Landsec Annual Report 2023

Sustainable

urban places

Landsec Annual Report 2023

Contents

Strategic report

 Chairman’s statement

 Chief Executive’s statement

 Market context

 Our top ten assets

 Our stakeholders

 Our business model

 Our strategy

 Our KPIs

 Our strategic focus

 Operating and portfolio review

 Financial review

 Our people and culture

 Our approach to sustainability

 Build well – our commitment to the environment

 Live well – our commitment to our communities

 Act well – our commitment to being a responsible business

 Task Force on Climate-related Financial Disclosures

(TCFD)statement

 Managing risk

 Principal risks and uncertainties

 Going concern and viability

 Non-nancial information statement

Governance

 Introduction to the Corporate Governance Report

fromtheChairman

 Board of Directors

 Our governance structure

 Executive Leadership Team

 The Board in action

 The Board and our stakeholders

 The Board and our culture

 Introduction from the Chairman of the

NominationCommittee

 Report of the Nomination Committee

 Board induction

 Board evaluation

 Introduction from the Chairman of the Audit Committee

 Report of the Audit Committee

 Directors’ Remuneration Report –

Chairman’sAnnualStatement

 Remuneration at a glance

 Annual Report on Remuneration

 Directors’ Remuneration Policy Summary

 Directors’ Report

Financial statements

 Statement of Directors’ Responsibilities

 Independent Auditor’s Report

 Income statement

 Statement of comprehensive income

 Balance sheets

 Statements of changes in equity

 Statements of cash ows

 Notes to the nancial statements

Additional information

 Business analysis – EPRA disclosures

 Business analysis – Group

 Sustainability performance

 Alternative performance measures

 Combined Portfolio analysis

 Reconciliation of segmental information

note to statutory reporting

 Ten year summary

 Subsidiaries, joint ventures and associates

 Shareholder information

 Key contacts and advisers

 Glossary

 Cautionary statement

Building on our

competitive advantages

First to opportunities,

in shape to act

Three years ago we set out our strategy to

create sustainable value – focusing on areas

where we have a genuine competitive

advantage, underpinned by the strength of our

balance sheet. Since then, we have sold mature

London oces and made acquisitions that

bring value, opportunity and long-term growth.

And we’ve restructured our business to bring

uscloser to our customers and better able to

take advantage of the changes on thehorizon.

High-quality oces, in the right locations,

continue to attract new businesses and

talent;the future of major retail destinations

ismore positive than many people thought

three years ago; and there remains a structural

need to remodel city centres in a sustainable

way. With exibility on the timing of any

futurecapital commitments, we are ready

toseize the opportunities this new market

environment presents.

But our strategy is about more than buildings.

It’s built on a vision and commitment to

shapesuccessful and sustainable urban places

where our customers can achieve their goals

and our communities can realise their potential.

With the quality of our portfolio, expertise

ofour people and strength of our customer

relationships underpinning our business, this

strategy is the right one and we are well

positioned to continue to pursue it.

Our areas of focus

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.

Valuation

6.2

Central

London

—

Read more on page 19

Strategic Report Landsec Annual Report 2023 001

This is our third year executing

on a clear strategy for the

business under Mark and

histeam.

Progressing our Strategy

In Central London we have continued

developing best-in-class assets, while

recycling capital where appropriate.

During the year we sold 21 Moorelds, EC2,

a complex development nearing completion

that showcased Landsec’s deep development

expertise during the life of the project. We

also sold One New Street Square, a recent

development as part of a larger estate,

leton a long lease to Deloitte. These two

signicant sales in the City reduce our overall

exposure to this sub-market, and re-balance

our portfolio towards London’s West End

anda portfolio increasingly focused on

thebest quality space. We have several

developments ongoing in the rest of London

and are seeing healthy demand for exible

and environmentally friendly space amongst

a wide range of customers.

We have also continued to strengthen our

retail portfolio, signing exciting new lettings

in our major retail destinations and acquiring

the outstanding 50% of St David’s centre

inCardi that we did not already own. We

continue to focus on investing as appropriate

in our leading retail destinations, which

post-pandemic have recovered well, proving

that consumers value the experience of the

best physical retail.

We have made progress on some exciting

mixed-use opportunities as well, and our

team has shown creativity and resilience

unlocking some complex opportunities in

London and Manchester. For example we

obtained planning consent for our 1,800

homes masterplan at a site on the Finchley

Road previously used for retail.

Managing returns

While our strategy has remained clear and

appropriate, the external macroeconomic

environment over the last year has been

dicult in the UK. Rising ination and

interest rates have created headwinds for

Chairman’s statement

“It has been a year of

activityand progress

against objectives,

despite the backdrop of

achallenging market as

interest rates have risen.”

Cressida Hogg

Chairman

Strategic ReportLandsec Annual Report 2023002

business, and rising yields have driven

downvaluations, with a knock on impact

on share prices. As a business we have

re-focused on the levers within our control

as we await more stable conditions.

The Board and management are always

focused on disciplined capital allocation,

and managing the balance sheet

eectively. Against a backdrop of rising

interest rates and reducing values, our

proactive approach to disposals means

that our loan to value ratio has nonetheless

fallen and stands at a sustainable 31.7%.

We were pleased with the issue of our

innovative Green bond in March as part

ofour ongoing bond issuance programme.

A key part of our strategy is to provide

shareholders with a predictable dividend

each year, underpinned by high-quality

earnings across our portfolio. The Board

is focused on the resilience of underlying

earnings, and factors in income

considerations when approving sales or

investments. The organisational review

undertaken this year should generate

eciencies to oset ination in the near

term. We appreciate that for most of

ourshareholders our dividends are an

important attraction, especially when

capital returns are volatile.

Our organisation and culture

Since Mark joined the business we have

been focused on ensuring that Landsec is

t for the future, especially in light of the

upheavals in our market caused by the

pandemic and macroeconomic change.

Over the last year the structure of the

organisation has been re-aligned to our

future strategy, becoming atter and

morestreamlined. We have added external

customer facing, data and technology

skillsto our senior team, and we now have

a clear roadmap for digital transformation.

While we have been sad to see some

long-term colleagues leave as part of this

project, we are very positive about the

impact on our culture and eciency that

these changes are bringing. We continue

tobe committed to making Landsec’s

workforce truly reective of the diverse

customers and communities that we serve

see pages 35-38.

Our sustainability agenda

We continue to be proud of our sector-

leading position on sustainability issues, but

are not complacent with the level of change

and investment that will be needed to make

our existing assets more environmentally

friendly. We are also driving necessary

innovation in our developments and have

just completed The Forge in Southwark,

ourrst Net Zero carbon building powered

entirely by renewable energy. Science Based

Targets are once again embedded in the ESG

objectives in management remuneration

schemes (seepage 109).

Board changes

Good governance continues to be

fundamental to the long-term success

ofLandsec, and in line with governance

guidelines this will be my last letter to you

asI hand over to my successor. It has been

aprivilege to serve nine years on the Landsec

Board, ve as your Chairman. We announced

in January that Sir Ian Cheshire will succeed

me. Ian has already joined the Board, and

brings deep experience as a chair and leader

to Landsec. I hope some of you will have the

opportunity to meet him around the AGM.

There have been other Board changes of

note during the year. Colette O’Shea stepped

down as COO of the Company, following

arestructuring of the executive team.

Colette had been with Landsec for many

years and made a signicant contribution

tothe development and management

ofour portfolio, in London in particular.

TheBoard is grateful for the commitment,

insight and empathy she brought, and we

wish her well for the future.

We welcomed Miles Roberts to the Board

inSeptember. Miles is a serving CEO, and

also brings deep experience as a NED across

several sectors. He has been a very positive

addition to the Board and Committees.

Looking forward

Overall the Board is condent that Landsec

is well positioned relative to others in the

sector, with a clear and appropriate

strategy and strong management team to

deliver it. I would like to thank our Landsec

colleagues for all their eorts over the year.

Going forward I wish the Company, the

Board and stakeholders all future success.

Cressida Hogg

Chairman

Introduction to Sir Ian Cheshire

On behalf of the Board I would like

tothank Cressida for her invaluable

contribution during her time on the

Board and as Chairman of Landsec.

The business has beneted considerably

from her experience and leadership.

Cressida’s inuence and oversight have

been signicant in getting us to the

strong strategic position we are in

today, despite the signicant challenges

faced by this business during the

pandemic and more recent

macroeconomic challenges.

I am excited and honoured to be taking

over as Chair at a time of opportunity

for signicant development of the

business in the coming years.

Since joining the Board in March, I have

spent time visiting Landsec locations

and meeting members of the senior

team and getting to understand

moreabout the business. I am hugely

impressed with the work Mark and his

team are leading to drive the business

forwards with strategic investments

and disposals, stronger customer focus

and operational performance and a

more agile culture.

I am looking forward to working with

Mark and the Board on behalf of all

ofour stakeholders, to continue with

this clear strategic momentum.

Sir Ian Cheshire

Non-executive Director

andChair Designate

Strategic Report Landsec Annual Report 2023 003

Actively executing on our strategy.

Well positioned in a changing market.

The strategy we launched in late 2020 was

based on two key principles of sustainable

value creation: focusing our resources

where we have a genuine competitive

advantage, and maintaining a strong

balance sheet. Back then, interest rates

and property yields in many sectors were

ator near all-time low levels, making

assetvalues in these sectors look expensive,

yet since then external market conditions

have changed materially, in particular

overthe last 12 months. Despite enduring

customer demand driving rents and

occupancy higher, increasing interest rates

meant the value of our portfolio was down

7.7% for the year, as an average 50bps rise

in valuation yields oset an overall 3.6%

ERV growth.

Whereas many slowed or paused activity

inresponse, we have remained active,

pragmatic and future-focused in executing

our strategy during the year. We sold £1.4bn

of London oces where our ability to add

further value was limited, bringing total

oce disposals since late 2020 to £2.2bn,

with an average yield of 4.4%, on average

just 4% below book value. We selectively

invested where we saw value, for example

buying the debt secured on St David’s,

Cardi at an implied property yield of 9.7%.

We kept to programme on new developments

by committing to early works during the

political turmoil in the autumn whilst

keeping exibility on c. £400m of future

spend, which we now expect to commit

toshortly. And we issued a £400m Green

bond, to pro-actively extend our sector-

leading debt maturities even further.

Our areas of competitive advantage remain:

i) our high-quality portfolio; ii) the strength

of our customer relationships; and iii) our

ability to unlock complex opportunities

through our development and asset

management expertise. Despite the change

in market conditions, these strengths are

clearly reected in our strong operational

performance during the year and we expect

these to persist going forward.

Chief Executive’s statement

“Having made considerable

progress on our strategy

overthe last couple of years,

Landsec is well placed to

drive long-term growth.”

Mark Allan

Chief Executive

Strategic ReportLandsec Annual Report 2023004

Our strong leasing activity drove 3.6%

ERVgrowth, with positive growth across all

four segments of our portfolio, reecting

itsenduring appeal to customers. Still,

thesharp increase in bond yields over

thepast 12 months put upwards pressure

on valuation yields, leaving our overall

portfolio value down 7.7% for the year.

Notwithstanding our strong operational

results and growth in earnings, EPRA NTA

per share therefore was down 11.9% to 936

pence, resulting in a total return on equity

of -8.3%.

Our strategy

Our strategy is focused on three areas –

Central London oces, major retail

destinations and mixed-use urban

neighbourhoods. Each of these benets

from growing demand for high-quality,

sustainable space, which continues to drive

rental growth. Whilst the proportions of use

dier, there is increasingly more that unites

these areas than divides them, as the lines

between where people want to work, live

and spend their leisure time blur. What

binds these areas together is the enduring

importance of a sense of place.

Whilst our strategic focus remains the

rightone, economic and nancial market

conditions have changed materially over

the past year. Interest rates have risen

sharply in response to higher ination and

credit conditions are tightening, resulting

inreduced lending and increased credit

margins. It is impossible for us to predict

where interest rates will settle over time,

but taking a long-term view, it seems clear

to us that the ultra-low rates over the prior

decade were the aberration, not the

adjustment over the past year.

This is important for a number of reasons.

Firstly, the strategy we set out in late 2020

was never built on a premise that low

interest rates would persist forever. Neither

are our actions now based on the hope that

markets will just “return to normal” and

interest rates come back down sharply if

wewait long enough. They might, but this

seems unlikely to us and hope is not a

strategy, so we have not and will not base

our decision-making on this. Our disposal

of£1.4bn of mature oces over the past

year is testament to this.

Secondly, and most importantly, this

adjustment plays directly to the strengths we

have been building since late 2020. At that

time, it was dicult for us to nd value in

aworld where excess liquidity and zero

interest rates meant there was invariably

someone prepared to borrow more at

articially low costs and pay more. However,

since last summer, property values have

been quick to adjust to the new reality of

ahigher cost of capital, similar to equities

and bonds. The full eect of increased

borrowing costs will likely only work its

waythrough the system over time, but

thisshould lead to attractive opportunities

forus.

Since late 2020 our focus has been on

i)focusing our new investment where

wehave a genuine competitive advantage

that enables us to create long-term value;

ii) the sale of £2.2bn of London oces

where yields were low and we had little

opportunity to add further value; and

iii)maintaining capital discipline. As a

result, we are well placed now.

To further support this, improve scalability

and increase pace, we started a review of

our operating model a year ago, with a

view of creating a more agile, ecient

culture, with less internal complexity and

more external focus. We have built, or are

on track to build, market-leading operating

platforms in each of the three areas we

operate in. We have started to see the

benets from this so despite high ination,

we expect overhead costs for the current

year to reduce slightly vs last year.

Supplemented by ongoing investment in

our systems, we have clear visibility on the

further eciencies this will drive over time.

Whilst part of the property market is busy

looking backwards to deal with leverage

orrenancing issues, we have the rare

opportunity to look forward to future

growth. Part of this will be funded by our

signicant headroom and residual c. £1.6bn

This is supported by the strength of our

capital base. With a 31.7% LTV and net

debt/EBITDA of 7.0x at the year-end our

leverage is low; at 10.3 years our average

debt maturity is long; and we have no need

to renance any debt until 2026. We have

also created more optionality in our

attractive pipeline and as a result of our

strategic choices and decisive action since

late 2020, we are well placed to take

advantage of the opportunities that will

undoubtedly emerge in a new higher rate,

higher yield environment.

Delivering continued growth

inoperational results

As people choose to spend time together

ininspiring places, be it to work, shop or

spend their leisure time, our customers

increasingly focus on the best space in the

best locations to attract the right talent

and consumers. Building on the positive

momentum our focus on growing customer

relationships has started to drive over the

past three years, we have delivered further

growth in operational results.

EPRA EPS for the year increased to 53.1

pence, or 50.1 pence on an underlying basis,

excluding the benet of a £22m increase

insurrender premiums received during the

year. Underlying EPRA EPS was up 4.4%

vsthe prior year, towards the high end

ofour guidance of low to mid-single digit

percentage growth. This was supported by

growth in like-for-like net rental income of

6.0%, which more than oset the impact

from our £1.4bn of disposals and our

signicant deleveraging. In line with growth

in underlying earnings, our dividend for the

year is up 4.3% to 38.6 pence, reecting a

dividend cover of 1.3 times.

Strategic Report Landsec Annual Report 2023 005

ourrevitalised platform and growing

brandrelationships are starting to drive.

Despite cost of living challenges, we

continue to see few signs of any let-up

indemand for space, with £11m of lettings

in solicitors’ hands 11% above ERV, up 28%

vs this time last year. Our portfolio saw

0.9% ERV growth last year and we expect

low to mid single digit percentage ERV

growth this year.

Our positive outlook for rental value growth

reects the high quality of our portfolio,

aswe expect overall demand for space will

continue to rationalise in both retail and

oces. We expect this will start to lead

toagrowing divergence in asset pricing.

Investment activity remains thin and so

theemerging stabilisation of values in

recent months needs to be viewed in that

context, yet we expect values for the best

assets to stabilise and return to growth well

before those where long-term structural

demand is questionable.

This is supplemented by our ability to

unlockcomplex opportunities, such as

thediscounted purchase of the debt on

StDavid’s from two separate lenders; the

resolution to grant planning consent we

obtained for our 1,800-homes masterplan

at Finchley Road; the deal we agreed with

our JV partners at Mayeld, which gives us

full control of the rst phase of this unique

site; our success at 21 Moorelds, where our

well-timed sale crystallised £145m of prot

on cost; the 17.5-year lease extension with

one of our top-10 customers, temporarily

moving them across our estate whilst we

undertake net-zero upgrade works to their

existing oces; or the pre-letting of 60%

ofour current London pipeline well ahead

of ERV.

Looking ahead, this also provides us with

aclear competitive advantage in terms

offuture opportunities. We now have a

1.1msq ft consented oce pipeline in the

West End and Southwark, deliverable into

awindow of a signicant shortage of

sustainable Grade A supply, and we could

potentially start on site with two major

mixed-use regeneration schemes later this

year. In addition, we continue to see value

in major retail destinations, where asset

values have already repriced materially

andour dierentiated platform provides

uswith the ability to drive income growth.

We also anticipate renancing events could

potentially unearth other opportunities,

such as to acquire and upgrade well-located

London oces in need of repositioning.

Driving returns

We remain decisive in our capital allocation

decisions – focusing squarely on the future

returns we expect our investments to

generate, rather than any historical book

value. The £1.4bn of oces we sold during

the year are a good example of this. The

two principal assets in this had generated

an attractive 10% IRR over the period we

had held them, but our expected forward

return from the price on oer was in the

mid-single digits. As this is below our

returnambitions and other investment

opportunities available to us, such as those

outlined above, we decided to sell. We will

maintain this clear discipline in the future.

Overall, we now target a total return on

equity of 8-10% over time, reecting a

combination of income returns and capital

growth driven by rental value growth and

development upside. Short-term market

uctuations in valuation yields, which are

outside of our control, mean that our return

on equity is unlikely to be exactly within this

range every individual year, as we have seen

over the past 12 months, but this return

target is what we base our medium-term

decisions on.

Within this, we are focused on growing our

high-quality earnings. Income has always

been important, but especially so when

valuations and hence NTAs reect a greater

degree of subjectivity, given that market

evidence is thin. The fact that since last

summer, our disposals made up c. 40% of

all investment activity in the City and that

there have been no transactions in major

retail destinations underlines this. We are

already in a strong position on this, with an

attractive earnings yield at NTA of over 5%.

This has now almost fully absorbed the

capital recycling programme. However,

theextent of the opportunity in our oce

and mixed-use pipelines, and for accretive

external growth, is such that this will likely

exceed our own balance sheet capacity

over time. Capital discipline remains our

priority, so we plan to explore opportunities

to enhance our own investment in future

growth with other sources of capital, to

accelerate our overall growth, capitalise

onthe platform value we are creating,

andenhance our return on equity.

Creating value through our

competitive advantages

Our value creation remains underpinned

byour key competitive advantages: our

high-quality portfolio; the strength of

ourcustomer relationships; and our

abilityto unlock complex opportunities.

Customer demand continues to bifurcate,

with growing demand for modern,

sustainable space in those locations with

the best amenities in London and fewer,

but bigger and better stores in key locations

in retail. Supply of both is limited, which is

driving growth in rental values across our

core portfolio.

In London, where 74% of our portfolio

isnow located in the vibrant West End

andSouthwark markets, up from 58%

in2020, we completed £43m of leases,

onaverage 3% above ERV, with a further

£6m in solicitors’ hands, 19% ahead of ERV.

As a result, occupancy increased 110bps

to95.9% and at 99.5% occupancy our

WestEnd oces are eectively full – both

substantially ahead of the wider market.

This drove 4.7% ERV growth, which is at the

high end of our guidance. As demand for

grade A space remains strong and supply is

low, we expect continued low to mid single

digit percent ERV growth this year.

Across our major retail destinations, where

we selectively expanded our presence with

our investments in Bluewater in late 2021

and St David’s in March, we signed £27m

ofnew lettings, on average 8% above ERV.

This was 35% higher than the prior year

andoccupancy of 94.3% was up 110bps

during the year, highlighting the value

Chief Executive’s statement

continued

Strategic ReportLandsec Annual Report 2023006

•

our portfolio is well-located and its

quality is high, which are decisive factors

for our customers;

•

our balance sheet strength is sector-

leading, with 7.0x net debt/EBITDA and

10.3-year debt maturity;

•

we have sold over £2bn of mature assets,

creating capacity to invest in higher-

return opportunities;

•

we have created an attractive and

protable pipeline, with exibility on

future commitments.

Reecting the continued strong demand

forour best-in-class space, we expect to

see low to mid single digit ERV growth in

London and major retail destinations this

year. We plan to continue to monetise

assets where our ability to add further value

is limited, so taking into account that we

will likely sell more than we buy in the short

term, we expect EPRA EPS for this year to

be broadly stable at last year’s underlying

level, before returning to growth the year

after. Having made considerable progress

on our strategy over the last couple of

years, Landsec is well placed to drive

long-term growth and although we are

mindful of the wider economic challenges,

we are excited about the future.

Mark Allan

Chief Executive

This is on track and the benet of this in

terms of higher EPC ratings will start to

become visible from 2025 onwards, once

our rst new air source heat pumps

becomeoperational.

Shortly after the year-end, we also updated

our carbon reduction targets to align with

the Science Based Targets initiative’s (SBTi)

new Net-Zero Standard, as we remain

committed to reaching net zero in the long

term. We have committed to a near-term

target of reducing our direct and indirect

greenhouse gas emissions by 47% by 2030

from a 2020 baseline and have committed

to reach net zero by 2040 from the same

baseline year. This target now covers

emissions from all sources, including all of

our reported scope 3 emissions such as the

emissions from our development pipeline,

supply chain and customers.

During the year, the energy intensity of our

portfolio increased marginally compared

tolast year, when utilisation was lower

inthe rst months of the year after the

emergence out of lockdown. Still our energy

intensity was 16.6% below pre-pandemic

levels and 33.2% below our 2013/14 baseline,

so we remain rmly on track to reduce

energy intensity by our targeted 45% by

2030. Aside from our net zero investments,

we continue to focus on energy eciency

measures and have expanded the

collaborative work with our largest

customers to help them identify ways

tosave energy.

Outlook

Our strategy continues to be grounded

inour purpose; Sustainable places.

Connecting communities. Realising

potential. In executing this, we continue

tobe led by three things: delivering

sustainably, delivering for our customers,

and being disciplined with our capital.

We expect global economic and nancial

uncertainty to remain elevated in the near

future. The transition from a decade of

ultra-loose monetary policy to a materially

higher rate environment was never going

tobe a smooth one. The reversal of decades

of globalisation and associated inationary

pressures will also continue to aect

economic prospects, for the UK further

exacerbated by the impact of Brexit.

Positively, the political situation in the UK

has stabilised somewhat since late last year

and despite all uncertainties, our strategic

decisions since late 2020 mean we are in

great shape for any eventuality:

reset in retail rents over the past few years,

which has been oset by the recovery

fromthe pandemic and growth in London.

For the past year, this resulted in 4.4%

growth in underlying EPRA EPS – towards

the high end of our guidance of low to mid

single digit growth for the year.

Looking forward, higher interest costs and

cost ination are a headwind to earnings

across every sector, but this is compensated

by the strengths of our business and the

successful execution of our strategy:

•

our long 10.3-year debt maturity, which

provides visibility and underpins our

sustainability of earnings;

•

our capital recycling out of mature and

subscale assets, into developments or

acquisitions which oer greater potential

to add value and generate higher income

and total returns;

•

our growth in like-for-like income,

reecting the strong demand for our

high-quality space, especially from next

year onwards once the last historically

over-rented leases in retail have reset.

For the year to March 2024, we expect

EPRAEPS to be broadly stable vs last year’s

underlying level of 50.1 pence, as we expect

the positive impact from continued strong

operational performance and like-for-like

rental growth to be more or less oset by

the fact that we have been – and in the

near term will likely remain – a net seller

ofassets. This year we will also see the last

over-rented leases in retail resetting, the

start-up cost of opening three new Myo

locations, and ongoing investment in our

systems, which have a combined impact

onearnings of c. £10m. We therefore expect

EPRA EPS to return to growth for the year

toMarch 2025. As our dividend cover is

currently at the high end of our 1.2-1.3x

range, we expect our dividend to grow by

alow single digit percentage per year over

these two years.

Delivering sustainably

Eighteen months ago we were the rst UK

REIT to set out a detailed net zero transition

investment plan. We continue to progress

the implementation of this, as delivery of

this plan will ensure we stay ahead of the

Minimum Energy Eciency Standard

Regulations, which require a minimum

EPCB certication by 2030, as well as

otherregulatory requirements. So far our

work has been focused on optimising

building management systems and

conducting the detailed design to install air

source heat pumps in our oce buildings.

Strategic Report Landsec Annual Report 2023 007

The Landsec property portfolio is invested in a

number of sectors within the UK. We own high-

quality oces in London, six regional shopping

centres, ve retail outlet centres and a portfolio

ofmixed-use urban development opportunities

inLondon, Manchester, Glasgow and Cambridge.

Market at a glance

£236m

sq ft

of oce space in central London

8.3%

vacancy rate in central London

oces (2022: 8.4%)

£7. 3b n

of investment transactions

incentralLondon in 2023

(2022:£14.5bn)

25.5%

Online sales as a percentage of

allretail sales (as at March 2023)

(March 2022: 26.3%)

The UK real estate market

The real estate investable market in the

UKis estimated to be valued at £920bn,

with assets across a wide range of sectors

including oces, industrial, healthcare,

retail and residential. Rather than try to

invest in all areas, and spread our

management focus too thinly, we currently

focus on three. These are: Central London

oces, Major retail destinations and

Mixed-use urban neighbourhoods – areas

where we have sources of competitive

advantage and expertise to be able to

maximise the value from our portfolio.

The performance of real estate is a

combination of the movement in values

and rent. Over the last year, global political

and economic factors, such as the war in

Ukraine and the increase in ination and

interest rates, have depressed property

values as yields have increased as a result

of uncertainty and higher policy rates.

Conversely, property in general has seen

astrong operational recovery as the

eectsof Covid diminish and the utilisation

of physical space has increased.

Market context

Central London oce vacant space (Source: CBRE, Landsec)

Chart 1

2013

2014

2015

2016

2017

2018

2019

2020

2021

2022

2023

2020

2019

2018

2017

2014

Million sq ft

Vacancy rate %

New Second-hand City West End Central London

Central London oce market – oor space under oer (Source: CBRE)

Chart 2

2013

2014

2015

2016

2017

2018

2019

2020

2021

2022

2023

2020

2019

2018

2017

2014

0.0

1.0

0.5

1.5

2.0

2.5

3.0

3.5

4.0

4.5

5.0

10-year average

Million sq ft

Strategic ReportLandsec Annual Report 2023008

Central London oces

London is well set to continue its position

as Europe’s pre-eminent global gateway

city. It has a unique ecosystem that

combines a rich network of world-class

universities, renowned research centres,

innovative small businesses and global

industry players. Alongside its global reach,

London’s ability to attract and retain talent

continues to be a competitive advantage,

and its reputation as a safe haven is

particularly valuable in times of turmoil.

It is clear the way people are using oces

has changed for the long term. We estimate

that changing working patterns and oce

use will result in long-term demand for

oce space reducing by 20%. However,

while overall demand will be lower, we

believe the demand for the best-quality

space will remain robust. By this, we mean

modern, well-congured space in great

locations, with amenities and excellent

sustainability credentials.

The demand for exible space continues

togrow as both established and new

businesses are looking to occupy space

thatmeets today’s exible-working needs.

Conventional space, occupied over a longer

length of lease, will still play a critical role;

but successful property companies need to

provide a range of spaces oering dierent

products. Creating workplaces as overt

displays of a company’s culture, and places

that facilitate the benets of collaborating

in person, will stimulate creativity and,

ultimately, productivity. We expect this

trend to continue, alongside the growing

requirement to ensure oces meet the

minimum credentials for sustainability by

2030. As a result, the divergence in the

performance and resilience of the best

space, compared with secondary space,

is likely to widen.

The last 12 months have seen a signicant

repricing of oce values as yields have

increased as a result of higher interest rates

and weaker global economic conditions.

The occupational market continues to

perform well, with take-up of oce space

up 6.9% and the vacancy rate reducing

to 8.3%.

Major retail destinations

The retail market has experienced a number

of signicant changes in recent years

including the material increase in online

retail and the change in consumer habits

caused by the pandemic. The current

economic environment is also a challenge,

with retailers facing higher costs due to

ination, and consumer disposable income

facing pressure from higher energy and

food costs, and higher interest rates.

It is clear there remains too much physical

retail space in the UK: perhaps up to 25%

ofthis space will be converted to alternative

uses such as leisure or residential space.

Butphysical retail is not dead. The best

space 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.

One other signicant dramatic change in

recent years is the cost of physical spaces

compared with online retailing. Physical

retail sales have recovered to pre-Covid

levels, whereas rents are still c. 35% below

their 2017 peak. In addition, the latest rates

review came into eect in April this year

and this has reduced the rates in retail

assets by c. 30%. At the same time, the

costs of marketing and delivery for online

retail have increased signicantly over the

same period.

The eect of all of these trends is an increase

in demand from retailers for physical space

in high-quality retail destinations. Over the

last 12 months, we have seen this in our

shopping centres, with 21 brands upsizing

their space, and 14 brands moving from

secondary sites to relocate within our

centres (a ‘ight to prime’).

This demand for physical space has also

been seen in shopping patterns. Shoppers

are choosing to spend their money in store,

rather than online.

As a result of these trends, we expect

investment activity to continue to grow.

Shopping centre yields are high compared

to other markets and sectors. With the

prospect of rental income growth, the

future returns look attractive. This provides

a cyclical investment opportunity, as there

are few investors with both the capital and

operational expertise required.

Mixed-use urban neighbourhoods

Urban mixed-use is an opportunity area

forLandsec. The varied potential uses are

supported by long-term trends, and our

scale, existing pipeline, and ability to

complete complex schemes, mean we are

well placed to become a leading player in

this market.

The concept of individual localities (or even

potentially buildings) being reserved for a

single use is weakening, and there is an

increasing desire to see a mix of living,

working and leisure within distinct

neighbourhoods. The appeal of this further

strengthened during the pandemic and we

expect it to be sustained, with convenience

being a key motivation in a society where

time is an increasingly precious commodity.

In addition, quality of life, health, wellbeing

and environmental sustainability are all

important themes, and political and

societal awareness of these factors has

increased considerably in recent times.

Done well, mixed-use urban communities

can achieve strong returns, as the appeal

ofthe location and amenity increases

values across phases of development –

known as placemaking.

At the same time, certain areas of cities

arerapidly becoming redundant and in need

of regeneration. There is increasing political

will behind redevelopment projects, but

they are complex and there are very few

developers with the scale and skills required.

From this perspective, developing strong

public-sector partnerships is critical to

success. Not only are they political

stakeholders, but in many cases their

participation will be key to accessing

development land – with U+I’s Mayeld

project in Manchester a case in point.

Strategic Report Landsec Annual Report 2023 009

Our top ten assets

Listed by value

New Street Square, EC4

80-100 Victoria Street, SW1

One New Change, EC4

Piccadilly Lights, W1

Gunwharf Quays,

Portsmouth

MediaCity, Greater Manchester

Bluewater, Kent

Nova, SW1

62 Buckingham Gate,

SW1

Queen Anne’s Mansions,

SW1

9 10

Strategic ReportLandsec Annual Report 2023010

Our stakeholders

To achieve our purpose, we need to understand our stakeholders, and the most eective way of

asking for their input and support. As the nature of commercial real estate is becoming much

more operational, we need to work even more closely with our customers and other stakeholders.

Who are they? Why are they

important to us?

What do they want

from us?

How do we engage

with them?

Our Customers

Everyone who uses our

buildings. Our office

occupiers’ employees and

their visitors. Our brand

partners and guests in our

retail and leisure assets,

and residents in the

accommodation we build.

Serving our customers is the reason

we exist. Our occupiers provide us

with rental income. Our reputation

depends on meeting the needs of

all our customers.

Customers want us to

understand and respond to their

changing needs. That means

providing sustainable, efficient,

fabulous space and services

that enhance their working,

shopping, leisure and living

experiences.

We meet our customers regularly

to understand what’s important

to them and evaluate the service

we provide.

Our Employees

Everyone employed

directly by Landsec.

Our people put our strategy

into practice, live our culture,

and enable us to achieve our

purpose. Ultimately, they create

value for our stakeholders.

Our employees want a

great career, and a positive

and motivating work

environment where they can

thrive, underpinned by

a supportive culture that

embraces diversity

and inclusion.

We use engagement surveys,

our Employee Forum, weekly

updates from across the business

and ‘town hall’ presentations,

alongside relevant training and

development programmes. And we

have recently launched a new

recognition platform to celebrate

those who bring our purpose to life.

Our Communities

Those who live in areas

where we work or where

we have assets. For

example, local residents,

businesses, schools and

charities.

We want our buildings and activities

to have a positive impact on the local

community. To achieve this, we need

to have good relationships and

understand local people’s needs.

Local people want us to

enhance the physical and

social infrastructure in their

area, helping their community

thrive. They also want us to

provide the right mix of

services for their needs.

Our activities range from providing

work experience and routes to

employment, to helping students

and addressing local socio-economic

needs. We consult local communities

ahead of all development activity

and maintain the relationships

following completion. Our

Community Charter sets out a list

ofcommitments that we, as a

responsible developer and landlord,

must stick to in order to fulfil our

purpose.

Our Investors

Those who own shares

in Landsec, and our

bondholders.

Investors provide capital to the

business, as well as valuable

feedback on our performance

and strategic options.

Investors want a clearly

articulated long-term strategy,

together with shorter-term

plans and effective

communication of our progress.

Formal results presentation every

sixmonths plus capital market

daysas appropriate. Financial

institutions and debt providers

meetour management regularly.

We hold an AGM every year.

Our Partners

Those who have a direct

working or contractual

relationship or share a

mutual interest with us.

Their vital contributions to our

business range from providing services

and advice, through to granting the

planning permission and approvals

that allow us to develop buildings and

run our business.

Our partners want us to be

trustworthy and live up to our

promises.

We work to find mutually effective

ways to communicate and collaborate

with each group. The highest

standards of health, safety and

security underpin everything we do.

Our Section 172 Statement

You can nd our Section 172 Statement, which sets out how the Board takes stakeholder

interests into account when making decisions, in our Governance section.

—

See our Governance section on pages 76-79

—

You can nd commentary on our culture on pages 34-39

Strategic Report Landsec Annual Report 2023 011

Our business model

To create value, we buy, develop, manage and

sell property, drawing on a range of nancial,

real estate and social resources.

Input How we create value

Financial

The dierent types of funding

we deploy, from shareholder

capital to borrowings.

Financial

Long-term growth in asset

values and income, creating

value and potential for

increased dividends to

shareholders.

We aim to achieve 8-10% annual return

onequity through the cycle, split

almostequally between income and

capital growth.

—

To read our Financial review go to

pages 28-33

Properties and places

Our land and buildings, the

materials and technologies

weuse, and the natural

environment.

Properties and places

Space that creates value

for us by meeting the

changing requirements of our

customers and communities,

and being a healthy

environment for all.

We constantly look to strengthen our

portfolio to ensure it meets the changing

needs of our customers and communities.

We always bring social, economic and

environmental benets to the areas where

we operate, creating a sense of place.

Thetransition to a net zero carbon portfolio

involves changing the design, materials and

the way we construct new buildings, and

how we operate our existing portfolio.

—

To read more go to pages 41-43

People and

relationships

The relationships we have with

customers, communities and

partners, and the capabilities

of our employees.

People and

relationships

Our ability to help businesses

and people thrive – including

our own employees.

We design our buildings to support wellbeing

and productivity, and provide a great

experience for everyone who uses our spaces.

For our employees, we invest to attract

anddevelop great people who add value

toour business. We focus on engagement,

wellbeing, diversity and reward, and

conduct regular reviews.

We help those further from the jobs

marketaccess opportunities in our

industry, believing everyone must be

treated and paid fairly, and that our

business should reect and support our

diverse communities.

—

To read more go to pages 44-46

Our

focus

Our main

activities

Our

objective

Asset

management

Building strong relationships

with our customers to

provide the space and

services they, and their

customers, need, to help

them succeed, so growing

our income and value.

Development

and refurbishment

Creating new or

refurbished spaces and

places, from stand-alone

oce and retail, through

tourban mixed-use

neighbourhoods. With

afocus on sustainability,

design and wellbeing, these

spaces create long-term

value for our customers

and our business.

Investment

activity

We balance our

investment activity,

acquiring income-

generating assets or

potential development

schemes, and funding this

by disposing of mature

assets or those where

wehave no sources of

competitive advantage.

To achieve the best

risk-adjusted returns

from our activity.

We focus on areas of

thereal estate market

where we have sources

ofcompetitive advantage

and can maximise the

value from our portfolio

and our talent.

Strategic ReportLandsec Annual Report 2023012

Everything we do aims to achieve our

purpose: Sustainable places. Connecting

communities. Realising potential. Our

culture, supported by our values, provides

a common language to enable our people

to thrive, and realise their potential.

We are able to add signicant value

through our portfolio and activities, and

we match our capital and capabilities to

ensure we focus on areas where we can

add the most value.

We aim to be a sustainable business

by anticipating and responding to

thechanging needs of our customers,

communities, partners and employees.

We plan for the long term but have the

exibility to respond to opportunities

and challenges as they arise.

Total return

on equity

Our aim is to achieve

above-market total return

on equity, together with

signicant social and

economic value for all

ourstakeholders.

—

How we manage risk,

seepages 54-59

—

How we monitor performance,

see page 16

—

How we reward success,

seepages 98-116

Output

Creating sustainable long-term value with a focus on total return on equity

Goal

Financial

The dierent types of funding

we deploy, from shareholder

capital to borrowings.

Financial

Long-term growth in asset

values and income, creating

value and potential for

increased dividends to

shareholders.

We aim to achieve 8-10% annual return

onequity through the cycle, split

almostequally between income and

capital growth.

—

To read our Financial review go to

pages 28-33

Properties and places

Our land and buildings, the

materials and technologies

weuse, and the natural

environment.

Properties and places

Space that creates value

for us by meeting the

changing requirements of our

customers and communities,

and being a healthy

environment for all.

We constantly look to strengthen our

portfolio to ensure it meets the changing

needs of our customers and communities.

We always bring social, economic and

environmental benets to the areas where

we operate, creating a sense of place.

Thetransition to a net zero carbon portfolio

involves changing the design, materials and

the way we construct new buildings, and

how we operate our existing portfolio.

—

To read more go to pages 41-43

People and

relationships

The relationships we have with

customers, communities and

partners, and the capabilities

of our employees.

People and

relationships

Our ability to help businesses

and people thrive – including

our own employees.

We design our buildings to support wellbeing

and productivity, and provide a great

experience for everyone who uses our spaces.

For our employees, we invest to attract

anddevelop great people who add value

toour business. We focus on engagement,

wellbeing, diversity and reward, and

conduct regular reviews.

We help those further from the jobs

marketaccess opportunities in our

industry, believing everyone must be

treated and paid fairly, and that our

business should reect and support our

diverse communities.

—

To read more go to pages 44-46

Strategic Report Landsec Annual Report 2023 013

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.

Our 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.

Importantly, our strategy remains grounded

in our purpose; Sustainable places.

Connecting communities. Realising potential.

In executing it, 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. Which is

whywe focus on those areas where we

believe we have a genuine competitive edge.

We are a total-return business and the

investment areas we focus on are attractive

because of the potential returns they can

generate. We are not wedded to particular

assets or regions, and prefer to be nimble,

applying our skills to where we believe we

can achieve the best total return over the

long term.

Landsec focuses on three areas of the UK

realestatemarket where we have sources of

competitive advantage and can maximise the

value from our portfolio and our talent: Central

London oces; Majorretail destinations; and

Mixed-use urban neighbourhoods.

Our strategy

Landsec strategy

Two key principles

of sustainable

value creation

Preserving balance

sheet strength

• Disciplined capital

recycling

• Managing LTV

• Preserving optionality

Focus on

competitive

advantage

•

High-quality portfolio

• Strong customer

relationships

• Unlocking complex

opportunities

Strategic ReportLandsec Annual Report 2023014

Global economic and nancial market

conditions have changed signicantly

overthe past year. Interest rates have

surged in response to rising ination, with

the central bank support that articially

depressed them for most of the last decade

now in reverse. While it is dicult to predict

where interest rates will settle in the

longer-term, it is clear we are back to a

higher-rate environment – the very low

interest rate environment of the last

decade was an aberration.

Importantly, the strategy we set out in

late2020 was not based on a continuing

low-rate environment. This is why we said

we would i) focus our investment on sectors

where we have a genuine competitive

advantage that helps us create long-term

value, rather than sectors which happened

to be in vogue at the time; ii) over time sell

c. £2.5bn of mature London assets where

yields were low, of which we have now sold

£2.2bn; and iii) maintain capital discipline.

Our strategic focus on sustainable value

creation in three key areas, central London

oces, major retail destinations and

mixed-use urban neighbourhoods, remains

the right one. Demand in each area

remains resilient, underpinned by the

strength of our customer relationships

andhigh-quality portfolio.

In executing our strategy, we are guided

bythree things: developing sustainably,

succeeding for our customers and being

disciplined with our capital. The built

environment accounts for 40% of carbon

emissions globally, so everything we do

needs to have sustainability at its heart.

This year, we have refreshed our

environmental targets, setting far more

demanding carbon-reduction targets,

inline with the latest recommendations

from the Science Based Targets initiative.

We will continue to strive to remove carbon

from our construction and the operational

use of our buildings.

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

dierently 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.

We have a total-return approach that is

aware of the importance of income. To

generate the returns we are targeting, we

need to allocate capital to areas of growth

in a meaningful way. We are also mindful of

the importance of income – it is a key part

ofthe property return, but should not be the

key driver. We are prepared to sell income-

generating assets to fund investment

opportunities with better return prospects,

but we will also preserve income growth

through careful phasing of our activity.

Chart 3

Our strategy’s

impact on portfolio

weighting (%)

March 2022

£12.0bn

March 2023

£10.2bn

Medium term

Portfolio split March 2022 March 2023 Medium term

Central London

65% 61% 55-60%

Major retail destinations

16% 18% 20-25%

Urban mixed-use

7% 8% 20-25%

Subscale sectors

12% 13% n/a

015Landsec Annual Report 2023Strategic Report

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.

—

You can nd further information in

Remuneration on pages 96-116

The measures and their weightings are

30% 30% 20%

EPRA earnings Total return

onequity

ESG targets

Our KPIs

We set KPIs in line with our strategy.

They provide direction for our people,

and oer clear links to remuneration.

EPRA earnings

How we measure it

We set targets for EPRA earnings in

linewith our ve-year strategic plan

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

ESG

How we measure it

We have two action-orientated targets

driving energy intensity reduction

across all assets (ve actions) and

embodied carbon reduction across

alldevelopments (ve actions)

Link to remuneration

30% of annual bonus performance

islinked to this KPI

Link to remuneration

30% of annual bonus performance

islinked to this KPI

Link to remuneration

20% of annual bonus performance

islinked to this KPI

Our performance in 2022/23

EPRA earnings of £393m were ahead

ofthe £372m target

Our performance in 2022/23

Total return on equity was -8.3%

compared with the target of +8.5%

Our performance in 2022/23

5/5 actions delivered contributing

toenergy intensity reduction;

4/5actions delivered contributing

toembodied carbon reduction

Achieved

Not

achieved Achieved

Strategic ReportLandsec Annual Report 2023016

Our strategic focus

Oces

£6.2bn

of prime oce space

incentral London with

ancillary retail space

£43m

oce lettings or renewals,

3% ahead of valuers’

assumptions

95.9%

like-for-like occupancy

three

developments completing

in 2023, with a 1.1m sq ft

near-term pipeline of

fourassets

The portfolio

Strategy in focus

Our view of the market

London oces have seen valuations fall

asyields have increased in response to

higher interest rates. However, the market

remains strong operationally, and rents

have continued to grow in prime assets

asdemand for this space has remained

strong. Within this, customers continue

towant exible options and strong

sustainability credentials – so only the best

spaces will thrive. Our portfolio is well

placed to benet from these trends.

Our plan for our

Central London portfolio

We sold £1.4bn of mature, single-let oces,

taking our City oce disposals to £1.7bn

since 2020. The remaining portfolio consists

of modern space or assets we plan to

redevelop.

Three oce developments will complete

in2023 and these are expected to generate

£39m of gross income when fully let.

Wehave a consented pipeline of 1.1m sq ft

of oce-led development opportunities,

including Portland House in Victoria and

Timber Square in Southwark, where we

arealready on site with early works. Our

developments will oer a range of our

products – Myo, Customised and Blank

Canvas – and will provide the space and

facilities customers now demand. We plan

to open three new Myo locations in the

autumn, totalling 138,000 sq ft, with a

further location to open next summer.

We also think rising interest rates will lead

to investment opportunities in 2024, as high

renancing costs will cause some owners

todispose of assets that no longer meet

the rising cost of debt. Our balance sheet

means we are well placed to invest.

With ESG as a consideration, our

investment in air source heat pumps and

innovative AI systems to increase eciency,

will ensure our portfolio remains sustainable

and meets the needs of our customers.

Thisyear, we will install our rst air source

heat pump at Dashwood in the City.

During the last nancial year,

we sold three major oce

assets for a total of £1.4bn.

Allthree were let to single

occupiers on long leases and

wetherefore had limited

value-creation opportunities

from these assets. Despite

deteriorating nancial and

economic conditions, we

crystallised an average 10%

lifetime IRR from the disposals.

We can use the proceeds from

these to invest in higher-return

opportunities across the

portfolio.

These disposals demonstrate

our strategy in action. We were

disciplined in our approach and

took the opportunity to realise

value even though property

values were falling in the market.

017Landsec Annual Report 2023Strategic Report

Our view of the market

Prime retail destinations have been one

ofthe most resilient real estate sectors

overthe last year. As the cost of online

retail has increased in recent years, physical

retail costs – rent and rates – have declined.

For many leading brands, online and physical

channels are now rmly inter-connected,

sowe continue to see existing brands upsize,

new brands opening stores in our assets as

they move from nearby locations to benet

from higher footfall, and digital-native

brands opening stores to grow customer

connectivity and experience.

Consumer behaviour has gradually reverted

to pre-Covid trends, with online sales down

and in-store sales growing over the past

year. Given the inationary pressure on

margins for many brands, both online and

physical, we expect that the rationalisation

of the tail-end of brands’ store portfolios

will further accelerate. This adds to the

challenges for secondary retail locations,

where there remains a signicant excess

ofspace, yet brands are focusing on fewer,

but bigger and better stores.

Therefore, prime destinations continue to

get stronger. With attractive yields and the

potential for rental growth, we view prime

retail destinations as attractive assets to

invest in, albeit the number of centres with

long-term potential is limited to a relatively

small number of sites.

Our plan for our retail portfolio

We will concentrate on catchment-

dominant locations we are condent

willbelong-term winners, by oering

anexperience that draws shoppers time

and again. We will sell assets where we do

not have scale or sources of competitive

advantage: the retail parks from our

subscale sector, for example. We will also

make selective disposals and acquisitions,

to ensure our portfolio always holds retail

assets that have long-term appeal to brand

partners and visitors.

Our strategic focus

Retail

£1.9bn

portfolio comprising six

high-quality regional

shopping centres and ve

outlet centres

£38m

lettings signed or in

solicitors’ hands

94.3%

like-for-like occupancy

4.4%

like-for-like sales up vs 2020

The portfolio

Strategy in focus

Investing in Cardi

During the last year we secured

100% ownership of St David’s

shopping centre in Cardi.

Using our competitive advantage

to unlock complex opportunities,

we acquired the outstanding

50% from two debt holders at

anet initial yield of 9.7%.

St David’s has rmly established

itself as the prime, regionally

dominant shopping destination

in Cardi. Leasing momentum

has been strong, with 30 leases

signed since March 2022, on

average 10% ahead of ERV.

Via a separate deal, we also

acquired the adjacent vacant

Debenhams store for a minimal

sum. All combined, this unlocks

the opportunity to deliver our

future vision for the centre, to

further enhance its attractions

for brands and guests. We

expect to deliver a high single-

digit income return on

incremental capital expenditure.

Strategic ReportLandsec Annual Report 2023018

Our view of the market

There remains a structural need to

remodelmany parts of today’s built

environment to make sure they suit

changing consumer expectations for how

we live, work and spend our leisure time,

and also suit increasing sustainability

demands. Situated in attractive locations

with strong transport links in some of the

fastest-growing urban areas in the UK,

ourpipeline remains well placed to cater

forthese demands. At the same time, our

sustainability and development expertise,

combined with the now fully integrated U+I

team’s placemaking skills, means we are

well positioned to meet this structural need.

Done well, these mixed-use urban

communities can generate strong returns,

as the appeal of the location and its

amenity increases the value through phases

of placemaking. There is political support

for such projects, but very few developers

with the scale and skills to take them on.

Our plan for our mixed-use urban

neighbourhoods portfolio

We have continued to make good progress

in preparing our pipeline, through planning

and other pre-development activities. This

means we now have the option to start the

rst phase at Mayeld in Manchester this

year. Subject to further planning and land

assembly workstreams being satisfactorily

progressed, we could also start on site with

enabling works at Finchley Road in London

later this year.

However, the changes in capital market

conditions have a clear impact on our

underwriting assumptions. Any decision

to start a scheme will have to reect an

appropriate level of return, with target IRRs

in the low-to-mid teens. Our mixed-use

development assets include our three

shopping centres in London and Glasgow

which are held for future development, but

where the existing income is managed on a

short-term basis to maximise our exibility

to obtain access for development.

Our strategic focus

Mixed-use urban

neighbourhoods

10m

sq ft

pipeline of mixed-use urban

schemes in London,

Manchester and Glasgow

First

phase of Mayeld totals

320,000 sq ft with an

expected yield on cost

ofc. 8%

Potential

to start on site at Mayeld,

and commence enabling

works at Finchley Road,

later this year

The portfolio

Strategy in focus

Preparing the pipeline

Our mixed-use schemes are

regeneration projects in the

heart of communities. Strong

relationships with local

authorities and organisations

istherefore essential to ensure

our schemes work both for us

and their local communities.

During the year, we made

progress on the planning phases

of a number of our schemes. At

Mayeld in central Manchester,

we agreed terms with our JV

partners for a draw-down of

land for the rst phases of

development, once we intend

tostart on site. In Glasgow, we

have concluded the rst rounds

of public consultation and

intend to submit a planning

application. And at Finchley

Road in London, we have

secured a resolution to grant

planning consent for our

residential-led scheme.

019Landsec Annual Report 2023Strategic Report

Investment activity

When we set out our strategy in late 2020,

we said we planned to sell c. £4bn of mature

London oces and assets in sectors which

were subscale for us over a period of circa six

years, with a view to reinvest this into higher

growth opportunities over time. We have

continued to make strong progress on this, so

2.5 years into this period, we have now sold

£2.4bn, including £1.4bn over the past year.

Our largest sale last year was the £809m

disposal of our 21 Moorelds, EC2

development in September. The building is

fully pre-let to Deutsche Bank for 25 years

and therefore oered little room to add

further value. The sale represented a 9%

discount to March book value, partly

reecting the fact that construction had

not yet completed, but crystallised a 25%

prot on cost and 11% IRR since we acquired

the site.

In January, we sold One New Street Square,

EC4 for £350m. This building is fully let to

Deloitte for a further 14 years and, following

a regear of the lease at the start of the

year, also oered little to room to add

further value. The price was 4% below the

September valuation, yet crystallised a 10%

IRR since our acquisition of the site in 2005.

At the start of the year, we also sold 32-50

Strand, WC2 for £195m, following a 10-year

lease regear with the sole occupier, 15%

above its prior book value. In addition, we

sold £54m of smaller non-core assets, 22%

ahead of book value, and we have now sold

or exchanged contracts to sell over half of

U+I’s non-core assets for £98m, on average

16% above book value.

Relative to £1.4bn of disposals, we spent

£120m on acquisitions and £280m on

development capex last year. Our main

purchase was the debt secured on 50% of

St David’s, Cardi via separate transactions

with two lenders. This allowed us to obtain

100% control of the shopping centre at a

discount to the £113m book value of our

existing half of the asset and an implied

initial and equivalent yield of 9.7%. In

addition, we spent a small amount on land

assembly deals around some of our major

mixed-use projects.

Operating and

portfolio review

Overview

Our overall portfolio on a combined basis was valued at

£10.2bn atthe end of March, which adjusted for disposals

and new investments, was down £848m for the year due

toa softening ofvaluation yields, and is made up of the

following areas:

61 %

Central London

Our modern, high-quality oce (82%) and retail

andother commercial space (18%), located in the

WestEnd (68%), City (26%) and Southwark (7%).

18%

Major retail destinations

Our investments in six shopping centres and ve retail

outlets, with the seven largest assets comprising 85%

of the overall retail portfolio value, most of which are

amongst the highest selling locations for retailers in

the UK.

Mixed-use urban neighbourhoods

Our investments in mixed-use assets and future

development opportunities, focused on ve sites

inLondon, Manchester and Glasgow, of which some

still have a short-term use as retailahead of their

medium-term redevelopment.

13%

Subscale

Assets in sectors where we have limited scale and

which we therefore intend todivest over time, split

broadly equally between retail parks, hotels and

leisureassets.

Strategic ReportLandsec Annual Report 2023020

We have now sold £2.2bn of the c. £2.5bn

London oces we earmarked in 2020, at

anaverage yield of 4.4% and a 4% discount

to book value. This means our London

assets are now 74% in the West End and

Southwark, with City exposure down from

39% to 26% over the year. We are planning

further disposals this year, yet we expect

future disposal activity to be more

balanced towards our subscale sectors.

Portfolio valuation

The sharp increase in interest rates during

the year meant that transaction volumes

across global and UK property markets

slowed materially. Yields reset quickly as a

result, especially during the second half of

2022. Despite ERV growth across all key

segments, this meant the value of our

portfolio reduced 7.7%.

The value of our Central London portfolio

was down 7.3% for the year. This reected

a42bps increase in yields to 4.9%, which

was partly oset by 4.7% growth in ERVs

– at the high end of our guidance of low

tomid single digit ERV growth for the year.

The value of our West End oce (-8.0%)

and retail and other assets (+1.3%), which

make up 74% of our London investment

portfolio, proved more resilient than our

City oces (-15.4%). This reected our

strong leasing activity in Victoria, driving

3.7% ERV growth and strong growth at

Piccadilly Lights. In the City, where we have

sold £1.7bn of oces since late 2020, ERV

growth was 4.7%, which solely reected

amajor lease regear at a higher rent at

New Street Square, with the associated

refurbishment works to facilitate this taken

as a cost in the valuation. Development

values were down slightly (-3.0%), with ERV

growth due to successful lettings oset by

softer valuation yields.

The value of our major retail assets reduced

6.4% during the year, despite our successful

leasing activity driving 0.9% ERV growth.

Virtually all of this movement occurred in

the nal quarter of the 2022 calendar year,

as valuers moved yields out by 40bps,

mostly based on sentiment, as there were

no comparable transactions during the

period. We ascribe more value to the

continued improvement in operational

performance than “sentiment”, so we

continue to focus on driving this. Reecting

the high income return, the total return of

our major retail assets was at 0.5% ahead

of London (-3.4%) and mixed-use (-2.8%).

In mixed-use, our completed assets at

MediaCity were down 5.9%, as ERV growth

of 8.6% was oset by a 61bps increase in

yields. Our future developments were down

9.4%, reecting the fact that these are

mostly valued based on their existing use

and we manage the income on a short-

term basis to maximise exibility for future

development. In Subscale, hotel values

weredown slightly (-3.1%), whilst retail

parks were down 12.1% driven by 69bps

yieldsoftening, following a strong 31.9%

increase in values during the prior year.

Thevalue of our leisure assets was down

17.7% reecting concerns around the largest

tenant, Cineworld, although the news of

itsrecapitalisation post the year-end is

aclear positive.

Valuation analysis

Table 4

Market

value

 March



m

Surplus/

(decit)

m

valuation

change

H

valuation

change

LFL rental

value

change



Net initial

yield

Topped up

net initial

yield

Equivalent

yield

LFL

equivalent

yield

change

bps

West End oces , () (.) (.) . . . . 

City oces , () (.) (.) . . . . 

Retail and other ,  . . . . . . 

Developments , () (.) (.) n/a . . . n/a

Total Central London , () (.) (.) . . . . 

Shopping centres , () (.) (.) . . . . 

Outlets  () (.) (.) (.) . . . 

Total Major retail , () (.) (.) . . . . 

Completed investment  () (.) (.) . . . . 

Developments  () (.) (.) n/a . . . n/a

Total Mixed-use urban  () (.) (.) . . . . 

Leisure  () (.) (.) (.) . . . 

Hotels  () (.) (.) . . . . 

Retail parks  () (.) (.) . . . . 

Total Subscale sectors , () (.) (.) . . . . 

Total Combined Portfolio , () (.) (.) . . . . 

. Rental value change excludes units materially altered during the period.

. Excluding developments

Looking ahead, whilst yields appear to

havestarted to stabilise in recent months,

investment activity in reality remains thin

across most sectors. Investor demand is

selective, so combined with the volatility

ininterest rates and tightening of credit

conditions the outlook remains uncertain,

although we expect values for prime assets

to stabilise and return to growth well before

secondary. We also expect high yields in

major retail destinations to oer more

resilience than lower yielding sectors.

Reecting the strong demand for high-

quality space and limited supply, we expect

ERVs in London and major retail to grow by

a further low to mid single digit percentage

this year.

Strategic Report Landsec Annual Report 2023 021

Operating and

portfolio review continued

Leasing and operational

performance

Central London

Despite the recent disruption from

transport strikes, London continues to

getbusier and oce utilisation continues

togradually increase. We continue to see

agrowing bifurcation in demand, with

customers focusing on exibility, the

bestquality space in areas with the right

amenities to attract key talent, and

sustainability. Across the London market,

oce take-up slowed in the second half,

ending the year at 11.8m sq ft – up 7% vs

last year and just 4% below the 10-year

average. Space under oer reduced to

3.2msq ft vs a 10-year average of 3.4m

sq ft and vacancy in the City remains high

at 11.7%. Conversely, vacancy in the West

End, where c. 70% of our assets are located

is just 3.6% and down 70bps YoY. Overall,

67% of available space is second-hand,

asGrade A vacancy remains low at 1.7%.

Reecting the strong demand for the best

quality space, we signed 44 lettings and

renewals, totalling £43m of rent, on

average3% ahead of valuers’ assumptions,

with a further £6m in solicitors’ hands,

19%above valuers’ estimates. This included

an upsized, new 17.5-year lease with Taylor

Wessing at New Street Square, in a deal

where we are temporarily relocating them

to a dierent building on the estate where

we are drawing up plans for medium-term

redevelopment, whilst we decarbonise

theirexisting building. In line with our

guidance, occupancy increased 110bps to

95.9%, with our West End oces eectively

full, at 99.5% occupancy. We continue to

see strong demand for our Myo exible

oer, with 123 Victoria Street 100% let

andDashwood 85% let, vs 98% and 64%

ayear ago. We plan to open three new

Myolocations in autumn, totalling

138,000sq ft, with a further location

toopen next summer.

Looking forward, we have been clear in

ourexpectation that more exible ways of

working would reduce overall demand for

oce space in the UK. However, we have

also consistently said that the impact of

this will not be evenly spread, with large

HQtype space and areas which lack the

amenities that oer people a reason to

want to spend time there expected to see

amuch bigger impact. This has started

toplay out and we expect this will continue.

Across London space marketed for subletting

increased to 5.1m sq ft over the year, but

75% of this is in the City, City Fringe and

Docklands. In the West End and Southwark,

where assets are smaller and occupiers

more diversied, demand remains strong

and Grade A supply is low. This continues

todrive ERV growth for the best assets,

which continues to benet our portfolio.

Major retail destinations

Customer demand for retail space in

thebest locations continues to grow.

Underlining the value of our major retail

destinations for brands and consumers,

total retail sales across our portfolio

grew6.9% YoY and like-for-like sales were

4.4% above 2019 levels. Footfall across

ourshopping centres increased 12% and

isnow at 90% of pre-pandemic levels,

compared to 83% for the UK market and

80% a year ago.

Consumer behaviour continues to gradually

revert back to pre-Covid trends, with online

sales down and in-store sales up over the

past year. For most leading brands, online

and physical channels are now rmly

interconnected, and a number of key

brands such as Next and Inditex indicated

recently that online is no longer expected

togrow as quickly as previously anticipated.

The increase in cost of capital and cost of

doing business online has also led many

online pure-play retail models to shift their

focus from growing market share to

growing protability, increasing the cost

forconsumers to buy online.

Whilst we expect brands to continue to

rationalise their overall store footprints,

their focus on ‘fewer, bigger, better’ stores

continues to drive growth in demand for

space in our assets, as they upsize existing

stores or open new stores as they move

from nearby locations to benet from

higher footfall in a ‘ight to prime’.

Reecting this, we completed 218 lettings

totalling £27m, up 35% vs the prior year, on

average 8% above ERV. Close to 70% of the

leases we signed during the year had some

Operational performance analysis

Table 5

Annualised

rental

income

m

Estimated

rental value

m

LFL

Occupancy



LFL

occupancy

change



ppt

WAULT



years

West End oces   . . .

City oces   . . .

Retail and other   . . .

Developments   n/a n/a n/a

Total Central London   . . .

Shopping centres   . . .

Outlets   . (.) .

Total Major retail   . . .

Completed investment   . . .

Developments   n/a n/a n/a

Total Mixed-use urban   . . .

Leisure   . (.) .

Hotels   n/a n/a .

Retail parks   . . .

Total Subscale sectors   . . .

Total Combined Portfolio   . . .

. Excluding developments.

Strategic ReportLandsec Annual Report 2023022

turnover linkage, although the average

turnover element was only 10% of the total

rent. Overall, 53% of our leases now have

some turnover component, with turnover

rent making up 12% of our total retail

income. This turnover data provides us with

valuable insights and a unique competitive

advantage in underwriting income levels.

As a result, occupancy increased 110bps

during the year to 94.3%. We continue

tomonitor credit risks, but units in

administration remain low at 0.4%, vs 0.5%

a year ago. There have been no CVAs and

minimal insolvencies, as the most

challenged businesses already folded during

the pandemic. Whilst Cineworld (less than

1% of annual rent in major retail destinations),

led for Chapter 11 bankruptcy protection in

the US during the year, it continues to trade

and pay rent and agreed a recapitalisation

shortly after the year-end.

Looking forward, despite the cost of living

challenges consumers are faced with, we

continue to see few signs of any let-up in

demand from brands, with £11m of lettings

in solicitors’ hands, up 28% vs this time

lastyear, on average 11% above ERV.

Withsales in our shopping centres close

topre-pandemic levels and rents having

reset c. 35% during the pandemic,

operational protability for brands further

improved due to the c. 30% reduction in

business rates last month. With the last

large over-rented historical leases expected

to reset this year, this is expected to

underpin solid like-for-like income growth

from next year.

