 for further details of the Group’s assessment of the credit risk associated
with trade receivables.
2024
£m
2023
£m
Net trade receivables
46
47
Tenant lease incentives (note 14)
195
175
Prepayments
58
46
Accrued income
22
11
Amounts due from joint ventures and associates
17
39
Deferred consideration
16
17
Other receivables
25
30
Total current trade and other receivables
379
365
Non-current amounts due from joint ventures and associates
129
142
Deferred consideration
30
4
Total trade and other receivables
538
511
The accounting for lease incentives is set out in note 6. The value of the tenant lease incentive, included in current trade and other receivables,
is spread over the lease term.
The non-current amounts due from joint ventures have maturity dates ranging from April 2028 to the dissolution of the joint venture.
Interest is charged at rates ranging from 4% to 5% (2023: 4% to 5%).
150
LANDSEC ANNUAL REPORT 2024
151
FINANCIAL STATEMENTS
AGEING OF TRADE RECEIVABLES
Not
past due
£m
Up to
30 days
past due
£m
Up to
6 months
past due
£m
Up to
12 months
past due
£m
More than
12 months
past due
£m
Total
£m
As at 31 March 2024
Not impaired
–
20
16
5
5
46
Impaired
–
–
4
4
31
39
Gross trade receivables
–
20
20
9
36
85
As at 31 March 2023
Not impaired
5
12
18
8
4
47
Impaired
–
–
3
5
37
45
Gross trade receivables
5
12
21
13
41
92
None of the Group’s other receivables are past due and therefore no ageing has been shown (2023: £nil).
MOVEMENT IN TENANT LEASE INCENTIVES
2024
£m
2023
£m
At the beginning of the year
175
212
Revenue recognised
15
(3)
Movement in break penalties and other movements
–
3
Capital incentives granted
6
7
Provision for doubtful receivables
–
(5)
Disposal of properties
(2)
(49)
Acquisition of properties
–
10
At 31 March
194
175
28 › TRADE AND OTHER PAYABLES
Group
Company
2024
£m
2023
£m
2024
£m
2023
£m
Trade payables
56
14
–
–
Capital accruals
48
32
–
–
Other payables
20
25
8
8
Accruals
90
88
–
7
Deferred income
129
111
–
–
Contract liabilities
5
22
–
–
Amounts owed to joint ventures
–
14
–
–
Loans from Group undertakings
–
–
2,243
2,806
Total current trade and other payables
348
306
2,251
2,821
Non-current other payables
–
17
–
–
Deferred income
4
–
–
–
Total trade and other payables
352
323
2,251
2,821
Capital accruals represent amounts due for work completed on investment properties but not paid for at the year end. Deferred income
principally relates to rents received in advance.
The Loans from Group undertakings are repayable on demand with no fixed repayment date. Interest is charged at 4.9% per annum (2023: 4.3%).
LANDSEC ANNUAL REPORT 2024
FINANCIAL STATEMENTS
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2024 CONTINUED
SECTION 6 – OTHER REQUIRED DISCLOSURES
This section gives further disclosure in respect of other areas of the financial statements, together with mandatory disclosures required in
accordance with IFRS.
29 › INVESTMENTS IN SUBSIDIARY UNDERTAKINGS
A ACCOUNTING POLICY
Investments in subsidiary undertakings are stated at cost in the Company’s balance sheet, less any provision for impairment in value.
In accordance with IFRS 2 Share Based Payments the equity settled share-based payment charge for the employees of the Company’s
subsidiaries is treated as an increase in the cost of investment in the subsidiaries, with a corresponding increase in the Company’s equity.
2024
£m
2023
£m
At the beginning of the year
6,229
6,222
Capital contributions relating to share-based payments (note 36)
8
6
Impairment (charge)/reversal
(578)
1
At 31 March
5,659
6,229
A full list of subsidiary undertakings at 31 March 2024 is included in Additional information on pages 179-183. This includes those which are exempt
from the requirement of the Companies Act 2006 (the Act) relating to the audit of individual accounts by virtue of Section 479A of the Act.
In the year ended 31 March 2024, there has been an impairment charge on the Company’s investment in its subsidiaries of £578m (2023: reversal
of £1m) as a result of a decrease in net assets held in those subsidiary companies. The recoverable amount of the investments has been based
on the fair value of each of the subsidiaries at 31 March 2024 as determined by their individual net asset values at that date, totalling £5,659m
(2023: £6,229m).
30 › OTHER NON-CURRENT ASSETS
2024
£m
2023
£m
Other property, plant and equipment
7
9
Net pension surplus (note 35)
11
16
Derivative financial instruments (note 25)
22
41
Other investments1
8
1
Total other non-current assets
48
67
1. During the year the Group’s investment ownership percentage in YC Shepherds Bush Limited reduced to 14.2% because of a dilution of shareholding. The investment in associate
was reclassified to other investments as the Group is no longer considered to have significant influence over the operations of the entity. In the year ended 31 March 2024,
£3m (2023: £nil) has been recognised in the income statement for the fair value gain of the investment in line with IAS 28. The investment is categorised as Level 3 in the fair
value hierarchy. The recoverable amount has been based on the fair value less costs of disposal of the entity at 31 March 2024 as determined by its net asset value at that date.
31 › OTHER CURRENT ASSETS
2024
£m
2023
£m
Derivative financial instruments (note 25)
8
3
Other investments
–
1
Current tax assets
3
–
Total other current assets
11
4
152
LANDSEC ANNUAL REPORT 2024
153
FINANCIAL STATEMENTS
32 › OTHER CURRENT LIABILITIES
2024
£m
2023
£m
Derivative financial instruments (note 25)
–
6
Provisions (note 34)
–
18
Total other current liabilities
–
24
33 › OTHER NON-CURRENT LIABILITIES
2024
£m
2023
£m
Deferred tax liability (note 12)
–
4
Net liabilities incurred on behalf of joint ventures1 (note 16)
8
5
Derivative financial instruments (note 25)
5
–
Total other non-current liabilities
13
9
1. The Group’s share of accumulated losses of a joint venture interest are recognised as net liabilities (see note 16) where there is an obligation to provide for these losses.
34 › PROVISIONS
A ACCOUNTING POLICY
Provisions are recognised when the Group has a present obligation (legal or constructive) as a result of a past event, it is probable that an
outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount
of the obligation. Provisions are estimated considering various possible outcomes and determining the most likely outcome. When the Group
expects some or all of a provision to be reimbursed, the reimbursement is recognised as a separate asset, but only when the reimbursement is
virtually certain. The expense relating to a provision is presented in the income statement net of any reimbursement.
If the effect of the time value of money is material, provisions are discounted using a current pre-tax rate that reflects, when appropriate, the
risks specific to the liability. When discounting is used, the increase in the provision due to the passage of time is recognised as a finance cost.
2024
Building and
fire safety
remediation
£m
Transaction
and contract
related
£m
Total
£m
At 1 April 2023
–
–
–
Transfer from other current liabilities (note 32)
14
4
18
Charge for the year
12
45
57
Reversed during the year
(3)
–
(3)
At 31 March 2024
23
49
72
Current
23
7
30
Non-current
–
42
42
At 31 March 2024
23
49
72
BUILDING AND FIRE SAFETY REMEDIATION PROVISIONS
Management have assessed their legal and constructive obligations arising from the Building Safety Act 2022 and other associated fire
regulations and remediation works for identified reinforced autoclaved aerated concrete. Where an obligation exists, including for properties
no longer owned by the Group but for which the Group is responsible for remediation works, a provision is recorded on the Group’s balance
sheet. £13m of the provision recorded at 31 March 2024 relates to properties no longer owned by the Group. Moreover, a receivable of £5m
has been recorded in note 27 where the Group is virtually certain that the provision recorded will be reimbursed by the original developer of
the property for such remediation works.
LANDSEC ANNUAL REPORT 2024
FINANCIAL STATEMENTS
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2024 CONTINUED
TRANSACTION AND CONTRACT RELATED PROVISIONS
Relate to historic or ongoing transactions and contracts that the Group is party to wherein an obligation arises as part of its developer
contractual arrangements, queries received from tax authorities, or contractor claims. These provisions are classed together as they pertain
to past transactions or contracts executed to acquire or dispose of assets or queries arising therefrom. The provisions reflect management’s
best estimate of the costs required to settle these obligations, however owing to the nature of these provisions there is uncertainty over both
the amount and the timing of the potential cash outflows.
35 › NET PENSION SURPLUS
A ACCOUNTING POLICY
Contributions to defined contribution schemes are charged to the income statement as incurred.
The pension obligations arising under the Group’s defined benefit pension scheme are measured at discounted present value. The scheme
assets are measured at fair value, except annuities which are valued to match the liability or benefit value. The operating and financing costs
of the scheme are recognised separately in the income statement. Service costs are spread using the projected unit credit method. Past service
costs are recognised immediately in the income statement in the period in which they are identified. Net financing costs are recognised in
the period in which they arise, calculated with reference to the discount rate, and are included in finance income or expense on a net basis.
Remeasurement gains and losses arising from either experience differing from previous actuarial assumptions, or changes to those
assumptions, are recognised immediately in other comprehensive income.
DEFINED CONTRIBUTION SCHEMES
The charge to operating profit for the year in respect of defined contribution schemes was £4m (2023: £3m).
DEFINED BENEFIT SCHEME
The Pension & Assurance Scheme of the Land Securities Group of Companies (the Scheme) is a registered defined benefit final salary scheme
subject to the UK regulatory framework for pensions, including the Scheme Specific Funding requirements. The Scheme is operated under
trust and as such, the Trustees of the Scheme are responsible for operating the Scheme and they have a statutory responsibility to act in
accordance with the Scheme’s Trust Deed and Rules, in the best interest of the beneficiaries of the Scheme and UK legislation (including trust
law). The Trustees and the Group have the joint power to set the contributions that are paid to the Scheme.
In setting contributions to the Scheme, the Trustees and the Group are guided by the advice of a qualified independent actuary on the basis
of triennial valuations using the projected unit credit method. The Scheme is closed to new members (and was closed to future accrual on
31 October 2019). A full actuarial valuation of the Scheme was undertaken on 30 June 2021 by the independent actuaries, Hymans Robertson
LLP. This valuation was updated to 31 March 2024 using, where required, assumptions prescribed by IAS 19 Employee Benefits. The next full
actuarial valuation will be performed as at 30 June 2024.
There have been no employer or employee contributions following the closure of the Scheme to future accrual on 31 October 2019. Prior to this,
the employer contribution rate was 43.1% of pensionable salary to cover the costs of accruing benefits and the employee contributions were
at 8% of monthly pensionable salary. It was also agreed that no further deficit contributions were required from the Group. Employee
contributions were paid by salary sacrifice, and therefore appeared as Group contributions. The Group does not expect to make any employee
or employer contributions to the Scheme in the year to 31 March 2025 (2024: £nil).
All death-in-service and incapacity benefits arising during employment are wholly insured. No post-retirement benefits other than pensions are
made available to employees of the Group.
ANALYSIS OF THE AMOUNTS CHARGED TO THE INCOME STATEMENT
2024
£m
2023
£m
Analysis of the amount charged to operating profit
Current service costs
–
–
Past service costs
–
–
Charge to operating profit
–
–
Analysis of amount credited to net finance expense
Interest income on plan assets
(8)
(6)
Interest expense on defined benefit scheme liabilities
8
6
Impact on net finance expense
–
–
34 › PROVISIONS CONTINUED
154
LANDSEC ANNUAL REPORT 2024
155
FINANCIAL STATEMENTS
ANALYSIS OF THE AMOUNTS RECOGNISED IN OTHER COMPREHENSIVE INCOME
2024
£m
2023
£m
Analysis of gains and losses
Net remeasurement losses on scheme assets
–
(58)
Net remeasurement (losses)/gain on scheme liabilities
(1)
46
Net remeasurement loss related to authorised payments charge due on net pension surplus
(4)
–
Net remeasurement loss
(5)
(12)
Cumulative net remeasurement loss recognised in other comprehensive income
(41)
(36)
The net surplus recognised in respect of the defined benefit scheme can be analysed as follows:
2024
2023
%
£m
%
£m
Bonds – Government
–
–
1
2
Proceeds from corporate bond sale
–
–
5
8
Insurance contracts
83
151
90
153
Cash and cash equivalents
17
15
4
6
Fair value of scheme assets
100
166
100
169
Fair value of scheme liabilities
(151)
(153)
Net pension surplus as per IAS 19
15
16
Expected authorised payments charge
(4)
–
Net pension surplus
11
16
In the year ended 31 March 2024, £11m (2023: £9m) of benefits were paid to members.
During the prior year, the Scheme purchased a buy-in policy with Just Retirement for £79m. This insurance contract is valued as an asset using
the same IAS 19 assumptions. Insurance contracts are annuities which are unquoted assets. All other Scheme assets have quoted prices in
active markets. The Scheme assets do not include any directly owned financial instruments issued by the Group. Indirectly owned financial
instruments had a fair value of £nil (2023: £nil).
In the most recent triennial valuation, the defined benefit scheme liabilities were split nil% (2023: nil%) in respect of active scheme participants,
31% (2023: 26%) in respect of deferred scheme participants, and 69% (2023: 74%) in respect of retirees. As the scheme is now closed to future
accrual, there are no longer any active scheme participants. The weighted average duration of the defined benefit scheme liabilities at 31 March
2024 is 11.5 years (2023: 12.0 years).
The assumptions agreed with the Trustees of the Scheme for the triennial valuation at 30 June 2021 have been restated to the assumptions
described by IAS 19 Employee Benefits. The major assumptions used in the valuation were (in nominal terms):
2024
%
2023
%
Rate of increase in pensionable salaries
n/a
n/a
Rate of increase in pensions with no cap
3.45
3.50
Rate of increase in pensions with 5% cap
3.30
3.35
Discount rate
4.80
4.75
Inflation – Retail Price Index
3.45
3.50
– Consumer Price Index
2.75
2.80
The mortality assumptions used in this valuation were:
2024
Years
2023
Years
Life expectancy at age 60 for current pensioners – Men
26.8
26.7
– Women
29.1
29.0
Life expectancy at age 60 for future pensioners (current age 40) – Men
29.8
29.7
– Women
31.9
31.8
LANDSEC ANNUAL REPORT 2024
FINANCIAL STATEMENTS
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2024 CONTINUED
The sensitivities regarding the principal assumptions used to measure the Scheme liabilities are set out below. These were calculated using
approximate methods taking into account the duration of the Scheme liabilities.
