Landsec Annual Report 2024

Creating

valuable

places

This year, the work we have done to build

our organisational capability, and our efforts

to shape best-in-class assets in the markets

with the highest growth potential, mean we are

well-placed to capitalise on future opportunities.

We enter the coming year with a renewed sense

of clarity and purpose.

In 2024, we celebrate 40 years of the FTSE100,

withLandsec the only real estate business

to retainits position within it for all that time.

Wealso celebrate 80 years of Landsec, with

a common theme that has run throughout

our heritage, which is the ability to create value

forpeople through places. From 80 years ago,

helping rebuild cities damaged by war, to today’s

need to create sustainable places where people

live, eat, shop, work or enjoy their leisure time.

Through our ability to continually adapt – to shape

the places that meet the needs of people and

business in a changing world – we are well placed

to thrive, now and in the future. There is real

excitement within our business and among

our partners about the opportunities ahead,

and the impact we can have.

CONTENTS

STRATEGIC REPORT

01 Our portfolio

02 Chief Executive’s statement

06 Market context

07 Our business model

08 Our strategy

10 Our KPIs

11 Operating and portfolio review

16 Financial review

22 Our stakeholders

25 Our people and culture

28 Our approach to sustainability

33 TCFD statement

38 Managing risk

41 Principal risks and uncertainties

46 Going concern and viability

48 Non-financial and sustainability

informationstatement

GOVERNANCE

50 Introduction from the Chair

51 Board of Directors

55 Executive Leadership Team

56 Governance report

60 Introduction from the Chair of the

NominationCommittee

61 Report of the Nomination Committee

62 Introduction from the Chair of the

Audit Committee

64 Report of the Audit Committee

70 Directors’ Remuneration Report –

Chairman’sAnnualStatement

72 Annual Report on Remuneration

83 Directors’ Remuneration Policy

92 Directors’ Report

FINANCIAL STATEMENTS

95 Statement of Directors’ Responsibilities

96 Independent Auditor’s Report

105 Income statement

105 Statement of comprehensive income

106 Balance sheets

107 Statements of changes in equity

108 Statements of cash flows

109 Notes to the financial statements

ADDITIONAL INFORMATION

162 Business analysis – EPRA disclosures

168 Business analysis – Group

170 Sustainability performance

173 Alternative performance measures

174 Combined Portfolio analysis

176 Reconciliation of segmental information

notetostatutory reporting

177 Ten year summary

179 Subsidiaries, joint ventures and associates

184 Shareholder information

186 Key contacts and advisers

187 Glossary

IBC Cautionary statement

01STRATEGIC REPORTLANDSEC ANNUAL REPORT 2024

OUR PORTFOLIO

READ HOW WE CREATE VALUE FOR PEOPLE THROUGH PLACES

ONPAGES 07-09

VALUATION

£6.2bn

VALUATION

£1.8bn

VALUATION

£0.7bn

WHO WE ARE

We are one of the leading real estate

companies in theUK. We create places that

make a lasting positive contribution to our

communities and our planet. We bring

people together, forming connections with

each other and the spaces we create.

OUR PURPOSE

Sustainable places. Connecting communities.

Realising potential. Three principles to live

by,they articulate what we want toachieve,

and the benefits and experiences we will

create for our stakeholders, now and in

thefuture.

OUR PERFORMANCE 2024 2023

VALUATION (£bn)

10.0

10.2

EPRA EARNINGS (£m)

371

393*

DIVIDEND PER SHARE (pence)

39.6

38.6

* Underlying EPRA earnings excluding the benefit of increased surrender

premiums during 2022/23 was £371m.

Mixed-use

urban

Retail

Central

London

LANDSEC ANNUAL REPORT 2024STRATEGIC REPORT

CHIEF EXECUTIVE’S STATEMENT

SUCCESSFUL EXECUTION

ONSTRATEGY. FOCUS

ONDRIVINGGROWTH

Over the last three years, our focus has

beentwo-fold: firstly, on increasing our

investments in best-in-class assets where

our competitive advantages can drive

long-term growth, and secondly on preserving

balance sheet strength. The success of this is

reflected in our continued like-for-like income

growth and rising occupancy, significantly

outperforming market averages. And despite

the adjustment in property values over the

past two years following the sharp rise in

global interest rates, our proactive capital

recycling means that pro-forma for our

recent hotels disposal, our 32.3% LTV is now

lower than it was two years ago, and our net

debt is down £1.1bn, creating balance sheet

capacity to grow.

Owning the right real estate has never been

more important, as the normalisation in cost

of capital means value drivers in real estate

have fundamentally changed compared to

much of the 2010s decade, when ultra-cheap

money and sector themes were key drivers

of performance. Irrespective of sector, there

is now a growing distinction between those

assets that really fulfil customers’ future

expectations and hence deliver like-for-like

income growth and those that do not. This

means future performance across the entire

sector will be much more driven by asset

quality than generic themes.

The successful execution of our strategy over

the last few years means Landsec is well

positioned in this context. Customer demand

for our high-quality product has remained

robust despite the unsettled political/economic

backdrop, concerns about hybrid working

andcost of living pressures for consumers.

InLondon, our £6.2bn West End-focused

portfolio is almost full, with occupancy up to

97.3%, so rents are rising. In retail, our £1.8bn

portfolio of nine major destinations has seen

occupancy rise to 95.4% and we have started

to drive positive reversionary uplifts on lettings

and renewals. As a result, our like-for-like net

rental income increased by 2.8% last year and,

following a period of interest rate-driven asset

repricing, the valuation of c. 60% of our

portfolio was effectively stable in the second

half of last year.

Looking forward, we expect high demand for

best-in-class space to persist and, as supply

of this space remains limited, this will

continue to drive like-for-like income growth.

Meanwhile, as the interest rate outlook today

appears more balanced than at any point

inthe last couple of years, yields and values

for the best assets are starting to stabilise.

Having sold early when values were higher,

“

After a period of proactive

asset recycling, we have

meaningful capacity

toreinvest proceeds in

acquiring high-quality

assets at an attractive

point in the cycle.”

MARK ALLAN, CHIEF EXECUTIVE

STRATEGIC REPORTLANDSEC ANNUAL REPORT 2024 03

we now have balance sheet capacity to

invest at an attractive point in time. As a

result, Landsec is well-placed for growth.

CONTINUED STRENGTH IN

OPERATIONAL PERFORMANCE

Our financial results reflect the quality of our

portfolio, the strong operational performance

of our platform and our resilient capital base.

Our FY23 earnings included the benefit of a

£22m increase in surrender premiums, which

we adjusted for in our 50.1 pence underlying

EPRA EPS. Our EPRA EPS last year was stable

vs this underlying level, in line with our

guidance, as the 2.8% growth in like-for-like

income we delivered, and the completion of

our successful developments fully offset the

impact of our significant disposals during the

past two years and a rise in finance costs.

Our dividend for the year is up 2.6% to

39.6pence per share, again in line with our

guidance, reflecting a healthy dividend cover

of 1.27 times.

During the first half of the year, the marked

rise in interest rates across the globe resulted

in upwards pressure on valuation yields, but

this eased in the second half and throughout

the year the impact of this has been partly

offset by our 3.2% ERV growth. This meant

that our portfolio value was down 6.0%, or

£625m, for the year, driving a £341m loss and

an 8.2% reduction in EPRA NTA per share for

the year. However, the impact of this was

weighted towards the first half, as yields

remained stable in the final quarter and our

total return on equity for the year improved

to -4.0% from -8.3% in the prior year.

HIGHLIGHTS

TABLE 1

Mar 2024 Mar 2023 Change %

EPRA earnings (£m)

1,2

371 393 (5.6)

Loss before tax (£m) (341) (622) (45.2)

Total return on equity (%) (4.0) (8.3) (51.8)

Basic loss per share (pence) (43.0) (83.6) (48.6)

EPRA earnings per share (pence)

1,2

50.1 53.1 (5.6)

Underlying EPRA earnings per share (pence)

1,2

50.1 50.1 –

Dividend per share (pence) 39.6 38.6 2.6

Combined portfolio (£m)

9,963 10,239 (2.7)

IFRS net assets (£m) 6,447 7,072 (8.8)

EPRA Net Tangible Assets per share (pence)

859 936 (8.2)

Adjusted net debt (£m)

3,517 3,287 7.0

Group LTV ratio (%)

35.0 31.7 10.4

Proportion of portfolio rated EPC A-B (%) 49 36

Average upfront embodied carbon reduction

development pipeline (%)

40 36

Energy intensity reduction vs 2020 (%) 18 17

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

information in the Financial Review.

2. FY23 EPRA earnings and EPRA EPS include the benefit of £22m increase in surrender premiums; underlying EPRA EPS

excludes this.

OUR STRATEGY

Since we launched our strategy in late 2020,

our focus has consistently been on our two

key principles of sustainable value creation:

focusing our resources on where we have

a genuine competitive advantage and

maintaining a strong balance sheet. We have

increased our investment in best-in-class

assets where our skillset allows us to enhance

returns and drive long-term growth. This has

supported our like-for-like income growth and

operational outperformance thus far and

should continue to do so in the future. At the

same time, our proactive capital recycling

means that, despite the rise in interest rates

and adjustment in property values, pro-forma

for our recent disposals, our 32.3% LTV and

7.0x net debt/EBITDA are low.

For much of the decade leading up to 2022,

creating value in real estate was often about

leveraging up a spread between rental yields

and ultra-low borrowing costs or picking

high-level sector themes. The significant rise

in cost of capital across the globe has not

only changed the former but also the latter,

as shown by the challenges faced by

low-margin online retail models and the shift

back to physical retail. As such, irrespective

of sector, quality has become a much more

important driver of future performance,

which means it can be misleading to look

at market averages. Indeed, even though

market-wide vacancy is elevated, with

London offices at 8.8%, retail at 15% and

even logistics at 7.8% now, the best assets

in each of these sectors have little vacancy

and so continue to show good rental growth.

The successful execution of our strategy

means we are well placed to benefit from

this. Since late 2020, we have sold around

40 standalone assets, including the 21 hotels

we sold since the year-end. We reinvested

principally in our key places, be it through

development in Victoria, at Piccadilly Lights

and in Southwark, or by buying out JV

partners in our retail destinations at

Bluewater and in Cardiff, such that c. 80%

of our portfolio is now invested in twelve

key locations with significant scarcity value.

We expect each of these unique, multi-let

places to drive superior income returns and

growth over time.

This provides a critical underpin for capital

values. The outlook for interest rates is more

balanced now than it has been for a couple

of years, but we remain of the view that it

is unlikely that rates will come down sharply

from current levels. In what will therefore

likely remain a higher nominal rate

environment, we think yields for assets which

have inherent income growth and therefore

provide a real income stream look attractive,

yet for most assets which lack this growth,

we think the risk to values remains down.

In today’s more normalised rate environment,

we continue to target to deliver a total return

on equity of 8-10% p.a. over time, comprising

a mix of income and capital returns, driven

by rental growth and selective development

upside. Short-term movements in valuation

yields are outside of our control and mean

our return on equity will not be exactly in this

range each individual year, as we have seen

over the past twelve months. However, with

an income return on our March 2024 NTA

of c. 5.7%, an expectation of further rental

growth and yields starting to stabilise, the

outlook for this is encouraging.

As part of this, it is important that we

operate efficiently. We reduced our overhead

costs by 9% during the year and expect

further savings over the next 2-3 years,

driven partly by our investments in data and

technology. Although our EPRA cost ratio has

remained stable at 25%, this solely reflects

the impact of capital allocation decisions:

since late 2020, we have sold £2.2bn of

LANDSEC ANNUAL REPORT 2024STRATEGIC REPORT

CHIEF EXECUTIVE’S STATEMENT

CONTINUED

mature, low-yielding offices which incurred

minimal operating costs, but equally had

little room to add further value and a

mid-single digit forward IRR, whereas we

acquired more operational assets that

come with higher operating cost, but also

a materially higher net income return and

much higher forward IRR.

As borrowing costs and our cost of capital

have increased, it is also critical we continue

to think carefully about our capital allocation

decisions. Including our £400m of disposals

since the year-end, we have now sold £3.1bn

of assets since late 2020, which means most

of the c. £4bn disposal target we set out at

that time is done. Looking ahead, we have

three principal opportunities to invest in:

acquiring major retail; our Central London

pipeline; and our mixed-use pipeline. We also

have three main sources of funding: our

balance sheet headroom towards a slightly

higher LTV now that rates and values are

starting to stabilise; further capital recycling;

or attracting other, complementary sources

of capital which can enhance our overall

growth, capitalise on our platform value,

and grow our overall return on equity.

In terms of opportunities, the right major

retail destinations offer attractive high single

digit income returns with income now

starting to grow, as seen across our own

portfolio. Alongside our two committed

office developments in London, where the

yield on the overall capex we are investing

is high at c. 12%, this is our key focus for

investment at the moment and where we

plan to apply most of our existing balance

sheet capacity too. Following a period of

limited transaction activity in this sector, we

are now seeing signs of activity levels around

the work-out of broken ownership structures

starting to pick up. Further capital recycling

out of our residual retail parks will add to

our investment capacity in this space and,

overall, this is expected to enhance our

income growth and return on equity.

Given the significant size of our medium-term

London and mixed-use pipelines and our

desire to maintain a sustainable level of

development exposure, it is unlikely that we

will fund all of this on our own balance sheet.

Rents for highly sustainable, best-in-class

space continue to grow and construction

cost inflation has normalised, yet returns on

future commitments will of course have to

compensate for higher cost and higher

exit yields. We continue to optimise costs,

planning consents and delivery programmes

in London and mixed-use to ensure any

future commitments deliver an appropriate

return and risk premium vs the return on

any assets we choose to sell to fund our

investment in these. We will progress the

schemes that deliver this, adjust plans for

others, or sell those where the holding cost

of maintaining optionality does not outweigh

the future upside. Overall, this will enhance

our overall return on equity through

development upside and longer-term rental

growth, reflecting the quality of our pipeline.