Mixed-use urban neighbourhoods

Our completed investment assets in

mixed-use at present solely comprise our

investment in MediaCity, where occupancy

increased 1.8% to 97.8%, with lettings well

ahead of ERV. The bulk of the income in our

mixed-use development assets relate to our

three shopping centres in London and

Glasgow. This income is managed on a

short-term basis to maximise our exibility

for future development. This will eventually

erode and be replaced by our new schemes,

but in the near term it compensates for the

holding costs of these sites as we prepare

them for future development.

Subscale sectors

Across our subscale portfolio, operational

performance remained robust. We completed

£7m of retail park and leisure lettings, 10%

above valuers’ assumptions, with a further

£1m of rent in solicitors’ hands, 5% above

valuers’ assumptions, and overall occupancy

increased 30bps. Our hotels, which are fully

let to Accor, saw occupancy rise to 94%

ofpre-Covid levels, up from 67%last year,

driving a substantial increase in RevPAR.

Development pipeline

Central London

Demand for the best quality space remains

strong. Our two on-site West End schemes,

n2 in Victoria and Lucent behind Piccadilly

Lights, are set to complete shortly and are

73% and 71% pre-let or in solicitors’ hands

respectively, with rents agreed over the

last12 months on average 11% ahead of

ERV. Atthe end of March, we completed

The Forge, in Southwark. Our Myo exible

oering will operate 35% of this space and

is set to open in autumn, and we are now

insolicitors’ hands on 11% of the remaining

space. Combined, these three projects are

expected to generate an ERV of £39m once

fully let, which will support our near-term

income growth.

During the year, we sold our development

at 21 Moorelds in the City, which we fully

pre-let to Deutsche Bank, for £809m,

ahead of its completion. This crystallised

a25% prot on cost and 11% IRR since our

acquisition of the site in 2012.

As expected, we are seeing a slowdown

innew development starts across the

London market, reecting the increase

inconstruction and nance costs, but

alsothe decline in available development

nance. In previous periods of economic

uncertainty, new development starts ended

up c. 30-90% below originally expected

levels and we believe this is likely to repeat

this time. As demand for the best, most

sustainable space remains strong, this

creates an attractive window for us to

deliver new space in 2025, when Grade A

supply is expected to be very low.

Last autumn, we decided to commit to the

early works for the refurbishment of

Portland House, SW1 and Timber Square,

SE1. At a cost of £55m, this allowed us to

maintain our programme for a delivery in

late 2025, whilst keeping exibility on the

residual c. £400m of capex at a time of high

nancial and political uncertainty. Returns

on both projects remain attractive, with

gross yields on cost of 7.4% and a yield on

capex of 12%+, so supported by the strong

leasing success in our current pipeline,

withrecent lettings 11% ahead of ERV, we

therefore plan to commit to the full works

on both imminently.

We also continue to progress our future

pipeline, as we received planning consent

for Red Lion Court, SE1 in March; are

currently seeking to enhance our existing

consent at Liberty of Southwark, SE1; and

unlocked a future opportunity at Southwark

Bridge Road, SE1 adjacent to The Forge,

through a lease surrender we agreed in the

second half of the year. This further adds

tothe potential to create a unique cluster

of highly sustainable oces in Southwark,

which is one of the most attractive areas of

London in terms of amenities. All combined,

this provides us with a 2.0m sq ft future

pipeline, of which 1.1m sq ft is now

consented.

Committed development pipeline

Table 6

Property Sector

Size

sqft

’

Estimated

completion

date

Net income/

ERV

m

Market

value

m

Costs to

complete

m

Market

value 

future TDC

m

Gross yield

on MV 

future TDC

Lucent, W Oce/retail/residential  Aug-     .

n, SW Oce  Jun-     .

Total      .

Strategic Report Landsec Annual Report 2023 023

Operating and

portfolio review continued

Future Central London development pipeline

Table 7

Property Sector

Proposed

sqft

’

Indicative

TDC

m

Indicative

ERV

m

Gross yield

on TDC

Potential

start date Planning status

Near term

Timber Square, SE Oce    . H  Consented

Portland House refurbishment, SW Oce    . H  Consented

Liberty of Southwark, SE Oce/residential    .



H  Consented

Red Lion Court, SE Oce    . H  Consented

Total near term , ,  .

Medium term

Nova Place, SW Oce   Design

Old Broad Street, EC Oce   Design

Hill House, EC Oce   Design

Southwark Bridge Road, SE Oce   Design

Total medium term 

Total future pipeline ,

. Gross yield on cost adjusted for residential TDC.

Mixed-use urban neighbourhoods

Consumer expectations on how we live,

work and spend our leisure time continue

toevolve and demands on sustainability

continue to grow, which means there is

astructural need to remodel many parts

ofthe built environment, to make sure

theyare t for future needs. Located in

attractive locations with strong transport

links in some of the fastest growing

urbanareas in the UK, our pipeline is well

placed to cater for this. The combination

ofU+I’s placemaking skills and Landsec’s

sustainability and development expertise

means we now have the platform to both

deliver and curate thriving mixed-use places

and realise the long-term sustainable

valuefrom the future opportunities we

havecreated.

Our 10m sq ft mixed-use pipeline in London,

Glasgow and Manchester has a total

development cost of c. £5bn, with a mix

ofresidential, oce and leisure space

deliverable across multiple phases over

thenext 10-15 years. The current book value

of these sites is modest compared to its

potential upside, at c. £330m, and given the

c. 5% income yield on the current use of the

existing assets, its holding cost is modest.

With unlevered IRR targets in the low to

mid-teens, this oers valuable optionality

for growth.

We have made excellent progress during

the year at our two most advanced

projects, which provides optionality to

potentially start rst works on site over

thenext 12 months. At Mayeld, next to

Manchester’s main train station, the new

6.5-acre public park opened in September

and we agreed terms with our JV partners

for a drawdown of land for the rst phases

of development. This allows us to develop

100% of the rst phase, covering around

one-third of the overall project, ourselves

and therefore paves the way for a potential

start on site with the rst two oce

buildings totalling 320,000 sq ft later this

year. The expected investment for this is

c. £150m, with an expected gross yield on

cost of c. 8%.

At Finchley Road, in zone two, London,

wesecured a resolution to grant planning

consent at the end of March for our

masterplan to develop 1,800 new homes.

Subject to further planning and land

assembly workstreams being satisfactorily

progressed, this could allow us to start on

site with enabling works for our rst major

residential scheme later this year.

In Glasgow, we intend to submit the

planning application for our mixed-use

masterplan shortly, which we expect to

bedetermined in the rst half of 2024.

InLewisham, south-east London, we

maintain positive engagement with the

Council on our new residential-led

masterplan, for which we are preparing

tosubmit a planning application later

thisyear. At MediaCity, we are working

withour partner Peel on establishing

thelong-term vision forthis site, ahead

ofthe future phases of its development.

Our good progress during the year has

further added to the valuable opportunity

to build an attractive balance of income,

development upside and medium-term

growth potential our pipeline provides.

Themixed-use nature, ability to phase

capex, geographic spread of the pipeline,

and the exibility to adapt to changes in

demand all add to the balanced risk-prole

of this part of our business.

Strategic ReportLandsec Annual Report 2023024

Delivering sustainably

During the year, we delivered a 16.6%

reduction in energy intensity compared

to2019/20. This was up 0.9% year-on-year,

although this largely reected particularly

low utilisation in the prior year in the early

months of emergence from the pandemic.

At current levels, it is 33.2% below 2013/14

levels and therefore remains on track vs

ourtarget to reduce energy intensity by

45% from this baseline by 2030.

At the start of this year, we updated our

carbon reduction targets to align with the

Science Based Targets initiative’s (SBTi) new

Net-Zero Standard. Landsec was amongst

the rst companies worldwide to have our

science-based targets validated under the

Net-Zero Standard, which is the world’s rst

framework for corporate net-zero target

setting. In response to the new SBTi standard,

and in recognition of progress to date, we

have committed to a near-term target of

reducing direct and indirect greenhouse

gasemissions by 47% by 2030 from a 2020

base year and have committed to reach

netzero by 2040 from the same base year.

This signicantly increases the scope of our

targets, as it now includes emissions from all

sources, including all of our scope 3 emissions

such as the emissions from our development

pipeline, supply chain and customers.

In late 2021 we were the rst UK property

company to launch our fully costed net zero

carbon transition plan. This plan will see us

deliver our science-based target and meet

the Minimum Energy Eciency Standard

ofEPC B by 2030, with the expected cost

for this already reected in our current

portfolio valuation. 36% of our portfolio is

already rated B or higher, including 38% of

our oce portfolio. The latter is down from

44% last year, partly reecting the sale of

One New Street Square. We expect this to

increase to 44% in the coming months once

our current pipeline completes and this will

increase further from 2025 onwards, as the

benets from our net zero transition

investment kicks in.

Mixed-use urban neighbourhoods development pipeline

Table 8

Property

Landsec

Proposed

sqft

’

Earliest

start

on site

Number

of blocks

Estimated rst/

total scheme

completion

Indicative

TDC

m

Target

yield

on cost

Planning

status

Mayeld, Manchester - ,   / - - Consented

MediaCity, Greater Manchester  ,   / - - Consented

Finchley Road, NW  ,   / -, - Consented

Buchanan Galleries, Glasgow  ,   / ,-, - Design

Lewisham, SE  ,   / ,-, - Design

Total future pipeline , ,-,

We remain on track with this plan and have

now completed air source heat pump

feasibility studies for six oces, with four

progressing to concept design and two to

detailed design. We have also completed

the optimisation of building management

systems for 11 oces, and will be

completing this for two of our shopping

centres this year. In addition, we have

expanded our energy audits from 15 to 25

ofour largest customers, which combined

cover 19% of the energy use in our oce

portfolio. This identied potential annual

carbon and costs savings of 10-15% per

customer and we plan to expand this to

thenext 12 customers this year.

Bluewater, Kent

Mayeld, Manchester

Strategic Report Landsec Annual Report 2023 025

We continue to work on driving down

upfront embodied carbon and during the

year we announced a target to reduce this

by 50% vs a typical development by 2030,

to below 500kgCO

e/m

for oces and

400kgCO

e/m

for residential. We are

already tracking an average 36% reduction

in upfront embodied carbon across our

future pipeline, which equates to an

average upfront embodied carbon intensity

of 640kgCO

e/m

on our oces and

535kgCO

e/m

for residential. To help us

achieve our longer-term targets, during the

year we signed up to the ConcreteZero

Initiative where we commit to using 100%

net zero concrete by 2050 with ambitious

interim targets. This complements our

existing membership of the SteelZero

Initiative and sends a clear signal of our

commitment to net zero to our supply chain.

Near-term, at Timber Square, SE1 our plans

show upfront embodied carbon intensity

of535kgCO

e/m

, reecting the retention

ofpart of the existing structure, a highly

optimised design and the use of low carbon

cross-laminated timber. At Portland House,

SW1, retaining the existing structure and

upgrading the existing façade has resulted

in upfront embodied carbon intensity of

395kgCO

e/m

. At Red Lion Court, SE1 we

expect an upfront embodied carbon intensity

of c. 600kgCO

e/m

, reecting the retention

of 35-40% of the existing basement and piles

and the use of a highly exible concrete

structural solution with demountable

timber inlls. The Forge, SE1, which recently

completed, is the rst building in the UK

tobe designed, constructed and aspiring to

operate in line with the UK Green Building

Council framework denition of a net zero

carbon building.

Building on our strong track record of

investing in our local communities, we have

enhanced our approach to community

investment by launching the Landsec

Futures fund last month. This is aimed at

improving social mobility in the real estate

industry and will see us invest £20m over

Operating and

portfolio review continued

Lucent, W1

21 Moorelds, EC2 – sold

SOLD

Strategic ReportLandsec Annual Report 2023026

the next ten years, to empower 30,000

people towards the world of work and

create £200m in social value. This includes

abursary programme that provides

nancial support to underrepresented

young adults studying for a placemaking

career, internships within Landsec and a

small grants programme for local charities

and community organisations in the areas

we operate.

Creating the right culture and

investing in our platforms

Our strong operational performance

andcontinued progress on executing our

strategy over the past year clearly reects

the capability and dedication of the

substantial talent within Landsec. We

continue to work on creating the right

culture and a more diverse organisation,

which is key in getting the most out of

thevaluable skills and expertise our teams

harbour and in successfully delivering our

strategy over time.

With this in mind, we initiated an

organisational review early last year aimed

at reducing internal complexity and

becoming more agile, customer-orientated

and outward focused. This work built on

previous changes in our retail team, where

we brought in signicant experience and

capabilities from international retailer

backgrounds to focus more on growing

brand relationships and guest experience,

and our focus on retaining the unique

placemaking and design capability of

U+Iduring its successful integration over

the past 12 months.

As a result of this organisational review,

wemade several changes, including to

ourleadership team. We also reduced the

number of layers in our organisation and

increased management reporting spans.

This has improved our eciency and freed

up resource to focus more on activities

which drive value for our customers, rather

than on internal processes. In a sector

which is rapidly becoming more operational,

this further underpins the value of our

operating platforms and their future

growth potential.

Despite high ination, this also meant

wemanaged to keep overhead costs at

over the past 12 months and although

inationary pressures remain elevated,

weexpect overhead cost to be down

slightly for the current year. In early 2022

wealso initiated signicant investments in

upgrading our systems and data capability.

We incurred £6m of cost for this during the

year and expect a broadly similar cost in

the current year, but this is set to drive

further eciency improvements for the

year to March 2025 onwards.

One New Change, EC4 The Forge, SE1

Strategic Report Landsec Annual Report 2023 027

Overview

Global economic and nancial market

conditions have changed considerably over

the past year. The volatility this caused has,

unsurprisingly, aected the valuation of

property and other asset classes across the

globe, but we have continued to focus on

driving operational performance and

executing our strategy. Our success in this

during the year has further strengthened our

strong balance sheet and quality of earnings

and underpins our condence in our ability

to grow earnings and dividend over time.

EPRA earnings for the year were up 10.7%

to£393m, partly due to an increase in

surrender premiums received, which were

up£22m vs the prior year. The two main

surrenders unlocked the opportunity for a

major 17.5-year lease regear elsewhere in our

estate and two medium term developments.

Like-for-like gross rental income excluding

these surrender premiums was up 6.0%,

or5.8% on a net rental income basis.

Thisreects our strong leasing, growth in

turnover income in major retail destinations,

higher variable income and continued

growth in income across our hotel portfolio.

Despite our signicant disposals, underlying

EPRA EPS, which excludes the 3.0 pence

impact of the increase in surrender

premiums, rose 4.4% to 50.1 pence, towards

the high end of our guidance for low to mid

single digit percentage growth. In line with

growth in underlying earnings, our 38.6 pence

dividend for the year is up 4.3% vs the prior

year. This reects a dividend cover of 1.30x,

in line with our policy to have dividends

annually covered 1.2 to 1.3 times.

Although our successful leasing activity drove

growth in occupancy and ERVs, the value of

our portfolio was down £848m as a result of

an increase in valuation yields, reecting the

rise in bond yields during the year. Despite our

growth in EPRA earnings, this resulted in an

overall loss before tax of £622m and basic

EPSof -83.6 pence, compared to a prot of

£875m in the prior year. As a result, EPRA NTA

per share reduced 11.9% to 936 pence, which

including dividends paid, resulted in a total

return on equity of -8.3%.

Financial review

1. Including our proportionate share of subsidiaries

andjoint ventures, as explained in the Presentation

of nancial information in the Financial Review.

2. Excluding increase in surrender premiums received

of£22m.

Financial review

Vanessa Simms reports on

our nancial performance

and explains the movement

in our key nancial measures.

Presentation of nancial

information

The condensed consolidated

preliminary nancial 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 £10.2bn,

is an example of this approach,

reecting 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 nancial

performance of the Group’s property

rental business, which is our core

operating activity. A full denition 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 dened

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 nancial statements.

For further details see table 70 in the

Business analysis section.

Highlights

£393m

EPRA earnings

(2022: £355m)

£(622)m

(Loss)/prot before tax

(2022: £875m)

53.1p

EPRA earnings

per share

(2022: 48.0p)

(83.6)p

Basic (loss)/earnings

pershare

(202 2: 117.4p)

£10,239m

Combined portfolio

(2022: £12,017m)

£7,072m

IFRS net assets

(2022: £7,991m)

(8.3)%

Total return on equity

(2022: 10.5%)

38.6p

Dividend per share

(202 2: 37.0p)

31.7%

Group LTV ratio

(2022: 34.4%)

£3,287m

Adjusted net debt

(2022: £4,179m)

936p

EPRA Net Tangible

Assetsper share

(2022: 1,063p)

50.1p

Underlying EPRA

earningsper share

1, 2

(2022: 48.0p)

Strategic ReportLandsec Annual Report 2023028

Despite this, our decisive action during

theyear further strengthened our strong

capital base. We reduced net debt by

£0.9bn to £3.3bn, so despite the reduction

in value of our portfolio, our LTV is down

from 34.4% to 31.7%. This is an imperfect

measure to judge leverage, particularly

sowhen investment activity is low and

theapproach to valuations varies widely in

dierent markets, which is why in times like

this we focus more on net debt/EBITDA as

acash-on-cash measure. This stood at 7.0x

at the end of March, down from 9.7x a year

ago, or 8.0x on a weighted average net

debt basis, down from 8.6x twelve months

ago. We increased our average debt

maturity to 10.3 years and with £2.4bn

ofundrawn facilities, we have no need to

renance any maturing debt until 2026,

soour balance sheet is in excellent shape.

Income statement

Our successful leasing activity and the high

quality of our portfolio is clearly reected in

the growth in income we have delivered.

Compared to the prior year, when the

UKwas just emerging out of lockdown

atthe start of the period, this growth

hasbeen most prevalent in our major

retaildestinations; our mixed-use assets,

where some of our future projects have an

existing retail use; and our subscale sectors,

which include our retail parks, leisure and

hotels, as trading in these areas returned

tonormal.

Income statement

Table 9

Year ended  March  Year ended  March 

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 income



          

Net service charge expense () () () () () () () () () () –

Net direct property expenditure () () () () () () () () () () ()

Movement in bad/doubtful debts provisions ()   –  ()   ()  ()

Segment net rental income           

Net administrative expenses () () –

EPRA earnings before interest   

Net nance expense () () ()

EPRA earnings   

Capital/other items

Valuation (decit)/surplus ()  (,)

(Loss)/gain on changes in nance leases () () –

(Loss)/prot on disposals ()  ()

Impairment charges () () ()

Fair value movement on interest rate swaps   

Other () () 

(Loss)/prot before tax attributable to

shareholders of the parent

()  (,)

Non-controlling interests ()  ()

(Loss)/prot before tax ()  (,)

. Including our proportionate share of subsidiaries and joint ventures, as explained in the Presentation of nancial information above.

. Includes nance lease interest, after rents payable.

Net rental income

Overall gross rental income increased by

£61m to £647m, which includes the benet

of a £22m increase in surrender premiums

received compared to the prior year. This

increase reects a lease surrender we

agreed at Southwark Bridge Road to create

optionality for a new redevelopment,

adjacent to our recent scheme at The Forge,

and the lease restructuring with Deloitte at

New Street Square we agreed at the start

of the year.

The space this freed up paved the way

foranother lease regear with a dierent

major customer at the estate and the

successful disposal of One New Street

Square in January.

Excluding the increase in surrender premiums,

like-for-like gross rental income was up £29m,

or 6.0%. This included a £19m increase in

variable rent, which comprises income from

hotels, Piccadilly Lights, parking and retail

turnover rent, as trading normalised relative

to the pandemic eects in the prior year.

Overall net rental income for the year

increased by £51m to £561m. The reversal of

our bad and doubtful debt provisions was

£3m, compared to £12m in the prior year.

Direct property expenditure increased by

£1m, which reects a £7m increase due to

acquisitions, oset by a £6m decrease in

direct property costs elsewhere in the

portfolio. This reects the benet of

increased occupancy and our focus on

costs. Net service charge expenditure was

stable compared to the prior year.

Strategic Report Landsec Annual Report 2023 029

The full year impact of our acquisitions in

late 2021 more than oset the impact from

disposals during the past 12 months, so

overall the impact of investment activity

onnet rental income for the year was £8m.

As a result, our gross to net margin was

86.7%. We expect this to improve on a

like-for-like basis, as void and letting costs

reduce as occupancy continues to grow.

However, we expect the overall margin

toreduce slightly this year, reecting the

start-up cost of opening three new Myo

locations and the initial lease-up cost of

ourthree London oce developments

which will be completed by this summer.

Rent collections remain strong and are

currently in line with this time last year

andpre-Covid levels. We have seen minimal

insolvencies and no CVAs during the period,

although Cineworld, which makes up 2.0%

of our annual rent, entered Chapter 11

bankruptcy protection in the US. We have

taken appropriate provisions during the

year and its recently announced

recapitalisation now provides a positive

stepforward, whilst all units in our portfolio

continue to trade and the company

continues to pay rent.

Net rental income

(£m)

Chart 10

Net rental income for the

year ended 31 March 2023

Net rental income for the

year ended 31 March 2022

Increase in variable and

turnover-based rents

Acquisitions since

1 April 2021

Disposals since

1 April 2021

Like-for-like net service

charge expense

Like-for-like net direct

property expenditure

Like-for-like movement in bad

and doubtful debts provisions

Increase in surrender

premiums received

Gross rental income

like-for-like movement

in the period

Other movements

Developments

510

10 0

(6)

(4)

(11)

561

600

550

500

450

400

350

300

1. Including our proportionate share of subsidiaries and joint ventures, as explained in the Presentation of nancial 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

Despite the surge in UK ination, our net

administrative expenses were stable vs

theprior year at £84m, in line with our

guidance. This includes the full absorption

of the additional administrative cost of

theU+I acquisition at the end of 2021 and

reects our continued focus on making

sureour cost base is right. This also includes

£6m of costs reecting an investment in

upgrading our systems and data capability,

which based on updated IFRIC accounting

guidance is now expensed instead of

capitalised. This is expected to reduce from

the year to March 2025, as this investment

programme completes during that year.

Although high wage ination and general

cost ination continue to put upward

pressure on costs, we expect administrative

expenses for this year to be down slightly.

This reects the eciency benets of the

organisational review we undertook last

year. We have identied clear opportunities

to reduce costs the years after, partly

driven by our investments in technology,

sowe remain on track to reduce our EPRA

cost ratio towards the low 20’s over time,

compared to 25.2% last year and 26.4%

inthe prior year.

Net nance expenses

Net interest costs increased £13m to £84m,

principally due to higher gross borrowings

inthe rst half of the year, ahead of

disposals during the year, plus an increase

in variable interest rates. At the start of last

year, 70% of our borrowings were xed or

hedged but following our disposals, we are

now fully hedged. We expect net interest

costs to increase slightly in the current year,

reecting a small increase in average

borrowing costs.

Financial review

continued

Strategic ReportLandsec Annual Report 2023030

Non-cash nance income, which includes

the fair value movements on derivatives,

caps and hedging and which is not included

in EPRA earnings, increased from a net

income of £16m in the prior year to a net

income of £23m over the past year. 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

and loss on disposals

The independent external valuation of

ourCombined Portfolio showed a £848m

value reduction. Whilst the strong leasing

evidence we created drove 3.6% ERV

growth and we delivered further prots

onour current development pipeline, the

upside of this was more than oset by a

market-wide softening of yields due to the

sharp rise in bond yields.

We recognised a £144m loss on disposals,

mostly reecting the discounts to historical

book value on the sale of 21 Moorelds and

One New Street Square, partly oset by the

premiums to book value of the sale of 32-50

Strand and a leisure asset in north London.

IFRS loss after tax

Substantially all our activity during the year

was covered by UK REIT legislation, which

means our tax charge for the year remained

minimal. Reecting the increase in EPRA

earnings, oset by the valuation shortfall,

IFRS loss after tax for the period was

£622m, compared to a prot of £875m

inthe prior period.

Net assets and return on equity

EPRA Net Tangible Assets, which principally

reects the value of our Combined Portfolio

less adjusted net debt, reduced to £6,967m,

or 936 pence per share, marking a 11.9%

reduction for the year on a per share basis.

Including dividends paid, this means our

total return on equity for the year was -8.3%.

Balance sheet



Table 11

 March



m

 March



m

Combined Portfolio , ,

Adjusted net debt (,) (,)

Other net assets/(liabilities)  

EPRA Net Tangible Assets , ,

Shortfall of fair value over net investment in nance leases book value  

Other intangible asset  

Excess of fair value over trading properties book value () –

Fair value of interest-rate swaps  

Net assets, excluding amounts due to non-controlling interests , ,

Net assets per share p ,p

EPRA Net Tangible Assets per share (diluted) p ,p

. Including our proportionate share of subsidiaries and joint ventures, as explained in the Presentation of nancial information above.

Movement in EPRA Net Tangible Assets

(£m)

Chart 12

Like-for-like

valuation movement

Development

valuation movement

Impact of

acquisitions/disposals

EPRA Net Tangible Assets

at 31 March 2023

EPRA Net Tangible Assets

at 31 March 2022

EPRA earnings

Dividends

Loss on disposals

Other

Total valuation decit £848m

7,888

393

(687)

(73)

(88)

(290)

(144)

6,967

(32)

9,000

8,000

7,000

6,000

5,000

1,063 53 (92) (10) (12) (39) (22) (5) 936

Diluted per share (pence)

1. Including our proportionate share of subsidiaries and joint ventures, as explained in the Presentation of nancial information above.

Strategic Report Landsec Annual Report 2023 031

Net debt and leverage

Adjusted net debt, which includes our

shareof JV borrowings, reduced by £892m

to £3,287m during the year. This was

principally driven by our £1.4bn of disposals

in London. We spent £120m on acquisitions,

including the debt secured against St David’s

in Cardi. Capital expenditure on our

portfolio was £340m, reecting our

Londonoce development programme,

the preparation of future developments

and the investment in our existing assets.

We only have £90m committed capex left

to spend, although we anticipate this will

increase in the coming months as we

commit to the full refurbishment of

Portland House and our new development

at Timber Square.

The other key elements behind the

decreasein net debt are set out in our

statement of cash ows and note 13 to

thenancial 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 nancial statements.

Due to the reduction in borrowings, our

netdebt/EBITDA reduced to 7.0x based on

our net debt at the end of March, or 8.0x

based on our weighted-average net debt

for the year. We target net debt/EBITDA

toremain below 9x over time. Group LTV

which includes our share of JVs, reduced

from 34.4% to 31.7%. This remains well

within our target range of 25% to 40%

andin line with the low 30’s level we said

we expected for the foreseeable future.

Net debt and leverage

Table 13

 March



m

 March



m

Net debt ,m ,m

Adjusted net debt



,m ,m

Interest cover ratio .x .x

Net debt/EBITDA

(period-end)

.x .x

Net debt/EBITDA

(weighted average)

.x .x

Group LTV



.% .%

Security Group LTV .% .%

. Including our proportionate share of subsidiaries and

joint ventures, as explained in the Presentation of

nancial information above.

Movement in adjusted net debt

(£m)

Chart 14

Adjusted net debt

at 31 March 2023

Adjusted net debt

at 31 March 2022

Adjusted net cash inow

from operating activities

Dividends paid

Capital expenditure

Acquisitions

Disposals

Other

4,179

(359)

289

340

120

(1,269)

(13)

3,287

5,000

4,500

4,000

3,500

3,000

1. Including our proportionate share of subsidiaries and joint ventures, as explained in the Presentation of nancial information above.

Financial review

continued

Strategic ReportLandsec Annual Report 2023032

Financing

Our gross borrowings of £3,358m are

diversied across various sources, including

£2,736m Medium Term Notes, £310m

syndicated and bilateral bank loans and

£312m of commercial paper. Our MTN and

bank loans form part of our Security Group,

which provide security on a oating pool

ofassets currently valued at £9.6bn. This

provides exibility to include or exclude assets

and an attractive cost of funding, with our

MTN currently rated AA and AA- with a

stable outlook respectively by S&P and Fitch.

The Security Group structure has a number

of tiered covenants. Below 65% LTV, these

involve very limited operational restrictions,

whilst a default only occurs when LTV is more

than 100% or the ICR falls below 1.0 times.

With a Security Group LTV of 33.0%, down

from 36.4% in March, our portfolio could

withstand a c. 50% fall in value before

wereach the 65% hurdle and 67% before

reaching 100%, whilst our EBITDA could fall

78% before we reach 1.0x ICR.

We have £2.4bn of undrawn facilities, which

provides substantial exibility. The amount

ofborrowings which is xed or hedged

increased from 70% to 100%, as we used

theproceeds from our signicant disposals

during the period to repay part of our

oating debt, as planned. We expect this

gure to come down slightly as we repay

some of our near-term maturities and

continue to target a medium-term range

ofc. 80-90% to keep some exibility for

potential divestments.

In March, we issued our rst Green bond,

which is earmarked for the investment in

ournear-term London pipeline. This raised

£400m with a 9.5 year maturity at a margin

of 133bps, representing an all-in cost of

4.875%. Combined with the reduced

utilisation of our revolving credit facilities, this

increased our average maturity of debt from

9.1 to 10.3 years, even though our average

cost of debt only rose slightly, to 2.7%.

We have £733m of debt maturing in the next

two and a half years, but all of this is more

than covered by existing undrawn facilities,

which means we have no renancing

requirements until 2026.

Available facilities



Table 15

 March



m

 March



m

Medium Term Notes , ,

Drawn bank debt  ,

Outstanding commercial paper  

Cash and cash equivalents



() ()

Available undrawn facilities



, ,

Total committed credit facilities , ,

Weighted average maturity of debt . years . years

Percentage of borrowings xed or hedged % %

Weighted average cost of debt .% .%

. Including our proportionate share of subsidiaries and joint ventures, as explained in the Presentation of nancial information above.

. Cash and cash equivalents and available undrawn facilities have been restated as at  March  following a clarication by IFRIC on classication of funds with externally

imposed restrictions.

Outlook

Looking ahead, our strong capital base

putsus in an excellent position to take

advantage of opportunities which will no

doubt arise as the world continues to adjust

to the new reality of higher interest rates

and tighter credit conditions. Our strong

credit prole and long 10.3-year average

debt maturity therefore provide clear

visibility and underpin the resilience of

ourattractive earnings prole.

We now target to deliver an 8-10% annual

return on equity over time, driven by a

combination of growing income returns

andcapital growth from rental value growth

and development upside. Short term

changes in valuation yields remain beyond

our control, which means we will not land

precisely in this range every single year,

butour high-quality portfolio and the clear

competitive advantages of our operating

platforms mean we are well placed to

deliver this over time. For the current year,

we expect continued customer demand to

drive low to mid single digit growth in ERVs

in London and major retail destinations.

We expect EPRA EPS for the current year to

be broadly stable vs last year’s 50.1 pence

underlying EPS. This reects the fact that

we expect the positive impact from

continued strong operational performance

and like-for-like rental growth to be more

orless oset by the fact that we have been

– and in the near term will likely remain –

anet seller of assets. It also fully absorbs

c. £10m of impact from the last over-rented

retail leases resetting, Myo start-up

costsand IT systems investment this year.

As such, we expect EPRA EPS to return

togrowth the year after. As our current

dividend cover is at the high end of our

1.2-1.3x target range, we expect dividends

to grow by a low single digit percentage

p.a. over these two years.

Vanessa Simms

Chief Financial Ocer

Strategic Report Landsec Annual Report 2023 033

Our approach ensures everyone is clear

about what we expect of them, through

frequent communication and feedback.

This constantly raises performance

expectations as people are accountable for

what they do, and know how to contribute

to our success and how that will link to the

rewards they then receive.

Our leadership behaviour sets the cultural

tone, with an emphasis on achievement

through partnership, collaboration, self-

management and building an inclusive

environment being central to success.

Recognising and celebrating one another,

being open about and learning from our

mistakes, and creating time for innovation

and creativity, lay the foundations of

realising our ambitions in the Landsec way.

We aim to build a workforce that is skilled,

adaptable and future-focused, to enable

ourbusiness to grow and thrive in the ever-

changing environment it operates in. We

know that if we take care of our people, our

people will take care of our customers and

our business. We want to be an employer

ofchoice everywhere we operate, so we

canattract, recruit and retain the best

people. We build our business on strong

foundations, with our purpose – Sustainable

Places, Connecting Communities, Realising

Potential – being rmly at the heart of

everything we do and every decision we

make. We are vocal in our commitment to

equal opportunities, diversity and inclusion.

We invest in learning and development for

all, and support wellbeing, and healthy and

safe workplaces.

We aim to pay fairly and competitively, and

recognise and reward high performance.

We expect the best from all our people,

providing the support needed for every

individual to ourish and demonstrate their

inherent talent and capability.

Our people and culture

At Landsec, we aim to create a high-performance

environment where each of our circa 600 colleagues

cansee clearly how they contribute to, and benet

from, Landsec’s success.

Employee engagement

Chart 16

Our culture

56%

80%

68%

78%

18%

12%

17%

15%

74%

16%

15%

18%65% 17%

16%71% 13%

21%62% 17%

20%66% 14%

17%77% 6%

Trust

Empowerment

Accountability

Purpose

Enablement

Autonomy

Reward

Leadership

Engagement

Favourable

Themes Response favourability

Neutral Unfavourable

28%

77%

Overall employee

engagement score

Strategic ReportLandsec Annual Report 2023034 Strategic Report

“The Circl Leadership Programme has

opened my eyes to inclusive leadership,

using the power of coaching to build

stronger, more eective relationships.

The skills that I have gained from the

programme are helping me and my fellow

Circl graduates to create a culture where

everyone is empowered to take action

and deliver results. It’s great that

Landsec oers this programme which is

delivered by an engaging, creative team.”

Beth Howell, Retail Manager at Landsec graduating

from the Circl Leadership programme

Transforming our business for success

Responding to uncertainty and turning

challenges into opportunities has become

standard, so we are constantly looking to

develop even more ways to support our

colleagues to adapt and thrive.

We have taken decisive steps to transform

our business, ensuring we are in the optimum

position to best support our customers

inachieving their goals. Alongside this

transformation, we’ve created a suite of

development products designed to hone

the skills, capabilities and experiences

thatwill set our people apart, and equip

usfor growth.

Listening to our people

We know it is critical to listen to every

employee’s voice, and use that feedback

tocontinually improve our business. We

launched a new employee survey, where

weare able to benchmark our results with

other organisations based on size or sector.

This has given us some clear insights that

will allow us to identify areas of strength

and areas for improvement. Questions

focused on the key employee viewpoints

that underpin engagement and allowed

usto explore our culture.

75% of our colleagues responded, with an

overall engagement score of 77% across

thebusiness (see chart 16). This puts us

onpar with organisations of a similar

sizeand provides us with a target to reach

to compare to thehighest-performing

organisations. Thesurvey identied

strengths in our clear purpose and the

quality of our portfolio as well as strong

interpersonal relationships. Each business

area has created a plan detailing what they

will do to address the points where we can

improve performance.

Developing our talent

We know great leadership is central to our

success, so, alongside our key Leadership

Development programmes – Stepping into

Leadership, Leading with Purpose and

CirclLeadership Programme – we have

curated learning mapped to our leadership

expectations, targeting ‘courageous’

conversations, performance, development

and careers.

We are incentivising the demonstration

ofexcellent leadership, with a proportion

ofleaders’ performance-related pay (PRP)

taken into consideration.

Highlighting achievements

•

As a signal of our commitment to

improving leadership and management

eectiveness – 77 managers and leaders

have attained an Institute of Management

and Leadership accreditation, having

participated in our cornerstone leadership

programmes, while 36 more are currently

working on the accreditation.

•

Demonstrating a self-driven appetite

fordevelopment – our people have

completed 9.2 hours of learning each on

average, and completed 6,442 courses.

•

Supporting our commitment to diversity

and inclusion (D&I) – 28 women have

completed our female-focused

development programme Thrive, with

afurther 14 having just started a new

programme.

•

Developing deeper relationships more

eectively both internally and externally

is underlying to our ongoing success –

97% of our workforce has completed the

Strengths Deployment Inventory (SDI),

which supports meaningful and eective

relationship-building.

Developing our approach to diversity

and inclusion

This year, we revised our approach to D&I,

launching our new strategy: Diverse Talent,

Inclusive Culture, Inclusive Places.

We created our new framework with

colleagues across the business, and it is

endorsed by our Executive Leadership Team

and Board. Wehave developed a shared

vision that articulates why D&I is important

to Landsec, and whatwe want to achieve:

“We 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.”

We will achieve this vision through actions

grouped under three pillars, nine D&I

themes and foundations that support the

overall delivery:

Our D&I strategy

Strategic Report Landsec Annual Report 2023 035

Our purpose — Sustainable places, connecting communities, realising potential

Foundations

Our approach to D&I will be led by data and evidence of what works, and we will build transparency

and accountability to make sure we meet our commitments.

Our vision — We 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

Diverse talent

We will recruit, retain and progress a diverse

workforce at all levels and nurture and

support diverse talent into the wider real

estate industry.

Inclusive culture

We will create a workplace culture where all

colleagues are respected, supported and

empowered to realise their potential.

Inclusive places

We will design, build and manage places that

meet the needs of the communities we serve

and use our position in industry to create

positive D&I change.

Leadership

Workforce

Future talent

Inclusive leadership

Employee engagement

Training and ongoing learning

Procurement and supply chain

Development

Operations

raise the prole of improving the

customer experience for disabled people

and their families.

•

Working with our partners to deliver

education programmes to our workforce,

to provide support and education

ontopics such as the menopause,

neurodiversity and maintaining a

healthylifestyle.

Landsec Pride

•

Celebrating LGBTQ+ History Month

inFebruary with our British Queer

Historyexhibition at our head oce.

Theexhibition allowed our workforce to

learn more about the LGBTQ+ movement

in the UK, highlighting the progress made

to date but also raising awareness of the

work still to do.

•

We hosted Oxford Pride at Westgate –

opening the doors of our centre for

the celebrations of the local LGBTQ+

community.

Diaspora Network

•

Led a series of events during Black History

Month, including hosting black business

owners’ pop-up markets across a

numberof Landsec sites and facilitating

an event with our partners to celebrate

black art and culture and showcase

blackexcellence in music, poetry,

comedy, art and food.

•

Ran a three-day event with Somerset

Multicultural Association, Clarks

andUNTHNKBLE to celebrate Black

History Month.

where we need to change. This has led to

a greater focus on diversity at leader level

and above, in our targets and priorities,

which are proving to make a dierence,

like including multiple women in shortlists

for leadership positions.

•

We will be transparent about our work,

publishing annually our progress towards

our targets. To support accountability

forthis, our Executive Leadership Team

members have annual diversity targets

intheir performance plans, linked to their

bonuses. These targets focus on diversity

at leadership, with KPIs relating to

increasing diversity in succession plans

and talent development programmes,

and for reducing senior leavers we would

wish to retain.

Anity networks

In support of our D&I objectives, we want

tohear all voices across the Company, and

so we continue to work closely with our four

anity networks to ensure we get feedback

from all perspectives. They have achieved a

huge amount this year, including:

Landsec Women

•

Celebrating International Women’s Day

with a highly successful event on Allyship.

•

Continued external networking in the

wider property industry to enhance the

prole of Landsec Women.

Hand in Hand

•

Running another hugely successful Purple

Tuesday event across Landsec assets

tosupport improving accessibility and

inclusivity for disabled people, and to

Our people and culture

continued

Since the launch of the strategy, we are

already taking action as highlighted below.

Diverse talent

•

To support greater leadership diversity,

we have introduced a new inclusive

recruitment process for senior-leader level

and above. This will involve de-biasing

role descriptions, mandating ethnic and

gender diversity on shortlists, and

including an employee panel in the

assessment process.

•

We launched the Landsec Futures

internship programme to enhance

socialmobility within our business and,

more broadly, within the wider real

estateindustry.

Inclusive culture

•

Our anity networks continue to have

animportant voice in our business in

advising how we shape our culture,

andthis year played a part in improving

support for colleagues through some

ofthe most challenging life milestones.

Inclusive places

•

We are implementing a D&I procurement

and supply chain strategy with three core

objectives, increasing the diversity of our

supply chain, improving D&I practices

within our supply chain, and working

withsuppliers who can support us in

delivering our strategy. We have included

specic D&I training requirements in

contractual specications, made the

latest guidance on designing for

neurodiversity part of our design brief

fora major waynding contract, and

worked with our supply chain partners

todevelop a diversity plan for our Timber

Square development.

Foundations

•

Our revised commitments and actions

are led by data and evidence of what

works. We have introduced improved

dashboards, helping us to know

workforce diversity by business unit and

level, but also to understand recruitment,

promotion and turnover trends, to inform

Strategic ReportLandsec Annual Report 2023036

Diversity charts

Gender by level (%)

Chart 17

Ethnicity by level (%)

Chart 18

Executive

Senior leader

Leader

Manager

Professional

Support

Whole organisation

3367

3169

64 36

50 50

42 58

22 78

50 50

Executive

Senior leader

Leader

Manager

Professional

Support

Whole organisation

100

89 322 31

80 11 1322

74 9 12 4

71 10 16 3

80 8 6 3

Male Female

Our overall workforce is gender balanced with 50% female representation

and 50% male representation. We are increasing our focus on achieving

greater gender balance at Leader level and above and have seen

improvements over the past year, particularly at Executive level where

female representation has increased from 22% to 33%. We have also seen

small improvements at Senior Leader level (from 30% to 31%) and Leader

level (from 35% to 36%).

White Asian Black Mixed Other Prefer not say Not provided

18% of our sta are from ethnic minority backgrounds, broadly

representative of the overall UK population. We are increasing our focus

onachieving greater ethnic diversity at Leader level and above having

seenminor decreases in ethnic minority representation at Senior Leader

level (from 3% to 0%) and Leader level (10% to 8%) over the past year.

Whole organisation by sexual orientation (%)

Chart 19

Whole organisation by disability (%)

Chart 20

Heterosexual – 84

LGBO (Lesbian, gay, bisexual

or other) – 4

Prefer not to say – 9

Not recorded – 3

Disabled – 4

No disability – 92

Prefer not to say – 3

Not recorded – 1

4% of our sta are Lesbian, Gay, Bisexual or Other (LGBO), slightly higher

representation than in the wider UK based on Census population statistics.

Our LGBTQ+ focus remains on creating an inclusive culture for all LGBTQ+

colleagues and supporting LGBTQ+ inclusion in the wider real estate industry.

4% of our employees are disabled, a one percentage point decrease from

last year. There has been no change since last year in the percentage of

employees who have not recorded their details or prefer not to say (4%).

Strategic Report Landsec Annual Report 2023 037

Our people and culture

continued

Pay gap

We are committed to reducing our pay

gaps through improving the representation

of women and ethnic minority sta at all

levels of the business.

Please note these are our 2022 pay gap

gures. We plan to report our 2023 pay

gapgures later this year. While we made

progress in some areas in 2022 – notably

in reducing our gender pay gap – we went

backwards on our ethnicity pay gaps.

Pay gap reporting not only supports

transparency, it also helps us to identify

theactions we need to take to address

these gaps. Further details of our actions

are available at Landsec.com.

Our mean gender pay gap reduced from

36.6% to 30.8% in 2022 and our median

gender pay gap reduced from 29.3% to

28.7% over the same period. This reduction

in the gender pay gap is primarily due to

increases in the representation of women in

the upper middle pay quartile (1.7 percentage

point increase) and upper pay quartile

(2.9percentage point increase) over the

past 12 months. This is a result of a higher

number of male leavers in the upper pay

quartile than joiners and an increase in

female representation at executive level.

Our mean ethnicity pay gap increased

from 32.7% to 36.5% in 2022 and our

median ethnicity pay gap increased

from27.6% to 37.6% in the same period.

Our ethnicity pay gaps have increased

because the representation of ethnic

minority sta has increased in the lowest

pay quartile and decreased in all other pay

quartiles. This is due to a high proportion

ofethnic minority new starters at our

morejunior levels – 50-70% of new starters

at these levels over the past 12 months are

from ethnic minority backgrounds.

During the same period, we had a higher

proportion of ethnic minority sta leave

the business at manager level and this

decreased ethnic minority representation

within these more senior roles. This points

to the importance of our anity networks

and the need for us to increase our focus

onretention.

Gender pay gap

Our mean gender pay gap

Chart 21

Our median gender pay gap

Chart 22

2021

36.6%

2022

30.8%

2021

29.3%

2022

28.7%

Table 23

Quartile split (hourly rate – mean)

Quartile proportions No. Male Female Total Avg Male Female % Gap

Lower Income Quartile  .% .% . . . –.%

Lower Middle Income Quartile  .% .% . . . .%

Upper Middle Income Quartile  .% .% . . . –.%

Upper Income Quartile  .% .% . . . .%

Ethnicity pay gap

Our mean Ethnicity pay gap

Chart 24

Our median Ethnicity pay gap

Chart 25

2021

32.7%

2022

36.5%

2021

27. 6%

2022

37.6%

Table 26

Prefer

not

tosay

Quartile split (hourly rate – mean)

Quartile proportions No. White

Ethnic

minority

Total

Avg White

Ethnic

minority % Gap

Lower Income Quartile  .% .% .% . . . .%

Lower Middle Income Quartile  .% .% .% . . . .%

Upper Middle Income Quartile  .% .% .% . . . –.%

Upper Income Quartile  .% .% .% . . . .%

Strategic ReportLandsec Annual Report 2023038

Recruitment and retention

Despite some challenging considerations

over the last 12 months, turnover has

remained stable and consistent with the

last nancial year. We have undergone

onlyvery marginal changes in voluntary

and involuntary turnover, in line with our

expectations, which is a positive outcome

when viewed in the context of challenging

macro factors presenting signicant

economic and cultural challenges.

We are now looking to the future as

we continue to seek out talented and

passionate individuals to join our team.

This year, we have focused particularly on

building future talent through the launch

of our Internship scheme, Landsec Futures,

which aims to provide opportunities in the

real estate industry to those from diverse

backgrounds. This scheme received

overwhelming interest, with 75 applicants,

and introduced some fantastic talent to

opportunities within our sector. This year,

we will welcome seven individuals into

ourbusiness, creating aspirations and

opportunities for fresh new talent. Read

more about this on page 44 of this report.

We have also continued to focus in a big

way on developing our own internal pipeline

of talent with great skills, behaviour and

capabilities. This has resulted in 35 internal

promotions, 21 of whom were female

appointments.

Wellbeing

Just as we provide places that support the

wellbeing of our customers and guests, we

also ensure we protect the wellbeing of our

own people. This year, we have continued to

build on the broad range of benets oered

for social, nancial, mental and physical

wellbeing, by arranging sessions such as

healthy lifestyle webinars and creating a

nancial wellbeing partnership to provide

nancial education and nancial peace

of mind.

We continue to respect and encourage

theneed for balance in all aspects of life,

by supporting initiatives such our rst

WorkLife Balance group, created by

ourRegeneration Development Team to

gauge thoughts and feelings, and gather

suggestions of things we could do to create

the most eective work-life balance.

In recognition of supporting families better

during their most challenging periods, we

have created a new policy for colleagues

going through pregnancy loss, with paid

time o, and improved our policy on

compassionate leave, which recognises

the importance of close relationships

outside of immediate family. We also

created comprehensive guidelines on

how to support colleagues through loss

or bereavement, to equip our workforce

to do this in the best way.

Strategic Report Landsec Annual Report 2023 039

We recognise the strong link between the

planet and society, and the importance

ofmaintaining strong sustainability

performance as a key value driver to our

business. As the war in Europe continues to

disrupt livelihoods and global supply chains,

including energy, and the fact that 2022

was the fth-hottest year on record, The

World Economic Forum’s Global Risk Report

2023 has identied the cost-of-living crisis

and failure to mitigate and adapt to

climate change as two of the major global

risks for the next decade. Addressing these

risks requires action from government,

non-governmental organisations, media,

individuals and purpose-led businesses

likeLandsec. In addition, our customers

arealso increasingly aware of these issues,

and demanding an exemplary approach

tosustainability.

It is therefore critical that we continue to

focus on achieving our vision, embedding

our Build well, Live well, Act well (BWLWAW)

framework across our organisation – to help

balance the needs of our stakeholders with

positive environmental and social impact.

This year, we’ve maintained our focus on:

•

driving down operational carbon

emissions through our net zero transition

investment plan and striving to meet our

ambitious embodied carbon targets

•

maintaining our prudent approach to

energy procurement to protect our

customers from rising energy costs

•

supporting the needs of our communities,

specically those groups who are

disproportionately aected by rising

livingcosts.

Our approach to sustainability

Our sustainability vision is to design, develop

andmanage our places to enhance the health

ofour environment and improve the quality of

lifefor our people, customers and communities,

now and for future generations.

£400m

Inaugural Green bond issued under our

Green Financing Framework (value as of

March2023), attracting capital to support

thecreation of green buildings, renewable

energy and energy-eciency projects.

Net Zero

by2040

Updated our carbon-reduction targets to align

with the Net-Zero Standard from the Science

Based Targets initiative (SBTi), committing to

achieve net zero by 2040.

Oce occupiers engaged to identify

opportunities to reduce energy

consumptionby20-30%.

36%

Reduction in upfront embodied carbon

compared to traditional construction methods

achieved at The Forge, SE1. Our rst net zero

carbon building and the rst commercial

building to be designed and built using a

platform approach to design for manufacture

and assembly.

33%

Reduction in energy intensity from 2013/14

baseline, so we remain on track to achieve

a45% reduction by 2030.

100%

Of our portfolio is compliant with the 2023

Minimum Energy Eciency Standard (MEES)

ofEPC E and 36% of our portfolio already at

EPCB or higher – the proposed MEES for 2030.

55%

Reduction in operational carbon emissions

(tCO

e) compared with 2013/14 baseline,

ontrack to meet carbon-reduction target

of70%by 2030.

7,067

People facing barriers in our communities

supported towards the world of work, and

£25.1m of social value created, since 2020.

£20m

Committed £20m to enhance social

mobility and create pathways for people

from underrepresented backgrounds into

our industry through Landsec Futures.

—

For our full 2022/2023

sustainability progress update visit

landsec.com/sustainability/

sustainability-performance

1. weforum.org/reports/global-risks-report-2023

2022/23 highlights

Strategic ReportLandsec Annual Report 2023040

Decarbonising our portfolio

andtransitioning to net zero

Our net zero transition

investmentplan

In November 2021, we published our £135m

net zero transition investment plan (NZTIP).

It will ensure we meet our near-term carbon-

reduction target and the proposed Minimum

Energy Eciency Standard (MEES) of EPC B

by 2030.

Our portfolio is now 100% compliant with

the 2023 MEES EPC E or above requirements.

In addition, 36% of our portfolio, 38%

ofoces and 34% of retail, are already

meeting the proposed MEES of EPC B.

Withthe sale of 1 New Street Square,

whichhad an EPC B rating, the proportion

of our portfolio meeting EPC B has reduced,

however we are condent that as we

continue with our NZTIP we will meet the

proposed MEES.

We expect the plan to remove 24,000

tonnes of carbon emissions from

Landsec’s operations.

We are making excellent progress with our

plan, spending over £2m in 2022/23 on the

following initiatives:

•

Moving to cleaner sources of energy,

replacing gas-red boilers with air source

heat pumps.

•

Optimising building management

systems, ensuring they operate in

accordance with the way buildings are

occupied. We’re testing predictive and

self-adaptive AI technology to optimise

heating, ventilation and air-conditioning

systems at our head oce. We predict

this will contribute to energy reductions

of up to 10%.

•

Increasing the capacity of onsite renewable

energy, installing solar panels ateight of

our retail sites. This year we carried out six

air source heat pump feasibility studies and

seven renewable energy feasibility studies.

•

Replacing all uorescent lighting with LEDs.

Reducing emissions from

our construction activities

Approximately a third of carbon emissions

from commercial buildings are produced

before a building is even occupied. For

Landsec, 40% of our total emissions comes

from capital goods which include our

construction activities. We expect this

proportion to increase as we decarbonise

our buildings, the grid decarbonises, our

development pipeline expands and our

occupiers employ more sustainable

workingpractices.

To address this, we’ve set ambitious targets

to reduce emissions from our construction

activities, targeting a 50% reduction in

average upfront embodied carbon compared

with a typical building by 2030. Achieving

this target won’t be easy and we know

we’regoing to have to do things dierently

– making changes throughout our supply

chain to transform the way we design and

develop buildings, ensuring we consider

carbon from the outset of a scheme.

We’re investing in low-carbon construction

materials such as cross-laminated timber

and Concretene, which we hope will build

condence in these products and pave

theway for the industry to accelerate the

transition to net zero. To further increase

industry demand for low-carbon steel

andconcrete, we’re signatory members

ofSteelZero and ConcreteZero.

1. The Net-zero buildings Halving construction

emissions today report (2022).

Portfolio EPC rating (by ERV)

Chart 27

24%

36%

36% 33% 3%28%

26% 28% 4%1%

25% 20% 4% 2% 25%

2020/21

2021/2 2

2022/23

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.

Retail and oce breakdown

Chart 28

29%

34% 41% 19% 6%

37% 19% 5% 8%2%

2021/2 2

Retail

2022/23

45%

38% 22% 40%

12% 38% 5%

2021/2 2

Oces

2022/23

A-B C D E F-G EPC required

Landsec Annual Report 2023 041Strategic Report

—

Overall net-zero target: We’ve

committed to reaching net zero

greenhouse gas (GHG) emissions across

the value chain by 2040 from a 2020

base year.

—

Near-term target: We’ve committed

to reducing absolute scope 1, 2 and 3

greenhouse gas emissions 47% by 2030

from a 2020 base year.

—

Long-term target: We’ve committed to

reducing absolute scope 1, 2 and 3 GHG

emissions 90% by 2040 from a 2020

base year.

To achieve our near-term target, we must

continue to execute our net zero transition

investment plan (NZTIP) as detailed

above.In addition, we must achieve

ourembodied-carbon target by 2030, to

reduceaverage upfront embodied carbon

by 50% compared with a typical building,

aiming for 500 kgCO

e/m

for oces and

400 kgCO

e/m

for residential.

To achieve our long-term target, we must

continue to reduce carbon emissions from

our operational and construction activities.

This will require us to focus on: targeting

suppliers with lower carbon impacts,

investing in and demanding low-carbon

construction materials, removing fossil fuels

from our operations, investing in on-site

renewable-electricity capacity, and working

with occupiers to promote sustainable

working practices.

Nature plays an important role in the built

environment – nature’s capacity to store

carbon and support resilient societies is

linked with the ght against climate change,

and access to green spaces supports the

health and wellbeing of those who use

ourplaces.

We will enhance nature and biodiversity

across our portfolio, targeting a 25%

biodiversity net gain across our operational

sites that currently oer the greatest

potential, and eectively targeting 15%

biodiversity net gain at all of our new

Enhancing nature and green spaces

Taking a prudent approach to

energy procurement

Landsec has a exible-procurement

framework in place to manage wholesale

energy risk across our portfolio. The

strategy is to spread risk as much as

possible by forward-hedging three years

inadvance in six-month trading windows

tominimise our exposure to market

conditions, which is to be fully hedged by

nancial year end. We review our usage

across our assets every quarter to ensure

we make accurate purchasing decisions

that meet expected consumption. We have

again procured 100% renewable electricity

as part of our ongoing commitment to

RE100; a global group of large companies

that will use only 100% renewable power.

We continue to reduce our exposure to

thewholesale markets by buying into

longer-term, xed-rate renewable

contracts. We will be aiming to introduce

Corporate Power Purchasing Agreements

into Landsec’s fuel mix by 2025.

Updating our carbon-reduction

targets, committing to net zero

by 2040

Our current science-based carbon-

reduction target is to reduce our

operational carbon emissions by 70%

by2030, from a 2013/14 baseline year.

In October 2021, due to the scale and

urgency of the climate emergency, the

Science Based Target initiative (SBTi)

published the Net-Zero Standard, which

provides the world’s rst credible,

independent assessment of corporate

netzero targets. We’ve therefore increased

our ambition this year in response to this

standard, updating our science-based

targets to cover emissions from all sources,

including all of our reported scope 3

emissions such as emissions from our

development pipeline, supply chain and

customers. We have updated our baseline

from 2013/14 to 2020 and have committed

to reach net zero by 2040, ensuring we will

meet the requirements set out by the SBTi.

Understanding that a substantial amount

of material often sits below the ground in

basements and structural foundations, our

starting point is to consider repurposing

existing buildings rather than demolishing

and replacing them, to reduce the upfront

embodied carbon of a scheme. If we

conclude that a retention scheme would

result in a signicantly sub-optimal product

for our customers or communities by

limiting the public benets we can provide,

we will look into a replacement scheme

that maintains a focus on positive

environmental outcomes, for example,

byreusing and upcycling demolition waste.

This year we completed The Forge, SE1, our

rstnet zero carbon oce development

tobe constructed and operated in line

withthe UK Green Building Council’s

(UKGBC) framework denition of net zero

carbon buildings.

In addition to its net zero credentials,

TheForge has the following sustainability

features:

•

Approximately 36% reduction in overall

upfront embodied carbon compared

totraditional construction methods.

•

It is an all-electric building that uses

heatpumps to provide heating, cooling

and hot water.

•

5-star NABERS UK design-stage rating.

•

Roof top solar PV panels, green roof

areasand rainwater harvesting – all

contributing toan Excellent BREEAM

rating.

•

18.4% reduction in primary steelworks

compared to traditional steel frame.

•

13% less concrete compared with

traditional benchmarks.

•

50% ground granulated blast-furnace

slag (GGBS) content in substructure

concrete and 40% GGBS content in

Platform Design for Manufacture and

Assembly (P-DfMA) oor slabs.

•

All remaining upfront embodied carbon

has been oset using Gold Standard

carbon credits.

Build well

continued

Strategic ReportLandsec Annual Report 2023042

developments. Across our retail sites

wehave replaced hedgerows with native

species at White Rose, Leeds, planted trees

as part of the Queen’s Green Canopy at

Gunwharf Quays, and introduced a bee

hive with 35,000 honey bees at Lewisham

Shopping Centre.

This year, we’re investigating how our

business activities depend on and aect

nature, so we can integrate nature into

decision making across our operational

anddevelopment activities. The work will

consider the draft recommendations of

theTaskforce on Nature-related Financial

Disclosures (TNFD) and build upon our

current commitments, as well as provide

biodiversity toolkits to support the whole

business in considering how we can best

enhance nature and biodiversity through

our activities.

Water

Over the last year, we have undertaken

water management assessments across

assets under our operational control, to

help shape our water strategy for both

ouroce and retail portfolios.

Actions taken include a programme of work

to install automatic meter reading (AMR)

across our portfolio, testing technology

toobtain increased detail of where water

isconsumed within our buildings and to

identify potential leaks, and developing

awater standard for the taps, toilets and

showers we use across our facilities.

To raise awareness of the importance of

saving water, on World Water Day in March

2023 we communicated our approach to

water management and reduction across

the business and encouraged our colleagues

to take action. We are in the process of

setting a new water target using 2022/23

asour baseline year, due to launch later

thisyear.

Using resources eciently

Using innovative

materials at

Mayeld

Production of cement for use in

concrete creates approximately 8%

of total global carbon emissions.

Atour Mayeld regeneration

scheme, we’ve therefore tested

Concretene, a pioneering low-

carbon material that has the

potential to transform the global

construction sector by providing

analternative to traditional

cement. Concretene uses a product

called graphene to signicantly

improve the mechanical

performance of concrete, allowing

for reductions in the amount of

material used and the need for

steel reinforcement. We were

therst developer to employ

Concretene on a commercial

scheme and have used it to create

a 54x14m mezzanine oor.

Waste

In 2022/23 we continued to divert

100% of waste from landll and recycled

68% of operational waste (2021/22: 71%).

Materials

To use more sustainable materials and

to use these resources eciently, we

encourage reuse and recycling where

possible, promoting the principles of a

circular economy. On our development

schemes, we work closely with our supply

chain, including carbon consultants in the

design team from the very start to guide

decisions on the most carbon-ecient

solutions. Additionally, our Materials Brief

sets out the requirements for common

materials used across our schemes,

considering health impacts, responsible

sourcing, carbon and resource eciency.

We continue to source all our construction

materials from ethical sources (materials

with a responsible sourcing certication).

We’ve used an innovative alternative tocement

atMayeld, Manchester – Concretene.

Strategic Report 043Landsec Annual Report 2023

Launching Landsec Futures: a fund

to maximise the potential of people,

places and communities

In May 2022, we announced our

commitment to enhance social mobility

inthe real estate industry and the places

where we invest, committing £20m from

2023/24 – 2033/34. To achieve this, in April

2023 we launched Landsec Futures, which

will provide support through industry and

local programmes.

This commitment enables us to focus our

approach to community investment on

aclear purpose, which is to enhance

socialmobility in the real estate industry

bycreating pathways for people from

under-represented backgrounds in our

communities to enter careers in our sector.

Additionally, we recognise that the

communities where we create, curate and

sustain places all face a wide range of local

issues, from fuel poverty to homelessness,

and if these issues are not addressed, our

places won’t thrive. We’re therefore also

focused on tackling issues local to our

assets and developments.

We will support people from lower socio-

economic backgrounds who meet key

metrics outlined by the UK Social Mobility

Commission, in entering the real estate

industry, and we will support charities

thattackle issues local to our assets

anddevelopments.

Creating healthy buildings

To ensure we continue to maximise the

wellbeing of those who occupy our

buildings, in April 2023 we submitted

evidence for WELL Portfolio certication

forfour assets; 80-100 Victoria Street,

Dashwood House, Zig Zag Building and

OneNew Change. We are also targeting

WELL Equity certication for the managed

oces portfolio. Additionally, across our

development schemes, we’re targeting

WELL Core Gold or above for oces and

theHome Quality Mark or equivalent for

residential properties.

—

To nd out how we are supporting

ourcolleagues’ wellbeing please

readpage 39

Improving wellbeing

Creating opportunities

andtacklinglocal issues

Supporting our communities

through the cost-of-living crisis

Over the last ten years, we have worked

hard to support our local communities and

charities. Our site teams across the UK

continue to work with community

organisations to support people aected by

the cost-of-living crisis, providing support to

some of the most vulnerable in society.

This includes:

• the White Rose team supporting the work

of the Leeds South and Rethink Food Bank

• creating warm spaces for vulnerable

people at W12 Centre and the O2 Centre

• introducing the CommUNITY Space at

Lewisham Shopping Centre, providing

awarm space for those who need it

• providing promotional support for The

Felix Project at Piccadilly Lights, while

supporting their work at Lewisham

Shopping Centre.

Our new social-mobility fund, Landsec

Futures, will enhance this work in our local

communities, ensuring we have a long-term

approach to investing in our communities

over the next ten years.

Landsec Futures

A £20m fund to maximise the potential of people, places and communities.

Webelieve increasing diversity across our industry and supporting local

communities are essential to the future success of the places we create.

Industry programmes

Industry programmes to enhance social

mobility in the real estate industry,

helpingus create more-inclusive and

successful places.

Local programmes

Local programmes to improve

opportunities and support within our

communities, helping people and places

to thrive.

Real estate

bursaries

Financial support

and mentoring

forindividuals

carrying out

placemaking

qualications

atuniversity.

Landsec

internships

Six-month, paid

entry-level work

placements at

Landsec.

Employability

partnerships

Three-year

partnerships with

charities in each of

our communities,

aiming to support

local school

students and

people facing

barriers with the

careers insights,

skills and

opportunities to

enter our industry.

Community

grants

Quarterly funding

for local charities,

supporting them

in tackling

important issues

inour communities.