Assumption
Change in assumption
Impact on Scheme liabilities
Discount rate
Decrease by 0.5%
Increase by £9m
Life expectancy
Increase by 1 year
Increase by £6m
Rate of inflation
Increase by 0.5%
Increase by £7m
The above sensitivities show the impact on liabilities only and do not reflect the hedging the Scheme has in place. In December 2022, the
Scheme transacted a buy-in policy for £79m covering all remaining uninsured members. As a result, the Group no longer bears any longevity,
interest rate or inflation risk in respect of the pension scheme. The buy-in policy is an investment asset of the Scheme.
The Company did not operate any defined contribution schemes or defined benefit schemes during the financial years ended 31 March 2024
or 31 March 2023.
In June 2023, the UK High Court (Virgin Media Limited v NTL Pension Trustees II Limited) ruled that certain historical amendments for
contracted-out defined benefit schemes were invalid if they were not accompanied by the correct actuarial confirmation. The judgement
is subject to appeal. The Trustees and the Group are monitoring developments and will consider if there are any implications for the Scheme,
if the ruling is upheld.
36 › SHARE-BASED PAYMENTS
A ACCOUNTING POLICY
The cost of granting shares, options over shares and other share-based remuneration to employees and Executive Directors is recognised
through the income statement. All awards are equity settled and therefore the fair value is measured at the grant date. Where the awards have
non-market related performance criteria, the Group uses the Black-Scholes option valuation model to establish the relevant fair values. Where
the awards have Total Shareholder Return (TSR) market related performance criteria, the Group has used the Monte Carlo simulation valuation
model to establish the relevant fair values. The resulting values are amortised through the income statement over the vesting period of the
awards. For awards with non-market related criteria, the charge is reversed if it appears probable that the performance or service criteria will
not be met.
The following table analyses the total cost recognised in the income statement for the year between each plan, together with the number of
options outstanding.
2024
2023
Charge
£m
Number
(millions)
Charge
£m
Number
(millions)
Long-Term Incentive Plan
3
3
3
3
Deferred Share Bonus Plan
2
–
1
–
Executive Share Option Scheme
–
1
–
1
Sharesave Plan
–
1
–
1
Restricted Share Plan
3
2
2
2
8
7
6
7
A summary of the main features of each type of plan is given below. The plans have been split into two categories: Executive plans and Other
plans. For further details on the Executive plans, see the Directors’ Remuneration Report on pages 72 to 82.
35 › NET PENSION SURPLUS CONTINUED
156
LANDSEC ANNUAL REPORT 2024
157
FINANCIAL STATEMENTS
EXECUTIVE PLANS:
LONG-TERM INCENTIVE PLAN (LTIP)
The LTIP is open to Executive Directors, Executive Leadership Team and Senior Management members with awards made at the discretion
of the Remuneration Committee. In addition, other than for Executive Directors, an award of ‘matching shares’ could be made where the
individual acquired shares in Land Securities Group PLC and pledged to hold them for a period of three years. The awards are issued at nil
consideration, subject to performance and vesting conditions being met. Awards of LTIP shares and matching shares are subject to the same
performance criteria and normally vest after three years. Awards are satisfied by the transfer of existing shares held by the Employee Benefit
Trust (EBT). The weighted average share price at the date of vesting was 635p (2023: no awards exercised during the year). The estimated fair
value of awards granted during the year under the scheme was £8m (2023: £7m).
DEFERRED SHARE BONUS PLAN (DSBP)
The Executive Directors’ annual bonus is structured in two distinct parts made up of an initial payment and deferred shares. The shares are
usually deferred for one or two years and are not subject to additional performance criteria. Awards are satisfied by the transfer of existing
shares held by the EBT at nil consideration. The weighted average share price at the date of vesting during the year was 565p (2023: 615p).
The estimated fair value of awards granted during the year under the scheme was £1m (2023: £2m).
OTHER PLANS:
EXECUTIVE SHARE OPTION SCHEME (ESOS)
The 2005 ESOS was previously open to managers not eligible to participate in the LTIP, but was largely replaced by the new Restricted Share
Plan in the year ended 31 March 2020. Awards are discretionary and are granted over ordinary shares of the Company at the middle market
price on the three dealing days immediately preceding the date of grant. Awards normally vest after three years and are not subject to
performance conditions. Awards are satisfied by the transfer of shares from the EBT and lapse ten years after the date of grant. There were no
awards exercised during the year (2023: none). The estimated fair value of awards granted during the year under the scheme was £nil (2023: £nil).
SHARESAVE PLAN
Under the Sharesave Plan, Executive Directors and other eligible employees are invited to make regular monthly contributions into a Sharesave
plan operated by Equiniti. On completion of the three or five year contract period, ordinary shares in the Company may be purchased at a price
based upon the middle market price on the three dealing days immediately preceding the date of invitation less 20% discount. The weighted
average share price at the date of exercise for awards exercised during the year was 641p (2023: 717p). The estimated fair value of awards
granted during the year under the scheme was £1m (2023: £1m).
RESTRICTED SHARE PLAN (RSP)
The RSP started in the year ended 31 March 2020. It is open to qualifying management level employees with awards granted as nil cost options.
Awards are discretionary and are granted over ordinary shares of the Company at the middle market price on the day immediately preceding
date of grant. Awards normally vest after three years and are not subject to performance conditions. Awards are satisfied by the transfer of
shares from the EBT and lapse ten years after the date of grant. The weighted average share price at the date of exercise for awards exercised
during the year was 648p (2023: 697p). The estimated fair value of awards granted during the year under the scheme was £2m (2023: £6m).
The aggregate number of awards outstanding, and the weighted average exercise price, are shown below:
Executive plans1
Other plans
Number of awards
Number of awards
Weighted average
exercise price
2024
Number
(millions)
2023
Number
(millions)
2024
Number
(millions)
2023
Number
(millions)
2024
Pence
2023
Pence
At the beginning of the year
3
2
3
2
758
805
Granted
2
2
1
1
563
685
Exercised
–
–
(1)
–
540
736
Lapsed
(1)
(1)
–
–
755
699
At 31 March
4
3
3
3
755
768
Exercisable at the end of the year
–
–
1
1
978
2,072
Years
Years
Years
Years
Weighted average remaining contractual life
1
1
2
2
1. Executive plans are granted at nil consideration.
LANDSEC ANNUAL REPORT 2024
FINANCIAL STATEMENTS
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2024 CONTINUED
The number of share awards outstanding for the Group by range of exercise prices is shown below:
Outstanding at 31 March 2024
Outstanding at 31 March 2023
Exercise price – range
Weighted
average
exercise
price
Number of
awards
Weighted
average
remaining
contractual
life
Weighted
average
exercise
price
Number of
awards
Weighted
average
remaining
contractual
life
Pence
Pence
Number
(millions)
Years
Pence
Number
(millions)
Years
Nil1
–
6
1
–
5
1
400 – 599
535
–
2
552
1
1
600 – 799
633
–
1
665
–
3
800 – 999
953
–
4
936
–
4
1,000 – 1,199
1,022
1
2
1,022
1
3
1,200 – 1,399
1,328
–
1
1,328
–
2
1. Executive plans are granted at nil consideration.
FAIR VALUE INPUTS FOR AWARDS WITH NON-MARKET PERFORMANCE CONDITIONS
Fair values are calculated using the Black-Scholes option pricing model for awards with non-market performance conditions. The weighted
average inputs into this model for the grants under each plan in the financial year are as follows:
Long-Term Incentive Plan
Deferred Share Bonus Plan
Restricted Share Plan
Sharesave Plan
Year ended 31 March
2024
2023
2024
2023
2024
2023
2024
2023
Share price at grant date
625p
687p
621p
716p
619p
706p
574p
644p
Exercise price
n/a
n/a
n/a
n/a
n/a
n/a
502p
615p
Expected volatility
33%
39%
35%
39%
35%
39%
35%
39%
Expected life
3 years
3 years
1 year
1.41 years
2.94
years
3 years
3 to
5 years
3 to
5 years
Risk-free rate
4.36%
2.37%
4.75%
1.92%
4.45%
1.96%
4.66% to
5.05%
1.65% to
1.71%
Expected dividend yield
Nil
5.47%
Nil
Nil
6.23%
5.25%
6.72%
5.75%
Expected volatility is determined by calculating the historical volatility of the Group’s share price over the previous ten years. The expected
life used in the model has been determined based upon management’s best estimate for the effects of non-transferability, vesting/exercise
restrictions and behavioural considerations. The risk-free rate is the yield at the date of the grant of an award on a gilt-edged stock with
a redemption date equal to the anticipated vesting of that award.
FAIR VALUE INPUTS FOR AWARDS WITH MARKET PERFORMANCE CONDITIONS
Fair values are calculated using the Monte Carlo simulation option pricing model for awards with market performance conditions. Awards made
under the 2015 LTIP include a TSR condition, which is a market-based condition. The weighted average inputs into this model for the scheme are
as follows:
Share price at date
of grant
Exercise
price
Expected volatility
– Group
Expected volatility
– index of comparator
companies
Correlation
– Group vs. index
Year ended 31 March
2024
2023
2024
2023
2024
2023
2024
2023
2024
2023
Long-Term Incentive Plan
625p
689p
n/a
n/a
33%
39%
34%
33%
55%
53%
36 › SHARE-BASED PAYMENTS CONTINUED
158
LANDSEC ANNUAL REPORT 2024
159
FINANCIAL STATEMENTS
37 › ORDINARY SHARE CAPITAL
A ACCOUNTING POLICY
Ordinary shares are classified as equity. External costs directly attributable to the issue of new shares are shown in equity as a deduction from
the proceeds.
The consideration paid by any Group entity to acquire the Company’s equity share capital, including any directly attributable incremental costs,
is deducted from equity until the shares are cancelled, reissued or sold. Where own shares are sold or reissued, the net consideration received is
included in equity.
Group and Company
Allotted and fully paid
2024
£m
2023
£m
Ordinary shares of 102/3p each
80
80
Number of shares
2024
2023
At the beginning of the year
751,381,219
751,328,142
Issued on the exercise of options
295,438
53,077
At 31 March
751,676,657
751,381,219
The number of options over ordinary shares from Executive plans that were outstanding at 31 March 2024 was 5,836,592 (2023: 5,223,270).
If all the options were exercisable at that date then 5,836,592 (2023: 5,223,270) shares would be required to be transferred from the Employee
Benefit Trust (EBT). The number of options over ordinary shares from Other plans that were outstanding at 31 March 2024 was 1,498,647
(2023: 1,636,828). If all the options were exercisable at that date then 538,608 new ordinary shares (2023: 565,439) would be issued and
960,039 shares would be required to be transferred from the EBT (2023: 1,107,389).
Shareholders at the Annual General Meeting have previously authorised the acquisition of shares by the Company representing up to 10%
of its share capital, to be held as treasury shares. There were no treasury shares transferred to the EBT during the year ended 31 March 2024
(2023: none) to satisfy future awards under employee share plans. At 31 March 2024, the Group held 6,789,236 ordinary shares (2023: 6,789,236)
with a market value of £45m (2023: £42m) in treasury. The Company’s voting rights and dividends in respect of the treasury shares, including
those own shares which the EBT holds, continue to be waived.
38 › OWN SHARES
A ACCOUNTING POLICY
Shares acquired by the EBT are presented on the Group and Company balance sheets within ‘Other reserves’. Purchases of treasury shares are
deducted from retained earnings.
Group and Company
2024
£m
2023
£m
At the beginning of the year
29
30
Transfer of shares to employees on exercise of share options
(6)
(1)
At 31 March
23
29
Own shares consist of shares in Land Securities Group PLC held by the EBT in respect of the Group’s commitment to a number of its employee
share option schemes (note 36).
The number of shares held by the EBT at 31 March 2024 was 3,119,107 (2023: 3,831,399). The market value of these shares at 31 March 2024 was
£21m (2023: £24m).
LANDSEC ANNUAL REPORT 2024
FINANCIAL STATEMENTS
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2024 CONTINUED
39 › CONTINGENCIES
The Group has contingent liabilities in respect of legal claims, contractor claims, remediation for building defects, developer contractual
arrangements, guarantees and warranties arising in the ordinary course of business. A provision for such matters is only recognised to the
extent that the Group has a legal or constructive obligation as a result of a past event and it is probable that an outflow of economic benefit
will be required to settle the obligation.
40 › RELATED PARTY TRANSACTIONS
SUBSIDIARIES
During the year, the Company entered into transactions, in the normal course of business, with related parties as follows:
2024
£m
2023
£m
Transactions with subsidiary undertakings1:
Recharge of costs
(281)
(288)
Dividends received
1,000
500
Interest paid
(148)
(120)
1. All significant cash payments for the parent company, including dividend payments, are made by the Group’s treasury function in accordance with the Group’s financial risk
management policy.
JOINT ARRANGEMENTS
As disclosed in note 16, the Group has investments in a number of joint arrangements. Details of transactions and balances between the Group
and its joint arrangements are as follows:
Year ended and as at 31 March 2024
Year ended and as at 31 March 2023
Income/
(expense)
£m
Net
investments
into joint
ventures
£m
Amounts
owed by
joint
ventures
£m
Amounts
owed to
joint
ventures
£m
Income/
(expense)
£m
Net
investments
into joint
ventures
£m
Amounts
owed by
joint
ventures
£m
Amounts
owed to
joint
ventures
£m
Nova, Victoria
6
–
54
–
6
–
69
–
Southside Limited Partnership
3
–
74
–
3
–
75
–
St. David’s Limited Partnership1
–
–
–
–
(1)
(123)
–
–
Westgate Oxford Alliance Limited Partnership
(2)
(13)
6
–
(2)
(8)
6
–
Other
(1)
4
8
–
–
(33)
23
(14)
6
(9)
142
–
6
(164)
173
(14)
1. On 24 March 2023, the Group acquired the remaining 50% interest in St David’s. From that date, the results of the operations from St David’s are consolidated together with other
subsidiary undertakings.