CREATING VALUE THROUGH

OURCOMPETITIVE ADVANTAGES

In executing our strategy, we continue to focus

on our three key competitive advantages:

our high quality portfolio; the strength of

our customer relationships; and our ability

to unlock complex opportunities. Customer

demand continues to polarise, as demand

for modern, sustainable space in areas with

exciting amenities in London remains strong,

even though overall leasing across the market

was down during the year. In retail, brands

continue to focus on fewer, but bigger and

better stores in key locations. Supply of both

is constrained, which is driving income and

rental value growth across our assets.

In London, 77% of our portfolio is now

located in the vibrant West End and

Southwark markets, up from 58% in 2020.

Our recently completed schemes are 89%

let or in solicitors’ hands, up from 60%

a year ago, with rents 12% above initial

expectations. Office utilisation is up 18% for

the year and 81% of our lettings over the year

have seen customers grow or keep the same

space. Across our existing portfolio we signed

or are in solicitors’ hands on £35m of leases,

on average 6% above ERV, whilst occupancy

is up 140bps to 97.3%. With 15% uplifts on

relettings/renewals, our offices saw 1.4% LFL

rental income growth and overall ERVs were

up 5.0%, at the top end of our guidance of

low to mid single digit growth.

Across our major retail destinations, we

completed or are in solicitors’ hands on

£37m of lettings, on average 6% above ERV.

Reflecting the marked turnaround of the

best assets in this space, we have started to

capture positive reversionary potential during

the year, with relettings and renewals on

average 2% above previous passing rent,

whilst occupancy increased by a further

130bps to 95.4%. Combined with strong

turnover growth, this meant we delivered

6.9% growth in LFL net rental income.

Valuers’ assumed ERVs continue to trail

operational performance, up 1.4%, albeit

in line with our guided range.

Our strong operational performance is

supplemented by our ability to unlock

complex opportunities, such as in London,

where we completed three projects over

live Underground stations featuring highly

bespoke engineering solutions, combined

creating c. £238m of value, or in mixed-use,

STRATEGIC REPORTLANDSEC ANNUAL REPORT 2024 05

where we secured planning consent for

our 1,800 homes-scheme at Finchley Road,

including detailed consent for the first phase.

This ability is expected to serve us well when it

comes to new opportunities in the year ahead.

DELIVERING SUSTAINABLY

We continue to make progress against our

carbon reduction targets, which are aligned

with the Science Based Targets initiative’s

(SBTi) Net-Zero Standard. Our near-term

target is to reduce our direct and indirect

greenhouse gas emissions by 47% by 2030

from a 2019/20 baseline and to reach net

zero by 2040 from the same baseline year.

So far, emissions have already reduced by

24% vs this baseline. During the year we

updated our target to reduce our energy

intensity by 52% by 2030 from a 2019/20

baseline, to align this with our carbon

reduction target. We are already tracking

an 18% reduction, having achieved an energy

intensity reduction across our portfolio of

3.7% during the year vs the prior year.

To make sure we meet our carbon reduction

target and stay ahead of the proposed

Minimum Energy Efficiency Standard

Regulations requiring a minimum EPC ‘B’

rating by 2030, we have continued to

progress our Net Zero Transition Investment

Plan. 49% of our overall portfolio is already

rated B or higher, up from 36% a year ago.

We have started air source heat pump

retrofits at two sites and expect to start

a further three this year, which will result

in improved EPC ratings from 2025 onwards

when these become operational. We also

continue to focus on reducing upfront

embodied carbon from our development

schemes and improving energy efficiency

across our operational assets, and have

beenexpanding the work with our largest

customers to help them identify ways to

saveenergy.

In its first year, our Landsec Futures fund,

which is aimed at improving social mobility

in the real estate industry and will see us

invest £20m over 2023-2033, has already

made a significant contribution to our target

to create £200m in social value and empower

30,000 people towards the world of work by

2030. Since 2019/20, we have now created

£54m of social value and empowered 10,249

people to work.

OUTLOOK

The UK macro outlook has improved over the

past year, with a sharp reduction in inflation

and a return to real wage growth for

consumers, even though economic growth

is expected to remain modest in the short

term. Combined with the more normalised

interest rate environment, this means it has

never been more important to own the very

best assets in the right locations that cater

for customers’ future needs and can therefore

deliver positive like-for-like income growth.

In late 2022, we said that we expected

property values would continue to adjust

for some time after a decade of ultra-low

interest rates. This has proven to be the

case but there are increasingly signs that

this is now coming to an end. The relative

stabilisation of long-term rates is a clear

positive and reflecting the historically

attractive pricing of good quality income in

London and major retail, we are starting to

see interest emerge from investors who have

not been active in these markets for some

time. As such, we expect activity levels to

pick up from here. The refinancing of cheap

debt issued before 2022 remains a challenge

for parts of the sector, yet absent any further

macro shocks, we think the value of high-

quality assets has largely bottomed out

and will start to grow in the foreseeable

future as rents rise.

Against this backdrop, our actions over the

past three years leave us well placed:

•

we increased our focus on high-quality

places where customer demand is

demonstrably strong;

•

we preserved our balance sheet strength,

providing room to grow at an attractive

time in the cycle;

•

we have a built pipeline of attractive

opportunities with flexibility on future

commitments.

As customer demand for the best space

remains robust, we expect our Central

London and major retail assets to again

see ERVs grow by a low to mid single digit

percentage this year. We are now capturing

positive leasing reversion across all main

parts of our portfolio, which delivered 2.8%

growth in like-for-like net rental income

last year, and we expect like-for-like growth

to be similar for the year ahead.

Determining how this continued operational

growth will then translate into EPS growth

will depend on the quantum and timing of

net investment from here, where we remain

disciplined on quality and price. We have

created meaningful balance sheet capacity

through our significant asset disposals

but our recent sales activity does reduce

annualised earnings by c. 4%, all else equal.

This means that, before reflecting the impact

of any reinvestment of these sales proceeds,

EPS for the year to March 2025 would likely

be slightly below the 50.1 pence for 2024.

For March 2026, we currently expect EPS

to be slightly above this level, reflecting the

combined effect of continued like-for-like

income growth and accretive capital

recycling. As a result, we continue to expect

our dividend to grow by a low single digit

percentage this year, as our dividend cover

remains towards the high end of our 1.2-1.3x

target range.

As macro-economic signals look more

encouraging than they have for a while,

with long-term interest rates stabilising

and customer demand for the best assets

remaining robust, the outlook for capital

values of the best assets and, as a result,

our overall return on equity is positive.

With capacity to grow at an attractive point

in time, we are positive about the future.

MARK ALLAN, CHIEF EXECUTIVE

LANDSEC ANNUAL REPORT 2024STRATEGIC REPORT

MARKET CONTEXT

The Landsec property portfolio is invested in a number of

sectors within the UK. We own high-quality offices in London,

six regional shopping centres, three retail outlet centres and

aportfolio of mixed-use urban development opportunities

inLondon, Manchester and Glasgow. In all of these markets,

asset quality is key, and the way we shape, curate and sustain

these places has never been more important that it is today.

MARKET AT A GLANCE

CENTRAL LONDON OFFICES

The central London office market is adapting

as businesses and employees establish the

most appropriate ways of working in a

post-pandemic world. Inevitably, flexible

working practices will reduce the overall

demand for office space, but the impact

willbe mostly in large HQ buildings and

locations lacking the right amenities.

Demand for the best space has proven to

beresilient as businesses look to provide

ahigh-quality environment to attract and

retain their talent.

The best office space has the following three

characteristics:

´ A GREAT LOCATION – CLOSE PROXIMITY

TO TRANSPORT HUBS, PARTICULARLY

OVERGROUND TRAIN STATIONS

´ A VIBRANT MIX OF LOCAL AMENITIES

– INCLUDING FOOD, BEVERAGE,

RETAIL AND LEISURE FACILITIES

TOGETHER WITH GREEN SPACE

´ COMPELLING SUSTAINABILITY

CHARACTERISTICS – FROM NET ZERO

CONSTRUCTION TO MINIMISING

OPERATIONAL CARBON EMISSIONS

The quality and location of office buildings

isnow critical in driving occupier demand.

Research undertaken by JLL for Landsec in

2024 showed that almost 40% of all vacant

space in central London offices resided in just

1% of buildings and 90% of vacant space was

in 10% of buildings. 86% of central London

offices had no material vacancies at all.

Theinvestment market remained subdued

due to the rapid rise in interest rates.

Transaction volumes in the year to March 24

were just £4.6bn, 64% below the ten-year

average. As a result, prime yields softened by

125bps in the City and 25bps in the West End

and have now increased by 200bps and 75bps

respectively since June 2022. The stark

difference in the strength of the occupational

and investment markets has resulted in an

unprecedented market position – asset values

have seen a material re-pricing (down 25%

since August 2022) but rental values have

continued to grow and have hit record levels

in most of the sub-markets of Central London.

MAJOR RETAIL DESTINATIONS

As consumers continue to shift back from

online to physical sales, the best retail space

in the UK is thriving. There is clear consumer

demand for shopping centres with an

attractive mix of retail, leisure, and

hospitality, but all these elements must

bepresent for shopping centres to thrive.

And brand partners with omnichannel

strategies are looking for the right space

tosupport their online businesses.

Despite significant pressures on consumers’

disposable income over the last year, retailer

sales in the best locations have remained

resilient. Retail sales in our portfolio were

up4.1% and footfall rose by 3.9%. Brand

partners are increasingly focused on ‘fewer,

bigger, better’ stores in the best locations in

order to provide the best customer service

and offer to their customers. As a result,

demand for space in our shopping centres

has been strong and our occupancy levels

are now at pre-Covid levels. This demand has

also benefited rental income: the rental levels

we have achieved in our letting activity this

year have been above both market levels and

the previous passing rent.

Transactions in the shopping centre

investment market remain subdued due

tothe higher interest rate environment

affecting most property sectors. However,

shopping centre property values have been

broadly stable. The combination of a high

income return and strong operational

performance make this sector an attractive

investment opportunity.

236m

sq ft

OF OFFICE SPACE IN CENTRAL LONDON

8.8%

VACANCY RATE IN CENTRAL

LONDON OFFICES

£4.6bn

OF INVESTMENT TRANSACTIONS

IN CENTRAL LONDON IN YEAR

TOMARCH 2024

25.4%

ONLINE SALES AS A

PERCENTAGE OF ALL RETAIL

SALES (AS AT MARCH 2024)

2023: 7.8%

2023: £7.3bn

2023: 26.1%

OUR BUSINESS MODEL

Our business is increasingly focused on

aportfolio of high-quality places with real

scarcity value. Our role isto identify and

thenshape, curate and sustain these places

to create value for all our stakeholders.

OUR BUSINESS MODEL

TWO PRINCIPLES OF SUSTAINABLE VALUE CREATION

MAINTAIN

A STRONG

FINANCIAL POSITION

FOCUS RESOURCES

WHERE WE HAVE A TRUE

COMPETITIVE ADVANTAGE

PORTFOLIO OF HIGH QUALITY PLACES

WITH REAL SCARCITY VALUE

Strong

customer

relationships

Ability to

unlock complex

opportunities

Focus on opportunities

to create value while

managing risks

DELIVERING FOR OUR

CUSTOMERS & PARTNERS

Appropriate

leverage

Healthy

liquidity

Flexible pipeline

optionality

Disciplined capital

allocation

ATTRACTIVE INCOME-LED RETURNS

8-10% RETURN ON EQUITY PER ANNUM THROUGH THE CYCLE

FOCUSED ASSET

RECYCLING

07STRATEGIC REPORTLANDSEC ANNUAL REPORT 2024

LANDSEC ANNUAL REPORT 2024STRATEGIC REPORT

OUR STRATEGY

Landsec focuses on three areas of the UK real

estate market where we can apply our unique

competitive advantages and can maximise

thevalue from our portfolio and our talent in

shaping and sustaining places: Central London

offices; Majorretail destinations; and Mixed-use

urban neighbourhoods.

What binds these three areas together

istheimportance of a sense of place

totheirenduring success, and to that

oftheirsurrounding areas. We strive to

create,curate, and activate places that

inspire people, generating value for all

ourstakeholders.

The environment we operate in has changed

markedly since we launched our strategy

over three years ago, yet our strategy

remains the right one. That strategy is

underpinned by two key principles of

sustainable value creation: focusing

ourresources on where we have genuine

competitive advantage and preserving

astrong balance sheet. To achieve this

strategy, we need a clear sense of purpose

and a culture that supports, respects, and

motivates our people. The three – strategy,

purpose, culture – are inextricably linked.

In executing our strategy, we continue to

beled by three things: working sustainably,

meeting the needs of our customers, and

being disciplined with our capital. It is vital

we make healthy, sustainable returns to

enable our business to grow over time.

We are a total-return business, and we

continue to target a return on equity of

8-10% p.a. over time, comprising a mix of

income and capital returns, driven by rental

growth and selective development upside.

Inevitably, short-term valuation movements,

that are outside of our control, may

adversely affect our returns in the short term,

but our current income return on NTA of

c. 5.7% and the prospect of stabilising yields

means the outlook is encouraging.

LANDSEC

STRATEGY

Two key

principles

of sustainable

value creation.

FOCUS ON COMPETITIVE

ADVANTAGE

´ HIGH-QUALITY PORTFOLIO

´ STRONG CUSTOMER

RELATIONSHIPS

´ UNLOCKING COMPLEX

OPPORTUNITIES

PRESERVING BALANCE

SHEET STRENGTH

´ DISCIPLINED CAPITAL

RECYCLING

´ MANAGING LTV

´ PRESERVING OPTIONALITY

09STRATEGIC REPORTLANDSEC ANNUAL REPORT 2024

The surge in inflation and interest rates since

early 2022 has had a material impact on

asset values globally, be it for real estate,

equities or bonds. Positively, inflation has

come down markedly from its highs in 2023,

but interest rates are likely to fall more slowly.