Strategic ReportLandsec Annual Report 2023044

Embedding sustainability

across our business

Our sustainability framework, Build well,

Live well, Act well (BWLWAW) is run

business-wide, as well as at portfolio and

asset level, helping us embed sustainability

throughout the business.

Across our operational portfolio, every asset

has its own BWLWAW plan that identies the

ESG themes relevant to the site, and what it

will do to support achieving our corporate

sustainability commitments andtargets.

This year, we published our Sustainable

Development Toolkit, which provides a

comprehensive guide for our development

teams and external partners to ensure we

design and develop our new schemes and

refurbishments in line with our sustainability

vision, corporate commitments and

targets. It sets out a systematic approach

for us to achieve sustainable development,

culminating in a scheme-specic

sustainability strategy and social value

strategy being developed.

Ensuring every colleague takes responsibility

for achieving our sustainability vision, we link

a proportion of our remuneration to achieving

our energy and carbon targets, and we ask

100% of our colleagues to set an annual

objective demonstrating how they contribute

to our sustainability commitments.

This year we also launched our Introduction to

Sustainability training, to build sustainability

capability and knowledge across our business.

The course is mandatory for all colleagues.

Doing the basics brilliantly

Sustainable procurement

51% of our emissions emanate from our

supply chain, therefore it is important we

work with suppliers that share our values

and help us achieve the highest standards

in our supply chain, while achieving wider

social, economic and environmental

benets. In June 2022, we published our

Supply Chain Commitment, which sets

outhow we do business, the commitments

we’ve set ourselves, and the minimum

requirements we expect of all those we

work with. 100% of our strategic partners

align with our sustainability requirements

and are working with us for a sustainable

future, with 93% signing up to our

commitment to date. Complementing our

Supply Chain Commitment, we’ve also

published our Sustainable Procurement

Guide – a document that provides us with

the knowledge to make the right decisions

when buying consumables or business

services, and to spend money wisely and

eectively while supporting our corporate

and sustainability commitments.

To support our supply chain in meeting

OurSupply Chain Commitments, we’ve

joined the Supply Chain Sustainability

School – an online platform that shares

knowledge and resources to build the

skillsrequired to achieve a sustainable

builtenvironment.

Creating healthy, safe and

securespaces

This year we have maintained our ISO 45001

certication, with independent auditors

reporting no non-conformances or

improvement recommendations. A full

re-certication audit to this standard will

take place in FY23/24.

We continued to focus our safety

improvements on areas where we

knowwecould have the biggest impact,

including reducing the risk of signicant

occupational-safety hazards, such as

working at height, re safety, and working

near electromagnetic elds. We have also

continued to work with other leading

property companies to establish consistency

in measuring and reporting health and

safety data, to enable performance

benchmarking with our peer group.

Fire safety

We continue to enhance re safety across

the business, and ensure we meet new

government initiatives and legislation. In

2022, we achieved certication to BS 9997

for our re safety management system,

which we have maintained this year.

Allhigh-rise residential buildings above

11metres in our portfolio have been

examined by independent re engineers

toensure they remain safe for occupation

and meet stringent new building

regulations, with design principles aligned

with requirements of the Building Safety

Act mandated on all future schemes.

Wehave accepted responsibility under

theDevelopers’ Pledge to remediate

atourexpense any life-safety-critical

defectsin any building we developed

orsubstantially renovated, going back

30 years. We will complete any remedial

works as quickly as possible, with no cost

and minimum disruption to tenants and

local communities.

Strategic Report Landsec Annual Report 2023 045

Act well

continued

•

Investigate innovative technologies,

services and materials that will help us

transition to net zero, and be prepared

to try these products on our schemes.

•

Run Landsec Futures, working with

ourcommunities to better understand

and meet their requirements alongside

achieving greater diversity across

ourindustry.

•

Continue to lobby government to

ensurethere is a supportive, stable

policyenvironment that creates a

greener, fairer society for all.

allocation of risk owner, description of

controls and control owners, and nally

providing an evaluation of any residual risks.

—

You can nd more detail about our

climate change risks and opportunities,

our mitigation and adaptation strategy,

and metrics and targets, in our TCFD

Disclosure Statement on pages 47-53

Additionally, to comply with relevant

environmental legislation and industry

standards, we maintain a legal register

aspart of our environmental and energy

management systems, which are certied

to ISO 14001 and ISO 50001. We review

thisregister quarterly to ensure we

considernewlegislation or regulatory

changes, and take any necessary action

tomaintain compliance.

Future plans

We have already made great progress with

our sustainability targets, but with a new

year comes a fresh opportunity to turn our

vision and ambition into tangible action.

We recognise there will be challenges in

achieving these plans, and we don’t have all

the answers, but we believe that by being

explicit in our targets we can incentivise

and support action across our industry.

Key to this will be our ongoing collaboration

with our peers, customers and government

to ensure we have a united approach that

achieves the progress and outcomes

required to create a greener, fairer society

for all.

Our priorities for the year ahead:

•

Continue to follow our NZTIP, moving

ourportfolio to net zero and meeting

theimpending Minimum Energy

EciencyStandard of EPC B by 2030.

•

Continue to account for carbon at

theoutset of every development and

refurbishment scheme, striving to

meetour embodied-carbon targets

byengaging early with our supply

chainto secure sustainable construction

materials, and encouraging our design

teams and contractors to prioritise

retention and reposition where possible.

Advocating for a sustainable future

We share our experience and challenges

inaiming for a sustainable future through

being members of industry bodies such

asthe UK Green Building Council (UKGBC),

Better Buildings Partnership (BBP) and

British Property Federation (BPF); by

responding to public consultations on

emerging policy; by raising awareness

withour customers and investors, and

bycontributing to the debate on various

sustainability topics.

This year, we published our Carbon

Manifesto, outlining what we are doing to

reduce our emissions across our portfolio

and development pipeline and our

commitment as a partner for government.

We are calling for action from the

government: to introduce a performance-

based energy rating scheme; to mandate

for whole-life carbon assessments for all

new developments; and to lead by example

by setting a standard for sustainable

development through their procurement.

Identifying and responding to

ESGrisks and opportunities

Our approach to sustainability is

determined by shifting global challenges

and the ESG issues our stakeholders think

are most critical for us to address and

inuence through our business activity.

Oursustainability strategy, targets and

activity, demonstrate how we are

responding to these issues and where we

know we can have the biggest impact.

Ourmateriality matrix sets out our high-

priority issues landsec.com/sustainability/

our-material-issues.

As the climate crisis becomes more of a

reality, with increased severe weather,

tightening legislation, and growing pressure

from investors and occupiers – we’ve

identied climate change as a principal risk

and, as such, govern and manage it in line

with our risk management and control

framework. This framework enables us

toidentify, assess and manage climate-

related risks eectively – evaluating the

potential impact, the consequences,

Strategic ReportLandsec Annual Report 2023046

Task Force on Climate-related Financial

Disclosures (TCFD) statement

In 2016, we were the rst property company

in the world to have its carbon emissions

target approved by the Science Based

Targets initiative (SBTi). Since then, we

havereduced emissions, and achieved our

original science-based target (SBT) in 2019,

11 years ahead of our 2030 target date.

In2019, we increased the ambition of our

SBT in line with a 1.5ºC global warming

scenario, which formed the foundation

ofour transition to net zero. Over the last

year, we have updated our SBT and net zero

commitment, which SBTi has now approved

to be in line with their Net-Zero Standard.

We have also committed to all new

developments being net zero carbon

bothin construction and operation.

In 2017, we were one of the rst companies

to report our approach to the recommended

disclosures of the Task Force on Climate-

related Financial Disclosures (TCFD) and

weintroduced climate change as a principal

risk in 2020. Over the last year, we have

continued to evolve our approach to

identifying and assessing the risks of climate

change, by forming a Climate Transition

Disclosure Working Group andaligning

ourstatement with the recommendations

of the UK Government’s Transition Plan

Taskforce.

We continue to progress our net zero

transition investment plan and are on track

with what we need to do to meet our

science-based carbon reduction target,

andhave incorporated this into our

nancial statements.

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 conrm we have

made climate-related nancial disclosures

for the year ended 31 March 2023 in relation

to governance, strategy, risk management

and metrics and targets.

Governance

Board oversight and reporting

The Board is responsible for overseeing

ourapproach to climate-related risks and

opportunities aecting the business, with

our CEO having overall responsibility.

The Board receives reports on our

sustainability and climate-related

performance twice per calendar year,

andthis year has focused on the progress

of our transition plans, embedding our new

sustainability framework across the business

and monitoring performance of our SBT

and embodied-carbon commitments.

As we consider climate change a principal

risk, the Board considers the impact of

climate risks when discussing Landsec

strategy and long-term success, including

signicant investment decisions.

Roles, responsibilities and accountability

The Audit Committee supports the Board

inmanaging risk, and is responsible for

reviewing our principal risk register, and

theeectiveness of our risk management

and internal control processes.

Ongoing responsibility and management

ofclimate-related risks is carried out by the

Executive Leadership Team (ELT), chaired

byour CEO and supported by our CFO and

Managing Directors. The ELT is responsible

for developing the sustainability strategy

to ensure it addresses our relevant

environmental, social and governance

(ESG) risks and opportunities, including

those pertaining to climate change.

Theydiscuss sustainability and climate

risksquarterly, or more often if required.

The ELT is supported by the Sustainability

Forum, which consists of senior

representatives responsible for programmes

of work that meet our sustainability

targets, and for mitigating climate risks

across our Workplace and Lifestyle business

units. The Sustainability team, led by the

Head of ESG and Sustainability, is responsible

for co-ordinating the sustainability strategy

and updating the climate risks, collaborating

with all areas of the business to ensure

appropriate mitigation and adaptation

plans are in place. The Climate Transition

Disclosure Working Group comprises

members of the Sustainability team and

representatives from our Strategy, Risk

andFinance teams, to continue to evolve

our approach to transition planning.

—

We provide further information on

ourwebsite showing our governance

structure for managing climate risk:

landsec.com/sustainability/

governance-policies

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.

Strategic Report Landsec Annual Report 2023 047

Task Force on Climate-related Financial

Disclosures (TCFD) statement continued

Culture

We’re working towards a culture centred

ontrust, empowerment and accountability.

Our culture comes from the values we share.

These values guide the way we interact with

others and help us make the right decisions.

Sustainability, which includes our focus

onclimate-related risks, has long been a

strategic priority for Landsec and as such,

isembedded within our culture. Every

colleague is empowered to contribute to

our purpose with consideration for the

environmental, social and economic issues

relevant to our business and stakeholders –

our Employee Code of Conduct provides

guidance on how to do this and highlights

key policies, including our Sustainability

Policy that all colleagues must follow.

To hold colleagues accountable, every

colleague is encouraged to set an annual

objective demonstrating how they will

contribute to achieving our sustainability

vision and commitments. Achievement

ofthis objective is assessed annually and

forms part of our performance-related pay.

Over the last year, we launched our

Landsec Spotlight Awards to recognise

individuals, projects and teams who

demonstrate bringing our purpose to life,

whereby celebrating our achievements

isanimportant part of our culture.

To support our strategy and further

establish sustainability throughout the

business, we have created our Green

Financing Framework, enabling us to issue

green bonds. It describes the types of

projects eligible, the process for selecting

and allocating projects, management

ofproceeds and reporting in support of

ourclimate transition aims. It has been

third-party assured and aligns with the

Green Bond Principles 2021 and Green

Loans Principles 2021 administered by

ICMAandLMA, respectively.

The framework can be accessed on our

website: landsec.com/investorsdebt-

investors/green-bonds

Incentives and remuneration

Our commitment to addressing climate

riskruns throughout the business, with

climate-related targets linked to a

proportion of our bonus remuneration,

including our science-based carbon

reduction target, energy eciency and

embodied carbon from new developments.

Skills, competencies and training

Over the last year, as we continue to

mitigate the risks of climate change and

transition our portfolio to net zero, we’ve

focused on increasing Board and executive

leadership level awareness and knowledge

on our science-based carbon reduction

targets and the actions that we need to

take to meet them, including executing

ournet-zero transition investment plan

(NZTIP) and our ambitious embodied

carbon targets.

Further, we are ensuring everyone across

our business undertakes sustainability

training, which includes information on

oursustainability strategy and approach

toclimate change – demonstrating how

everyone can play a part in reducing our

contribution to climate change and

preparing for inevitable changes in climate.

Additionally, we’ve joined the Supply Chain

Sustainability School which provides an

online platform to share knowledge and

resources to build the skills required to

deliver a sustainable built environment.

Strategy

Identifying climate-related risks and

opportunities

In accordance with TCFD recommendations,

we’ve identied climate risks and

opportunities against (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’ve considered these over the short

(<1 year), medium (until 2030) and

long-term (beyond 2030) against two

science-based scenarios – below 2ºC

(aligned with Shared Socioeconomic

Pathways (SSPs) SSP1-2.6) and exceeding

4ºC (aligned with SSP5-8.5).

We summarise the output of our scenario

analysis below, where we have used MSCI’s

Climate Value at Risk (VaR) methodology

to assess our portfolio exposure to climate

risks. Physical risks are assessed based on

the geolocation of assets and their exposure

to individual hazards as a consequence of

climate change. Transitional risks are assessed

based on alignment of assets to relevant

regulations (e.g. Minimum Energy Eciency

Standards (MEES)) and market demand.

Assessing impact of climate-related risks

and opportunities on our strategy

Based on the risks identied in our scenario

analysis and following our group risk

management framework and methodology,

we have assessed these against likelihood

(1 being very unlikely; 5 being very likely)

and potential nancial impact (1 being

insignicant (< £75m); 5 being very signicant

(> £500m)) across all areas of our business

including investments, divestments,

development and operations to determine

both inherent risk (before mitigating actions)

and residual risk (after mitigating actions).

Strategic ReportLandsec Annual Report 2023048

Time horizons How Landsec denes

Short (<1 year) Our immediate business planning and budgeting for each asset occurs annually, so it is important that appropriate resource for

mitigating and adapting to climate change is identied each year and included in annual budgets.

Medium (until 2030) We are taking action now until 2030 to meet our near-term science-based carbon reduction target.

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.

Short term (< 1 year) Medium term (until 2030) Long term (beyond 2030)

< 2ºC scenario

Proactive and sustained

actionto halve emissions by

2030 and reach net zero by

2050 – 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;

ooding and windstorms

within current variability.

Low physical risks as only a small proportion of

ourportfolio (2.5% VaR) is exposed to aggregated

physical risk (extreme cold, extreme heat, ooding,

windstorms and wildre). The most signicant

physical risk to our portfolio is from coastal

ooding(1.8% VaR).

Medium transitional risks associated with existing

regulations, for example, Minimum Energy Eciency

Standards (MEES) requiring all non-domestic

properties to meet a minimum EPC E by 1 April 2023

and local planning requirements favouring low

embodied carbon development schemes.

In addition, there is increasing occupier and investor

demand for assets with high sustainability

credentials, as more of these stakeholders set net

zero commitments and are required to report on

thesustainability outcomes of their investments.

Physical risks remain the same

as the short term.

High transitional risks

associated with:

•

Emerging regulations, for

example, MEES requiring all

non-domestic properties to

meet a minimum of EPC B

by2030.

•

Carbon tax – potential for the

built environment to be

included in UK Emissions

Trading Scheme.

•

Operational and embodied

carbon obligations for our

development schemes – some

planning requirements need

projected operational energy

emission shortfalls to be

oset– Greater London

Authority recommends a price

of £95t/CO

Additionally, our commitment

todevelop net zero buildings

requires the residual embodied

carbon to be oset via the

Voluntary Carbon Market, where

prices vary signicantly based on

quality of credit.

•

Continued increase in occupier

and investor demand for ESG.

Slight increase in physical risks

but no signicant change to

overall portfolio exposure to

climate risks. For instance, slightly

warmer summers are expected

but these don’t pose signicant

risk of heat stress.

Transition risks remain high

asfurther mitigation actions and

legislative changes are expected

to continue driving reductions in

carbon emissions.

> 4ºC scenario

Limited actions are taken to

mitigate climate change –

there is a push for economic

and social development at

whatever costs.

UK climate will experience

anincrease in severe weather

events (ash ooding);

increased summer and

winter temperatures; drier

summers and wetter winters.

Low physical risks as only a small proportion of

ourportfolio (5.4% VaR) is exposed to aggregated

physical risk. The most signicant physical risk to

ourportfolio is from coastal ooding (4.1% VaR).

Low transitional risks due to no mitigation

actionsor policies in place to reduce emissions.

Physical and transitional

risksremain the same as the

short term.

Signicant 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 ows has

potential for ood defence failures

across the UK, leading to higher

portfolio exposure.

Signicant increase in

transitional risks as adaptation

measures are adopted to cope

with changes in climate and

associated physical risks.

Strategic Report Landsec Annual Report 2023 049

Task Force on Climate-related Financial

Disclosures (TCFD) statement continued

Addressing our climate-related risks and

opportunities across our business model

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 actions to be taken toreduce

emissions, such as policy and regulation

changes, as well as changes incustomer

and investor preference.

We are addressing these risks and

opportunities through three priorities,

allofwhich are 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

In an eort to reduce our contribution

toclimate change, we need to reduce

ouroperational carbon emissions from

theassets that we own and manage.

Thisyear, we’ve increased the ambition

ofour carbon reduction target to align

withthe SBTi Net-Zero Standard and have

continued to progress our £135m Net Zero

Transition Investment Plan (NZTIP).

The Net-Zero Standard sets out a consistent

denition of net zero and the science-based

requirements of achieving it. To meet the

standard, and demonstrate the business

ismoving towards net zero, we must set

two reduction targets; a near-term target

(5-10 years) and a long-term target (2050

at the latest). The near-term target must

cover 95% of scope 1 and 2 emissions and

67% of scope 3 emissions. The long-term

target must increase scope 3 coverage to

90%. Both targets must align with a 1.5ºC

ambition level of limiting temperature rise.

Risk Inherent risk

rating

Residual risk

rating

Short term (< 1 year)

Portfolio at risk of aggregated physical risks (extreme cold, extreme heat, ooding, windstorms and wildre)

VaR: 2.5%

3 2

Portfolio is not compliant with MEES requirements in meeting a minimum of EPC E by April 2023

3 1

Local planning requirements favouring low carbon embodied development schemes

12 6

Failure to oer assets with high sustainability credentials being unable to respond to increased customer and

investor demand

12 4

Medium term (until 2030)

Portfolio at risk of aggregated physical risks (extreme cold, extreme heat, ooding, windstorms and wildre)

6 2

Portfolio is not compliant with emerging MEES regulations in meeting a minimum of EPC B by 2030

15 6

Introduction of carbon tax for total carbon emissions (using 2019/20 baseline, nancial impact could be

c.£15.8m)

3 3

Impact of carbon emission pricing on development costs – including procurement of materials and

osetting costs

12 6

Not achieving of our ambitious embodied carbon targets

15 6

Increased cost of high quality carbon osets required for our new developments to be net zero

5 3

Failure to oer assets with high sustainability credentials being unable to respond to increased customer and

investor demand

16 4

Long term (beyond 2030)

Portfolio at risk of aggregated physical risks (extreme cold, extreme heat, ooding, windstorms and wildre)

9 4

Strategic ReportLandsec Annual Report 2023050

Our near-term carbon reduction target

We commit to an absolute reduction in

allemissions of 47% by 2030, from a 2020

baseline year.

We commit to reduce absolute scope 1

and2 GHG emissions by 60% by 2030,

from a 2020 baseline year. We also

commit to reducing absolute scope 3

GHG emissions from all reported sources

by 45% within thesame timeframe.

Our long-term carbon reduction target

We commit to reaching net-zero GHG

emissions across the value chain by 2040.

We commit to reducing absolute scopes 1,

2and 3 GHG emissions 90% by 2040,

from a 2020 base year.

To meet our near-term science-based

target and stay ahead of impending

2030MEES requirements of minimum

EPCB, we’ve continued to progress our

£135m NZTIP:

•

Optimising building management

systems across our portfolio, deploying

innovative technologies such as articial

intelligence to reduce operational

energyconsumption.

•

Reducing our reliance on fossil fuels,

replacing gas-red boilers with electric

systems such as air source heat

pumps(ASHP).

•

Increasing on-site renewable electricity

generation by installing solar panels

across our retail assets.

•

Engaging and collaborating with our

customers on energy eciency to reduce

consumption within their spaces.

—

We provide further details on the

progress of our NZTIP on page 41

We continue to operate our buildings

inaccordance with our Company-wide

environmental and energy management

system, which is certied 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 eectively. The ERPs form part of

theoperational nancial 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.

Income statement Balance sheet

Financial

impact

Research shows buildings that have high sustainability credentials attract

higher average rents, improving leasing and occupancy rates. Improved

energy eciency should also improve service charges payable by tenants.

Conversely, older, less sustainable assets will ultimately see longer voids

forretrots and a loss of rental income where they do not meet the

minimum EPC requirements.

To achieve our targets, we developed our £135m NZTIP. The focus of this

iscapital spending to electrify energy across the portfolio, improving the

capital value of the aected assets, which have shown more resilience

toyield pressures than assets without a clear ESG strategy. The cost of

ourNZTIP will uctuate over the next seven years as we account for changes

inination.

Developing net zero carbon buildings

A credible net zero claim for a building

must address both upfront embodied

carbon and operational carbon, and align

with industry best practice – currently this

is the UK Green Building Council (UKGBC)

framework denition of net zero. The

framework requires embodied carbon to be

minimised and oset at practical completion,

and reductions in energy demand and

consumption to be prioritised over all other

measures. There should be no reliance on

fossil fuels and on-site renewables should

be prioritised, and any remaining carbon

should be oset using a recognised

osetting framework.

Our commitment to creating net zero

carbon buildings

We are committed to designing and

building net zero buildings in accordance

with the UKGBC framework denition

andhave set a target to reduce upfront

embodied carbon by 50% compared

with a typical building by 2020, seeking

to achieve <500kgCO

e/m

for oce

developments and <400kgCO

e/m

for

residential ones.

The commitment forms a key part of

our Sustainable Development Toolkit – a

comprehensive guide for our development

teams and external partners to ensure that

sustainability is considered throughout the

life-cycle of our schemes.

We engage carbon consultants on each

of our developments. These become part

of our design team from the very onset

ofthe process. Alongside the guidance

fromour internal teams, their role is to

guide decision making towards the most

carbon-ecient solution, balancing

upfrontcarbon with whole-life carbon,

toensure our design decisions do not

aectthe longer-term carbon impacts

ofour assets negatively.

All whole-life carbon models align with

the RICS guidance Whole life carbon

assessment for the built environment

rst edition, November 2017.

To reduce upfront embodied carbon, we

look at a number of dierent interventions:

•

Structural retention and material reuse

to avoid using virgin material.

•

Building as lean as possible to use less

material and put less pressure on the

foundations beneath the building.

•

Using low-carbon materials like timber or

concrete with high cement replacement.

•

Prioritising local procurement to minimise

transport emissions.

We track embodied carbon throughout the

design evolution of a building and during

construction, and we receive twice-yearly

updates to the model based on actual

material quantities brought to site and

emissions from site. At the end of a project,

we receive an ‘as-built’ model, which

represents the actual upfront carbon

emissions of the project. We then purchase

high-quality carbon osets that comply with

the UKGBC’s eight principles of osetting.

Strategic Report Landsec Annual Report 2023 051

Task Force on Climate-related Financial

Disclosures (TCFD) statement continued

Income statement Balance sheet

Financial

impact

Strong and increasing market demand for net zero properties, especially

inthe oce market, is outstripping supply, which will likely lead to rent

andvalue premia for these assets.

Increased demand for low-carbon materials could delay completion dates,

increasing construction costs in our development pipeline.

Increased demand for low-carbon materials, many of which are still

nascent markets, could increase the construction costs of our

development pipeline.

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

take action to mitigate these risks through

physical measures, insurance and business-

continuity planning.

In our development pipeline, we’re

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

facades and fabric materials is designed to

address the expected higher temperatures

by minimising energy demand, as well as to

be able 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 ood risks

using physical and nature-based solutions.

Across our operational portfolio, assets in

areas highly exposed to physical risks have

developed plans to ensure that adequate

protection and mitigation are in place,

including business-continuity and

emergency-response plans.

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, assessing

ood risk and embodied carbon, and work

with MSCI to use their Climate Risk Due

Diligence Analysis platform foracquisitions.

Income statement Balance sheet

Financial

impact

The changing environment has direct cost implications due to potential

increases in insurance premiums, the future impact of carbon taxes and

increased energy costs to counteract more extreme seasonal trends.

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 aect the

long-term capital values of these assets negatively.

Resilience of our strategy

andbusinessmodel

Our analysis gives us condence in the

resilience of our strategy, as we’re

supporting the transition to a low-carbon

world whilst managing the impact of

climate-related risks to our portfolio.

Werecognise our strategy and adaptation

measures may need to evolve in the long

term, particularly under a > 4ºC scenario.

Under a > 4ºC scenario, our analysis

demonstrates that changes to our strategy

and nancial planning will be required.

Thiswill likely include divestment of assets

which are less resilient to extreme heat and

rainfall, or investment into infrastructure

tolimit the impact of ooding 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.

Increased due diligence in supply chain

selection will be required, particularly

considering the sourcing of construction

materials which may be processed or

manufactured in countries where the

eects of climate change are more extreme.

Through the implementation of our

mitigation strategies we have assessed our

residual risks to be minor as detailed in the

Assessing impact of climate-related risks

and opportunities on our strategy section.

Engagement

We are committed to leading the way

toa lower-carbon economy and aim to

redene what it is to be a modern landlord.

We recognise that we don’t have all the

answers, but are ready and willing to

engage with others to address the

emissions challenge.

Over the last year, we have continued to

engage across the value chain, from our

customer engagement programme to

reduce energy consumption within their

spaces, to launching our new Supply Chain

Commitment and becoming members of

the Supply Chain Sustainability School.

We are active participants of industry

groups, including the Better Buildings

Partnership, British Property Federation

andUKGBC and work with members to

accelerate change.

To further drive industry demand for low-

carbon steel and concrete, we’re signatory

members of SteelZero and ConcreteZero.

Strategic ReportLandsec Annual Report 2023052

We launched our Carbon Manifesto, which

sets out what we are doing as a business

and with our supply chain – but also steps

that Government can take to support and

accelerate our transition towards net zero.

We released our Shaping Successful Future

Cities report developed in conjunction with

The Future Laboratory. It investigates what

a successful – and unsuccessful – 2030 city

could look like and the steps developers and

leaders need to take to trigger positive

change. It highlights the importance of

creating planet-centric spaces by outlining

our ‘Six Principles of Urbanisation’ including

being climate-prepared and resilient as the

most urgent.

—

The report can be accessed on our website:

landsec.com/future-cities

Risk management

Climate change is identied 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 dened and owned, with

their potential impacts and consequences

noted. Risks are scored, as described in the

Managing Risks and Principal Risks sections

on page 54, on a gross and net basis,

following evaluation of the mitigating

controls in place. Furthermore, Landsec has

dened 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 specic member of the ELT, who is

accountable for ensuring the operating

eectiveness of the internal control systems

and for implementing key risk mitigation

plans. Risks are also assigned a secondary

owner – usually at the SeniorLeader level –

who is responsible for ensuring we mitigate

the risk appropriately.

Our Corporate Aairs Director has primary

responsibility for climate risk, 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 page 56

Metrics and targets

Targets

To address climate change risks, we have set ambitious climate-related targets within our sustainability framework, Build well, Live well,

Act well – the headlines of which are summarised below:

Decarbonising our portfolio

Near-term target: reduce absolute scope 1, 2 and 3 GHG emissions 47% by 2030 from a 2020 baseline

Long-term target: reduce absolute scope 1, 2 and 3 GHG emissions 90% by 2040 from a 2020 baseline

Developing net zero carbon buildings

Reducing upfront embodied carbon across our developments by 50% compared with a typical building by 2030

Building resilience to a changing climate

Ensure 100% of assets located in areas highly exposed to climate risks have adaption measures in place

—

Performance against these are detailed in our Sustainability Performance and Data Report: landsec.com/sustainability/reports-

benchmarking. Additionally, our Streamlined Energy and Carbon Reporting (SECR) on pages 195-198 provides details of our energy

consumption and carbon emissions

Metrics

In addition to targets, we also monitor a number of climate-related metrics that support our risk assessment as provided below:

Table 29

2022/23 2021/22

Reduction in energy intensity from a / baseline % %

Total energy from renewable sources % %

Percentage of portfolio which is BREEAM-certied (by value) % %

Percentage of portfolio which is already EPC B or above (by value) % %

Percentage of portfolio which is EPC E or above (by value) % %

Investment in energy-eciency measures implemented in the year .m .m

Estimated annual savings from energy-eciency measures implemented in the year .m .m

Portfolio Climate Value at Risk (VaR) based on aggregated physical risks

,

.% .%

. The VaR represents the combined discounted physical risks costs (extreme cold, extreme heat, ooding, windstorm/tropical cyclones and wildre) based on probable change

in physical climate risks for the next  years expressed as a percentage of the portfolio’s value in a  ºC scenario.

. The increase in portfolio VaR is due to the disposal of some London based assets which had a lower rate of exposure.

Strategic Report Landsec Annual Report 2023 053

Risk management framework

andgovernance

We have an established risk management

and control framework, which is embedded

throughout the Company. This framework

enables us to identify, evaluate and

manage our principal and emerging risks

eectively. Our approach is not to eliminate

risk, but to manage it within our appetite.

Key elements of the framework are:

•

The Board has overall responsibility for

overseeing risk and for maintaining a

robust risk management and internal

control system.

•

The Audit Committee is responsible for

reviewing the eectiveness of the risk

management and internal control system

during the year.

•

The Executive Leadership Team is

responsible for day-to-day monitoring

and management of Group-wide risks,

emerging risks and key risk indicators (KRIs).

•

Business area leadership teams monitor

and manage risks and emerging risks

relevant to their business areas.

•

The Risk and Assurance function oversees

the framework, providing support,

challenge and insight to business areas

and support functions.

•

The Group Insurance team sits within

theoverall Risk and Assurance function,

enabling collaboration between

Insuranceand Risk teams and detailed

consideration of risk treatment planning,

residual risk and transference to the

insurance market, where appropriate.

Identifying and evaluating risks

As part of annual business planning, the

Board undertakes an assessment of the

risks that would threaten the Group’s

strategic objectives, future performance,

solvency or liquidity. We use scenario

modelling 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. Senior

management and teams across the

business identify the strategic, operational,

and legal and compliance risks, facing each

area of our business. Risks are reviewed in

detail with their respective owners, typically

an ELT member or key business leader.

We use a risk scoring matrix to consider the

likelihood and impact of each risk at regular

points throughout the year. We evaluate

risks on an inherent (before mitigating

actions) and residual (after mitigating

actions and controls) basis. From this, we

identify principal risks (current risks with

relatively high impact and certainty) and

emerging risks (risks where the extent and

implications are not yet fully understood).

These are included on our Group Risk

Team challenges and validates. The Audit

Committee reviews our principal risks

before presenting them to the Board.

Managing risk

Risk management is embedded throughout Landsec;

from annual business planning to the day-to-day

operational management of our assets.

Our key successes in 2022/2023

Our key priorities in 2023/2024

•

Alignment of the risk management

framework with the business

structureand development of

business area risk registers and

associated governance structures

•

Development of risk registers for key

support functions, reinforcing roles

and responsibilities for risk ownership

between functions and business areas

•

Assessment and application of

riskappetite across all risks,

underpinning business decision

making and planning

•

New risk waterfall implemented

overlaying risk appetite to clearly

identify where risks are inside or

outside of tolerance.

•

Continued embedding of risk review

governance structures and cadence

– strengthening linkages between

risk, appetite and business planning

•

Further development and denition

ofkeyrisk indicator thresholds and

formalised reporting mechanisms

•

Revisiting and refreshing the Board

riskappetite statement

•

Embedding risk acceptance process

aspart of maturing understanding

ofappetite and governance of risk.

Strategic ReportLandsec Annual Report 2023054

—

See page 88 for more information

intheReport of the Audit Committee

In addition, the Risk and Assurance team

manages Landsec’s Key Controls Toolkit.

The Toolkit is a set of clearly dened

controls that are self-certied by control

owners within the business on a quarterly

basis, providing ongoing assurance and

coverage of key risk areas. The Audit

Committee monitors the results of this

process. The Audit Committee also reviews

our risk management framework at least

twice a year as well as our Assurance Map,

which sets out the key controls and assurance

activities for each risk. 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.

Risk Register bi-annually. The Board reviews

principal and emerging risks bi-annually,

with principal risks presented for review

ateach Audit Committee meeting.

The principal operational risks, including

health and safety, and information

securityand cyber threat are managed

bydedicated second-line functions that

dene and implement policy and mitigating

controls, and undertake assurance activities.

Risk deep-dives are completed throughout

the year for specic risks, evaluating the

current risk level and risk appetite, and

agreeing any further actions.

Landsec has an Internal Audit function that

provides independent assurance over key

controls and processes to management and

the Audit Committee. We identify where

the impact of controls is greatest i.e. where

there is a relatively high inherent risk and

relatively low residual risk, and this helps to

focus the work of Internal Audit and other

assurance providers.

Risk appetite

The Board is responsible for dening the

level of risk the Group is willing to take

andensuring it remains in line with our

strategy. Risk appetite is a forward-looking

view, and is informed by Landsec’s current

and future risk management philosophy.

Comparing the residual score to appetite

helps to determine how risks or opportunities

are managed. To embed risk appetite

eectively in the business we have established

key risk indicators associated with each risk,

dening limits that are aligned to our

appetite. Scenario planning assists in

setting these thresholds.

Management and assurance of risks

Day-to-day ownership and management

ofkey risks is assigned to members of

theExecutive Leadership Team. They are

responsible for ensuring the eectiveness

ofcontrols and for implementing risk

mitigation plans, where necessary. Business

area leadership teams review their risks

quarterly and the ELT reviews the Group

Risk management framework

Top-down

Oversight,

identication,

assessment and

mitigation of risk

ata Group level

Risk Governance

Board

•

Set strategy and objectives

•

Set the risk culture

•

Monitoring risk exposure

(including emerging risks)

•

Dene and approve risk appetite

Audit Committee

•

Supports the Board in monitoring risk exposure

•

Review the eectiveness 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

•

Dene 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 identication

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 signicant risks

Bottom-up

Identication,

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

eectiveness of key controls

Support functions

•

Provide guidance/support

to the Risk team and

business units

Strategic Report Landsec Annual Report 2023 055

Our principal risks consist of the ten most

signicant group risks, including seven

strategic and three operational risks. The

strategic risks relate to the macroeconomic

environment; our key markets – oce and

retail; capital allocation; development;

climate change; and people and skills.

Theoperational risks are health and safety;

and information security and cyber-attack.

‘Change projects fail to deliver’ is a new

operational principal risk this year.

The risk waterfall below sets out Landsec’s

principal risks in columns from left to right

ordered according to the level of residual

risk. The colour of the header box indicates

whether the risk is strategic (light blue)

oroperational (dark blue). Risk scores are

generated by the multiplication of the

impact and likelihood of a risk incident

occurring using a ve-by-ve scale. The

yellow arrows indicate the inherent risk

score before mitigating controls and blue

arrows show residual risk scores after

taking account of controls, as determined

at year end.

Our appetite range for each risk is reected

by the white box. The lower down the

column the box is, the lower our appetite.

The appetite range is a future looking view

as opposed to risk scores, which are stated

asat the year end. For risks that have

beenmitigated to within our appetite,

theblue residual arrow is within the box.

The appetite for each risk, when compared

tothe residual score, helps to determine

business priorities and mitigation activities

in the future.

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).

Riskappetite is a continuum and the range

for some risks extend over more than one

ofthese categories.

At present, there are no residual risk scores

above appetite, though some are below,

indicating an opportunity for greater risk

tobe taken in delivering business activities.

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

Eectively understanding and managing Landsec’s

principal risks and uncertainties allows our business

leaders and the Board to make informed decisions.

Principal Risks

Inherent risk

Residual risk

Appetite range

Strategic risk

Operational risk

Critical

Signicant

Moderate

Minor

OpenFlexibleCautiousMinimalistAverse

Appetite Rating

Strategic ReportLandsec Annual Report 2023056

Macroeconomic

outlook

Oce occupier

market

Retail and

hospitality

occupier market

Information

security and

cyber threat

Change projects

failto deliver

Capital

allocation

Development

strategy

Health and

safety

People and skills

Climate change

transition

Macroeconomic outlook

Executive responsible | Mark Allan Appetite: Flexible/Cautious

Changes in the macroeconomic

environment result in reduced

demand for space or deferral

ofdecisions by retail and oce

occupiers. Due to the length

ofbuild projects, the prevailing

economic climate at initiation

may be dierent from that

atcompletion.

Example KRIs

•

UK Gross Domestic Product

•

UK household spending levels

•

Ination rate

•

Interest rates

•

Business condence

•

Employment intentions

•

Our loan to value ratio

Mitigation

•

KRIs monitored

•

Scenario-based modelling of

plausible economic trajectories

•

Research team prepares reports

forELT and area leadership teams

on macroeconomic and internal

riskmetrics

•

Twice-yearly Cycle Watch produced

by our Research team, 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  INCREASING

The UK economy has endured a

tumultuous 2022/23 with ination,

interest rate rises and high energy

prices leading to a slow-down in the

UK market – and potential for

recession. The risk increased in the

rst-half of the year and has softened

in 2023, with ination appearing to

have peaked and energy prices falling.

Overall, the risk has increased over

the course of the year. The net risk

remains in line with our ‘Flexible/

Cautious’ appetite.

Oce occupier market

Executive responsible | Marcus Geddes Appetite: Flexible

Structural changes in customer

expectations leading to changing

demand for oce space and the

consequent impact on income

and asset values. Further, the risk

includes the inability to identify

or adapt to changing markets

ina timely manner.

Example KRIs

•

Oce usage percentages

•

Percentage of lease expiries over

our ve-year plan

•

Void rates across our portfolio

•

Like-for-like rental income metrics

•

Customer and space churn

Mitigation

•

Customer relationship and

customer base monitoring

•

KRIs monitored and reviewed

monthly by Oce leadership team

•

ESG programme to decarbonise

oce 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 oce space closely

monitored

•

Strict credit policy and process,

including regular 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  DECREASING

The risk has reduced, as businesses

have dened and implemented new

working practices, oce occupancy

has settled and demand for prime

space has strengthened.

Residual risk at year end was below

our ‘Flexible’ appetite – reecting our

view of the oce occupier market

outlook and opportunities for stronger

leasing terms in the coming year.

Retail and hospitality occupier market

Executive responsible | Bruce Findlay Appetite: Flexible

Structural changes in consumer

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

ve years

•

Customer credit risk and tenant

counterparty risk

Mitigation

•

KRIs monitored and reviewed

monthly by Retail leadership team

•

Brand partner relationship and

guest experience monitoring

•

Data-led development of asset

andsector strategies, promoting

proactive leasing

•

Brand Account, Asset Management

and Guest Experiences teams

established

•

Customer satisfaction surveys

•

Strict credit policy and process,

including regular review of

customers at risk

CHANGE IN YEAR  NO CHANGE

This risk has remained consistent as

the impacts of the pandemic have

levelled – with online penetration

falling from lockdown levels and

growing omni-channel business

models. With the potential for

recession, we continue to monitor

therisk.

Residual risk at year end was below

our ‘Flexible’ appetite – reecting

ourview of the retail and hospitality

market outlook and opportunities

forstronger leasing terms in the

coming year.

Information security and cyber threat

Executive responsible | Mark Lockton-Goddard Appetite: Cautious

Data loss or disruption to

business processes, corporate

systems or building-management

systems resulting in a negative

reputational, operational,

regulatory or nancial impact.

Example KRIs

•

Speed of threat and vulnerability

detection (against agreed Pen test/

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

•

A specic Cyber Security team

andData Protection Ocer

•

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

•

Dened technical IT standards

forall building systems

•

Extensive use of cloud-based

systems

•

Business resilience, crisis

management and IT disaster-

recovery plans in place for all

assets, including regular testing

•

Regular penetration testing across

our IT estate and vulnerability-

management system

•

Corporate environment cyber

insurance in place including access

to instant support and external

expertise and resources

CHANGE IN YEAR  DECREASING

The risk has reduced in the year,

largely due to signicant investment

in, and development of, our cyber

capability – as validated by an

independent review.

We continue to develop and invest

inthe wider information security

andcyber-control environment, and

remain vigilant as the cyber threat

landscape continues to evolve.

Strategic Report Landsec Annual Report 2023 057

Principal risks and uncertainties

continued

Change projects

Executive responsible | ELT Appetite: Cautious

Landsec is engaging in a number

of important internal change

programmes aiming to deliver

operational and cultural benets.

There is a risk that these projects

fail to deliver the identied

benets in a timely manner

andto budget.

Example KRIs

•

Key project milestones missed

•

Projects operating without

appropriate governance

•

Success criteria achieved at

post-implementation reviews

andaudits

Mitigation

•

ELT sponsorship, with ELT and

Boardoversight

•

Project governance methodology

•

Qualied project managers used

onall large projects

•

Documented and approved

benets cases

•

Company-wide communication

supported by Senior Leadership

Team engagement

•

Regular progress reporting to

project boards

CHANGE IN YEAR  NEW RISK

The number and impact of active

change projects at Landsec has

resulted in increased risk associated

with programmes not achieving

identied outcomes.

Cultural change is a key element of

the wider change portfolio, making

itof particular importance.

Capital allocation

Executive responsible | Mark Allan Appetite: Flexible/Cautious

Capital allocated to specic

assets, sectors or locations does

not yield the expected returns

i.e.we are not eective in placing

capital or recycling.

Specically:

•

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

10% GDV

•

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 business

area 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 area

leadership, ELT and Board

•

Investment Appraisal Guidelines

dene 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  NO CHANGE

We have a clear view of the scale

ofthe opportunity in each sector

andrelative returns achievable

acrossCentral London, major retail

destinations and mixed-use urban

neighbourhoods.

The macroeconomic backdrop has

put upward pressure on this risk and

our appetite in the last year was

lower. We responded by de-risking

ourbalance sheet, with the sale of

21Moorelds and other assets, a more

exible approach to development

commitments and the recent issue

ofLandsec’s Green bond.

Over the course of the coming year,

we expect the risk to increase

towardsour desired appetite range,

as we commit to developments and

potentially deploy capital into new

capital opportunities.

Development strategy

Executive responsible | Mike Hood Appetite: Flexible/Cautious

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 oces

•

Tender-price ination

•

Monitor build-to-sell and build-to-

rent ratios to determine phasing

approach of developments

Mitigation

•

Development strategy addresses

risks that could adversely aect

underlying income and capital

performance

•

A detailed appraisal is undertaken

by business area leadership and

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;

nancial 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-os

•

Strong community involvement

inthe design process for our

developments

•

Early engagement and strong

relationships with planning

authorities

CHANGE IN YEAR  NO CHANGE

The external factors that inuence

this risk, such as market conditions

and ination, have increased.

However, this is oset as three

majordevelopment schemes are

close to completion.

Over the course of the coming year,

we expect the risk to increase towards

our desired appetite range, as we

commit to new developments.

Strategic ReportLandsec Annual Report 2023058

Health and safety

Executive responsible | Mark Allan Appetite: Cautious/Minimalist

Failure to identify, mitigate or

react eectively to major health

or safety incidents, leading to:

•

Serious injury, illness or loss of life

•

Criminal or civil proceedings

•

Loss of stakeholder condence

•

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 Health, Safety

and Security Committee, (Chaired

by the CEO), ELT and Board

•

Health & Safety management

system accredited to ISO 45001

standard

•

Fire-safety management system

accredited to the BS 9997 standard

•

Accelerated asset integration

assessment process for new

acquisitions (e.g. U+I and MediaCity)

•

H&S audits by Internal Audit, plus

annual programme of data-led and

second-line audits by H&S team

•

Legal and best practice compliance

monitored in real time

•

Strict H&S standards applied to the

selection of key service and

construction partners; assessed by

KPIs and regular reviews

CHANGE IN YEAR  NO CHANGE

The likelihood of a major health

andsafety incident hasremained

constant throughout the year, with

U+I and MediaCity properties now

falling under the wider Health and

Safety regime following integration.

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,

benchmarked and 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 identies high-

potential individuals

•

Clear employee objectives and

development plans

•

Health and Wellbeing Statement

ofPractice

•

Regular employee engagement

surveys

CHANGE IN YEAR  INCREASE

The risk has increased due to a

combination of voluntary and forced

attrition due to ongoing

transformation programmes.

Further, the continuation of a

buoyant post-pandemic employment

market has created an employee and

candidate-led market with high levels

of wage ination.

Climate change transition

Executive responsible | Chris Hogwood Appetite: Cautious/Minimalist

Climate change risk has

twoelements:

 Our commitment to reducing

Landsec’s near and long-term

carbon reduction targets by

2030 and 2040 is not met in

time or achieved at a

signicantly higher cost than

expected, leading to

regulatory, reputational and

commercial impact.

 Failure to ensure all new

developments are net zero in

construction and operation,

asdened 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

•

Portfolio ESG credentials

•

Energy eciency measures

Mitigation

•

Climate risks and opportunities

forpotential acquisitions assessed

against 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 Energy

Management System

•

Continued monitoring of portfolio

exposure to physical climate risks,

and review of mitigation actions

forsites located in high-risk areas

•

Early supply chain engagement

forprocurement of air source heat

pumps and solar PVs – ensuring

appropriate due diligence

CHANGE IN YEAR  DECREASE

The transitional risks of climate

change have continued to reduce

aswe have reviewed and updated

ourfully costed net zero transition

investment plan for the eects of

ination and have begun portfolio

decarbonisation planning.

Strategic Report Landsec Annual Report 2023 059

Going concern

The Directors conrm they have a

reasonable expectation that the Company

has adequate resources to continue in

operational existence for at least 12 months

from the date of signing these nancial

statements. This conrmation is made after

having reviewed assumptions about future

trading performance, valuation projections,

capital expenditure, asset sales and debt

requirements contained within the period

ending 30 September 2024 from the Group’s

budget and long-term strategic plan. The

Directors also considered potential risks and

uncertainties in the business, credit, market

and liquidity risks, including the availability

and repayment prole of bank facilities,

as well as forecast covenant compliance.

Further stress testing has been carried out

to ensure the Group has sucient cash

resources to continue in operation for at

least the next 16 months to 30 September

2024 with materially reduced levels of cash

receipts. Based on the above, together

with available market information and the

Directors’ knowledge and experience of the

Group’s property portfolio and markets,

the Directors continue to adopt the going

concern basis in preparing the accounts

for the year ended 31 March 2023. Refer

to note 1 of the nancial statements for

further information.

Viability statement

The viability assessment period

The Directors have assessed the viability of

the Group over a ve-year period to March

2028, taking account of the Group’s current

nancial position and the potential impact

of our principal risks.

Process

Our nancial planning process comprises

a budget for one nancial year 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 nancial planning process considers

theGroup’s protability, capital values,

gearing, cash ows and other key nancial

metrics over the plan period. These metrics

are subject to sensitivity analysis, in

whicha number of the main underlying

assumptions are exed and tested to

consider alternative macroeconomic

environments. Additionally, the Group also

considers the impact of potential structural

changes to the business in light of varying

economic conditions, such as signicant

additional sales and acquisitions or

renancing. These assumptions are then

adapted further to assess the impact

ofconsiderably worse macroeconomic

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 Directors’

assessment of the viability of the Group.

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.

Strategic ReportLandsec Annual Report 2023060

Key risks

The table below sets out those of the

Group’s principal risks (see pages 56-59 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

results in reduced demand for space or deferral

of decisions by retail and oce occupiers.

Due to the length of build projects, the prevailing

economic climate at initiation may be dierent

from that at completion.

•

Declines in capital values and outward yield

movements across all assets within the portfolio

•

Additional impact of a higher inationary

market captured within costs

•

No issuance of additional xed term bonds

through the assessment period

•

Additional impact of increased interest rates on

servicing debt

Oce occupier market

Structural changes in customer expectations

leading to changing demand for oce space and

the consequent impact on income and asset values.

•

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 specic assets, sectors or

locations does not yield the expected returns i.e.

we are not eective 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 prots

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 concluded that as we have

fully costed and committed to invest £135m to achieve our science-based net zero target

by2030, this mitigated the climate change transition risk suciently.

Impact on key metrics

We have assessed the impact of these

assumptions on the Group’s key nancial

metrics over the assessment period, including

protability, net debt, loan-to-value ratios

and available nancial headroom.

The viability scenario represents a

contraction in the size of the business over

the ve-year period considered, with the

Security Group LTV at 48.0% in March 2028,

its highest point in the assessment period.

The Group maintains a positive nancial

headroom from March 2023 through to

March 2025. From March 2026 the Group will

be required to secure new funding as existing

facilities expire. This drives the negative

available nancial headroom in the viability

scenario at March 2028. The Directors expect

the Group to be able to secure new funding,

or exercise extension options, given the

Group’s expected loan-to-value ratio, the

exibility of the nancing structure in place,

and positive engagement with providers of

funds to date.

Key Metrics

Table 30

Actuals

31 March 2023

Viability

scenario

31 March 2028

Security Group LTV % .%

Adjusted net debt ,m ,m

EPRA Net Tangible

Assets per share

p p

Available nancial

headroom

.bn (.bn)

Conrmation 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 2028.

Strategic Report Landsec Annual Report 2023 061

This section of our Strategic Report constitutes Landsec’s Non-

nancial Information Statement. This is intended to help stakeholders

understand our position on these key non-nancial matters. The table

below highlights our policies and standards and where you can nd

more information in this report.

—

You can nd our policies on our website: landsec.com/

sustainability/governance-policies, landsec.com/about/

corporate-governance

Topic Our policies and standards that govern our approach

Where information can be found

in this report

Environmental

matters

•

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

•

Biodiversity brief: used to guide our partners and expand on

ourbiodiversity requirements across our portfolio

•

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 eciency

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

•

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 – our commitment

tothe environment on

pages 41-43

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 oence 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 rst aider policy: sets out how we manage our

trained mental health support network

—

Our people and culture on

pages 34-39

—

Act well – our commitment to

being a responsible business on

pages 45-46

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 are 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117-119

—

Our approach to sustainability

on pages 40-53

Non-nancial information

statement

Strategic ReportLandsec Annual Report 2023062

Topic Our policies and standards that govern our approach

Where information can be found

in this report

Social matters

•

Diversity and inclusion: our revised 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

•

Community Charter: our commitment to engage our communities

throughout the development process and beyond

—

Our people and culture on

pages 34-39

—

Live well – our commitment

tocreating opportunities and

inclusive places, supporting

communities to thrive on

page 44

Anti-bribery and

corruption

•

Anti-Bribery Gifts and Hospitality Policy: we have a zero tolerance

for any form of bribery or corruption

•

Conicts 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 – our commitment to

being a responsible business on

pages 45-46

—

Report of the Audit Committee

on pages 88-95

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 54-55

—

Principal risks and uncertainties

on pages 56-59

—

Report of the Audit Committee

on pages 88-95

Description of

businessmodel

•

To create value, we buy, develop, manage and sell property,

drawing on a range of nancial, physical and social resources

—

Our business model on

pages 12-13

Non-nancial key

performance indicators

•

In addition to our nancial performance metrics, we set ourselves

a range of KPIs for the year including sustainability targets

—

Key performance indicators on

page 16

The EU taxonomy

The EU taxonomy has been developed to support the transformation

of the EU economy to meet its European Green Deal objectives,

helping to redirect capital ows towards a more sustainable

economy. It aims to set a common language and clear denition

tohelp companies, investors and policymakers understand whether

an economic activity is environmentally sustainable.

The EU taxonomy is a classication system, establishing a list of

sustainable economic activities that substantially contribute to

theEU’s six environmental objectives:

1. Climate change mitigation

2. Climate change adaptation

3. The sustainable use and protection of water and marine resources

4. The transition to a circular economy

5. Pollution prevention and control

6. The protection and restoration of biodiversity and ecosystems

To date, details for only the rst two environmental objectives were

released: climate change mitigation and climate change adaptation.

As a UK company, Landsec is not in scope of the EU Taxonomy

Regulation. However, we recognise the importance of providing

our investors and stakeholders with information about the

sustainability of our activities and portfolio of assets. For that

reason, we have started working towards voluntarily disclosing

information that can help investors to assess the alignment of our

activities with the EU taxonomy.

The UK has established a Green Technical Advisory Group who have

issued its initial recommendations to the UK Government on UK

Green Taxonomy, which builds on the EU taxonomy and net zero in

the UK context. Taking steps to understand the requirements from

the EU taxonomy, helps us to prepare Landsec for the incoming

implementation of the UK Green Taxonomy.

In the Build well section on pages 41-43, we provide information on

how we are investing across our portfolio to transition to net zero,

its current EPC ratings, and approach to new developments.

We provide further information on our portfolio EPC ratings

andbuilding certications in our Sustainability Performance

andData Report.

This Strategic Report was approved by the Board of Directors on

15 May 2023 andsigned on its behalf by:

Mark Allan

Chief Executive

Strategic Report Landsec Annual Report 2023 063

Dear shareholder

I am pleased to introduce

thegovernance section of

this year’s Annual Report.

This section of the report gives more detail

on the governance structures that we have

in place, and how we comply with the UK

Corporate Governance Code.

The Board takes seriously its responsibility

for the long-term sustainable success of

the Company, generating value for our

shareholders and contributing more widely

to society.

The year in review

The business has maintained momentum

in delivering against its strategic plan,

notwithstanding the challenging economic

backdrop this year. Eective governance

together with the strength of leadership

of our Board has continued to provide

structure and stability in times of uncertainty.

I am grateful to my fellow Directors,

the Executive Leadership Team and our

colleagues for their continued support

and dedication during the year.

Board succession and diversity

This year, the Board, together with the

Nomination Committee has continued to

focus on succession planning and Board

composition.

During the year we have actively engaged

with two search consultancies to ensure the

Board has the necessary skills, knowledge,

experience and diversity to deliver superior

performance and enhance the success of

the Company. As a result, we appointed

Miles Roberts and Sir Ian Cheshire.

We remain committed to having a Board

that is diverse in all respects. As at the date

of this report and throughout this nancial

year we have complied with the Listing Rules

requirements relating to diversity: (i) at least

40% of the Board are women (also meeting

the FTSE Women Leaders target); (ii) at least

one of the senior board positions are women

(both Chair and CFO); and (iii) at least one

individual on the Board is from a minority

ethnic background (also meeting the Parker

Review target). The Board and new Chair

areaware that on my retirement our gender

diversity will dip below 40%, and this will

be taken into account in our near-term

succession planning.

Importantly, across the wider business,

we have refreshed our diversity and

inclusion strategy during the year and

agreed new targets (see pages 35-38).

Stakeholder engagement

Landsec’s success is dependent on the

Board taking decisions for the benet of

our shareholders and in doing so having

regard to all our stakeholders. Throughout

the year, the Board received institutional

investor updates and our Committee

Chairs and Senior Independent Director

have made themselves available to

investors for meetings.

Our 2022 AGM was held at our

headquarters in London and shareholders

were able to submit questions in advance

for consideration by the Board.

This year we continued with our workforce

engagement activities, including receiving

a full brieng on the annual employee

engagement survey results and Directors

meeting directly with employees.

Christophe Evain also engaged with our

Employee Forum to answer questions on

executive remuneration. The Board is

committed to understanding the views of

all of Landsec’s stakeholders to inform the

decisions that we make.

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 monitored our culture

with regular updates on our people, our

organisational transformation programme,

our culture, talent, diversity and inclusion

activities and engagement survey, and

direct engagement with the workforce.

Board evaluation

This year our Board evaluation was carried

out internally. The Board was satised

withits own performance, with all Board

members rating performance as good or

excellent. The composition of the Board was

considered appropriate with the impact of

recent changes noted.

Conclusion

I would like to conclude by thanking

members of the Board for their continued

support and commitment over the past

year and throughout my time as Chairman.

I have much enjoyed my tenure at Landsec,

especially the last ve years as Chairman.

I know I will be leaving the Company in a

robust position with Sir Ian Cheshire, our

experienced Board members, the leadership

team and the wider workforce.

I would also like to extend my personal

thank you to our colleagues, as I step down

from the Board, for all their hard work and

commitment to the business. I wish

everyone at Landsec all the best for the

future.

Cressida Hogg

Chairman

Introduction to the Corporate

Governance Report from the Chairman

Landsec Annual Report 2023064 Governance

Board of Directors

Cressida Hogg, Chairman Sir Ian Cheshire, Non-executive

Director*

andChair Designate

Edward Bonham Carter, Non-executive Director*

and Senior Independent Director

Years on the Board  Nine

(Chairman since July 2018). Due to retire from

the Board on 16 May 2023.

Committees  Nomination Committee

(Chairman), Remuneration Committee

Role  Leads the Board, responsible for

governance, major shareholder and other

stakeholder engagement.

Skills and experience  Cressida has spent

over 20 years in the investment industry and has

experience of building and developing businesses

both in the UK and globally. She brings signicant

board experience to the Group, together with a

strong corporate background in infrastructure

and private equity, mergers and acquisitions,

and investment. Cressida was one of the

co-founders of 3i Group’s infrastructure business

in 2005, becoming Managing Partner in 2009,

and she was also Global Head of Infrastructure

at Canada Pension Plan Investment Board

between 2014 and 2018. In addition to her senior

executive positions, Cressida has broad

experience as a non-executive in a variety of

sectors. Cressida received a CBE in 2014 for

services to infrastructure investment and policy.

Cressida was independent upon appointment

asChairman.

Other current appointments  Non-executive

Director and Chair Designate of BAE Systems plc,

Senior Independent Director and Chair of

Remuneration Committee, London Stock

Exchange Group plc. Non-executive Director,

Troy Asset Management.

Years on the Board  Less than one

(appointed to the Board 23 March 2023). Due to

assume the role of Chair from 16 May 2023.

Committees  Nomination Committee,

Remuneration Committee

Skills and experience  Sir Ian joined the

Landsec Board as Non-executive Director and

Chair Designate on 23 March 2023 and will assume

the role of Chair on 16 May 2023. 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 Kingsher plc from 2008 to 2015.

He previously held Non-executive Director roles

at Barclays PLC (and as Chairman of Barclays

Bank UK), Whitbread PLC (where he was Senior

Independent Director), Debenhams and Maison

Du Monde. He was lead Non-executive Director

at the UK Cabinet Oce 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 Merite of France.

Other current appointments  Chair of

Channel 4, Spire Healthcare Group plc and

Menhaden Resource Eciency plc (due to

relinquish the role of Chair on 16 May 2023).

Non-executive Director of BT Group plc and

Chair of their Remuneration Committee (due to

retire at their AGM in July 2023). Chairman of the

Prince of Wales’s Charitable Fund and We Mean

Business Coalition.

Years on the Board  Nine

Committees  Nomination Committee,

Remuneration Committee

Role  A sounding board for the Chairman

anda trusted intermediary for other Directors

and shareholders.

Skills and experience  Edward has signicant

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 benecial to

theCompany when it considers its engagement

with investors.

Other current appointments  Senior

Independent Director, ITV plc. Trustee and

Chairman of Investment Committee, Esmée

Fairbairn Foundation. Non-executive Chairman,

Netwealth Investments Ltd. Member, Strategic

Advisory Board, Livingbridge LLP.

Committees

Audit Committee

Nomination Committee

Remuneration Committee *Independent as per the UK Corporate Governance Code.

N R N R N R

Landsec Annual Report 2023 065Governance

Board of Directors

continued

Nicholas Cadbury, Non-executive Director* Madeleine Cosgrave, Non-executive Director* Christophe Evain, Non-executive Director* Miles Roberts, Non-executive Director* Manjiry Tamhane, Non-executive Director*

Years on the Board  Six

Committees  Audit Committee (Chairman),

Nomination Committee

Skills and experience  Nicholas brings

wide-ranging and international nancial and

general management experience to the Group

gained from working in consumer-facing

businesses, particularly in the retail, leisure and

hospitality sectors. He also has extensive

commercial and operational knowledge and skills

in relation to strategy and IT development. This

broader commercial perspective adds breadth

toBoard discussions and enables Nicholas to

provide eective challenge as Chairman of the

Audit Committee. Nicholas was appointed Chief

Financial Ocer of International Airline Group

(IAG) in March 2022. Prior to this, Nicholas was

Group Finance Director of Whitbread PLC, a

position he held from November 2012 until March

2022. Before that, he was Chief Financial Ocer

of Premier Farnell PLC and Chief Finance Ocer

of Dixons Plc. Nicholas originally qualied as an

accountant with Price Waterhouse.

Other current appointments  Chief Financial

Ocer, International Airline Group (IAG).

Years on the Board  Four

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 RE 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.

Years on the Board  Four

Committees  Nomination Committee,

Remuneration Committee (Chairman)

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 diversied

alternative asset management group with

€34bn assets under management. 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-Pacic region and

North America, and was instrumental in adding

various additional businesses, including a UK

property lending business.

Other current appointments  Chairman,

Bridges Fund Management. Non-executive

Director, Quilvest Capital Partners.

Years on the Board  Less than one

(Appointed to the Board 19 September 2022)

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. Prior to this, he was Chief Executive at

McBride plc from 2005 to 2010. Miles brings a

wide level of Board experience, together with

specic experience of large, long-term capital

projects, alongside a particular focus on

sustainability. Miles is a qualied chartered

accountant.

Other current appointments  Chief

Executive, DS Smith Plc.

Years on the Board  Two

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 Ocer 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 rst 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 Ocer, Gain Theory, a subsidiary

ofWPP plc. Advisory Board member, Saracens

Women’s Rugby.

*Independent as per the UK Corporate Governance Code.

NA A N R

Landsec Annual Report 2023066 Governance

Years on the Board  Six

Committees  Audit Committee (Chairman),

Nomination Committee

Skills and experience  Nicholas brings

wide-ranging and international nancial and

general management experience to the Group

gained from working in consumer-facing

businesses, particularly in the retail, leisure and

hospitality sectors. He also has extensive

commercial and operational knowledge and skills

in relation to strategy and IT development. This

broader commercial perspective adds breadth

toBoard discussions and enables Nicholas to

provide eective challenge as Chairman of the

Audit Committee. Nicholas was appointed Chief

Financial Ocer of International Airline Group

(IAG) in March 2022. Prior to this, Nicholas was

Group Finance Director of Whitbread PLC, a

position he held from November 2012 until March

2022. Before that, he was Chief Financial Ocer

of Premier Farnell PLC and Chief Finance Ocer

of Dixons Plc. Nicholas originally qualied as an

accountant with Price Waterhouse.

Other current appointments  Chief Financial

Ocer, International Airline Group (IAG).

Years on the Board  Four

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 RE 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.

Years on the Board  Four

Committees  Nomination Committee,

Remuneration Committee (Chairman)

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 diversied

alternative asset management group with

€34bn assets under management. 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-Pacic region and

North America, and was instrumental in adding

various additional businesses, including a UK

property lending business.

Other current appointments  Chairman,

Bridges Fund Management. Non-executive

Director, Quilvest Capital Partners.

Years on the Board  Less than one

(Appointed to the Board 19 September 2022)

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. Prior to this, he was Chief Executive at

McBride plc from 2005 to 2010. Miles brings a

wide level of Board experience, together with

specic experience of large, long-term capital

projects, alongside a particular focus on

sustainability. Miles is a qualied chartered

accountant.