ASSOCIATES
Details of transactions and balances between the Group and its associates are as follows:
Year ended and as at 31 March 2024
Year ended and as at 31 March 2023
Income
£m
Net
investments
into
associates
£m
Amounts
owed by
associates
£m
Amounts
owed to
associates
£m
Income
£m
Net
investments
into
associates
£m
Amounts
owed by
associates
£m
Amounts
owed to
associates
£m
Associates
–
–
4
–
–
(1)
6
–
160
LANDSEC ANNUAL REPORT 2024
161
FINANCIAL STATEMENTS
REMUNERATION OF KEY MANAGEMENT PERSONNEL
The remuneration of the Directors, who are the key management personnel of the Group and Company, is set out below in aggregate for each
of the applicable categories specified in IAS 24 ‘Related Party Disclosures’. Further information about the remuneration of individual Directors is
provided in the audited part of the Directors’ Remuneration Report on pages 72 to 82.
2024
£m
2023
£m
Short-term employee benefits1
5
5
Share-based payments
3
4
8
9
1. Short-term employee benefits include pension allowances.
41 › OPERATING LEASE ARRANGEMENTS
A ACCOUNTING POLICY
The Group earns rental income by leasing its properties to tenants under non-cancellable operating leases. Leases in which substantially all
risks and rewards incidental to ownership of investment properties are retained by the Group as the lessor are classified as operating leases.
Payments, including prepayments, received under operating leases (net of any incentives paid) are charged to the income statement on
a straight-line basis over the period of the lease.
At the balance sheet date, the Group had contracted with tenants to receive the following undiscounted future minimum lease payments:
2024
£m
2023
£m
Not later than one year
416
455
Later than one year, but not more than two years
395
427
Later than two years, but not more than three years
356
382
Later than three years, but not more than four years
330
333
Later than four years, but not more than five years
286
299
More than five years
2,371
2,595
4,154
4,491
The total of contingent rents, primarily turnover based rents, recognised as income during the year was £61m (2023: £51m).
42 › EVENTS AFTER THE REPORTING PERIOD
On 8 May 2024, the Group sold its interest in LS Hotels Limited for a headline price of £400m.
No other significant events occurred after the reporting period but before the financial statements were authorised for issue.
LANDSEC ANNUAL REPORT 2024
ADDITIONAL INFORMATION
BUSINESS ANALYSIS – EPRA DISCLOSURES
EPRA NET ASSET MEASURES
TABLE 55
31 March 2024
EPRA NRV
£m
EPRA NTA
£m
EPRA NDV
£m
Net assets attributable to shareholders
6,402
6,402
6,402
Shortfall of fair value over net investment in finance lease book value
(5)
(5)
(5)
Deferred tax liability on intangible asset
–
–
–
Goodwill on deferred tax liability
–
–
–
Other intangible asset
–
(2)
–
Fair value of interest-rate swaps
(22)
(22)
–
Shortfall of fair value of debt over book value (note 22)
–
–
313
Excess of fair value of trading properties over book value
25
25
25
Purchasers’ costs1
605
–
–
Net assets used in per share calculation
7,005
6,398
6,735
EPRA NRV
EPRA NTA
EPRA NDV
Diluted net assets per share
940p
859p
904p
EPRA NET ASSET MEASURES
TABLE 56
31 March 2023
EPRA NRV
£m
EPRA NTA
£m
EPRA NDV
£m
Net assets attributable to shareholders
7,005
7,005
7,005
Shortfall of fair value over net investment in finance lease book value
(6)
(6)
(6)
Deferred tax liability on intangible asset
1
1
–
Goodwill on deferred tax liability
(1)
(1)
(1)
Other intangible asset
–
(2)
–
Fair value of interest-rate swaps
(42)
(42)
–
Shortfall of fair value of debt over book value (note 22)
–
–
324
Excess of fair value of trading properties over book value
12
12
12
Purchasers’ costs1
617
–
–
Net assets used in per share calculation
7,586
6,967
7,334
EPRA NRV
EPRA NTA
EPRA NDV
Diluted net assets per share
1,020p
936p
986p
1. EPRA NTA and EPRA NDV reflect IFRS values which are net of purchasers’ costs. Purchasers’ costs are added back when calculating EPRA NRV.
162
LANDSEC ANNUAL REPORT 2024
163
ADDITIONAL INFORMATION
EPRA PERFORMANCE MEASURES
TABLE 57
31 March 2024
Measure
Definition for EPRA measure
Notes
EPRA
measure
EPRA earnings
Recurring earnings from core operational activity
5
£371m
EPRA earnings per share
EPRA earnings per weighted number of ordinary shares
5
50.1p
EPRA diluted earnings per share1
EPRA diluted earnings per weighted number of ordinary shares
5
50.1p
EPRA Net Tangible Assets (NTA)
Net assets adjusted to exclude the fair value of interest-rate swaps, intangible assets
and excess of fair value over net investment in finance lease book value
5
£6,398m
EPRA Net Tangible Assets per share
Diluted Net Tangible Assets per share
5
859p
EPRA net disposal value (NDV)
Net assets adjusted to exclude the fair value of debt and goodwill on deferred tax and
to include excess of fair value over net investment in finance lease book value
5
£6,735m
EPRA net disposal value per share
Diluted net disposal value per share
5
904p
EPRA loan-to-value (LTV)2
Ratio of adjusted net debt, including net payables, to the sum of the net assets, including
net receivables, of the Group, its subsidiaries and joint ventures, all on a proportionate
basis, expressed as a percentage
21
36.3%
Table
EPRA
measure
Voids/vacancy rate
ERV of vacant space as a % of ERV of Combined Portfolio excluding the development
programme3
58
3.5%
Net initial yield (NIY)
Annualised rental income less non-recoverable costs as a % of market value plus
assumed purchasers’ costs4
60
5.4%
Topped-up NIY
NIY adjusted for rent free periods4
60
6.2%
Cost ratio5
Total costs as a percentage of gross rental income (including direct vacancy costs)5
61
25.0%
Total costs as a percentage of gross rental income (excluding direct vacancy costs)5
61
20.3%
1. In the year ended 31 March 2024, share options are excluded from the weighted average diluted number of shares when calculating EPRA diluted earnings per share because they
are not dilutive, based on IFRS loss for the year.
2. EPRA LTV differs from the Group LTV presented in note 21 as it includes net payables and receivables and includes trading properties at fair value and debt instruments at nominal
value rather than book value.
3. This measure reflects voids in the Combined Portfolio excluding only properties under development.
4. This measure relates to the Combined Portfolio, excluding properties currently under development, and is calculated by our external valuer. Topped-up NIY reflects adjustments
of £82m for rent free periods and other incentives.
5. This measure is calculated based on gross rental income after rents payable and excluding costs recovered through rents but not separately invoiced of £9m. Further information
on the Group’s accounting policies pertaining to capitalised costs can be found in section 3 of the financial statements.
EPRA VACANCY RATE
The EPRA vacancy rate is based on the ratio of the estimated market rent for vacant properties versus total estimated market rent, for the
Combined Portfolio excluding properties under development. There are no significant distorting factors influencing the EPRA vacancy rate.
TABLE 58
31 March
2024
£m
ERV of vacant properties
22
ERV of Combined Portfolio excluding properties under development
632
EPRA vacancy rate (%)
3.5
CHANGE IN NET RENTAL INCOME FROM THE LIKE-FOR-LIKE PORTFOLIO
TABLE 59
2024
£m
2023
£m
Change
£m
%
Central London
230
229
1
0%
Major retail
131
122
9
7%
Subscale sectors
111
108
3
3%
472
459
13
3%
LANDSEC ANNUAL REPORT 2024
ADDITIONAL INFORMATION
EPRA NET INITIAL YIELD (NIY) AND TOPPED-UP NIY
TABLE 60
31 March 2024
£m
Combined Portfolio
9,963
Trading properties
125
Less: Properties under development, trading properties under development and land
(1,087)
Like-for-like investment property portfolio, proposed and completed developments, and completed trading properties
9,001
Plus: Allowance for estimated purchasers’ costs
546
Grossed-up completed property portfolio valuation (a)
9,547
EPRA annualised cash passing rental income1
603
Net service charge expense2
(16)
Void costs and other deductions
(73)
EPRA Annualised net rent1 (b)
514
Plus: Rent-free periods and other lease incentives (annualised)
82
Topped-up annualised net rents (c)
596
EPRA NIY (b/a)
5.4%
EPRA Topped-up NIY (c/a)
6.2%
1. EPRA annualised cash passing rental income and EPRA annualised net rent as calculated by the Group’s external valuer.
2. Including costs recovered through rents but not separately invoiced.
BUSINESS ANALYSIS – EPRA DISCLOSURES
CONTINUED
164
LANDSEC ANNUAL REPORT 2024
165
ADDITIONAL INFORMATION
COST ANALYSIS
TABLE 61
2024
2023
Total
£m
Cost
ratio
%1
Total
£m
Cost
ratio
%1
Gross rental income (before
rents payable)
653
659
Costs recovered through rents
but not separately invoiced
(9)
(9)
Adjusted gross rental
income
644
650
Rents payable
(12)
(12)
EPRA gross rental income
632
638
£m
Gross rental income (before rents payable)
653
Rents payable
(12)
Gross rental income (after rents payable)
641
Direct
property
costs
£90m
Managed operations
10
10
Net service charge expense
(16)
Tenant default
(6)
(3)
Net direct property expenditure
(81)
Void related costs
30
27
Movement in bad and doubtful debts
provision
6
Other direct property costs
54
48
Segment net rental income
550
Development expenditure
9
14
Net indirect expenses
(77)
Net
indirect
expenses
£77m
Asset management,
administration and
compliance
70
74
Segment profit before finance expense
473
Net finance expense – Group
(91)
Net finance expense – joint ventures
(11)
EPRA earnings
371
Total (incl. direct
vacancy costs)
167
170
Costs recovered through rents
(9)
(9)
EPRA costs (incl. direct
vacancy costs)
158
25.0
161
25.2
Less: Direct vacancy costs
(30)
(27)
EPRA (excl. direct
vacancy costs)
128
20.3
134
21.0
1. Percentages represent costs divided by EPRA gross rental income.
LANDSEC ANNUAL REPORT 2024
ADDITIONAL INFORMATION
ACQUISITIONS, DISPOSALS AND CAPITAL EXPENDITURE
TABLE 62
Year ended
31 March
2024
Year ended
31 March
2023
Investment properties
Group (excl.
joint
ventures)
£m
Joint
ventures
£m
Adjustment for
non-wholly
owned
subsidiaries1
£m
Combined
Portfolio
£m
Combined
Portfolio
£m
Net book value at the beginning of the year
9,658
601
(139)
10,120
11,833
Transfer from joint venture
–
–
–
–
11
Acquisitions
144
–
–
144
223
Capital expenditure
374
3
(1)
376
340
Capitalised interest
19
–
–
19
22
Net movement in head leases capitalised
(30)
–
–
(30)
(25)
Disposals
(207)
–
–
(207)
(1,430)
Net deficit on revaluation of investment properties
(628)
(19)
22
(625)
(848)
Transfer to trading properties
–
–
–
–
(6)
Net book value at the end of the year
9,330
585
(118)
9,797
10,120
Loss on disposal of investment properties
(16)
–
–
(16)
(144)
Trading properties
£m
£m
£m
£m
£m
Net book value at the beginning of the year
118
–
–
118
146
Transfer from investment properties
–
–
–
–
6
Capital expenditure
13
–
–
13
3
Capitalised interest
1
–
–
1
–
Disposals
(21)
–
–
(21)
(18)
Movement in impairment
(11)
–
–
(11)
(19)
Net book value at the end of the year
100
–
–
100
118
Profit on disposal of trading properties
–
–
–
–
1
ACQUISITIONS, DEVELOPMENT AND OTHER CAPITAL EXPENDITURE
Investment
properties1
£m
Trading
properties
£m
Combined
Portfolio
£m
Combined
Portfolio
£m
Acquisitions2
144
–
144
223
Development capital expenditure3
220
6
226
278
Other capital expenditure
156
7
163
65
Capitalised interest
19
1
20
22
Acquisitions, development and other capital expenditure
539
14
553
588
Disposals
£m
£m
Net book value – investment property disposals
207
1,430
Net book value – trading property disposals
21
18
Net book value – other net assets
3
52
Loss on disposal – investment properties
(16)
(144)
Profit on disposal – trading properties
–
1
Other
1
(3)
Total disposal proceeds
216
1,354
1. See EPRA analysis of capital expenditure table on page 167 for further details.
2. Properties acquired in the year.
3. Development capital expenditure for investment properties comprises expenditure on the future development pipeline and completed developments.