Importantly, the strategy we set out in late

2020 was not based on a continuing low-rate

environment, and we have delivered on this

strategy. We have now sold £3.1bn of the

c.£4bn assets we identified for sale. This

enables us to focus this year on investing

inhigher-return acquisition opportunities

inmajor retail and selective development

opportunities within our business.

In London, we will likely balance any potential

opportunities to invest more in our key

clusters with recycling capital out of mature

or standalone assets. We will always apply

our judgement and expertise in assessing

thetiming and nature of developments to

ensure we maximise the value from our

capital investments.

Our strategic focus is on sustainable value

creation in three key areas, central London

offices, major retail destinations and mixed-

use urban neighbourhoods. Customer demand

in each area remains resilient, underpinned

by the strength of our customer relationships

and high-quality portfolio.

The built environment accounts for 40% of

carbon emissions globally, so everything we

do needs to have sustainability at its heart.

This year, in line with our updated carbon

reduction targets, we have continued to

execute on our Net Zero Transition

Investment Plan reducing operational

emissions alongside driving down upfront

embodied carbon from our development

pipeline ensuring our actions align with the

latest climate science. To recognise real

estate’s role in, and respond to, the growing

biodiversity crisis and to maintain our

position as a leading sustainable business,

wealso launched our first nature strategy.

We also launched our principal community

investment programme, Landsec Futures,

committing to invest £20m over the next

decade to enhance social mobility in our

workplace and wider industry.

At the heart of our philosophy is a belief that

we can only be successful if our customers

are successful. We look to build positive and

lasting relationships with them, to understand

their businesses better, and determine

whatwe can do better or differently to help

them succeed.

We think constantly and very carefully about

where to invest, focusing in particular on

projected returns and the associated risks.

With visibility and expertise across three

distinct focus areas, we have a unique

perspective on relative risk and returns,

whichenables us to be clear and decisive

inour capital allocation decisions.

It has never been more important to own

thevery best assets in the right locations

that cater for customers’ future needs.

Ourportfolio is built on high-quality places

with real scarcity value. Through the careful

curation and stewardship of these places,

they can deliver positive like-for-like income

growth. In addition, the best quality assets

with rental growth look attractive in a higher

cost of capital world, and we are already

seeing increasing investor interest for assets

with these characteristics. In contrast,

secondary asset values will almost certainly

have further to fall.

CENTRAL LONDON

We create workplaces designed

for life – not just the 9 to 5–

froma net zero office space

inSouthwark to a 2.5m sq ft

cluster of high-quality buildings

in Victoria.

RETAIL

We own and operate some of the UK’s

most renowned retail and hospitality

destinations that connect brands with

people and partners to create brilliant

experiences for customers.

MIXED-USE URBAN

Working closely with communities

and local authorities around the UK,

we regenerate urban spaces into

thriving places to live, work and play.

Creating value for people

through places

LANDSEC ANNUAL REPORT 2024STRATEGIC REPORT

OUR KPIs

We set KPIs in line with our strategy.

They provide direction for our people,

and offer clear links to remuneration.

As well as the performance measures below,

everyone has personal objectives toachieve

for the year. For our Executive Directors, these

focus on strategic development and execution,

performance, and culture and values.

In addition to the annual bonus KPIs below,

we set KPIs for LTIP awards in line with our

remuneration policy.

FURTHER INFORMATION ON REMUNERATION

ON PAGES 72-82 AND DETAILS OF OUR

PROPOSED NEW REMUNERATION POLICY

ONPAGES 83-91

EPRA EARNINGS

HOW WE MEASURE IT

We set targets for EPRA earnings and LFL EPRA earnings

in linewith our five-year strategic plan.

LINK TO REMUNERATION

30% of annual bonus performance islinked to this KPI.

OUR PERFORMANCE IN 2023/24

EPRA earnings of £371m were ahead ofthe £369m

target. LFL EPRA earnings of £335m were ahead of the

£331m target.

TOTAL RETURN ON EQUITY

HOW WE MEASURE IT

The cash dividends per share paid in theyear plus the

change in EPRA net tangible assets (NTA) per share.

LINK TO REMUNERATION

30% of annual bonus performance islinked to this KPI.

OUR PERFORMANCE IN 2023/24

Total return on equity was -4.0%, compared with the

target of +4.7%, as our return from income, ERV growth

and developments was more than offset by outward

movement in valuation yields.

ESG TARGETS

HOW WE MEASURE IT

We have two action-oriented targets: (1) driving energy

intensity reduction across all our assets (four actions);

and (2) driving embodied carbon reduction across our

developments (four actions).

LINK TO REMUNERATION

20% of annual bonus performance islinked to this KPI.

OUR PERFORMANCE IN 2023/24

3/4 actions relating to energy were delivered; 4/4actions

relating to developments were delivered.

ACHIEVED

NOT ACHIEVED

THE MEASURES AND THEIR WEIGHTINGS ARE

EPRA earnings

30%

Total return onequity

30%

ESG targets

20%

Personal targets

20%

STRATEGIC REPORTLANDSEC ANNUAL REPORT 2024 11

OPERATING AND PORTFOLIO REVIEW

Our combined portfolio was valued at £10.0bn

asof March, comprising the following segments:

INVESTMENT ACTIVITY

During the financial year we sold £225m

of assets, including our two smallest retail

outlets, a retail park in Romford, and two

small leisure assets and two mixed-use

development assets in London, on average

at a 1% discount to March 2023 book value.

Since the year-end we have sold our hotel

portfolio for £400m, slightly ahead of the

March 2023 book value. This crystallised

thestrong recovery in performance post

Covid yet as the income on this portfolio

was100% turnover linked on long-term

leases to Accor, there was no opportunity

forus to influence or enhance its future

operational performance.

During the year we made £136m of

acquisitions and spent £220m on development

capex. We acquired an 89,000 sq ft office

in Kings Cross for £90m which we plan to

reposition to Myo for an opening in 2025, with

an expected IRR in the mid-teens. In addition,

we bought a £30m site adjacent to our Timber

Square development for an implied price

of c.£100 per sq ft. This could almost double

the size of the combined site and create a

significant c.670,000 sq ft estate across four

buildings. We also spent £16m on a small

number of site amalgamation opportunities

adjacent to existing assets. Whilst these

acquisitions do not produce income in the

short term and therefore create a c.£6m

earnings drag in the current year because

of finance costs, they unlock substantial

near-term upside potential at a low in-price.

With the sale of our hotel portfolio, we have

now sold £3.1bn of the c.£4bn assets we said

we intended to sell over a period of c.6 years

when we launched our updated strategy

in late 2020. We will continue to recycle

capital where assets do not meet our return

requirements or fit our strategic focus, but

this means we are now through the vast

majority of our disposal programme. As such,

our focus for the rest of the year is now

on acquisitions, as we aim to recycle the

proceeds of our hotels disposal into additional

opportunities in major retail. In London and

mixed-use, our own investment in new

development commitments is likely to be

funded principally through future disposals

of mature or standalone assets, alongside

other, complementary sources of capital.

PORTFOLIO VALUATION

The marked increase in interest rates during

the first half of the year meant that

transaction activity across global property

markets has been subdued. As a result,

valuation yields softened so despite the fact

that our successful leasing delivered 3.2%

ERV growth, our portfolio value reduced by

6.0%. The impact of rising rates principally

affected the first half of the year, as yields

remained flat in the final quarter and c.60%

of our portfolio was effectively stable in value

in the second half.

Our Central London portfolio was down 6.9%

for the year, as upside from 5.0% ERV growth

was offset by a 46bps increase in yields to

5.4%. The value of our West End office

(-3.6%) and retail and other assets (-4.7%),

which make up 77% of our London investment

portfolio following our significant City

disposals over the last three years, again

proved more resilient than City values

(-13.9%). This reflects strong ERV growth,

driven by our successful leasing in Victoria,

which means West End office values were

stable in the second half. Development

values were down 9.9% given the early stage

these projects are in, but we are confident

these will deliver attractive returns once

these are completed and let.

Major retail valuations were virtually stable

for the year, down just 1.1%, following a

minor increase in the second half (+0.2%),

reflecting their high income return and

improving operational performance, with LFL

net income up 6.9%. Valuers’ assumed ERVs

continue to trail operational performance

and leasing, up just 1.4%, but despite this,

major retail again was the best performing

part of our core portfolio with a 7.1% total

return over the year, ahead of Central

London (-2.9%) and mixed-use (-8.9%).

63%

CENTRAL LONDON

Our well-connected,

high-quality office

(84%) and retail and

other commercial

space (16%), located

inthe West End (69%),

City (23%) and

Southwark (8%).

18%

MAJOR RETAIL

DESTINATIONS

Our focused

investments in six

shopping centres and

three retail outlets,

which are amongst

the highest selling

locations for retailers

in the UK.

MIXED-USE URBAN

NEIGHBOURHOODS

Our investments in

mixed-use urban

places in London and

asmall number of

other major growth

cities, with medium-

term repositioning or

development potential.

12%

SUBSCALE

Assets in sectors

wherewe have limited

scale or competitive

advantage and which

we therefore plan

todivest over time,

split broadly equally

between retail parks,

leisure and hotels, the

last of which we have

sold since the year-end.

LANDSEC ANNUAL REPORT 2024STRATEGIC REPORT

OPERATING AND PORTFOLIO REVIEW

CONTINUED

In mixed-use, values were down 14.0%,

mostly driven by outward yield shift at

MediaCity and a softening of yields and

a reduction in income at our three existing

retail assets in Glasgow and London, as these

have so far been managed for short-term

income to maximise flexibility for future

development.

Across our subscale portfolio, the value of

our hotels was up slightly (0.6%), whilst retail

park values were relatively resilient (-1.8%).

The value of our leisure assets was down

8.2% as investor sentiment towards cinemas

remains subdued, even though our largest

leisure customer, Cineworld, successfully

recapitalised during the year and operational

performance and ERV growth remains

positive.

VALUATION ANALYSIS

TABLE 2

Market

value

31 March

2024

£m

(Deficit)/

Surplus

£m

valuation

change

valuation

change

LFL rental

value

change

Net initial

yield

Topped up

net initial

yield

Equivalent

yield

LFL

equivalent

yield

change

bps

West End offices 3,109 (111) (3.6) (0.5) 6.9 4.2 5.5 5.3 37

City offices 1,192 (188) (13.9) (4.6) 1.3 3.9 5.4 6.0 78

Retail and other 991 (48) (4.7) (3.3) 5.0 4.6 4.8 4.9 30

Developments 926 (102) (9.9) (4.1) n/a 0.0 0.1 5.4 n/a

Total Central London 6,218 (449) (6.9) (2.4) 5.0 4.2

5.3

5.4 46

Shopping centres 1,226 1 0.1 – 1.5 8.1 8.7 8.1 23

Outlets 605 (21) (3.3) 0.5 1.3 6.3 6.5 7.0 17

Total Major retail 1,831 (20) (1.1) 0.2 1.4 7.5 8.0 7.8 22

London 191 (23) (10.3) (8.7) 2.0 4.2 4.2 6.6 22

Major regional cities 510 (93) (15.3) (6.6) (1.2) 6.7 6.7 7.7 106

Total Mixed-use urban

701 (116) (14.0) (7.8) (0.3) 6.1

6.1

7.3 85

Leisure 423 (35) (8.2) (5.5) 1.5 8.7 8.9 8.8 26

Hotels 400 2 0.6 (1.1) 5.7 7.3 7.3 7.2 54

Retail parks 390 (7) (1.8) (1.2) 1.4 6.0 6.8 6.8 38

Total Subscale sectors 1,213 (40) (3.2) (2.6) 2.7 7.4 7.7 7.6 38

Total Combined Portfolio 9,963 (625) (6.0) (2.4) 3.2 5.4

6.2

6.2 45

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

2. Excluding developments/land.

3. Previous Mixed-use urban sub-segments have been changed to a classification based on geographical location, which is better aligned to how these assets are managed internally

and our revised approach to a number of assets.

Looking ahead, we expect that the relative

stability in long-term rates and improvement

in availability and pricing of credit will

support a pick-up in investment activity.

We are seeing investor interest emerge in

London and shopping centres from parties

who have not been active in these markets

for years, but who are now attracted by

historically attractive yields and clear

evidence of rental growth for best-in-class

assets. The refinancing of cheap debt issued

pre-2022 remains a challenge for parts of

the sector, yet the risk of disorderly sales

substantially driving down the value of

high-quality assets seems low. Markets

remain sensitive to rates, yet values for the

best assets have begun to stabilise, even

though secondary likely has further to fall.

Whilst we are principally focused on driving

like-for-like income, we expect ERVs for our

London and major retail assets to grow by

a low to mid single digit percentage this year.

LEASING AND OPERATIONAL

PERFORMANCE

CENTRAL LONDON

Customer demand remains firmly focused

on buildings with the best sustainability

credentials, transport connectivity and local

amenities. The amount of space which meets

these criteria remains limited, so pricing

of this continues to go up, whereas space

which does not meet these criteria is at risk

of becoming obsolete, almost regardless

of price. We continue to see the evidence

of this strong demand across our portfolio,

for example in the new record rents we

achieved in Victoria.

Reflecting the appeal of our buildings and

locations to people, we have seen an

increase in daily turnstile tap-ins of 18%,

significantly ahead of the growth in TFL

public transport data. Across our leasing

deals, we have also seen customers plan for,

on average, c. 30% more square foot per

person than they did before the pandemic in

2019, to create more space for collaboration,

focus work or wellbeing. As such, of our

£40m of office lettings over the past year,

47% saw customers increasing floor space,

whilst only 19% reflected customers

downsizing. This is in line with market data

which shows that only one-fifth of active

tenant requirements is for less space.

We have consistently said that we felt that

large HQ space and areas which lack the

amenities to make people want to spend

time there are most at risk as a result of

more flexible ways of working. Virtually all

of the £2.2bn offices we sold since late 2020

were large, single-let HQ buildings where

our ability to add further value was limited,

whilst we increased our focus on multi-let

clusters in the lively, well-connected West

End and Southbank markets. These now

make up 77% of our London portfolio vs 58%

in 2020.