Other current appointments  Chief

Executive, DS Smith Plc.

Years on the Board  Two

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 Ocer 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 rst 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 Ocer, Gain Theory, a subsidiary

ofWPP plc. Advisory Board member, Saracens

Women’s Rugby.

*Independent as per the UK Corporate Governance Code.

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.

Other Directors on the Board during the year

Colette O’Shea stepped down as an Executive

Director on 30 September 2022 having joined the

Board in 2018, and stepped down from her role as

Chief Operating Ocer in March 2023 after a

transitional period.

Company Secretary appointment

Marina Thomas was appointed as Company

Secretary with eect from 31 October 2022.

Marina provides advice and support to the Board,

its Committees and the Chairman, is responsible

for corporate governance across the Group as

wellas being responsible for the health and safety

function. The appointment and removal of the

Company Secretary is a matter for the Board.

A R

Landsec Annual Report 2023 067Governance

Current gender

diversity of Board

(All directors)

Chart 31

60%

Male

40%

Female

Current Board tenure

Chart 32

(Non-executive Directors including Chairman)

24%

4-6 years

38%

Over

6 years

38%

0-3 years

Board of Directors

continued

Mark Allan,

Chief Executive, Executive Director

Vanessa Simms,

Chief Financial Ocer, Executive Director

Years on the Board  Three

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 nancial 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 nancial and commercial roles in the

business, including Chief Financial Ocer from

2003 to 2006. A qualied Chartered Accountant,

Mark is also a member of the Royal Institution

ofChartered Surveyors.

Other current appointments  Mark is

VicePresident of the British Property Federation.

Management committees  Chairman of

theGroup’s Executive Leadership Team. Mark

isinvited to attend the Audit, Remuneration

andNomination Committees at the invitation

ofthe Chairs.

Years on the Board  Two

Role  Works closely with the Chief Executive

in developing and implementing vision and

strategy. Responsible for Group nancial

performance, nancial 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 nance 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 nance 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 Ocer. Prior to that Vanessa was UK

nance director at SEGRO plc. Vanessa is a

Chartered Certied Accountant (FCCA) and

hasan executive MBA (EMBA) from Ashridge

Business School.

Other current appointments  Audit Chair

and a Non-executive Director at Drax Group Plc.

Management committees  A member of

theGroup’s Executive Leadership Team. Vanessa

attends Audit Committee meetings at the

invitation of the Committee Chairman.

Landsec Annual Report 2023068 Governance

Our governance structure

* We also operate a Disclosure Committee, chaired by the CFO, which oversees compliance

with market abuse requirements and manages inside information.

Executive

Leadership Team

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

nancial performance of

theGroup

Appointment of executive

directors

Approves property and

investment decisions and

other commitments

above£150m

CEO

Leads the Group

Articulates vision,

valuesandpurpose

Develops and

implementsstrategy

Responsible for

overallperformance

ofthebusiness

Manages the Executive

Leadership Team

Business Unit (Workplace, Retail, Mixed-Use)

executive committees

Audit Committee

Responsible for oversight

of the Group’s nancial

and narrative reporting

processes

Responsible for the

integrity of nancial

statements and

internalcontrol

Supports the Board

inriskidentication

andmanagement

Ensures transparency

and nancial governance

Remuneration

Committee

Recommends to the Board

the Executive

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

Workplace and Lifestyle Boards

Board committees*

Management committees

Monitor

performanceand

organisational health

Develop and oversee

the Group’s people and

culture strategy

Oversight of

sustainability and

datastrategies, risk

andcompliance

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

Develop

andexecute

business plans

Assess and

manage

operational risks

Deliver

nancial

performance

Talent

development

Landsec Annual Report 2023 069Gove rnance

How we make decisions

Decisions that can only be made by

the Board, together with the terms of

reference for our Committees, can be

foundon the corporate governance

sectionof our website.

Decision making on investments,

commercial agreements, including the

acquisition, disposal and development

ofassets, is delegated according to

nancial values.

Our Delegation of Authorities framework

sets out levels of authority for decision

making throughout the business.

During the year, in light of the changing

environment a review of the organisation

structure was undertaken to ensure

Landsec was well positioned for the future.

The result was the identication of a

number of dierentiators and a change

tothe internal operating model.

The governance for this model is focused

around the two dierent business areas

primarily based on Landsec’s customers’

needs. Workplace covers oce activity

(currently mainly Central London but

could expand in the future to other regions)

and Lifestyle which covers retail and the

mixed-use business.

Under the new operating model the Board

continues to oversee governance and

assurance, supported by the Executive

Leadership Team, which is responsible for

Group strategy and co-ordination alongside

the Workplace and Lifestyle Boards who

areresponsible for strategic planning.

The Workplace and Lifestyle Boards are

supported by executive committees

whichare responsible for developing

andexecuting business plans, managing

operational matters day to day and

delivering nancial performance.

Managing Directors

Up to £10m

Executive Leadership Team

£10m-£150m (Non-property)

Workplace and Lifestyle Boards

£10m-£150m (Property)

Board

Over £150m

Conicts of interest and external

appointments

The Board has a policy to identify and

manage Directors’ conicts or potential

conicts of interest and has delegated

authority to the Nomination Committee

to(i) approve or otherwise any such

disclosed conicts, 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’ conicts of interest (which

extendbeyond third-party directorships

and include close family) are reviewed by

the Nomination Committee annually, with

new conicts arising between meetings

dealt with at the time between the

Chairman and the Company Secretary.

During the year, Madeleine Cosgrave

declared two appointments, which were

ultimately not deemed to be of concern

from a time commitment or conicts

perspective (senior advisor to ICG Real

Estate and independent member of the

CBRE IM EMEA Investment Committee).

We follow the Institutional Shareholder

Services (ISS) proxy voting guidelines on

overboarding and accordingly deem all

ourNon-executive Directors to be within

these guidelines.

We appreciate that other proxy bodies

andinstitutional investors impose more

stringent guidelines than ISS and that

eachindividual’s portfolio of appointments

must be considered on a case-by-case

basis, which the Board duly does before

approving any appointments and then,

onan annual basis, assesses whether each

member of the Board is able to continue

contributing eectively.

Sir Ian Cheshire is currently Chair of

Channel 4, Spire Healthcare Group Plc,

UK investment trust Menhaden Resource

Eciency Plc and serves as Non-executive

Director at BT Group Plc. He is stepping

down from the Chair position (remaining

as Non-executive Director) at Menhaden

Resource Eciency Plc on 16 May 2023

and will retire from BT Group Plc at its AGM

in July 2023 to ensure he has sucient

capacity to act as Chair of Landsec.

The Board was not asked to approve any

additional external appointments for any

of our Directors during the year.

Our governance structure

continued

Potential conicts of interest and how we have managed them

Director Potential conict situation Nomination Committee decision and mitigating action taken

Ian Cheshire

(Non-executive

Director)

Decisions on investing in Landsec securities

conicting with role on Landsec Board.

As Menhaden Resource Eciency invests primarily in US and European

markets, investing in businesses and opportunities delivering or benetting

from the ecient use of energy and resources, investment in Land

Securities Group PLC securities is unlikely and in any event Sir Ian Cheshire

does not participate directly in investment decisions at Menhaden and has

agreed to never participate in investment decisions concerning the shares

of Land Securities Group PLC at Menhaden.

Landsec Annual Report 2023070 Governance

Induction

Our induction plan is delivered over the

rstyear of appointment. The aim is to

enable a new Director to assume their

responsibilities as quickly as possible and

feel able to contribute to business and

strategy discussions, with sucient

knowledge to provide eective challenge.

An induction plan was put in place for Miles

Roberts upon joining as a Non-executive

Director in September 2022. The aim of his

induction was to support his understanding

of Landsec’s business and nancial position,

strategy, culture, risks and opportunities,

Board governance and dynamics. The plan

assisted him to form relationships with the

Chairman, the Board, the Executive

Leadership Team and key external advisers,

in addition to a number of site visits. Sir Ian

Cheshire is currently undertaking a similar

induction plan.

—

More information on their inductions

can befound on page 85.

Board diversity

As at the date of this report and throughout

this nancial year we have complied with

the Listing Rules requirements relating to

diversity: (i) at least 40% of the Board are

women (also meeting the FTSE Women

Leaders target); (ii) at least one of the senior

board positions are women (both Chair and

CFO); and (iii) at least one individual on the

Board is from a minority ethnic background

(also meeting the Parker Review target). The

Board and new Chair are aware that on the

retirement of Cressida Hogg, our gender

diversity will dip below 40%, and this will

be taken into account in our near term

succession planning. See table 33 below.

Training and development

Directors received regular updates in their

Board papers, facilitating greater

awareness and understanding of the

Group’s business and in particular the

emerging strategy.

The Board also received presentations on

the exible oce market and the future

ofoce assets acquired as part of the

U+IGroup and MediaCity acquisitions.

In June 2022, the Board had a deep dive

into the Southwark area of London,

whereLandsec has assembled a pipeline

ofc.1m sq ft. In addition, the Board received

a teach-in session on embodied carbon

from the Landsec sustainability team

whichincluded case studies on The Forge,

Red Lion Court, Timber Square and

Libertyof Southwark and discussed the

implications for n2 whilst the Board visited

the development.

In December 2022, the Board received a

detailed brieng on embodied carbon in

development and Landsec’s objective to

reduce embodied carbon. The Board also

received a brieng and site visit of the n2

development on the same day.

In February 2023, the Board held its

strategy away day at our Myo oces at

Dashwood House in London with a tour

of 21 Moorelds, a complex development

nearing completion that showcased

Landsec’s deep development expertise

during the life of the project.

Finally, the Board were also provided with

amarket disclosure brieng to reinforce

their knowledge of the Market Abuse

Regulation including recent developments

and case studies.

Board diversity

Table 33

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  %   %

Women  %   %

Not specied/prefer not to say – – – – –

Ethnic diversity

White British or other White (including minority-white groups)  %   %

Mixed/Multiple Ethnic Groups – – – – –

Asian/Asian British  % – – –

Black/African/Caribbean/Black British – – – – –

Other ethnic group, including Arab – – – – –

Not specied/prefer not to say – – – – -

. 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.

. Board numbers for gender diversity will change after the date of this report owing to the retirement of Cressida Hogg.

. Executive Leadership Team numbers for diversity will change after the date of this report owing to the appointment of a new ELT member in June  (see page ).

Landsec Annual Report 2023 071Governance

Executive Leadership Team

Our Executive Leadership Team is made up of our

Executive Directors and the Managing Directors

setout on this page. It is chaired by our CEO.

—

Biographies for our Executive Directors can be found on page 68.

Remco Simon,

Chief Strategy &

InvestmentOcer

Kate Seller,

Chief People Ocer

Mike Hood,

CEO of U+I

Marcus Geddes,

Managing Director, Central London

Bruce Findlay,

Managing Director, Retail

Chris Hogwood,

Managing Director, Corporate

Aairs & Sustainability

Marina Thomas,

Head of Governance

and Company Secretary

Role  Remco has responsibility

for the Group’s strategic planning,

capital allocation and capital

markets activity.

Skills and experience  He has

over 15 years’ prior experience in

international real estate capital

markets. Before joining Landsec,

Remco was Managing Director at

St. Modwen, with responsibility for

strategy, investment and capital

markets, and worked as director

of equity research at BofA Merrill

Lynch and Kempen & Co. He holds

a MSc in management and a BSc

inconstruction engineering.

Role  Kate is responsible for

helping the business to achieve our

people and cultural strategic goals.

Skills and experience 

Katehasover 25 years of multi

sector international HR experience,

including an early career spent in

retail, then ten years at Experian

where she held a variety of global

HR roles, including HR Director for

Experian Asia Pacic based in

Singapore. More recently she held

the role of Group People Director

atHomeServe plc, a founder-led

FTSE250.

Role  Mike leads U+I, Landsec’s

regeneration business and is

responsible for driving forward

theportfolio of transformative

mixed-use regeneration projects

across the UK.

Skills and experience  Prior

tojoining U+I in 2020, Mike was

Managing Director at Capital &

Counties Properties PLC (Capco),

where he led the 77 acre/£10bn

Earls Court project and subsequent

sale and spearheaded major,

award-winning heritage and

restoration projects for Capco’s

prestigious Covent Garden estate.

Mike trained in the UK and Holland

as an architect.

Role  Marcus has responsibility

for the performance of our Central

London portfolio and executing

Group investment acquisitions

anddisposals.

Skills and experience  Marcus

Geddes is a qualied chartered

surveyor with over 20 years’

experience in the central London

market. A Cambridge Land

Economy graduate, he qualied

and spent 13 years at Savills before

joining Landsec in 2011.

Role  Bruce helps to dene the

overall direction of the retail assets,

ensuring our retail destinations

remain relevant for both retailers

and consumers in order to provide

asustainable retail model.

Skills and experience  Bruce has

over 25 years of consumer brand

experience where he’s developed his

operational leadership and

strategic management skills. Prior

to joining Landsec, Bruce was Chief

Commercial Ocer of Furla and

prior to that as the VP Global Retail

for Diesel, where he led the brand’s

Direct to Consumer business

through its transformation from a

traditional wholesale manufacturer

to a modern omni-channel retailer.

Role  Chris leads the Corporate

Aairs and Sustainability teams

atLandsec.

Skills and experience 

Chrisjoined from Portland

Communications where he was a

Senior Partner, leading its local

engagement and real estate

specialism as well as jointly leading

the agency’s agship corporate

practice. He has worked in leading

communications agencies for

the last ten years and before that

worked in London local government.

Role  Marina has responsibility

for governance and the Company

secretary and health and safety

functions at Landsec.

Skills and experience  Marina

has over 20 years’ experience in

governance, across aerospace and

defence and nancial services. Prior

to joining Landsec, Marina was

Group Company Secretary and EVP

of Ethics and Communications at

Meggitt PLC.

Role  Nisha will lead the

data and technology teams,

overseeing digital and data

transformation programmes

across the business.

Skills and experience  Most

recently, Chief Technology

Ocer for Hiscox Re & ILS, part

of the Hiscox insurance group,

Nisha has over 20 years of

technology leadership

experience, with expertise

across data, engineering and

operations. Nisha has been

featured as a Top 100 CIO in

the UK, recognised for

delivering digital business

transformation through

complex change programmes.

Landsec Annual Report 2023072 Governance

Remco Simon,

Chief Strategy &

InvestmentOcer

Kate Seller,

Chief People Ocer

Mike Hood,

CEO of U+I

Marcus Geddes,

Managing Director, Central London

Bruce Findlay,

Managing Director, Retail

Chris Hogwood,

Managing Director, Corporate

Aairs & Sustainability

Marina Thomas,

Head of Governance

and Company Secretary

Role  Remco has responsibility

for the Group’s strategic planning,

capital allocation and capital

markets activity.

Skills and experience  He has

over 15 years’ prior experience in

international real estate capital

markets. Before joining Landsec,

Remco was Managing Director at

St. Modwen, with responsibility for

strategy, investment and capital

markets, and worked as director

of equity research at BofA Merrill

Lynch and Kempen & Co. He holds

a MSc in management and a BSc

inconstruction engineering.

Role  Kate is responsible for

helping the business to achieve our

people and cultural strategic goals.

Skills and experience 

Katehasover 25 years of multi

sector international HR experience,

including an early career spent in

retail, then ten years at Experian

where she held a variety of global

HR roles, including HR Director for

Experian Asia Pacic based in

Singapore. More recently she held

the role of Group People Director

atHomeServe plc, a founder-led

FTSE250.

Role  Mike leads U+I, Landsec’s

regeneration business and is

responsible for driving forward

theportfolio of transformative

mixed-use regeneration projects

across the UK.

Skills and experience  Prior

tojoining U+I in 2020, Mike was

Managing Director at Capital &

Counties Properties PLC (Capco),

where he led the 77 acre/£10bn

Earls Court project and subsequent

sale and spearheaded major,

award-winning heritage and

restoration projects for Capco’s

prestigious Covent Garden estate.

Mike trained in the UK and Holland

as an architect.

Role  Marcus has responsibility

for the performance of our Central

London portfolio and executing

Group investment acquisitions

anddisposals.

Skills and experience  Marcus

Geddes is a qualied chartered

surveyor with over 20 years’

experience in the central London

market. A Cambridge Land

Economy graduate, he qualied

and spent 13 years at Savills before

joining Landsec in 2011.

Role  Bruce helps to dene the

overall direction of the retail assets,

ensuring our retail destinations

remain relevant for both retailers

and consumers in order to provide

asustainable retail model.

Skills and experience  Bruce has

over 25 years of consumer brand

experience where he’s developed his

operational leadership and

strategic management skills. Prior

to joining Landsec, Bruce was Chief

Commercial Ocer of Furla and

prior to that as the VP Global Retail

for Diesel, where he led the brand’s

Direct to Consumer business

through its transformation from a

traditional wholesale manufacturer

to a modern omni-channel retailer.

Role  Chris leads the Corporate

Aairs and Sustainability teams

atLandsec.

Skills and experience 

Chrisjoined from Portland

Communications where he was a

Senior Partner, leading its local

engagement and real estate

specialism as well as jointly leading

the agency’s agship corporate

practice. He has worked in leading

communications agencies for

the last ten years and before that

worked in London local government.

Role  Marina has responsibility

for governance and the Company

secretary and health and safety

functions at Landsec.

Skills and experience  Marina

has over 20 years’ experience in

governance, across aerospace and

defence and nancial services. Prior

to joining Landsec, Marina was

Group Company Secretary and EVP

of Ethics and Communications at

Meggitt PLC.

Role  Nisha will lead the

data and technology teams,

overseeing digital and data

transformation programmes

across the business.

Skills and experience  Most

recently, Chief Technology

Ocer for Hiscox Re & ILS, part

of the Hiscox insurance group,

Nisha has over 20 years of

technology leadership

experience, with expertise

across data, engineering and

operations. Nisha has been

featured as a Top 100 CIO in

the UK, recognised for

delivering digital business

transformation through

complex change programmes.

Nisha Manaktala,

Chief Data and

Technology Ocer

Joining Landsec

in June 2023

Landsec Annual Report 2023 073Governance

Board meetings

Board members attend eight scheduled

meetings a year and meet as required

foradditional discussions.

All members of the Board attended all

Board and Committee meetings during

their tenure and membership, with the

exception of Christophe Evain who missed

the Board, Nomination and Remuneration

Committee meetings held in March 2023

due to a family bereavement.

If the Board needs to make decisions in

between meetings, it can do so by

unanimous approval by email but will only

do so in such situations where the matter

has been discussed at previous meetings

sothat Directors are fully appraised, have

had the opportunity to ask questions and

are therefore in a position to make a fully

informed decision.

The Board met for four dinners throughout

the year at which a number of matters were

discussed including the macro-economic

climate, areas of risk, culture and talent

retention. These opportunities allow the

Board to develop and solidify relationships

and further discuss matters impacting the

business in an informal manner without the

inevitable time restrictions of Board and

Committee meetings.

The Non-executive Directors also met without

the Executive Directors being present.

Execution of strategy

This year, the Board has continued to

consider the Group’s strategy and the

execution of strategy, particularly in

the context of the uncertain macro-

economic and political environments.

In addition, the alignment of culture

and the internal governance framework

and strategy has been a focus of the Board.

All of Landsec’s stakeholder interests

remain at the heart of strategy decisions

especially in uncertain climates.

—

There is further information about the

Board and our stakeholders on

pages 76-79 and the Board and our

Culture on pages 80-81

The Board considered a number of strategic

areas during the year, which included

reviews of the retail strategy, the residential

strategy and the alignment with urban

mixed-use. In addition, the Board considered

the future of the oce and ex oce. More

details on the strategic (and other matters)

considered by the Board can be found on

page 75. As part of these strategic reviews

the Board had a tour and deep dive review

of our developments in the Southwark area

of London.

In addition, the Board beneted from

asession with some of the sustainability

team on embodied carbon followed by

atour of the n2 development site, which

brought to life some of the matters that

had been discussed in the session.

The Board in action

Decisions of the Board this year have been

considered in the context of a challenging macro-

economic environment and whilst considering the

changes, risks and opportunities that such an

environment can bring.

Board’s tour

of Southwark

The June meeting of the Board took

place in Southwark and allowed the

Board to benet from a walking tour

of the area led by the Executive

Directors and members of the

Central London oce team.

The Board were initially given a

presentation on why the Southbank

was considered an important area

and how in particular the Southwark

area tted into this growing part

ofLondon.

During the tour the Board were able

to see our four existing (or potential)

development sites in the area –

Timber Square, The Forge, Liberty of

Southwark and Red Lion Court, and

the thriving neighbourhoods in which

they are located.

The tour allowed the Board to ask

questions on the area, its heritage,

development progress, and

sustainability credentials. The Board

welcomed the additional insight

intothe developments, the location

and the impact on Landsec’s

growthstrategy.

Landsec Annual Report 2023074 Governance

Strategy

•

Update of the strategic plan

•

Consideration of the retail strategy

•

Update on the residential strategy

•

Urban mixed-use business review

•

The future of oce and the ex oce market

•

Optimum capital recycling and capital allocation

•

Capital Markets Day held in Southwark

•

Approval of sale of 21 Moorelds, One New Street Square

and 32-50 Strand

•

Purchase of additional 50% stake in St David’s

Financial

•

Macroeconomic environment consideration

•

Budget and ve-year plan

•

Key business targets

•

Dividend consideration

•

Going concern and viability statement

•

Investor relations

•

Portfolio valuation

•

Source of funding and gearing levels

•

Preliminary Results

•

Annual Report and Accounts

•

Half-year Report

•

Dividend payments

•

Launch of new Green bond

•

Annual Tax Strategy

•

U+I post investment appraisal

Operational

•

The impact on the business of the inationary

environment

•

Development pipeline and pre-let activity

•

Market and sector trends

•

Investment and sales

•

Board’s heightened focus on the impact of cost increases

for the business, customers and employees

•

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

•

Flexible retail and oce models

•

Recognition of the increasing importance of customers’

changing needs

•

Monitoring pre-let activity

People and organisation

•

Succession planning

•

Talent

•

Diversity and inclusion

•

Culture

•

Sustainability

•

Gender pay

•

Health and safety

•

Fire safety

•

Data strategy and governance

•

Internal operating model and governance

•

Employee engagement

•

Appointment of additional Non-executive Director and

anew Chair

•

Importance of diversity reinforced at Board level and

throughout the business

•

New diversity and inclusion strategy

•

Revised internal operating model and its governance

framework to support cultural change

•

Embodied carbon update for the Board

•

Gender Pay Gap Report

•

Updated sustainability strategy and targets

•

Health and safety updates provided at every Board

meeting with particular focus on the new re safety

legislation and ensuring that Landsec’s residential

portfolio is in compliance

•

Driving cultural change embedded in Board discussions

Governance

•

Risk identication, management and internal control

•

Cyber security and technology

•

Meeting reports from Chairs of Audit, Remuneration

andNomination Committees

•

Modern slavery

•

Board and Committee eectiveness

•

Legal and litigation updates

•

Risk appetite and tolerance ranges for each principal risk

•

Internal Board and Committee evaluation

•

Annual General Meeting

•

Approval of Modern Slavery Statement

•

Progression of technology transformation programme

Board discussions during the year

Topics Outcomes

Landsec Annual Report 2023 075Governanc e

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 benet of the

members, having regard to the interest

ofstakeholders in their decision making.

Over the next few pages, we provide

examples of how the Board engages with

stakeholders and takes into account their

interests when making decisions.

—

An introduction to our stakeholders

canbe found in our Strategic Report

onpage 11

Stakeholders and Board

decision making

Our stakeholders’ interests and priorities

continue to change, and aect the way

wework, shop and engage with each

other.Eective 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 up

tothe Board on stakeholder engagement,

the importance of which is embedded

throughout our business.

Our customers

We have made good progress with growing

our customer relationships which has been

a key feature of our strategy for two years.

The Board receives regular updates on

ourcustomers.

During the year, the Board received a

detailed brieng on our retail, oce and

mixed-use strategies including customer

insights, as well as regular updates on

customers as part of the business update

at every meeting. This has helped to

understand the changing requirements

ofoce customers since the pandemic,

including changing space requirements

andthe increased demand for ‘healthy

buildings’. As a business we have listened

tooce occupiers regarding their needs,

resulting in us providing greater exibility

ofoce leases.

The Board reviewed the retail strategy

update in September. The Reimagine

Retailchange programme has been

implemented and is based on three main

strategies: the future asset, brand partners

and guest experience. We have developed

clear plans for each of our assets to make

sure they deliver the physical experience,

which continues to attract the right visitors

for brands.

Each location will see a more distinct

identity, more closely representing the

narrative of the area in which it is located,

although there are some key themes that

reach across all locations. The Board noted

the good progress that had been made in

recognising and understanding consumer

behaviour and its impact on investment

decisions, the importance of improving

data insights and direct relationship

management, but also ensuring that

downside scenarios were considered.

The Board also received a residential

strategy update from the Chief Strategy

and Investment Ocer and Head of

Lifestyle Investment. The Board supported

the view that residential should be part of

our strategy.

The Board and our stakeholders

Our ve key stakeholders

Customers

Communities

Partners

Employees

Investors

Landsec Annual Report 2023076 Governance

Our communities

To understand in more detail some of the

communities our assets are located within,

the Board visited certain assets during the

year, including Southwark. The Board

received a presentation on the Southwark

area which highlighted the rich culture

andheritage of this community, along with

the good transport links, young population

and amenities.

The assets owned by Landsec in the area

were highlighted, including Red Lion Court,

the Forge, the Liberty of Southwark and

Timber Square. This was then followed by

awalking tour of the area. Our Capital

Markets Day event in September also

focused on Southwark and provided

investors with an operational update and

tour of the area.

The Board visited the n2 development in

December to see rst hand one of our sites

under construction.

The Board had a tour of 21 Moorelds as

part of their strategy day in February which

was held at our Myo exible oce space in

Dashwood House. The Board were impressed

with the engineering challenges overcome

at21 Moorelds and thought the business

should be proud of their achievement with

this complex development.

—

You can read more about our

community support on page 44

Our partners

The Board received updates during the year

on re safety. The political and legislative

landscape had evolved since the last review,

including the introduction of the Developers’

Pledge that required developers to rectify or

fund remediation of critical re safety works

in certain circumstances. Landsec committed

to the pledge in July 2022 and signed the

associated contract in March 2023.

The Board were updated by our Managing

Director of Corporate Aairs during the

year on local and national Government

issues impacting the business. The Board

also discussed the output of Landsec’s local

and national Government engagement.

One New

Street Square

In January 2023 the Board approved the

sale of One New Street Square, EC4 to

Chinachem Group, a property developer

based in Hong Kong.

The total consideration for the sale amounts

to £349.5m. The sale price compares to

aSeptember 2022 valuation of £362.8m

andcrystallises a total return on capital

averaging 10% per annum since Landsec’s

acquisition of the site in June 2005 and

subsequent redevelopment in 2016.

One New Street Square is fully let to

Deloitte, with a 14-year unexpired lease

term remaining and a current annual net

rent of £16.8m. With limited opportunities

to add further value, the disposal was in line

with Landsec’s strategy to recycle capital

out of mature London oces.

The Board considered the sale to be in

linewith the strategic review conducted

inlate 2020, when Landsec announced its

intention to sell c.£2.5bn of mature London

oces over the medium term. With the

inclusion of One New Street Square, the

Company has now sold £2.1bn of oces,

representing an average yield of 4.4%.

The disposal proceeds will initially be used

torepay debt and, on a pro-forma basis,

would reduce Landsec’s long-term value from

31.1% to 28.9% based on September 2022

valuations. Its strong balance sheet provides

Landsec with signicant optionality for future

reinvestment in higher-return opportunities

which are expected to emerge as markets

continue to adjust to a new reality.

Landsec Annual Report 2023 077Governance

The Board and our stakeholders

continued

Our employees

Employee Forum meetings were held

monthly throughout the year, with four

quarterly meetings held which Mark Allan,

CEO, attends to answer any questions

andget an indication of topical issues

ofimportance to employees.

The Employee Forum sends out a list of

summary topics for employees to vote

onat the start of every nancial year.

TheEmployee Forum will then report

backto constituents on topics throughout

the year.

Christophe Evain met with the Employee

Forum separately to answer questions on

executive remuneration.

We continued with our employee

engagement sessions with two Non-

executive Directors meeting a small group

of employees from the Lifestyle area of the

business. A range of matters were discussed

including culture change, communications

and business strategy. Manjiry Tamhane

also joined asession of our Women’s

Network. The feedback from those sessions

is passed back into the boardroom.

The Board also received a full brieng on

the employee engagement survey which

was undertaken in Summer 2022 which also

gave them a good insight into employee

sentiment. Read more about our

engagement survey results on page 34.

During the year there have been a number

of drop in lunches held with members of

ourExecutive Leadership Team, including

our CEO and CFO.

We are also planning to hold another

‘Meetthe NEDs’ event for employees

immediately after our Annual General

Meeting in July and further engagement

events with smaller groups of employees

from the other areas of our business in

September and December. This will be a

great opportunity for the Board to engage

further with employees.

“We met with Christophe on behalf of the Employee

Forum to discuss Executive Remuneration and raise

queries on behalf of the business. It was really great

to meet Christophe and we really valued the open

discussions we had with him. We were given a clear

insight into Board life and dealing with shareholders,

he elaborated on his role and discussed the recent

recruitment process for our new Chairman which

was really interesting.”

“I thoroughly enjoy the monthly ELT lunch sessions,

they are great opportunities to have conversations

and build relationships with our leadership team.

To me, it shows how committed our Executive team

are to listen to and engage with colleagues across

the business.”

“I was lucky enough to meet Sir Ian Cheshire to discuss

the Employee Forum’s role and how it represents

Landsec employees. We had a really open and

wide-ranging conversation where Ian wanted to

hear all about Landsec, the culture and what

employees really cared about. We discussed the cost

of living crisis, our focus on improving diversity and

employee satisfaction drivers in a post-covid world

– all issues that Ian is clearly engaged with and keen

to help drive forward. We look forward to working

with him and the wider Board more closely to make

Landsec the best possible place to work.”

Feedback from employee engagement events

Themes raised at the employee engagement events included

the cost of living

the reorganisation and

changes to the internal

operating model

oce environment

and culture

retention of talent

diversity and inclusion

managing change

change communications

employee wellbeing

and benets

U&I integration

business strategy

career development

Landsec Annual Report 2023078 Governance

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.

Institutional investors Private investors Debt investors

Institutional investors

Our Executive Directors once again held

meetings with investors representing more

than half the share register by value.

We were delighted to return to a full

programme of in-person investor events

during the last year. Whilst some investor

meetings were conducted online for the sake

of convenience, the vast majority of our

investor engagement has been face-to-face.

In September 2022, we held a Capital

Markets Day in Southwark in London for

institutional investors. This event provided

an overview of the Southwark region and

detail on the existing and potential

development schemes Landsec has in this

area of London. In addition, we explained

our plans to reduce the embodied carbon

within our developments through a

combination of ecient use of materials,

design and construction methods. The

event also included a tour of Southwark to

view our four major committed/potential

development sites.

We engaged with investors throughout the

year on all aspects of environmental, social

and governance matters. In February 2023,

we conducted a sustainability roadshow

inthe Netherlands, meeting with fund

managers and sustainability analysts from

major institutional investors.

Industry conferences

Industry conferences provide Executive

Directors with a chance to meet a large

number of investors on a formal and

informal basis. Conferences attended this

year included the UBS Global Property

conference in London, the Kempen

conference in Amsterdam, 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.

All conferences were in-person events.

Our private investors are encouraged to

give feedback and communicate with the

Directors via the Company Secretary

throughout the year.

2022 Annual General Meeting

We continued to hold our AGM as a

hybridmeeting in 2022. We invited

shareholders to ask questions and vote

onthe resolutions online or they could

jointhe meeting physically.

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 ve-year private investor

plan, the intention of which is to maintain

an ecient share register, limited paper

distributions, eective 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.

Credit side institutional investors

and analysts

In March 2023, as part of the marketing

process for the Green bond issuance, we

held a series of debt investor meetings.

Acombination of the physical and virtual

meetings, including a Group lunch and a

recorded presentation, was well received

bythe investors and allowed us to provide

acomprehensive update on our strategy

aswell as to present the recently updated

Green Financing Framework.

Banks

Regular dialogue is maintained with our

keyrelationship banks, including regular

meetings and calls with our treasury team.

Credit rating agencies

During the year, business and nancial

updates were provided by our treasury

team and senior managers to Standard

&Poor’s, Fitch Ratings and Moody’s.

Furtherinformation for our debt

investorscan be found on our website:

landsec.com/investors.

No. of listed bonds

Institutional investors Private investors No. of equity investors

1,371

98.9%

of shares

7,593

1.1%

of shares

8,964

Landsec Annual Report 2023 079Governance

A year of progress

In previous years we have outlined how

anappropriate governance framework

andan environment of trust, respect and

accountability were all fundamental to

ourculture, and that the Board played an

important role in monitoring and assessing

our culture and the governance framework.

This year we have made signicant progress

on a journey that had already commenced,

but which has now been considered in

detail by the Board and is being embedded

throughout the Group. The key components

of that journey are outlined here.

In order to ensure that our growth

strategywas not hindered by legacy ways

of working, a cultural change programme

was initiated during the year which resulted

in a change to the operating model and a

new internal governance framework led by

the Board and supported by the Executive

Leadership Team.

—

More detail on this revised framework

can be found on pages 69-70

The new operating model and governance

structure ultimately ows up to the

Boardand is designed to facilitate and

encourage clear reporting, decision making,

empowerment, accountability, employee

input and stakeholder feedback, and

enable a focus on our customers, leading

to growth.

The Board have been regularly updated

and inputted as this programme has

evolved and are now supporting

management in embedding this across

theorganisation through organisational

design, business planning, leadership

eectiveness and behaviours, reward and

incentivisation and diversity and inclusion.

More details on each of these areas are

setout on the opposite page.

In shaping this framework, feedback

from an externally facilitated employee

engagement survey undertaken during

the year was also taken into account.

TheBoard were appraised of the key themes

arising from the survey and challenged

management as to how theyaddress the

areas where the need forimprovement

wasidentied. Positive changes are already

underway and employee engagement

surveys will be undertaken on a regular basis,

which will assist in allowing the Board to

assess progress.

In addition, as the Board have greatly

beneted from rst hand engagement

with employees at Non-executive Director

engagement sessions, similar meetings are

continuing and a further series is planned

throughout the coming year.

—

Further information on employee

engagement can be found on page 34

Metrics which are provided to the Board

toallow them to consider certain cultural

themes are shown on the next page.

The Board and our culture

This year has seen the Board focus on supporting

management to design and embed a more agile,

ecient culture, with less internal complexity

and more external and customer focus.

Embedding

cultural change

through a new

operating model

Landsec Annual Report 2023080 Governance

Cultural metrics – FY2023Embedding cultural change

Organisational design

•

Decision-making framework focusing

on two key business areas – workplace

and lifestyle-owing up to the Board

•

Flatter organisation with increased

spans of control

•

Newly created roles and leadership

changes

Business planning

•

A business plan drafted for each area

of the business linked to the overall

strategic plan of the Group as

approved by the Board

•

Business planning process coordinated

and consistent across the business

•

Clear nancial and non-nancial

objectives and targets owned by each

business plan area and linked to

remuneration

Leadership eectiveness and

behaviours

•

Leadership-rst approach to

embedding cultural change, starting

with the Board

•

Enabling leaders to role model the

required behaviours

•

A fully refreshed leadership programme

Reward and incentivisation

•

Refreshed performance management

•

Updated salary philosophy

•

Agile incentives

Diversity and inclusion

•

Updated diversity and inclusion

strategy as approved by the Board

•

Creating more diversity within our

decision making

•

Embedding a diversity and inclusion

focus into the business planning

process

—

Pages 35-36 contain more

information on our approach to

diversity and inclusion

Purpose and meaning

We give our employees a sense of purpose as to why Landsec exists with a

focus on our role in wider society. Our purpose – sustainable places, connecting

communities, realising potential – reects our role in wider society and

consideration of all our stakeholders continues to be more important than ever

and has been at the forefront of Board discussions and central to our culture.

£8.7m

Value of social contribution

100%

Employees that are requested to have energy and

carbon reduction objectives

Ethics and fairness

We behave ethically and treat all our stakeholders fairly. Our employees are

critical to our business and we continue to nurture talent and development

and to assess our gender pay gaps to build a balanced, diverse workforce for

the long term.

Equal pay claims

Grievances raised

Diversity network

groups

Whistleblowing

incidents

Transparency and openness

We share information openly and discuss our challenges and mistakes.

Theimportance of eective communication and transparency is crucial to

ourculture. We continue to hold town halls and hold Non-executive Director

engagement sessions to oer a means of direct, informal engagement between

our Board and our workforce. We have encouraged our workforce to reassess

priorities and to feel empowered to challenge expectations placed upon them

in terms of what and how we deliver.

Town hall

meetings

Company-wide

events

Independent

employee

engagement

survey

77%

Employee

engagement

average score

Employee forum

meetings

Exit interviews

completed

Collaboration and growth

We collaborate, innovate and collectively contribute to Landsec’s growth.

Ourculture promotes personal development and growth and we encourage

internal moves and promotion from within our business. Succession planning

and promotion of our talent at all levels within the business is identied as

anarea of improvement.

13.8%

Roles lled

by internal

candidates

People promoted

in the last year

People on female

development

programme

Landsec Annual Report 2023 081Governance

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

Following a comprehensive selection

process, in January we announced the

appointment of Sir Ian Cheshire as Non-

executive Director and Chair Designate.

Sir Ian joined the Board at the end of March

and will succeed me as Chair on 16 May.

On behalf of the Board, I am pleased to

bewelcoming someone of Sir Ian Cheshire’s

calibre as Chair.

We also appointed Miles Roberts as

Non-executive Director in September 2022.

Miles, who originally trained as a structural

engineer, brings signicant experience as

aserving chief executive and has held a

number of non-executive roles. You can

read about the Committee’s appointment

process for both Sir Ian and Miles on

page 84.

Colette O’Shea stepped down from the

Board in September and as Chief Operating

Ocer in March. Colette joined Landsec

in2003 and was appointed to the Board in

2018. The Committee is extremely grateful

to Colette for her signicant contribution

tothe Board and the business during her

time at Landsec.

Board evolution

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

reviewed the composition and skills of

theBoard, and developed an ongoing plan

for Board succession, taking into account

recent and likely future Board changes.

The Board is mindful that Edward Bonham

Carter has been a Director in excess of nine

years and so the Committee reviewed his

independence and role and was completely

satised that Edward continues to bring

independent judgement to the Board.

Assuch, the Nomination Committee was

satised that Edward can continue to fulll

the role of Senior Independent Director.

The Committee also has responsibility for

oversight of Executive Leadership Team and

senior management succession. This is also

discussed by the Board as a whole, with

afocus on diversity and inclusion and

developing and maintaining the internal

talent pipeline.

Introduction from the

Chairman of the Nomination Committee

Committee members

Cressida Hogg (Chairman)

Edward Bonham Carter

Nicholas Cadbury

Christophe Evain

Sir Ian Cheshire

(from 23 March 2023)

Highlights

•

Appointment of new Non-

executive Director

•

Appointment of Chair designate

•

Internal Board evaluation

Key responsibilities

•

Skills matrix and composition of

the Board and Committees

•

Succession planning

•

Board appointment process

•

Corporate governance

Number of meetings

and attendance

•

Four scheduled meetings

•

Additional meeting regarding

recruitment

•

All members of the Committee

attended all meetings during

their membership with the

exception of Christophe Evain

who was unable to attend one

meeting due to a family

bereavement

Landsec Annual Report 2023082 Governance

Internal Board evaluation

This year our Board evaluation was carried

out internally with the Committee’s

eectiveness assessed as part of the internal

review. The Committee was satised with its

own eectiveness as a whole and pleased

with the outcome of the Non-executive

succession planning and processes, including

the Chair selection process, which had been a

main focus during the year. With a new Chair

and Executive Leadership Team in place it is

appropriate to reset the Committee’s

priorities to focus more on wider Board

succession, while continuing to cover all areas

of the Committee’s remit including ongoing

management succession planning.

—

Further details on the internal Board

evaluation can be found on pages 86-87

Corporate governance

During the year, the Committee has

overseen the corporate governance agenda

on behalf of the Board. I am pleased to

conrm that Landsec has complied with

and applied all of the principles of the

2018 UK Corporate Governance Code for

the nancial year ended 31 March 2023.

The Code is published by the Financial

Reporting Council and is available from

frc.org.uk.

Cressida Hogg

Chairman, Nomination Committee

Diversity

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. 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.

During the year, we have refreshed the

overall diversity and inclusion strategy for

the Group, including setting new targets.

I am pleased to report that during this

nancial year we met the Listing Rule

requirements targets for diversity. 40%

ofour Board members are women, our

Chair and CFO positions have been held

bywomen, and we have one member

ofthe Board from an ethnic minority

background. The Committee is aware that

as a result of the change of Chair in May

2023, the Board’s gender diversity will dip

below 40%, and this will be taken into

consideration in Board composition and

succession planning.

I am pleased to report that following

therecruitment of Marina Thomas as

Headof Governance and Company

Secretary and Kate Seller as Chief People

Ocer during the year, one third of the

Executive Leadership Team are women

(which will increase to 40% when our

newChief Data &Technology Ocer joins

us in June 2023). We acknowledge that

ongoing work is needed to increase diversity

of our Executive Leadership Team and its

direct reports whilst ensuring that

appointments and succession plans are

based on merit and objective criteria and

the Committee, and the Board will continue

to monitor progress.

—

You can read more about diversity

andinclusion at Landsec in our People

and Culture section on pages 35-38

Landsec Annual Report 2023 083Gover nance

Executive Director changes

During the year, Colette O’Shea stepped

down from the Board on 30 September

2022 and as Chief Operating Ocer on

31 March 2023.

Non-executive Director changes

Cressida Hogg will step down as Chairman

on 16 May 2023, having served over ve

years as Chairman and nine years on

theBoard.

As the Chairman succession process

began,it was agreed that Edward Bonham

Carter would lead the process as Senior

Independent Director, joined by the other

members of the Committee, excluding

Cressida Hogg (the Chairman, Succession

Committee). Hedley May, an independent

executive search rm and with no connection

to Landsec, was appointed to conduct the

search for a Chairman with experience in

retail and customer-focused businesses.

Adiverse shortlist of candidates was put

forward by Hedley May and the candidates

met with members of the Chairman

Succession Committee andthe CEO, CFO

and the other Non-executive Directors.

The Chairman Succession Committee

concluded that Sir Ian Cheshire would be

an excellent addition to the Board bringing

a wealth of experience across customer-

focused businesses in executive and

non-executive positions in listed companies.

In 2022, the Nomination Committee

appointed Russell Reynolds, an independent

executive search rm with no connection

to Landsec to conduct a search for a

Non-executive Director. Members of the

Committee and the CEO met with a shortlist

of candidates put forward by Russell Reynolds.

The Committee concluded that Miles Roberts

with his experience as a serving chief

executive and in non-executive roles would

be a positive addition to the Board.

Diversity

The Board’s policy on diversity establishes

the importance of diversity in the broadest

sense, not just gender or ethnicity but also

experience, skills, professional background,

tenure and also other dierentials between

directors such as cognitive and personal

strengths. The Board believes that diversity

is crucial to creating a high-performing,

eective Board, to provide a breadth of

perspective and debate that aids decision

making and which supports and directs the

business more eectively.

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.

Diversity at Board level sets the tone for

diversity throughout the business. The

Nomination Committee monitors our

talentpipeline to ensure we have a diverse

succession pool of talent being developed

and maintained at all levels of the business.

Maintaining a diverse workforce is as

important as diverse recruitment and

wecontinue to assess this.

Diversity is also addressed at the

Remuneration Committee, particularly

inthe context of gender pay gap, and

discussed at the main Board in light of

itsincreased focus on the promotion

andmaintenance of diversity at all levels

oftalent throughout our business.

—

Further information on diversity at

Landsec can be found on pages 35-38

Independence and re-election

to the Board

The independence, eectiveness and

commitment of each of the Non-executive

Directors has been reviewed by the

Committee. The Committee is satised

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 Chairman) before

recommending their approval to the Board.

It also considers potential conict issues as

part of that assessment. The Committee

ismindful that Edward Bonham Carter has

been a director of the Board in excess of

nine years and has reviewed his

independence and role and is completely

satised that Edward continues to bring

independent judgement to the Board.

As such the Committee is satised that

Edward can continue to fulll the role

ofSenior Independent Director. The

Committee is condent that each of

theNon-executive Directors remains

independent and will be in a position to

discharge their duties and responsibilities

inthe coming year. From a governance

perspective, the Board as a whole is

independent.

Sir Ian Cheshire and Miles Roberts are

standing for initial election by shareholders

at the AGM, with all other Directors

standing for re-election at the AGM in

July 2023 with the support of the Board

(with the exception of Cressida Hogg

who is stepping down from the Board

on16 May 2023).

Internal evaluation of the

eectiveness of the Nomination

Committee

Following a busy few years of Executive

andNon-executive appointments, the

internal review of the performance of the

Nomination Committee included a review

of the Chair succession process and

considering the Committee’s priority for the

year ahead to include role prole planning

for future non-executive recruitment and

continued detailed reporting back to the

main Board.

Report of the

Nomination Committee

Landsec Annual Report 2023084 Governance

Miles Roberts’ induction

Miles Roberts’ induction focused on gaining

insight into Landsec’s purpose, strategic

priorities, key performance drivers and

amarket overview with Mark Allan. In

addition, Miles met with Vanessa Simms

who provided an overview of Landsec’s

nancial position and our ve-year plan,

budget and in-depth nancial review.

Miles met with members of the Executive

Leadership Team to gain a deeper

understanding of their areas of the business

and get an understanding of the individual

priorities and challenges that they face.

Another key focus was meetings with

the Managing Director of People and

Corporate Services for a deep dive into

ourpeople and culture.

Additionally, Miles spent time with other

Non-executive Directors, including those

that he had not met as part of the

selection process.

On 19 September 2022, Miles became a

member of the Audit Committee. As part

ofhis induction, Miles spent time with our

Audit Committee Chairman, our Group

Financial Controller and Director of Risk

andAssurance, who provided Miles with

information as to the role of the Committee.

Asset visits

Miles was able to visit the following assets

during the year: Bluewater, O2 Finchley

Road and the Landsec Victoria portfolio.

Miles also visited Dashwood House as part

of the Board Strategy day in February.

Sir Ian Cheshire’s induction

To date Sir Ian Cheshire’s induction plan

hasincluded (i) a series of handover

meetings with the Chair focused on

strategy, forward looking agenda and

Board processes; (ii) meeting Non-executive

Directors and Executive Directors including

Chairs of both the Audit and Remuneration

Committees and the Company Secretary;

(iii) meeting Landsec’s auditors and brokers;

(iv) meeting senior leaders of the retail

business and a site visit to Gunwharf

Quays; (v) meeting the Chief People Ocer

and MD, Corporate Aairs; and (vi)

meeting with our Employee Forum to

understand current employee sentiment.

Induction focus for the year ahead

The next phase of Sir Ian’s induction will

mainly focus on getting more insight into

our portfolio and will include oce and

mixed-use visits scheduled to various assets

and developments. Sir Ian will be joined on

these asset tours by senior leaders of the

business areas.

Board induction

Landsec Annual Report 2023 085Governance

Board evaluation

Board evaluation process 2022/23

In line with year two of our three-year cycle, we carried

outthis year’s review of the Board’s eectiveness internally

viaquestionnaire, having conducted a detailed external

evaluation last year. Our Board evaluation provides the

Boardand its Committees with an opportunity to reect

oneectiveness and performance.

Board evaluation cycle Progress against objectives set for 2022/23

Succession planning

Continue to evolve the Board

to meet the needs of the

business and to work

eectively with management.

A key part of this is Board and

Executive Leadership Team

succession. The Board would

like more visibility of the talent

coming up through the

business and how diverse

talent is being maintained

anddeveloped.

Execution of strategy

andevolving and adapting

thestrategy to reect

thechanging external

environment and

investorneeds.

Culture

Accelerating the pace of

change and of the turnaround

for the business, looking both

shorter and longer term. The

Board would like more agenda

time on culture and business

transformation.

Data strategy

and governance

Continued focus and drive

onLandsec becoming a data-

driven business. The Board

needs to monitor and support

Landsec on this journey.

Our objectives 2022/23

Year 1

Independent, externally

facilitatedreview

Performance review against

targets set for 2022/23

An external evaluation carried

out by the advisory rm No 4

Areas of focus identied

for 2023/24

Year 2

Internal review focused on Year 1 issues

raised and any new issues arising.

The process for internal review is

determined on a year-by-year basis.

Year 3

Year 2 progress reviewed internally,

and areas of focus identied

aheadofexternal evaluation

thefollowing year.

Landsec Annual Report 2023086 Governance

Conclusions of evaluation

The overall conclusion of the Board evaluation this year is

thatthe Landsec Board and its Committees continue to

operate in a collaborative and open way and work eectively.

The priorities for the incoming Chair include strategic

development and capital allocation, cultural and

organisational change and succession planning. A priority

forthe Board as a whole is to provide support to the new

Chair. The Board agenda and topics have the right focus on

key areas, however there were some preferences for more time

to be allowed for discussions during meetings or informally.

The Board felt it added value in developing and implementing

strategy and supporting the disposal programme, with the

Board feeling they are appropriately agile to adjust to the

changing environment.

Nomination Committee evaluation

The Committee looked at its own eectiveness. Overall, the

Committee was satised with its own eectiveness and that

of the Non-executive Director and Chair succession processes.

The Committee will keep Board succession planning and

diversity as a key area of focus.

The composition of the Board

was considered appropriate

with good progress made

during the year with the

recruitment of two Directors

to the Board, including the

Chair Designate.

Members of the Executive

Leadership Team and their

direct line reports have

spenttime over the year

onasset visits and providing

presentations to the Board.

However, the Board have

requested continued increased

visibility of the Executive

Leadership Team and senior

leaders in the year ahead.

Progress has been made

against the strategic

objectives of the Company

and regular reporting to the

Board in this area was noted.

During the year, the Board

hasspent more time focused

on culture and business

transformation including

regular updates on

organisational and digital

transformation programmes,

as well as sessions with the

leadership team on

engagement and diversity

andinclusion. The Board

havenoted that the pace

ofchange continues to

accelerate across the business.

The Board has monitored

progress with data and

technology through sessions

with the executives during the

year and was pleased to note

signicant improvements in

progress with our technology

strategy, as well as the

appointment of a Chief

Dataand Technology Ocer

who will join the Executive

Leadership Team in June 2023.

Our performance 2022/23 Output of 2022/23 Board evaluation:

areas of focus for the year ahead

Strategic

development

Continued progress with

strategic developments.

TheBoard would like to

continue to build on their

understanding of customer

needs through enhanced

access to customer data as

part of the strategyprocess.

Capital

allocation

Continued focus on capital

allocation and investment.

Culture and

organisational change

Progress already made on

culture change within the

business should continue,

monitored by the Board

through sessions with the

executive and engagement

survey results.

Succession

planning

An area of focus for the

Board is succession planning

andtalent development.

Support to

new Chair

A key focus for the Board is

in supporting the new Chair

to develop relationships

across the Board.

Board papers

and Executive

Leadership Team

Continued improvement

ofBoard papers with a focus

to move towards more

executive summaries to

allow more time for debate

at Board meetings.

The Board would like

tofocus on more

exposureto the Executive

Leadership Team and other

senior leaders.

Landsec Annual Report 2023 087Governance

Dear shareholder

During the nancial year the

Committee has continued

tofull its oversight

responsibilities on the

nancial statements, the

integrity of the reporting

process and the Company’s

system of internal controls

and risk management, the

audit and valuation processes

and the procedures for

ensuring compliance with

laws, regulations and ethical

codes of practice.

Risk focus

Risk management is a primary responsibility

of the Committee on behalf of the Board

and is consistently monitored throughout

the year. Information security and cyber

threat remains a key operational risk and

theCommittee has had regular oversight

ofthe signicant work undertaken to

mitigate against this risk and will continue

toconsider updates and monitor progress

ofthe programme to improve cyber resilience.

The macroeconomic outlook is currently the

most signicant risk. The risk management

strategy in place to mitigate against this

risk includes the regular monitoring of key

risk indicators and scenario-based

modelling of plausible economic

trajectories. No emerging risks have been

identied through the risk management

process.

Climate reporting

The Committee has updates from the

sustainability team on how Landsec is

implementing the requirements of the

TaskForce on Climate-related Financial

Disclosure (TCFD), the evolving reporting

landscape for climate risks and our

approach to climate risk identication,

assessment and strategy.

We have continued to make disclosures

that are consistent with the TCFD

recommendations and will continue to

monitor these. Our TCFD disclosures can

befound on pages 47 to 53.

Fire safety remediation

Following the introduction of the Building

Safety Act 2022, the Committee has been

updated on work to assess our liability for

reremediation works on residential buildings

developed by Group over the last 30 years.

The Committee has regularly considered,

alongside the external auditor, the level of

the provision required, how the provision is

determined and the associated disclosures.

Financial statements

The Group’s nancial statements are of

critical importance to investors and the

Committee monitors the integrity of the

Group’s reporting process and nancial

management. It scrutinises the full and

half-yearly nancial 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 signicant nancial judgements

and estimates made by management to

ensure that it is satised with the outcome.

I am pleased to say that the Financial

Reporting Council (FRC) included some

disclosures from our 2022 Annual Report

inits publication “What Makes a Good

Annual Report and Accounts”, as they

wereconsidered examples of best practice.

Asset valuation

The valuation of our assets is an important

constituent of our nancial results and

measurement of our performance. For a

number of years CBRE has been the principal

valuer of our entire portfolio, however in

order to increase market insight and future

exibility, Jones Lang LaSalle Limited (JLL)

has been appointed to value a large

proportion of Landsec’s retail portfolio with

eect from 31 March 2023. CBRE will continue

to value the oce portfolio and some of

theretail portfolio. Both CBRE and JLL are

industry-leading agencies with extensive

expertise and appropriate knowledge who

Introduction from the

Chairman of the Audit Committee

Committee members

Nicholas Cadbury (Chairman)

Madeleine Cosgrave

Christophe Evain

(until19 September 2022)

Miles Roberts

(from19 September 2022)

Highlights

•

Integrity ofreporting process

•

Rigorous assessment of risk

management and internal controls

•

Cyber and information security

•

Accounting treatment of

signicant acquisitions/disposals

•

Preparation for the new

governance regime

•

Consideration of re safety

provision

•

Appointment of third-party advisers

•

Financial systems transformation

Key responsibilities

•

Reliability of the nancial

statements and internal controls

•

Eective risk identication

andmanagement

•

Overall transparency and nancial

governance

Number of meetings

and attendance

•

Four scheduled meetings

•

100% attendance from all

members during their membership

Landsec Annual Report 2023088 Governance

UK Corporate Governance Code/

Financial Reporting Council (FRC)

Guidance on Audit Committees

The Committee considered its compliance

with the 2018 UK Corporate Governance

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 has been regularly monitoring

the potential changes to the new corporate

governance regime and preparing for its

implementation, including reviewing a draft

audit and assurance policy.

Committee eectiveness

During the rst half of the year the

Committee requested that a specic

eectiveness survey was undertaken to

supplement and support the Board and

Committee annual evaluations. This

in-depth review was undertaken by internal

audit and concluded that the Committee

isoperating well and should maintain many

of its existing practices. The internal Board

evaluation was undertaken later in the year,

which also highlighted the high standards

of the Committee.

The Committee welcomed Miles Roberts

who joined as a member of the Committee

in September 2022, replacing Christophe

Evain. Myself and the Committee would

liketo thank Christophe for his valued

contributions.

I continue to appreciate the valuable input

from the other members of the Audit

Committee, management and the key

advisers EY, KPMG, CBRE and JLL and would

like to thank them for their support during

the year.

Nicholas Cadbury

Chairman, Audit Committee

appoint an external third party which

wouldincrease exibility over audits and

improve the quality of the audits as a

resultof access to current best practice

andsubject matter expertise. Following

atender process, KPMG were selected

asthe preferred provider and since their

appointment have undertaken stakeholder

interviews to understand Landsec’s key

risks, reviewed the internal audit plan

andagreed an internal audit charter.

Theyhave completed audits on Turnover

Rents, Car Park Income and Investment

Appraisal. Eleven further audits are planned

for the year ended 31 March 2024 and will

include, amongst others, Treasury and

CashManagement, U+I Post integration,

Risk Management and ESG.

Fair, balanced and understandable

The Committee considered the Company’s

2023 Annual Report in the round and

concluded and recommended to the Board

that, taken as a whole the 2023 Annual

Report is fair, balanced and understandable.

Going concern and viability statement

We continue to focus on the

appropriateness of adopting the going

concern assumption in preparing the

nancial statements for the year ended

31 March 2023 particularly in light of the

uncertain macroeconomic environment.

The going concern statement is set out

onpages 60 and 61, along with the viability

statement and the rationale behind the

chosen ve-year time horizon.

Audit tender

As highlighted last year, we were required

to tender our audit as EY were approaching

being in oce for ten years having

performed their rst audit for Landsec for

the year end 31 March 2014. A competitive

and thorough tender process was

undertaken during the year and following

indepth consideration, the Committee and

the Board concluded that EY remained the

appropriate auditor for Landsec. EY would

ensure continued independence through

achange in partner with eect from

July2022. The appointment is subject to

shareholder approval at the 2023 Annual

General Meeting.

provide us with an external valuation of our

portfolio twice a year, in accordance with

therelevant industry standards.

The valuation process requires the valuers

to evaluate the likely future nancial

performance of each individual asset

andapply recent, relevant transactional

evidence in the market 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 specic assets

are also reviewed independently by our

auditor, EY, as part of its audit scope.

Acquisitions and disposals

During the year, Landsec progressed

withits strategy to accelerate growth

through recycling capital into higher

returnopportunities through a number

ofsignicant disposals of 32-50 Strand,

21 Moorelds and One New Street Square,

and securing 100% ownership of St David’s

shopping centre in Cardi via the

acquisition of the remaining 50% interest.

The Committee considered the accounting

treatment and disclosures of these material

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. The rent collection

statistics are strong and although there

remains bad debt provisions in respect of

some occupiers who have been or may be

unable to satisfy their rent obligations, the

provisions have decreased from last year.

Continual monitoring of the provisions is

undertaken by the Committee particularly

inlight of the uncertain macro-environment.

Internal audit

Until mid-summer 2022, the internal audit

function was an in-house team which sat

within the Risk and Assurance team and

although this was operating eectively,

itwas considered an appropriate time to

Landsec Annual Report 2023 089Governance

The Audit Committee continued to focus this year

onrisk assessment and management, internal

controls and nancial reporting processes, together

with additional focus on the requirements of changes

to re safety regulations and legislation.

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. The terms

ofreference are available on our website:

landsec.com/aboutcorporate-

governance/board-committees.

To maintain eective communication

between all relevant parties, and in support

of its activities, the Chairman of the Board,

Chief Executive, Chief Financial Ocer,

Company Secretary, Director of Risk and

Assurance, the partner and representatives

of our external auditor, EY, the partner and

representatives of our internal auditor, KPMG

and other members of the senior nance

team regularly attend Committee meetings.

All directors are invited to attend meetings

when the Group’s external valuers, CBRE,

and JLL, present their full year and half-

year property valuation.

The Committee has private and informal

sessions with the EY audit team and the

CBRE and JLL valuation teams to ensure

that open lines of communication exist,

incase they wish to raise any concerns

outside of formal meetings.

The Committee members are all

independent Non-executive Directors and

collectively have a broad range of nancial,

commercial and property sector expertise

that enables them to provide oversight of

both nancial and risk matters, and to

advise the Board accordingly. The Board

has determined that Nicholas Cadbury,

asChairman of the Committee, has recent

and relevant nancial experience for the

purposes of satisfying the UK Corporate

Governance Code. Details of the experience

of all members of the Committee can be

found on pages 66 and 67.

The Committee works to a structured

programme of activities and meetings

tocoincide with key events around our

nancial calendar and, on behalf of the

Board, to provide oversight of the Group’s

risk management process. Following each

Report of the Audit Committee

Audit Committee meetings

Property valuation

presentations

Regular attendance

atmeetings

tosupport the

Committee

private sessions

•

Chairman of

theBoard

•

Chief Executive

•

Chief Financial

Ocer

•

Company Secretary

•

Director ofRisk

andAssurance

•

Members of senior

nance team

•

Representatives of

the external auditor

•

Representatives

ofthe third party

internal auditor

•

CBRE valuation team

•

JLL valuation team

•

EY external

auditteam

•

KPMG internal

auditteam

•

All Directors are

invited to attend

meetings when

CBREand JLL

property valuation

presentations

aremade

Landsec Annual Report 2023090 Governance

•

a comprehensive strategic and business

planning review

•

a robust budgeting, forecasting and

nancial reporting process

•

various policies, procedures and

guidelines underpinning the development,

asset management and nancing

operations of the business

•

a compliance certication process

conducted in relation to the half-yearly

and full year results, and business

activities generally

•

a quarterly key controls self-certication

by management

•

an internal audit function provided by

KPMG whose work spans the whole Group

•

a focused post-acquisition review and

integration programme to ensure the

Group’s governance, procedures,

standards and control environment are

implemented eectively and on time

•

a nancial and property information

management system

•

a whistleblowing process that enables

concerns to be reported condentially

and on an anonymous basis and for those

concerns to be investigated.

Additionally, the Committee discusses on

aquarterly basis:

•

the Group’s signicant and emerging

risks, and how exposures have changed

during the period

•

the eectiveness of internal controls and

processes at mitigating those risks

•

internal audit reports, summary reports

of ndings and recommendations from

completion of the internal audit plan

•

progress against completion of agreed

actions from the internal audit reports.

The Committee was satised that the

system of risk management and internal

controls has been eective throughout

theyear.

Risk assurance and internal control

Under the overall supervision of the

Committee, there are several sub-

committees and working groups that give

assurance over risks being managed within

the business. The Group has a Director of

Risk and Assurance (with a direct reporting

line to the Audit Committee Chairman) who

provides regular oversight of risk matters,

evaluates emerging risks and monitors

compliance to ensure that any mitigating

actions are properly managed and

completed. During the year the Committee

beneted from regular updates from the

technology team who provided detailed

information on the progress of the projects

to improve information security, cyber

threat and processes to assist with nancial

controls. In addition, the EY team now

includes a partner with expertise on

technology and cyber.

Internal audits are carried out in accordance

with an agreed annual assurance plan and

reviewed by the Committee throughout the

year. This plan was previously undertaken

bythe in-house internal audit team and is

now the responsibility of KPMG who were

appointed as internal auditor during the year

following a tender process. It was considered

appropriate to appoint a third party in order

to increase exibility over the audits and

improve the quality of the audits due to

access to current best practice and subject

matter expertise.

Both the in-house team and KPMG have

provided assurance to the Committee on

key controls and programme assurance

andidentied improvements in key

nancialprocesses.

The key elements of the Group’s risk

management and internal control systems

are as follows:

•

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

meeting, the Committee Chairman reports

on the main discussion points and ndings

to the Board.