BUSINESS ANALYSIS – EPRA DISCLOSURES
CONTINUED
166
LANDSEC ANNUAL REPORT 2024
167
ADDITIONAL INFORMATION
EPRA ANALYSIS OF CAPITAL EXPENDITURE
TABLE 63
Year ended 31 March 2024
Other capital expenditure
Capitalised
interest
£m
Total capital
expenditure
– Combined
Portfolio
£m
Total capital
expenditure
– joint
ventures
(Group
share)
£m
Adjustment
for
non-wholly
owned
subsidiaries
£m
Total capital
expenditure
– Group
£m
Acquisitions1
£m
Development
capital
expenditure2
£m
Incremental
lettable
space3
£m
No
incremental
lettable
space4
£m
Tenant
improvements
£m
Total
£m
Central London
West End offices
–
42
–
11
1
12
7
61
1
–
60
City offices
–
–
–
66
–
66
1
67
–
–
67
Retail and other
8
–
–
11
–
11
–
19
–
–
19
Developments
123
155
–
–
–
–
11
289
–
–
289
Total Central
London
131
197
–
88
1
89
19
436
1
–
435
Major retail
Shopping centres
2
–
1
24
–
25
–
27
–
–
27
Outlets
–
–
–
9
1
10
–
10
–
–
10
Total Major
retail
2
–
1
33
1
35
–
37
–
–
37
Mixed-use urban
London
–
11
–
1
–
1
–
12
–
–
12
Major regional
cities
–
12
–
6
–
6
–
18
2
(1)
17
Total Mixed-use
urban
–
23
–
7
–
7
–
30
2
(1)
29
Subscale sectors
Leisure
11
–
–
16
–
16
–
27
–
–
27
Hotels
–
–
–
2
–
2
–
2
–
–
2
Retail parks
–
–
–
7
–
7
–
7
–
–
7
Total Subscale
sectors
11
–
–
25
–
25
–
36
–
–
36
Total capital
expenditure
144
220
1
153
2
156
19
539
3
(1)
537
Timing difference between accrual and cash basis
(70)
2
–
(72)
Total capital expenditure on a cash basis
469
5
(1)
465
1. Investment properties acquired in the year.
2. Expenditure on the future development pipeline and completed developments.
3. Capital expenditure where the lettable area increases by at least 10%.
4. Includes £35m of expenditure relating to Myo.
LANDSEC ANNUAL REPORT 2024
ADDITIONAL INFORMATION
BUSINESS ANALYSIS – GROUP
TOP 12 OCCUPIERS AT 31 MARCH 2024
TABLE 64
% of Group
rent1
Accor
5.6
Central Government
5.5
Deloitte
2.2
Taylor Wessing
1.6
Cineworld
1.5
Boots
1.4
Peel
1.3
Qube RT
1.3
BBC
1.2
Sainsbury’s
1.0
H&M
1.0
Cheil
0.9
24.5
1. On a proportionate basis.
PROPERTY INCOME DISTRIBUTION (PID) CALCULATION
TABLE 65
Year ended
31 March
2024
£m
Year ended
31 March
2023
£m
Loss before tax per income statement
(341)
(622)
Accounting loss on residual operations
(23)
(67)
Prior year adjustment
–
77
Loss attributable to tax-exempt operations
(364)
(612)
Adjustments
Capital allowances
(55)
(43)
Capitalised interest
(20)
(22)
Revaluation deficit/(gain)
649
848
Tax exempt disposals
12
142
Capital expenditure
6
5
Other tax adjustments
(27)
(27)
Goodwill amortisation and impairment
–
5
Estimated tax-exempt income for the year
201
296
PID thereon (90%)
181
266
As a REIT, our income and capital gains from qualifying activities are exempt from corporation tax. 90% of this income must be distributed
as a Property Income Distribution and is taxed at the shareholder level to give a similar tax position to direct property ownership. Non-
qualifying activities, such as sales of trading properties, are subject to corporation tax. This year, there was no net tax charge (2023: £nil).
The table above provides a reconciliation of the Group’s loss before tax to its estimated tax exempt income, 90% of which the Company
is required to distribute as a PID to comply with REIT regulations.
168
LANDSEC ANNUAL REPORT 2024
169
ADDITIONAL INFORMATION
The Company has 12 months after the year end to make the minimum distribution. Accordingly, PID dividends paid in the year may relate
to the distribution requirements of previous periods. The table below sets out the dividend allocation for the years ended 31 March 2024 and
31 March 2023:
TABLE 66
PID allocation
Ordinary
dividend
Total
dividend
Year ended
31 March 2024
£m
Year ended
31 March 2023
£m
Pre-
31 March 2023
£m
£m
£m
Dividends paid in year to 31 March 2023
–
156
134
–
290
Dividends paid in year to 31 March 2024
181
110
–
–
291
Minimum PID to be paid by 31 March 2025
–
–
n/a
n/a
–
Total PID required
181
266
The Group has met all the REIT requirements, including the payment by 31 March 2024 of the minimum Property Income Distribution (PID)
for the year ended 31 March 2023. The forecast minimum PID for the year ended 31 March 2024 is £181m, which must be paid by 31 March 2025.
The Group has already made PID dividends relating to 31 March 2024 of £181m.
Our latest tax strategy can be found on our corporate website. In the year, the total taxes we incurred and collected were £136m (2023: £134m),
of which £37m (2023: £38m) was directly borne by the Group including environmental taxes, business rates and stamp duty land tax. The Group
has a low tax risk rating from HMRC.
REIT BALANCE OF BUSINESS
To retain the Group’s REIT status, it must meet conditions from the REIT legislation. At least 75% of the Group’s assets and 75% of the Group’s
income must relate to qualifying activities. The results of these tests at the balance sheet date are below:
TABLE 67
For the year ended 31 March 2024
For the year ended 31 March 2023
Tax-exempt
business
Residual
business
Adjusted
results
Tax-exempt
business
Residual
business
Adjusted
results
Profit before tax (£m)1
271
(3)
268
319
(18)
301
Balance of business – 75% profits test
100.0%
0.0%
100.0%
0.0%
Adjusted total assets (£m)1
10,063
606
10,669
10,357
609
10,966
Balance of business – 75% assets test
94.3%
5.7%
94.4%
5.6%
1. Calculated according to REIT rules.
ANNUAL NET RENT BREAKDOWN BY OCCUPIER
BUSINESS SECTOR
CHART 68
FLOOR SPACE (MILLION SQ FT1)
CHART 69
■ Retail trade
27%
■ Services
27%
■ Financial services
17%
■ Public administration
8%
■ Manufacturing
4%
■ Transport, communications
3%
■ Wholesale trade
2%
■ Other
12%
■ Central London
5.4
■ Major retail
7.7
■ Mixed-use urban
2.8
■ Subscale sectors
6.9
Total
22.8
1. Joint ventures are reflected at 100% values, not Group share.
LANDSEC ANNUAL REPORT 2024
ADDITIONAL INFORMATION
GREENHOUSE GAS REPORTING
In line with requirements set out in the Companies Act 2006 (Strategic Report and Directors’ Report) Regulations 2013 and the Companies
(Directors’ Report) and Limited Liability Partnerships (Energy and Carbon Report) Regulations 2018, and in accordance with the Streamlined
Energy and Carbon Reporting (SECR), this statement reports our GHG emissions for the financial year ending 31 March 2024.
STREAMLINED ENERGY AND CARBON REPORTING (SECR)
Our streamlined energy and carbon reporting figures include energy consumption and carbon emissions associated with all properties
under our operational control (i.e. absolute portfolio). Energy consumption is reported as kWh and no normalisation technique is applied.
Carbon emissions are reported as tonnes of carbon dioxide equivalent (tCO2e). We report our full greenhouse gas (GHG) emissions annually
in accordance to the WRI GHG Protocol.
GHG emissions are broken down into three scopes: Scope 1, 2 and 3.
Scope 1 emissions are direct emissions from activities controlled by us that release emissions into the atmosphere, while Scope 2 emissions
are indirect emissions associated with our consumption of purchased energy.
At Landsec, Scope 1 comprises emissions from natural gas purchased for common areas and shared services and refrigerant gas losses based
on top-ups recorded on our compliance reporting system – Riskwise. Scope 2 emissions are from electricity, heating and cooling purchased
for common areas and shared services. All material sources of Scope 1 and 2 emissions are reported. As the remaining sources (e.g. diesel used
in generator testing) represent such a small proportion of total emissions, we do not report them.
Scope 2 emissions are reported using both the “location-based” and “market-based” accounting methods. Location-based emissions are
reported using the UK Government’s ‘Greenhouse gas reporting: conversion factors 2023’. Scope 2 market-based emissions are reported using
the conversion factor associated with each individual electricity, heating and cooling supply, either obtained directly from the supplier or from
their official company website.
Scope 3 emissions are those that are a consequence of our business activities, but which occur at sources we do not own or control and which
are not classified as Scope 2 emissions. The GHG Protocol identifies 15 categories of which 8 are directly relevant for Landsec. Our Scope 3
reporting methodology is detailed in our Sustainability Performance and Data Report on landsec.com/sustainability/reports-benchmarking.
LANDSEC – SCOPE 1 AND 2 EMISSIONS
TABLE 70
Emissions
Unit
2021/22
2022/231
2023/24
Scope 1
tCO2e
7,151
6,950
5,809
Scope 2 (location-based method)
tCO2e
18,338
16,798
17,667
Scope 2 (market-based method)
tCO2e
2,054
2,954
2,760
Scope 1 and 2 (location-based method)
tCO2e
25,489
23,748
23,476
Scope 1 and 2 (market-based method)
tCO2e
9,205
9,904
8,569
Intensity
Unit
2021/22
2022/23
2023/24
Scope 1 and 2 (location-based method)
kgCO2e/m2
14.12
12.84
13.01
Scope 1 and 2 (market-based method)
kgCO2e/m2
5.10
5.36
4.75
1. Scope 1 emissions for 2022/23 have been restated due to a change in the refrigerant gas data collection methodology. This data is now reported based on input date into the
reporting system, whereas previously it was based on delivery date.
SUSTAINABILITY PERFORMANCE
170
LANDSEC ANNUAL REPORT 2024
171
ADDITIONAL INFORMATION
LANDSEC SCOPE 1 AND 2 EMISSIONS –
YEAR ON YEAR DRIVING FACTORS
CHART 71
23,748
(297)
(345)
127
(1,039)
1,281
23,475
0
5,000
10,000
15,000
20,000
25,000
tCO2e
2022/23
Portfolio
changes
External
temperature
Occupancy
changes
Energy
efficiencies
Emission
factor
2023/24
Scope 1 and 2 GHG emissions using location-based emission factors
have decreased by 1% compared with the previous reporting year.
The key reduction driver comes from our energy efficiency initiatives
across our assets however the impact has been offset by the change
of emissions factors, particularly electricity, with a 7% increase
compared with last year.
The detailed breakdown of main factors driving the change in our
Scope 1 and Scope 2 can be seen in the waterfall chart 71. In terms
of market-based emissions, we have seen a reduction of 13% due
to an increase of assets under our operational control supplied with
REGO-backed renewable electricity.
LANDSEC EMISSIONS INVENTORY
TABLE 72
Scope 3 Category
Unit
2021/221
2022/231
2023/24
Purchased goods and services (PG&S)
tCO2e
21,623
27,516
35,354
Capital goods
tCO2e
49,682
52,987
73,355
Fuel- and energy-related activities
tCO2e
7,765
6,792
6,575
Upstream transportation and distribution
tCO2e
Under PG&S
Under PG&S
Under PG&S
Waste generated in operations
tCO2e
516
625
605
Business travel
tCO2e
40
135
274
Employee commuting
tCO2e
159
104
131
Downstream leased assets
tCO2e
89,375
87,551
88,415
Scope 3
tCO2e
169,160
175,710
204,709
Scope 1,2 and 3 (location-based method)
tCO2e
194,649
199,458
228,185
Scope 1,2 and 3 (market-based method)
tCO2e
178,365
185,614
213,278
1. Capital Goods emissions for 2021/22 and 2022/23 have been restated due to previously double-counting emissions for one development project.
The following Scope 3 emissions are considered not applicable to us thus excluded from the above table: 8. Upstream leased assets; 9. Downstream transportation and distribution;
10. Processing of sold products; 11. Use of sold products; 12. End-of-life treatment of sold products; 14. Franchises and 15. Investments. Further information is detailed in our
Sustainability Performance and Data Report on landsec.com/sustainability/reports-benchmarking.
LANDSEC ANNUAL REPORT 2024
ADDITIONAL INFORMATION
LANDSEC EMISSIONS INVENTORY
(% OF TOTAL EMISSIONS)
CHART 73
Capital goods
32%
Downstream
leased assets
39%
Purchased goods
and services (PG&S)
15%
Other
emissions
0.4%
Fuel and
energy-related
activities
3%
Scope 2 (location
based method)
8%
Scope 1
3%
Scope 3
89%
Our emissions inventory can be seen in table 72. The two largest
Scope 3 categories are Capital goods and Downstream leased assets,
making up over 70% of our total emissions, as shown in chart 73.
Capital goods include the emissions associated with the manufacture
and transport of materials used within our development activities
and portfolio projects. Downstream leased assets are those emissions
associated with energy consumed by our customers within our assets.
Emissions from Capital goods have increased by 38% compared with
last year due to a combination of portfolio projects, refurbishment
works across our sites and inflation. Overall higher costs impact the
proportion of our emissions that are estimated based on procurement
spend. We continue making considerable progress in reducing upfront
embodied carbon at our developments, as discussed on page 29.
Our development pipeline performance which includes our target
and performance of upfront embodied carbon is detailed in our
Sustainability Performance and Data Report.
In relation to Downstream leased assets, we continue engaging
our tenants of our FRI assets and retail brand partners to increase
the share of primary tenant energy usage data (69% of our total
downstream leased assets data), thereby increasing actual
performance data. The small 1% increase in carbon emissions
compared with last year for this category is explained by a
combination of increase of actual data included in the calculation
and increase in electricity emissions factor compared with last year.
LANDSEC – ENERGY CONSUMPTION
TABLE 74
Unit
2021/22
2022/23
2023/24
Natural Gas
kWh
for landlord shared services
34,618,470
31,202,547
28,558,903
(sub)metered to tenants
17,627,638
19,526,063
16,912,876
Total Natural Gas consumption
52,246,108
50,728,610
45,471,779
Electricity
kWh
for landlord shared services
81,414,523
82,227,618
81,052,747
(sub)metered to tenants
48,120,743
51,168,404
50,356,156
Total Electricity consumption
129,535,266
133,396,023
131,408,903
District Heating and Cooling
kWh
for landlord shared services
5,551,710
4,973,961
5,022,348
(sub)metered to tenants
4,170,874
4,263,285
3,991,868
Total Heating and Cooling consumption
9,722,584
9,237,246
9,014,216
Total Energy Consumption
kWh
for landlord shared services
121,584,703
118,404,126
114,633,998
(sub)metered to tenants
69,919,255
74,957,753
71,260,900
Total Energy consumption
191,503,958
193,361,879
185,894,898
Energy intensity
kWh/m2
106
105
103
The table 74 shows the absolute energy consumption with a breakdown by landlord and tenant consumption. This year, absolute energy
intensity has decreased by 1% compared with the previous year.
Despite higher occupancy rates, energy intensity has reduced due to energy efficiencies achieved through a combination of active energy
management, optimisation of building controls, lighting upgrades and our Net Zero Transition Investment Plan (NZTIP). Progress against
our NZTIP is discussed on pages 28-29.
ASSURANCE
Landsec’s auditor, EY, has once again conducted sustainability assurance. This is part of our journey to embed sustainability across the business
and enhance the integrity, quality and usefulness of the information we provide. EY performed a limited assurance engagement on selected
performance data and qualitative statements in the ‘People and Culture’, ‘Our approach to sustainability’, ‘Build well’, ‘Live well’, ‘Act well’
and ‘TCFD’ sections of the Strategic Report pages 25-37; the sustainability content in the ‘Additional Information’ section of the Landsec 2024
Annual Report pages 170-172; and the online Sustainability Performance and Data Report 2024.