STRATEGIC REPORTLANDSEC ANNUAL REPORT 2024 13

In a world where demand is concentrated in

the best part of the market, market averages

become rather meaningless. This is illustrated

by the fact that, whereas overall office

vacancy in London is elevated, at 8.8%,

90% of all vacant space sits in 10% of all

buildings and close to 40% of vacant space

sits in just 1% of all offices in London. This

shows vacancy is mostly a building issue, not

a market-wide issue. It also shows offices are

different than retail 5+ years ago, as in retail

even the best locations saw vacancy rise

and, as a result, rents fall, whereas in offices

Grade A availability remains low, so rents

continue to rise.

Even though take-up across the overall

London market slowed, demand for space

across our standing portfolio remained

resilient. We signed lettings during the year

totalling £30m of rent, on average 5% above

valuers’ assumptions, with a further £5m in

solicitors’ hands, 9% above valuers’ estimates.

Overall, relettings and renewals reflected

a 15% uplift vs previous passing rent and

occupancy increased 140bps to 97.3% –

substantially outperforming the Central

London market, where occupancy fell by

100bps. Our two existing Myo locations saw

average occupancy for the year rise to 93%,

up from 86%.

MAJOR RETAIL DESTINATIONS

We have continued to see a further shift

back from online to physical sales, with

negative online non-food sales growth for

the last two years. The exact split between

online and offline is becoming less of a factor

for the best locations as for most major

brands online and physical channels are

firmly interconnected. The increase in cost

of capital and cost of doing business online

is keeping pressure on low-margin online

sales. This principally affects pure-play online

models, which in response have shifted their

focus to improving profitability rather than

growing market share, increasing the cost for

consumers to buy online.

Reflecting this, we continue to see growing

demand from brands for physical space in the

best locations. There is a clear focus on ‘fewer,

bigger, better’ stores, as leading brands

such as Inditex and H&M have announced

significant investments in their best stores,

even though they often continue to close the

tail ends of their portfolio. Supported by the

fact that for many key brands, including JD,

Zara, Boots and Next sales growth in our

centres is outperforming their overall sales

growth, this explains the strong demand for

our space. Across our portfolio, total sales

grew 4.1% and like-for-like sales were up 1.5%.

Footfall increased 3.9% and is now at c. 93%

of pre-pandemic levels.

On the back of this, we delivered 6.9%

like-for-like income growth and a 130bps

increase in occupancy to 95.4% – effectively

back to pre-pandemic levels. As a result,

we are seeing improved pricing tension and

selective competition for space. A year ago

we said we expected the last large over-

rented leases to reset during the year, which

has happened. Despite this, for the first time

in years we have started capturing positive

uplifts on renewals and relettings. This was

still modest at 1% for the year, but is up to

6% for deals in solicitors’ hands. In total, we

completed 219 lettings totalling £27m of rent,

on average 5% ahead of ERV, with a further

£10m in solicitors’ hands, 7% above ERV.

MIXED-USE URBAN

NEIGHBOURHOODS & SUBSCALE

SECTORS

In mixed-use, the increase in vacancy

partly reflects the fact that we have so far

managed part of the existing income for

maximum development flexibility. We expect

this to reverse with our revised approach

to these assets, which involves retaining more

of the existing built stock to reduce embodied

carbon and build on the existing income,

rather than working towards a wholesale

redevelopment in one go. The operational

performance of our retail parks and leisure

remains strong, with £7m of lettings on

average 5% ahead of valuers’ assumptions

plus a further £3m in solicitors’ hands at a 3%

premium, whilst occupancy was up 30bps to

98.0%. We agreed a restructure of a number

of leases with Cineworld following its

recapitalisation during the first half resulting

in an annual rent reduction of less than £1m,

but all our units continue to trade. Our hotels,

which are fully let to Accor, saw occupancy

rise from 94% to 98% of pre-Covid levels,

driving an increase in RevPAR, which

supported our disposal post the year-end.

DEVELOPMENT PIPELINE

CENTRAL LONDON

We continue to see good demand for the

high-quality space we develop. During the

year, we completed our n2 development in

Victoria and Lucent behind Piccadilly Lights,

both of which were effectively fully let within

four months post completion, with rents on

average 14% ahead of initial assumptions.

At The Forge in Southwark, Myo opened in

the Phosphor building just before Christmas,

whilst the Bronze building is 42% let or in

solicitors’ hands. We also completed the

development of 21 Moorfields, which we sold

in September 2022 for £809m, crystallising

a 25% profit on cost.

Aside from The Forge, we also opened two

Myo locations at One New Change and New

Street Square just before Christmas and in

February, combined making up 138,000 sq ft,

so all three of these are currently in lease-up.

OPERATIONAL PERFORMANCE ANALYSIS

TABLE 3

Annualised

rental

income

£m

Net

estimated

rental value

£m

EPRA

occupancy

LFL

occupancy

change

ppt

WAULT

Years

West End offices 160 186 99.6 0.1 6.5

City offices 70 93 93.7 3.2 7.8

Retail and other 43 55 97.2 1.9 5.7

Developments 8 93 n/a n/a n/a

Total Central London 281 427 97.3 1.4 6.8

Shopping centres 121 122 95.1 1.0 4.3

Outlets 48 49 96.0 2.0 3.0

Total Major retail 169 171 95.4 1.3 3.9

London 11 16 90.2 (3.5) 9.0

Major regional cities 37 38 93.5 (4.1) 6.8

Total Mixed-use urban

48 54 92.6 (4.0) 7.2

Leisure 46 42 96.9 1.6 10.2

Hotels 35 29 n/a n/a 7.1

Retail parks 27 29 97.5 (1.1) 5.9

Total Subscale sectors 108 100 98.0 0.3 8.0

Total Combined Portfolio 606 752 96.5 0.8 6.2

1. Excluding developments.

2. Previous Mixed-use urban sub-segments have been changed to a classification based on geographical location,

which is better aligned to how these assets are managed internally and our revised approach to a number of assets.

LANDSEC ANNUAL REPORT 2024STRATEGIC REPORT

OPERATING AND PORTFOLIO REVIEW

CONTINUED

We are opening a new Myo at Lucent shortly

and plan to open a seventh location in Kings

Cross in 2025, which will bring our total Myo

space to c. 300,000 sq ft. Rents are broadly

in line with our underwriting assumptions,

representing net margins of c. 20% over

standard office space.

Whilst the sharp increase in interest rates over

the past two years has naturally impacted

property values, the flipside is that it is

limiting new supply. Compared to a year ago,

total space under construction has increased

from 12m to 13m sq ft yet 42% of this is

already pre-let. This means that speculative

office space under construction which is

expected to complete over 2024-26 is roughly

half of the long-term average new-build

office take-up in London. As demand remains

focused on the best, most sustainable space,

we expect this will drive further rental growth

for the best quality assets.

As such, during the year we started

the major refurbishment of Thirty High

(formerly Portland House) in Victoria and the

development of Timber Square in Southwark.

Reflecting our positive outlook for rental

values, we expect these to deliver a gross

yield on cost of 7.2% and be highly earnings

accretive, with an expected ERV of £59m

once fully let vs £434m residual cost to

complete.

COMMITTED PIPELINE

TABLE 4

Property Sector

Size

sqft

‘000

Estimated

completion

date

Net income/

ERV

£m

Market

value

£m

Costs to

complete

£m

TDC

£m

Gross yield

on TDC

Thirty High, SW1 Office 299 Aug-25 30 238 183 412 7.3%

Timber Square, SE1 Office 381 Dec-25 29 137 251 411 7.1%

Total 680 59 375 434 823 7.2%

FUTURE CENTRAL LONDON DEVELOPMENT PIPELINE

TABLE 5

Property Sector

Proposed

sqft

‘000

Indicative

TDC

£m

Indicative

ERV

£m

Gross yield

on TDC

Potential

start

date Planning status

Near-term

Red Lion Court, SE1 Office 250 335 24 7.2 H2 2024 Consented

Liberty of Southwark, SE1 Office/residential 225 260 17 7.4

H1 2025 Consented

Total near-term 475 595 41 7.3

Medium-term

Old Broad Street, EC2 Office 285 2025 Consented

Hill House, EC4 Office 380 2026 Consented

Nova Place, SW1 Office 60 2025 Design

Southwark Bridge Road, SE1 Office 150 2025 Design

Timber Square Phase 2, SE1 Office 290 2026 Design

Total medium-term 1,165

Total future pipeline 1,640

1. Gross yield on cost adjusted for residential TDC.

In terms of future pipeline, we have started

the deconstruction of the existing building at

Red Lion Court to prepare this for a potential

start late this year. We also secured planning

consents for the development of 55 Old Broad

Street and Hill House, at our New Street

Square estate, and a significant increase

in scale of our planning consent at Liberty

of Southwark. Combined, this brings our

consented pipeline to 1.1m sq ft. We also

acquired a site adjacent to Timber Square for

a low implied land value of c. £100 per sq ft,

which unlocks the opportunity to create

a significant c. 670,000 sq ft estate across

two phases, with significant public realm

incorporating the site’s historic Victorian

railway arches.

MIXED-USE URBAN

NEIGHBOURHOODS

Landsec has a long history of creating

thriving urban places, such as in Victoria,

Oxford, Leeds or Cardiff. These places are

scarce and their enduring attraction

underpins their longer-term growth, even

though the exact mix of uses of space differs

by location. As consumer expectations on

how we live, work and spend our leisure time

continue to change, we have a number of

opportunities in some of the fastest growing

areas in the UK to create and curate the next

generation of such places.

At Finchley Road, in zone two London,

we received unconditional planning consent

for our 1,800 homes masterplan including

detailed consent for the first 600 homes

during the year. We have started offsite

utility upgrades with site preparatory and

enabling works to follow in autumn this year.

We anticipate spending c. £10m on these

works over the next 18 months. This will put

us in a position where we can commit to the

development of the first 600 homes by late

2025. The investment for this would be

roughly £300m, with a target IRR in the low

double-digits. At the same time, we will look

to rebuild the income in the existing retail

asset ahead of its potential longer-term

redevelopment.

STRATEGIC REPORTLANDSEC ANNUAL REPORT 2024 15

At Mayfield, adjacent to Manchester’s main

train station, we have been working with our

JV partners on optimising the development

strategy for this site. Building on the

successful place we have created with the

new 6-acre park, we have the option to start

the first c. £140m office block late this year,

which would then also unlock the future

residential phases of this new mixed-use

neighbourhood.

At Lewisham, south-east London, and

Glasgow we are evolving our plans to focus

more on masterplans that can be delivered

in discrete incremental phases. Alongside

this we will seek to embrace opportunities to

retain and reinvent existing buildings in our

ambition to reduce embodied carbon. This

new approach will improve overall returns by

retaining more of the existing income and

growing this, alongside discrete development

interventions. We are still finalising our plans,

but this will likely result in less embodied

carbon, lower risk and less capital intensive

routes to realising the potential of these

mixed-use estates.

Rents for the highly sustainable, best-in-class

space we can deliver in London and across

our mixed-use pipeline continue to grow and

construction cost inflation has normalised,

although returns on any future commitments

will need to compensate for higher costs and

higher exit yields. We will therefore continue

to optimise designs, planning and delivery

programmes to ensure our future

developments deliver an attractive return

and sufficient risk premium vs the return

on assets we sell to fund our investment in

these. The significant size of our medium-

term London and mixed-use pipelines means

it is unlikely that we will fund all of this on

our own balance sheet, so we will explore

opportunities to access other, complementary

sources of capital to help accelerate the

delivery of these opportunities.

DELIVERING IN A SUSTAINABLE WAY

Aligned to the Science Based Targets

initiative’s (SBTi) new Net-Zero Standard, we

have committed to a target to reduce direct

and indirect greenhouse gas emissions by

47% by 2030 vs a 2019/20 base year and to

reach net zero by 2040 from the same base

year. This includes emissions from all sources,

including all of our reported Scope 3 emissions

such as the emissions from our development

pipeline, supply chain and customers. So far,

our emissions have already reduced by 24%

compared to this baseline. To align with our

revised carbon reduction target, we have

updated our energy intensity target to reduce

energy intensity by 52% by 2030 from a

2019/20 baseline. We are currently tracking

an 18% reduction, having achieved an energy

intensity reduction across our portfolio of

3.7% vs the prior year.

We continue to progress our Net Zero

Transition Investment Plan, which will ensure

we deliver our near-term science-based

target and meet the proposed Minimum

Energy Efficiency Standard of EPC ‘B’ by

2030. The expected cost to deliver this plan

isalready reflected in our current portfolio

valuation. 49% of our portfolio is already

rated ‘B’ or higher, including 44% of our

office portfolio, up from 36% a year ago.

Weexpect this to increase from 2025

onwards, as the benefits from our net zero

investments come through.

We have now started the retrofit of air

source heat pumps at two office locations.

We expect to start a further three retrofit

projects in the current year and are

progressing detailed designs for another one.

During the year, we have expanded the

workwith our customers on energy audits

from 25 to 38 of our largest customers.

Thesecover 56% of the energy used by our

customers in our office portfolio and so far

this work has identified potential annual

carbon and energy savings of 10-40% for

themajority of customers.

With respect to our target to reduce

upfrontembodied carbon by 50% vs a

typicaldevelopment by 2030, to below

500kgCO

e/sqm for offices and

400kgCO

e/sqm for residential, our future

pipeline is currently tracking at an average

40% reduction. The two schemes we started

this year are already close to, or ahead of our

2030 reduction target. At Timber Square, we

achieved a reduction to 522kgCO

e/sqm due

to retention of part of the existing structure,

a highly optimised design and the use of low

carbon cross laminated timber, whilst at

Thirty High, retaining the original structure

and upgrading the existing façade resulted

inan upfront embodied carbon intensity of

just 347kgCO

e/sqm.

In March, we launched our new nature

strategy, Let Nature In, which recognises

the interdependency between the climate

and biodiversity crises and aims to

consistently enhance nature across our

portfolio to improve biodiversity in the built

environment; promote health, wellbeing,

and community engagement; and create

nature-based solutions to mitigate and

adapt to climate change.