Risk management

The Board is responsible for the Group’s risk

management framework and risk appetite

and is supported by the Committee

through its monitoring and reviewing of

theeectiveness of risk management and

internal control processes during the year.

An overview of Landsec’s approach to risk

management, its risk management

framework and governance, risk appetite,

management and assurance of risks and

principal risks and uncertainties are

described on pages 54-59. The risk

management framework includes the

Board’s strategic overview, the Executive

Leadership Team’s detailed review of the

business risks, controls and mitigation

strategies, and the assessment of the

eectiveness of the risk management

andinternal controls system by the Audit

Committee. 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. In response to changes

in Landsec’s organisational structure, the risk

management framework has been redened

in order to ensure clarity on roles and

responsibilities at all levels and to embed

risk management within the business.

Primary responsibility for the operation

ofthe Company’s internal control and

riskmanagement systems, which extend

toinclude nancial, 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.

These systems have been designed to

manage, rather than eliminate, the risk

offailure to achieve the Group’s business

goals and can provide only reasonable,

notabsolute, assurance against material

misstatement or loss.

Landsec Annual Report 2023 091Governance

Report of the Audit Committee

continued

External auditor

EY are Landsec’s external auditor and are

engaged to conduct a statutory audit and

express an opinion on the Company’s and

the Group’s nancial statements.

Their 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 dierent 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

full its duties and responsibilities. As audit

partner, Julie Carlyle is authorised to

contact the Committee Chairman directly

at any time to raise any matter of concern.

Audit plan

EY presented its proposed audit plan

(reviewed by senior management and the

Director of Risk and Assurance), to the

Committee for discussion. The objective

was to ensure that the focus of its work

remained aligned to the Group’s structure

and strategy.

The Committee is keen to ensure that

itsauditor feels able to challenge

management and is aorded all the access

it requires to report on matters that may

not be part of the statutory audit but

which, in the opinion of the auditor, should

be brought to the attention of the Audit

Committee. These matters may be nancial

or non-nancial and may be based on fact

or opinion (including any concern over

culture or behaviour). An example may be

the use or adequacy of any controls used

bythe Company to detect any fraud or

improper behaviour.

EY is aorded such access through

attendance at each Committee meeting,

supported by other meetings held during the

year with the Committee or the Committee

Chairman without management being

present and the knowledge that it can raise

any matter of concern to the Committee

Chairman 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 introduced

by the FRC in December 2019 and eective

from 15 March 2020.

The Committee reviewed:

•

the conrmation 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 conrmation

•

the mitigation actions we take 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 ve

years); Julie Carlyle was appointed as

EYaudit partner to the Group in July 2022

•

the internal performance and

eectiveness 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.

Eectiveness of the external audit

Following the issue of our Annual Report

each year, the Director of Risk and

Assurance conducts a performance

evaluation and eectiveness review of the

external audit. This is conducted against

structured guidelines in consultation with

the Executive Directors and members of the

senior nance team and members of the

Audit Committee to whom they report.

The Committee Chairman met privately

with the audit engagement partner before

the Committee meeting to consider the

results of the eectiveness review. The

Committee’s preliminary view is that EY

hascontinued to perform its audit services

eectively and to a high standard, and this

is consistent with performance each year

since appointment in 2013. Areas identied

for development will be shared with EY for

inclusion in its audit and service delivery

plans going forward.

Audit tendering

EY was rst appointed to the oce

ofauditor in respect of the 2013/14

nancialyear.

Under current regulations, we were required

to re-tender the audit by no later than the

2023/24 nancial year and therefore a

competitive audit tender process was

undertaken during the year which concluded

that EY remained the appropriate auditor

forLandsec, as recommended by the Audit

Committee and approved by the Board.

Theevaluation criteria used during the

tender process included the capability and

competence of the audit partner, team

andrm, the audit approach and service,

cultural t, quality of deliverables and

presentation, and fees. EY were selected

because the proposed team would provide a

mix of continuity and embedded knowledge

with the comfort of independence via a new

partner, their ability to provide a partner

with technology expertise embedded within

the team, a strong commitment on audit

approach and service, and a driven and

enthusiastic outlook.

The decision on the appointment was made

by the Board without any inuence by a

third party, and without any contractual

term of the kind mentioned in Article 16(6)

of the Audit Regulation being imposed on

the Company.

Landsec Annual Report 2023092 Governance

The valuation helps to determine a

signicant 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 eectiveness represent an

important part of the Committee’s work.

Valuations for the half-year results were

presented to the Committee by CBRE, and

by CBRE and JLL for the full-year results.

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 Chairman

and other members of the Committee also

had separate meetings with the valuer’s

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. EY has experienced

chartered surveyors on its team who

consider the valuer’s qualications 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 inuence in arriving

atthem. This year 41 properties (comprising

78% of the portfolio) were identied for

substantive review by its valuation experts

primarily on the basis of their value, type,

risk prole, commitments to ESG and

location. The Committee reviewed the

auditor’s ndings.

An internal evaluation of the valuers’

performance and eectiveness will be

conducted after the year-end results

arenalised, with the results reported

totheCommittee.

Table 35

Per assignment

(£)

Aggregate

during the year

(£)

Chief

Financial

Ocer

–, ,

Audit

Committee

Chairman

,–

,

,–

,*

Committee , ,*

*50% of the prior year audit fee

All approvals are noted at the Audit

Committee.

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,

non-statutory audit of the Security Group,

work in relation to the update of the

bondprogramme documentation and the

issuance of the Green bond. It was decided

that it would be in the interest of the

Company to use EY for these services,

recognising that the use of audit rms for

non-audit work should generally be kept to a

minimum. Total fees for non-audit services,

amounted to £359,000. Details of the fees

charged by EY during the year can be found

in note 8 to the nancial 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 as joint valuer to undertake

thevaluation of a large part of the retail

portfolio whilst CBRE will retain the

valuation of the oce portfolio and some

of the retail portfolio. This change was

implemented to increase market insight

and future exibility, and therefore the

overall quality of the valuations.

EY will be appointed for the 31 March 2024

nancial 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 2022/23

(including the audit of the Group’s joint

ventures) are £1.8m (2021/22: £1.8m).

Thisfee takes into account a reduction in

the number of Group subsidiaries that will

be audited as they have taken advantage

of the exemption from having accounts

audited under s479A-479C of the

Companies Act 2006.

Non-audit services

To help safeguard EY’s objectivity and

independence, we operate a non-audit

services policy that sets out the

circumstances and nancial limits within

which EY may be permitted to provide

certain non-audit services.

Audit vs. non-audit fees

2022/23 (including the audit

of the Group’s joint ventures)

Chart 34

79.8%

Audit

20.2 %

Non-audit

22.5% non-audit fees as a ratio to Group audit fee

(excluding the audit of the Group’s joint ventures).

The Committee monitors compliance

with the policy, including the prior

approvals required for non-audit services,

and approval levels are as follows:

Landsec Annual Report 2023 093Governance

Report of the Audit Committee

continued

The Committee considered the independence

of the valuers and has noted that CBRE and

JLL check for conicts of interest and seek

approval for non-valuation activity and this

process has been eective during the year.

CBRE and JLL have also conrmed that

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 xed-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

nancial statements. These fees reect

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 for the year.

Signicant nancial matters

The Committee reviewed four signicant

nancial matters in connection with the

nancial statements, namely the valuation

of the Group’s property portfolio, revenue

recognition, re safety remediation

provisions and signicant acquisitions and

disposals. Further details are set out in the

table on page 95.

These items were considered to be

signicant taking into account the level of

materiality and the degree of judgement

exercised by management and, in respect

of the valuation, the external valuers.

In addition, the Committee considered,

andmade onward recommendations to the

Board, as appropriate, in respect of other

key matters including impairment of trade

receivables, including lease incentive

balances, development contracts, pensions

buy-in, maintenance of the Group’s REIT

status, nancial systems transformation

(including controls, processes and system

upgrades and improvements), going

concern, and other specic areas of

individual property and audit focus.

The Committee was satised 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-nancial 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 199. 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 UK

Corporate Governance Code requirements.

The Committee received assurance from

the verication process carried out on

thecontent of the Annual Report by the

Executive Leadership Team to ensure

consistent reporting and the existence of

appropriate links between key messages

and relevant sections of the Annual Report.

Particular attention has been given this

year to the consistency of the narrative

disclosures around climate risks, our

strategy and the nancial statements.

Taking the above into account, together

with the views expressed by EY, the

Committee recommended, and in turn

theBoard conrmed, that the 2023 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 nancial or otherwise) on a

condential 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

investigated by the Company Secretary,

Chief People Ocer and the Director of

Riskand Assurance and escalated to the

Committee, as appropriate. During the year

two whistleblowing incidents were reported.

One matter was investigated and no

concerns or action were required following

conclusion of the investigation. The second

matter, which was reported close to the

year-end is being fully investigated.

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, Sustainability Toolkit,

procurement tender documentation,

on our website, and at our assets and

development sites.

Landsec Annual Report 2023094 Governance

Signicant nancial matters

Signicant nancial 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, the nature

ofthe valuation estimates is inherently subjective and requires

signicant judgements to be made by management and the valuer.

Signicant 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 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

Chairman and the Committee itself. The Group uses CBRE and JLL, both leading

rms 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 its remit extends to

conrming that no undue inuence has been 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 (CBRE only as JLL were not yet appointed as principal valuer) and full

year results process. Both valuers were asked to attend and present their reports

to the Board and to highlight any signicant judgements made or disagreements

which existed between them and management.

CBRE and JLL proposed changes to the values of our properties and developments

during the year, which were discussed by the Committee in detail and accepted.

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 satised that the revenue reported

for the year had been appropriately recognised.

Completeness of provisions for re safety remediation works

Following the Grenfell Tower disaster, a series of new re safety

regulations were introduced which impact the Group’s residential

portfolio. Additionally, the Building Safety Act was enacted on

28 April 2022, with the related leaseholder protections coming

intoforce on 28 June 2022.

These require companies to assess whether their properties are

safe to use and perform remedial building works where they are

not, including properties which are no longer owned. Management

have therefore undertaken a review of which properties, in both

the current portfolio and previously owned, are impacted by this

legislation and which require remediation works. There is a risk that

management do not identify all properties where re remediation

works are required.

The Committee has been briefed throughout the year on the changes to the

regulations and legislation, and management have provided detail on the process

for identifying properties that are in scope for remediation assessment and the

amount of any provisions required.

The Audit Committee has discussed the re remediation works provisions in detail

at its meetings throughout the year and has heard from EY on their procedures

for understanding the completeness of management’s review. TheCommittee

has concluded that the procedures for identifying in scope properties, the

assessment of re remediation works and the level of the provision is appropriate.

Signicant acquisitions and disposals

Certain transactions require management to make judgements

onaccounting treatment, including how a prot or loss is

recognised and calculated, and how a contract is interpreted.

There is a risk that prots and losses on disposals are overstated or

understated respectively, or asset ownership is incorrectly recorded.

The Audit Committee has considered the accounting treatment of a number

ofcomplex sale and acquisition contracts during the year, particularly those for

21 Moorelds, One New Street Square and the remaining interest of St David’s.

These transactions and the proposed accounting treatment were explained

by management and the Committee thoroughly reviewed the appropriate

treatment.

The Committee was satised, based on its review and having considered the

views of EY, that the accounting treatment was appropriate.

The above description of the signicant nancial matters should be read in conjunction with the Independent Auditor’s Report on pages 121

to 128 and the signicant accounting policies disclosed in the notes to the nancial statements.

Landsec Annual Report 2023 095Governance

Dear shareholder

I am pleased to present,

on behalf of the Board,

the Directors’ Remuneration

Report for the year ended

31 March 2023.

This year, the Executive Team has delivered

strong operational results and continued to

pro-actively execute the strategy, despite

increased macroeconomic uncertainty.

Our performance has been underpinned by

a strong balance sheet, creating signicant

optionality for future growth.

Directors’ Remuneration Policy

We have continued to operate under

theRemuneration Policy approved by

shareholders at our 2021 AGM. The

Committee believes that the Policy provides

strong alignment with our ambitious

strategy whilst following best practice in

corporate governance and providing an

appropriate level of exibility. We are next

due to put forward an updated Policy for

approval at the 2024 AGM and the

Committee will start the process to

reviewthe Policy this summer.

Performance for the 2022/23

nancial year

During the course of the year, executive

management has continued to drive the

business strategy forward. In Central

London we delivered continued strong

leasing results as well as the disposal of

£1.4bn of mature oces. In retail we

delivered strong leasing momentum via

ourdierentiated brand focused platform

capitalising on the ‘ight to prime’, with

6.9% year on year sales growth. In mixed-

use we have secured planning consent

forour major Finchley Road project and

signed a drawdown agreement for the

rstphase of land at Mayeld, progressing

preparations for our 11m sq ft pipeline.

Despite the general macro challenges,

ourperformance highlights the high quality

of the Landsec platform and portfolio and

strong progress on executing strategy since

late 2020, creating balance sheet resilience

and optionality for future growth.

We are a purpose-led business and aim

tocreate value for all stakeholders. Our

strategy for the coming year continues

tofocus on shaping Central London oces,

major retail destinations and mixed-use

urban neighbourhoods.

For the year ended 31 March 2023,

whilstasset values decreased by 7.7%

inaggregate owing to wider economic

conditions, EPRA earnings were up 10.7%

and net debt has reduced by £0.9bn,

reducing LTV by 2.7% to 31.7% in line

withour LTV target range of 25% to 40%

and net debt/EBITDA from 9.7x to 7.0x.

Ourcurrent development pipeline is 60%

pre-let or under oer. In Central London,

£48m of lettings were completed or in

solicitors’ hands, 5% ahead of valuers’

assumptions, and occupancy up 110bps

to95.9%. In Major retail destinations,

£38mof lettings were completed or in

solicitors’ hands, 9% ahead of ERV with

occupancy up 110bps to 94.3%. These

results are clearlyreected in the variable

pay awarded to the Executive Directors.

Annual bonus performance

The performance of the Executive Team

hasbeen both focused and decisive, with

progress made in all areas of the strategic

plan that was set out at the start of the

year. This performance was achieved

despite increased macroeconomic

uncertainties including ination tensions

owing to geopolitical issues and the energy

crisis leading to increased interest rates.

Signicant achievements include completing

on key transactions at attractive prices

including the sale of 21 Moorelds and

OneNew Street Square. We further

strengthened our sector-leading balance

sheet with the issue of our inaugural

£400mGreen bond in challenging bond

market conditions. We also carried out

anorganisational restructure enabling

ustohold overhead costs stable year on

year despite rising ination. This leaves

theGroup well placed to pursue growth

opportunities. The acquisition of the

Directors’ Remuneration Report –

Chairman’s Annual Statement

Committee members

Christophe Evain

(CommitteeChair)

Edward Bonham Carter

Cressida Hogg

Manjiry Tamhane

Sir Ian Cheshire

(from 23 March 2023)

Highlights

•

Operating the Approved Policy

•

Workforce engagement

Key responsibilities

•

Reviewing the link between

rewardand the Group’s purpose

and strategy

•

Oversight of reward matters

across the Group

•

Maintaining a strong connection

between returns to shareholders

and reward for Executives

Number of meetings

and attendance

•

Three scheduled and one

unscheduled meeting

•

Full attendance from members

atall scheduled meetings except

for the March meeting which

Christophe Evain could not attend

owing to a family bereavement

Landsec Annual Report 2023096 Governance

Remuneration across the Company

The Committee oversees all remuneration

policies and practices across the organisation,

and is regularly briefed by theChief People

Ocer in this regard. 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 2023, we continued

togrant LTIP awards below the Executive

Leadership Team, more closely aligning those

who execute our strategy on a daily basis

with the interests of our shareholders.

Employee voice

In April 2023, I took the opportunity to

meetwith members of our Employee Forum

(which represents the wider Landsec

workforce). This is an important activity

and I was pleased to answer a number of

questions posed by the forum on pay ratios,

pay structures, LTIPs, base salary and

investor views on remuneration.

Eectiveness

During the year the Committee reviewed

itsown eectiveness and the eectiveness

of FIT as advisers to the Committee.

Overall, the Committee was satised with

the eectiveness of both. Follow-up actions

included streamlining Committee processes

and ensuring proactive responses to issues

and advice.

Conclusion

Despite increased macroeconomic

uncertainty, Landsec’s Executive Team

continue to lead the business to deliver

strong operational results and active

execution on strategy. I am grateful for the

engagement and support provided by our

shareholders and welcome your feedback.

Christophe Evain

Chair, Remuneration Committee

Discretion

No positive discretion was exercised in

theyear ended 31 March 2023. Negative

discretion has been used to reduce the

value of an unbudgeted surrender premium

received from EPRA earnings prior to

calculating the annual bonus outcome.

Thiswas recommended by management

and agreed by the Committee given that

the surrender premium was unbudgeted

and was not therefore factored into the

original earnings targets.

Executive remuneration 2023/24

1. Base salary

From 1 June 2023, Executive Director

salaries will increase by 4%. The payrise

across the wider workforce was 6.75%

(5%of which was accelerated and paid

from 1 January 2023 to assist employees

with the cost of living crisis). This was in

addition to a one-o award of £1,000 paid

to all employees earning below £40,000 p.a.

2. Pension and benets

Consistent with the UK Corporate

Governance Code, Executive Director

pension contributions are aligned to the

wider workforce at 10.5% of salary. No

changes will be made to benet provision

other than a switch from a car to a travel

allowance for Vanessa Simms.

3. Annual bonus

For the year ending 31 March 2024, Executive

Directors will be eligible for an annual bonus

of up to 150% of salary. Our bonus scheme,

which remains aligned to our strategy,

combines stretching targets for earnings,

Total Return on Equity (TRE) (previously

known as Total Accounting Return (TAR))

and ESG for the year ending 31 March 2024.

Personal objectives will continue to apply

for a minority of the award.

4. Long-Term Incentive Plan

We intend to grant awards under the

LTIPinJune 2023 which will be subject

toperformance conditions measured

overathree-year performance period.

Performance targets will continue to be

based on TRE (previously known as TAR),

relative TSR, and carbon reduction. Any

awards which vest will be subject to a

two-year post-vesting holding period.

remaining 50% of the St David’s shopping

centre in Cardi at an implied property

yield of 9.7% demonstrates management

focus on decisive capital allocation,

reinvesting capital back into the business

atattractive returns to generate growth.

The Committee has carefully considered the

performance against the targets, business

outcomes and the wider stakeholder

context and believes that it is appropriate

for the Executive Directors to receive annual

bonuses for 2022/23. The assessment

against the targets resulted in overall bonus

outcomes of 50% of maximum (equating

to75.04% of salary), which is considered

tobe appropriate in the context of the

performance of the business.

Long-Term Incentive Plan

performance

Vesting of the 2020 LTIP in 2023 was

determined by performance against two

equally weighted measures of Total

Property Return (TPR) and Total Shareholder

Return (TSR) relative to FTSE 350 real estate

companies. Performance under the TPR

measure was below threshold while TSR

wasbetween threshold and maximum over

the three years to 31 March 2023. As such,

andafter consideration of the value of the

shares expected to vest, 37.69% of the

2020LTIP awards will vest.

In addition, the 2021 buyout award granted

to Vanessa Simms was determined by

performance measured against the same

targets as the 2021 LTIP award, albeit over

two years to 31 March 2023. Performance

against the Total Accounting Return (TAR)

measure (now called Total Return on Equity

(TRE)) was below threshold, TSR was upper

quartile and ESG (reduction in carbon

emissions) was above maximum over the

two years to 31 March 2023. As such, 60%

of the 2021 buyout award will vest.

Executive Director change

Colette O’Shea left the Board on

30 September 2022 and stepped down

fromher role as Chief Operating Ocer

with eect from 31 March 2023 after a

transitional period.

Landsec Annual Report 2023 097Governance

Remuneration

at a glance

Our at a glance summary sets out clearly

and transparently the total remuneration

paid to our Executive Directors in 2022/23.

Remuneration structure 2022/23 in numbers

•

We will materially dierentiate

reward according to performance.

•

Performance targets will be

relevant, stretching, and aligned

to our business strategy.

•

Rewards will be compatible with

the Group’s risk policies and

systems, with malus and clawback

applied to all forms ofvariable pay.

•

We will provide a balance

betweenattracting, retaining

andmotivating talented people

aswell assupporting equal

opportunity and diversity of talent.

•

Our framework will ensure that

levels of performance-related

payare appropriate to each level

of the organisation.

•

Remuneration outcomes will

beclear and explainable, avoiding

paying more than the Committee

considers necessary.

* EPRA earnings of £376.5m (adjusted to remove a material surrender premium)

used for annual bonus payout purposes.

** Includes promotions and role changes.

Fixed pay



To read more go to page 114

Annual bonus



To read more go to page 115

Long-term incentive



To read more go to page 115

Base salary

Benets

Pension

Landsec Annual Report 2023098 Governance

Performance

Remuneration

across theGroup

Chief Executive

remuneration

£393m

EPRA earnings*

(2022: £355m)

£65m

Total pay bill

(2022: £66m)

£2,657,730

Single gure

(2022: £1,999,930)

Upper

quartile

Relative TSR

(2022: Above median)

15.3%

Change in

average salary

(2022: 8.4%)

37.69%

LTIP vesting

(2022: 0%)

-16.2%

Annual TSR

(2022: 19.1%)

99.3%

Employees received

an annual increase

(2022: 82.6%)

50%

Annual bonus

percentage ofmax

(2022: 90.4%)

53.1p

EPRA EPS

(2022: 48.0p)

94.8%

Employees paid

a bonus

(2022: 88.4%)

32.9%

Change in total

remuneration

(2022: –31.5%)

Remuneration principles – supporting long-term success

and sustainable value

We aim to align the total

remuneration for our

Executive Directors to

ourbusiness strategy

through a combination

ofxed pay, bonus and

long-term incentives,

underpinned by stretching

performance targets.

Summary of CEO and CFO total remuneration (£000) Table 36

Mark Allan

Chief Executive

Vanessa Simms

Chief Financial Ocer

,

,

,



,







,













2022/23 2021/22 2022/23 2021/22

Base salary

   

Benets

   

Pension allowance

   

Annual bonus paid in cash

   

Annual bonus deferred intoshares

   

LTIP

, –  –

Other (LTIP CFO Buyout)

 –  

Total remuneration

, , , ,

Summary of Annual Bonus and Long-Term Incentive Plan outcomes

Weighting Outturn % of weighting achieved

Annual

bonus

EPRA earnings % %

EPRA NTA (Total Return on Equity) % %

ESG % %

Personal % %

Total bonus % %

Long-term

incentive

(CEO)

Three-year relative TSR % .%

Three-year ungeared TPR % %

Total LTIP % .%

Long-term

incentive

(CFO buyout)

Three-year relative TSR % %

TAR % %

ESG % %

Total % %

—

To read more on our strategy, go to pages 14-15 and 17-19

.  LTIP vesting in  (CEO).

.  buyout award vesting in  (CFO).

Landsec Annual Report 2023 099Governance

Annual Report

on Remuneration

The Annual Report on Remuneration describes

how the Directors’ Remuneration Policy has

been applied in the nancial year ended

31 March 2023 and how the policy will operate

in the nancial year ending 31 March 2024.

During the course of 2022/23, the Remuneration

Committee was engaged in a number of key

matters, including:

•

reviewing remuneration levels for employees

and Executive Directors

•

setting and subsequently reviewing the

outcomes for corporate, business unit and

personal targets under the annual bonus

scheme for Executive Directors and Executive

Leadership Team (ELT) members

•

reviewing and determining the outturns

against the performance conditions, and

subsequent vesting outcome, of awards

granted under the Long-Term Incentive Plan

(LTIP) in 2020 and 2021 buyout award

•

reviewing the variable pay arrangements

below Executive Director level

•

determining the annual level of LTIP grants

toExecutive Directors and ELT members

•

monitoring Directors’ compliance with the

Company’s share ownership policy

•

monitoring developments in stakeholder

sentiment on executive pay and corporate

governance

•

overseeing the calculation and publishing

ofthe Group’s gender pay gap report and

voluntary publishing of the Group’s ethnicity

pay gap report

•

reviewing and approving the exit terms

forColette O’Shea.

Unless otherwise stated, narrative and tables

are unaudited.

In this section

Remuneration

outcomes

The context of pay

in Landsec

Directors’ interests

Dilution

Application of

Policy for 2022/23

Remuneration

Committee

meetings

Total Shareholder

Return and CEO pay

Shareholder voting

Colour key

Annual

bonus

Fixed

pay

Long-term

incentive

Landsec Annual Report 2023100 Governance

1. Remuneration outcomes for Directors during the year

In this section, we explain the pay outcomes for Directors in relation to the nancial year ended 31 March 2023. Tables 37 and 38 showthe

payments we have made or expect to make and tables 39 to 47 give more detail on how we have measured the performance outcomes

with respect to the annual bonus and LTIP/buyout awards.

1.1 Directors’ emoluments (Audited)

The basis of disclosure in the table below is on an ‘accruals’ basis. This means that the annual bonus column includes the amount that

willbe awarded in June 2023 in connection with performance achieved in the nancial year ended 31 March 2023.

Single gure of remuneration for each Executive Director (£000)

Table 37

Base

salary

Benets

Pension

allowance

Annual

bonus

paid in

cash

Annual

bonus

deferred

into shares LTIPs Other Total

Total

xed

pay

Total

variable

pay

Executive Directors

Mark Allan /      , – ,  ,

/      – – ,  ,

Vanessa Simms



/      –  ,  

/      –  ,  ,

Former Directors

Colette O’Shea



/     –  – ,  

/      – – ,  

Martin Greenslade /      – –   

. Base salary earned during the year ended  March  (with prior year comparatives).

. The benets consist of a car/travel allowance, private medical insurance, income protection and life assurance premiums.

. The pension amount for Mark Allan, Vanessa Simms and Colette O’Shea was a cash allowance of .% of base salary.

. Further details of the bonus awards are set out in section . below.

. Further details of the  LTIP vesting are set out in section . below.

. Vanessa Simms joined Landsec’s Board as CFO designate on  May , taking up the post of CFO on  June . The ‘Other’ column relates to the estimated vesting value of

the  buyout award granted to Vanessa Simms based on two years of performance to  March  (see section . for further details). The prior year number related to

the acquisition of , shares in the Company following the exercise of options granted under a recruitment Deferred Share Bonus Plan and LTIP award and a replacement

bonus of , relating to Vanessa Simms’ recruitment, as set out in last year’s Annual Report on Remuneration.

. Colette O’Shea left the Board on  September . See section . below.

. Martin Greenslade left the Board on  May .

. In addition to the above, Vanessa Simms and Colette O’Shea participated in the Sharesave at the maximum monthly savings limit ().

Single gure of remuneration for each Non-executive Director (£000)

Table 38

Fees

Benets

Pension

allowance

Annual

bonus LTIPs Total

Total

xed

pay

Total

variable

pay

Non-executive Directors

Cressida Hogg /  – – – –   –

/  – – – –   –

Edward Bonham Carter /  – – – –   –

/  – – – –   –

Nicholas Cadbury /  – – – –   –

/  – – – –   –

Sir Ian Cheshire



/  – – – –   –

Madeleine Cosgrave /  – – – –   –

/  – – – –   –

Christophe Evain



/  – – – –   –

/   – – –   –

Miles Roberts



/  – – – –  

Manjiry Tamhane /  – – – –   –

/  – – – –   –

. Fees paid to Directors during the year ended  March  (with prior year comparatives).

. Sir Ian Cheshire was appointed to the Board on  March .

. Christophe Evain, who is based in France, received national insurance contribution support in /, which was treated as a benet in kind.

. Miles Roberts was appointed to the Board on  September .

Landsec Annual Report 2023 101Governance

Annual Report

on Remuneration continued

1.2 Payments to former directors

As announced on 9 September 2022, following almost 20 years at Landsec, Colette O’Shea ceased to be a director of the Company on

30 September 2022 and stepped down from her role as Chief Operating Ocer with eect from 31 March 2023 after a transitional period.

In respect of her remuneration arrangements, she:

•

received £281,906 in respect of her salary and normal benets between 1 October 2022 and 31 March 2023 after leaving the Board.

Shewill continue to be an employee until the end of her 12-month notice period on 8 September 2023 and will continue to receive her

salary and normal benets during the remainder of her employment

•

was eligible to receive an annual bonus in respect of the 2023 nancial year to reect her time served as Chief Operating Ocer, subject

to the satisfaction of the relevant performance criteria and determined on the normal timetable in line with the shareholder approved

Remuneration Policy

•

will not be eligible to receive an annual bonus in respect of the 2024 nancial year

•

was treated as a good leaver in respect of her outstanding:

— deferred bonus awards, which will continue and vest on the normal vesting dates

— LTIP awards which will vest on their normal vesting dates, subject to the satisfaction of applicable performance conditions and time

pro-rating. A two year post-vesting holding period will apply as normal. To the extent that awards vest, dividend equivalents may be

credited where applicable

— options under the Company’s Sharesave plan, which will be exercisable (to the extent of her savings as at the date of exercise) within

six months after she ceases to be an employee

•

will receive a statutory redundancy payment of £15,417 calculated in accordance with applicable legislation and will be paid in lieu of any

accrued holiday that cannot be taken. She will also receive a contribution of up to £14,500 (excluding VAT) in respect of legal fees and up

to £70,000 (excluding VAT) in respect of outplacement support

•

will comply with the Company’s post-cessation shareholding requirements.

Other than the amounts disclosed above, Colette will not be eligible for any remuneration payments or payments for loss of oce.

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 conrms the targets and their respective outcomes.

Annual bonus performance summary for 2022/23

Table 39

Measure Weighting Description Performance outcome

Threshold Target Maximum Actual

Outturn

(% of targets)

Outturn

(% of max)

EPRA earnings (m) % EPRA earnings targets .m .m .m .m



.% .%

TAR (now called TRE)

(pence per share)

% Total Return on Equity targets .% .% .% -.% % %

ESG % Milestone targets relating to Energy

and Developments (% each)

%

 targets

met

%

 targets

met

%

 targets

met

See tables

 and 

% %

Personal objectives % Individual goals set at the beginning

of the year

% % % See table



% %

Total annual bonus % .%

. Negative discretion was exercised to reduce the value of unbudgeted surrender premium from the EPRA earnings result, as recommended by management and agreed by the

Committee. The EPRA earnings before adjustment were m.

Landsec Annual Report 2023102 Governance

ESG – Energy (10%)

Table 40

Target Detail Committee assessment

Outturn

(% of max)

Energy

reduction

% like-for-like energy reduction

compared with /

Achieved .% energy intensity reduction through various factors

including energy eciency measures and improved energy

management. Excluding impact of occupancy levels, we have

achieved % energy intensity reduction.

Achieved

EPC % relevant portfolio has a valid

EPC rating E or above, compliant

with  MEES regulation

% compliance with MEES regulation achieved. Achieved

ASHP Concept design is completed for

veassets, with at least two assets

(proof of concepts) progressing

withdeveloped and technical

design(stage  and )

Concept design completed for four assets with detailed technical

design progressed for two assets and additional feasibility studies

completed for two further assets.

Achieved

Customer

engagement

Progress customer engagement

programme, engaging total

customers (follow-up with

customers included in the

/ programme and engage

tennew customers)

 customers have been engaged, with  collaborating on

anongoing basis and seven completing their audit processes.

Achieved

SBTi net zero

commitment

Update our science-based target

and net zero commitment in line

with Science Based Targets initiative

Net-Zero Standard

Near term and net zero targets were updated and approved by SBTi

on  February . Our near-term target is to reduce emissions by

% from a / baseline by  and achieve net zero by 

from the same baseline year.

Achieved

Total Five out of ve outcomes achieved %

Based on number of outcomes achieved: Threshold (%): at least three outcomes are achieved/Target (%): at least four outcomes are achieved/Maximum (%):

all ve outcomes are achieved.

ESG – Developments (10%)

Table 41

Target Detail Committee assessment

Outturn

(% of max)

Embodied

carbon

reduction

All new developments not already

on site (design stage) to target

average % lower embodied

carbon than typical buildings

New developments have not met % lower embodied carbon

targets than typical buildings. This has been largely caused by the

limited availability of low carbon steel.

Not

achieved

NABERS UK/

Energy

All new developments to target:

NABERS  stars or above for

oces/kWh/m



energy intensity

for residential

Target considered to be met in respect of NABERS/Energy intensity

performance across all new developments.

Achieved

ASHP/all

electric

All new developments to be all

electric in operation

All of our developments are now being designed as all-electric

asstandard.

Achieved

Refurbishments All large scale refurbishments

toundertake whole life carbon

assessment to enable us to develop

a baseline for an embodied carbon

target for refurbishments

Whole life carbon assessments completed for all large scale

refurbishments and now embedded as standard.

Achieved

BREEAM/WELL

or other

relevant

certication

All new developments in design

stage to target BREEAM outstanding

and/or WELL Core Gold or above for

oces/BREEAM excellent or above

for retail/Home Quality Mark or

equivalent for residential

All new developments met or exceeded their target certications. Achieved

Total Four out of ve outcomes achieved %

Based on number of outcomes achieved: Threshold (%): at least three outcomes are achieved/Target (%): at least four outcomes are achieved/Maximum (%):

all ve outcomes are achieved.

Landsec Annual Report 2023 103Governance

Annual Report

on Remuneration continued

Personal objectives (20%)

Table 42

Target Detail Committee assessment

Business performance

and strategy delivery

Progress

development

pipeline and

maintain portfolio

recycling

programme

(CEO only)

Major disposals were successfully executed (including the disposal of .bn of mature oces).

The London development pipeline was progressed, while preserving optionality and %

ofStDavid’s in Cardi was secured. Combined, this activity accounted for c.% of all

investment activity in the City and c.% of central London overall across the year, resulting

inone of the strongest balance sheets in the sector and the retention of Landsec’s strong

investment grade rating.

Deliver refreshed

strategic plan

in year

(CEO only)

Following eective Board and Senior Leader engagement, the strategy was refreshed

successfully in the context of the current/expected market conditions, our future oce

proposition, a longer-term view of the future of retail, the residential strategy and the

acceleration of growth.

Deliver cost

challenge

(Shared)

New business planning cycle and streamlined organisation design launched, resulting in

areduction to overhead costs despite inationary pressures.

Deliver updated

Green Financing

Framework

(CFO only)

Following the publication of Landsec’s refreshed Green Financing Framework, Landsec launched

its rst Green bond to enhance Landsec’s nancial capacity and exibility and leave it well

placed to continue to deliver against the strategy.

Organisation

and culture

Refresh D&I

strategy with

greater focus

on leadership

(Shared)

While steps were taken to refresh Landsec’s D&I strategy, with greater focus on leadership

accountability and data driven action, there is still progress to be made in respect of delivering

the D&I strategy. As such, this target was considered to be partially met.

Maintain

momentum in

data and digital

modernisation

strategy delivery

(Shared)

The CEO and CFO sponsored the core business systems change programme, ensuring that it

remained on track with important decisions being made in a timely manner.

Accelerate

cyber security

programme

(CFO only)

During /, the CFO championed a detailed review of cyber security, the conclusions of

which led to substantial and rapid improvements.

The personal objectives were considered by the Committee to have been largely met. On assessment, they delivered an outcome of 17%

out of 20% against the CEO’s personal and shared targets and 17% out of 20% against the CFO’s personal and shared targets. These

results (i.e. 85% of maximum against both sets of targets) are consistent with the strong operational performance delivered in 2022/23.

Total Annual bonus achievement

Table 43

Director

EPRA earnings

(30%)

EPRA NTA (Total

Return on Equity)

(30%)

ESG – Energy

(10%)

ESG – Developments

(10%)

Personal

(20%)

Total % of max

(% of salary)

Total

£’k

Mark Allan

.% of max % of max % of max % of max

% of max % (.% of salary) 

Vanessa Simms % of max % (.% of salary) 

Colette O’Shea % of max % (.% of salary) 

Landsec Annual Report 2023104 Governance

1.4 Long-Term Incentive Plan outturns

The table below summarises how we have assessed performance in respect of the 2020 LTIP awards granted on 24 July 2020 (held by Mark

Allan and Colette O’Shea) over the three years to 31 March 2023.

Table 44

Measure Weighting Description Performance outcome

Outturn

(% of max)

Total Shareholder

Return (TSR)



% TSR relative to the FTSE  Real Estate

Index, weighted by market capitalisation,

measured over the three-year

performanceperiod.

Threshold

(%)

Index

Target

(%)

Index

.% p.a.

Maximum

(%)

Index

% p.a.

Actual

Index

.% p.a.

.%

Ungeared Total

Property Return

(TPR)

% The Group’s ungeared TPR relative to

anMSCI benchmark comprising all

March-valued properties, measured

overathree-year period.

Threshold

(%)

Benchmark

Target

(%)

Benchmark

.% p.a.

Maximum

(%)

Benchmark

.% p.a.

Actual

Below

benchmark

%

Total % % % % .%

. Index excludes Landsec.

. The outturn is adjusted to take account of the performance of trading properties.

. Excluding Landsec.

The value of these awards shown in the single gure table for Mark Allan and Colette O’Shea are as follows:

Table 45

Shares granted

Number of shares

thatwilllapse

Number of shares

thatwill vest

Estimated value

of shares vesting

Impact of share price

at vesting

Mark Allan , , , ,k k

Colette O’Shea , , , k k

. LTIP award granted on  July .

. Based on a  month average share price to  March  of .. Excludes the value of dividend equivalents which only accrue post vesting during the two year holding period.

. The difference between the value of the shares under awards vesting (. per share) and the value of the shares at grant (. per share).

The Committee reviewed the estimated LTIP vesting values set out above (this is the rst LTIP vesting since 2017) and concluded that the

vesting values do not represent unjustied windfall gains, noting Landsec’s:

•

strong operational performance over the three years to 31 March 2023

•

proactive execution of the strategy (which includes a number of material asset disposals), notwithstanding the challenging market conditions

•

balance sheet strength (one of the strongest in the sector)

•

strong relative share price performance over the three years to 31 March 2023.

In addition, Vanessa Simms was granted a buyout award on 18 May 2021 in respect of LTIP awards forfeited from her previous employer.

Thetable below summarises how we have assessed performance in respect of this 2021 buyout award over the two years to 31 March 2023.

Table 46

Measure Weighting Description Performance outcome

Outturn

(% of max)

Total Shareholder

Return (TSR)

% TSR relative to the constituents of the FTSE  Real

EstateIndex, measured over a two-year period, from

 April 

Threshold

(%)

Median

Maximum

(%)

Upper

Quartile

Actual

Upper

Quartile

(ranking /

as at year

end)

%

Total Accounting

Return (TAR),

nowcalled TRE

% Growth in EPRA NTA per share over the performance

period as adjusted for dividends in line with overall

ve-year strategic plan

Threshold

(%)

% p.a.

Maximum

(%)

% p.a.

Actual

Below

threshold

%

ESG



% Reduction of carbon emissions over the

performanceperiod

Threshold

(%)

.%

Maximum

(%)

.%

Actual

Above

maximum

(%

reduction to

year end)

%

Total % %

. Original -year targets of % to % pro-rated to reflect -year performance. Carbon emissions were reduced by % from a / baseline. In assessing the performance

target, benefits from asset sales and lower utilisation have been neutralised.

Landsec Annual Report 2023 105Gove rnance

Annual Report

on Remuneration continued

The value of these awards shown in the single gure table for Vanessa Simms is as follows:

Table 47

Shares granted

Number of shares

that willlapse

Number of shares

thatwill vest

Estimated value

of shares vesting

Impact of share

price at vesting

Vanessa Simms , , , k k

. Buyout award granted on  May .

. In addition, dividend equivalents accrue between the grant date and the end of the two-year holding period or date of exercise if earlier.

. The difference between the value of the shares under awards vesting (.) and the value of the shares at the announcement date as used to determine the buyout value (.).

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 their required shareholding, are set out in the table below.

Executive Directors are expected to meet the minimum shareholding requirements within ve 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.

Non-executive Directors are expected to meet the minimum shareholding requirements within three years of appointment to the Board.

The shareholding requirements are considered met once the Non-executive Director has obtained the required holding value and, provided

those shares are retained, no adjustment is required due to movements in the share price.

Directors’ shares

Table 48

Name

Salary/

base fee at

31 March 2023

(£)

Minimum

shareholding

requirements

(% of salary/

base fee)

Required

holding

value

(£)

Holding

(ordinary

shares)

1 April 2022

Holding

(ordinary

shares)

31 March 2023

Deferred

bonus shares

under holding

period

Value of

holding

(£)



Met

requirement

or building in

line with

policy

Mark Allan , % ,, , , , ,, Building

Vanessa Simms , % ,, , , , , Building

Colette O’Shea , % , , , , , Building

Cressida Hogg , % , , , – , Met



Edward Bonham Carter , % , , , – , Met



Nicholas Cadbury , % , , , – , Met



Sir Ian Cheshire , % , – – – – Building

Madeleine Cosgrave , % , , , – , Met



Christophe Evain , % , , , – , Met



Miles Roberts , % , – – – – Building

Manjiry Tamhane , % , , , – , Building

. Using the closing share price of .p on  March  and including any deferred bonus shares, net of the notional tax and employee NIC.

. Colette O’Shea retired from the Board on  September  and is required to hold shares equivalent to % of the value of her salary for two years post-cessation.

. Sir Ian Cheshire was appointed to the Board on  March .

. Miles Roberts was appointed to the Board on  September .

. Once the minimum shareholding requirement has been met, the number of shares is frozen with subsequent share price movements disregarded.

Landsec Annual Report 2023106 Governance

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 49

Award date

Market price

at award

date

(p)

Options

awarded

Options

vested

Market price

at date of

vesting

(p) Vesting date

Mark Allan LTIP shares //



. ,  n/a //

//



. , //

// . , //

// . , //

Deferred shares // . , //

// . , //

// . , //

Vanessa Simms Buyout shares // . , //

LTIP shares // . , //

// . , //

Deferred shares // . , , .p //

// . , //

// . , //

// . , //

Colette O’Shea LTIP shares // . ,  n/a //

//



. , //

// . , //

// . , //

Deferred shares // . , //

// . , //

// . , //

. See section . in respect of the vesting of the  LTIP awards over three-year performance to  March . No time pro-rating was applied to Colette O’Shea’s  LTIP

award given that the performance period was completed before cessation.

. See section . in respect of the vesting of Vanessa Simms’ buyout award in respect of two-year performance to  March .

. As set out in last year’s Directors’ Remuneration Report, awards lapsed in full as a result of below threshold performance against the targets measured over the three years

to March .

. Subject to performance conditions and time pro-rating. The maximum number of shares which can vest is ,.

. Subject to performance conditions and time pro-rating. The maximum number of shares which can vest is ,.

. Colette O’Shea retired from the Board on  September  and will remain an employee until  September .

2.3 Share awards granted in the year ended 31 March 2023

Awards were granted under the LTIP in June 2022, subject to three performance conditions measured over a three-year performance

period, as set out below. No awards will vest if the threshold performance targets are not met. In the performance period from 1 April 2022

to31 March 2025, the performance conditions are 40% TSR relative to the FTSE 350 Real Estate Super Sector, 40% Total Accounting

Returnperformance based on the percentage change in EPRA Net Tangible Assets per share over the performance period and 20%

ESGperformance, measuring the reduction in carbon emissions. Full details of the performance targets are set out on page 121 of the

2022Annual Report. Awards may normally be exercised between 24 June 2025 and 23 June 2032 and a two-year post-vesting holding

period applies.

Table 50

Number of awards Share price (p)

Face value

Mark Allan , . ,,

Vanessa Simms , . ,,

Colette O’Shea , . ,,

. Face value of awards has been determined based on the closing share price on the trading day immediately prior to the date of grant.

Landsec Annual Report 2023 107Governance

Annual Report

on Remuneration continued

Awards were granted under the Deferred Share Bonus Plan in June 2022. Awards may normally be exercised between 24 June 2023 and

23 June 2027.

Table 51

Number of awards Vesting date Number of awards Vesting date Share price (p)

Total face value

Mark Allan , // , // . ,

Vanessa Simms , // , // . ,

Colette O’Shea , // , // . ,

. Face value of awards has been determined based on the closing share price on the trading day immediately prior to the date of grant.

. Colette O’Shea retired from the Board on  September . Her award will continue to vest on the normal vesting date.

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). The Sharesave is open to all

qualifying employees (including Executive Directors) and under HMRC rules does not include performance conditions.

Outstanding grants and those which were exercised during the year

Table 52

Number of

options at

1 April 2022

Exercise price

per share

(p)

Number of

options

granted in year

to 31 March

2023

Number

options

exercised/

lapsed



Market price

at exercise

(p)

Number of

options at

31 March 2023 Exercisable dates

Colette O’Shea ,  – – – , /-/

,  – – – , /-/

Total , – – – ,

Vanessa Simms ,  – – – , /-/

Total ,  - - - ,

. Sharesave awards may be exercised within six months of cessation for awards held by Colette O’Shea.

. 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 %.

. Colette O’Shea retired from the Board on  September .

2.5 External appointments for Executive Directors

Executive Directors are permitted to hold one external directorship subject to prior approval by the Board and are permitted to retain any

fees paid. Vanessa Simms holds the positions of Non-executive Director and Audit Committee Chair of Drax Group plc and received fees

of£70,382 in respect of the 2022/23 nancial year.

2.6 Directors’ Service Contracts and Letters of Appointment

Dates of appointment for Directors

Table 53

Name Date of appointment

Date of contract/Letter of

Appointment

Executive Directors

Mark Allan  April   November 

Vanessa Simms  May   October 

Non-executive Directors

Cressida Hogg  July   May 

Edward Bonham Carter  January   May 

Nicholas Cadbury  January   January 

Sir Ian Cheshire  March   January 

Madeleine Cosgrave  January   November 

Christophe Evain  April   March 

Miles Roberts  September   August 

Manjiry Tamhane  March   January 

Landsec Annual Report 2023108 Governance

3. Application of Policy for 2023/24

3.1 Executive Directors’ base salaries

Executive Directors

Table 54

Name

Current salary

(£000)

New salary



(£000)

Percentage

increase

Mark Allan   

Vanessa Simms   

. From  June .

From 1 June 2023, Executive Director salaries will increase by 4%. The payrise across the wider workforce was 6.75% (5% of which was

accelerated and paid from 1 January 2023 to assist employees with the cost-of-living crisis).

3.2 Non-executive Directors’ fees

The fees for Non-executive Directors and Chairman for 2023/24 are presented below. Base fees for Non-executive Directors will increase

from 1 June 2023 by 3%. In line with the Committee’s Terms of Reference, no individual was involved in the decisions relating to their own

remuneration.

Non-executive Directors’ fees

Table 55

Current

Base fee

(£000)

New

Base fee



(£000)

Percentage

increase

Chairman   %

Non-executive Director   %

Additional fees

Audit Committee Chairman   %

Remuneration Committee Chairman   %

Senior Independent Director   %

. From  June .

3.3 Performance targets for the coming year

Performance metrics and weightings in respect of the annual bonus, which will continue to be capped at 150% of salary, are set out below.

To reect the importance of delivering growth in like-for-like earnings in line with Landsec’s strategic aims notwithstanding the challenging

market conditions, the EPRA earnings measure will be split equally between the existing EPRA earnings measured against budget and a

like-for-like EPRA earnings growth measure in respect of the year ending 31 March 2024. Challenging sliding scale targets will operate and

the Remuneration Committee will retain discretion to ensure any payouts against the targets reect 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 2023/24: Performance criteria

Table 56

Measure Weighting Description

EPRA earnings % EPRA earnings targets – split / between Actual and Like-for-Like performance.

TRE (previously

calledTAR)

% Delivery of EPRA NTA targets (adjusted for dividends) through pro-active asset management.

ESG % A milestones approach as per the approach adopted in / based on energy eciency and embodied

carbon reduction.

Personal objectives % A mix of individual goals set at the beginning of the year.

Total annual bonus %

LTIP 2023-2026: Performance criteria

Table 57

Measure Weighting Description Performance range



TSR % TSR relative to the constituents of the FTSE  Real Estate

Index, measured over a three-year period, from  April .

Threshold (%)

Median

Maximum (%)

Upper quartile

TRE (previously

calledTAR)

% Growth in EPRA NTA per share over the three-year

performanceperiod as adjusted for dividends.

Threshold (%)

% p.a.

Maximum (%)

% p.a.

ESG % Reduction of carbon emissions over the three-year

performanceperiod.

Threshold (%)

.%

Maximum (%)

.%

Total LTIP %

. Vesting takes place on a straight-line basis between threshold and maximum values.

Landsec Annual Report 2023 109Governance

Annual Report

on Remuneration continued

The approach for the 2023 LTIP awards reects 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. Relative TSR is based on an unweighted, median to upper quartile

vesting schedule and TRE (previously called TAR) targets deliver a close alignment to strategy and a clear line of sight for management.

The widening of the TRE targets from the prior year awards reects elevated volatility levels in the market. The 2% to 10% p.a. TRE target

range compares with a 4% to 10% p.a. range set for the 2021 LTIPs and a 6% to 11% p.a. range set for the 2022 LTIPs. However, reecting

the lower threshold for the 2023 LTIP award, the level of vesting for this part of the award has been reduced from the 20% normally

operated to 0%, with a pro-rata vesting between threshold and maximum.

The 2023 LTIP award will be set at up to 300% of salary for the CEO and CFO.

4. Total Shareholder Return and Chief Executive pay

The following graphs illustrate the performance of the Company measured by TSR (share price growth plus dividends paid) against

a‘broad equity market index’. In addition to the ten-year period required by the disclosure regulations, a ve-year period has also been

presented to demonstrate Landsec’s performance more recently. 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 graphs. An additional line to illustrate the Company’s

performance compared with the FTSE 100 Index over the previous ve and ten years is also included.

This graph shows the value, by 31 March 2023, of £100 invested in Landsec on 31 March 2018, compared with the value of £100 invested

in the FTSE 100 and FTSE 350 Real Estate Indices on the same date.

Total Shareholder Return

Chart 58

Land Securities Group PLC FTSE 100 FTSE 350 Real Estate

100

125

150

Mar-18 Mar-19 Mar-21 Mar-23Mar-22Mar-20

Value (£) (rebased)

107.7

65.3

83.1

99.0

83.0

102.9

99.7

85.2

87.9

100.9

107.1

121.9

86.1

131.1

124.4

Landsec Annual Report 2023110 Governance

This graph shows the value, by 31 March 2023, of £100 invested in Landsec on 31 March 2013, compared with the value of £100 invested

inthe FTSE 100 and FTSE 350 Real Estate Indices on the same date.

Total Shareholder Return

Chart 59

Land Securities Group PLC FTSE 100 FTSE 350 Real Estate

100

150

200

Mar-13 Mar-14 Mar-15 Mar-16 Mar-17 Mar-18 Mar-19 Mar-21 Mar-23Mar-22Mar-20

Value (£) (rebased)

106.7

113.4

107. 5

132.5

132.8

143.0

116.7

174.1

142.3

165.2

127.2

160.6

145.1

144.6

133.4

13 7. 2

87.1

110.7

110.9

132.0

146.5

127.4

135.7

156.5

146.1

157.5

157.1

134.2

158.9

192.0

The following table shows remuneration for the Chief Executive over a period of ten years.

Chief Executive remuneration over ten years

Table 60

Year Chief Executive

Single gure

of total

remuneration

(£000)

Annual bonus

payment

(% of maximum)

Long-term

incentive vesting

(% of maximum)

 Mark Allan , . .

 Mark Allan , . .

 Mark Allan ,



. n/a

 Robert Noel , . .

 Robert Noel , . .

 Robert Noel , . .

 Robert Noel , . .

 Robert Noel , . .

 Robert Noel , . .

 Robert Noel , . .

. Includes ,, 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, performance-related pay for our 37 most senior employees (excluding the Executive Directors) ranged from

27%to 72% of salary (2022: 33% to 87%), equating to 45% to 60% of the maximum potential. The average bonus was 33.9% of salary

(2022: 51.4%), equating to 49% of the maximum potential.

b. All other employees

Executive Directors’ base salaries were increased by 3% in 2022, which was below the workforce average increase of 5%. From 1 June 2023,

Executive Director salaries will increase by 4%. The pay rise across the wider workforce was 6.75% (5% of which was accelerated and paid

from 1 January 2023 to assist employees with the cost of living crisis).

In addition, in autumn 2022, we made a one-o payment of £1,000 to employees earning below £40,000.

As at 31 March 2023, the ratio of the base salary of the Chief Executive to the average base salary across the Group (excluding Executive

Directors) was 10:1 (£82,948: £824,000).

Landsec Annual Report 2023 111Governance

Annual Report

on Remuneration continued

c. Percentage change in remuneration between Directors and employees

The table below shows the year on year percentage change in salary, benets and annual bonus earned for all current Directors compared

to all employees. As noted above, 5% of the employee pay rise for 2023/24 was accelerated and paid in 2022/23, but this acceleration did

not apply to Directors or members of the Executive Leadership Team. This will impact comparative numbers in both years.

Table 61

2020/21 2021/22 2022/23

Salary/fee

change

(%)

Benets

change

(%)

Bonus

change

(%)

Salary/fee

change

(%)

Benets

change

(%)

Bonus

change

(%)

Salary/fee

change

(%)

Benets

change

(%)

Bonus

change

(%)

Executive Directors

Mark Allan n/a n/a n/a % -% % % -% -%

Vanessa Simms n/a n/a n/a n/a n/a n/a % % -%

Colette O’Shea % -% -% % % % -% -% -%

Non-executive Directors

Cressida Hogg -% n/a n/a % n/a n/a % n/a n/a

Edward Bonham Carter -% n/a n/a % n/a n/a % n/a n/a

Nicholas Cadbury -% n/a n/a % n/a n/a % n/a n/a

Sir Ian Cheshire



n/a n/a n/a

Madeleine Cosgrave -% n/a n/a % n/a n/a n/a n/a n/a

Christophe Evain % n/a n/a % % n/a % n/a n/a

Miles Roberts



% n/a n/a

Manjiry Tamhane n/a n/a n/a n/a n/a n/a % n/a n/a

Average employee

% % -% -% % % % -% -

. Vanessa Simms joined the Board during /.

. Colette O’Shea stepped down from the Board on  September  therefore comparing part-year (FY/) with full year prior.

. Sir Ian Cheshire was appointed on  March .

. Miles Roberts was appointed on  September .

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 benets for all employees, and is the same methodology that is used to calculate the CEO’s single gure

of remuneration table on page 101. Figures are calculated by reference to 31 March 2023 using actual pay data from April 2022 to March 2023.

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 partial vesting of the 2020 LTIP (the 2019 LTIP did not vest last year) more than osetting the

reduced bonus award for the year ended 31 March 2023. Given the alignment of incentive arrangements 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 62

Year Method 25th percentile pay ratio Median pay ratio 75th percentile pay ratio

/ Option A : : :

/ Option A : : :

/ Option A : : :

/ Option A : : :

CEO pay P25 pay P50 pay P75 pay

Salary , , , ,

Total pay ,, , , ,

Landsec Annual Report 2023112 Governance

e. Total pay and benets

Table 63

Lower quartile (25th percentile) Median Upper quartile (75th percentile)

Year Method

Total Pay

andBenets

Total

Salary

Total Pay

andBenets

Total

Salary

Total Pay

andBenets

Total

Salary

/ A , , , , , ,

/ A , , , , , ,

/ A , , , , , ,

/ A , , , , , ,

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 64

March 2023

(£m)

March 2022

(£m)

change

Spend on pay



  -.

Dividend paid   .

. Including base salaries for all employees, bonus and share-based payments.

. Dividend paid represents dividends declared for the year. See note  to the nancial 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 satised through the funding of an Employee Benet Trust (administered by an external trustee) which acquires existing Land

Securities Group PLC shares in the market. The Employee Benet Trust held 781,456 ordinary shares (2022: 888,400) and 3,049,943 treasury

shares (2022: 3,049,943) at 31 March 2023.

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 satised by the allotment of newly issued shares. At 31 March 2023, the total number

of shares which could be allotted under this Scheme was 565,439 shares (2022: 635,473), which represents less than 0.08% (2022: 0.09%)

of the issued share capital of the Company.

7. Remuneration Committee meetings

The Committee met for three scheduled meetings and one unscheduled meeting over the course of the year. All members attended all

the scheduled meetings with the exception of one meeting which Christophe Evain could not attend owing to a family bereavement. The

Committee meetings were normally also attended by the Chief Executive, the Chief People Ocer and Company Secretary who acted

as the Committee’s Secretary.

The Committee received advice on remuneration and ancillary share plan matters from FIT Remuneration Consultants LLP. 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 satised that the advice it receives is independent and objective. Aside from some support in benchmarking remuneration

for roles below the Board, FIT has no other connection with the Group. For the nancial year under review, FIT received fees of £75,676

(FY2022: £66,610) in connection with advice provided to the Committee.

8. Shareholder voting

Table 65

% of votes

For

% of votes

Against

Number of votes

withheld

Directors’ Remuneration Policy ( AGM) . . ,

Annual Report on Remuneration ( AGM) . . ,

. A vote withheld is not a vote in law.

The Committee engaged with a single major shareholder in relation to the 2022 vote against on the Annual Report on Remuneration. It has

been agreed that feedback received from that shareholder would be taken into consideration during the Remuneration Policy review in 2023/24.

The Directors’ Remuneration Report was approved by the Board on 15 May 2023 and signed on its behalf by:

Christophe Evain

Chairman, Remuneration

Landsec Annual Report 2023 113Governance

A summary of our Directors’ Remuneration Policy is set out below. The policy, which was approved by shareholders at the 2021 AGM, will

bereviewed during FY2024 in advance of seeking shareholder approval for a new policy at the 2024 AGM. The full policy can be found in

the2021 Annual Report.

1. Executive Directors

Base salary

Purpose and link

tostrategy

•

To aid the recruitment, retention and motivation of high-performing Executive Directors

•

To reect the value of their experience, skills and knowledge, and importance to the business

Operation Normally reviewed annually, with eect from 1 June, and reects:

•

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 specic 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

Benets

Purpose and link

tostrategy

•

To provide protection and market competitive benets to aid recruitment and retention of high-performing

Executive Directors

Operation Typical benets 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 benets 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 benets

Operation

•

Participation into a dened 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

Directors’ Remuneration

Policy Summary

Landsec Annual Report 2023114 Governance

Annual bonus

Purpose and link

tostrategy

•

Incentivise Executive Directors and senior management to achieve specic, predetermined goals during a one-year period, or less

•

Reward nancial 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 nancial 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 deferred into shares for one

year. Any amounts in excess of 100% of salary are 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 Annual Report on Remuneration

that follows such exercise of discretion

Opportunity

•

150% of salary

Performance measures

•

The performance measures applied may be nancial, non-nancial, 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 nancial 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 signicant 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 the three-year vesting period expiry

•

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 nancial, non-nancial, 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 nancial performance as well as one or more measures

torecognise the Company’s broader strategic ESG commitment

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.

Landsec Annual Report 2023 115Governance

Directors’ Remuneration

Policy Summary continued

2. 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 reect 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 reect 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 reect 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 specic

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 reect relevant benchmark data for Non-executive Directors in companies of a similar size and complexity, and the time

commitment required

Other incentives and benets

Operation

•

Non-executive Directors do not receive any other remuneration or benets beyond the fees noted above

•

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

Opportunity

•

n/a

Landsec Annual Report 2023116 Governance

The Directors present their report for the

year ended 31 March 2023.

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 66

Pages

Likely future developments in

thebusiness

-

Employee engagement -

Going concern and viability

statement

-

Governance -

Capitalised interest 

Financial instruments 

Credit, market and liquidity risks -

Related party transactions -

Energy and carbon reporting -

Workforce engagement 

Stakeholders 

Section  Statement -

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 comtofioperate as the holding company of

theGroupthefiGroup.

Dividends

The results for the year are set out in the nancial statements on pages 129-186.

The Company has paid three interim dividends to shareholders for the year under review.

The rst interim dividend of 8.6 pence was paid to shareholders in October 2022, a second

interim dividend of 9 pence was paid to shareholders in January 2023; and third interim

dividend of 9 pence per share was paid to shareholders in April 2023. A nal dividend of

12 pence per share is being put to shareholders for approval at the AGM in July.

Table 67

1st Interim

2022/23

2nd Interim

2022/23

3rd Interim

2022/23

Final 2022/23

(proposed)

Property Income

Distribution (PID)/

Non-PID

. pence (PID)  pence (PID)  pence (PID)  pence (PID)

Record date  August   November   February   June 

Payment date  October   January   April   July 

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 41 to the Financial Statements as

events occurring after the reporting period.

Since 31 March 2023, the Group sold

or exchanged contracts to sell certain

interests in trading properties acquired

as part of U+I Group PLC in the previous

nancial year. No other signicant events

occurred after the reporting period but

before the nancial statements were

authorised for issue. See note 41.

Directors

The names and biographical details of

the current Directors and the Board

Committees of which they are members

are set out on pages 65-68.

All the Directors proposed for election and

re-election held oce throughout the year.

The Service Agreements of the Executive

Directors and the Letters of Appointment of

the Non-executive Directors are available

for inspection at Landsec’s registered oce.

A summary of these documents is also

included in the Directors’ Remuneration

Policy on pages 114-116.

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

ll 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 oce 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 oce

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.

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.

Directors’ Report

Landsec Annual Report 2023 117Governance

Directors’ Report

continued

entitlements have been waived for the

shares held by Treasury and the Employee

Benet Trust. This transfer has not aected

total number of voting rights. No shares

were bought back during the year. Further

details relating to share capital, including

movements during the year, are set out

innote 36 to the nancial statements.

At the Company’s AGM held on 7 July 2022,

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 2023 AGM and a renewal of that

authority will be sought.

The Company received no other DTR

notications by way of change to the

information in the substantial shareholders

table during the period from 1 April to

15 May 2023, 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 benet trust

Equiniti Trust (Jersey) Limited continues

astrustee (Trustee) of Landsec’s Employee

Benet Trust (EBT). The EBT is used to

purchase Land Securities Group PLC

ordinary shares in the market from time to

time for the benet 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 (2022: nil).

On3 June 2021, 3,049,943 Treasury shares

were transferred to the EBT. The EBT released

106,944 shares during the year to satisfy

vested share plan awards. At 31 March 2023,

the EBT held 781,456 ordinary shares

purchased on the market and 3,049,943

ordinary shares previously held in treasury

in Land Securities Group PLC.

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 35-37 to the nancial

statements.

Substantial shareholders

As at 31 March 2023, the Company had been notied 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 68

Shareholder name

Number of

ordinary shares

Percentage of total voting rights

attaching to issued share capital

BlackRock, Inc. ,, .

Government of Norway ,, .

Schroders Plc ,, .

The Vanguard Group, Inc. ,, .

State Street Corporation ,, .

Legal & General Group ,, .

Jupiter Investment Management Holdings ,, .

. Total number of voting rights attaching to the issued share capital of the Company on  March  was

,,.