This report and the full assurance statement is available at landsec.com/sustainability/reports-benchmarking.
SUSTAINABILITY PERFORMANCE
CONTINUED
172
LANDSEC ANNUAL REPORT 2024
173
ADDITIONAL INFORMATION
The Group has applied the European Securities and Markets Authority (ESMA) ‘Guidelines on Alternative Performance Measures’ in these results.
In the context of these results, an alternative performance measure (APM) is a financial measure of historical or future financial performance,
position or cash flows of the Group which is not a measure defined or specified in IFRS.
The table below summarises the APMs included in these results and where the reconciliations of these measures can be found. The definitions
of APMs are included in the Glossary.
TABLE 75
Alternative performance measure
Nearest IFRS measure
Reconciliation
EPRA earnings
Profit/loss before tax
Note 4
EPRA earnings per share
Basic earnings/loss per share
Note 5
EPRA diluted earnings per share
Diluted earnings/loss per share
Note 5
EPRA Net Tangible Assets
Net assets attributable to shareholders
Note 5
EPRA Net Tangible Assets per share
Net assets attributable to shareholders
Note 5
Total return on equity
n/a
Note 5
Adjusted net cash inflow from operating activities
Net cash inflow from operating activities
Note 13
Combined Portfolio
Investment properties
Note 14
Adjusted net debt
Borrowings
Note 21
Group LTV
n/a
Note 21
EPRA LTV
n/a
Note 21
ALTERNATIVE PERFORMANCE MEASURES
LANDSEC ANNUAL REPORT 2024
ADDITIONAL INFORMATION
COMBINED PORTFOLIO ANALYSIS
TOTAL PORTFOLIO ANALYSIS
Market value1
Valuation movement1
Rental income1
Annualised rental
income2
Net estimated rental
value3
31 March
2024
£m
31 March
2023
£m
(Deficit)/
surplus
£m
Surplus/
(deficit)
%
31 March
2024
£m
31 March
2023
£m
31 March
2024
£m
31 March
2023
£m
31 March
2024
£m
31 March
2023
£m
Central London
West End offices
3,109
2,653
(111)
(3.6)
148
140
160
134
186
146
City offices
1,192
1,304
(188)
(13.9)
68
76
70
61
93
87
Retail and other
991
1,095
(48)
(4.7)
58
76
43
42
55
56
Developments4
926
1,190
(102)
(9.9)
20
21
8
5
93
57
Total Central London
6,218
6,242
(449)
(6.9)
294
313
281
242
427
346
Major retail
Shopping centres
1,226
1,196
1
0.1
131
120
121
114
122
123
Outlets
605
684
(21)
(3.3)
57
59
48
56
49
60
Total Major retail
1,831
1,880
(20)
(1.1)
188
179
169
170
171
183
Mixed-use urban
London
191
285
(23)
(10.3)
17
19
11
16
16
22
Major regional cities
510
530
(93)
(15.3)
41
39
37
36
38
35
Total Mixed-use urban5
701
815
(116)
(14.0)
58
58
48
52
54
57
Subscale sectors
Leisure
423
476
(35)
(8.2)
48
51
46
51
42
50
Hotels
400
408
2
0.6
35
30
35
31
29
28
Retail parks
390
418
(7)
(1.8)
30
28
27
28
29
30
Total Subscale sectors
1,213
1,302
(40)
(3.2)
113
109
108
110
100
108
Combined Portfolio
9,963
10,239
(625)
(6.0)
653
659
606
574
752
694
Properties treated as finance leases
–
–
–
–
(1)
(2)
Combined Portfolio
9,963
10,239
(625)
(6.0)
652
657
Represented by:
Investment portfolio
9,347
9,603
(606)
(6.2)
613
603
569
536
712
655
Share of joint ventures
616
636
(19)
(3.2)
39
54
37
38
40
39
Combined Portfolio
9,963
10,239
(625)
(6.0)
652
657
606
574
752
694
174
LANDSEC ANNUAL REPORT 2024
175
ADDITIONAL INFORMATION
TOTAL PORTFOLIO ANALYSIS CONTINUED
TABLE 76
Notes:
1. Refer to Glossary for definition.
2. Annualised rental income is annual ‘rental income’ (as defined
in the Glossary) at the balance sheet date, except that car park
and commercialisation income are included on a net basis (after
deduction for operational outgoings). Annualised rental income
includes temporary lettings.
3. Net estimated rental value is gross estimated rental value, as defined
in the Glossary, after deducting expected rent payable.
4. Comprises the development pipeline – refer to Glossary for definition.
5. The prior year data has been restated to align with the updated
categories disclosed.
6. Net initial yield – refer to Glossary for definition. This calculation
includes all properties including those sites with no income.
7. Equivalent yield – refer to Glossary for definition. Future developments
are excluded from the calculation of equivalent yield on the
Combined Portfolio.
8. The like-for-like portfolio – refer to Glossary for definition.
Net initial yield6
Equivalent yield7
31 March
2024
%
Movement
in like-for-
like8
bps
31 March
2024
%
Movement
in like-for-
like8
bps
Central London
West End offices
4.2
24
5.3
37
City offices
3.9
64
6.0
78
Retail and other
4.6
42
4.9
30
Developments4
(0.0)
n/a
5.4
n/a
Total Central London
4.2
39
5.4
46
Major retail
Shopping centres
8.1
3
8.1
23
Outlets
6.3
13
7.0
17
Total Major retail
7.5
8
7.8
22
Mixed-use urban
London
4.2
(108)
6.6
22
Major regional cities
6.7
64
7.7
106
Total Mixed-use urban5
6.1
21
7.3
85
Subscale sectors
Leisure
8.7
51
8.8
26
Hotels
7.3
61
7.2
54
Retail parks
6.0
(63)
6.8
38
Total Subscale sectors
7.4
17
7.6
38
Combined Portfolio
5.4
31
6.2
45
Represented by:
Investment portfolio
5.4
n/a
6.2
n/a
Share of joint ventures
6.0
n/a
6.0
n/a
Combined Portfolio
5.4
n/a
6.2
n/a
LANDSEC ANNUAL REPORT 2024
ADDITIONAL INFORMATION
RECONCILIATION OF SEGMENTAL INFORMATION NOTE TO STATUTORY REPORTING
RECONCILIATION OF SEGMENTAL INFORMATION NOTE TO STATUTORY REPORTING FOR THE YEAR ENDED 31 MARCH 2023
TABLE 77
Year ended 31 March 2023
Group
income
statement
£m
Joint
ventures1
£m
Adjustment for
non-wholly
owned
subsidiaries2
£m
Total
£m
EPRA
earnings
£m
Capital
and other
items
£m
Rental income
612
53
(8)
657
657
–
Finance lease interest
2
–
–
2
2
–
Gross rental income (before rents payable)
614
53
(8)
659
659
–
Rents payable
(10)
(2)
–
(12)
(12)
–
Gross rental income (after rents payable)
604
51
(8)
647
647
–
Service charge income
91
10
(3)
98
98
–
Service charge expense
(100)
(12)
2
(110)
(110)
–
Net service charge expense
(9)
(2)
(1)
(12)
(12)
–
Other property related income
29
2
–
31
31
–
Direct property expenditure
(100)
(10)
2
(108)
(108)
–
Movement in bad and doubtful debt provision
2
1
–
3
3
–
Segment net rental income
526
42
(7)
561
561
–
Other income
3
–
–
3
3
–
Administrative expenses
(80)
(2)
–
(82)
(82)
–
Depreciation
(5)
–
–
(5)
(5)
–
EPRA earnings before interest
444
40
(7)
477
477
–
Share of post-tax loss from joint ventures
(1)
1
–
–
–
–
Profit on disposal of trading properties
1
–
–
1
–
1
Loss on disposal of investment properties3
(144)
–
–
(144)
–
(144)
Net deficit on revaluation of investment properties
(827)
(30)
9
(848)
–
(848)
Net development contract expenditure
(9)
–
–
(9)
–
(9)
Loss on changes in finance leases
(6)
–
–
(6)
–
(6)
Impairment of goodwill
(5)
–
–
(5)
–
(5)
Impairment of trading properties
(19)
–
–
(19)
–
(19)
Depreciation
(3)
–
–
(3)
–
(3)
Operating (loss)/profit
(569)
11
2
(556)
477
(1,033)
Finance income
34
–
1
35
11
24
Finance expense
(87)
(11)
–
(98)
(95)
(3)
(Loss)/Profit before tax
(622)
–
3
(619)
393
(1,012)
Taxation
–
–
–
–
(Loss)/Profit for the year
(622)
–
3
(619)
1. Reallocation of the share of post-tax loss from joint ventures reported in the Group income statement to the individual line items reported in the segmental information note.
2. Removal of the non-wholly owned share of results of the Group’s subsidiaries. The non-wholly owned subsidiaries are consolidated at 100% in the Group’s income statement,
but only the Group’s share is included in EPRA earnings reported in the segmental information note.
3. Included in the loss on disposal of investment properties is a £9m charge related to the provision for fire safety remediation works on properties no longer owned by the Group
but for which the Group is responsible for remediating under the Building Safety Act 2022.
176
LANDSEC ANNUAL REPORT 2024
177
ADDITIONAL INFORMATION
TEN YEAR SUMMARY
INCOME STATEMENT
TABLE 78
Year ended and as at 31 March
2024
£m
2023
£m
2022
£m
2021
£m
2020
£m
2019
£m
2018
£m
2017
£m
2016
£m
2015
£m
Revenue
824
791
679
635
741
757
830
781
936
765
Costs
(409)
(382)
(308)
(333)
(274)
(271)
(321)
(260)
(404)
(329)
415
409
371
302
467
486
509
521
532
436
Share of post-tax profit/(loss)
from joint ventures
2
(1)
33
(192)
(151)
(85)
27
69
199
326
(Loss)/profit on disposal of
investment properties
(16)
(144)
107
8
(6)
–
1
19
75
107
Profit/(loss) on disposal of
investments in joint ventures
–
–
2
–
–
–
66
(2)
–
3
Profit on disposal of other
investments
–
–
–
–
–
–
–
13
–
–
Net (deficit)/surplus on revaluation
of investment properties
(628)
(827)
416
(1,448)
(1,000)
(441)
(98)
(186)
739
1,771
(Loss)/gain on changes in
finance leases
–
(6)
6
–
–
–
–
–
–
–
Operating (loss)/profit
(227)
(569)
935
(1,330)
(690)
(40)
505
434
1,545
2,643
Net finance expense
(114)
(53)
(60)
(63)
(147)
(83)
(548)
(268)
(185)
(207)
Net gain on business combination
–
–
–
–
–
–
–
–
–
2
(Loss)/profit before tax
(341)
(622)
875
(1,393)
(837)
(123)
(43)
166
1,360
2,438
Taxation
–
–
–
–
5
4
(1)
1
2
–
(Loss)/profit for the year
(341)
(622)
875
(1,393)
(832)
(119)
(44)
167
1,362
2,438
Net (deficit)/surplus on
revaluation of investment
properties1:
Investment portfolio
(628)
(827)
416
(1,448)
(998)
(440)
(98)
(187)
736
1,768
Share of joint ventures
(19)
(30)
(3)
(198)
(181)
(117)
7
40
171
269
Adjustment for non-wholly
owned subsidiaries2
22
9
(4)
–
–
–
–
–
–
–
Total
(625)
(848)
409
(1,646)
(1,179)
(557)
(91)
(147)