Our Landsec Futures fund, which will see

us invest £20m over 2023-2033, aimed at

improving social mobility in real estate and

tackling issues local to our assets, continues

to support the delivery of our 2030 target to

create £200m of social value and empower

30,000 people towards the world of work.

From our 2019/20 baseline, we have so far

created £54m of social value and empowered

10,249 people.

MIXED-USE URBAN NEIGHBOURHOODS PIPELINE

TABLE 6

Property

Landsec

Proposed

sqft

‘000

Earliest

start

on site

Number

of blocks

Estimated first/

total scheme

completion

Indicative

TDC

£m

Target yield

on cost

% Planning status

Near-term

Mayfield, Manchester 50-100 2,500 2024 18 2027/2034 800-950 7-8 Consented

Finchley Road, NW3 100 1,400 2025 10 2028/2035 950-1,050 6-7 Consented

Medium-term

MediaCity, Greater Manchester 75 2026 Consented

Buchanan Galleries, Glasgow 100 2026 Design

Lewisham, SE13 100 2026 Design

LANDSEC ANNUAL REPORT 2024STRATEGIC REPORT

FINANCIAL REVIEW

HIGHLIGHTS

£371m

EPRA earnings

(2023: £393m

)

£(341)m

(Loss)/profit before tax

(2023: £(622)m)

50.1p

EPRA earnings

per share

(2023: 53.1p

)

(43.0)p

Basic (loss)/earnings

pershare

(2023: (83.6)p)

£9,963m

Combined portfolio

(2023: £10,239m)

£6,447m

IFRS net assets

(2023: £7,072m)

(4.0)%

Total return on equity

(2023: (8.3)%)

39.6p

Dividend per share

(2023: 38.6p)

35.0%

Group LTV ratio

(2023: 31.7%)

£3,517m

Adjusted net debt

(2023: £3,287m)

859p

EPRA Net Tangible

Assetsper share

(2023: 936p)

1. Including our proportionate share of subsidiaries

andjoint ventures, as explained in the Presentation

offinancial information in the Financial Review.

2. Underlying EPRA earnings of £371m, excluding

£22myear-on-year increase in surrender premiums.

3. Underlying EPRA EPS of 50.1p, excluding £22m

year-on-year increase in surrender premiums.

PRESENTATION OF FINANCIAL

INFORMATION

The condensed consolidated preliminary

financial information is prepared under

UK adopted international accounting

standards (IFRSs and IFRICs) where

the Group’s interests in joint ventures

are shown collectively in the income

statement and balance sheet, and all

subsidiaries are consolidated at 100%.

Internally, management reviews the

Group’s results on a basis that adjusts

for these forms of ownership to present

a proportionate share. The Combined

Portfolio, with assets totalling £10.0bn, is

an example of this approach, reflecting

our economic interest in our properties

regardless of our ownership structure.

Our key measure of underlying earnings

performance is EPRA earnings, which

represents the underlying financial

performance of the Group’s property

rental business, which is our core

operating activity. A full definition of

EPRA earnings is given in the Glossary.

This measure is based on the Best

Practices Recommendations of the

European Public Real Estate Association

(EPRA) which are metrics widely used

across the industry to aid comparability

and includes our proportionate share of

joint ventures’ earnings. Similarly, EPRA

Net Tangible Assets per share is our

primary measure of net asset value.

Measures presented on a proportionate

basis are alternative performance

measures as they are not defined

under IFRS. This presentation provides

additional information to stakeholders

on the activities and performance of

the Group, as it aggregates the results

of all the Group’s property interests

which under IFRS are required to be

presented across a number of line items

in the statutory financial statements.

For further details see table 57 in the

Business analysis section.

OVERVIEW

External market conditions improved as

the year progressed. The relative stability

in interest rates of late, after the significant

rise in the first half of the year, material

reduction in inflation and return to real wage

growth for consumers are all supportive

for the outlook. Even though we do not

anticipate a sharp reduction in rates, our

high-quality portfolio, strong operational

performance and robust capital base provide

an attractive base for future growth.

Reflecting the continued strength in

customer demand, like-for-like gross rental

income was up 3.0%, or 2.8% on a net rental

income basis, driven by a further increase in

occupancy, positive uplifts on relettings and

renewals, and growth in turnover income.

Combined with a reduction in overhead

costs, this offset the impact of higher

finance costs and disposals. As a result,

ourEPRA earnings were in line with the prior

year’s underlying level of £371m and, in line

with our guidance, EPRA EPS was stable

at50.1 pence. Our total dividend for the

yearof 39.6 pence is up 2.6%, in line with

ourguidance of low single digit percentage

growth. Our dividend cover of 1.27x remains

comfortably within our target range of

1.2-1.3x on an annual basis.

Our successful leasing activity increased

overall occupancy and drove 3.2% growth

in ERVs but as investment volumes across

the wider market remained subdued, the

valuation of our portfolio was down £625m,

or 6.0%. This was driven by an increase in

valuation yields in the first half of the year

in particular, as c.60% of our portfolio was

stable in value in the second half. This yield

movement primarily drove an overall IFRS loss

before tax of £341m and basic EPS of -43.0

pence, compared with a loss of £622m for

the prior year, and a reduction in EPRA NTA

per share of 8.2% to 859 pence. Including

dividends paid, our total return on equity

was -4.0%, reflecting a 5.3% income return

and 4.2% upside from ERV growth and

developments, offset by -13.5% on account

of yield shift.

Our balance sheet remains strong and

comfortably within our operating guidelines.

Net debt increased slightly by £0.2bn to

£3.5bn during the year, which combined

with the valuation movement of our portfolio

resulted in an LTV of 35.0% at the end of

STRATEGIC REPORTLANDSEC ANNUAL REPORT 2024 17

March. More importantly, at a time when

investment activity is low and the approach

to valuations varies widely in different

markets, as a cash measure, our net debt/

EBITDA at the year-end remained low at 7.4x

vs 7.0x a year ago, in line with our target to

keep this below 8x. Moreover, pro-forma for

our £0.4bn of disposals since the year-end,

our net debt/EBITDA is down to 7.0x whilst

our 32.3% LTV is lower than it was in March

2022, before the correction in values, and net

debt is £1.1bn down since then. Combined

with our average debt maturity of 9.5 years

and £1.9bn of cash and undrawn facilities,

this provides substantial capacity to invest

in growth.

INCOME STATEMENT

Our strong leasing performance continues

to underpin the growth of our high-quality

income. Our proactive disposals over the

past two years have created room for future

growth, even though this came at a modest

cost to income during the year. Finance costs

increased due to a rise in interest rates and

lower capitalised interest following our recent

development completions, but this has

been offset by our positive like-for-like

income growth, income from our

successful developments and a reduction

in administrative expenses.

Headline EPRA earnings in the prior year

benefited from a £22m year-on-year increase

in surrender premiums received, which we

adjusted for in the underlying earnings we

reported a year ago. As such, EPRA earnings

of £371m are in line with the prior year’s

underlying level.

INCOME STATEMENT

TABLE 7

Year ended 31 March 2024 Year ended 31 March 2023

Central

London

£m

Major

retail

£m

Mixed-

use

urban

£m

Subscale

sectors

£m

Total

£m

Central

London

£m

Major

retail

£m

Mixed-

use

urban

£m

Subscale

sectors

£m

Total

£m

Change

£m

Gross rental income

291 181 57 112 641 310 171 57 109 647 (6)

Net service charge expense (4) (7) (3) (2) (16) (1) (8) (2) (1) (12) (4)

Net direct property expenditure (24) (23) (12) (16) (75) (20) (31) (10) (13) (74) (1)

Segment net rental income 263 151 42 94 550 289 132 45 95 561 (11)

Net administrative expenses (77) (84) 7

EPRA earnings before interest 473 477 (4)

Net finance expense (102) (84) (18)

EPRA earnings 371 393

(22)

Capital/other items

Valuation deficit (625) (848) 223

Loss on changes in finance leases – (6) 6

Loss on disposals (16) (144) 128

Impairment charges (12) (24) 12

Fair value movement on interest rate swaps (17) 22 (39)

Other (20) (12) (8)

Loss before tax attributable to shareholders

ofthe parent

(319) (619) 300

Non-controlling interests (22) (3) (19)

Loss before tax (341) (622) 281

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

2. Includes finance lease interest, after rents payable.

3. Underlying EPRA earnings of £371m excluding £22m year-on-year increase in surrender premiums.

NET RENTAL INCOME

Reported gross rental income was down

£6m to £641m, but up £16m adjusted for the

aforementioned £22m year-on-year increase

in surrender premiums in the prior year and

up 3.0% on a like-for-like basis excluding the

impact of these movements. Surrender

premiums over the last twelve months were

£2m higher than the underlying level over the

previous two years, at £18m, part of which

relates to income foregone during the year.

We expect surrender receipts going forward

to be lower than the levels in recent years, as

a result of lower levels of customer rightsizing

or repurposing activity across our portfolio.

Net rental income was up £11m on an

underlying basis. Direct property costs

increased by £1m and net service charge

expenses were up £4m, primarily driven by

the costs associated with the initial lease-up

phase of our recent London office

developments. The impact from the

repurposing of conventional office space

to introduce two Myos reduced net rental

income by £2m, but given the c. 20%

premium on Myo rent we achieve, we expect

this to more than reverse as we lease up

this space. Investment activity reduced

income by £9m, reflecting our significant

deleveraging. On a like-for-like basis, our

net rental income was up £13m, or 2.8%.

Reflecting continued demand for our space,

we expect like-for-like growth for the current

year to be broadly similar.

In line with our guidance, our gross to net

margin for the year reduced slightly to 85.8%

from 86.7% in the prior year due to the

start-up costs of opening three new Myo

locations and our completed developments.

The sale of our hotel portfolio will reduce

our overall margin but on a like-for-like

basis we expect our gross to net margin

to improve so we expect our overall margin

to be broadly stable this year. Overall,

insolvencies remain low, with rent from

customers in administration at 0.4%, in line

with the prior year.

LANDSEC ANNUAL REPORT 2024STRATEGIC REPORT

FINANCIAL REVIEW

CONTINUED

NET RENTAL INCOME1 (£m)

CHART 8

Net rental income for the

year ended 31 March 2024

Net rental income for the

year ended 31 March 2023

Increase in variable and

turnover-based rents

Acquisitions since

1 April 20222

Disposals since

1 April 20222

Like-for-like net service

charge expense

Like-for-like net direct

property expenditure

Decrease in surrender

premiums received

Gross rental income

like-for-like movement

in the period2

Other movements

Developments2

561

(3)

(20)

(21)

550

600

550

500

450

400

350

300

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

2. Gross rental income on a like-for-like basis and the impact of developments, acquisitions and disposals exclude surrender premiums received.

NET ADMINISTRATIVE EXPENSES

Net administrative expenses were down

£7m to £77m, as the cost savings from the

organisational review we undertook in late

2022 and our continued focus on ensuring

our cost base is efficient more than offset

inflation. For the current year, we expect

continued efficiency improvements to offset

inflation and we anticipate further savings

from our investments in data and technology

over time.

Our EPRA cost ratio was virtually stable

at 25.0% vs 25.2% in the prior year, which

reflects our capital allocation decisions.

Naturally, assets with long leases to a single

tenant often have lower operating costs than

more operational sectors such as flexible

office, shopping centres, or for example

residential, yet this does not mean they

generate a better overall return. Illustrating

this, over the last three years we have sold

£2.2bn of virtually triple-net offices with a

17-year lease term where our ability to add

further value was limited and which had an

expected mid-single digit forward IRR. We

invested in more operational assets with a

higher net income yield and much higher IRR,

which clearly improved our overall returns,

even though the combined impact of

this increased our EPRA cost ratio by

almost 3ppt.

NET FINANCE EXPENSES

Net interest costs increased by £18m to

£102m, which reflected an increase in our

weighted average cost of debt and a

reduction in capitalised interest following

the completion of our recent London

developments, partly offset by our

deleveraging through disposals. All else

equal, we expect net interest costs for this

year to be up slightly, as the reduction in

debt following our recent disposals is offset

by an increase in average borrowing costs

reflecting our recent £300m bond issue and

the higher average floating rate compared

to last year, with 94% of our debt fixed or

hedged at the end of March.

Non-cash finance income, which includes

the fair value movements on derivatives,

caps and hedging and which is not included

in EPRA earnings, decreased from a net

income of £23m during the prior year to a

net expense of £24m. This is predominantly

due to the fair value movements of our

interest-rate swaps as a result of the increase

in interest rates over the period.

VALUATION OF INVESTMENT

PROPERTIES

The independent external valuation of our

Combined Portfolio showed a reduction in

value of £625m. Our strong leasing activity

resulted in 3.2% ERV growth, yet the upside

of this was more than offset by a 45bps

increase in valuation yields driven by the

sharp increase in bond yields during the first

half of the year. This upwards pressure on

yields reduced during the second half, as our

valuers indicated yields were broadly stable

in the final quarter of the year.

IFRS LOSS AFTER TAX

Substantially all our activity during the year

was covered by UK REIT legislation, which

means our tax charge for the period

remained minimal. The IFRS loss after tax

primarily as a result of the above fair value

adjustment of our investment portfolio

moderated to £341m, compared to £622m

for the prior year.

STRATEGIC REPORTLANDSEC ANNUAL REPORT 2024 19

NET ASSETS AND RETURN ON EQUITY

Our total return on equity for the year was

-4.0%, compared with -8.3% for the prior

year. Our income return on NTA is an

attractive 5.3%, whilst ERV growth and

development upside drove a capital return

of 4.2%. The combination of these two

factors therefore yielded a return of 9.5%,

with the remaining negative impact driven

by an increase in valuations yields. As yields

for the best assets begin to stabilise, this

shows we are inherently well placed to

deliver the 8-10% return on equity we target

over time.