Shareholders’ authority to empower the

Directors to make market purchases of up

to 10% of its 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

2023 did any Director hold a material

interest, directly or indirectly, in any

contract of signicance 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 oce. Landsec has

appropriate Directors’ & Ocers’ 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 10⁄p each ranking pari

passu. No other securities have been issued

by the Company. At 31 March 2023, there

were 751,381,219 ordinary shares in issue

andfully paid. To satisfy future awards

under the Company’s shareholder approved

employee share plans, on 3 June 2021, of

the 9,839,179 existing shares held by the

Company in Treasury, 3,049,943 were

transferred to the Company’s Employee

Benet Trust, leaving, 6,789,236 shares held

in Treasury. The voting rights and dividend

Landsec Annual Report 2023118 Governance

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 conrm the reappointment

of Ernst & Young LLP as auditor of the

Company will be proposed at the 2023

AGM. The reappointment has been

recommended to the Board by the Audit

Committee and EY has indicated its

willingness to remain in oce.

2023 Annual General Meeting

This year’s AGM is scheduled to be held

at 10.00 am on Thursday, 6 July 2023

at80 Victoria Street, London SW1E 5JL.

A separate circular, comprising a letter

fromthe Chairman, 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 15 May 2023.

By Order of the Board.

Marina Thomas

Company Secretary

Land Securities Group PLC

Company number 4369054

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,

specically to conrm that workers are

notenslaved or tracked. Landsec’s latest

Modern Slavery Statement was approved

bythe Board on 8 September 2022 and

posted on our website the same day.

Landsec is an equal opportunities employer

and our range of employment policies and

guidelines reects 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 oer

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 aorded

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 34-39.

Political donations

The Company did not make any political

donations or expenditure in the year that

require disclosure (2022: nil).

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 attaching 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 oer

ismade to all shareholders to acquire their

shares in Landsec, the Trustee will not be

obliged to accept or reject the oer 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 oer.

Subject to the above, the Trustee may

takesuch action with respect to an oer

asit thinks t.

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 2023 AGM. These documents

are available on Landsec’s website at:

landsec.com/agm.

Change of control

There are a number of agreements that

take eect, alter or terminate upon a

change of control of the Company

following a takeover. None of these are

considered signicant. The Company’s

share plans contain provisions that take

eect 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 oce

or employment or otherwise that occurs

specically because of a takeover.

Landsec Annual Report 2023 119Governance

The Directors are responsible for preparing

the Annual Report and the nancial

statements in accordance with applicable

law and regulations.

Company law requires the Directors to

prepare nancial statements for each

nancial year. Under that law the Directors

have prepared the Group and the Company

nancial 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 nancial

statements are required to be prepared in

accordance with UK adopted international

accounting standards (IFRSs and IFRICs).

Directors must not approve the nancial

statements unless they are satised that

they give a true and fair view of the state

ofaairs of the Group and the Company

and of the prot and loss of the Group and

the Company for that period.

In preparing these nancial 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 nancial

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nancial statements;

•

in respect of the Company nancial

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 nancial statements;

•

provide additional disclosures when

compliance with the specic

requirements of UK adopted international

accounting standards is insucient to

enable users to understand the impact of

particular transactions, other events and

conditions on the Group’s and Company’s

nancial position and performance; and

•

prepare the Group’s and Company’s

nancial statements on a going concern

basis, unless it is inappropriate to do so.

The Directors are responsible for keeping

adequate accounting records that are

sucient to show and explain the Group’s

and Company’s transactions and disclose

with reasonable accuracy at any time the

nancial 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 nancial 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, conrm to the

bestof their knowledge:

•

the Group nancial 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, nancial position, performance

and cash ows 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 conrm 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 nancial 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 dierent legal

requirements. Legislation in the United

Kingdom governing the preparation and

dissemination of nancial statements may

dier from legislation in other jurisdictions.

The Directors of Land Securities Group PLC

as at the date of this announcement are

asset out below:

•

Cressida Hogg, Chairman, retiring from

the Board on 16 May 2023*

•

Sir Ian Cheshire, Chair Designate, assuming

the role of Chair on 16 May 2023*

•

Mark Allan, Chief Executive

•

Vanessa Simms, Chief Financial Ocer

•

Edward Bonham Carter,

SeniorIndependent Director*

•

Nicholas Cadbury*

•

Madeleine Cosgrave*

•

Christophe Evain*

•

Manjiry Tamhane*

•

Miles Roberts*

*Non-executive Directors

The Statement of Directors’ Responsibilities

was approved by the Board of Directors on

15 May 2023 and is signed on its behalf by:

Mark Allan

Chief Executive

Vanessa Simms

Chief Financial Ocer

Statement of Directors’ Responsibilities

Landsec Annual Report 2023120 Financial statements

Independent Auditor’s Report

to the members of Land Securities Group PLC

Opinion

In our opinion:

•

Land Securities Group PLC’s Group nancial statements and Parent Company nancial statements (the “nancial statements”)

give atrue and fair view of the state of the Group’s and of the Parent Company’s aairs as at 31 March 2023 and of the Group’s loss

for theyear then ended;

•

the Group nancial statements have been properly prepared in accordance with UK adopted international accounting standards;

•

the Parent Company nancial 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 nancial statements have been prepared in accordance with the provisions of the Companies Act 2006.

We have audited the nancial statements of Land Securities Group PLC (the ‘Parent Company’) and its subsidiaries (the ‘Group’) for

theyear ended 31 March 2023 which comprise:

Group Parent Company

Consolidated balance sheet as at  March  Balance sheet as at  March 

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 ows for the year then ended

Consolidated statement of changes in equity for the year then ended Related notes  to  to the nancial statements including

asummary of signicant accounting policies

Consolidated statement of cash ows for the year then ended

Related notes  to  to the nancial statements, including a summary

ofsignicant accounting policies

The nancial reporting framework that has been applied in their preparation is applicable law and UK adopted international accounting

standards and as regards the Parent Company nancial 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 nancial statements section of our report.

We believe that the audit evidence we have obtained is sucient 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 nancial

statements in the UK, including the FRC’s Ethical Standard as applied to listed public interest entities, and we have fullled 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 nancial statements, we have concluded that the Directors’ use of the going concern basis of accounting in the preparation

of the nancial 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.

•

conrming 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 end of September 2024 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 modelled scenarios, which included challenging the key assumptions used by management by comparing to corroborative

evidence and searching out independent contradictory evidence. We assessed management’s consideration of downside sensitivity analysis

taking into account current events and market conditions. We have also challenged the impact of the historic impact on events such as

covid-19 on the performance of the Group and the valuation of investment properties. We also applied further sensitivities on income and

expense cash ows and forecast valuation movements 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.

Landsec Annual Report 2023 121Financial statements

Independent Auditor’s Report

continued

•

checking the integrity of the models developed by management for the base case cash ow and liquidity forecasts and covenant

calculations covering the going concern review period to September 2024 and the additional downside scenarios.

•

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 prole of the Group’s borrowings, the impact of the Security Group structure (as dened

in the Glossary on page 215) and the tiered operating covenant regime.

•

performed 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. We performed reverse stress testing on key assumptions and considered

the likelihood of outcomes including controllable mitigating actions over and above the scenarios modelled.

•

further challenging the cash ow forecasts with reference to historical trends and assessing the outcome of management’s previous

forecasts.

•

reviewing the disclosures in the nancial statements relating to going concern with a view to conrming 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 2024.

Based on the work we have performed, we have not identied any material uncertainties relating to events or conditions that, individually

or collectively, may cast signicant doubt on the Group and Parent Company’s ability to continue as a going concern for a period to

30 September 2024.

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 nancial 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 identied the entire Group as one component and perform full procedures across the entire Group. The Group audit team

also performed audit procedures on joint venture balances included within the Group nancial statements.

Key audit

matters

•

The valuation of property, including investment properties and investment properties held in joint ventures.

•

Revenue recognition, including the timing of revenue recognition and the treatment of lease incentives.

Materiality

•

Overall Group materiality of £99m which represents 0.9% of total assets in the Group balance sheet at 31 March 2023. Overall

materiality is applied to account balances related to investment properties, trading properties (either wholly owned or held within

joint ventures) and related loans and borrowings.

•

Specic materiality of £19m, which represents 5% of EPRA Earnings before tax. Specic materiality is applied to account balances

not related to any of the following balances; investment properties, trading properties (either wholly owned or held within joint

ventures) and loans and borrowing.

•

Parent Company materiality of £56m, 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 2023122 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

theGroup. Taken together, this enables us to form an opinion on the consolidated nancial statements. We take into account size, risk

prole, the organisation of the Group and eectiveness 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.

Changes from the prior year

In the prior year, U and I Group Plc (U+I) was identied as a separate component for the purpose of scoping the audit and designated

a specic scope. U+I has subsequently been integrated within the Group during the current nancial year and has not been identied

as a separate component for the purpose of our audit this year.

Climate change

Stakeholders are increasingly interested in how climate change will impact Land Securities Group PLC. The Group has determined that

themost signicant future impacts from climate change on their operations will be from failure to meet their 2030 carbon reduction

target leading to regulatory, reputational and commercial impact and failure to mitigate physical impact on Landsec assets. These are

explained in the required Task Force for Climate related Financial Disclosures and on pages 56 to 59 in the principal risks and uncertainties.

They have also explained their climate commitments on pages 40 to 46. All of these disclosures form part of the “Other information,”

rather than the audited nancial statements. Our procedures on these unaudited disclosures therefore consisted solely of considering

whether they are materially inconsistent with the nancial 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 nancial statements.

The Group has explained in the basis of preparation note within the nancial statements how they have reected the impact of climate

change in their nancial statements including how this aligns with their commitment to achieve net zero emissions by 2030. Signicant

judgements and estimates relating to climate change are included in note 2.

Our audit eort in considering the impact of climate change on the nancial statements was focused on evaluating management’s

assessment of the impact of climate risk, physical and transition, their climate commitments, the eects of material climate risks

disclosed on pages 56 to 59 and the signicant judgements and estimates disclosed in note 2 and whether these have been appropriately

reected in the valuation of the investment properties, investment properties held in joint ventures and trading properties or have any

other material impact on the nancial 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 nancial 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 we have not identied the impact of climate change on the nancial statements to be a key audit matter or to impact

a key audit matter.

Key audit matters

Key audit matters are those matters that, in our professional judgment, were of most signicance in our audit of the nancial statements

of the current period and include the most signicant assessed risks of material misstatement (whether or not due to fraud) that we

identied. These matters included those which had the greatest eect on: the overall audit strategy, the allocation of resources in the

audit; and directing the eorts of the engagement team. These matters were addressed in the context of our audit of the nancial

statements as a whole, and in our opinion thereon, and we do not provide a separate opinion on these matters.

Landsec Annual Report 2023 123Financial statements

Independent Auditor’s Report

continued

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

: ,m in investment

properties and m (the

Group’s share) in investment

properties held in joint ventures

(: ,m in investment

properties and m share in

investment properties held in

jointventures)

Refer to the Report of the Audit

Committee (pages -);

Accounting policies (pages

-); Note  &  of the

Financial statements (pages

-).

The valuation of property,

including investment properties

and investment properties held in

joint ventures, requires signicant

judgement and estimation by

management and their external

valuers. This also includes

considering the impact of climate

change on the investment

properties. Inaccuracies in inputs

or unreasonable bases used in

these judgements (namely in

respect of estimated rental value

and yield prole applied) could

result in a material misstatement

of the income statement and

balance sheet.

There is also a risk that

management may inuence

thesignicant 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 qualications and expertise.

We attended meetings between management and CBRE and management and

JLL to assess for evidence of undue management inuence and we obtained

conrmation from CBRE and JLL that they had not been subject to undue inuence

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 prole and other assumptions that impact the value.

We assessed and challenged these judgements made by CBRE and JLL in light of the

continued turbulence in the retail sector, lack of comparable market evidence from

transactions and costs associated with climate change.

We selected a sample of investment properties based on a number of factors

including size, risk, representation across asset classes and segments and including

a further random selection which in total comprised % 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 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

specic 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 ndings from our audit work described above and to seek further

explanations as required.

We challenged whether sustainability costs identied by management have been

appropriately considered within the valuation.

We conducted 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 specic 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  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 identied 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 identied during our development meetings, review of

meeting minutes and other supporting information. We corroborated 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  that were made in accordance with IFRS  – 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  March .

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

inuence.

We have reviewed

the disclosures in the

nancial statements

including the

signicant accounting

estimates and

sensitivities and

consider them to

be appropriate.

Landsec Annual Report 2023124 Financial statements

Risk Our response to the risk

Key observations

communicated to the

Audit Committee

Revenue recognition, including

the timing of revenue

recognition and the treatment

of lease incentives

: m rental income

(:m rental income)

: m service charge income

(: m service charge

income)

Refer to the Report of the Audit

Committee (pages -);

Accounting policies (pages

-); Note  of the Financial

statements (pages -).

Market expectations and EPRA

earnings-based 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

the incorrect treatment of lease

incentives.

Our audit procedures over revenue recognition included:

We tested certain manual controls governing approvals and changes to lease terms

and the upload of this information to the Group’s property information

management system (PIMS). We also performed testing of certain manual controls

over the billings process.

We selected a sample of new, existing and amended lease agreements in the year

and agreed the key lease terms input into PIMS, including lease incentive clauses.

We performed data analytics procedures to recalculate 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  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 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-o.

We performed audit procedures specically designed to address the risk of

management override of controls including consolidation adjustments and

journalentry testing, which included a particular focus on 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.

In the prior year, our auditor’s report included a key audit matter in relation to the accounting for the acquisition of U+I. In the current year,

there are no such similar transactions.

Our application of materiality

We apply the concept of materiality in planning and performing the audit, in evaluating the eect of identied 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 inuence the economic

decisions of the users of the nancial 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 dierences applied on our audit:

Basis Materiality Performance materiality Audit dierences

Overall .% of total assets

(: .% of total assets)

m

(: m)

m

(: m)

m

(: m)

Specic – account balances not related

to investment properties, trading

properties (either wholly owned or

held within joint ventures) or loans

and borrowing

% of EPRA earnings before tax

(: % of average revenue

prot before tax over two years)

m

(: m)

m

(: m)

m

(: m)

Parent Company .% of total assets

(: .% of total assets)

m

(: m)

m

(: m)

m

(: m)

When establishing our overall audit strategy, we determined a magnitude of uncorrected misstatements that we judged would be material

for the nancial 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 nancial 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 (2022: 0.9% of total assets). We applied

overall materiality to the investment property and trading property balances, including those in joint ventures, and other directly related

balance sheet items such 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.

Landsec Annual Report 2023 125Financial statements

Independent Auditor’s Report

continued

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 nancial statements as a whole

could inuence the economic decisions of users. We believe that it is most appropriate to use a prot-based measure as prot is also

afocus of users of the nancial 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 has not resulted in a change from our planning materiality.

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% (2022: 75%) of the respective 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 identied misstatements are considered as being clearly trivial.

We agreed with the Audit Committee that we would report to them all uncorrected audit dierences in excess of £5m (2022: £6m), as well

as audit dierences in excess of £1m (2022: £1m) that relate to our specic testing of the other account balances not related to investment

properties or loans and borrowings, which are set at 5% of their respective planning materiality, as well as dierences 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 1-119, other than the nancial statements and our auditor’s report thereon. The Directors are responsible for the other

information contained within the annual report.

Our opinion on the nancial 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

nancial 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 nancial 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.

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 nancial year for which the nancial statements are

prepared is consistent with the nancial 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 nancial 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 nancial 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.

Landsec Annual Report 2023126 Financial statements

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 identied material misstatements in:

•

the Strategic Report or the Directors’ Report; or

•

the information about internal control and risk management systems in relation to nancial 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 nancial 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 specied 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 specied 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 nancial 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 identied set out on pages 60-61 and 120;

•

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 60-61;

•

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 120;

•

Directors’ Statement on fair, balanced and understandable set out on page 120;

•

Board’s conrmation that it has carried out a robust assessment of the emerging and principal risks set out on pages 56-59;

•

The section of the annual report that describes the review of eectiveness of risk management and internal control systems set out on

pages 54-59; and

•

The section describing the work of the Audit Committee set out on pages 88-95.

Responsibilities of directors

As explained more fully in the Directors’ responsibilities statement set out on page 120, the Directors are responsible for the preparation of

the nancial statements and for being satised that they give a true and fair view, and for such internal control as the Directors determine

is necessary to enable the preparation of nancial statements that are free from material misstatement, whether due to fraud or error.

In preparing the nancial 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.

Auditor’s responsibilities for the audit of the nancial statements

Our objectives are to obtain reasonable assurance about whether the nancial 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 inuence the economic decisions of users taken on the basis of these nancial 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.

Landsec Annual Report 2023 127Financial statements

Independent Auditor’s Report

continued

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

signicant are those that relate to the reporting framework (UK adopted international accounting standards, the Companies Act 2006

and UK Corporate Governance Code), the relevant tax regulations in the United Kingdom, including the UK REIT regulations, the UK

General Data Protection Regulation (GDPR), Health & Safety Regulations and the Bribery Act. There are no signicant industry specic

laws or regulations that we considered in determining our approach.

•

We understood how Land Securities Group PLC is complying with those frameworks by through enquiry with management, and by

identifying the Group’s policies and procedures regarding compliance with laws and regulations. We also identied 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 nancial 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 identied, 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 aect the nancial statements;

— Reading minutes of meetings of those charged with governance;

— Reading of internal audit reports;

— Obtaining electronic conrmations 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; 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 nancial statements is located on the Financial Reporting Council’s website

at https://www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor’s report.

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 nancial

statements for the year ending 31 March 2014 and subsequent nancial periods.

•

The period of total uninterrupted engagement including previous renewals and reappointments is 10 years, covering the years ending

31 March 2014 to 31 March 2023.

•

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

15 May 2023

Landsec Annual Report 2023128 Financial statements

2023 2022

Notes

EPRA

earnings

£m

Capital

and other

items

£m

Total

£m

EPRA

earnings

£m

Capital

and other

items

£m

Total

£m

Revenue 6

726

65 791 647 32 679

Costs – movement in bad and doubtful debts provisions 7

– 2 13 – 13

Costs – other 7

(291) (93)

(384) (273) (48) (321)

437 (28) 409 387 (16) 371

Share of post-tax profit/(loss) from joint ventures 16 29 (30) (1) 29 4 33

(Loss)/profit on disposal of investment properties – (144) (144) – 107 107

Profit on disposal of investment in joint ventures – – – – 2 2

Net (deficit)/surplus on revaluation of investment properties 14 – (827) (827) – 416 416

(Loss)/gain on changes in finance leases – (6) (6) – 6 6

Operating profit/(loss) 466 (1,035) (569) 416 519 935

Finance income 10 11 23 34 9 16 25

Finance expense 10 (84) (3) (87) (70) (15) (85)

Profit/(loss) before tax 393 (1,015) (622) 355 520 875

Taxation 12 – –

(Loss)/profit for the year (622) 875

Attributable to:

Shareholders of the parent (619) 869

Non-controlling interests (3) 6

(622) 875

(Loss)/profit per share attributable to shareholders of

the parent:

Basic (loss)/earnings per share 5 (83.6)p 117.4p

Diluted (loss)/earnings per share 5 (83.6)p 117.1p

Statement of comprehensive income

for the year ended 31 March 2023

2023 2022

Notes

Total

£m

Total

£m

(Loss)/profit for the year (622) 875

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:

Movement in the fair value of other investments – (3)

Net re-measurement (loss)/gain on defined benefit pension scheme 34 (12) 22

Deferred tax credit/(charge) on re-measurement above 12 3 (5)

Other comprehensive (loss)/income for the year (10) 13

Total comprehensive (loss)/income for the year (632) 888

Attributable to:

Shareholders of the parent (629) 882

Non-controlling interests (3) 6

(632) 888

Income statement

for the year ended 31 March 2023

Landsec Annual Report 2023 129Financial statements

Group Company

Notes

2023

£m

2022

(restated)

£m

2023

£m

2022

(restated)

£m

Non-current assets

Investment properties 14 9,658 11,207 – –

Intangible assets 20 6 8 – –

Net investment in finance leases 19 21 70 – –

Investments in joint ventures 16 533 700 – –

Investments in associates 17 3 4 – –

Investments in subsidiary undertakings 29 – – 6,229 6,222

Trade and other receivables 27 146 177 – –

Other non-current assets 30 67 61 – –

Total non-current assets 10,434 12,227 6,229 6,222

Current assets

Trading properties 15 118 145 – –

Trade and other receivables 27 365 368 – –

Monies held in restricted accounts and deposits 23 4 4 – –

Cash and cash equivalents 24 41 146 2 2

Other current assets 31 4 5 – –

Total current assets 532 668 2 2

Total assets 10,966 12,895 6,231 6,224

Current liabilities

Borrowings 22 (315) (541) – –

Trade and other payables 28 (306) (320) (2,821) (2,912)

Other current liabilities 32 (24) (11) – –

Total current liabilities (645) (872) (2,821) (2,912)

Non-current liabilities

Borrowings 22 (3,223) (4,012) – –

Trade and other payables 28 (17) (8) – –

Other non-current liabilities 33 (9) (12) – –

Total non-current liabilities (3,249) (4,032) – –

Total liabilities (3,894) (4,904) (2,821) (2,912)

Net assets 7,072 7,991 3,410 3,312

Equity

Capital and reserves attributable to shareholders

Ordinary shares 36 80 80 80 80

Share premium 318 317 318 317

Other reserves 13 9 13 9

Merger reserve – – 374 374

Retained earnings 6,594 7,511 2,625 2,532

Equity attributable to shareholders of the parent 7,005 7,917 3,410 3,312

Equity attributable to non-controlling interests 67 74

Total equity 7,072 7,991

1. Cash and cash equivalents and monies held in restricted accounts and deposits have been restated as at 31 March 2022 following clarification by IFRIC on classification of funds

with externally imposed restrictions.

The profit for the year of the Company was £381m (2022: £15m).

The financial statements on pages 129 to 186 were approved by the Board of Directors on 15 May 2023 and were signed on its behalf by:

Mark Allan

Directors

Vanessa Simms

Balance sheets

at 31 March 2023

Landsec Annual Report 2023130 Financial statements

Statements of changes in equity

for the year ended 31 March 2023

Attributable to shareholders of the parent Group

Ordinary

£m

premium

£m

Other

reserves

£m

Retained

earnings

£m

Total

£m

Non-

controlling

interests

£m

Total

equity

£m

At 1 April 2021 80 317 28 6,787 7,212 – 7,212

Total comprehensive income for the financial year – – – 882 882 6 888

Transactions with shareholders of the parent:

Share-based payments – – 2 2 4 – 4

Dividends paid to shareholders of the parent – – – (181) (181) – (181)

Transfer of treasury shares – – (21) 21 – – –

Total transactions with shareholders of the parent – – (19) (158) (177) – (177)

Acquisition of subsidiaries – – – – – 68 68

At 31 March 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 – 1 4 2 7 – 7

Dividends paid to shareholders of the parent – – – (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

Attributable to shareholders Company

Ordinary

£m

premium

£m

Other

reserves

£m

Merger

reserve

£m

Retained

earnings

£m

Total

equity

£m

At 1 April 2021 80 317 28 374 2,675 3,474

Total comprehensive income for the financial year – – – – 15 15

Transactions with shareholders:

Share-based payments – – 2 – 2 4

Dividends paid to shareholders – – – – (181) (181)

Transfer of treasury shares – – (21) – 21 –

Total transactions with shareholders – – (19) – (158) (177)

At 31 March 2022 80 317 9 374 2,532 3,312

Total comprehensive income for the financial year – – – – 381 381

Transactions with shareholders:

Share-based payments – 1 4 – 2 7

Dividends paid to shareholders – – – – (290) (290)

Total transactions with shareholders – 1 4 – (288) (283)

At 31 March 2023 80 318 13 374 2,625 3,410

1. Available for distribution.

Landsec Annual Report 2023 131Financial statements

Statements of cash flows

for the year ended 31 March 2023

Group Company

Notes

2023

£m

2022

(restated)

£m

2023

£m

2022

(restated)

£m

Cash flows from operating activities

Net cash generated from operations 13 356 448 – –

Interest received 16 23 – –

Interest paid (92) (84) – –

Rents paid (13) (8) – –

Capital expenditure on trading properties (6) (5) – –

Disposal of trading properties 18 8 – –

Development income proceeds received 54 – – –

Other operating cash flows 9 (1) – (1)

Net cash inflow/(outflow) from operating activities 13 342 381 – (1)

Cash flows from investing activities

Investment property development expenditure (253) (302) – –

Other investment property related expenditure (102) (42) – –

Acquisition of investment properties (2) (147) – –

Disposal of investment properties 1,269 265 – –

Acquisition of subsidiaries, net of cash acquired (92) (399) – –

Cash distributions from joint ventures 16 14 22 – –

Increase in monies held in restricted accounts and deposits – (4) – –

Net cash inflow/(outflow) from investing activities 834 (607) – –

Cash flows from financing activities

Proceeds from new borrowings (net of finance fees) 22 394 1,053 – –

Repayment of bank debt 22 (1,407) (489) – –

Net cash inflow/(outflow) from derivative financial instruments 22 25 (3) – –

Dividends paid to shareholders of the parent 11 (289) (190) – –

Dividends paid to non-controlling interests (4) – – –

Other financing cash flows – (9) – –

Net cash (outflow)/inflow from financing activities (1,281) 362 – –

(Decrease)/increase in cash and cash equivalents for the year (105) 136 – (1)

Cash and cash equivalents at the beginning of the year 146 10 2 3

Cash and cash equivalents at the end of the year

24 41 146 2 2

1. Cash and cash equivalents and monies held in restricted accounts and deposits have been restated as at 31 March 2022 following clarification by IFRIC on classification of

funds with externally imposed restrictions.

Landsec Annual Report 2023132 Financial statements

Section 1 – General

This section contains a description of the Group’s signicant accounting polis significant accounting policies that relate to the nhe financial statements as a whole.

Adescription of aA description of accounting policies specic tecific to individual areas (e.g. investment properties) is included within the relevant note to the

nancial sfinancial 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  1 › Basis of preparation and consolidation

Basis of preparation

These nanThese 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 nanciy financial statements, as applied in accordance with the provisions of

theCompthe Companies Act 2006. The nThe 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 PLis the presentation currency of the Group (Land Securities Group PLC and all its subsidiary undertakings), and under the historical cost

convention as modieconvention as modified by the revaluation of investment property, nancial as, financial assets at fair value through other comprehensive income

(without recycling), derivative nanci, derivative financial instruments and pension assets. As applied by the Group and the Company, there are no material

dierences bedifferences between UK adopted international accounting standards and EU IFRS.

The preparation of nanThe preparation of financial statements in conformity with generally accepted accounting principles (GAAP) requires the use of estimates

and assumptions that aect affect the reported amounts of assets and liabilities at the date of the nhe 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 acof the amount, event or actions, actual results ultimately may dier from those estimately 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disor distributable protle profit. Other reserves includes the Capital redemption reserve, which represents the nominal value of cancelled shares,

theShare-based pthe 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

recessionary period and therefore the Directors have continued to place additional focus on the appropriateness of adopting the going

concern assumption in preparing the nancial ssumption in preparing the financial statements for the year ended 31 March 2023. The Group’s going concern assessment considers

changes in the Group’s principal risks (see pages 56-59) and is dependent on a number of factors, including our nancial perg 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 nancial covenants, which are describthin 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 ow modedels, 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 reeccenario reflects

unfavourable macro-economic conditions, a deterioration in our ability to collect rent and service charge from our customers and removes

uncommitted 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m6 months to 30 September 2024, are shown below alongside the actual position at 31 March 2023.

Mitigated downside

scenario

Key metrics  Marc31 March h 2023 30 September  September 2024

Security Group LTV .%33.0% .%39.2%

Adjusted net debt ,m£3,287m ,m£3,670m

EPRA net tangible assets ,m£6,967m ,m£6,021m

Available nancial headroomAvailable financial headroom .bn£2.4bn .bn£1.6bn

Notes to the he financial statements

for the year ended 31 March 2023

Landsec Annual Report 2023 133Financial statements

Notes to the nancial statements

for the year ended 31 March 2023 continued

In our mitigated downside scenario, the Group has sucient cash reserd 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 at least 16 months from the date of authorisation of these nancial statementese financial statements. The value of our

assets would need to fall from 31 March 2023 values by approximately a further 50% for LTV to reach 65%. The Directors consider the

likelihood of this occurring over the going concern assessment period to be remote.

The Security Group requires earnings of at least £150m in the year ending 31 March 2024 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 are well above the level required to meet the interest cover covenant, and would need to fall

from 31 March 2023 values by over £300m for interest cover to reach 1.45x. Therefore, the Directors do not anticipate a reduction in Security

Group earnings over the period ending 30 September 2024 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 sucient cash resercontinues 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 these nanciasis in preparing these financial statements for the year

ended 31 March 2023.

Basis of consolidation

The consolidated nancial slidated financial statements for the year ended 31 March 2023 incorporate the nancie 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 abilitto variable returns and has the ability to aeo 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 eective dad from the effective date of acquisition

orto the eective daor to the effective date of disposal. Accounting policies of subsidiaries and joint ventures which dier from Group accounting policiehich 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 classied as ats are classified as a

nancial liabilifinancial 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 classied as a non-controllingsified 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 prot or lofit 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

nancial sfinancial 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  1 › Basis of preparation and consolidation continued

Landsec Annual Report 2023134 Financial statements

2  2 › Signicanificant accounting judgements and estimates

The preparation of nanThe 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 signicant invt significant involve assumptions or key estimates

inrespecin respect of future events, where actual results may dier frffer from these estimates. These key estimates are deemed to have a signicantemed to have a significant

riskofcausing a marisk of causing a material adjustment to the carrying amounts of assets and liabilities within the next nancial yext financial year. Other sources of

estimation uncertainties identied below are esentified 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 nancial yeart 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)

In preparing the nanciIn 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 Taskforce on Climate related Financial Disclosure.

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-baseto achieve our science-based net zero target by 2030 (note this cost will ucnote this cost will fluctuate year on year to account for changes in inationes in inflation). On this

basis, the Group has concluded that climate change did not have a material impact on the nancial report on the financial reporting judgements and estimates,

consistent with the assessment that this is not expected to have a signicant impacave a significant impact on the Group’s going concern or viability assessment.

3  3 › Changes in accounting policies and standards

T he accounting policies used in these nancial statements are consise financial statements are consistent with those applied in the last annual nancial st annual financial statements, as

amended where relevant to reeceflect the adoption of new standards, amendments and interpretations which became eechich became effective in the year.

Following clarication by IFRIC on the clasllowing clarification by IFRIC on the classication of monies hesification of monies held in restricted accounts, monies that are restricted by use only are

classieclassified at 31 March 2023 as ‘Cash and cash equivalents’, whereas monies to which access is restricted remain classied as ‘Mted remain classified as ‘Monies held

inrestricin restricted accounts and deposits’. The comparative balances have been restated where applicable to reeceflect this change in classicationassification .

As a result, £18m of monies held in restricted accounts has been reclassied to Cash and cash equisified to Cash and cash equivalents in the Group balance sheet

asat 3as at 31 March 2022 which increased the Cash and cash equivalent from £128m to £146m and decreased the restricted accounts from

£22mt£22m to £4m. Within the Group cash ow stath flow statement for the year ended 31 March 2022, this reclassication also resulted in the overallassification also resulted in the overall

netmovemnet movement in Cash and cash equivalent from £128m to £136m, as well as the movements in monies held in restricted accounts being

classieclassified as cash ows from invd as cash flows from investing activities rather than nancing acvities rather than financing activities as in prior year, based on the nature of the accounts.

AsaAs at1 April 20t 1 April 2021, the total value of the reclassication is £1ssification is £10m which increased the Cash and cash equivalent from £nil to £10m and

decreased the restricted accounts from £10m to £nil. This prior year restatement did not have any impact on the reported net assets,

netcurrent assenet current assets or net prot or lots or net profit or loss.

Additionally, £2m of monies held in restricted accounts has been reclassied to Cash and cash een reclassified to Cash and cash equivalents in the Company balance sheet

as at 31 March 2022 which increased the Cash and cash equivalent from £nil to £2m and decreased the restricted accounts from £2m to

£nil. Within the Company cash ow statement for the year ee Company cash flow statement for the year ended 31 March 2022, this reclassication did not result in a nesification did not result in a net movement of

Cash and cash equivalents. As at 1 April 2021, the total value of the reclassication is £3m which increasesification is £3m which increased the Cash and cash equivalent

from £nil to £3m and decreased the restricted accounts from £3m to £nil. This prior year restatement did not have any impact on the

reported net assets, net current assets or net prot or loss.r net profit or loss.

There has been no material impact on the nancial statements of ade financial statements of adopting any other new standards, amendments and interpretations.

Amendments to IFRS

A number of new standards, amendments to standards and interpretations have been issued but are not yet eecut are not yet effective for the Group.

TheapplicaThe application of these new standards, amendments and interpretations are not expected to have a signicant impacted to have a significant impact on the Group’s

income statement or balance sheet.

Landsec Annual Report 2023 135Financial statements

Notes to the nancial statements

for the year ended 31 March 2023 continued

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shper share, together with further details on specic compoecific 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 dierent forms of ownts for these different forms of ownership to present a proportionate share. The Combined Portfolio, with assets

totalling £10.2bn, is an example of this approach, reeeflecting 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whebasis 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’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

nancial sfinancial statements.

The same principle is applied to many of the other measures we discuss and, accordingly, a number of our nancial meer 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 nancial sry 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 nancial mein all financial measures.

EPRA earnings is an alternative performance measure and is the Group’s alternative measure of the underlying pre-tax prot of thetax profit of the

property rental business. EPRA earnings excludes all items of a capital nature, such as valuation movements and prots and loovements 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 denition of EPull 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, prots or losses oges, profits or losses on the disposal of properties, renancing acties, 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

signicantly from year to yearsignificantly from year to year.

4  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secpotential 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. There has been no change to the classication of theen no change to the classification of these segments during the year to 31 March 2023.

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Managinthe Managing Directors. The information presented to ELT includes reports from all functions of the business as well as strategy, nancial, financial

planning, succession planning, organisational development and Group-wide policies.

The Group’s primary measure of underlying prot before tax is EPrlying profit before tax is EPRA earnings. However, Segment net rental income is the lowest level to which

the prot arising from the ongoing othe profit arising from the ongoing operations of the Group is analysed between the four segments. The administrative costs, which are

predominantly sta costs for cey staff costs for centralised functions, are all treated as administrative expenses and are not allocated to individual segments.

Landsec Annual Report 2023136 Financial statements

The Group manages its nancinges its financing structure, with the exception of joint ventures, on a pooled basis. Individual joint ventures may have

specic nancing arrangements in pific financing arrangements in place. Debt facilities and nance exebt 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 2023 2022

2

Central

London

m£m

Major

retail

m£m

Mixed-use

urban

m£m

Subscale

sectors

m£m

Total

m£m

Central

London

m£m

Major

retail

m£m

Mixed-use

urban

m£m

Subscale

sectors

m£m

Total

m£m

Rental income 313 179 58 107 657 287 167 43 89 586

Finance lease interest – – – 2 2 6 – – 2 8

Gross rental income

(before rents payable)

313 179 58 109 659 293 167 43 91 594

Rents payable

1

()(3) ()(8) ()(1) – ()(12) ()(4) ()(1) – 2 ()(8)

Gross rental income

(after rents payable)

310 171 57 109 647 289 313 43 93 586

Service charge income 46 42 10 – 98 40 39 2 – 86

Service charge expense ()(47) ()(50) ()(12) ()(1) ()(110) ()(41) ()(45) ()(9) ()(3) ()(98)

Net service charge expense ()(1) ()(8) ()(2) ()(1) ()(12) ()(3) ()(1) ()(2) ()(3) ()(12)

Other property related income 15 10 1 1 31 13 11 2 2 28

Direct property expenditure ()(34) ()(44) ()(14) ()(16) ()(108) ()(42) ()(37) ()(11) ()(14) ()(104)

Movement in bad and doubtful

debtsprdebts provisions

()(1) 1 6 – 1 ()(3) 13 2 ()(2) 12

Segment net rental income 289 132 45 95 561 258 142 34 76 510

Other income 1 3

Administrative expense ()(82) ()(82)

Depreciation ()(5) ()(5)

EPRA earnings before interest 477 426

Finance income 11 9

Finance expense ()(84) ()(70)

Joint venture net nance expt finance expense ()(11) ()(10)

EPRA earnings attributable

tosharehto shareholders of the parent

393 355

. 1. Included within rents payable is lease interest payable of m£2m (2022: m: £2m) for the Central London segment, m£1m for the Mixed-use urban segment (20: 22: £nil) and m£1m

(2022: m: £2m) for the Subscale segment.

2. A reconciliation from the Group income statement to the information presented in the segmental results table for the year ended  March ded 31 March 20 is in22 is included in table .d in table 90.

Landsec Annual Report 2023 137Financial statements

Notes to the nancial statements

for the year ended 31 March 2023 continued

The following table reconciles the Group’s income statement to the segmental results.

Reconciliation of segmental information note to statutory reporting

Year ended  March ed 31 March 2023

Group

income

statement

m£m

Joint

ventures

6

m£m

Adjustment

fornfor non-

wholly owned

subsidiaries

2

m£m

Total

m£m

EPRA

earnings

m£m

Capital

and other

items

m£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) ()(3) ()(12) ()(12) –

Other property related income 29 2 – 31 31 –

Direct property expenditure ()(100) ()(10) 2 ()(108) ()(108) –

Movement in bad and doubtful debts provisions 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, including amortisation of software ()(5) – – ()(5) ()(5) –

EPRA earnings before interest 444 93 ()(7) 477 477 –

Share of post-tax loss from joint ventures ()(3) 1 – – – –

Prot on disofit on disposal of trading properties 1 – – 1 – 1

Loss on disposal of investment properties

3

()(144) – – ()(144) – ()(144)

Net (decitdeficit)/surplus on revaluation of investment properties ()(827) ()(30) 9 ()(848) – ()(848)

Net development contract expenditure ()(9) – – ()(9) – ()(9)

Loss on changes in na changes in finance leases ()(1) – – ()(1) – ()(1)

Impairment of goodwill ()(5) – – ()(5) – ()(5)

Impairment of trading properties ()(34) – – ()(34) – ()(34)

Depreciation ()(3) – – ()(3) – ()(3)

Operating (loss)/protrofit ()(569) 11 2 ()(556) 477 (,)(1,033)

Finance income 34 – 1 35 11 24

Finance expense ()(87) ()(11) – ()(98) ()(95) ()(3)

(Loss)/prot beprofit before tax ()(622) – 1 ()(619) 393 (,)(1,012)

Taxation – – – –

(Loss)/prot for thprofit for the year ()(622) – 1 ()(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 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 % in the Gated 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 oital 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, protes, 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 m£9m charge related to the provision for re saon 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 t 20.22.

4  4 › Segmental information continued

Landsec Annual Report 2023138 Financial statements

5  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assnet assets per share attributable to shareholders of the parent together with certain measures denetain 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

nancial pfinancial performance measures are EPRA earnings per share, EPRA Net Tangible Assets per share and total return on equity, which was

previously referred to as total accounting return. There has been no change to the calculation of this measure other than the change of

name during the year to 31 March 2023. Refer to Table 70 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

signicantly from year to yearsignificantly from year to year.

Earnings per share

Year ended

 Marc31 March h 2023

Year ended

 Ma31 March h 2022

Loss for

the year

m£m

EPRA

earnings

m£m

Prot foProfit for

the year

m£m

EPRA

earnings

m£m

(Loss)/proofit attributable to shareholders of the parent ()(619) ()(619) 869 869

Valuation and loss/(protprofit) on disposals – ,1,016 – ()(527)

Net naNet finance income (excluded from EPRA earnings) – ()(21) – ((1 )

Impairment of goodwill – 5 – 6

Other – 12 – 8

(Loss)/prot useprofit used in per share calculation ()(619) 393 869 355

IFRS EPRA IFRS EPRA

Basic (loss)/earnings per share (.)p(83.6)p .p53.1p .p117.4p .p48.0p

Diluted (loss)/earnings per share

6

(.)p(83.6)p .p53.1p .p117.1p .p47.8p

. 1. In the year ended d 3 March 1 March 2023, share options are excluded from the weighted average diluted number of shares when calculating IFRS and EPRA diluted (loss)/earnings

pershare ber share because they are not dilutive.

Net assets per share  Marc31 March h 2023  M31 March h 2022

Net assets

m£m

EPRA NDV

m£m

EPRA NTA

m£m

Net assets

m£m

EPRA NDV

m£m

EPRA NTA

m£m

Net assets attributable to shareholders of the parent ,7,005 ,7,005 ,7,005 ,7,917 ,7,917 ,7,917

Shortfall of fair value over net investment in nat investment in finance leases book value – ()(6) ()(6) – ()(1) ()(1)

Deferred tax liability on intangible asset – – 6 – – 1

Goodwill on deferred tax liability – ()(1) ()(1) – ()(3) ()(3)

Other intangible asset – – ()(2) – – ()(2)

Fair value of interest-rate swaps – – ()(42) – – ()(21)

Excess of fair value of trading properties over book value – 12 12 – – –

Shortfall/(excess) of fair value of debt over book value (note e 22) – 324 – – ()(107) –

Net assets used in per share calculation ,7,005 ,7,334 ,6,967 ,7,917 ,7,803 ,7,888

IFRS EPRA NDV EPRA NTA IFRS EPRA NDV EPRA NTA

Net assets per share p945p n/a n/a ,p1,070p n/a n/a

Diluted net assets per share p942p p986p p936p ,p1,067p ,p1,052p ,p1,063p

Landsec Annual Report 2023 139Financial statements

Notes to the nancial statements

for the year ended 31 March 2023 continued

Number of shares 2023 2022

Weighted

average

million

 M31 March

million

Weighted

average

million

31 March

million

Ordinary shares 751 751 751 751

Treasury shares ()(7) ()(7) ()(2) ()(2)

Own shares ()(9) ()(3) ()(4) ()(4)

Number of shares – basic 740 741 740 740

Dilutive eect of stive effect of share options 9 1 2 2

Number of shares – diluted 744 744 742 742

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

 Marc31 March

2023

pence

Year ended

3 M1 March

2022

pence

(Decrease)/increase in EPRA NTA per share ()(127) 78

Dividend paid per share in the year (note e 11) 39 25

Total return (a) ()(88) 103

EPRA NTA per share at the beginning of the year (b) ,1,063 985

Total return on equity (a/b)

(.)%(8.3)% .%10.5%

6  6 › Revenue

Accounting policy

Rental income, including xed rental uplifuding fixed rental uplifts, is recognised in the income statement on a straight-line basis over the term of the lease.

Lease incentives being oered to occupiers to enteing offered to occupiers to enter into a lease, such as an initial rent-free period or a cash contribution to t out or simild 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 modiease 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 xed at the inception of a lt are not fixed at the inception of a lease, for example turnover rents, are variable consideration

and are recorded as income in the year in which they are earned. Where a single payment is received from a tenant to cover both rent and

service charge, the service charge component is separated and reported as service charge income.

The Group’s revenue from contracts with customers, as dened in IFRS 1tomers, 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 benet from the sernefit 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 benet simule 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abilithas the ability to direct the use of the property and the right to the cash inows and outy 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 signicantccur significantly after exchange or if the Group has signicantge 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 recothe contract and recognises revenue as each performance obligation is satised.n is satisfied.

5  5 › Performance measures continued

Landsec Annual Report 2023140 Financial statements

When property is let under a nance lease, the Group recognises a receier 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 nannts 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 nanaining 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 cothe 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.

Signicant accounting judgement 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 ecienciesing efficiencies

•

risk management and compliance

In addition, the residual rights residing with the Group are generally protective in nature.

All revenue is classieAll 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 and the non-owned element of the Group’s subsidiaries which are presented in the

‘Capital and other items’ column.

2023 2022

EPRA

earnings

m£m

Capital

and other

items

m£m

Total

m£m

EPRA

earnings

m£m

Capital

and other

items

m£m

Total

m£m

Rental income (excluding adjustment for lease incentives) 606 8 614 552 3 555

Adjustment for lease incentives ()(2) – ()(2) ()(18) – ()(18)

Rental income 604 8 612 534 3 537

Service charge income 88 1 91 77 1 78

Trading property sales proceeds – 77 77 – 27 27

Other property related income 29 – 29 25 – 25

Finance lease interest 2 – 2 8 – 8

Development contract income

1

– 32 32 – 1 1

Other income 1 – 1 3 – 3

Revenue per the income statement 726 65 791 647 32 679

. 1. Development contract income for the year ended d 3 M1 March arch 20 rela23 relates to the income released from the contract liability recorded on the disposal of  Mooral of 21 Moorelfields,

recognised in line with costs incurred on the development in note te 7.

The following table reconciles revenue per the income statement to the individual components of revenue presented in note 4.

2023 2022

Group

m£m

Joint

ventures

m£m

Adjustment

for

non-wholly

owned

subsidiaries

m£m

Total

m£m

Group

m£m

Joint

ventures

m£m

Adjustment

for non-wholly

owned

subsidiaries

m£m

Total

m£m

Rental income 612 53 ()(8) 657 537 52 ()(3) 586

Service charge income 91 10 ()(3) 98 78 9 ()(3) 86

Other property related income 29 2 – 31 25 3 – 28

Finance lease interest 2 – – 2 8 – – 8

Other income 1 – – 1 3 – – 3

Revenue in the segmental

informationnoten note

737 65 ()(11) 791 651 64 ()(4) 711

Development contract income

1

32 – – 32 1 – – 1

Trading property sales proceeds 77 – – 77 27 15 – 42

Revenue including Capital and

otheriother items

791 65 ()(11) 845 679 79 ()(4) 754

recognised in line with costs incurred on the development in note te 7.

Landsec Annual Report 2023 141Financial statements

Notes to the nancial statements

for the year ended 31 March 2023 continued

7  7 › Costs

Accounting policy

The carrying amounts of the Group’s non-nancifinancial 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impairmAn impairment loss is recognised in the income statement whenever the carrying amount of an asset exceeds its recoverable amount.

Therecoverable amount of an assThe 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 presethe net present value of the future cash ows expece of the future cash flows expected to be derived from the asset, discounted using a pre-tax discount rate that reectax discount rate that reflects

current market assessments of the time value of money and the risks specic to the asset. An impairmes 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 reeeflect 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 xed, or in-me statement as incurred. Where these rents are fixed, or in-substance ance fixed, at the inception of the

agreement, or become xed or in-substance xed aecome 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 classied within the ‘EPRA ets 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, 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.

2023 2022

EPRA

earnings

m£m

Capital

and other

items

m£m

Total

m£m

EPRA

earnings

m£m

Capital

and other

items

m£m

Total

m£m

Rents payable 10 – 10 6 – 6

Service charge expense 98 2 100 88 2 90

Direct property expenditure 98 2 100 94 – 94

Administrative expenses 80 – 80 80 – 80

Impairment of trading properties – 19 19 – 6 6

Cost of trading property disposals – 76 76 – 25 25

Development contract expenditure

1

– 41 41 – 1 1

Depreciation, including amortisation of software 5 1 8 5 – 5

Impairment of goodwill – 5 5 – 6 6

Business combination costs – – – – 8 8

Costs – other per the income statement 291 93 384 273 48 321

Movement in bad and doubtful debts expense – rent ()(9) – ()(9) ()(9) – ()(9)

Movement in bad and doubtful debts expense – service charge 2 – 2 ()(4) – ((4 )

Total costs per the income statement 289 93 382 260 48 308

. 1. Development contract expenditure for the year ended  March nded 31 March 202 in3 includes expenditure relating to the ongoing development of  Moornt of 21 Moorelfields following the sale of the

property during the period.

Landsec Annual Report 2023142 Financial statements

The following table reconciles costs per the income statement to the individual components of costs presented in note 4.

2023 2022

Group

m£m

Joint

ventures

m£m

Adjustment

for

non-wholly

owned

subsidiaries

m£m

Total

m£m

Group

m£m

Joint

ventures

m£m

Adjustment

for

non-wholly

owned

subsidiaries

m£m

Total

m£m

Rents payable 10 2 – 12 6 2 – 8

Service charge expense 100 12 ()(2) 110 90 10 ()(2) 98

Direct property expenditure 100 10 ()(2) 108 94 10 – 104

Administrative expenses 80 2 – 82 80 2 – 82

Depreciation, including amortisation

ofsofof software

5 – – 5 5 – – 5

Movement in bad and doubtful debts

expense – rent

()(9) ()(1) – ()(5) ()(9) 2 – ()(2)

Movement in bad and doubtful debts

expense – service charge

2 – – 2 ()(4) ()(3) – ((5 )

Costs in the segmental information note 293 25 ()(9) 314 262 25 ()(2) 285

Impairment of trading properties 19 – – 19 6 – – 6

Cost of trading property disposals 76 – – 76 25 31 – 41

Development contract expenditure

1

41 – – 41 1 – – 1

Depreciation 1 – – 1 – – – –

Impairment of goodwill 5 – – 5 6 – – 6

Business combination costs – – – – 8 – – 8

Costs including Capital and other items 382 25 ()(9) 403 308 41 ()(2) 347

. 1. Development contract expenditure for the year ended  March nded 31 March 202 in3 includes expenditure related to the ongoing development of t of 2 M1 Mooreldfields following the sale of the

property during the year.

The Group’s costs include employee costs for the year of £76m (2022: £78m), of which £5m (2022: £5m) is within service charge expense,

£58m (2022: £60m) is within administrative expenses and £13m (2022: £13m) is within direct property expenditure.

Employee costs

2023

m£m

2022

m£m

Salaries and wages 59 10

Employer payroll taxes 7 8

Other pension costs (note )e 34) 9 3

Share-based payments (note e 3)5) 6 4

76 78

2023

Number

2022

Number

The average monthly number of employees during the year was:

Indirect property or contract and administration 385 412

Direct property or contract services:

Full-time 180 184

Part-time 12 14

577 610

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 (2022: none) of the Executive Directors had retirement benets accruinenefits accruing under the dened bg under the defined benet scheenefit scheme.

Information on Directors’ emoluments share options and interests in the Company’s shares is given in the Directors’ Remuneration Report

on pages 100 to 113.

Details of the employee costs associated with the Group’s key management personnel are included in note 39.

Landsec Annual Report 2023 143Financial statements

Notes to the nancial statements

for the year ended 31 March 2023 continued

8  8 › Auditor remuneration

2023

m£m

2022

m£m

Services provided by the Group’s auditor

Audit fees:

Audit of parent company and consolidated nancial sted financial statements .1.0 .0.9

Audit of subsidiary undertakings .0.6 .0.7

Audit of joint ventures .0.2 .0.2

.1.8 .1.8

Non-audit fees:

Other assurance services .0.4 .0.2

.2.2 .2.0

The Group operates a non-audit services policy that sets out the circumstances and nanets out the circumstances and financial limits within which the Group’s auditors may

be permitted to provide certain non-audit services. 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  9 › External valuers remuneration

2023

m£m

2022

m£m

Services provided by the Group’s external valuers

Year end and half-yearly valuations – Group .0.9 .0.7

– Joint ventures .0.1 .0.1

Other consultancy and agency services – CBRE .2.5 .0.9

– JLL

1

.0.7 –

.4.2 .1.7

. 1. JLL other consultancy and agency services fees are stated for year ended ed 3 M1 March arch 2 onl023 only following their appointment in the year as a principal valuer. The comparable

fees for the year ended ed 3 M1 March arch 20 woul22 would have been een £0.m7m.

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’the valuation of the Group’s properties is xed, subject to an adjustment for acqties 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

conrmed to us that the totconfirmed to us that the total fees paid by the Group represented less than 5% of their total revenues in both the current and prior year.

Landsec Annual Report 2023144 Financial statements

10  10 › Net Net finance expense

2023 2022

EPRA

earnings

m£m

Capital

and other

items

m£m

Total

m£m

EPRA

earnings

m£m

Capital

and other

items

m£m

Total

m£m

Finance income

Interest receivable from joint ventures 11 – 11 9 – 9

Fair value movement on interest-rate swaps – 23 23 – 31 31

11 23 34 9 31 25

Finance expense

Bond and debenture debt ()(68) – ()(68) ()(12) – ()(12)

Bank and other short-term borrowings ()(38) ()(2) ()(40) ()(34) – ()(34)

Other interest payable – ()(1) ()(1) ()(3) ()(15) ()(16)

()(106) ()(3) ()(109) ()(87) ()(15) ()(102)

Interest capitalised in relation to properties under development 77 – 77 32 – 32

()(84) ()(3) ()(87) ()(70) ()(15) ()(85)

Net nanceNet finance (expense)/income ()(73) 20 ()(53) ()(61) 1 ()(60)

Joint venture net nance expt finance expense ()(11) ()(10)

Net nanceNet finance expense included in EPRA earnings ()(84) ()(71)

Lease interest payable of £4m (2022: £4m) is included within rents payable as detailed in note 4.

11  1 › Dividends

Accounting policy

Interim dividend distributions to shareholders are recognised in the nancial sgnised in the financial statements when paid. Final dividend distributions are

recognised as a liability in the period in which they are approved by shareholders.

Dividends paid Pence per share Year ended ear ended 3 March1 March

Payment date PID Non-PID Total

2023

m£m

2022

m£m

For the year ended d 3 M1 March ch 202:1:

Third interim  M30 March  2021 .6.00 – .6.00

Final 2 J3 July uly 2021 .9.00 – .9.00 11

For the year ended d 3 M1 March ch 2022:

First interim  Oc8 October tober 2021 .7.00 – .7.00 52

Second interim  J4 January  2022 .8.50 – .8.50 10

Third interim  April 7 April 2022 .8.50 – .8.50 63

Final  J22 July y 2022 .13.00 – .13.00 96

For the year ended d 3 M1 March ch 2023:

First interim  Oc7 October tober 2077 .8.60 – .8.60 64

Second interim  Januar3 January y 2021 .9.00 – .9.00 67

Gross dividends 290 181

Dividends in the statement of changes in equity 290 181

Timing dierence on pag difference on payment of withholding tax ()(1) 9

Dividends in the statement of cash owsh flows 289 190

Landsec Annual Report 2023 145Financial statements

Notes to the nancial statements

for the year ended 31 March 2023 continued

The third quarterly interim dividend of 9.0p per ordinary share, or £67m in total (2022: 8.5p or £63m in total), was paid on 6 April 2023 as

aPropera Property Income Distribution (PID). The Board has recommended a nal divided a final dividend for the year ended 31 March 2023 of 12.0p per ordinary

share (2022: 13.0p) to be paid as a PID. This nal di. This final dividend will result in a further estimated distribution of £90m (2022: £96m). Subject to

shareholders’ approval at the Annual General Meeting, the nal div, the final dividend will be paid on 21 July 2023 to shareholders registered at the close

of business on 16 June 2023.

The total dividend paid and recommended in respect of the year ended 31 March 2023 is 38.6p per ordinary share (2022: 37.0p) resulting

ina totin a total estimated distribution of £288m (2022: £274m).

The rst qThe first quarterly dividend for the year ending 31 March 2024 will be paid in October 2023 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 nal dividfor the final dividend is close of business on 30 June 2023.

12  2 › Income tax

Accounting policy

Income tax on the prot or losIncome 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 respefor the year and any adjustment in respect of previous years. Deferred tax is provided in full using the balance sheet liability method on

temporary dierences bety differences between the carrying amounts of assets and liabilities for nancial reporties 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 expeand are expected to apply when the asset is realised, or the liability is settled.

No provision is made for temporary dierences (i) arising on the initial recognition of asorary differences (i) arising on the initial recognition of assets or liabilities, other than on a business combination,

that aecthat affect neither accounting nor taxable prot and (iir accounting nor taxable profit and (ii) relating to investments in subsidiaries to the extent that they will not reverse in the

foreseeable future.

Signicant accounting judgement 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 prots anofits and gains from

thequalifthe qualifying rental business in the UK. Non-qualifying prots and gains of the Group continue to be subjecing 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 prots mofits must arise from the tax exempt business; and

•

at least 90% of the notional taxable prot of the properotional 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 dierenceporary 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 prots will be ataxable profits will be available against which the deductible temporary dierences can be utilisey differences can be utilised.

There is no income tax charge in the income statement (2022: none). There is a deferred tax credit of £3m (2022: £5m charge) included

within Other comprehensive income.

11  1 › Dividends continued

Landsec Annual Report 2023146 Financial statements

The tax for the year is lower than the standard rate of corporation tax in the UK of 19%. The dierence. The differences are explained in the table below.

2023

m£m

2022

m£m

(Loss)/prot beprofit before tax ()(622) 875

(Loss)/proofit before tax multiplied by the rate of corporation tax in the UK of e UK of 1% 9% ()(118) 166

Adjustment for exempt property rental losses/(protsprofits) and revaluations in the year 130 ((154 )

12 12

EeEffects of:

Timing dierence on repurchasg difference on repurchase of medium term notes ()(11) ()(11)

Interest rate fair value movements and other temporary dierencesy differences ()(3) ()(3)

Non-allowable expenses and non-taxable items 6 1

Movement in unrecognised tax losses 6 1

Total income tax charge in the income statement – –

2023

m£m

2022

m£m

The Group’s deferred tax liability is analysed as follows:

Arising on business combination 6 1

Arising on pension surplus 1 6

Total deferred tax liability 9 2

Deferred tax is calculated at the rate substantively enacted at the balance sheet date of 25% (2022: 25%). The movement in the deferred

tax liability arising on the re-measurement loss on the dened beneefined benet pension schfit 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.

2023

m£m

2022

m£m

Revenue losses 245 220

Capital losses 272 272

Other unrecognised temporary diersed temporary differences 239 313

Total unrecognised items 756 805

The other unrecognised temporary dierences relate primarily to the premium paid on the redemy differences 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 2023 147Financial statements

Notes to the nancial statements

for the year ended 31 March 2023 continued

13  3 › Net cash generated from operations

Reconciliation of operating (loss)/prot to net cashofit to net cash generated from operations Group Company

2023

m£m

2022

m£m

2023

m£m

2022

m£m

Operating (loss)/protrofit ()(569) 935 ()(26) 90

Adjustments for:

Net decit/Net deficit/(surplus) on revaluation of investment properties 827 ()(416) – –

Loss/(gain) on changes in nance leases finance leases 6 ()(1) – –

Prot on disofit on disposal of trading properties ()(1) ()(2) – –

Loss/(protfit) on disposal of investment properties 144 ()(107) – –

Prot on disposProfit on disposal of investment in joint ventures – ()(2) – –

Share of loss/(proofit) from joint ventures and associates 6 ()(33) – –

Share-based payment charge 6 4 – –

Impairment of goodwill 5 6 – –

Reversal of impairment of investment in subsidiary – – ()(1) ((117 )

Rents payable 10 8 – –

Depreciation and amortisation 5 5 – –

Impairment of trading properties 19 6 – –

Other – 1 – –

453 399 ()(27) ()(27)

Changes in working capital:

(Increase)/decrease in receivables ()(17) 28 – –

(Decrease)/increase in payables and provisions ()(80) 21 27 27

Net cash generated from operations 356 448 – –

Reconciliation to adjusted net cash inousted net cash inflow from operating activities Group Company

2023

m£m

2022

m£m

2023

m£m

2022

m£m

Net cash inow frh inflow from operating activities 342 381 – –

Joint ventures net cash inow from opet cash inflow from operating activities 17 23 – –

Adjusted net cash inow from opet cash inflow from operating activities

,1,2

359 404 – –

. 1. Adjusted net cash inow frosh inflow from operating activities is now presented inclusive of cash owf cash flows from trading property activities, whereas previously it had excluded these cash

ows. Thflows. The presentation for the year ended d 3 Ma1 March h 2 has b022 has been restated to reetated to reflect this change. Refer to the Glossary for the denr the definition of Adjusted net cash inow fromh inflow from

operating activities.

2. Includes cash ows reash flows relating to the interest in MediaCity which is not owned by the Group, but is consolidated in the Group numbers.

Landsec Annual Report 2023148 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 propershare 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 £10.2bn, is an example of this proportionate share, reec, reflecting the economic interest

wehave in our propwe 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 tare required to be presented across a number of line items in the statutory ne 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.

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 dierifference 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 decit. Invtion 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 nility 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repoeach 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. The interest capitalised is calculated using the Group’s weighted average cost of borrowings. Interest is capitalised from

thecommenthe commencement of the development work until the date of practical completion. Certain internal sta and asertain internal staff and associated costs directly

attributable to the management of major schemes are also capitalised. The total sta and associa. The total staff and associated costs are capitalised based on the

proportion of time spent on the relevant scheme. Internal sta costs are capitalised from the date the Group determinetaff 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 2023 149Financial statements

Notes to the nancial statements

for the year ended 31 March 2023 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 re-measured to fair value as at the date of

thetrthe transfer with any gain or loss being taken to the income statement. The re-measured 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 signicantly afted to occur significantly after exchange, or where the Group continues to have

signicant outsignificant outstanding obligations after exchange, the control will not usually transfer to the buyer until completion.

The prot on dispoThe profit on disposal is determined as the dierence bsal is determined as the difference between the sales proceeds and the carrying amount of the asset at the beginning

ofthe accounting periof the accounting period plus capital expenditure to the date of disposal. The prot oofit 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.

Signicant accounting judgement Significant accounting judgement

Acquisition and disposal of properties

Property transactions can be complex in nature and material to the nancial statements. Te 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sabe satised before the contract is ftisfied before the contract is fullled. In tulfilled. 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Charof Chartered Surveyors (RICS) Valuation – Global Standards and UK Supplement (together the “Red Book”). Real estate by its nature is

acomplex aa complex asset class with value determined by a range of factors overlaid by interpretation and judgemental assessment of market data;

as such it is classied as a ‘Level 3 asset’ wssified as a ‘Level 3 asset’ within IFRS. Factors aectors 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, reec, reflecting asset specic data provided by manaecific 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 uncea 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 signicant mo 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’of the Group’s investment and trading properties, which could in turn have an eecties, which could in turn have an effect on the Group’s nans financial position and results.

Landsec Annual Report 2023150 Financial statements

14  4 › Investment properties

2023

m£m

2022

m£m

Net book value at the beginning of the year ,11,207 ,9,607

Transfer from joint venture

1

23 –

Acquired through acquisition of group of subsidiaries – 619

Acquisitions of investment properties

2

218 247

Capital expenditure 356 343

Capitalised interest 77 32

Net movement in head leases capitalised

3

()(16) 62

Disposals

,4,5

(,)(1,319) ()(98)

Net (decitdeficit)/surplus on revaluation of investment properties ()(827) 416

Transfers to trading properties ()(6) ()(1)

Net book value at the end of the year ,9,658 ,11,207

. 1. Recognition of property following the change in classicassification of Wind Farms from a joint venture to a subsidiary during the year. Refer to note  for furer to note 16 for further details.

2. Includes acquisition of the remaining % intereing 50% interest in St David’s for cash consideration of m£113m, including the purchase of debt and subsequent purchase of the entire share

capital of the other Limited Partner, Intu The Hayes Limited, on d, on 2 March 4 March 2023. This has been accounted for as an asset acquisition, with assets and liabilities acquired at the

date of acquisition consisting of investment property of m£113m, cash of m£11m, trade and other receivables of m£4m and trade and other payables of m£12m. The acquisition

amount in the table above also includes the transfer of the investment property held in the existing % interesng 50% interest in St David’s from investment in joint venture to wholly

owned subsidiary.

3. See note  for detae note 22 for details of the amounts payable under head leases and note  for deote 4 for details of the rents payable in the income statement.

. 4. Includes impact of disposals of nance lf finance leases.