907
2,037
EPRA earnings
371
393
355
251
414
442
406
382
362
329
Results per share
Total dividend payable in respect
of the financial year
39.6p
38.6p
37.0p
27.0p
23.2p
45.55p
44.2p
38.55p
35.0p
31.85p
Basic (loss)/earnings per share
(43.0)p
(83.6)p
117.4p
(188.2)p
(112.4)p
(16.1)p
(5.8)p
21.1p
172.4p
308.6p
Diluted (loss)/earnings per share
(43.0)p
(83.6)p
117.1p
(188.2)p
(112.4)p
(16.1)p
(5.8)p
21.1p
171.8p
307.4p
EPRA earnings per share
50.1p
53.1p
48.0p
33.9p
55.9p
59.7p
53.1p
48.4p
45.9p
41.7p
EPRA diluted earnings per share
50.1p
53.1p
47.8p
33.9p
55.9p
59.7p
53.1p
48.3p
45.7p
41.5p
Net assets per share
863p
945p
1,070p
975p
1,182p
1,341p
1,404p
1,418p
1,434p
1,293p
Diluted net assets per share
859p
942p
1,067p
973p
1,181p
1,339p
1,404p
1,416p
1,431p
1,288p
EPRA Net Tangible Assets per share
859p
936p
1,063p
985p
1,192p
1,348p
1,410p
1,422p
1,433p
1,296p
1. Includes our non-wholly owned subsidiaries on a proportionate basis.
2. This represents the interest in MediaCity which we do not own but consolidate in the Group numbers.
LANDSEC ANNUAL REPORT 2024
ADDITIONAL INFORMATION
TEN YEAR SUMMARY
CONTINUED
BALANCE SHEET
TABLE 79
As at 31 March
2024
£m
2023
£m
2022
£m
2021
£m
2020
£m
2019
£m
2018
£m
2017
£m
2016
£m
2015
£m
Investment properties
9,330
9,658
11,207
9,607
11,297
12,094
12,336
12,144
12,358
12,158
Intangible assets
3
6
8
8
14
20
34
36
38
35
Net investment in finance leases
21
21
70
152
156
159
162
165
183
185
Loan investments
–
–
–
–
–
–
–
–
–
50
Investment in joint ventures
529
533
700
625
824
1,031
1,151
1,734
1,668
1,434
Investment in associates
–
3
4
–
–
–
–
–
–
–
Trade and other receivables
159
146
177
170
178
176
165
123
86
53
Other non-current assets
48
67
61
22
32
30
49
51
44
29
Total non-current assets
10,090
10,434
12,227
10,584
12,501
13,510
13,897
14,253
14,377
13,944
Trading properties and long-term
development contracts
100
118
145
36
24
23
24
122
124
222
Trade and other receivables
383
365
368
354
433
437
471
418
445
404
Monies held in restricted accounts
and deposits
6
4
22
10
9
36
15
21
19
10
Cash and cash equivalents
78
41
128
–
1,345
14
62
30
25
14
Other current assets
11
4
5
6
48
14
–
–
–
–
Total current assets
578
532
668
406
1,859
524
572
591
613
650
Non-current assets held for sale
–
–
–
–
–
–
–
–
–
283
Borrowings
(975)
(315)
(541)
(906)
(977)
(934)
(872)
(404)
(19)
(191)
Trade and other payables
(352)
(306)
(320)
(252)
(270)
(273)
(294)
(302)
(289)
(367)
Provisions
(30)
–
–
–
–
–
–
–
–
–
Other current liabilities
–
(24)
(11)
(7)
(2)
(18)
(14)
(7)
(19)
(10)
Total current liabilities
(1,357)
(645)
(872)
(1,165)
(1,249)
(1,225)
(1,180)
(713)
(327)
(568)
Borrowings
(2,805)
(3,223)
(4,012)
(2,610)
(4,355)
(2,847)
(2,858)
(2,859)
(3,222)
(3,985)
Trade and other payables
(4)
(17)
(8)
(1)
(1)
(1)
–
(25)
(28)
(30)
Provisions
(42)
–
–
–
–
–
–
–
–
–
Other non-current liabilities
(13)
(9)
(12)
(2)
(5)
(5)
(8)
(9)
(47)
(45)
Redemption liability
–
–
–
–
–
(36)
(37)
(36)
(35)
(35)
Total non-current liabilities
(2,864)
(3,249)
(4,032)
(2,613)
(4,361)
(2,889)
(2,903)
(2,929)
(3,332)
(4,095)
Net assets
6,447
7,072
7,991
7,212
8,750
9,920
10,386
11,202
11,331
10,214
Net debt1
(3,596)
(3,348)
(4,254)
(3,509)
(3,942)
(3,747)
(3,654)
(3,219)
(3,229)
(4,193)
Market value of the Combined
Portfolio
9,963
10,239
12,017
10,791
12,781
13,750
14,103
14,439
14,471
14,031
Adjusted net debt1
(3,517)
(3,287)
(4,179)
(3,489)
(3,926)
(3,737)
(3,652)
(3,261)
(3,239)
(4,172)
1. Net debt and adjusted net debt exclude amounts payable under head leases for reporting periods from, and including, the year ended 31 March 2022. Net debt and adjusted
net debt for prior periods included in the table above have not been restated, but would have excluded amounts payable under head leases of £61m (2021), £30m (2020 and 2019),
£31m (2018 and 2017), £14m (2016) and £17m (2015).
178
LANDSEC ANNUAL REPORT 2024
179
ADDITIONAL INFORMATION
SUBSIDIARIES, JOINT VENTURES AND ASSOCIATES
As at 31 March 2024, the Company had
a 100% interest, direct or indirect, in the
ordinary share capital of the following
subsidiaries, all of which are registered in the
UK at 100 Victoria Street, London, SW1E 5JL,
except for entities with a footnote indicating
their country of registration and address.
B.M. COM. Lease Extension LLP
Barrack Close Limited
Beyond Green Developments (Broadland)
Limited10
Birmingham International Park Limited
Blueco Limited10
Bluewater Outer Area Limited10
Bluewater Two Limited
Burlington House Developments Limited2
Castleford (UK) Limited
Cathedral (Brighton) Limited10
Cathedral (Bromley 2) Limited10
Cathedral (Bromley Esco) Limited
Cathedral (Bromley) Limited
Cathedral (Greenwich Beach) Limited
Cathedral (Preston Barracks) Limited
Cathedral (Sittingbourne) Limited10
Dashwood House Limited10
Deadhare Limited
Development Securities (Curzon Park)
Limited
Development Securities (Edgware Road No.1)
Limited
Development Securities (Furlong) Limited10
Development Securities (Greenwich)
Limited10
Development Securities (Hammersmith)
Limited
Development Securities (HDD) Limited10
Development Securities (Ilford) Limited10
Development Securities (Investment
Ventures) Limited10
Development Securities (Investments) PLC
Development Securities (Launceston)
Limited10
Development Securities (Nailsea) Limited
Development Securities (No. 22) Limited
Development Securities (Romford) Limited
Development Securities (Sevenoaks) Limited3
Development Securities (Slough) Limited
Development Securities Estates Limited
DS Investment Properties LLP
DS Jersey (Capital Partners) Limited4
DS Jersey (Notting Hill) Limited4
DS Renewables LLP10
DS Robswall Ireland (Residential) Limited2
ECC Investments Limited
Elystan Developments Limited
EPD Buckshaw Village Limited10
Furlong Shopping Centre Limited
Greenhithe Holdings Limited5
Greenhithe Investments Limited5
Greenwitch Limited
Gunwharf Quays Limited10
HDD Didcot Limited
HDD Lawley Village Limited
HDD Newton Leys Limited
Hendy Wind Farm Limited
Kent Retail Investments Limited6
Kingsland Shopping Centre Limited
L.& P. Estates Limited
Land Securities (Finance) Limited
Land Securities Buchanan Street
Developments Limited10
Land Securities Capital Markets PLC
Land Securities Development Limited10
Land Securities Ebbsfleet Limited10
Land Securities Insurance Limited9
Land Securities Intermediate Limited
Land Securities Lakeside Limited10
Land Securities Management Limited10
Land Securities Management Services
Limited
Land Securities Partnerships Limited10
Land Securities Pensions Trustee Limited
Land Securities PLC
Land Securities Portfolio Management
Limited
Land Securities Properties Limited
Land Securities Property Holdings Limited1
Land Securities SPV’S Limited10
Land Securities Trading Limited10
Land Securities Trinity Limited10
Landsec 1 Limited12
Landsec 2 Limited13
Landsec 3 Limited14
Landsec 4 Limited15
Landsec 5 Limited16
Landsec 6 Limited17
Landsec 7 Limited18
Landsec 8 Limited19
Landsec 9 Limited20
Landsec 10 Limited21
Company name
Company name
LANDSEC ANNUAL REPORT 2024
ADDITIONAL INFORMATION
SUBSIDIARIES, JOINT VENTURES AND ASSOCIATES
CONTINUED
Landsec 11 Limited22
Landsec 12 Limited23,10
Landsec 13 Limited24
Landsec 14 Limited25
Landsec 15 Limited26
Landsec 16 Limited27
Landsec 17 Limited28
Landsec 18 Limited29
Landsec 19 Limited30
Landsec 20 Limited31
Landsec 21 Limited32,10
Landsec 22 Limited33
Landsec 23 Limited34
Landsec Investment Services Limited36
Landsec Limited
Landsec U and I Developer Limited35,10
Landsec Workplace Developer Limited37,10
LC25 Limited10
Leisure II (North Finchley Two) Limited6
Leisure II (North Finchley) Limited6
Leisure II (West India Quay LP) Shareholder
Limited
Leisure II (West India Quay Two) Limited6
Leisure II (West India Quay) Limited6
Leisure Parks I Limited10
Leisure Parks II Limited10
LS (Jaguar) GP Investments Limited
LS 1 New Street Square Developer Limited
LS 1 Sherwood Street Developer Limited10
LS 1 Sherwood Street Limited10
LS 123 Victoria Street Limited10
LS 21 Moorfields Development Management
Limited10
LS 60-78 Victoria Street Limited10
LS 62 Buckingham Gate Limited10
LS Aberdeen Limited10
LS Aldersgate Limited10
LS Banbridge Phase Two Limited
LS Bexhill Limited10
LS Bluewater Investments Limited10
LS Bracknell Limited10
LS Braintree Limited10
LS Buchanan Limited10
LS Canterbury Limited
LS Cardiff (GP) Investments 2 Limited
LS Cardiff (GP) Investments Limited
LS Cardiff 2 Limited10
LS Cardiff Holdings Limited10
LS Cardiff Limited10
LS Cardinal Limited10
LS Chadwell Heath Limited10
LS Chesterfield Limited10
LS City Gate House Limited
LS Company 31 Limited
LS Company 32 Limited
LS Company 33 Limited
LS Company 34 Limited
LS Company 35 Limited
LS Company 36 Limited
LS Company 37 Limited
LS Company 38 Limited
LS Company 39 Limited
LS Company Secretaries Limited
LS Development Holdings Limited10
LS Director Limited
LS Dundas Square Limited
LS Eastbourne Terrace Limited10
LS Easton Park Development Limited10
LS Easton Park Investments Limited10
LS Entertainment Venues Limited10
LS Ewer Street Limited10
LS Finchley Road Limited10
LS Forge Bankside Limited
LS Great North Finchley Limited10
LS Gunwharf Limited
LS Harrogate Limited
LS Harvest 2 Limited10
LS Harvest Limited
LS Hill House Developer Limited
LS Hill House Limited10
LS Hotels Limited10
LS Kings Gate Residential Limited10
LS Kingsmead Limited10
LS Leisure Parks Investments Limited10
LS Lewisham Limited10
LS Liberty of Southwark Limited
LS Liverpool Limited10
LS London Holdings One Limited10
LS London Holdings Three Limited10
LS Moorgate Limited10
LS MYO 123 Victoria Street Limited
LS MYO Dashwood House Limited
LS Myo Limited10
LS MYO New Street Square Limited10
LS MYO St Pauls Limited39
LS MYO The Forge Limited38
LS n2 Limited10
LS New Street Square Investments Limited
LS Nominees Holdings Limited10
LS Nova Development Management
Limited10
LS Nova GP Investments Limited
LS Nova LP1 Limited10
LS Nova LP2 Limited10
LS Nova Place Limited10
LS Occupier Limited10
LS Old Broad Street Developer Limited
LS Old Broad Street Limited10
LS One New Change Limited10
LS Oval Limited10
LS Poole Retail Limited10
LS Portfolio Investments Limited10
LS Portland House Developer Limited10
LS Project 92 Limited10
LS Property Finance Company Limited
LS QAM Limited10
LS Red Lion Court Developer Limited10
LS Red Lion Court Limited
LS Regent Quarter Limited43
LS Regent Quarter Residential Limited42,10
LS Retail Warehouses Limited10
LS Rome Limited44
LS Shepherds Bush Limited10
LS Southside Limited10
LS Street Limited10
LS Taplow Limited10
LS Thanet Limited10
LS Timber Square Developer Limited10
LS Timber Square Limited
LS Tottenham Court Road Limited10
LS Victoria Properties Limited10
LS West India Quay Limited10
LS Westminster Limited
LS White Rose Limited10
LS Workplace Managed Services Limited41,10
Company name
Company name
Company name
180
LANDSEC ANNUAL REPORT 2024
181
ADDITIONAL INFORMATION
LS Xscape Castleford Limited10
LS Xscape Milton Keynes Limited10
LS Zig Zag Limited10
Luneside East Limited
Mayfield Medlock Limited10
Mayfield Poulton Limited10
Mayfield Republic Limited10
Njord Wind Developments Limited10
Nova Developer Limited10
Oriana GP Limited
OSB (Holdco 1) Limited10
OSB (Holdco 2) Limited10
Oxford Castle Apartments Limited
Percy Place DS (Ireland) Limited2
Prime London Net Zero Office GP Limited45
Prime London Net Zero Office LP
Prime London Net Zero Office REIT Limited46
Public Private Partnership (H) Limited
Purplexed LLP
Ravenseft Properties Limited10
Retail Property Holdings Trust Limited
Rhoscrowther Wind Farm Limited10
Rivella Properties Bicester Limited
Rosefarm Leisure Limited
St David’s (Cardiff Residential) Limited10
St David’s (General Partner) Limited10
St. David’s (No.1) Limited
St. David’s (No.2) Limited
St. David’s Limited Partnership10
The City of London Real Property Company
Limited10
The Deptford Project 2 Limited
The Deptford Project Limited
The Imperial Hotel Hull Limited
The Telegraph Works Limited10
The X-Leisure (General Partner) Limited10
The X-Leisure Unit Trust6
Tops Shop Estates Limited
Triangle Developments Limited
Triangle London Limited
U and I (8AE) Limited10
U and I (Ashford) Limited
U and I (Bromley Commercial) Limited
U and I (Broombridge) Ind Limited2
U and I (Cambridge) Limited10
U and I (Development and Trading) Limited
U and I (Golf) Limited10
U and I (GVP) Limited10
U and I (Harwell) Limited10
U and I (Innovation Hubs) Limited10
U and I (Management) Ireland Limited2
U and I (PB) Commercial Limited10
U and I (Pincents Lane) Limited
U and I (White Heather) Limited2
U and I (WIE) Limited10
U and I Company Secretaries Limited
U and I Director 1 Limited
U and I Director 2 Limited
U and I Exit Limited10
U and I Finance Limited47
U and I Group Limited
U and I Investment Portfolio Limited10
U and I IPA Limited
U and I IPA SC Limited
U and I IPB Limited
U and I IPC Limited10
U and I Netherlands BV7
U and I Plus X TC Limited8,10
U and I PPP Limited10
Westminster Trust Limited(The)
Willett Developments Limited
X-Leisure Limited10
X-Leisure Management Limited
Xscape Castleford Limited6
Xscape Castleford No.2 Limited6
Xscape Milton Keynes (Jersey) No.2 Limited6
Xscape Milton Keynes Limited6
1. Subsidiary directly held by the Company, Land
Securities Group PLC.
2. C/O William Fry, 2 Grand Canal Square, Dublin 2,
Ireland, D02 A342.
3. C/O James Cowper Kreston The White Building,
1-4 Cumberland Place, Southampton, SO15 2NP.
4. Fifth Floor, 37 Esplanade, St. Helier, JE1 2TR, Jersey.
5. 44 Esplanade, St Helier, JE4 9WG, Jersey.
6. IFC 5, St Helier, JE1 1ST, Jersey.
7. Prins Bernhardplein 200, 1097 JB Amsterdam, PO Box
990, 1000 AZ Amsterdam, Netherlands.
8. 85 Great Portland Street, First Floor, London, England,
W1W 7LT.
9. Dorey Court, Admiral Park, St Peter Port, Guernsey,
GY1 4AT.
10. Exempt from the requirement of the Companies Act
2006 (the Act) relating to the audit of individual
accounts by virtue of Section 479A of the Act.
11. The name of this company was changed to LS
Bluewater Investments Limited on 30 September
2023.
12. The name of this company was changed to Landsec 1
Limited on 30 June 2023.
13. The name of this company was changed to Landsec 2
Limited on 5 July 2023.
14. The name of this company was changed to Landsec 3
Limited on 5 July 2023.