After the £291m of dividends paid, EPRA Net

Tangible Assets, which reflects the value of

our Combined Portfolio less adjusted net

debt, reduced to £6,398m, or 859 pence

per share. This represents an 8.2% reduction

versus the prior year, half of which was made

up for by dividends.

BALANCE SHEET

TABLE 9

31 March

2024

£m

31 March

2023

£m

Combined Portfolio 9,963 10,239

Adjusted net debt (3,517) (3,287)

Other net assets (48) 15

EPRA Net Tangible Assets 6,398 6,967

Shortfall of fair value over net investment in finance leases book value 5 6

Other intangible asset 2 2

Excess of fair value over trading properties book value (25) (12)

Fair value of interest-rate swaps 22 42

Net assets, excluding amounts due to non-controlling interests 6,402 7,005

Net assets per share 863p 945p

EPRA Net Tangible Assets per share (diluted) 859p 936p

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

MOVEMENT IN EPRA NET TANGIBLE ASSETS1 (£m)

CHART 10

Like-for-like

valuation movement

Development

valuation movement

Impact of

acquisitions/disposals

EPRA Net Tangible Assets

at 31 March 2024

EPRA Net Tangible Assets

at 31 March 2023

EPRA earnings

Dividends

Loss on disposals

Other

Total valuation deficit £625m

6,967

371

(460)

(102)

(63)

(291) (16)

6,398

(8)

8,000

7,000

6,000

5,000

4,000

936 50 (62) (14) (8) (39) (3) (1) 859

Diluted per share (pence)

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

LANDSEC ANNUAL REPORT 2024STRATEGIC REPORT

FINANCIAL REVIEW

CONTINUED

NET DEBT AND LEVERAGE

Adjusted net debt, which includes our share

of JV borrowings, increased by £230m to

£3,517m during the year. We spent £137m on

acquisitions and invested £328m in capex,

largely on London office developments,

the preparation of future developments and

the investment in our existing assets. This

was partly offset by the sale of investment

properties generating receipts of £176m

during the period.

Since the year-end we have sold £400m

of assets, which would reduce adjusted

net debt to £3,117m on a pro-forma basis.

Following the completion of our recent

London pipeline, we have £399m committed

capex to spend over the next two years

on our two new projects in Victoria and

Southbank.

The other key elements behind the decrease

in net debt are set out in our statement

of cash flows and note 13 to the financial

statements, with the main movements

in adjusted net debt shown below.

A reconciliation between net debt and

adjusted net debt is shown in note 21

of the financial statements.

MOVEMENT IN ADJUSTED NET DEBT1 (£m)

CHART 11

Adjusted net debt

at 31 March 2024

Adjusted net debt

at 31 March 2023

Adjusted net cash inflow

from operating activities

Dividends paid

Capital expenditure

Acquisitions

Disposals

Other

3,287

(353)

291

328

137

(176)

3 3,517

4,000

3,500

3,000

2,500

2,000

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

Due to the modest increase in borrowings,

net debt/EBITDA increased slightly to 7.4x

based on our net debt at the end of March

2024, or 7.3x based on our weighted-average

net debt for the period. We target net debt/

EBITDA to remain below 8x over time. Group

LTV which includes our share of JVs,

increased from 31.7% to 35.0%. This reduces

to 32.3% pro-forma for the hotels disposal

post the year-end, which is 2.1ppt lower than

it was in March 2022, before the sharp rise

in interest rates and resulting correction

in property values. We expect our LTV to

increase slightly from this level as we will look

to invest at an attractive point in the cycle,

but to remain within our target range of

25% to 40%.

NET DEBT AND LEVERAGE

TABLE 12

31 March

2024

31 March

2023

Net debt £3,594m £3,348m

Adjusted net debt

£3,517m £3,287m

Interest cover ratio 3.9x 4.5x

Net debt/EBITDA (period-end) 7.4x 7.0x

Net debt/EBITDA (weighted average) 7.3x 8.0x

Group LTV

35.0% 31.7%

Security Group LTV 37.0% 33.0%

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

information above.

STRATEGIC REPORTLANDSEC ANNUAL REPORT 2024 21

FINANCING

Our gross borrowings of £3,703m are

diversified across various sources, including

£2,607m of Medium Term Notes (MTNs),

£415m of syndicated and bilateral bank loans

and £681m of commercial paper. Our MTNs

and the majority of bank loans form part of

our Security Group, which provides security

on a floating pool of assets valued at £9.2bn.

This structure provides flexibility to include

orexclude assets, and an attractive cost of

funding, with our MTNs currently rated AA

and AA- with a stable outlook respectively

by S&P and Fitch.

Our Security Group has a number of tiered

covenants, yet below 65% LTV and above

1.45x ICR, these involve very limited

operational restrictions. A default only

occurswhen LTV is more than 100% or the

ICR falls below 1.0x. Our portfolio could

withstand a c. 43% fall in value before we

reach the 65% LTV threshold and c. 63%

before reaching 100% LTV, whilst our EBITDA

could fall by c. 63% before we reach the

1.45xICR threshold and c. 74% before

reaching 1.0x ICR.

We had £1.9bn of cash and undrawn

facilities at the end of March 2024, providing

substantial flexibility. As expected, the

percentage of borrowings which is fixed or

hedged reduced slightly to 94%, reflecting

our net investment in the year. Across the

year we redeemed £427m of MTNs on their

expected maturity dates. In March, we issued

a £300m bond with a maturity of 7.5 years

at 4.75%, representing a spread of 103bps

over the reference gilt rate. This spread shows

the strength of our credit profile, and ensured

our overall debt maturity remains long,

at 9.5 years, providing clear visibility and

underpinning the resilience of our attractive

earnings profile. Our average cost of debt

rose to 3.3% compared with 2.7% in the prior

year. Reflecting our strong financial position,

we expect this to increase only slightly during

the year ahead. At the end of March 2024,

we had a limited £306m of debt maturing

in the next two years.

AVAILABLE FACILITIES

TABLE 13

31 March

2024

£m

31 March

2023

£m

Medium Term Notes 2,607 2,736

Drawn bank debt 415 383

Outstanding commercial paper 681 312

Cash and available undrawn facilities 1,889 2,353

Total committed credit facilities 2,907 3,007

Weighted average maturity of debt 9.5 years 10.3 years

Percentage of borrowings fixed or hedged

94% 98%

Weighted average cost of debt

3.3% 2.7%

1. Calculated as fixed rate debt and hedges over gross debt based on the nominal values of debt and hedges.

2. Including amortisation and commitment fees; excluding this the weighted average cost of debt is 3.2% at 31 March 2024.

OUTLOOK

Looking ahead, our high-quality portfolio,

strong operational performance actions and

strong capital base mean that, with an LTV

and net debt position which is lower than

itwas two years ago, we are well placed

toinvest at an attractive point in the cycle.

We maintain our target to deliver an 8-10%

annual return on equity over time, comprising

a mix of income and capital returns, driven

by rental growth and selective development

upside. Short-term movements in valuation

yields are outside of our control, and mean

our return on equity will not be exactly in this

range each individual year, as we have seen

over the past twelve months. However,

with an income return on NTA of c. 5.7%,

an expectation of further low-to-mid single

digit ERV growth in London and Major Retail

this year and yields starting to stabilise,

the outlook for this is encouraging.

We are now capturing positive leasing

reversion, which supported 2.8% growth in

like-for-like net rental income over the past

year and we expect growth for the current

year to be similar. How this will translate into

EPS growth depends on the quantum and

timing of net investment from here. We have

meaningful balance sheet capacity following

our significant disposals yet our recent sales

will reduce annualised earnings by c. 4%, all

else equal. This means that, before reflecting

the impact of any reinvestment of these

sales proceeds, EPS for the year to March

2025 would likely be slightly below the 50.1

pence for 2024. For March 2026, we currently

expect EPS to be slightly above this level,

reflecting the combined effect of continued

like-for-like income growth and accretive

capital recycling. As a result, we continue to

expect our dividend to grow by a low single

digit percentage this year, as our dividend

cover remains towards the high end of our

1.2-1.3x target range.

VANESSA SIMMS, CHIEF FINANCIAL OFFICER

LANDSEC ANNUAL REPORT 2024STRATEGIC REPORT

Our purpose – sustainable places, connecting communities,

realising potential – puts all our stakeholders at the forefront

of the Board’s decision making.

This is our Section 172 Statement.

The Board is pleased to provide a

statementthat supports Section 172(1)

oftheCompanies Act 2006. This requires

that Directors promote the success of the

Company for the benefit of the members,

having regard to the interest of stakeholders

in their decision making. In this section, we

provide examples of how the Board engages

with stakeholders and takes into account

their interests when making decisions.

STAKEHOLDERS AND BOARD

DECISION MAKING

Our stakeholders’ interests and priorities

continue to change, and affect the way

wework, shop and engage with each

other.Effective communication with our

stakeholders is critical to keeping pace with

their evolving needs, which is so important

for our long-term success. The Board’s

engagement with stakeholders is both

direct and by management reporting

tothe Board on stakeholder engagement,

the importance of which is embedded

throughout our business.

OUR CUSTOMERS

During the year, the Board received a

detailed briefing on our retail, office and

mixed-use strategies including customer

insights, as well as regular updates on

customers as part of the business update at

every meeting. The following Board activities

took place in 2023/24: (a) in June 2023,

a Retail business review alongside a tour

of our Gunwharf Quay site with a focus on

future plans for that site and across the retail

business; (b) in July 2023, the Board received

a detailed Workplace update; (c) in February

2024 the Board visited our new Myo facility at

New Street Square; and (d) in January 2024,

the Board held a strategy day and covered

mixed-use developments in detail.

OUR FIVE KEY

STAKEHOLDERS

OUR STAKEHOLDERS

STRATEGIC REPORTLANDSEC ANNUAL REPORT 2024 23

In 2022, we restructured our governance

framework to better reflect our customer

base, creating the Workplace and Lifestyle

Boards and Executive Committees (see

pages 56-57). In 2023, we created Shadow

Boards to add more diverse perspectives to

decision making in those areas (see page 57).

Throughout this year we have operated

underthis new structure which has provided

enhanced focus on our customers and

associated strategies for those business areas.

OUR COMMUNITIES

In April 2023, we launched Landsec Futures,

afund designed to maximise the potential

of people, places and communities by

enhancing social mobility and creating

pathways into our industry for people from

under-represented backgrounds.

We’ve committed to investing £20m into

Landsec Futures over ten years, which will

enable us to meet our corporate commitment

to help 30,000 people facing barriers towards

the world of work, creating £200m in social

value for our communities.

To understand in more detail some of the

communities our assets are located within,

the Board has reviewed in detail the Mayfield,

O2 Finchley Road, Lewisham, Buchanan

Galleries, Glasgow, St David’s Cardiff,

Cambridge Leisure and Hartree projects.

Theimportance of engaging with local

communities as part of our work on these

and other projects was emphasised.

YOU CAN READ MORE ABOUT OUR

COMMUNITY WORK ON PAGE 31

OUR PARTNERS

We have strong relationships with our

suppliers and are signatories of the

Prompt Payment Code. In 2022 we

launched our Supply Chain Commitment.

More information on our relationships

with our suppliers and associated processes

is available on our website.

In 2023, we undertook a significant re-tender

of our facilities management providers across

our Workplace and Lifestyle businesses. Our

Future of Facilities Programme explored the

latest innovations in facilities management,

helping us to identify the best service

partners in the market, and enabling us to

design the best operating model for us to

achieve sustainable operational excellence,

best-in-class customer experience, and a safe

and secure environment in a post-Covid

world. The programme was a significant

effort, with collaboration across the business,

and has now completed with new service

partners onboarded. The Board approved

theFuture of Facilities Programme in

November 2023.

The Board was also updated regularly during

the year by our Managing Director, Corporate

Affairs & Sustainability, on changes in the

political landscape in the UK.

OUR EMPLOYEES

During the year, the Board appointed Manjiry

Tamhane as the Non-executive Director

responsible for Employee Engagement

and Whistleblowing. This role builds on the

work the Board has been doing in overseeing

employee engagement and culture.

A successful programme of engagement

activities was undertaken during the year by

Manjiry and other Non-executive Directors.

Manjiry Tamhane attended an affinity

network introductory event and separately

met our Landsec Futures interns. The intern

group enjoyed working for Landsec and

experiencing the culture of the business.

There were a number of suggested

improvements for the next cohort.

During the year there were also three

engagement events run with two Non-

executive Directors and a cross section of

upto 15 employees. During these sessions

itwas highlighted that there was a lot of

enthusiasm for Landsec generally, and for

engaging with the Board in an informal

manner. Topics discussed included specific

business topics, delegation of authority,

diversity and inclusion, the culture, hybrid

working and the refresh of the headquarters

office. There was a meet the Board event

in July with a group of around 70 employees

and the whole Board which was very

well received.

In August 2023, we introduced Shadow

Boards who shadow our Workplace and

Lifestyle Boards (see page 57 for more

details). The Shadow Board members met

with James Bowling and Madeleine Cosgrave

to discuss their experiences and feedback.

Overall the feedback was very positive and

it was clear that the shadow boards had a

positive impact from a personal development

perspective.

Our Employee Forum represents our

employee voice. They meet monthly, with

four quarterly meetings with our CEO and

Chief People Officer to answer any questions

and get insights into issues of importance

toemployees.

Manjiry also met the Employee

Forum twice this year, where the discussion

covered the performance and reward culture

(including salary and benefits) at Landsec.

The Board received a full briefing on the

employee engagement survey which was

undertaken in summer 2023 and a summary

of our Pulse survey in the autumn, which

provided them with good insights into

employee sentiment (see page 25 for more

onour engagement survey).

Finally, a number of our Non-executive

Directors attended our annual spotlight

awards event in March 2024, celebrating

individual and team achievements that

had taken place during the prior year.

LANDSEC ANNUAL REPORT 2024STRATEGIC REPORT

OUR STAKEHOLDERS

CONTINUED

Our investors

We want to create sustainable value for our three types of investors: institutional, private and debt. It is important to us that our

investors understand our strategy and our equity story so they can support the execution of our strategy and our capital recycling.