5. Includes 5766m impact of disposal of f 2 Mo1 Moorelds. Gfields. Gross proceeds of 5742m (inclusive of development costs to go) were received following adjustments to the headline

price of m£809m for rent top up and tent top up and fit-out contributions.

The market value of the Group’s investment properties, as determined by the Group’s external valuers, diers from the net bternal valuers, differs from the net book value

presented in the balance sheet due to the Group presenting tenant nance lece 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.

2023 2022

Group

(excl. joint

ventures)

m£m

Joint

ventures

6

m£m

Adjustment

for

non-wholly

owned

subsidiaries

m£m

Combined

Portfolio

m£m

Group

(excl. joint

ventures)

m£m

Joint

ventures

1

m£m

Adjustment

for

non-wholly

owned

subsidiaries

m£m

Combined

Portfolio

m£m

Market value ,9,743 635 ()(139) ,10,239 ,11,362 800 ()(145) ,12,017

Less: properties treated as nance leases finance leases ()(17) – – ()(17) ()(11) – – ()(11)

Plus: head leases capitalised 107 6 – 108 123 9 – 132

Less: tenant lease incentives ()(175) ()(35) – ()(210) ()(212) ()(38) – ((250 )

Net book value ,9,658 601 ()(139) ,10,120 ,11,207 771 ()(145) ,11,833

Net (decitNet (deficit)/surplus on revaluation

ofinvestment pof investment properties

()(827) ()(30) 9 ()(848) 416 ()(3) ()(4) 409

. 1. Refer to note  for a breRefer to note 14 for a breakdown of this amount by entity.

The net book value of leasehold properties where head leases have been capitalised is £1,723m (2022: £2,908m).

Investment properties include capitalised interest of £271m (2022: £249m). The average rate of interest capitalisation for the year is 3.0%

(2022: 2.5%). The gross historical cost of investment properties is £8,280m (2022: £8,604m).

Valuation process

The fair value of investment properties at 31 March 2023 was determined by the Group’s external valuers, CBRE and JLL. The valuations are

inaccordance with RICin 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.

Landsec Annual Report 2023 151Financial statements

Notes to the nancial statements

for the year ended 31 March 2023 continued

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, forecasUnder this approach, forecast net cash ows, baset 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 owl cash flows would produce the fair value, is described as the equivalent yield.

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 nane, including finance and developer’s prot, to arrive at the valuation. Costs ins profit, to arrive at the valuation. Costs include future estimated costs associated with

refurbishment or development (excluding nance costsg 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 dened by IFRS 1, as defined by IFRS 13 and as explained in note 26(iii).

Accordingly,there have b, there have been no transfers of properties within the fair value hierarchy in the nancial yearchy 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properand properties owned by the Group but where a third party holds a non-controlling interest, at 31 March 2023:

2023

Market

value

m£m

Estimated rental value

 pe£ per sq ft

Equivalent yield

Costs

 pe£ per sq ft

Low Average High Low Average High Low Average

6

High

Central London

West End ocesst End offices ,2,288 20 64 156 .%4.0% .%4.3% .%5.6% –  38  231

City ocesy 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% 1 11 25

Mixed-use urban

Completed investments 518  17  25  47 .%5.5% .%6.3% .%10.0% – –  4

Developments 410  10  17  27 .%5.6% .%6.4% .%11.4% – – –

Total Mixed-use urban 928 10 76 47 .%5.5% .%6.3% .%11.4% – – 9

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% – – –

Retails 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  March Market value at 31 March 20 – Group23 – Group ,9,743

. 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  4 › Investment properties continued

Landsec Annual Report 2023152 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 2023

Impact on valuations

of % chaof 5% change in

estimated rental value

Impact on valuations

of  bpof 25 bps change in

equivalent yield

Impact on valuations

of % chaof 5% change

incoin costs

Market

value

m£m

Increase

m£m

Decrease

m£m

Decrease

m£m

Increase

m£m

Decrease

m£m

Increase

m£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 ()(9)

Total Mixed-use urban (excluding developments)  518  17 () (16)  20 () (19) – –

Total Subscale sectors (excluding developments) , 1,265  47 () (46)  16 () (13)  2 ()(2)

Developments: Mixed-use urban  410  13 () (13)  13 () (13)  1 ()(1)

Developments: income capitalisation method  167  11 () (12)  15 () (14)  4 ()(9)

Developments: residual method , 1,023  72 () (87)  104 () (107)  23 ()(40)

Market value at  March Market value at 31 March 20 – Group23 – Group , 9,743  409 () (419)  491 () (455)  48 ()(59)

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 2022:

2022

Market

value

m£m

Estimated rental value

 pe£ per sq ft

Equivalent yield

Costs

 pe£ per sq ft

Low Average High Low Average High Low Average

1

High

Central London

West End ocesst End offices ,2,613 34 65 77 .%3.8% .%4.7% .%5.0% –  18  96

City oces y offices ,1,928 56 112 280 .%4.3% .%4.6% .%6.0% –  42  95

Retail and other ,1,096 8 56 84 .%2.5% .%4.2% .%6.5% – 2 23

Total Central London ,5,637 8 79 280 .%2.5% .%4.6% .%6.5% – 23 41

Major retail

Shopping centres 852  22  26  36 .%6.3% .%7.4% .%7.8% –  2  19

Outlets 743  19  48  56 .%6.1% .%6.8% .%12.8% –  2  6

Total Major retail ,1,595 34 36 56 .%6.1% .%7.1% .%12.8% – 2 34

Mixed-use urban

Completed investments 545  15  29  72 .%4.7% .%5.7% .%8.4% – –  11

Developments 473  3  19  55 .%4.5% .%6.7% .%9.7% – – –

Total Mixed-use urban ,1,018 3 24 72 .%4.5% .%6.2% .%9.7% – – 11

Subscale sectors

Leisure 515  1  12  31 .%6.5% .%7.4% .%10.5% –  4  23

Hotels 422  2  31  30 .%4.8% .%5.7% .%7.4% – – –

Retails parks 466  12  18  24 .%4.0% .%5.7% .%7.7% –  3  32

Total Subscale sectors ,1,403 6 12 30 .%4.0% .%5.7% .%10.5% – 3 32

Developments: income capitalisation

method

923 52 12 75 .%4.1% .%4.2% .%5.0% – – –

Developments: residual method 786 34 65 94 .%4.0% .%4.2% .%5.4% – – –

Development programme ,1,709 34 11 94 .%4.0% .%4.2% .%5.4% – – –

Market value at  March Market value at 31 March 20 – Group22 – Group ,11,362

. 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.

Landsec Annual Report 2023 153Financial statements

Notes to the nancial statements

for the year ended 31 March 2023 continued

The sensitivities below illustrate the impact of changes in key unobservable inputs (in isolation) on the fair value of the Group’s properties:

Sensitivities 2022

Impact on valuations of

% chang5% change in

estimated rental value

Impact on valuations of

 bps ch25 bps change in

equivalent yield

Impact on valuations of

% chang5% change

incoin costs

Market

value

m£m

Increase

m£m

Decrease

m£m

Decrease

m£m

Increase

m£m

Decrease

m£m

Increase

m£m

Total Central London (excluding developments) , 5,637  202 () (190)  311 () (269)  2 ()(4)

Total Major retail (excluding developments) , 1,595  11 () (250)  60 () (56)  3 ()(3)

Total Mixed-use urban (excluding developments)  545  15 () (14)  24 () (22) – –

Total Subscale sectors (excluding developments) , 1,403  53 () (50)  13 () (55)  3 ()(3)

Developments: Mixed-use urban  473  31 () (15)  31 () (15) – –

Developments: income capitalisation method  923  29 () (29)  74 () (66)  10 ()(9)

Developments: residual method  786  14 () (68)  47 () (81)  34 ()(34)

Market value at  March Market value at 31 March 20 – Group22 – Group , 11,362  450 () (616)  593 () (564)  48 ()(49)

15  15 › Trading properties

Development

land and

infrastructure

m£m

Residential

m£m

Total

m£m

At  April At 1 April 2021 24 12 36

Transfer from investment properties – 6 6

Acquisitions 128 – 128

Capital expenditure 1 5 6

Disposals ()(25) – ()(25)

Impairment provision – ()(1) ()(1)

At At 3 Ma1 March ch 2022 128 32 145

Transfer from investment properties 6 – 6

Capital expenditure 6 ()(3) 1

Disposals ()(17) – ()(17)

(Impairment provision)/reversal of impairment ()(25) 6 ()(19)

At At 3 March 1 March 2021 98 20 118

The cumulative impairment provision at 31 March 2023 in respect of Development land and infrastructure was £25m (2022: £nil) and

inrespecin respect of Residential was £nil (2022: £6m).

14  4 › Investment properties continued

Landsec Annual Report 2023154 Financial statements

16  6 › Joint arrangements

Accounting policy

Joint arrangements are those entities over whose activities the Group has joint control, established by contractual agreement. Interests

injoint arrangemein 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 equitof accounting. The equity method requires the Group’s share of the joint venture’s post-tax prot or lax 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.

Where a joint venture is in a net liability position, the Group’s share of accumulated losses of a joint venture interest are recognised as net

liabilities where there is an obligation to provide for these losses.

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 nanems in the financial statements on a line-by-line basis.

The Group’s principal joint arrangements are described below:

Joint ventures

6

Percentage owned

&votin& voting rights

2

Business segment Year end date

1

Joint venture partner

Held at d at 3 March 1 March 2021

,4,5

Nova, Victoria

6

%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

Harvest

,7,9

%50% Subscale sectors 31 March J Sainsbury plc

The EbbseeThe Ebbsfleet Limited Partnership

9

%50% Subscale sectors 31 March Ebbseet Prsfleet Property Limited

West India Quay Unit Trust

9

%50% Subscale sectors 31 March Schroder UK Real Estate Fund

Mayeldfield

8,,9

%50% Mixed-use urban 31 March LCR Limited, Manchester City Council,

Transport for Greater Manchester

Curzon Park Limited

9

%50% Subscale sectors 31 March Derwent Developments (Curzon)

Limited

Plus X Holdings Limited

9

%50% Subscale sectors 31 March Paul David Rostas, Matthew Edmund

Hunter

Landmark Court Partnership Limited

9

5%1% Central London 31 March TTL Landmark Court Properties Limited

Joint operation Ownership interest Business segment Year end date

1

Joint operation partners

Held at d at 3 March 1 March 2021

Bluewater, Kent 48.%.75% Major retail 31 March M&G Real Estate and GIC

Royal London Asset Management

Aberdeen Standard Investments

. 1. Refer to Additional information pages es 20-5- for th209 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 nasing financial information for the

Group’s own reporting year and reporting date.

. 4. During the year to  March o 31 March 202, Wind Farms a3, Wind Farms are no longer classiessified as a joint venture and are consolidated together with other subsidiary undertakings. Wind Farms

includes DS Renewables LLP, Hendy Wind Farm Limited and Rhoscrowther Wind Farm Limited.

5. On  March On 24 March 20 the Gro23 the Group acquired the remaining % interesg 50% interest in St David’s Limited Partnership. From that date, the results of the operations from St David’s

areconare consolidated together with other subsidiary undertakings. Results from its operations prior to that date are included as share of prot or lf profit or loss from joint ventures.

ForfurFor furtherdetails or details on the acquisition refer to note te 1.4.

6. 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  Limiee 1 Limited and Nova Nominee  Linee 2 Limited.

2. Harvest includes Harvest  Limit 2 Limited Partnership, Harvest Development Management Limited, Harvest  Svest 2 Selly Oak Limited, Harvest  Gvest 2 GP Limited and Harvest GP Limited.

8. Mayefield includes Mayeld Dfield Development Partnership LP and Mayelfield Development (General Partner) Limited.

9. Included within Other in subsequent tables.

Landsec Annual Report 2023 155Financial statements

Notes to the nancial statements

for the year ended 31 March 2023 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 Ebbseet Limie Ebbsfleet Limited Partnership which is a holding

company and Harvest which is engaged in long-term development contracts. 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  March ed 31 March 2023

Comprehensive income statement

Nova,

Victoria

%100%

m£m

Southside

Limited

Partnership

%100%

m£m

St. David’s

Limited

Partnership

%100%

m£m

Westgate

Oxford

Alliance

Partnership

%100%

m£m

Other

%100%

m£m

Total

%100%

m£m

Total

Group share

m£m

Revenue

6

49 10 11 34 9 130 65

Gross rental income (after rents payable) 36 10 25 27 9 102 51

Net rental income 36 7 16 77 2 83 42

EPRA earnings before interest 35 6 15 77 2 80 93

Finance expense ()(17) ()(6) – – – ()(71) ()(11)

Net nanceNet finance expense ()(17) ()(6) – – – ()(71) ()(11)

EPRA earnings 18 – 15 77 2 57 29

Capital and other items

Net (deciteficit)/surplus on revaluation of investment

properties

()(67) 6 6 ()(8) 8 ()(60) ()(30)

(Loss)/prot beprofit before tax ()(49) 6 76 14 10 ()(3) ()(1)

Post-tax (loss)/protprofit ()(49) 6 76 14 10 ()(3) ()(1)

Total comprehensive (loss)/income ()(49) 6 76 14 10 ()(3) ()(1)

Group share of (loss)/prot beprofit before tax ()(24) – 10 7 6 ()(1)

Group share of post-tax (loss)/prot/profit ()(24) – 10 7 6 ()(1)

Group share of total comprehensive (loss)/income ()(24) – 10 7 6 ()(1)

1. Revenue includes gross rental income (before rents payable), service charge income, other property related income and income from development contracts.

16  6 › Joint arrangements continued

Landsec Annual Report 2023156 Financial statements

Joint ventures Year ended ed 3 M1 March arch 2022

Comprehensive income statement

Nova,

Victoria

10%0%

m£m

Southside

Limited

Partnership

10%0%

m£m

St. David’s

Limited

Partnership

10%0%

m£m

Westgate

Oxford

Alliance

Partnership

10%0%

m£m

Other

10%0%

m£m

Total

10%0%

m£m

Total

Group share

m£m

Revenue

6

45 11 33 02 6 132 64

Gross rental income (after rents payable) 36 10 25 26 6 103 52

Net rental income 29 11 32 25 – 82 41

EPRA earnings before interest 29 10 15 24 ()(3) 77 39

Finance expense ()(30) ()(1) – – – ()(34) ()(10)

Net nanceNet finance expense ()(30) ()(1) – – – ()(34) ()(10)

EPRA earnings 31 4 15 24 ()(3) 58 29

Capital and other items

Net surplus/(decideficit) on revaluation of investment

properties

31 ()(3) ()(20) ()(2) – ()(2) ()(3)

Prot on disofit on disposal of investment properties – – – – 12 12 8

Loss on disposal of trading properties – – – – ()(2) ()(2) ()(3)

Prot/Profit/(loss) before tax 32 3 ()(5) 22 9 61 33

Post-tax prot/ax profit/(loss) 32 3 ()(5) 22 9 61 33

Total comprehensive income/(loss) 32 3 ()(5) 22 9 61 33

Group share of prot/are of profit/(loss) before tax 31 2 ()(3) 11 2 33

Group share of post-tax prottax profit/(loss) 31 2 ()(3) 11 2 33

Group share of total comprehensive income/(loss) 31 2 ()(3) 11 2 33

1. Revenue includes gross rental income (before rents payable), service charge income, other property related income and income from development contracts.

Landsec Annual Report 2023 157Financial statements

Notes to the nancial statements

for the year ended 31 March 2023 continued

Joint ventures  Marc31 March h 2023

Balance sheet

Nova,

Victoria

%100%

m£m

Southside

Limited

Partnership

%100%

m£m

St. David’s

Limited

Partnership

%100%

m£m

Westgate

Oxford

Alliance

Partnership

%100%

m£m

Other

%100%

m£m

Total

%100%

m£m

Total

Group share

m£m

Investment properties

1

748 619 – 225 98 ,1,205 601

Non-current assets 748 619 – 225 98 ,1,205 601

Cash and cash equivalents 36 1 – 23 7 69 35

Other current assets 64 9 – 61 68 154 78

Current assets 100 12 – 36 75 771 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)

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 liabilities

2

– ()(9) – – – ()(9) ()(5)

Market value of investment properties

6

807 619 – 711 98 ,1,272 635

Net cash/(debt)

1

36 1 – 23 7 69 35

. 1. The dieThe 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 nance leases finance leases, where applicable.

2. The Group’s share of accumulated losses of a joint venture interest are recognised as net liabilities (see note te 3) whe3) where there is an obligation to provide for these losses.

3. Excludes funding provided by the Group and its joint venture partners.

16  6 › Joint arrangements continued

Landsec Annual Report 2023158 Financial statements

Joint ventures  Ma31 March h 2022

Balance sheet

Nova,

Victoria

10%0%

m£m

Southside

Limited

Partnership

10%0%

m£m

St. David’s

Limited

Partnership

10%0%

m£m

Westgate

Oxford

Alliance

Partnership

10%0%

m£m

Other

10%0%

m£m

Total

10%0%

m£m

Total

Group share

m£m

Investment properties

1

815 133 235 236 132 ,1,551 771

Non-current assets 815 133 235 236 132 ,1,551 771

Cash and cash equivalents 27 4 10 12 10 10 31

Other current assets 10 2 13 14 53 150 105

Current assets 90 11 23 26 10 213 136

Total assets 905 144 258 262 195 ,1,764 907

Trade and other payables and provisions ()(22) ()(10) ()(9) ()(10) ()(12) ()(10) ()(44)

Current liabilities ()(22) ()(10) ()(9) ()(10) ()(12) ()(10) ()(44)

Non-current liabilities ()(139) ()(145) ()(22) ()(3) ()(131) ()(440) ()(168)

Total liabilities ()(161) ()(155) ()(31) ()(30) ()(143) ()(503) ()(212)

Net assets/(liabilities) 744 ()(11) 227 249 52 ,1,261 695

Comprised of:

Net assets 744 – 227 249 52 ,1,272 700

Accumulated losses recognised as net liabilities

2

– ()(11) – – – ()(11) ()(5)

Market value of investment properties

6

870 133 226 247 124 ,1,600 800

Net cash/(debt)

1

27 2 ()(1) 12 4 39 34

. 1. The dieThe 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 nance leases finance leases, where applicable.

2. The Group’s share of accumulated losses of a joint venture interest are recognised as net liabilities (see note te 3) whe3) 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 2023 159Financial statements

Notes to the nancial statements

for the year ended 31 March 2023 continued

Joint ventures

Net investment

Nova,

Victoria

Group share

m£m

Southside

Limited

Partnership

Group share

m£m

St. David’s

Limited

Partnership

Group share

m£m

Westgate

Oxford

Alliance

Partnership

Group share

m£m

Other

Group share

m£m

Total

Group share

m£m

At  April At 1 April 2021 351 ()(2) 124 125 32 625

Total comprehensive income/(loss) 31 2 ()(3) 11 2 33

Acquisitions – – – – 54 54

Non-cash contributions 5 – – – – 5

Cash distributions – – ()(8) ()(11) ()(3) ()(22)

At At 3 Ma1 March ch 2022 372 ()(5) 113 125 90 695

Total comprehensive (loss)/income ()(24) – 10 7 6 ()(1)

Cash distributions – – ()(9) ()(8) ()(2) ()(14)

Other distributions – – – – ()(7) ()(7)

Disposals and transfers from joint arrangements – – ()(119) – ()(25) ()(144)

Other non-cash movements – – – – ()(1) ()(1)

At At 3 March 1 March 2021 348 ()(5) – 679 61 528

Comprised of:

At At 3 Ma1 March ch 2022

Non-current assets 372 – 113 125 90 700

Non-current liabilities

1

– ()(5) – – – ()(5)

At At 3 Ma1 March ch 2023

Non-current assets 348 – – 679 61 533

Non-current liabilities

6

– ()(5) – – – ()(5)

. 1. The Group’s share of accumulated losses of a joint venture interest are recognised as net liabilities (see note e note 33) where there is an obligation to provide for these losses.

16  6 › Joint arrangements continued

Landsec Annual Report 2023160 Financial statements

17  7 › Investments in associates

Accounting policy

Associates are those entities over whose nansociates are those entities over whose financial and operating policy decisions the Group has signicant inuence, established bye 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 prot orax 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, acquired as part of the purchase of the share capital of U+I Group PLC in the prior year, are

described below:

Associates

6

Percentage owned and voting rights Year end date Business segment

CDSR Burlington House Developments Limited %20% 3 De1 December Subscale sectors

Northpoint Developments Limited 42% 3 December1 December Subscale sectors

YC Shepherds Bush Limited

2

18..9% 3 De1 December Subscale sectors

. 1. Refer to Additional information pages es 20-5- for th209 for the full list of the Group’s related undertakings.

2. The Group’s investment in YC Shepherds Bush Limited was reduced from rom 2.4.% to 5% to 1.8.% foll9% following capital calls during the year.

All of the Group’s associates have their principal place of business in the United Kingdom, except for CDSR Burlington House Developments

Limited which operates in Ireland. All of 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.

All associates are registered in England and Wales with the exception of CDSR Burlington House Developments Limited which is registered

in Ireland.

The Group’s share of prot or loss from its share of profit or loss from its investments in associates was £nil (2022: £nil).

Associates

Net investment

Total

Group share

m£m

At  April At 1 April 2021 –

Acquisitions 4

At At 3 Ma1 March ch 2022 4

Reduction in investment ()(1)

At At 3 March 1 March 2021 1

18  8 › Capital commitments

2023

m£m

2022

m£m

Contracted capital commitments at the end of the year in respect of:

Investment properties 153 289

Trading properties 76 3

Joint ventures (our share) 6 1

Total capital commitments 175 293

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 2023 161Financial statements

Notes to the nancial statements

for the year ended 31 March 2023 continued

19  9 › Net investment in nance leasesn finance leases

Accounting policy

Where the Group’s leases transfer the signicant risks aneases transfer the significant risks and rewards incidental to ownership of the underlying asset to the tenant, the lease

isaccounted for as a nance leis 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 nance lease receid as a finance lease receivable. The nan. The finance lease receivable is derecognised in the event that the lease is terminated. Lease income

is recognised over the period of the lease, reec, reflecting a constant rate of return. The dierence b. The difference between the gross receivable and the present

value of the receivable is recognised as nance incomgnised as finance income within Revenue over the lease term.

2023

m£m

2022

m£m

Non-current

Finance leases – gross receivables 38 82

Unguaranteed residual value 1 28

Unearned nance incomed finance income ()(20) ()(40)

76 70

Current

6

Finance leases – gross receivables 2 6

Unearned nance income d finance income ()(1) ()(4)

6 2

Net investment in nance lent in finance leases 77 72

Gross receivables from nance les from finance leases due:

No later than one year 2 6

One to two years 2 6

Two to three years 2 6

Three to four years 2 6

Four to ve yeo five years 6 6

More than ve yearMore than five years 31 58

93 88

Unguaranteed residual value 1 28

Unearned nance incomed finance income ()(21) ()(44)

Net investment in nance lent in finance leases 77 72

. 1. Included in Other Receivables in note ote 3.1.

The Group has leased out several investment properties under nance lties under finance leases, which range from 20 to 40 years in duration from the

inception of the lease. During the year to 31 March 2023, the surrender of a tenant lease resulted in the derecognition of the related net

investment in nance linvestment in finance lease of £50m.

Landsec Annual Report 2023162 Financial statements

20  20 › Intangible assets

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leat 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 ve years.omic lives, normally three to five years.

Goodwill

m£m

Software

m£m

Other

intangible

asset

m£m

Total

m£m

At  April At 1 April 2021 1 5 2 8

Capital expenditure – 2 – 2

Additions 6 – – 6

Amortisation – ()(2) – ()(2)

Impairment ()(1) – – ()(1)

At At 3 Ma1 March ch 2022 1 5 2 8

Additions 5 – – 5

Amortisation – ()(2) – ()(2)

Impairment ()(5) – – ()(5)

At At 3 March 1 March 2021 6 1 2 6

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 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 intangible asset is amortised or impaired, and the

corresponding element of the goodwill is being tested for impairment.

In the year ended 31 March 2023, the intangible asset has been impaired by £nil (2022: £nil). The recoverable amount of the intangible asset

has been based on its value in use, using a discount rate of 7.0% (2022: 4.0%).

Landsec Annual Report 2023 163Financial statements

Notes to the nancial statements

for the year ended 31 March 2023 continued

Section 4 – Capital structure and ure and financing

This section focuses on the Group’s nancins financing structure, including borrowings and nancial risk manings 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 nancial andate 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 exerm 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 exibiliterable flexibility to move assets between the two, we are able to raise the most

appropriate nance for ee finance for each specic asset or joint venturefic asset or joint venture.

21  21 › Capital structure

2023 2022

3

Group

m£m

Joint

ventures

m£m

Adjustment

for

non-wholly

owned

subsidiaries

m£m

Combined

m£m

Group

m£m

Joint

ventures

m£m

Adjustment

for non-wholly

owned

subsidiaries

m£m

Combined

m£m

Property portfolio

Market value of investment properties ,9,743 635 ()(139) ,10,239 ,11,362 800 ()(145) ,12,017

Trading properties and long-term contracts 118 – – 118 145 1 – 146

Total property portfolio (a) ,9,861 635 ()(139) ,10,357 ,11,507 801 ()(145) ,12,163

Net debt

Borrowings ,3,431 – ()(73) ,3,358 ,4,430 3 ()(20) ,4,360

Monies held in restricted accounts and

deposits

()(9) – 6 ()(3) ()(4) –

–

((4 )

Cash and cash equivalents ()(41) ()(35) 2 ()(74) ()(146) ()(31) 5 ()(172)

Fair value of interest-rate swaps ()(44) – 2 ()(42) ()(21) – 2 ((19 )

Fair value of foreign exchange swaps and

forwards

6 – – 6 ()(5) –

–

((5 )

Net debt (b) ,3,348 ()(35) ()(68) ,3,245 ,4,254 ()(28) ()(11) ,4,160

Less: Fair value of interest-rate swaps 44 – ()(2) 42 21 – ()(2) 34

Adjusted net debt (c) ,3,392 ()(35) ()(70) ,3,287 ,4,275 ()(28) ()(68) ,4,179

Adjusted total equity

Total equity (d) ,7,072 – ()(67) ,7,005 ,7,991 – ()(74) ,7,917

Fair value of interest-rate swaps ()(44) – 2 ()(42) ()(21) – 2 ((19 )

Adjusted total equity (e) ,7,028 – ()(65) ,6,963 ,7,970 – ()(72) ,7,898

Gearing (b/d) .%47.3% .%46.3% .%53.2% .%52.5%

Adjusted gearing (c/e) .%48.3% .%47.2% .%53.6% .%52.9%

Group LTV (c/a) .%34.4% .%31.7% .%37.2% .%34.4%

EPRA LTV

6

.%33.2% .%35.5%

Security Group LTV .%33.0% .%36.4%

Weighted average cost of debt

2

.%2.7% .%2.7% .%2.4% .%2.4%

. 1. EPRA LTV is a new measure introduced by EPRA in the current year. The EPRA measure diers froffers from the 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. EPRA LTV was not presented in the nted in the financial statements as at t 3 Marc1 March h 2022

as the measure had not yet been introduced. EPRA LTV would have been presented as d as 35..5% at t 3 Marc1 March h 2022.

2. The weighted average cost of debt is calculated based on historical average rates of gross debt for the period. The weighted average cost of debt as at  March t as at 31 March 20 has22 has

been restated to reectated to reflect average rates of gross debt for the period, rather than average rates of net debt used in the calculation in previous periods.

3. Cash and cash equivalents and monies held in restricted accounts and deposits have been restated as at t 3 Marc1 March h 2 follow022 following a claricaarification by IFRIC on classicasification

offuof funds with externally imposed restrictions. There was no impact on computed net debt, adjusted net debt, gearing, adjusted gearing, Group LTV and Security Group LTV.

Landsec Annual Report 2023164 Financial statements

22  22 › Borrowings

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 dierence by difference between the amount initially recognised and the redemption

value being recognised in the income statement over the period of the borrowings, using the eece borrowings, using the effective interest method.

When debt rebt refinancing exercises are carried out, existing liabilities will be treated as being extinguished when the new liability is substantially

dierent from the existing liabilidifferent 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.

2023 2022

Secured/

unsecured

Fixed/

oatinfloating

EecEffective

interest rate

Nominal/

notional

value

m£m

Fair

value

m£m

Book

value

m£m

Nominal/

notional

value

m£m

Fair

value

m£m

Book

value

m£m

Current borrowings

Commercial paper

Sterling Unsecured Floating SONIA  marginSONIA + margin – – – 140 140 140

Euro Unsecured Floating SONIA  marginSONIA + margin 167 167 167 217 217 217

US Dollar Unsecured Floating SONIA  marginSONIA + margin 145 145 145 142 142 142

Euro loan note Unsecured Fixed .4.8 – – – 30 30 30

Syndicated and bilateral

bank debt

Secured Floating SONIA  maSONIA + margin – – – 2 2 2

Syndicated and bilateral

bank debt

Secured Floating Euribor  marginEuribor + margin – – – 10 10 10

Total current borrowings 167 167 167 541 541 541

Amounts payable under

head leases

.3.4 1 1 1 – – –

Total current borrowings

including amounts payable

under head leases

315 315 315 541 541 541

Non-current borrowings

Medium term notes (MTN)

AA1 0 4..82% MTN due 5% MTN due 2025 Secured Fixed .5.0 10 10 10 10 10 10

A A12 1.42% MTN due 4% MTN due 2026 Secured Fixed .2.0 400 389 400 400 399 399

A A4 5..391% MTN due e 2026 Secured Fixed .5.4 17 17 17 32 18 32

A A5 5..391% MTN due e 2022 Secured Fixed .5.4 87 87 87 87 93 87

AA1 6 2..375% MTN due % MTN due 2022 Secured Fixed .2.5 350 317 348 350 351 348

A A6 5..326% MTN due % MTN due 2029 Secured Fixed .5.4 65 66 65 65 74 65

A A13 2..3% MTN due 99% MTN due 2031 Secured Fixed .2.4 133 263 299 300 299 299

A A7 5..341% MTN due % MTN due 2032 Secured Fixed .5.4 77 79 77 77 107 77

AA1 2 4..82% MTN due 5% MTN due 2034 Secured Fixed .5.0 400 406 394 – – –

A A11 5..12% MTN due 5% MTN due 2036 Secured Fixed .5.1 50 50 50 50 68 50

AA1 4 2.62% MTN due 5% MTN due 2039 Secured Fixed .2.6 500 378 494 500 491 494

A A15 2.2% MT50% MTN due ue 2059 Secured Fixed .2.7 500 167 495 500 497 495

,2,756 ,2,374 ,2,736 ,2,356 ,2,407 ,2,341

Syndicated and bilateral

bank debt

Secured Floating SONIA  maSONIA + margin 383 383 383 ,1,546 ,1,546 ,1,546

Syndicated and bilateral

bank debt

Secured Floating Euribor  marginEuribor + margin – – – 2 2 2

Total non-current borrowings ,3,139 ,2,757 ,3,119 ,3,904 ,3,955 ,3,889

Amounts payable under

head leases

.3.4 104 142 104 123 164 123

Total non-current borrowings including

amounts payable under head leases

,3,243 ,2,899 ,3,223 ,4,027 ,4,119 ,4,012

Total borrowings including amounts

payable under head leases

,3,558 ,3,214 ,3,538 ,4,568 ,4,660 ,4,553

Total borrowings excluding amounts

payable under head leases

,3,451 ,3,069 ,3,431 ,4,445 ,4,496 ,4,430

Landsec Annual Report 2023 165Financial statements

Notes to the nancial statements

for the year ended 31 March 2023 continued

Reconciliation of the movement in borrowings

2023

m£m

2022

m£m

At the beginning of the year ,4,553 ,3,516

Bank debt assumed through acquisition of subsidiaries – 403

Proceeds from new borrowings – ,1,053

Repayment of bank debt (,)(1,407) ()(489)

Issue of MTNs (net of nance feet of finance fees) 394 –

Foreign exchange movement on non-Sterling borrowings 14 8

Movement in amounts payable under head leases ()(16) 62

At At 3 March 1 March ,3,538 ,4,553

Reconciliation of movements in liabilities arising from nancingom financing activities 2023

Non-cash changes

At the

beginning

of the

year

m£m

Cash

owsflows

m£m

Foreign

exchange

movements

m£m

Other

changes

in fair

values

m£m

Other

changes

m£m

At the end

of the

year

m£m

Borrowings ,4,553 (,)(1,013) 14 – ()(16) ,3,538

Derivative nancial insDerivative financial instruments ()(26) 25 ()(14) ()(71) – ()(38)

,4,527 ()(988) – ()(71) ()(16) ,3,500

2022

Borrowings ,3,516 564 8 – 465 ,4,553

Derivative nancial insDerivative financial instruments 3 ()(3) ()(8) ()(12) ()(1) ()(26)

,3,519 561 – ()(12) 459 ,4,527

Medium term notes

The MTNs are secured on the xed and oThe MTNs are secured on the fixed and floating pool of assets of the Security Group. The Security Group includes investment properties,

development properties, the X-Leisure fund, and the Group’s investment in Westgate Oxford Alliance Limited Partnership, Nova, Victoria and

Southside Limited Partnership, in total valued at £9.6bn at 31 March 2023 (31 March 2022: £11.2bn). The secured debt structure has a tiered

operating covenant regime which gives the Group substantial exibiliantial 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 xed until the expection 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 oating on a SONIA basis pe floating on a SONIA basis plus an increased margin

(relative to that at the time of issue), or subject to a xeo a fixed coupon uplift, depending on the terms and conditions of the specic notes.ns of the specific notes.

The eecThe effective interest rate is based on the coupon paid and includes the amortisation of issue costs. 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 did not purchase any MTNs (2022: none).

At 31 March 2023, the Group’s committed facilities totalled £3,007m (31 March 2022: £3,022m).

Syndicated and bilateral bank debt

Authorised Drawn Undrawn

Maturity as

at  Marat 31 March

2023

m£m

2022

m£m

2023

m£m

2022

m£m

2023

m£m

2022

m£m

Syndicated debt 2022 – 12 – 12 – –

Syndicated debt –2024–27 ,2,782 ,2,785 383 ,1,393 ,2,399 ,1,392

Bilateral debt 2026 225 225 – 155 225 70

,3,007 ,3,022 383 ,1,560 ,2,624 ,1,462

22  22 › Borrowings continued

Landsec Annual Report 2023166 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 2023 and £294m drawn at 31 March 2022). During the year

ended 31 March 2023, the amounts drawn under the Group’s facilities decreased by £1,177m.

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. The total amount of cash and available undrawn facilities, net of commercial

paper, at 31 March 2023 was £2,353m (31 March 2022: £1,109m, restated following the IFRIC claricam, restated following the IFRIC clarification on the classication of ftion on the classification of funds with

externally imposed restrictions during the year).

23  23 › Monies held in restricted accounts and deposits

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, does not meet the denition of cash and cash ee definition of cash and cash equivalents.

Group Company

2023

m£m

2022

(restated)

1

m£m

2023

m£m

2022

(restated)

1

m£m

Cash at bank and in hand – – – –

Short–term deposits 9 4 – –

9 4 – –

. Monie1. Monies held in restricted accounts and deposits have been restated as at  March d as at 31 March 20 foll22 following a clarilarification by IFRIC on classiassification of funds with externally

imposed restrictions.

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

2023

m£m

2022

(restated)

1

m£m

2023

m£m

2022

(restated)

1

m£m

Counterparties with external credit ratings

AA+ 9 – – –

A – 4 – –

9 4 – –

imposed restrictions.

24  24 › Cash and cash equivalents

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 classied as catricted 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 ows.ose of the statement of cash flows.

Group Company

2023

m£m

2022

(restated)

1

m£m

2023

m£m

2022

(restated)

1

m£m

Cash at bank and in hand 41 146 2 2

41 146 2 2

. Cash an1. Cash and cash equivalents have been restated as at  March ted as at 31 March 202 fo2 following a claricatioification by IFRIC on classicatioification of funds with externally imposed restrictions.

Landsec Annual Report 2023 167Financial statements

Notes to the nancial statements

for the year ended 31 March 2023 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

2023

m£m

2022

(restated)

1

m£m

2023

m£m

2022

(restated)

1

m£m

Counterparties with external credit ratings

AA+ 34 130 – –

A 6 14 2 1

A- 6 1 – 1

BBBBBB+ – 1 – –

41 146 2 2

. 1. Cash and cash equivalents have been restated as at t 3 M1 March arch 20 fol22 following a claricatiofication by IFRIC on classicatiofication of funds with externally imposed restrictions.

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 osetct to offsetting agreements.

2023  (re2022 (restated)

1

Gross

amounts of

nancialfinancial

assets

m£m

Gross

amounts of

nancialfinancial

liabilities

m£m

Net amounts

recognised in

the balance

sheet

m£m

Gross

amounts of

nancialfinancial

assets

m£m

Gross

amounts of

nancialfinancial

liabilities

m£m

Net amounts

recognised in

the balance

sheet

m£m

Assets

Cash and cash equivalents 101 ()(60) 41 152 ()(1) 146

101 ()(60) 41 152 ()(1) 146

25  25 › Derivative nance financial instruments

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 ows baseated 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 nance exme statement, within net finance expense.

Carrying value of derivative  derivative financial instruments

2023

m£m

2022

m£m

Current assets 1 5

Non-current assets 41 21

Current liabilities ()(6) –

Non-current liabilities – –

38 26

Notional amount

2023

m£m

2022

m£m

Interest-rate swaps

1

,1,559 894

Foreign exchange swaps 319 348

,1,878 ,1,242

. A1. At  March t 31 March 202, the Group h3, the Group held forward starting pay-6xed and receive-oatin-floating rate interest-rate swaps of £940m (202: 2: £22m) which a5m) which are included in the notional

amounts above.

24  24 › Cash and cash equivalents continued

Landsec Annual Report 2023168 Financial statements

26  6 › 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 54 to 59). This note provides further detail on nancial risk managen financial risk management and includes quantitative

information on specic nancial riskn specific financial risks.

The Group is exposed to a variety of nanciosed 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 eecdverse effects of these on the Group’s nancial pes financial performance and

includes the use of derivative nancial inse 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 nancial aold its financial assets to collect the contractual cash ows, or whet the contractual cash flows, or whether it intends to sell them

before maturity and classies its nanciassifies its financial instruments into the appropriate categories. The following table summarises the Group’s

nancial assfinancial assets and liabilities into the categories required by IFRS 7 Financial Instruments: Disclosures:

2023

m£m

Group

2022

1

m£m

2023

m£m

Company

2022

1

m£m

Financial assets at amortised cost 450 570 – –

Cash and cash equivalents 41 146 2 2

Financial liabilities at amortised cost (,)(3,750) (,)(4,777) (,)(2,821) (,)(2,912)

Financial instruments at fair value through prot or lossgh profit or loss 38 26 – –

(,)(3,221) (,)(4,035) (,)(2,819) (,)(2,910)

. Cash an1. Cash and cash equivalents and monies held in restricted accounts and deposits, and the impacted categories in the table above, have been restated as at s at 3 M1 March arch 2022

following a clariclarification by IFRIC on classiassification of funds with externally imposed restrictions.

Financial risk factors

(i) Credit risk

The Group’s principal nans principal financial assets are cash and cash equivalents, trade and other receivables, net investment in nance leastment in finance leases and

amounts due from joint ventures. Further details concerning the credit risk of counterparties is provided in the note that specically relat specifically relates

to each type of asset.

Bank and nancial institutiBank and financial institutions

The principal credit risks of the Group arise from nancial credit risks of the Group arise from financial derivative instruments and deposits with banks and nancial institus 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 nancials and financial

institutions with a minimum rating of A- are accepted. For UK banks and n. 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 nancial insratings of all financial institution counterparties. Furthermore, the treasury function ensures that funds deposited with a single nanposited 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 lings or company voluntary arrangey 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 leprior 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 2023 169Financial statements

Notes to the nancial statements

for the year ended 31 March 2023 continued

Net investment in nannt in finance leases

This balance relates to amounts receivable from tenants in respect of tenant nance let of tenant finance leases. This is not considered a signicant crediases. This is not considered a significant credit risk

as the tenants are generally of good nancial standing.od financial standing.

(ii) Liquidity risk

The Group actively maintains a mixture of notes with nal maturities bith final maturities between 2025 and 2059, commercial paper and medium-term

committed bank facilities that are designed to ensure that the Group has sucient availabat are designed to ensure that the Group has sufficient available funds for its operations and its committed

capital expenditure programme.

Management monitors the Group’s available funds as follows

2023

m£m

2022

(restated)

2

m£m

Cash and cash equivalents 41 146

Commercial paper ()(312) ()(499)

Undrawn facilities ,2,624 ,1,462

Cash and available undrawn facilities ,2,353 ,1,109

As a proportion of drawn debt

6

.%68.2% .%25.0%

. Base1. Based on nominal values, including MTNs and commercial paper.

2. Cash and cash equivalents and monies held in restricted accounts and deposits, and the impacted categories, have been restated as at  March ted as at 31 March 202 fo2 following

a claricatirification by IFRIC on classicatisification of funds with externally imposed restrictions.

The Group’s core nancing ss core financing structure is in the Security Group, although the Non-restricted Group may also secure independent funding.

Security Group

The Group’s principal nans 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 property portfolio and certain investments in joint ventures. These arrangements

operate in ‘tiers’ determined by LTV and interest cover ratio (ICR). This structure is most exible at lt 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 prescriptive. No nancial covenant default is triggeo financial covenant default is triggered until the applicable LTV exceeds 100% or the ICR is less than 1.0x.

As at 31 March 2023, the reported LTV for the Security Group was 33.0% (2022: 36.4%), meaning that the Group was operating in Tier 1

and beneted from maximum opnefited from maximum operational exibilierational 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  6 › Financial risk management continued

Landsec Annual Report 2023170 Financial statements

The table below analyses the Group’s nancial liabilis 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 owsd cash flows.

2023

Less than

 year1 year

m£m

Between n 1

and

 years2 years

m£m

Between n 2

and

 years5 years

m£m

Over

 years5 years

m£m

Total

m£m

Borrowings (excluding lease liabilities) 837 463 717 ,2,476 ,4,493

Derivative nancial insDerivative 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

2022

Less than

 yea1 year

m£m

Between en 1

and

 yea2 years

m£m

Between en 2

and

 yea5 years

m£m

Over

 yea5 years

m£m

Total

m£m

Borrowings (excluding lease liabilities) 623 512 ,2,184 ,2,096 ,5,415

Lease liabilities 3 3 10 395 411

Trade payables 26 – – – 26

Capital accruals 42 – – – 42

Accruals 75 – – – 75

Other payables 20 – 8 – 81

842 515 ,2,202 ,2,491 ,6,050

(iii) Market risk

The Group is exposed to market risk through interest rates, availability 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exof its existing debt plus increases in debt associated with net committed capital expenditure to be at xee to be at fixed interest rates for the coming

three years and at least 50% for years four and ve. Due to a combination of faceast 50% for years four and five. Due to a combination of factors, including the degree of certainty required under

IFRS9 Financial insIFRS 9 Financial instruments, the Group does not apply hedge accounting to hedging instruments used in this context. Specic intcific interest-rate

hedges are also used from time to time to x the interest rate exposure on our do fix the interest rate exposure on our debt. Where specic hedgecific hedges are used to x tes are used to fix the interest

exposure on oexposure on floating rate debt, these may qualify for hedge accounting.

At 31 March 2023, the Group (including the Group’s share of joint ventures and non-wholly owned subsidiaries) had pay-xed and rece-fixed and receive-

oating interest-floating interest-rate swaps in place with a nominal value of £619m (2022: £619m) and forward starting pay-xed interest-fixed interest-rate swaps of

£940m (2022: £275m). The Group’s net debt (including the Group’s share of joint ventures and non-wholly owned subsidiaries) was 100.6%

xed (2fixed (2022: 70.0%) and based on the Group’s debt balances at 31 March 2023, a 1% increase/(decrease) in interest rates would increase/

(decrease) the annual net nance expal net finance expense in the income statement and reduce/(increase) equity by £1m (2022: £9m). The sensitivity has

been calculated by applying the interest rate change to the ohe floating rate components of borrowings, interest rate swaps as well as cash

and cash equivalents.

Landsec Annual Report 2023 171Financial statements

Notes to the nancial statements

for the year ended 31 March 2023 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’is not the Group’s functional currency.

As it is UK based, the Group’s foreign exchange risk is low. The vast 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

2023, the Group had issued €190m (2022: €255m) and $180m (2022: $185m) of commercial paper, fully hedged through foreign exchange

swaps. A 10% weakening or strengthening of Sterling would therefore have £nil (2022: £nil) impact in the income statement and equity

arising from foreign currency borrowings.

Where additional foreign exchange risk is identienal foreign exchange risk is identified (not linked to commercial paper borrowing), 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 2023, the Group

had no foreign currency exposures being managed using foreign currency derivative contracts (2022: €6m exposure, which were entered

into in order to economically hedge our exposure to movements in foreign currencies). A 10% weakening or strengthening of Sterling would

therefore have no impact on the prot bect on the profit before tax and/or total equity (2022: £1m impact).

Financial maturity analysis

The interest rate prole of tThe interest rate profile of the Group’s borrowings is set out below (based on notional values):

2023 2022

Fixed

rate

m£m

Floating

rate

m£m

Total

m£m

Fixed

rate

m£m

Floating

rate

m£m

Total

m£m

Sterling ,2,863 383 ,3,246 ,2,479 ,1,700 ,4,179

Euro – 167 167 30 217 247

US Dollar – 145 145 – 142 142

,2,863 695 ,3,558 ,2,509 ,2,059 ,4,568

The expected maturity proles of the Gofiles of the Group’s borrowings are as follows (based on notional values):

2023 2022

Fixed

rate

m£m

Floating

rate

m£m

Total

m£m

Fixed

rate

m£m

Floating

rate

m£m

Total

m£m

One year or less, or on demand 427 167 739 30 511 541

More than one year but not more than two years 87 292 379 427 2 429

More than two years but not more than ve yearsot more than five years 415 91 506 437 ,1,546 ,1,983

More than ve yearMore than five years ,1,934 – ,1,934 ,1,615 – ,1,615

Borrowings ,2,863 695 ,3,558 ,2,509 ,2,059 ,4,568

Eect oEffect of hedging 619 ()(619) – 400 ()(400) –

Borrowings net of interest–rate swaps ,3,482 76 ,3,558 ,2,909 ,1,659 ,4,568

The expected maturity proles of the Gofiles of the Group’s derivative instruments are as follows (based on notional values):

2023 2022

Foreign

exchange

swaps

m£m

Interest–

rate

swaps

m£m

Foreign

exchange

swaps

m£m

Interest–

rate

swaps

m£m

One year or less, on demand 319 400 360 –

More than one year but not more than two years – 494 – 400

More than two years but not more than ve yearsot more than five years – 665 – 494

More than ve yearMore than five years – – – –

319 ,1,559 360 894

26  6 › Financial risk management continued

Landsec Annual Report 2023172 Financial statements

Valuation hierarchy

Derivative tive financial instruments and nancial assetd financial assets at fair value through other comprehensive income (other investments) are the only

nancial insfinancial instruments which are carried at fair value. For nancial instrume. 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 methoby valuation method:

2023 2022

Level Level 1

m£m

Level Level 2

m£m

Level Level 3

m£m

Total

m£m

Level l 1

m£m

Level l 2

m£m

Level l 3

m£m

Total

m£m

Assets – 44 – 44 – 26 – 26

Liabilities – ()(6) – ()(6) – – – –

Note:

Level Level 3: valued using unadjusted quoted prices in active markets for identical nancial instruments.: valued using unadjusted quoted prices in active markets for identical financial instruments.

Level : valueLevel 2: valued using techniques based on information that can be obtained from observable market data.

Level 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 2.7% (31 March 2022: 2.2%), is £145m

(31 March 2022: £164m). The fair value of the Group’s net investment in tenant nance leases, calculaant finance leases, calculated by the Group’s external valuer

byapplyinby applying a weighted average equivalent yield of 7.9% (31 March 2022: 4.9%), is £16m (31 March 2022: £66m).

The fair values of any oaThe fair values of any floating rate nancial lie 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 nanciThe fair values of the financial instruments have been determined by reference to relevant market prices, where available. The fair values

ofthe Group’of the Group’s outstanding interest-rate swaps have been estimated by calculating the present value of future cash ows, using appe 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 2023 173Financial statements

Notes to the nancial statements

for the year ended 31 March 2023 continued

Section 5 – Working capital

This section focuses on our working capital balances, including trade and other receivables, trade and other payables, and provisions.

27  27 › Trade and other receivables

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

lingsor compfilings or company voluntary arrangements and market expectations and trends in the wider macro-economic environment in which

ourcusour 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 o once all avenues to recover the balances are exhauten off once all avenues to recover the balances are exhausted and the lease has ended. Receivables

written o arten off are no longer subject to any enforcement activity.

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.

2023

m£m

2022

m£m

Net trade receivables 47 38

Tenant lease incentives (note e 1)4) 175 212

Prepayments 46 34

Accrued income 11 11

Amounts due from joint ventures and associates 39 15

Deferred consideration 17 –

Other receivables 13 58

Total current trade and other receivables 365 368

Non-current amounts due from joint ventures and associates 142 147

Non-current property sales receivables – 5

Deferred consideration 9 18

Other non-current receivables – 2

Total trade and other receivables 511 545

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% (2022: 4% to 5%).

Landsec Annual Report 2023174 Financial statements

Ageing of trade receivables

Not

past due

m£m

Up to

 day30 days

past due

m£m

Up to  Up to 6

months

past due

m£m

Up to Up to 12

months

past due

m£m

More than

 mon12 months

past due

m£m

Total

m£m

As at  March As at 31 March 2021

Not impaired 5 12 18 8 9 47

Impaired – – 1 5 37 45

Gross trade receivables 5 12 76 61 41 92

As at t 3 M1 March ch 2022

Not impaired 1 6 14 10 2 38

Impaired – 3 4 2 60 74

Gross trade receivables 1 9 18 32 12 112

None of the Group’s other receivables are past due and therefore no ageing has been shown (2022: £nil).

Movement in allowances for doubtful debts

2023

m£m

2022

m£m

At the beginning of the year 74 111

Increase to provision 16 14

Decrease to provision ()(29) ((35 )

Utilised in the year ()(16) ((16 )

At At 3 March1 March 45 74

Movement in tenant lease incentives

2023

m£m

2022

m£m

At the beginning of the year 212 230

Revenue recognised ()(3) ()(18)

Movement in break penalties and other movements 1 –

Capital incentives granted 7 6

Provision for doubtful receivables ()(5) 1

Disposal of properties ()(49) ()(8)

Acquisition of properties 10 1

At At 3 March1 March 175 212

Landsec Annual Report 2023 175Financial statements

Notes to the nancial statements

for the year ended 31 March 2023 continued

28  28 › Trade and other payables

Group Company

2023

m£m

2022

m£m

2023

m£m

2022

m£m

Trade payables 14 26 – –

Capital accruals 32 42 – –

Other payables 25 72 8 8

Accruals 88 75 7 2

Deferred income 111 104 – –

Contract liabilities 77 – – –

Amounts owed to joint ventures 14 1 – –

Loans from Group undertakings – – ,2,806 ,2,897

Total current trade and other payables 306 320 ,2,821 ,2,912

Non–current other payables 17 8 – –

Total trade and other payables 323 328 ,2,821 ,2,912

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 and with no fixed repayment date. Interest is charged at .%4.3% per annum ( per annum (2022: : 3.%7%).

Section 6 – Other required disclosures

This section gives further disclosure in respect of other areas of the nhe financial statements, together with mandatory disclosures required

in accordance with IFRS.

29  29 › Investments in subsidiary undertakings

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.

2023

m£m

2022

m£m

At the beginning of the year ,6,222 ,6,101

Capital contributions relating to share-based payments (note e 35) 6 4

Impairment reversal 6 117

At At 3 March1 March ,6,229 ,6,222

A full list of subsidiary undertakings at 31 March 2023 is included in Additional information on pages 205 to 209.

In the year ended 31 March 2023, there has been a reversal of prior years’ impairment on the Company’s investment in its subsidiaries of £1m

(2022: reversal of £117m) as a result of an increase in the value of the net assets 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 2023 as determined by their individual net asset values

atthat dat that date, totalling £6,229m (2022: £6,222m).

Landsec Annual Report 2023176 Financial statements

30  30 › Other non-current assets

2023

m£m

2022

m£m

Other property, plant and equipment 9 11

Net pension surplus (note )e 34) 16 28

Derivative nancial insDerivative financial instruments (note e 25) 41 21

Other investments 6 1

Total other non-current assets 67 61

31  1 › Other current assets

2023

m£m

2022

m£m

Derivative nancial insDerivative financial instruments (note e 25) 1 5

Other investments 6 –

Total other current assets 9 5

32  2 › Other current liabilities

2023

m£m

2022

m£m

Derivative nancial insDerivative financial instruments (note e 25) 6 –

Provisions

1

18 11

Total other current liabilities 79 11

. Includ1. Includes a m £14m provision for re san for fire safety remediation works, of which m£9m relates to properties no longer owned by the Group but for which the Group is responsible for

remediating under the Building Safety Act t 2022.

33  33 › Other non-current liabilities

2023

m£m

2022

m£m

Deferred tax liability (note ote 12) 9 2

Net liabilities incurred on behalf of joint ventures

1

(note  1)6) 5 5

Total other non-current liabilities 9 12

. The Grou1. The Group’s share of accumulated losses of a joint venture interest are recognised as net liabilities (see note e note 16) where there is an obligation to provide for these losses.

Landsec Annual Report 2023 177Financial statements

Notes to the nancial statements

for the year ended 31 March 2023 continued

34  34 › Net pension surplus

Accounting policy

Contributions to deneo defined contribution schemes are charged to the income statement as incurred.

The pension obligations arising under the Group’s dened beneefined benet pension schfit 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 benet valueefit value. The operating and nancingperating 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 identiee period in which they are identified. Net nan. Net financing costs are

recognised in the period in which they arise, calculated with reference to the discount rate, and are included in nance incoo the discount rate, and are included in finance income or expense

on a net basis. Re-measurement gains and losses arising from either experience diering from previous acrience differing from previous actuarial assumptions, or changes

to those assumptions, are recognised immediately in other comprehensive income.

Dened conDefined contribution schemes

The charge to operating prot for the year in respeThe charge to operating profit for the year in respect of dened contribution scheefined contribution schemes was £3m (2022: £3m).

Dened benet sDefined benefit scheme

The Pension & Assurance Scheme of the Land Securities Group of Companies (the Scheme) is a registered denered defined beneed benefit nal salart final salary

scheme subject to the UK regulatory framework for pensions, including the Scheme Specic Fecific 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 beneciaries of the Schemneficiaries 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 qualied indepf 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 2023 using, where required, assumptions prescribed by IAS 19 Employee

Benets. The nexefits. 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 benets and the employee coefits and the employee contributions

were at 8% of monthly pensionable salary. It was also agreed that no further decit cother deficit contributions were required from the Group. Employee

contributions were paid by salary sacricerifice, 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 2024 (2023: £nil).

All death-in-service and incapacity benets arising during eenefits arising during employment are wholly insured. No post-retirement beneent benefits other than pensions

are made available to employees of the Group.

Landsec Annual Report 2023178 Financial statements

Analysis of the amounts charged to the income statement

2023

m£m

2022

m£m

Analysis of the amount charged to operating proterating profit

Current service costs – –

Past service costs – –

Charge to operating proterating profit – –

Analysis of amount credited to net nandited to net finance expense

Interest income on plan assets ()(6) ()(5)

Interest expense on dened beefined benet schenefit scheme liabilities 6 5

Net credit to nance incdit to finance income – –

Analysis of the amounts recognised in other comprehensive income

2023

m£m

2022

m£m

Analysis of gains and losses

Net re-measurement losses on scheme assets ()(58) ()(4)

Net re-measurement gains on scheme liabilities 46 26

Net re-measurement (losses)/gains ()(12) 22

Cumulative net re–measurement loss recognised in other comprehensive income ()(36) ()(24)

The net surplus recognised in respect of the dened beneefined benefit scheme can be analysed as follows:

2023

m£m %

2022

m£m

Equities – – 2 15

Bonds – Government 6 2 28 65

Bonds – Corporate – – 13 31

Proceeds from corporate bond sale 5 8 – –

Insurance contracts 90 153 40 92

Cash and cash equivalents 9 6 12 27

Fair value of scheme assets 100 169 100 230

Fair value of scheme liabilities ()(153) ()(202)

Net pension surplus 16 28

In the year ended 31 March 2023, £9m (2022: £9m) of benets were paid to membenefits were paid to members.

During the 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 nanctly owned financial instruments issued by the Group. Indirectly owned nancialtly owned financial

instruments had a fair value of £nil (2022: £nil).

In the most recent triennial valuation, the dened bcent triennial valuation, the defined benet schemenefit scheme liabilities were split nil% (2022: nil%) in respect of active scheme

participants, 26% (2022: 31%) in respect of deferred scheme participants, and 74% (2022: 69%) 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 dened bd average duration of the defined benet schemenefit scheme

liabilities at 31 March 2023 is 12.0 years (2022: 14.6 years).

Landsec Annual Report 2023 179Financial statements

Notes to the nancial statements

for the year ended 31 March 2023 continued

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 Benets. The major assumpenefits. The major assumptions used in the valuation were (in nominal terms):

2023

2022

Rate of increase in pensionable salaries n/a n/a

Rate of increase in pensions with no cap .3.50 .4.00

Rate of increase in pensions with th 5% cap .3.35 .3.75

Discount rate .4.75 .2.70

Ination – Retail Price IndInflation – Retail Price Index .3.50 .4.00

– Consumer Price Index .2.80 .3.30

The mortality assumptions used in this valuation were:

2023

Years

2022

Years

Life expectancy at age  for current pensioe 60 for current pensioners – Men .26.7 .26.6

– Women .29.0 .28.9

Life expectancy at age  for future pene 60 for future pensioners (current age e 40) – Men .29.7 .29.6

– Women .31.8 .31.7

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 crease by 0.% 5% Increase by ase by £m11m

Life expectancy Increase by  yeIncrease by 1 year Increase by se by £m£m

Rate of inationRate of inflation Increase by Increase by 0..5% Increase by ase by £m9m

The above sensitivities show the impact on liabilities only and do not reeeflect the hedging the Scheme has in place. In December 2022,

theScheme transacthe 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 ination risk in respec, 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 dened contribupany did not operate any defined contribution schemes or dened benefined benet schemes defit schemes during the nancial years enduring the financial years ended 31 March 2023

or 31 March 2022.

34  34 › Net pension surplus continued

Landsec Annual Report 2023180 Financial statements

35  35 › Share-based payments

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 pthe 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.

2023 2022

Charge

m£m

Number

(millions)

Charge

m£m

Number

(millions)

Long-Term Incentive Plan 1 1 2 2

Deferred Share Bonus Plan 6 – – –

Executive Share Option Scheme – 6 – 1

Sharesave Plan – 6 1 1

Restricted Share Plan 2 2 1 1

6 7 4 5

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 100 to 113.

Executive plans:

Long-Term Incentive Plan (LTIP)

The LTIP is open to Executive Directors, Executive Leadership Team members 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 satiseds are satisfied by the transfer of existing shares held

bythe Employee Benby the Employee Benet Tefit Trust (EBT). There were no awards exercised during the year (2022: the weighted average share price at the date

ofvesting durinof vesting during the year was 752p). The estimated fair value of awards granted during the year under the scheme was £7m (2022: £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 satised by the trfied 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 615p (2022: 703p).

The estimated fair value of awards granted during the year under the scheme was £2m (2022: £1m).

Landsec Annual Report 2023 181Financial statements

Notes to the nancial statements

for the year ended 31 March 2023 continued

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 satiseards 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 (2022: none). The estimated fair value of awards granted during the year under the scheme was £nil

(2022: £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 ve year contract pmpletion 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 717p (2022: 764p). The

estimated fair value of awards granted during the year under the scheme was £1m (2022: £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 satised by the. 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 697p (2022: 787p). The estimated fair value of awards granted during the year under the scheme was

£6m (2022: £2m).

The aggregate number of awards outstanding, and the weighted average exercise price, are shown below:

Executive plans

6

Other plans

Number of awards Number of awards

Weighted average

exercise price

2023

Number

(millions)

2022

Number

(millions)

2023

Number

(millions)

2022

Number

(millions)

2023

Pence

2022

Pence

At the beginning of the year 2 2 2 2 805 821

Granted 2 1 6 – 685 662

Exercised – – – – 736 635

Lapsed ()(1) ()(3) – – 699 781

At At 3 Ma1 March 1 2 1 2 768 805

Exercisable at the end of the year – – 6 1 ,2,072 ,1,367

Years Years Years Years

Weighted average remaining contractual life 6 1 2 3

. Exec1. Executive plans are granted at nil consideration.

35  35 › Share-based payments continued

Landsec Annual Report 2023182 Financial statements

The number of share awards outstanding for the Group by range of exercise prices is shown below:

Outstanding at  Maing at 31 March rch 2021 Outstanding at  March ng at 31 March 2022

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

Nil

1

– 5 6 – 3 1

 – 400 – 599 552 6 6 552 1 2

 – 600 – 799 665 – 1 725 – –

 – 800 – 999 936 – 9 936 – 5

,1,00 –0 – , 1,199 ,1,022 6 1 ,1,022 1 4

,1,200 – , – 1,399 ,1,328 – 2 ,1,328 – 3

. Exec1. 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 nancial year are as follows:h plan in the financial year are as follows:

Long-Term Incentive Plan Deferred Share Bonus Plan Restricted Share Plan Sharesave Plan

Year ended ear ended 3 Marc1 March 2023 2022 2023 2022 2023 2022 2023 2022

Share price at grant date p687p p696p p716p p696p p706p p697p p644p p683p

Exercise price n/a n/a n/a n/a n/a n/a p615p p584p

Expected volatility %39% %35% %39% %35% %39% %35% %39% %35%

Expected life  years3 years  years3 years .1.41

years

 years3 years  years3 years . years2.88 years 1 to

 years5 years

 to  3 to 5 years

Risk-free rate .%2.37% .%0.29% .%1.92% .%0.27% .%1.96% .%0.27% .% to1.65% to

.%1.71%

.% to0.22% to

.%0.40%

Expected dividend yield .%5.47% %0% nil nil .%5.25% %4% .%5.75% %4%

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 eects of nffects 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 2005 LTIP which were granted after 31 March 2009 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 ear ended 3 Marc1 March 2021 2022 2023 2022 2023 2022 2023 2022 2021 2022

Long-Term Incentive Plan p689p p696p n/a n/a %39% %35% %33% %35% %53% %55%

Landsec Annual Report 2023 183Financial statements

Notes to the nancial statements

for the year ended 31 March 2023 continued

36  36 › Ordinary share capital

Accounting policy

Ordinary shares are classied as ey 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

2023

m£m

2022

m£m

Ordinary shares of y shares of 102⁄p e3p each 80 80

Number of shares

2023 2022

At the beginning of the year ,,751,328,142 ,,751,313,063

Issued on the exercise of options ,53,077 ,15,079

At At 3 March1 March ,,751,381,219 ,,751,328,142

The number of options over ordinary shares from Executive plans that were outstanding at 31 March 2023 was 5,223,270 (2022: 3,278,372).