15. The name of this company was changed to Landsec 4
Limited on 30 June 2023.
16. The name of this company was changed to Landsec 5
Limited on 30 June 2023.
17. The name of this company was changed to Landsec 6
Limited on 30 June 2023.
18. The name of this company was changed to Landsec 7
Limited on 5 July 2023.
19. The name of this company was changed to Landsec 8
Limited on 5 July 2023.
20. The name of this company was changed to Landsec 9
Limited on 5 July 2023.
21. The name of this company was changed to Landsec 10
Limited on 5 July 2023.
22. The name of this company was changed to Landsec 11
Limited on 5 July 2023.
23. The name of this company was changed to Landsec 12
Limited on 5 July 2023.
24. The name of this company was changed to Landsec 13
Limited on 5 July 2023.
25. The name of this company was changed to Landsec 14
Limited on 5 July 2023.
26. The name of this company was changed to Landsec 15
Limited on 5 July 2023.
27. The name of this company was changed to Landsec 16
Limited on 5 July 2023.
28. The name of this company was changed to Landsec 17
Limited on 5 July 2023.
29. The name of this company was changed to Landsec 18
Limited on 5 July 2023.
30. The name of this company was changed to Landsec 19
Limited on 5 July 2023.
31. The name of this company was changed to Landsec 20
Limited on 6 July 2023.
32. The name of this company was changed to Landsec 21
Limited on 5 July 2023.
33. The name of this company was changed to Landsec 22
Limited on 5 July 2023.
34. The name of this company was changed to Landsec 23
Limited on 5 July 2023.
35. The name of this company was changed to Landsec U
and I Developer Limited on 27 May 2023.
36. The name of this company was changed to Landsec
Investment Services Limited on 21 June 2023.
37. The name of this company was changed to Landsec
Workplace Developer Limited on 22 June 2023.
38. The name of this company was changed to LS MYO
The Forge Limited on 29 August 2023.
39. The name of this company was changed to LS MYO
St Pauls Limited on 21 November 2023.
40. The name of this company was changed to LS
Liverpool Limited on 30 November 2023.
41. The name of this company was changed to LS
Workplace Managed Services Limited on 6 May 2023.
42. The name of this company was changed to LS Regent
Quarter Residential Limited on 31 January 2024.
43. The name of this company was changed to LS Regent
Quarter Limited on 29 August 2023.
44. The name of this company was changed to LS Rome
Limited on 21 June 2023.
45. The name of this company was changed to Prime
London Net Zero Office GP Limited on 30 November
2023.
46. The name of this company was changed to Prime
London Net Zero Office REIT Limited on 30 November
2023.
47. The name of this company was changed to U and I
Finance Limited on 14 March 2024.
Company name
Company name
LANDSEC ANNUAL REPORT 2024
ADDITIONAL INFORMATION
SUBSIDIARIES, JOINT VENTURES AND ASSOCIATES
CONTINUED
As at 31 March 2024, the Company had
an interest (as shown), direct or indirect,
in the ordinary share capital of the following
subsidiaries, joint ventures and associates.
All entities included below are registered
in the UK at 100 Victoria Street, London,
SW1E 5JL, except for entities with a footnote
indicating their country of registration and
address. Where the Group share of ordinary
share capital is from 75% to 100%, these
entities are subsidiaries of the Company.
Where the share of ordinary share capital
is from 50% to 74%, these entities are joint
venture interests based on contractually
agreed sharing of control with joint venture
partners. All other holdings are associate
interests.
Bluewater REIT
75%
Cathedral (Movement Greenwich) LLP
53%
CDSR Burlington House Developments
Limited7
20%
Central Research Laboratory (Hayes)
Limited
50%
Circus Street Developments Limited
50%
Curzon Park Limited
50%
Ebbsfleet Investment (GP) Limited
50%
Ebbsfleet Nominee No.1 Limited
50%
Harvest 2 GP Limited
50%
Harvest 2 Limited Partnership
50%
Harvest 2 Selly Oak Limited
50%
Harvest Development Management
Limited
50%
Harvest GP Limited
50%
Heart of Slough Management
Company Limited
67%
Kensington & Edinburgh Estates
(South Woodham Ferrers) Limited
50%
Landmark Court Partnership Limited
51%
Mayfield Development (General
Partner) Limited
50%
Mayfield Development Partnership LP
50%
Minevote Public Limited Company
50%
Northpoint (No.4) Limited
42%
Northpoint CH Limited
42%
Northpoint Developments Limited
42%
Northpoint KC Limited
42%
Nova Business Manager Limited
50%
Nova Estate Management Company
Limited
64%
Nova GP Limited
50%
Nova Limited Partnership
50%
Nova Nominee 1 Limited
50%
Nova Nominee 2 Limited
50%
NOVA Residential (GP) Limited
50%
NOVA Residential Intermediate Limited
50%
NOVA Residential Limited Partnership
50%
Opportunities for Sittingbourne
Limited
50%
Peel Holdings (Media) Limited3
75%
Peel Media (Holdings) Limited3
75%
Peel Media (Orange) Limited3
75%
Peel Media Canalside Limited3
75%
Peel Media Development (Holdings)
Limited3
75%
Peel Media Development
(Residential 1) Limited3
75%
Peel Media Development
(Residential 2) Limited3
75%
Peel Media Development Limited3
75%
Peel Media Development Residential
(Holdings) Limited3
75%
Peel Media Limited3
75%
Plus X Brighton Limited4
50%
Plus X Holdings Limited4
50%
Plus X Slough Limited1
50%
Schofield Centre Limited4
50%
Southside General Partner Limited
50%
Southside Limited Partnership2
50%
Southside Nominees No.1 Limited
50%
Southside Nominees No.2 Limited
50%
Spirit of Sittingbourne LLP
65%
Tarmac Clayform Limited5
50%
Tarmac Guildford Limited
50%
The Bund Limited3
75%
The Ebbsfleet Limited Partnership
50%
TLD (Landmark Court) Limited
99%
TLD Kidbrooke LLP
50%
Triangle London Developments LLP
50%
Victoria Circle Developer Limited
50%
West India Quay Limited
50%
West India Quay Management
Company Limited
50%
Westgate Oxford Alliance GP Limited
50%
Westgate Oxford Alliance Limited
Partnership
50%
Westgate Oxford Alliance Nominee
No.1 Limited
50%
Westgate Oxford Alliance Nominee
No.2 Limited
50%
White Lion Walk Limited4
50%
YC Shepherds Bush (Market) Limited
25%
YC Shepherds Bush Limited
14%
Company name
Group share %
Company name
Group share %
182
LANDSEC ANNUAL REPORT 2024
183
ADDITIONAL INFORMATION
399 Edgware Road Management
Company Limited
n/a
Development Securities (No.19)
Limited
n/a
Lightbox (MediaCityUK) Management
Company Limited3
n/a
Preston Barracks Management
Company Limited
n/a
St David’s Dewi Sant Merchant’s
Association Limited
n/a
Unit Trusts
Group share %
Regent Quarter Unit Trust
100%
Trematon Property Unit Trust
100%
West India Quay Unit Trust
50%
Xscape Castleford Property Unit Trust6 100%
Xscape Milton Keynes Property
Unit Trust6
100%
1. The name of this company was changed to
Plus X Slough Limited on 2 June 2023.
2. 26 New Street, St Helier, JE2 3RA, Jersey.
3. Venus Building 1 Old Park Lane, Trafford City,
Manchester, England, M41 7HA.
4. 85 Great Portland Street, First Floor, London,
England, W1W 7LT.
5. Ground Floor T3 Trinity Park, Bickenhall Lane,
Birmingham.
6. IFC 5, St Helier, JE1 1ST, Jersey.
7. C/O William Fry, 2 Grand Canal Square, Dublin 2,
Ireland, D02 A342.
Limited by guarantee
Group share %
LANDSEC ANNUAL REPORT 2024
ADDITIONAL INFORMATION
SHAREHOLDER INFORMATION
FINANCIAL CALENDAR
TABLE 80
2024
Annual General Meeting1
11 July
Final dividend payment date2
26 July
1. The Annual General Meeting is scheduled to be held at 2:30pm on Thursday 11 July
2024 at 80 Victoria Street, London SW1E 5JL. For further details, please see the Notice
of Meeting which can be found on the Company’s website: landsec.com/agm.
2. The Board has recommended a final dividend of 12.1 pence per ordinary share,
payable wholly as a Property Income Distribution, subject to shareholder approval.
SHARE REGISTER ANALYSIS AS AT 31 MARCH 2024
TABLE 81
Holding range:
Number
of holders
% of
holdings
Number
of shares
% of
shares
1–1,000
5,707
67.23
2,008,874
0.27
1,001–5,000
1,649
19.43
3,360,315
0.45
5,001–10,000
260
3.06
1,807,800
0.24
10,001–50,000
344
4.05
8,465,121
1.13
50,001–100,000
131
1.54
9,424,087
1.25
100,001–500,000
201
2.37
47,272,123
6.28
500,001–highest1
197
2.32
679,338,337
90.38
Total
8,489
100
751,676,657
100
SHARE REGISTER ANALYSIS AS AT 31 MARCH 2024
TABLE 82
Held by:
Number of
holders
% of
holders
within Type
Balance
% Issued
Capital
Private shareholders
7,199
84.80
7,475,231
0.99
Nominee and
institutional investors1
1,290
15.20
744,201,426
99.01
Total
8,489
100
751,676,657
100
1. Including 6,789,236 shares held in treasury by the Company.
ORDINARY SHARES
The Company’s Annual Report, results announcements and
presentations are available to view and download from its website:
landsec.com/investors.
The website also includes information about the latest Landsec
share price and dividend information, news about the Company, its
properties, and operations, and how to obtain further information.
REGISTRAR: EQUINITI
Our Registrar, Equiniti, can assist with queries regarding administration
of shareholdings, such as bank account payment details, dividends,
lost share certificates, change of address or personal details,
and amalgamation of accounts. You can contact Equiniti at
shareview.co.uk.
ELECTRONIC COMMUNICATIONS
We encourage shareholders to consider receiving their communications
from the Company electronically. This will enable you to receive
such communications more quickly and securely, whilst supporting
Landsec’s sustainability commitment by communicating in a more
environmentally friendly and cost-effective manner. Registration for
electronic communications is available via our website on the investor
page or on shareview.co.uk.
PAYMENT OF DIVIDENDS TO UK
RESIDENT SHAREHOLDERS
Dividend payments by cheque ceased from October 2020 and
all shareholders are now required to have their dividends paid
directly into their personal bank or building society account or
alternatively sign up to our Dividend Reinvestment Plan (see below).
Under this arrangement, dividend confirmations are still sent
to your registered address.
Shareholders who have not already done so should contact the
Registrar (Equiniti) or complete a mandate instruction available on
our website landsec.com/investorsshareholders-equity-investors/
dividend-information and return it to the Registrar. Alternatively,
these details can be sent via their Equiniti Shareview online account,
which is available on our website on the investors page under
shareholders or directly at Equiniti: shareview.co.uk.
Further information on UK REITs and the forms required to be
completed to apply for PIDs to be paid gross are available on
the Landsec website or from the Registrar: landsec.com/
investorsshareholders-equity-investors/uk-reit-regime-and-
dividends.
PAYMENT OF DIVIDENDS TO NON-UK
RESIDENT SHAREHOLDERS
As applicable to UK resident shareholders, dividend payments by
cheque ceased from October 2020 and all shareholders are now
required to have their dividends paid directly into their personal bank
or building society account. Payments to overseas accounts are
possible via the Equiniti Overseas Payment Service (OPS) provided
by Citibank. Payments via the OPS are made a few days after the
Company’s dividend payment date – charges are applicable (please
review the terms and conditions available online at shareview.co.uk
for further information).
Shareholders who have not already done so are encouraged to
contact the Registrar (Equiniti) on +44 (0)371 384 2030 for an
Overseas Payment Service application form or to download the
form for their given currency online at shareview.co.uk.
DIVIDEND REINVESTMENT PLAN (DRIP)
The DRIP provides shareholders with the opportunity to use cash
dividends to increase their shareholding in Landsec. It is a convenient
and cost-effective facility provided by Equiniti Financial Services
Limited. Under the DRIP, cash dividends are automatically used to
purchase shares in the market as soon as possible after the dividend
payment. Any residual cash will be carried forward to the next
dividend payment.
Details of the DRIP, including terms and conditions and participation
election forms, are available on our website: landsec.com/
investorsshareholders-equity-investors/dividend-reinvestment-
plan-drip.
184
LANDSEC ANNUAL REPORT 2024
185
ADDITIONAL INFORMATION
SHARE DEALING FACILITIES
Equiniti provides both existing and prospective UK shareholders
with an easy to access and simple-to-use share dealing facility for
buying and selling Landsec shares online, by telephone, or post.
The online and telephone dealing service allows shareholders to trade
‘real-time’ at a known price that will be given to them at the time
they give their instruction.
For telephone dealing, call +44 (0)345 603 7037¹ between 8.00am
and 4.30pm, Monday to Friday (excluding public holidays in England
and Wales). Calls are charged at the standard geographic rate and
will vary by provider. Calls outside the UK will be charged at the
applicable international rate. For online dealing, access is available
at Equiniti’s website: shareview.co.uk/dealing. For postal dealing,
call +44 (0)371 384 2030¹ to request full details and a dealing
instruction form. Existing shareholders will need to provide the
account/shareholder reference number shown on their share
certificate. Other brokers, banks and building societies also offer
similar share dealing facilities.
SHAREGIFT
Shareholders with a small number of shares, the value of which
would make them uneconomic to sell, may wish to consider
donating them to a charity through ShareGift, a registered charity
(No. 1052686) which specialises in using such holdings for charitable
benefit. A ShareGift donation form can be obtained from the
Registrar. Further information about ShareGift is available at:
sharegift.org or help@sharegift.org (Telephone: +44 (0)20 7930 3737)
and postal address: ShareGift 6th Floor, 2 London Wall Place,
London EC2Y 5AU.
CAPITAL GAINS TAX
Further details on UK tax on gains on a sale of Landsec shares can be
found on our website: landsec.com/investorsshareholders-equity-
investors/uk-tax-gains-sale-landsec-shares.
DATA PROTECTION
A copy of the Shareholder Privacy Notice can be found on our
website: landsec.com/policies/privacy-policy/shareholders.