NO. OF EQUITY INVESTORS

8,489

INSTITUTIONAL INVESTORS

During the year, our Chair wrote to our larger shareholders

offering introductory meetings, and as a result he met with some

of those shareholders to discuss governance and the overall

strategy of the Group. Christophe Evain also led a consultation

with our largest shareholders on proposed amendments to our

Directors’ Remuneration Policy and the way it operates (see

page 83 for more details).

Our Executive Directors continue to hold meetings with investors

representing more than half the share register by value.

We managed a comprehensive investor relations programme

for institutional investors, consisting of post-results roadshows,

industry conferences, private-client broker roadshows and

property tours.

In June 2023, we held a Capital Markets Day at Gunwharf Quays

in Portsmouth, for institutional investors and sell-side analysts.

This event provided an overview of the shopping centre and retail

outlet markets in the UK, and a detailed update on our portfolio

and the potential for us to make accretive investment in it.

The event also included a panel session, comprising a number

of retailers who provided views on their respective markets and

how Landsec is supporting their retail strategies.

In September 2023, we held a Capital Markets Event to show

institutional investors and sell-side analysts our recently-

completed n2 and Lucent office developments in central London.

The event included tours of the two buildings, as well as

presentations from our team explaining the challenges of

completing developments during the Covid restrictions, and the

subsequent success of our leasing strategy for the two schemes.

We actively engaged with investors throughout the year on

all aspects of environmental, social and governance matters.

In March 2024, we conducted a sustainability roadshow in the

Netherlands, meeting fund managers and sustainability analysts

from major institutional investors.

INDUSTRY CONFERENCES

Attending industry conferences provides our Executive Directors

with a chance to meet a large number of institutional investors

on a formal and informal basis. Conferences attended this year

include the UBS Global Property conference in London, the

Kempen conferences in Amsterdam and New York, the Bank of

America conference in New York, the Citi conference in Florida,

Barclays’ real estate conference in London, and Morgan

Stanley’s real estate conference in London.

INSTITUTIONAL INVESTORS

1,290

99.01%

OF SHARES

PRIVATE INVESTORS

Our private investors are encouraged to give feedback and

communicate with the Directors via the Company Secretary

throughout the year.

2023 ANNUAL GENERAL MEETING

We held our AGM as a physicalmeeting in 2023. We invited

shareholders to ask questions and vote onthe resolutions.

All resolutions put to the meeting received overwhelming

support of investors.

THE RESULTS OF THE VOTING AT ALL GENERAL

MEETINGSARE PUBLISHED ON OUR WEBSITE:

LANDSEC.COM/INVESTORS/REGULATORY-NEWS.

FIVE-YEAR PRIVATE INVESTOR PLAN

We have a rolling five-year private investor plan, the intention

ofwhich is to maintain an efficient share register, limited paper

distributions, effective communications andthe provision of

best-in-class service toour investors.

PRIVATE INVESTORS QUERIES

We work closely with our registrar Equiniti to address all

queriesthat we receive fromour private shareholders

throughout the year.

PRIVATE INVESTORS

7,19 9

0.99%

OF SHARES

DEBT STAKEHOLDERS

FIXED INCOME INVESTORS

In March 2023, we held a series of virtual and in-person meetings

with our fixed income investors as part of the Green bond

issuance. On our most recent bond issuance, in March 2024,

we followed up this engagement with a pre-recorded update.

Going forward, we plan to engage with our fixed income

investors on at least an annual basis, updating them on our

results and key developments.

BANKS

An active dialogue is maintained with all of our key relationship

banks, including regular engagement with our treasury team at

a relationship level and frequent interaction to discuss support

and opportunities.

CREDIT RATING AGENCIES

We work closely with each of Standard & Poor’s, Fitch Ratings

and Moody’s, in their capacity as credit rating agencies and

debt stakeholders, to provide them with business and financial

updates and understand any evolution in their credit rating

assessments and methodologies.

FURTHER INFORMATION FOR OUR DEBT

INVESTORSCAN BE FOUND ON OUR

WEBSITE: LANDSEC.COM/INVESTORS.

NO. OF LISTED BONDS

STRATEGIC REPORTLANDSEC ANNUAL REPORT 2024 25

OUR PEOPLE AND CULTURE

At Landsec, our purpose sits at the heart of

everything we do; building sustainable places,

connecting communities, and realising potential.

Our circa 600 employees play a fundamental

roleindelivering this and driving our success.

Our focus in the People team is to create

aninclusive environment for growth where

everyone can thrive, whilst moving our

culture forward. Evolving our culture is central

to our ability to deliver against our purpose.

We are an organisation full of talented

people and we are taking Landsec to the

next level by adopting high performance in

everything we do. To raise the bar, we are

focusing on developing our people through

curated training and development for all and

targeted talent development programmes,

strengthening our ability to attract and

retain our people, and continuing to enhance

diversity and inclusion.

EMPLOYEE ENGAGEMENT

We recognise the vital input of our employees

in fostering a high performance culture.

Byactively seeking feedback, we gain

valuable insights into our progress towards

our objectives and areas for enhancement.

Our People Survey serves as a cornerstone in

measuring our advancement and pinpointing

areas necessitating action. This year,

we implemented a bi-annual approach,

introducing a Pulse Survey in October 2023,

complementing the comprehensive survey

conducted in June 2023. We actively

benchmark against industry peers, those in

similar sized organisations and the highest

performing companies, shedding light

on engagement levels, company-wide

initiatives, and inclusivity. Achieving an

89% response rate, our engagement rating

increased from 84% in June 2023 to exceed

the high-performance benchmark (87%)

achieving 89% in October 2023.

This compares to an engagement score

of77% in 2022. Our comprehensive survey

inJune 2023 highlighted three main areas

ofopportunity: career development,

internalcommunication and rewards and

recognition. We have focused on these areas

of employee engagement through both

targeted actions and our ongoing plans.

Actions included:

•

continuing the integration of our Annual

Performance Planning (APP) and Annual

Bonus Plan (ABP) approaches, which

closely align and link individual

contributions to company and business

unit/enabling function performance

•

introducing our all employee Share

Incentive Plan, MySIP, achieving a

significant participation of just under

40%within three months, further

aligningour employees’ interests with

thecompany’s success

•

conducting a benefits review through

engagement with employees, to refine our

future benefits package ensuring we offer

the most value for our people and holding

two Benefits Expos to increase awareness

of our benefits offerings

•

enhanced internal communication

channels, streamlining, and expanding

digital platforms to foster dialogue

throughout the organisation

•

implementation of an office refresh to

create a collaborative, productive and

enjoyable workspace

•

a purpose-built Urban Inspiration Day to

connect all employees with our purpose

•

a series of live events covering diverse

topics led by internal and external experts

to broaden knowledge across various

disciplines and business areas

•

launching Spotlight Rewards, our ‘always

on’ recognition platform, empowering all

employees to recognise, appreciate, and

celebrate each other’s achievements.

DIVERSITY AND INCLUSION

This year we refreshed our Diversity &

Inclusion (D&I) strategy ‘Diverse Talent,

Inclusive Culture, Inclusive Places’.

LANDSEC ANNUAL REPORT 2024STRATEGIC REPORT

OUR PEOPLE AND CULTURE

CONTINUED

DIVERSE TALENT

We set out to better reflect the diversity

ofthe communities we work in at all levels

ofour organisation and support future

diverse talent into the industry. Our key

achievements include:

•

welcoming seven interns and committing

nine bursaries to real estate students

through our social mobility programme

Landsec Futures

•

hosting another cohort of our female

career development programme ‘Thrive’

– having seen an increase from 26% female

representation at Leadership to 37% since

we started it in 2020

INCLUSIVE CULTURE

An inclusive culture enables diverse talent

tothrive through inclusive leadership,

training and employee engagement. Our key

achievements include:

•

our Executive Leadership Team were paired

with colleagues for D&I focused reverse

mentoring to support inclusive leadership

•

we introduced improved benefits to

support working parents:

—

increased partners leave from 2 weeks

full pay to 6 weeks full pay

—

introduced up to 4 weeks paid leave for

those undergoing fertility treatment

—

introduced better support to help those

returning from 26 weeks or more family-

related leave including entitlement to

back-to-work coaching and the option

to phase return over 6 months, working

80% of the time for 100% of pay

•

our Affinity Networks made a difference,

from hosting ‘World of Work Days’ to

encourage students from underrepresented

backgrounds into real estate, to educating

colleagues on LGBT+ Allyship and

Neurodiversity inclusion. The networks,

Landsec Women (Gender), Hand in Hand

(Disability, Neurodiversity and Mental

Health), Landsec Pride (LGBT+) and

Diaspora (race, ethnicity and culture)

were also supported to develop with new

executive sponsors, training for network

co-chairs and a new Affinity network

Playbook – a ‘how to guide’ to running

effective networks

•

a new Inclusion Index was added to our

employee engagement survey to measure

progress in creating an inclusive culture –

87% of colleagues believe we are making

progress on creating a more diverse and

inclusive place to work

INCLUSIVE PLACES

We are shaping inclusive place through the

way we design, develop and manage our

places, and by working in partnership with

our supply chain. Key achievements include:

•

achieving the WELL Equity Rating across

our London managed office portfolio

(SeeSustainability page 31 for more details)

•

making D&I criteria part of our

procurement process, from introducing

requirements for disability training for

customer-facing staff to building the latest

guidance for neurodiversity-inclusive design

into new signage

•

rolling out stoma-facilities across our

retailportfolio and celebrating the diversity

of our communities through events for

Pride, Eid, Purple Tuesday and Black

HistoryMonth

Further details on our strategy are available

on our D&I strategy page on landsec.com

with progress against targets reported

annually on our D&I targets and performance

scorecard.

PAY GAP

During the year we reported on our 2023

ethnicity and gender pay gaps for the

Landsec Group* with full details available

onour website.

•

our mean gender pay gap reduced from

30.8% in 2022 to 29.1% in 2023

•

our median gender pay gap reduced from

28.7% to 27.6% over the same period

The improvement seen in our mean and

median gender pay gaps was driven by small

shifts in the distribution of women across

ourpay quartiles with increased female

representation in the two upper pay quartiles

and slight decreases in the two lower pay

quartiles. This is due to an increase in female

representation at executive level with two

new female executives, and small increases

in female representation within our Senior

Leader and Leader populations.

•

our mean ethnicity pay gap increased from

36.5% in 2022 to 43.0% in 2023

•

our median ethnicity pay gap increased

from 37.6% to 39.4% in the same period

Disappointingly, we saw an increase in our

ethnicity pay gaps. This was driven by a high

number of ethnic minority hires into our

more junior professional and support roles

over the preceding 12 months. Over the same

time period, we also had a few of our most

senior ethnic minority employees leave us.

Asa business that is relatively small by

headcount, even a small number of changes

in representation at our most senior levels

can have a significant impact on our pay

gapdata.

* After welcoming mixed-use regeneration business U+I

into the Landsec Group, we have chosen to voluntarily

publish pay gap data for all of our employees who are

onone PAYE reference. This includes both Landsec

Securities Properties Ltd, and U and I Group Ltd and we

refer to it as ‘Landsec Group’ in our pay gap reporting.

STRATEGIC REPORTLANDSEC ANNUAL REPORT 2024 27

TALENT MANAGEMENT AND

SUCCESSION PLANNING

With our focus on high performance, our

approach to talent and development has

evolved to reflect this. As a result, we have

been building on our previous general

leadership development programme

strategy, to introduce a more targeted talent

development approach coupled with curated

learning pathways for all.

We have introduced a bi-annual Group

TalentReview cadence, to provide the data

to inform the targeted development tools.

The approach is aimed at enhancing our

talent management strategy and driving

organisational effectiveness. Outputs of

thisapproach are:

•

succession plans for all our Executive

Leadership Team and Senior Leadership

Team roles

•

development of a targeted talent

development programme for our emergent

leaders called Landsec Builds: next level

leadership

•

a further targeted talent programme

witha D&I lens, called Enrich

To equip our Senior Leadership population

toshape and drive the high-performance

methodology and ethos through the

organisation we have launched a high-

performance leadership masterclass for

senior leaders.

To empower and develop our colleagues, we

have introduced Shadow Boards, giving

members the opportunity to join our Lifestyle

and Workplace Boards. The objective is to

drive diverse thinking across our business

through encouraging a range of voices and

backgrounds and experiences to be involved

in our decision making.

Our ‘Next Level’ learning platform has been

introduced to enhance the skills, knowledge

and behaviour of all of our people, and sets

out the approach and the mindset that we

need to achieve our high-performance

culture ambition. Next Level provides the

backdrop, alongside curated learning

pathways, against which all of our Talent

&Development offerings are built and

delivered, and includes:

•

knowledge: where we have come from,

what we have learnt and where we

aregoing

•

skills: increasing capability through skills

acquisition and development, aligned

toour five differentiators, to deliver

competitive advantage

•

behaviour: developing our high-performance

culture through the promotion and support

of complementary behaviours

We are proud that our people are committed

to their personal and professional

development with each person completing

an average of 7 hours and 35 minutes of

learning this year. Next Level allows us to

enhance the development experience with

arefined training offer, ensuring that the

training content is most pertinent, irrespective

of role or level. By investing in our employees’

growth and skills development, we are not

only boosting their individual capabilities but

also strengthening Landsec overall.

RECRUITMENT AND RETENTION

Employee turnover has decreased compared

with the last financial year. For voluntary

turnover, this correlates with the improvement

in engagement scores and suggests potential

improvements in employee satisfaction.

Involuntary turnover rates have also shown

aslight decrease this year.

Regrettable turnover, which typically involves

the loss of high-performing or critical

employees, shows a variable pattern across

quarters. Despite fluctuations, there’s a slight

downward trend in regrettable turnover

rates, indicating the actions detailed above

are having an impact. Average headcount

inthe rolling 12-month period remains

relatively stable.