If all the options were exercisable at that date then 5,223,270 (2022: 3,278,372) shares would be required to be transferred from the

Employee Benet Tenefit Trust (EBT). The number of options over ordinary shares from Other plans that were outstanding at 31 March 2023

was 1,636,828 (2022: 1,768,677). If all the options were exercisable at that date then 565,439 new ordinary shares (2022: 635,473) would

be issued and 1,071,389 shares would be required to be transferred from the EBT (2022: 1,133,204).

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 2023

(2022: 3,049,943) to satisfy future awards under employee share plans. At 31 March 2023, the Group held 6,789,236 ordinary shares

(2022:622: 6,789,236) with a market value of £42m (2022: £53m) 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.

37  7 › Own shares

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

2023

m£m

2022

m£m

At the beginning of the year 13 11

Transfer of treasury shares – 21

Transfer of shares to employees on exercise of share options ()(1) ()(2)

At At 3 March1 March 29 30

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 35).

The number of shares held by the EBT at 31 March 2023 was 3,831,399 (2022: 3,938,343). The market value of these shares at 31 March 202 3

was £24m (2022: £31m).

Landsec Annual Report 2023184 Financial statements

38  38 › Contingencies

The Group has contingent liabilities in respect of legal claims, tax queries, contractor claims, guarantees and warranties arising in the

ordinary course of business, as well as contingent liabilities for re safell as contingent liabilities for fire safety remediation arising from the Building Safety Act 2022, for which

it is not yet possible to quantify any potential future liability.

The Group has received queries from tax authorities relating to historical transactions which may result in additional tax liabilities. Based

on an assessment of the relevant tax rules, in addition to advice received from external parties, the Group does not believe that any tax

is due and has written to the authorities explaining that position. It is not possible to accurately state the timing of any potential outowosition. It is not possible to accurately state the timing of any potential outflow,

as the Group awaits further correspondence from the tax authorities. The Group has not disclosed an estimate of the nancial ee of the financial eect asffect as

it is considered this could be prejudicial to its position.

It is not anticipated that any material liabilities will arise from the contingent liabilities.

39  9 › Related party transactions

Subsidiaries

During the year, the Company entered into transactions, in the normal course of business, with related parties as follows:

2023

m£m

2022

m£m

Transactions with subsidiary undertakings

6

Recharge of costs ()(288) ()(193)

Dividends received 500 –

Interest paid ()(120) ()(44)

. All cash p1. All cash payments, including dividend payments, are made by another Group company.

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  March s at 31 March 2023 Year ended and as at s at 3 M1 March arch 2022

Income/

(expense)

m£m

Net

investments

into joint

ventures

m£m

Amounts

owed by

joint

ventures

m£m

Amounts

owed to

joint

ventures

m£m

Income

m£m

Net

investments

into joint

ventures

m£m

Amounts

owed by

joint

ventures

m£m

Amounts

owed to

joint

ventures

m£m

Nova, Victoria 6 – 69 – 9 5 20 –

Southside Limited Partnership 1 – 75 – 3 – 75 –

St. David’s Limited Partnership

1

()(1) ()(123) – – 2 ()(8) 1 –

Westgate Oxford Alliance Limited Partnership ()(2) ()(8) 6 – 1 ()(11) 1 –

Other – ()(11) 23 ()(14) – 51 6 ((1 )

6 ()(164) 173 ()(14) 15 02 156 ((1 )

. 1. On On 2 Marc4 March h 2 the Group a023 the Group acquired the remaining % inining 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. Results from its operations prior to that date are included as share of prot or lorofit or loss from joint ventures. For further details on the acquisition

refer to note ote 1.4.

Associates

Details of transactions and balances between the Group and its associates are as follows:

Year ended and as at  March s at 31 March 2023 Year ended and as at s at 3 M1 March arch 2022

Income

m£m

Net

investments

into

associates

m£m

Amounts

owed by

associates

m£m

Amounts

owed to

associates

m£m

Income

m£m

Net

investments

into

associates

m£m

Amounts

owed by

associates

m£m

Amounts

owed to

associates

m£m

Associates – ()(1) 6 – – 4 6 –

Landsec Annual Report 2023 185Financial statements

Notes to the nancial statements

for the year ended 31 March 2023 continued

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 species 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 100 to 113.

2023

m£m

2022

m£m

Short-term employee benetsee benefits

1

5 4

Share-based payments 9 2

9 6

1. Short-term employee benets employee benefits include pension allowance.

40  40 › Operating lease arrangements

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 classied as opessified 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:

2023

m£m

2022

m£m

Not later than one year 455 461

Later than one year, but not more than two years 427 459

Later than two years, but not more than three years 382 434

Later than three years, but not more than four years 111 388

Later than four years, but not more than ve yearsan five years 299 337

More than ve yearMore than five years ,2,595 ,3,142

,4,491 ,5,221

The total of contingent rents, primarily turnover based rents, recognised as income during the year was £51m (2022: £35m).

41  1 › Events after the reporting period

Since 31 March 2023, the Group sold or exchanged contracts to sell certain interests in trading properties acquired as part of U+I Group PLC

in the previous nancial yein the previous financial year.

No other signicant events oNo other significant events occurred after the reporting period but before the nancial statements were auefore the financial statements were authorised for issue.

39  9 › Related party transactions continued

Landsec Annual Report 2023186 Financial statements

EPRA net asset measures

Table 69

 March 

EPRA

NRV

m

EPRA

NTA

m

EPRA

NDV

m

Net assets attributable to shareholders , , ,

Shortfall of fair value over net investment in nance lease book value () () ()

Deferred tax liability on intangible asset   –

Goodwill on deferred tax liability () () ()

Other intangible asset – () –

Fair value of interest-rate swaps () () –

Shortfall of fair value of debt over book value (note ) – – 

Excess of fair value of trading properties over book value   

Purchasers’ costs



 – –

Net assets used in per share calculation , , ,

EPRA

NRV

EPRA

NTA

EPRA

NDV

Diluted net assets per share ,p p p

 March 

EPRA

NRV

m

EPRA

NTA

m

EPRA

NDV

m

Net assets attributable to shareholders , , ,

Shortfall of fair value over net investment in nance lease book value () () ()

Deferred tax liability on intangible asset   –

Goodwill on deferred tax liability () () ()

Other intangible asset – () –

Fair value of interest-rate swaps () () –

Excess of fair value of debt over book value (note ) – – ()

Purchasers’ costs



 – –

Net assets used in per share calculation , , ,

EPRA

NRV

EPRA

NTA

EPRA

NDV

Diluted net assets per share ,p ,p ,p

1. EPRA NTA and EPRA NDV reect IFRS values which are net of purchasers’ costs. Purchasers’ costs are added back when calculating EPRA NRV.

Business analysis – EPRA disclosures

Landsec Annual Report 2023 187Additional information

Business analysis – EPRA disclosures

continued

EPRA performance measures

Table 70

 March 

Measure Denition for EPRA measure Notes

EPRA

measure

EPRA earnings Recurring earnings from core operational activity  m

EPRA earnings per share EPRA earnings per weighted number of ordinary shares  .p

EPRA diluted earnings per share



EPRA diluted earnings per weighted number of ordinary shares  .p

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 nance lease book value

 ,m

EPRA Net Tangible Assets per share Diluted Net Tangible Assets per share  p

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 nance lease book value

 ,m

EPRA net disposal value per share Diluted net disposal value per share  p

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

 .%

Table

Voids/vacancy rate ERV of vacant space as a % of ERV of Combined Portfolio excluding the development

programme



 .%

Net initial yield (NIY) Annualised rental income less non-recoverable costs as a % of market value plus

assumed purchasers’ costs



 .%

Topped-up NIY NIY adjusted for rent free periods



 .%

Cost ratio



Total costs as a percentage of gross rental income (including direct vacancy costs)



 .%

Total costs as a percentage of gross rental income (excluding direct vacancy costs)



 .%

. In the year ended  March , 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.

. EPRA LTV is a new measure introduced by EPRA in the current year. The EPRA measure diers from the Group LTV presented in note  as it includes net payables and

receivables, and includes trading properties at fair value and debt instruments at nominal value rather than book value. EPRA LTV was not presented in the nancial

statements as at  March  as the measure had not yet been introduced. EPRA LTV would have been presented as .% at  March .

. This measure reects voids in the Combined Portfolio excluding only properties under development.

. This measure relates to the Combined Portfolio, excluding properties currently under development, calculated by our external valuer and includes certain developments

that currently generate income from meanwhile use. Excluding all developments, the EPRA NIY is .% and the EPRA topped up NIY is .%, refer to Table  in the Operating

and portfolio review for further details. Topped-up NIY reects adjustments of m for rent free periods and other incentives.

. This measure is calculated based on gross rental income after rents payable and excluding costs recovered through rents but not separately invoiced of m.

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 signicant distorting factors inuencing the EPRA vacancy rate.

Table 71

 March



m

ERV of vacant properties 

ERV of Combined Portfolio excluding properties under development 

EPRA vacancy rate (%) .

Change in net rental income from the like-for-like portfolio

Table 72

Change



m



m m %

Central London    

Major retail   () ()

Subscale sectors    

   

Landsec Annual Report 2023188 Additional information

EPRA Net initial yield (NIY) and Topped-up NIY

Table 73

 March 

m

Combined Portfolio ,

Trading properties 

Less: Properties under development, trading properties under development and land (,)

Like-for-like investment property portfolio, proposed and completed developments, and completed trading properties ,

Plus: Allowance for estimated purchasers’ costs 

Grossed-up completed property portfolio valuation (a) ,

EPRA annualised cash passing rental income





Net service charge expense



()

Void costs and other deductions ()

EPRA Annualised net rent



(b) 

Plus: Rent-free periods and other lease incentives (annualised) 

Topped-up annualised net rents (c) 

EPRA NIY (b/a)



.%

EPRA Topped-up NIY (c/a)



.%

. EPRA Annualised cash passing rental income and EPRA annualised net rent as calculated by the Group’s external valuer.

. Including costs recovered through rents but not separately invoiced.

. The above table includes certain developments that currently generate income from meanwhile use. Excluding all developments, the EPRA NIY is .% and the EPRA topped

up NIY is .%, refer to Table  in the Operating and portfolio review for further details.

Landsec Annual Report 2023 189Additional information

Business analysis – EPRA disclosures

continued

Cost analysis

Table 74

 

Total

m

Cost

ratio



Total

m

Cost

ratio



Gross rental income

(beforerents payable)

 

Costs recovered through

rents but not separately

invoiced

() ()

Adjusted gross rental

income

 

Rents payable () ()

EPRA gross rental income  

m

Gross rental income (before rents payable) 

Rents payable ()

Gross rental income (after rents payable) 

Direct

property

costs

m

Managed operations  

Net service charge expense () Tenant default () ()

Net direct property expenditure () Void related costs  

Bad and doubtful debts expense  Other direct property costs  

Segment net rental income  Development expenditure  

Net indirect expenses ()

Net

indirect

expenses



m

Asset management,

administration and

compliance

 

Segment prot before nance expense 

Net nance expense – Group ()

Net nance expense – joint ventures ()

EPRA earnings 

Totalcosts (incl. direct

vacancycosts)

 

Costs recovered

through rents

() ()

EPRA costs (incl. direct

vacancy costs)

 .  .

Less: Direct vacancy costs () ()

EPRA costs (excl. direct

vacancycosts)

 .  .

. Percentages represent costs divided by EPRA gross rental income.

. Net indirect expenses amounting to m (: m) have been capitalised as development costs and are excluded from table . See note  of the nancial statements

for the Group’s policy on capitalising indirect expenses.

Landsec Annual Report 2023190 Additional information

Acquisitions, disposals and capital expenditure

Table 75

Year ended

 March



Year ended

 March



Investment properties

Group (excl.

joint

ventures)

m

Joint

ventures

m

Adjustment for

non-wholly

owned

subsidiaries

m

Combined

Portfolio

m

Combined

Portfolio

m

Net book value at the beginning of the year ,  () , ,

Transfer from joint venture  () –  –

Acquisitions   –  

Capital expenditure  () ()  

Capitalised interest  – –  

Net movement in head leases capitalised () () – () 

Disposals (,) () – (,) ()

Net (decit)/surplus on revaluation of investment properties () ()  () 

Transfer to trading properties () – – () ()

Net book value at the end of the year ,  () , ,

(Loss)/prot on disposal of investment properties () – – () 

Trading properties m m m m m

Net book value at the beginning of the year   –  

Acquisitions – – – – 

Transfer from investment properties  – –  

Capital expenditure  – –  

Disposals () () – () ()

Movement in impairment () – – () ()

Net book value at the end of the year  – –  

Prot on disposal of trading properties  – –  

Acquisitions, development and other capital expenditure

Investment

properties



m

Trading

properties

m

Combined

Portfolio

m

Combined

Portfolio

m

Acquisitions



 –  

Development capital expenditure



 ()  

Other capital expenditure    

Capitalised interest  –  

Acquisitions, development and other capital expenditure    ,

Disposals m m

Net book value – investment property disposals , 

Net book value – trading property disposals  

Net book value – other net assets  

(Loss)/prot on disposal – investment properties () 

Prot on disposal – trading properties  

Other () –

Total disposal proceeds , 

. See EPRA analysis of capital expenditure table  for further details.

. Properties acquired in the year.

. Development capital expenditure for investment properties comprises expenditure on the future development pipeline and completed developments.

Landsec Annual Report 2023 191Additional information

EPRA analysis of capital expenditure

Table 76

Other capital expenditure Year ended  March 

Acquisitions



m

Development

capital

expenditure



m

Incremental

lettable

space



m

incremental

lettable

space

m

Tenant

improvements

m

Total

m

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

Central London

West End oces – – –    –  – – 

City oces – – –  –  –  – – 

Retail and other – – –    –  – – 

Developments –  – – – –   – – 

Total Central

London

–  –      – – 

Major retail

Shopping centres  – –    –  () – 

Outlets – –     –  – – 

Total Major

retail

 –     –  () – 

Mixed-use

urban

Completed

investment

– – –  –  –  – () 

Developments   – – – – –  () – 

Total Mixed-use

urban

  –  –  –  () () 

Subscale sectors

Leisure – – –    –  () – 

Hotels – – – – – – – – – – –

Retail parks – – –    –  – – 

Total Subscale

sectors

– – –    –  () – 

Total capital

expenditure

        () () 

Timing dierence between accrual and cash basis ()   ()

Total capital expenditure on a cash basis  () – 

. Investment properties acquired in the year.

. Expenditure on the future development pipeline and completed developments.

. Capital expenditure where the lettable area increases by at least %.

Business analysis – EPRA disclosures

continued

Landsec Annual Report 2023192 Additional information

Business analysis – Group

Top 12 occupiers at 31 March 2023

Table 77

% of Group

rent



Central Government .

Accor .

Deloitte .

Cineworld .

Boots .

Taylor Wessing .

Peel .

BBC .

M&S .

Sainsbury’s .

H&M .

Next .

.

. On a proportionate basis.

Property Income Distribution (PID) calculation

Table 78

Year ended

 March 

m

Year ended

 March 

m

(Loss)/prot before tax per income statement () 

Accounting prot on residual operations () ()

(Loss)/prot attributable to tax-exempt operations () 

Adjustments

Capital allowances () ()

Capitalised interest () ()

Revaluation decit/(gain)  ()

Tax exempt disposals  ()

Capital expenditure  

Other tax adjustments () ()

Goodwill amortisation and impairment  

Estimated tax-exempt income for the year  

PID thereon (%)  

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 (2022: £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.

Landsec Annual Report 2023 193Additional 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 2023 and

31 March 2022:

Table 79

PID allocation

Ordinary

dividend

Total

dividend

Year ended

 March 

m

Year ended

 March 

m

Pre-

March 

m m m

Dividends paid in year to  March  –  – – 

Dividends paid in year to  March    – – 

Minimum PID to be paid by  March   – n/a n/a n/a

Total PID required  

The Group has met all the REIT requirements, including the payment by 31 March 2023 of the minimum Property Income Distribution (PID)

for the year ended 31 March 2022. The forecast minimum PID for the year ended 31 March 2023 is £197m, which must be paid by 31 March

2024. The Group has already made PID dividends relating to 31 March 2023 of £158m, leaving £39m to be paid in the coming year.

Our latest tax strategy can be found on our corporate website. In the year, the total taxes we incurred and collected were £134m (2022: £154m),

of which £38m (2022: £57m) 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 80

For the year ended  March  For the year ended  March 

Tax-

exempt

business

Residual

business

Adjusted

results

Tax-

exempt

business

Residual

business

Adjusted

results

Prot before tax (m)



 ()    

Balance of business – % prots test .% .% .% .%

Adjusted total assets (m)



,  , ,  ,

Balance of business – % assets test .% .% .% .%

. Calculated according to REIT rules.

Annual net rent breakdown by occupier business sector

Chart 81

Floor space (million sq ft)

Chart 82



Retail trade

32%



Services 26%



Financial services 14



Public administration 7%



Transport, communications 4%



Manufacturing 3%



Wholesale trade



Other 12%



Central London 5.1



Major retail 8.2



Mixed-use urban 2.9



Subscale sectors 7.2



Total



23.4

. Joint ventures are reected at % values, not Group share.

Business analysis – Group

continued

Landsec Annual Report 2023194 Additional information

Greenhouse gas reporting

In line with requirements set out in the Companies Act 2006 (Strategic Report and Directors’ Reports) 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 nancial year ending 31 March 2023.

Streamlined energy and carbon reporting (SECR)

Methodology

Our streamlined energy and carbon reporting gures 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 (tCO

e). We report our full greenhouse gas (GHG) emissions annually

in accordance to the WRI Greenhouse Gas (GHG) Protocol, including scope 1, 2 and 3 emissions.

At Landsec, scope 1 comprises emissions from natural gas and refrigerant gases. 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 2022’. 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 ocial 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 classied as scope 2 emissions. The GHG Protocol identies 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 83

Location-based emission factors Market-based emission factors

Emissions Unit 2020/21 2021/22 2022/23 2020/21 2021/22 2022/23

Scope  tCO



e , , , , , ,

Scope  tCO



e , , , , , ,

Scope  and  tCO



e , , , , , ,

Intensity

Scope  and  kgCO



e/m



. . . . . .

Landsec Scope 1 and 2 emissions –

year on year driving factors

Chart 84

25,489

(554)

297

1,790

(1,593)

(1,949)

23,480

5,000

10,000

15,000

25,000

30,000

tCO

2021/22

Portfolio

changes

External

temperature

Occupancy

changes

Energy

eciencies

Emission

factor

2022/23

Scope 1 and 2 GHG emissions using location-based emission factors

have decreased by 8% compared with the previous reporting year,

despite an increase in occupancy levels. The decrease has been

largely due to changes in emissions factors and actions taken to

drive energy eciency across our assets.

Thedetailed breakdown of main factors driving the change in

ourscope 1and scope 2 can be seen in chart 84 Landsec Scope 1

and 2 emissions – year on year driving factors.In terms of

market-based emissions, we have seena small increase(5%) due

tothe inclusion of two assets that have come under our operational

control from 2022.

Sustainability performance

Landsec Annual Report 2023 195Additional information

Landsec – Energy Consumption

Table 85

Location-based emission factors

Unit 2020/21 2021/22 2022/23

Natural Gas kWh For landlord shared services ,, ,, ,,

(Sub)metered to tenants ,, ,, ,,

Total Natural Gas consumption ,, ,, ,,

Electricity kWh For landlord shared services ,, ,, ,,

(Sub)metered to tenants ,, ,, ,,

Total Electricity consumption ,, ,, ,,

District Heating and Cooling kWh For landlord shared services ,, ,, ,,

(Sub)metered to tenants ,, ,, ,,

Total Heating and Cooling consumption ,, ,, ,,

Total Energy Consumption kWh For landlord shared services ,, ,, ,,

(Sub)metered to tenants ,, ,, ,,

Total Energy consumption ,, ,, ,,

Energy intensity kWh/m



  

Table 85 shows the absolute energy consumption with a breakdown by landlord and tenant consumption. This year, absolute energy

intensity has slightly decreased by 1% compared with the previous year, largely due to energy eciencies achieved from our active energy

management programme and Net Zero Transition Investment Plan. Initiatives have included for example, lighting upgrades, further

software modications in our building management systems (BMS) to optimise the operation of our central plant services and a targeted

customer engagement programme with our oce occupiers.

Landsec – Carbon Footprint

Table 86

2020/21 2021/22 2022/23

GHG Scope Category

Emissions

(tCO

% of total

value chain

Emissions

(tCO

% of total

value chain

Emissions

(tCO

% of total

value chain

Scope  , .% , .% , .%

Scope  , .% , .% , .%

Scope  , .% , .% , .%

Purchased goods and services (PG&S) , .% , .% , .%

Capital goods , .% , .% , .%

Fuel- and energy-related activities , .% , .% , .%

Upstream transportation and distribution Grouped

under PG&S

.% Grouped

under PG&S

.% Grouped

under PG&S

.%

Waste generated in operations  .%  .%  .%

Business travel  .%  .%  .%

Employee commuting  .%  .%  .%

Upstream leased assets n/a .% Excluded .% Excluded .%

Downstream transportation and distribution n/a .% Excluded .% Excluded .%

Processing of sold products n/a .% Excluded .% Excluded .%

Use of sold products n/a .% Excluded .% Excluded .%

End-of-life treatment of sold products n/a .% Excluded .% Excluded .%

Downstream leased assets , .% ,

.% , .%

Franchises n/a .% Excluded

.% Excluded .%

Investments n/a .% Excluded

.% Excluded .%

Total emissions , ,

,

Sustainability performance

continued

Landsec Annual Report 2023196 Additional information

Table 86 provides a breakdown of our entire emissions inventory, including indirect emissions from our value chain activities (i.e. scope 3

emissions). Our scope 3 reporting allows us to identify the most signicant categories in our value chain that contribute to our carbon

footprint – Capital goods and Downstream leased assets, make up over 76% of our total emissions.

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.

The emissions from our development activities have decreased by 25% due to the fact that the four projects on-site are nearing

completion and the materials delivered during this phase are much less carbon intensive than in the earlier phases of structural works.

In table 87, we provide the amount of embodied carbon emissions reported for each development in 2022/23.

In relation to Downstream leased assets, we continue engaging our customers (specically those in our retail assets) to increase the share

of primary tenant energy usage data (now at 63% – a 6% increase compared with last year), thereby increasing data accuracy. There’s

a 2% reduction in carbon emissions as compared with last year for this category which can be explained by the increase of actual data

included in the calculation.

Because both categories represent a signicant proportion of our total carbon footprint, we are committed to understanding the source

of these emissions and taking action to reduce them. As such, for all our development and refurbishment schemes, we undertake life-cycle

assessments, following the RICS guidance document ‘Whole life carbon assessment for the built environment’ 1st Edition and BS EN 15978.

We will adopt the latest RICS guidance document once adopted. The assessment considers both the upfront embodied carbon emissions

from our supply chain and construction activities (stages A1 to A5), as well as anticipated emissions from a building’s operations and

embodied carbon associated with maintenance and repairs over the lifetime of the building (stages B1 to C4). To minimise our construction

impacts, we set targets on the upfront embodied carbon emissions from supply chain (A1-A5) on a project-by-project basis and track

these through to the completion of our buildings. We also track the carbon emissions from Modules B and C to ensure that the decisions

we make for upfront embodied carbon do not lead to negative consequences in the long term, for example higher replacement rates.

Once all reduction opportunities have been achieved, we oset the remainder of the upfront embodied carbon emissions of our buildings

at practical completion, in alignment with the UK Green Building Council guidelines. We also carefully design our buildings to minimise the

energy demand of our operations and meet this demand through renewable electricity contracts.

Landsec Annual Report 2023 197Additional information

Upfront Embodied Carbon – Development pipeline

Table 87

Development

Current forecasted embodied carbon

intensity kgCO

e/m

(RICS Modules A1-A5)

% reduction from typical

building

– 2030 target of 50%

Embodied carbon emissions

reported in 2022/23 (tCO

 Moorelds, EC , ,

Lucent, W , n/a – new target set in , after

the buildings were designed

,

n, SW  ,

The Forge, SE  ,

Timber Square, SE 



-% ,

Portland House, SW  -% 

Mayeld – The Poulton, Manchester

Acquired sites undergoing signicant design changes – no data available

Mayeld – The Republic, Manchester

Red Lion Court, SE  -%

Liberty of Southwark, SE Acquired sites undergoing signicant design changes – no data available

 Old Broad Street, EC  -%

Hill House, EC Too early design – no data available

O Finchley Road, NW (average)  -%

NE  -%

N  -%

N  -%

Media City, Greater Manchester – Plot C Acquired sites undergoing signicant design changes – no data available

Buchanan Galleries, Glasgow – Block A , %

Buchanan Galleries, Glasgow – Block B  -%

Lewisham, SE Too early design – no data available

Average reduction across development

pipeline

-%

Average upfront embodied carbon intensity Oce: 

Residential: 

Total embodied carbon emissions reported

in / (tCO



,

. Typical oces: ,kgCO



e/m



and typical residential: kgCO



e/m



(source: GLA Whole Life Carbon Guidance).

. Total embodied carbon baseline for Timber Square project has been reviewed to exclude sequestration in accordance with industry guidelines and the RICS guidance

document on whole life carbon. If sequestration is taken into account, the forecasted embodied carbon intensity is kgCO



e/m



(GIA).

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 34-53; the sustainability content in the

‘Additional Information’ section of the Landsec 2023 Annual Report pages 195-198; and the online Sustainability Performance Data Report 2023.

This report and the full assurance statement is available at landsec.com/sustainability/reports-benchmarking.

Sustainability performance

continued

Landsec Annual Report 2023198 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 nancial measure of historical or future nancial

performance, position or cash ows of the Group which is not a measure dened or specied in IFRS.

The table below summarises the APMs included in these results and where the reconciliations of these measures can be found. The denitions

of APMs are included in the Glossary.

Table 88

Alternative performance measure Nearest IFRS measure Reconciliation

EPRA earnings Prot/loss before tax Note 

EPRA earnings per share Basic earnings/loss per share Note 

EPRA diluted earnings per share Diluted earnings/loss per share Note 

EPRA Net Tangible Assets Net assets attributable to shareholders Note 

EPRA Net Tangible Assets per share Net assets attributable to shareholders Note 

Total return on equity n/a Note 

Adjusted net cash inow from operating activities Net cash inow from operating activities Note 

Combined Portfolio Investment properties Note 

Adjusted net debt Borrowings Note 

Group LTV n/a Note 

EPRA LTV n/a Note 

Alternative performance measures

Landsec Annual Report 2023 199Additional information

Total portfolio analysis

Total portfolio analysis continued

Table 89

Notes:

. Refer to Glossary for denition.

. Annualised rental income is annual ‘rental income’ (as dened

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.

. Net estimated rental value is gross estimated rental value,

as dened in the Glossary, after deducting expected rent payable.

. Net initial yield – refer to Glossary for denition. This calculation

includes all properties including those sites with no income.

. Equivalent yield – refer to Glossary for denition. Future developments

are excluded from the calculation of equivalent yield on the

Combined Portfolio.

. Comprises the development pipeline – refer to Glossary for denition.

. The like-for-like portfolio – refer to Glossary for denition.

Market value



Valuation

movement



Rental income



Annualised rental

income



Net estimated rental

value



Net initial yield



Equivalent yield



 March



m

 March



m

(Decit)/

surplus

m

(Decit)/

surplus

 March



m

 March



m

 March



m

 March



m

 March



m

 March



m

 March



Movement

like-for-



bps

 March



Movement

like-for-



bps

Central London Central London

West End oces , , () (.)       West End oces .  . 

City oces , , () (.)       City oces . () . 

Retail and other , ,  .       Retail and other . () . 

Developments



, , () (.)       Developments



. – . –

Total Central London , , () (.)       Total Central London .  . 

Major retail Major retail

Shopping centres , , () (.)       Shopping centres .  . 

Outlets   () (.)       Outlets .  . 

Total Major retail , , () (.)       Total Major retail .  . 

Mixed-use urban Mixed-use urban

Completed investment   () (.)       Completed investment .  . 

Developments



  () (.)       Development



. n/a . n/a

Total Mixed-use urban   () (.)       Total Mixed-use urban .  . 

Subscale sectors Subscale sectors

Leisure   () (.)       Leisure .  . 

Hotels   () (.)       Hotels .  . 

Retail parks   () (.)       Retail parks .  . 

Total Subscale sectors , , () (.)       Total Subscale sectors .  . 

Combined Portfolio , , () (.)       Combined Portfolio .  . 

Properties treated as nance leases () ()

Combined Portfolio , , () (.)   Represented by:

Investment portfolio . n/a . n/a

Represented by: Share of joint ventures . n/a . n/a

Investment portfolio , , () (.)       Combined Portfolio . n/a . n/a

Share of joint ventures   () (.)      

Combined Portfolio , , () (.)      

Combined Portfolio analysis

Landsec Annual Report 2023200 Additional information

Total portfolio analysis

Total portfolio analysis continued

Table 89

Notes:

. Refer to Glossary for denition.

. Annualised rental income is annual ‘rental income’ (as dened

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.

. Net estimated rental value is gross estimated rental value,

as dened in the Glossary, after deducting expected rent payable.

. Net initial yield – refer to Glossary for denition. This calculation

includes all properties including those sites with no income.

. Equivalent yield – refer to Glossary for denition. Future developments

are excluded from the calculation of equivalent yield on the

Combined Portfolio.

. Comprises the development pipeline – refer to Glossary for denition.

. The like-for-like portfolio – refer to Glossary for denition.

Market value



Valuation

movement



Rental income



Annualised rental

income



Net estimated rental

value



Net initial yield



Equivalent yield



 March



m

 March



m

(Decit)/

surplus

m

(Decit)/

surplus

 March



m

 March



m

 March



m

 March



m

 March



m

 March



m

 March



Movement

like-for-



bps

 March



Movement

like-for-



bps

Central London Central London

West End oces , , () (.)       West End oces .  . 

City oces , , () (.)       City oces . () . 

Retail and other , ,  .       Retail and other . () . 

Developments



, , () (.)       Developments



. – . –

Total Central London , , () (.)       Total Central London .  . 

Major retail Major retail

Shopping centres , , () (.)       Shopping centres .  . 

Outlets   () (.)       Outlets .  . 

Total Major retail , , () (.)       Total Major retail .  . 

Mixed-use urban Mixed-use urban

Completed investment   () (.)       Completed investment .  . 

Developments



  () (.)       Development



. n/a . n/a

Total Mixed-use urban   () (.)       Total Mixed-use urban .  . 

Subscale sectors Subscale sectors

Leisure   () (.)       Leisure .  . 

Hotels   () (.)       Hotels .  . 

Retail parks   () (.)       Retail parks .  . 

Total Subscale sectors , , () (.)       Total Subscale sectors .  . 

Combined Portfolio , , () (.)       Combined Portfolio .  . 

Properties treated as nance leases () ()

Combined Portfolio , , () (.)   Represented by:

Investment portfolio . n/a . n/a

Represented by: Share of joint ventures . n/a . n/a

Investment portfolio , , () (.)       Combined Portfolio . n/a . n/a

Share of joint ventures   () (.)      

Combined Portfolio , , () (.)      

Landsec Annual Report 2023 201Additional information

Reconciliation of segmental information note to statutory reporting for the year ended 31 March 2022

Table 90

Year ended  March 

Group

income

statement

m

Joint

ventures



m

Adjustment

for

non-wholly

owned

subsidiaries



m

Total

m

EPRA

earnings

m

Capital

and other

items

m

Rental income   ()   –

Finance lease interest  – –   –

Gross rental income (before rents payable)   ()   –

Rents payable () () – () () –

Gross rental income (after rents payable)   ()   –

Service charge income   ()   –

Service charge expense () ()  () () –

Net service charge expense () ()  () () –

Other property related income   –   –

Direct property expenditure () () – () () –

Movement in bad and doubtful debt provisions  () –   –

Segment net rental income   ()   –

Other income  – –   –

Administrative expenses () () – () () –

Depreciation () – – () () –

EPRA earnings before interest   ()   –

Share of post-tax prot from joint ventures  () – – – –

Net surplus/(decit) on revaluation of investment properties  () ()  – 

Prot on disposal of investment properties   –  – 

Prot on disposal of joint ventures  – –  – 

Prot/(loss) on disposal of trading properties  () –  – 

Gain on modication of nance lease  – –  – 

Movement in impairment charge on trading properties () – – () – ()

Impairment of goodwill () – – () – ()

Business combination costs () – – () – ()

Operating prot/(loss)   ()   

Finance income  – –   

Finance expense () () – () () ()

Prot/(loss) before tax  – ()   

Taxation – – – –

Prot/(loss) before tax  – () 

. 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.

. Removal of the non-wholly owned share of results of the Group’s subsidiaries. The non-wholly owned subsidiaries are consolidated at % in the Group’s income statement,

but only the Group’s share is included in EPRA earnings reported in the segmental information note.

Reconciliation of segmental information note to statutory reporting

Landsec Annual Report 2023202 Additional information

Ten year summary

Income statement

Table 91

Year ended and as at  March



m



m



m



m



m



m



m



m



m



m

Revenue          

Costs () () () () () () () () () ()

         

Share of post-tax (loss)/prot

from joint ventures

()  () () ()     

(Loss)/prot on disposal of

investment properties

()   () –     

Prot/(loss) on disposal of

investments in joint ventures

–  – – –  () –  

Prot on disposal of other

investments

– – – – – –  – – –

Net (decit)/surplus on

revaluation of investment

properties

()  (,) (,) () () ()  , 

(Loss)/gain on modication

of nance lease

()  – – – – – – – –

Operating (loss)/prot ()  (,) () ()   , , ,

Net nance expense () () () () () () () () () ()

Net gain on business combination – – – – – – – –  

(Loss)/prot before tax ()  (,) () () ()  , , ,

Taxation – – –   ()   – 

(Loss)/prot for the year ()  (,) () () ()  , , ,

Net (decit)/surplus on

revaluation of investment

properties



Investment portfolio ()  (,) () () () ()  , 

Share of joint ventures () () () () ()     

Adjustment for non-wholly owned

subsidiaries



 () – – – – – – – –

Total ()  (,) (,) () () ()  , 

EPRA earnings          

Results per share

Total dividend payable in respect

of the nancial year

.p .p .p .p .p .p .p .p .p .p

Basic (loss)/earnings per share (.)p .p (.)p (.)p (.)p (.)p .p .p .p .p

Diluted (loss)/earnings per share (.)p .p (.)p (.)p (.)p (.)p .p .p .p .p

EPRA earnings per share .p .p .p .p .p .p .p .p .p .p

EPRA diluted earnings per share .p .p .p .p .p .p .p .p .p .p

Net assets per share p ,p p ,p ,p ,p ,p ,p ,p ,p

Diluted net assets per share p ,p p ,p ,p ,p ,p ,p ,p ,p

EPRA Net Tangible Assets

per share

p ,p p ,p ,p ,p ,p ,p ,p ,p

. Includes our non-wholly owned subsidiaries on a proportionate basis.

. This represents the interest in MediaCity which we do not own but consolidate in the Group numbers.

Landsec Annual Report 2023 203Additional information

Balance sheet

Table 92

As at  March



m



m



m



m



m



m



m



m



m



m

Investment properties , , , , , , , , , ,

Intangible assets          –

Net investment in nance leases          

Loan investments – – – – – – – –  

Investment in joint ventures     , , , , , ,

Investment in associates   – – – – – – – –

Trade and other receivables          

Other non-current assets          

Total non-current assets , , , , , , , , , ,

Trading properties and long-term

development contracts

         

Trade and other receivables          

Monies held in restricted accounts



and deposits

         

Cash and cash equivalents



  – ,      

Other current assets      – – – – –

Total current assets    ,      

Non-current assets held for sale – – – – – – – –  –

Borrowings () () () () () () () () () ()

Trade and other payables () () () () () () () () () ()

Other current liabilities () () () () () () () () () ()

Total current liabilities () () (,) (,) (,) (,) () () () ()

Borrowings (,) (,) (,) (,) (,) (,) (,) (,) (,) (,)

Trade and other payables () () () () () – () () () ()

Other non-current liabilities () () () () () () () () () ()

Redemption liability – – – – () () () () () ()

Total non-current liabilities (,) (,) (,) (,) (,) (,) (,) (,) (,) (,)

Net assets , , , , , , , , , ,

Net debt



(,) (,) (,) (,) (,) (,) (,) (,) (,) (,)

Market value of the Combined

Portfolio

, , , , , , , , , ,

Adjusted net debt



(,) (,) (,) (,) (,) (,) (,) (,) (,) (,)

. The Balance Sheets for the years ending  March  and earlier have not been restated for the purpose of this table for the change in classication between Cash and

cash equivalents and monies held in restricted accounts and deposits following the IFRIC classication during the year to  March .

. Net debt and adjusted net debt exclude amounts payable under head leases for reporting periods from, and including, the year ended  March . 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 m (), m (, 

and ), m ( and ), m () and m ().

Ten year summary

continued

Landsec Annual Report 2023204 Additional information

Subsidiaries, joint ventures and associates

As at 31 March 2023, 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.

Barrack Close Limited

Beyond Green Developments

(Broadland) Limited

Birmingham International Park Limited

BLEL Limited

BLIL Limited

Blueco Limited

Bluewater Outer Area Limited

Bruform Limited

Burgheld Bolt Limited

Burlington House Developments Limited

Castleford (UK) Limited

Cathedral (Brighton) Limited

Cathedral (Bromley 2) Limited

Cathedral (Bromley Esco) Limited

Cathedral (Bromley) Limited

Cathedral (Greenwich Beach) Limited

Cathedral (Preston Barracks) Limited

Cathedral (Sittingbourne) Limited

Cathedral Special Projects (H) Limited

Crossways 2000 Limited

Crossways 3065 Limited

Crossways 7055 Limited

Dashwood House Limited

Deadhare Limited

Development Securities (Armagh) Limited

Development Securities (Curzon Park) Limited

Development Securities (Edgware Road

No.1) Limited

Development Securities (Furlong) Limited

Development Securities (Greenwich) Limited

Development Securities (Hammersmith)

Limited

Development Securities (HDD) Limited

Development Securities (Ilford) Limited

Development Securities (Investment

Ventures) Limited

Development Securities (Investments) PLC

Development Securities (Launceston) Limited

Development Securities (Maidstone) Limited

Development Securities (Nailsea) Limited

Development Securities (No.22) Limited

Development Securities (No.9) Limited

Development Securities (Romford) Limited

Development Securities (Sevenoaks)

Limited

Development Securities (Slough) Limited

Development Securities Estates Limited

Drake Bideford Limited

DS (Ringwood) Limited

DS (Thatcham) Limited

DS Investment Properties LLP

DS Jersey (Capital Partners) Limited

DS Jersey (No 1) Limited

DS Jersey (No 10) Limited

DS Jersey (No 2) Limited

DS Jersey (No 3) Limited

DS Jersey (No.5) Limited

DS Jersey (Notting Hill) Limited

DS Jersey (Renewables) Limited

DS Jersey Corporate Services Limited

DS Renewables LLP

DS Robswall Ireland (Residential) Limited

DS Wessex Barnstaple Limited

ECC Investments Limited

Elystan Developments Limited

EPD Buckshaw Village Limited

Executive Communication Centres

(Birmingham) Limited

Executive Communication Centres Limited

Furlong Shopping Centre Limited

Future High Streets Limited

Greenhithe Holdings Limited

Greenhithe Investments Limited

Greenwitch Limited

Grie Grange Wind Farm Limited

Gunwharf Quays Limited

HDD Burgheld Common Limited

HDD Didcot Limited

HDD Lawley Village Limited

HDD Llanelli Limited

HDD Newcastle Under Lyme Limited

HDD Newton Leys Limited

HDD RAF Watton Limited

Hendy Wind Farm Limited

I AM PRS Limited

Kent Retail Investments Limited

Kingsland Shopping Centre Limited

L.& P. Estates Limited

L.S.I.T.(Management) Limited

Land Securities (Finance) Limited

Land Securities Buchanan Street

Developments Limited

Company name Company name

Landsec Annual Report 2023 205Additional information

Land Securities Capital Markets PLC

Land Securities Consulting Limited

Land Securities Development Limited

Land Securities Ebbseet (No.2) Limited

Land Securities Ebbseet Limited

Land Securities Insurance Limited

Land Securities Intermediate Limited

Land Securities Lakeside Limited

Land Securities Management Limited

Land Securities Management Services

Limited

Land Securities Partnerships Limited

Land Securities Pensions Trustee Limited

Land Securities PLC

Land Securities Portfolio Management

Limited

Land Securities Properties Limited

Land Securities Property Holdings Limited

Land Securities SPV’S Limited

Land Securities Trading Limited

Land Securities Trinity Limited

Landsec Limited

LC25 Limited

Leisure II (North Finchley Two) Limited

Leisure II (North Finchley) Limited

Leisure II (West India Quay LP)

Shareholder Limited

Leisure II (West India Quay Two) Limited

Leisure II (West India Quay) Limited

Leisure Parks I Limited

Leisure Parks II Limited

LS (Eureka Two) Limited

LS (Eureka) Limited

LS (Fountain Park Two) Limited

LS (Fountain Park) Limited

LS (Jaguar) GP Investments Limited

LS (Parrswood Two) Limited

LS (Parrswood) Limited

LS (Riverside Two) Limited

LS (Riverside) Limited

LS (Victoria) Nominee No.1 Limited

LS (Victoria) Nominee No.2 Limited

LS 1 New Street Square Developer Limited

LS 1 Sherwood Street Developer Limited

LS 1 Sherwood Street Limited

LS 105 Sumner Street Developer Limited

LS 123 Victoria Street Limited

LS 130 Wood St Limited

LS 21 Moorelds Development

Management Limited

LS 60-78 Victoria Street Limited

LS 62 Buckingham Gate Limited

LS Aberdeen Limited

LS Aldersgate Limited

LS Banbridge Phase Two Limited

LS Bexhill Limited

LS Bracknell Limited

LS Braintree Limited

LS Buchanan Limited

LS Canterbury Limited

LS Cardi (GP) Investments 2 Limited

LS Cardi (GP) Investments Limited

LS Cardi 2 Limited

LS Cardi Holdings Limited

LS Cardi Limited

LS Cardinal Limited

LS Castleford Limited

LS Chadwell Heath Limited

LS Chattenden Marketing Limited

LS Chestereld Limited

LS City Gate House Limited

LS Company 2 Limited

LS Company 23 Limited

LS Company 24 Limited

LS Company 25 Limited

LS Company 26 Limited

LS Company 27 Limited

LS Company 28 Limited

LS Company 29 Limited

LS Company 3 Limited

LS Company 30 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 Developer 3 Limited

LS Company 36 Limited

LS Development Holdings Limited

LS Director Limited

LS Dundas Square Limited

LS Eastbourne Terrace Limited

LS Easton Park Development Limited

LS Easton Park Investments Limited

LS Entertainment Venues Limited

LS Ewer Street Limited

LS Finchley Road Limited

LS Forge Bankside Limited

LS Galleria Limited

LS Great North Finchley Limited

LS Greenwich Limited

LS Gunwharf Limited

LS Harrogate Limited

LS Harvest (GP) Investments Limited

LS Harvest 2 Limited

LS Harvest Limited

LS Hill House Developer Limited

LS Hill House Limited

LS Hotels Limited

LS Kings Gate Residential Limited

LS Kingsmead Limited

LS Leisure Parks Investments Limited

LS Lewisham Limited

LS Liberty of Southwark Limited

LS London Holdings One Limited

LS London Holdings Three Limited

LS Moorgate Limited

LS MYO 123 Victoria Street Limited

LS MYO Dashwood House Limited

LS Myo Limited

LS MYO New Street Square Limited

LS n2 Limited

LS New Street Square Investments Limited

LS Nominees Holdings Limited

LS Nova Development Management

Limited

LS Nova GP Investments Limited

LS Nova LP1 Limited

LS Nova LP2 Limited

LS Nova Place Limited

LS Occupier Limited

LS Old Broad Street Developer Limited

LS Old Broad Street Limited

Company name Company name Company name

Subsidiaries, joint ventures and associates

continued

Landsec Annual Report 2023206 Additional information

LS One New Change Developments

Limited

LS One New Change Limited

LS Oval Limited

LS Park House Development

Management Limited

LS Poole Retail Limited

LS Portfolio Investments Limited

LS Portland House Developer Limited

LS Project 92 Limited

LS Property Finance Company Limited

LS QAM Limited

LS Red Lion Court Developer Limited

LS Red Lion Court Limited

LS Retail Warehouses Limited

LS Rose Lane Limited

LS Shepherds Bush Limited

LS Southside Limited

LS Street Limited

LS Taplow Limited

LS Thanet Limited

LS Timber Square Developer Limited

LS Timber Square Limited

LS Tottenham Court Road Limited

LS Victoria Properties Limited

LS West India Quay Limited

LS Westminster Limited

LS White Rose Limited

LS Workington Limited

LS Xscape Castleford Limited

LS Xscape Milton Keynes Limited

LS Zig Zag Limited

Luneside East Limited

Mayeld Medlock Limited

Njord Wind Developments Limited

Nova Developer Limited

Oriana GP Limited

Oriana LP Limited

OSB (Holdco 1) Limited

OSB (Holdco 2) Limited

Oxford Castle Apartments Limited

Percy Place DS (Ireland) Limited

Public Private Partnership (H) Limited

Purplexed LLP

Purplexed Powerhouse Energy Limited

Purplexed Powerhouse Limited

Ravenseft Properties Limited

Retail Property Holdings Trust Limited

RHD (Dartmouth) Limited

Rhoscrowther Wind Farm Limited

Rivella Properties Bicester Limited

Rosefarm Leisure Limited

Sevington Properties Limited

St David’s (Cardi Residential) Limited

St David’s (General Partner) Limited

St. David’s (No.1) Limited

St. David’s (No.2) Limited

St. David’s Limited Partnership

STRD Holding Company Limited

The City of London Real Property

Company Limited

The Deptford Project 2 Limited

The Deptford Project Limited

The Imperial Hotel Hull Limited

The Telegraph Works Limited

The X-Leisure (General Partner) Limited

Tops Shop Estates Limited

Triangle Developments Limited

Triangle London Limited

U and I (8AE) Limited

U and I (Ashford) Limited

U and I (Bromley Commercial) Limited

U and I (Broombridge) Ind Limited

U and I (Cambridge) Limited

U and I (Development and Trading) Limited

U and I (Golf) Limited

U and I (GVP) Limited

U and I (Harwell) Limited

U and I (Innovation Hubs) Limited

U and I (Management) Ireland Limited

U and I (PB) Commercial Limited

U and I (Pincents Lane) Limited

U and I (White Heather) Limited

U and I (WIE) Limited

U and I Company Secretaries Limited

U and I Director 1 Limited

U and I Director 2 Limited

U and I Exit Limited

U and I Finance PLC

U and I Group Limited

U and I Investment Portfolio Limited

U and I IPA Limited

U and I IPA SC Limited

U and I IPB Limited

U and I IPC Limited

U and I Netherlands BV

U and I Plus X TC Limited

U and I Powerhouse Limited

U and I PPP Limited

U and I Retail Limited

Wallis Court Buckshaw Limited

Wassand Wind Farm Limited

Westminster Trust Limited(The)

Whitecli Developments Limited

Willett Developments Limited

X-Leisure (Bentley Bridge) Limited

X-Leisure (Boldon) Limited

X-Leisure (Brighton Cinema II) Limited

X-Leisure (Brighton Cinema) Limited

X-Leisure (Brighton I) Limited

X-Leisure (Brighton II) Limited

X-Leisure (Cambridge I) Limited

X-Leisure (Cambridge II) Limited

X-Leisure (Leeds I) Limited

X-Leisure (Leeds II) Limited

X-Leisure (Poole) Limited

X-Leisure Limited

X-Leisure Management Limited

Xscape Castleford Limited

Xscape Castleford No.2 Limited

Xscape Milton Keynes (Jersey) No.2

Limited

Xscape Milton Keynes Limited

1. Subsidiary directly held by the Company, Land

Securities Group PLC.

2. The name of this company was changed to

Mayeld Poulton Limited on 21 April 2023.

3. The name of this company was changed to

Mayeld Republic Limited on 20 April 2023.

4. C/O William Fry, 2 Grand Canal Square, Dublin 2,

Ireland, D02 A342.

5. C/O James Cowper Kreston The White Building,

1-4 Cumberland Place, Southampton, SO15 2NP.

6. Fifth Floor, 37 Esplanade, St. Helier, JE1 2TR, 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. 44 Esplanade, St Helier, JE4 9WG, Jersey.

10. IFC 5, St Helier, JE1 1ST, Jersey.

11. Dorey Court, Admiral Park, St Peter Port, Guernsey,

GY1 4AT.

12. 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.

13. The name of this company was changed to LS

Workplace Managed Services Limited on 5 May 2023.

Company name Company name Company name

Landsec Annual Report 2023 207Additional information

As at 31 March 2023, 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 Two Limited 75%

Bluewater REIT Limited 75%

Cathedral (Movement Greenwich)

LLP

53%

CDSR Burlington House

Developments Limited

20%

Central Research Laboratory

(Hayes) Limited

50%

Circus Street Developments

Limited

50%

Curzon Park Limited 50%

Ebbseet Investment (GP) Limited 50%

Ebbseet 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%

Mayeld Development

(General Partner) Limited

50%

Mayeld 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) Limited

75%

Peel Media (Holdings) Limited

75%

Peel Media (Orange) Limited

75%

Peel Media Canalside Limited

75%

Peel Media Development

(Holdings) Limited

75%

Peel Media Development

(Residential 1) Limited

75%

Peel Media Development

(Residential 2) Limited

75%

Peel Media Development Limited

75%

Peel Media Development

Residential (Holdings) Limited

75%

Peel Media Limited

75%

Plus X Brighton Limited

50%

Plus X Holdings Limited

50%

Plus X Unity Place Limited

50%

Schoeld Centre Limited

50%

Southside General Partner Limited 50%

Southside Limited Partnership

50%

Southside Nominees No.1 Limited 50%

Southside Nominees No.2 Limited 50%

Spirit of Sittingbourne LLP 65%

Tarmac Clayform Limited 50%

Tarmac Guildford Limited

50%

The Bund Limited

75%

The Ebbseet Limited Partnership 50%

TLD (Landmark Court) Limited 99%

Triangle London Developments LLP 50%

Victoria Circle Developer Limited 50%

West India Quay Limited 50%

West India Quay Management

Company Limited

63%

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 Limited

50%

YC Shepherds Bush (Market)

Limited

19%

YC Shepherds Bush Limited

19%

Company name Group share % Company name Group share %

Subsidiaries, joint ventures and associates

continued

Landsec Annual Report 2023208 Additional information

Connaught Place (Hale Barns)

Management Company Limited

n/a

Development Securities (No.19)

Limited

n/a

Lightbox (MediaCityUK)

Management Company Limited

n/a

Preston Barracks Management

Company Limited

n/a

St David’s Dewi Sant Merchant’s

Association Limited

n/a

399 Edgware Road Management

Company Limited

n/a

DS Cardi Unit Trust

100%

Nailsea Unit Trust

100%

The X-Leisure Unit Trust

100%

Xscape Castleford Property Unit

Trust

100%

Xscape Milton Keynes Property

Unit Trust

100%

West India Quay Unit Trust

50%

1. 2 Bentinck Street, London, England, W1U 2FA.

2. IFC 5, St Helier, JE1 1ST, Jersey.

3. Fifth Floor, 37 Esplanade, St. Helier, JE1 2TR, Jersey.

4. 26 New Street, St. Helier, JE2 3RA, Jersey.

5. Venus Building 1 Old Park Lane, TraordCity,

Manchester, England, M41 7HA.

6. C/O William Fry, 2 Grand Canal Square, Dublin 2,

Ireland, D02 A342.

7. The address of this company was changed from

C/O Ashby Capital, 1 St Vincent Street, London,

United Kingdom, W1U 4DA to 100 Victoria Street,

London, SW1E 5JL on 20 April 2023.

8. 85 Great Portland Street, First Floor, London,

England, W1W 7LT.

9. Ground Floor T3 Trinity Park, Bickenhill Lane,

Birmingham, United Kingdom, B37 7ES.

Limited by guarantee Group share %

Unit Trusts Group share %

Landsec Annual Report 2023 209Additional information

Financial calendar

Table 93

2023

Annual General Meeting



 July

Final dividend



 July

/ Half-yearly results announcement  November

2024

/ Financial year end  March

/ Annual results announcement



 May

. The Annual General Meeting is scheduled to be held at . am on Thursday,  July  at  Victoria Street, London SWE JL. For further details, please see the Notice

of Meeting, comprising a letter from the Chairman, resolutions proposed and explanatory notes which can be found on the Company’s website: landsec.com/agm.

. The Board has recommended a nal dividend of . pence per ordinary share, payable wholly as a Property Income Distribution, subject to shareholders’ approval at the

forthcoming Annual General Meeting.

. Provisional.

Share register analysis as at  March 

Table 94

Holding range:

Number of

holders % Number of ordinary shares %

–, , . ,, .

,–, , . ,, .

,–,  . ,, .

,–,  . ,, .

,–,  . ,, .

,–,  . ,, .

,–highest



 . ,, .

Total ,  ,, .

Share register analysis as at  March 

Table 95

Held by:

Number of

holders % Number of ordinary shares %

Private shareholders , . ,, .

Nominee and institutional investors



, . ,, .

Total , .% ,, .

. Including ,, shares held in treasury by the Company.

Ordinary shares

The Company’s ordinary shares of nominal value 10⁄p each are

traded on the main market for listed securities on the London Stock

Exchange (LSE:LAND).

Company website: landsec.com

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 Company Registrar, Equiniti, can assist with queries regarding

administration of shareholdings, such as bank account payment

details, dividends, lost share certicates, change of address or

personal details, and amalgamation of accounts. You can contact

Equiniti as follows:

Online:

Equiniti oer a free and secure online share management service

to shareholders called EQ Shareview, which also provides access

to current share prices, voting by proxy, buying and selling shares,

and receipt of electronic shareholder communications.

Registration to EQ Shareview is available on our website:

landsec.com/investors/shareholders-equity-investors or

Equiniti at: shareview.co.uk.

Telephone:

Your shareholder account number will be required when calling.

Telephone: 0371 384 2128¹

International dialling: +44 (0)121 415 7049¹

Post:

Equiniti

Aspect House, Spencer Road, Lancing, West Sussex BN99 6DA,

United Kingdom

Shareholder information

Landsec Annual Report 2023210 Additional information

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-eective manner. Registration

for electronic communications is available via our website on the

investor page or on shareview.co.uk.

UK Real Estate Investment Trust (REIT) taxation and

status on payment of dividends

As a UK REIT, Landsec does not pay corporation tax on Qualifying

Activities, which are rental prots and chargeable gains relating to

its property rental business.

At least 90% of income derived from Qualifying Activities must

be distributed as Property Income Distributions (PIDs). For most

shareholders, PIDs will be paid after deducting withholding tax

at 20%. However, certain categories of shareholder may be able

to receive PIDs gross, (i.e. without deduction of withholding tax).

These categories are principally UK companies, charities, local

authorities, UK pension schemes and managers of ISAs, PEPs and

Child Trust Funds.

A REIT may additionally pay ordinary dividends which will be

treated in the same way as dividends from non-REIT companies.

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 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

arrangement, dividend conrmations are still sent to your

registered address.

Receiving dividends directly into a nominated account has a

number of advantages, including the crediting of cleared funds

on the actual dividend payment date.

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.

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 made a few days after the Company’s dividend payment date.

Shareholders who have not already done so are encouraged to

contact the Registrar (Equiniti) on +44 (0)371 384 2030 or

download an application form online at shareview.co.uk or provide

these details via their Equiniti Shareview online account.

This service is available in over 90 countries worldwide.

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-eective 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 in the

investor section under shareholders.

These are also available by post from:

Dividend Reinvestment Plans Equiniti

Aspect House, Spencer Road, Lancing, West Sussex BN99 6DA

Telephone: +44 (0)371 384 2268¹

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

certicate. Other brokers, banks and building societies also oer

similar share dealing facilities.

Landsec Annual Report 2023 211Additional information

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

benet. A ShareGift donation form can be obtained from the

Registrar. Further information about ShareGift is available at:

sharegift.org

help@sharegift.org

Telephone: +44 (0)20 7930 3737

ShareGift 4th Floor Rear, 67/68 Jermyn Street, London SW1Y 6NY

Individual Savings Account (ISA)

The Company has arrangements in place to provide an ISA which

is managed by:

Equiniti Financial Services Limited

Aspect House, Spencer Road, Lancing, West Sussex BN99 6DA

Telephone: +44 (0)345 0700 720¹

Capital Gains Tax

For the purpose of Capital Gains Tax, the price of a Landsec share at

31 March 1982, adjusted for the capitalisation issue in November 1983

and the Scheme of Arrangement in September 2002, was 203p.

Onthe assumption that the 5 for 8 Rights Issue in March 2009 was

taken up in full and there were no fractional shares in the 2017 share

consolidation, the adjusted price, post consolidation, for Capital

Gains Tax purposes would be 229p per share. 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.

Unclaimed assets register

The Experian Unclaimed Asset Register (UAR) was decommissioned.

You can continue to uncover lost and dormant assets with

Estatesearch (estatesearch.co.uk).

Unsolicited mail

The Company is obliged by law to make its share register available

on request to other organisations which may result in shareholders

receiving unsolicited mail. To limit the receipt of unsolicited mail,

shareholders may register for free with the Mailing Preference

Service, an independent organisation by visiting mpsonline.org.uk,

or by telephone on: +44 (0)20 7291 3310.

Shareholder security

In the past, some of our shareholders have received unsolicited

telephone calls or correspondence concerning investment matters

from organisations or persons claiming or implying that they

havesome connection with the Company. These are typically

frompurported ‘brokers’ who oer to buy shares at a price often

far in excess of their market value. These operations are commonly

known as ‘boiler rooms’.

Shareholders are advised to be very wary of any oers of unsolicited

advice, discounted shares, premium prices for shares they own or

free reports into the Company. If you receive any such unsolicited

calls, correspondence or investment advice:

•

ensure you get the correct name of the person and rm;

•

check that the rm is on the Financial Conduct Authority (FCA)

•

use the details on the FCA Register to contact the rm;

•

call the FCA Consumer Helpline (freephone 0800 111 6768) if there

are no contact details in the Register or you are told they are out

of date; and

•

if you feel uncomfortable with the call or the calls persist,

simply hang up.

Additionally, feel free to report and/or discuss any shareholder

security matters with the Company. To do this, please call:

+44 (0)20 7413 9000 and ask to be put through to a member of

the Governance and Company Secretarial department or email:

shareholderenquiries@landsec.com

1. Lines are open 8.00am to 5.30pm (UK time), Monday to Friday, excluding public

holidays. Calls are charged at the standard geographic rate and will vary by

provider. Calls from outside the UK will be charged at the applicable international

rate. If calling from outside the UK, please ensure the country code is used.

Shareholder information

continued

Landsec Annual Report 2023212 Additional information

Registered oce 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 adviser: UBS

Solicitors: Slaughter and May

Brokers: UBS

Key contacts and advisers

Landsec Annual Report 2023 213Additional information

Adjusted net cash inow from operating activities

Net cash inow from operating activities including the

Group’s share of our joint ventures’ net cash inow 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 nancial 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.

Development pipeline

The development programme together with future

developments.

Dividend Reinvestment Plan (DRIP)

The DRIP provides shareholders with the opportunity

to use cash dividends received to purchase additional

ordinary shares in the Company immediately after the

relevant dividend payment date. Full details appear on

the Company’s website.

EPRA

European Public Real Estate Association.

EPRA earnings

Prot before tax, excluding prots on the sale of

non-current assets and trading properties, prots 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 dierence between the fair value

and the book value of the net investment in tenant

nance leases and xed interest rate debt.

EPRA net initial yield

EPRA net initial yield is dened 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

dierence between the fair value and the book value

of the net investment in tenant nance 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 dierence between the fair value

and the book value of the net investment in tenant

nance 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), reecting

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.

Fair value movement

An accounting adjustment to change the book value

of an asset or liability to its market value (see also

mark-to-market adjustment).

Finance lease

A lease that transfers substantially all the risks and

rewards of ownership from the Group as lessor to

the lessee.

Gearing

Total borrowings, including bank overdrafts, less

short-term deposits, corporate bonds and cash, at

book value, plus cumulative fair value movements

on nancial 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.

Head lease

A lease under which the Group holds an investment

property.

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.

Interest-rate swap

A nancial instrument where two parties agree to

exchange an interest rate obligation for a

predetermined amount of time. These are generally

used by the Group to convert oating-rate debt or

investments to xed rates.

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 oered to occupiers to enter into a lease.

Typically, the incentive will be an initial rent-free period,

or a cash contribution to t-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 assets per share

Equity attributable to owners divided by the number

of ordinary shares in issue at the end of the year. Net

assets per share is also commonly known as net asset

value per share (NAV per share).

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, nance 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 oset

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 prots. A REIT is required to distribute

at least 90% of its qualifying prots as a PID to its

shareholders.

Qualifying activities/Qualifying assets

The ownership (activity) of property (assets) which is

held to earn rental income and qualies for tax-exempt

treatment (income and capital gains) under UK REIT

legislation.

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.

Glossary

Landsec Annual Report 2023214 Additional information

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 benet of lenders. It has the

exibility to raise a variety of dierent forms of nance.

SONIA

The Sterling Overnight Index Average reects the

average overnight interest rate paid by banks for

unsecured sterling transactions with a range of

institutional investors. It is calculated based on actual

transactions and is often used as a reference rate in

bank facilities.

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 in line 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, nancing

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 nancial 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 specically 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.

Turnover rent

Rental income which is related to an occupier’s

turnover.

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/decit

The valuation surplus/decit represents the increase

or decrease in the market value of the Combined

Portfolio, adjusted for net investment and the eect 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.

Yield shift

A movement (negative or positive) in the equivalent

yield of a property asset.

Landsec Annual Report 2023 215Additional information

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 nancial 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, identied

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 dier 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

nance; the impact of legal or other proceedings against or which

aect 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 qualied 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 prot forecast or an invitation to deal

in the securities of the Company.

Land Securities Group PLC

Landsec, Land Securities, the Cornerstone

logo and the ‘L’ logo are trade marks of

the Land Securities Group of companies.

Landsec is the trading name of Land

Securities Group PLC.

All other trade marks and registered

trade marks are the property of their

respective owners.

This report is printed on paper certied in

accordance with the FSC

(Forest Stewardship

Council

) and is recyclable and acid-free.

Pureprint Ltd is FSC certied and ISO 14001

certied showing that it is committed to

all round excellence and improving

environmental performance is an important

part of this strategy.

Pureprint Ltd aims to reduce at source the

eect its operations have on the environment

and is committed to continual improvement,

prevention of pollution and compliance with

any legislation or industry standards.

Pureprint Ltd is a Carbon/Neutral

Printing Company.

Designed and produced by:

salterbaxter.com

Words:

Landsec and Richard Owsley

Photography:

Landsec

Andrew Urwin

Cautionary statement

Landsec Annual Report 2023216 Additional information

Head Office

100 Victoria Street

London

SW1E 5JL

landsec.com

Landsec Annual Report 2023