SHAREHOLDER SECURITY
Landsec is required by law to make its share register available on
request to other organisations. This may result in the receipt of
unsolicited mail. To limit this, shareholders may register with the
Mailing Preference Service. For more information, or to register,
visit mpsonline.org.uk. Shareholders are also advised to be vigilant
in regard to share fraud which includes telephone calls offering free
investment advice or offers to buy and sell shares at discounted or
highly inflated prices. Further information can be found on the
Financial Conduct Authority’s website fca.org.uk/scams or by calling
the FCA Consumer Helpline on 0800 111 6768.
LANDSEC ANNUAL REPORT 2024
ADDITIONAL INFORMATION
KEY CONTACTS AND ADVISERS
REGISTERED OFFICE AND PRINCIPAL UK ADDRESS
Land Securities Group PLC
100 Victoria Street
London SW1E 5JL
Registered in England and Wales
Company No. 4369054
Telephone: +44 (0)20 7413 9000
landsec.com
COMPANY SECRETARY
Marina Thomas
Company Secretary
shareholderenquiries@landsec.com
INVESTOR RELATIONS
Edward Thacker
Head of Investor Relations
enquiries@landsec.com
REGISTRAR
Equiniti
Aspect House
Spencer Road
Lancing
West Sussex BN99 6DA
Telephone: +44 (0)371 384 2128
If calling from outside the UK, please ensure the country code is used.
For deaf and speech impaired customers, Equiniti welcome calls via
Relay UK. Please see relayuk.bt.com for more information.
shareview.co.uk
AUDITOR
Ernst & Young LLP
1 More London Place
London SE1 2AF
Telephone: +44 (0)20 7951 2000
ey.com
EXTERNAL ADVISERS
Principal valuers: CBRE and JLL
Financial advisers: UBS, Robey Warshaw
Solicitors: Slaughter and May
Brokers: UBS, Deutsche Numis, Barclays
186
LANDSEC ANNUAL REPORT 2024
187
ADDITIONAL INFORMATION
Adjusted net cash inflow from operating activities
Net cash inflow from operating activities including the
Group’s share of our joint ventures’ net cash inflow from
operating activities.
Adjusted net debt
Net debt excluding cumulative fair value movements on
interest-rate swaps and amounts payable under head
leases. It generally includes the net debt of subsidiaries
and joint ventures on a proportionate basis.
Book value
The amount at which assets and liabilities are reported
in the financial statements.
Combined Portfolio
The Combined Portfolio comprises the investment
properties of the Group’s subsidiaries, on a
proportionately consolidated basis when not wholly
owned, together with our share of investment
properties held in our joint ventures.
Developments/development pipeline
Development pipeline consists of future developments,
committed developments, projects under construction
and developments which have reached practical
completion within the last two years but are not yet
95% let.
Development gross yield on total development cost
Gross ERV, before adjustment for lease incentives,
divided by total development cost. Gross ERV reflects
Landsec’s or the valuer’s view of expected ERV at
completion of the scheme.
EPRA earnings
Profit before tax, excluding profits on the sale of
non-current assets and trading properties, profits
on development contracts, valuation movements,
fair value movements on interest-rate swaps and
similar instruments used for hedging purposes, debt
restructuring charges, and any other items of an
exceptional nature.
EPRA loan-to-value (LTV)
Ratio of adjusted net debt, including net payables,
to the sum of the net assets, including net receivables,
of the Group, its subsidiaries and joint ventures, all on
a proportionate basis, expressed as a percentage.
The calculation includes trading properties at fair
value and debt at nominal value.
EPRA net disposal value (NDV) per share
Diluted net assets per share adjusted to remove the
impact of goodwill arising as a result of deferred tax,
and to include the difference between the fair value and
the book value of the net investment in tenant finance
leases and fixed interest rate debt.
EPRA net initial yield
EPRA net initial yield is defined within EPRA’s Best
Practice Recommendations as the annualised rental
income based on the cash rents passing at the balance
sheet date, less non-recoverable property operating
expenses, divided by the gross market value of the
property. It is consistent with the net initial yield
calculated by the Group’s external valuer.
EPRA Net Reinstatement Value (NRV) per share
Diluted net assets per share adjusted to remove the
cumulative fair value movements on interest-rate swaps
and similar instruments, the carrying value of deferred
tax on intangible assets and to include the difference
between the fair value and the book value of the net
investment in tenant finance leases and add back
purchasers’ costs.
EPRA Net Tangible Assets (NTA) per share
Diluted net assets per share adjusted to remove the
cumulative fair value movements on interest-rate swaps
and similar instruments, the carrying value of goodwill
arising as a result of deferred tax and other intangible
assets, deferred tax on intangible assets and to include
the difference between the fair value and the book
value of the net investment in tenant finance leases.
Equivalent yield
Calculated by the Group’s external valuer, equivalent
yield is the internal rate of return from an investment
property, based on the gross outlays for the purchase
of a property (including purchase costs), reflecting
reversions to current market rent and such items as voids
and non-recoverable expenditure but ignoring future
changes in capital value. The calculation assumes rent
is received annually in arrears.
ERV – Gross estimated rental value
The estimated market rental value of lettable space as
determined biannually by the Group’s external valuer. For
investment properties in the development programme,
which have not yet reached practical completion, the
ERV represents management’s view of market rents.
Gearing
Total borrowings, including bank overdrafts, less
short-term deposits, corporate bonds and cash, at book
value, plus cumulative fair value movements on financial
derivatives as a percentage of total equity. For adjusted
gearing, see note 21.
Gross market value
Market value plus assumed usual purchaser’s costs at
the reporting date.
Interest Cover Ratio (ICR)
A calculation of a company’s ability to meet its interest
payments on outstanding debt. It is calculated using
EPRA earnings before interest, divided by net interest
(excluding the mark-to-market movement on interest-
rate swaps, foreign exchange swaps, capitalised interest
and interest on the pension scheme assets and liabilities).
The calculation excludes joint ventures.
Investment portfolio
The investment portfolio comprises the investment
properties of the Group’s subsidiaries on a proportionately
consolidated basis where not wholly owned.
Lease incentives
Any incentive offered to occupiers to enter into a lease.
Typically, the incentive will be an initial rent-free period,
or a cash contribution to fit-out or similar costs. For
accounting purposes, the value of the incentive is spread
over the non-cancellable life of the lease.
Like-for-like portfolio
The like-for-like portfolio includes all properties which
have been in the portfolio since 1 April 2021 but excluding
those which are acquired or sold since that date.
Properties in the development pipeline and completed
developments are also excluded.
Loan-to-value (LTV)
Group LTV is the ratio of adjusted net debt, including
subsidiaries and joint ventures, to the sum of the market
value of investment properties and the book value of
trading properties of the Group, its subsidiaries and joint
ventures, all on a proportionate basis, expressed as a
percentage. For the Security Group, LTV is the ratio of
net debt lent to the Security Group divided by the value
of secured assets.
Market value
Market value is determined by the Group’s external
valuer, in accordance with the RICS Valuation Standards,
as an opinion of the estimated amount for which
a property should exchange on the date of valuation
between a willing buyer and a willing seller in an
arm’s-length transaction after proper marketing.
Net initial yield
Net initial yield is a calculation by the Group’s external
valuer of the yield that would be received by a purchaser,
based on the Estimated Net Rental Income expressed
as a percentage of the acquisition cost, being the market
value plus assumed usual purchasers’ costs at the
reporting date. The calculation is in line with EPRA
guidance. Estimated Net Rental Income is determined
by the valuer and is based on the passing cash rent
less rent payable at the balance sheet date, estimated
non-recoverable outgoings and void costs including
service charges, insurance costs and void rates.
Net rental income
Net rental income is the net operational income arising
from properties, on an accruals basis, including rental
income, finance lease interest, rents payable, service
charge income and expense, other property related
income, direct property expenditure and bad debts.
Net rental income is presented on a proportionate basis.
Net zero carbon building
A building for which an overall balance has been achieved
between carbon emissions produced and those taken out
of the atmosphere, including via offset arrangements.
This relates to operational emissions for all buildings
while, for a new building, it also includes supply-chain
emissions associated with its construction.
Passing rent
The estimated annual rent receivable as at the reporting
date which includes estimates of turnover rent and
estimates of rent to be agreed in respect of outstanding
rent review or lease renewal negotiations. Passing rent
may be more or less than the ERV (see over-rented,
reversionary and ERV). Passing rent excludes annual rent
receivable from units in administration save to the extent
that rents are expected to be received. Void units at
the reporting date are deemed to have no passing rent.
Although temporary lets of less than 12 months are
treated as void, income from temporary lets is included
in passing rents.
Property Income Distribution (PID)
A PID is a distribution by a REIT to its shareholders paid
out of qualifying profits. A REIT is required to distribute
at least 90% of its qualifying profits as a PID to its
shareholders.
GLOSSARY
LANDSEC ANNUAL REPORT 2024
ADDITIONAL INFORMATION
GLOSSARY
CONTINUED
Rental income
Rental income is as reported in the income statement,
on an accruals basis, and adjusted for the spreading
of lease incentives over the term certain of the lease in
accordance with IFRS 16 (previously, SIC-15). It is stated
gross, prior to the deduction of ground rents and without
deduction for operational outgoings on car park and
commercialisation activities.
Reversionary or under-rented
Space where the passing rent is below the ERV.
Reversionary yield
The anticipated yield to which the initial yield will rise
(or fall) once the rent reaches the ERV.
Security Group
Security Group is the principal funding vehicle for the
Group and properties held in the Security Group are
mortgaged for the benefit of lenders. It has the flexibility
to raise a variety of different forms of finance.
Topped-up net initial yield
Topped-up net initial yield is a calculation by the Group’s
external valuer. It is calculated by making an adjustment
to net initial yield in respect of the annualised cash rent
foregone through unexpired rent-free periods and other
lease incentives. The calculation is consistent with EPRA
guidance.
Total return on equity
Dividend paid per share in the year plus the change in
EPRA Net Tangible Assets per share, divided by EPRA Net
Tangible Assets per share at the beginning of the year.
Total cost ratio
Total cost ratio represents all costs included within EPRA
earnings, other than rents payable, financing costs and
provisions for bad and doubtful debts, expressed as a
percentage of gross rental income before rents payable
adjusted for costs recovered through rents but not
separately invoiced.
Total development cost (TDC)
Total development cost refers to the book value of the
site at the commencement of the project, the estimated
capital expenditure required to develop the scheme from
the start of the financial year in which the property is
added to our development programme, together with
capitalised interest, being the Group’s borrowing costs
associated with direct expenditure on the property under
development. Interest is also capitalised on the purchase
cost of land or property where it is acquired specifically
for redevelopment. The TDC for trading property
development schemes excludes any estimated tax
on disposal.
Trading properties
Properties held for trading purposes and shown as
current assets in the balance sheet.
Vacancy rates
Vacancy rates are expressed as a percentage of ERV and
represent all unlet space, including vacant properties
where refurbishment work is being carried out and
vacancy in respect of pre-development properties, unless
the scale of refurbishment is such that the property is not
deemed lettable. The screen at Piccadilly Lights, W1 is
excluded from the vacancy rate calculation as it will
always carry advertising although the number and
duration of our agreements with advertisers will vary.
Valuation surplus/deficit
The valuation surplus/deficit represents the increase or
decrease in the market value of the Combined Portfolio,
adjusted for net investment and the effect of accounting
for lease incentives under IFRS 16 (previously SIC-15). The
market value of the Combined Portfolio is determined
by the Group’s external valuer.
Voids
Voids are expressed as a percentage of ERV and represent
all unlet space, including voids where refurbishment
work is being carried out and voids in respect of
pre-development properties. Temporary lettings for
a period of one year or less are also treated as voids.
The screen at Piccadilly Lights, W1 is excluded from
the void calculation as it will always carry advertising
although the number and duration of our agreements
with advertisers will vary. Commercialisation lettings
are also excluded from the void calculation.
Weighted average unexpired lease term
The weighted average of the unexpired term of all leases
other than short-term lettings such as car parks and
advertising hoardings, temporary lettings of less than
one year, residential leases and long ground leases.
188
This Annual Report and Landsec’s website may contain certain
‘forward-looking statements’ with respect to Land Securities Group
PLC (the Company) and the Group’s financial condition, results of its
operations and business, and certain plans, strategy, objectives, goals
and expectations with respect to these items and the economies and
markets in which the Group operates. All statements other than
statements of historical fact are, or may be deemed to be, forward-
looking statements. Forward-looking statements are sometimes,
but not always, identified by their use of a date in the future or such
words as ‘anticipates’, ‘aims’, ‘ambition’, ‘milestones’, ‘objectives’,
‘outlook’, ‘plan’, ‘probably’, ‘project’, ‘risks’, ‘schedule’, ‘seek’, ‘due’,
‘could’, ‘may’, ‘should’, ‘expects’, ‘believes’, ‘intends’, ‘plans’, ‘targets’,
‘goal’ or ‘estimates’ or, in each case, their negative or other variations
or comparable terminology. Forward-looking statements are not
guarantees of future performance. By their very nature forward-
looking statements are inherently unpredictable, speculative and
involve risk and uncertainty because they relate to events and
depend on circumstances that will occur in the future. Many of
these assumptions, risks and uncertainties relate to factors that
are beyond the Group’s ability to control or estimate precisely. There
are a number of such factors that could cause actual results and
developments to differ materially from those expressed or implied by
these forward-looking statements. These factors include, but are not
limited to, changes in the political conditions, economies and markets
in which the Group operates; changes in the legal, regulatory and
competition frameworks in which the Group operates; changes in
the markets from which the Group raises finance; the impact of legal
or other proceedings against or which affect the Group; changes
in accounting practices and interpretation of accounting standards
under IFRS, and changes in interest and exchange rates.
Any forward-looking statements made in this Annual Report or
Landsec’s website, or made subsequently, which are attributable
to the Company or any other member of the Group, or persons
acting on their behalf, are expressly qualified in their entirety by
the factors referred to above. Each forward-looking statement
speaks only as of the date it is made. Except as required by its
legal or statutory obligations, the Company does not intend to
update any forward-looking statements.
Nothing contained in this Annual Report or Landsec’s website
should be construed as a profit forecast or an invitation to deal
in the securities of the Company.
CAUTIONARY STATEMENT
LAND SECURITIES GROUP PLC
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