A key initiative to improve recruitment

practices was the introduction of a new

approach to leadership hiring – including

removing bias from job descriptions, using

employee interview panels and setting

gender and ethnic diversity targets for

recruiter shortlists.

We have also continued to focus on

developing our own internal pipeline of talent

with great skills, behaviours and capabilities.

This has resulted in 43 internal promotions,

25 of whom were female appointments.

GENDER BY MANAGEMENT LEVEL

CHART 14

Executive

Senior leader

Leader

Manager

Professional

Support

Whole organisation

4060

3862

64 36

52 48

42 58

24 76

49 51

Male Female

Overall, as a business, we remain roughly gender balanced with 51% female representation and 49% male

representation. Over the past 12 months, progress has been made towards achieving our 2030 gender

diversity targets, with good levels of growth in female representation at Senior Leader level from 31% to 38%

and Executive level from 33% to 40%.

ETHNICITY GROUP BY MANAGEMENT LEVEL

CHART 15

Executive

Senior leader

Leader

Manager

Professional

Support

Whole organisation

100

89 4 2 11 3

81 8 3 3 2 3

73 11 9 4 12

53 13 27 6 1

78 8 7 3 2 2

White Asian Black Mixed Other Prefer not say

20% of our staff are from ethnic minority backgrounds, up from 18% last year. We have continued to

grow ethnic diversity in our junior populations and at Board and Executive level but have unfortunately

not seen growth in ethnic minority representation in our leadership populations – a key focus of our D&I

plans for the upcoming year.

LANDSEC ANNUAL REPORT 2024STRATEGIC REPORT

OUR APPROACH TO SUSTAINABILITY

We design, develop and manage buildings

inways that will enhance the health of our

environment andimprove quality of life for

our people, customers and communities,

now and for future generations.

The connection between climate change

andnature is becoming increasingly evident.

During the year we have seen biodiversity

growing in importance to corporate

sustainability, and an alignment between

companies’ nature and climate strategies.

The launch of the Taskforce on Nature-

related Financial Disclosures (TNFD), and

nature being a key theme at COP28, further

reflects the interdependence between the

two themes.

Demand for climate-adapted real estate

isgrowing1 as office occupiers and retailers

continue to consider the role of physical

space in their business model, and set

increasingly ambitious sustainability targets.

The belief that businesses should take the

lead in tackling key societal and environmental

issues is also mounting, with 82%2 of the

public now expecting CEOs to take a public

stand on climate change.

As such, we recognise that maintaining

strong sustainability performance remains

key to the value of our business. Our

sustainability strategy – Build well, Live well,

Act well – continues to focus our work on

theESG issues where we know we can have

the biggest impact.

DECARBONISING

OUR PORTFOLIO

ALIGNING OUR TARGETS

TO CLIMATE SCIENCE

In March 2023, we updated our science-based

carbon reduction targets to align with the

Science Based Targets initiative’s (SBTi) Net-

Zero Standard, committing to reducing all our

direct and indirect emissions by 47% by 2030,

from a 2019/20 baseline. This target will build

towards a long-term goal of reaching net

zero by 2040, achieving a 90% reduction in

absolute emissions from a 2019/20 baseline.

We have also updated our energy target,

committing to reducing energy intensity

by52% by 2030, from a 2019/20 baseline.

In2023/24, we achieved an energy intensity

reduction of 18%.

PROGRESSING OUR NET ZERO

TRANSITION INVESTMENT PLAN

Since launching our £135m Net Zero

Transition Investment Plan (NZTIP) in 2021,

we have invested £8.2m to ensure we

meetour near-term carbon reduction

target.Since launch we have progressed

the following activities:

´ AIR SOURCE HEAT PUMP RETROFIT

We started replacement works at 16 Palace

Street and Dashwood House, and plan

tostart installation at a further three

buildings over the coming year.

´ BUILDING MANAGEMENT SYSTEM

(BMS) OPTIMISATION

We completed BMS reviews and

implemented recommended optimisations

at 11 operational London assets, with

expected energy savings of between 5%

and 15% per building.

´ AI TRIAL

We ran a 12-month trial with Brainbox

AIat 80–100 Victoria Street, where the

technology controls heating and cooling.

An additional 5% energy savings

is expected.

´ SOLAR PV PANEL INSTALLATION

We began construction to install solar PV

at Gunwharf Quays in March 2024 and

completed feasibility studies for additional

on-site renewable capacity at Braintree

Village and Trinity Leeds.

1. RICS Sustainability Report 2023.

2. Edelman’s Trust Barometer 2023.

OUR 2023/24 HIGHLIGHTS

´ Reducing our operational

emissions through our

NetZero Transition

Investment Plan

SEE MORE ONPAGES 28-29

´ Reducing emissions

fromour construction

activities

SEE MORE ONPAGE 29

´ Launching our

naturestrategy

SEE MORE ONPAGE 30

´ Supporting our local

communities to thrive,

launching award-winning

Landsec Futures.

SEE MORE ONPAGE 31

24%

REDUCTION IN ABSOLUTE

CARBONEMISSIONS SINCE 2019/20

STRATEGIC REPORTLANDSEC ANNUAL REPORT 2024 29

´ CUSTOMER ENGAGEMENT

Since 2021/22 we have completed 38

energy audits for our highest energy-

consuming office occupiers, accounting

for56% of our total tenant consumption

across our office portfolio. We identified

potential annual carbon and energy

savings of 10-40% for the majority of

customers. Of the first 18 occupiers

participating in the customer engagement

programme, overall they have achieved

a20% electricity reduction compared to

2019/20. The impact of this programme

was reflected in our 2023 customer-

satisfaction survey, with 79% of office

customers saying we are doing a good

jobof supporting them in achieving

their sustainability goals.

This year, we have conducted net zero audits,

heat pump feasibility studies and BMS

optimisation reviews across our retail

assets to understand what we need to

do todecarbonise and improve the energy

efficiency of landlord controlled areas.

Theseinitiatives will support our NZTIP

tomeet our near-term carbon reduction

target, and accelerate progress towards

ourambition to become net zero by 2040.

CLIMATE TRANSITION PLAN

AND OFFSETTING STRATEGY

Following the publication of the Transition

Plan Task Force (TPT) Disclosure Framework

inOctober 2023, we have been developing

aClimate Transition Plan. This plan will

articulate our strategic ambition and

targets,outlining key steps we are taking

todecarbonise our business and reach net

zero across our value chain by 2040.

In addition to reducing our emissions, we

alsoaim to support ‘beyond value chain

mitigation’ (BVCM). This includes activities

that avoid, reduce, or remove and store

carbon emissions, also known as carbon

offsets. This year, we have enhanced our

offsetting strategy, developing rigorous

due-diligence criteria and a process in line

with UKGBC recommendations.

EPC RATINGS

Our portfolio is 100% compliant with the

2023 MEES of EPC E or above. Inaddition,

49% of our portfolio – 44% of offices and

55% of retail – already meets the proposed

MEES of EPC B. As we progress our NZTIP,

weexpect that half our office portfolio will

reach EPC B by 2025 and all of our portfolio

will meet the proposed MEES by2030.

REDUCING EMISSIONS FROM OUR

CONSTRUCTION ACTIVITIES

We have made considerable progress in

reducing upfront embodied carbon across

our development pipeline, achieving a 40%

reduction compared to a typical building.

We monitor embodied carbon from the

outset of each scheme, and collaborate

withour supply partners to reduce

emissionsthrough:

•

Structural retention and material reuse

– atHill House, we are retaining 58%

oftheexisting structure, resulting in

significant carbon savings.

•

Designing-out material – we have

challenged our teams to use less material

and remove redundant capacity from our

structural solutions, such as designing-out

raised-access floor tiles and removing

heating, ventilation, and air conditioning

(HVAC) systems through natural ventilation.

At the Republic in Manchester, we have

reduced the size of our structural grid,

leading to around a 10% reduction in

concrete required.

•

Changing our specifications to low-carbon

materials alternatives – at Timber Square,

we have sourced 115 tonnes of reused steel.

This year we refined our Sustainable

Development Toolkit to align with our

refurbishment projects, reflecting the fact

that refurbishments need a case-by-case

approach, with project-specific targets.

2023/24 EPC RATING (BY ERV)

CHART 16

Landsec

Office

Retail

34%22%44%

25% 3%23%49%

5%24% 16%55%

EPC data excludes spaces that are not required to have EPCs, spaces designated for development, spaces with

registered EPC exemptions or spaces not covered by MEES regulations such as assets located in Scotland.

A-B C D E

To encourage innovation, in September 2023,

our development team hosted a full-day

event for almost 90 Landsec colleagues.

Theyshowcased each of our live projects,

focusing on sustainability targets and

performance, and received valuable

knowledge and lessons in return. This

included the costed pathway for achieving

our carbon reduction targets across our

developments, and presenting a business

case for low-carbon innovations to support

achieving our targets.

REDUCING

CARBON AT

TIMBER SQUARE

At Timber Square, SE1, we have

retained 80% of the existing structure,

while using a lightweight, hybrid steel

and cross-laminated timber (CLT)

structure. This has resulted in Timber

Square being around 20% lower in

weight than if built with traditional

building materials. By sourcing 115

tonnes of reused steel, we have saved

approximately 276 tonnes of carbon

while helping the circular economy,

which has dramatically reduced the

project’s upfront embodied carbon

intensity. Timber Square remains on

track to achieve an upfront embodied

carbon intensity of around 50% less

than a typical office building.

Once completed, the development

will be the UK’s first Design for

Performance project to complete

itsIndependent Design Review with

atargeted 5* NABERS UK energy

rating. This means it will be net zero

in accordance with UK Green Building

Council guidelines and powered

by renewable energy sources.

The scheme has been recognised

as a model case study by the World

Green Building Council (WGBC) and

New London Architecture (NLA).

LANDSEC ANNUAL REPORT 2024STRATEGIC REPORT

USING RESOURCES

EFFICIENTLY

MATERIALS

On our development schemes, we continue

to work closely with our supply chain,

including carbon consultants in the design

team, from the very start, to guide decisions

on the most carbon-efficient solutions.

This year, we updated our Materials Brief

toalign with the current industry standards,

while also establishing an approach to

material selection and specification for our

new developments. This will help us to

further: reduce embodied and whole-life

carbon; promote reuse and circular economy

principles; align to green building certification

requirements and strengthen our approach

to tackling modern slavery.

WASTE

In 2023/24 we continued to divert 100%

ofwaste from landfill, and recycled 66% of

operational waste (2022/23: 68%). We are

also embedding circular-economy principles

across our developments, to minimise waste,

and have achieved a 99.5% recycling rate

fornew developments.

WATER

We strive to use water efficiently. Across our

developments, at design stage, we follow

our Sustainable Development Toolkit to

incorporate water efficiency, and explore

the use of water-recycling strategies.

For operational assets under our control,

the water-management assessments

undertaken last year continue to help shape

our water strategy for both our office and

retail portfolios. Initiatives include installing

automatic meter reading across our

portfolio, testing technology to obtain more

detail of where water is consumed in our

buildings and to identify potential leaks, and

developing a water standard for the taps,

toilets and showers in our facilities.

ENHANCING NATURE

AND GREEN SPACES

We believe that more nature leads to

better,more desirable places which,

in turn,contributes to shaping sustainable

cities. Therefore, we want to use our

placesas a catalyst to improve nature

intheurban environment.

LAUNCHING ‘LET NATURE IN’

In March 2024, we launched a new strategy

for enhancing nature at our operational

assets and developments. The strategy

centres on three principles that will guide

ourapproach to designing, developing

andmanaging our places to benefit nature

and the people that live, work and play

in ourspaces:



IMPROVE BIODIVERSITY IN

THE BUILT ENVIRONMENT



PROMOTE HEALTH, WELL-

BEING AND COMMUNITY

ENGAGEMENT



CREATE NATURE-BASED

SOLUTIONS TO TACKLE

CLIMATE CHANGE

How we apply these principles, and what

thismeans in practice for our developments

and operational sites, is detailed in our

new ‘Let Nature In’ strategy available at

landsec.com.

Following the publication of the TNFD

recommendations in September 2023, we

have signed up as an Adopter, committing

tostart disclosing nature-related information

in line with the recommendations.

READ OUR TNFD DISCLOSURE IN OUR2024

SUSTAINABILITY PERFORMANCE AND DATA

REPORT

OUR APPROACH TO SUSTAINABILITY

CONTINUED

ENHANCING

BIODIVERSITY

INMANCHESTER

At Mayfield, Manchester, we have

redeveloped 6.5 acres of brownfield land to

create an urban park – the first in the centre

of Manchester in 100 years. We have allowed

the River Medlock to regain its natural path

and enhanced it with diverse planting and

landscaping. As a direct result of having

their habitat restored, fish species including

brown trout, bullhead, minnow and

stickleback were officially recorded in May

2023 by the Environment Agency for the

first time in this stretch of the Medlock.

6.5ac

OF BROWNFIELD LAND TO

CREATE AN URBAN PARK

STRATEGIC REPORTLANDSEC ANNUAL REPORT 2024 31

CREATING OPPORTUNITIES

AND TACKLING LOCAL

ISSUES

We continue to create opportunities and

inclusive places to change lives and help

ourcommunities thrive. We are committed

tothe following:

´ DELIVERING £200M OF SOCIAL VALUE

BY 2030

´ EMPOWERING AT LEAST 30,000 PEOPLE

FROM UNDERREPRESENTED SOCIO-

ECONOMIC BACKGROUNDS TOWARDS

LONG-TERM EMPLOYMENT BY 2030

´ INVESTING £20M TO ENHANCE SOCIAL

MOBILITY IN REAL ESTATE BY 2033

We are making strong progress towards our

social value targets, creating £54m of social

value and empowering over 10,000 people

towards employment since 2019/20.

ENHANCING SOCIAL MOBILITY

IN REAL ESTATE

Our £20m social mobility fund, Landsec

Futures, is already having a significant

impact – highlighting a critical issue in UK

society and helping people meet their

potential, in collaboration with our industry

and beyond. Since Landsec Futures launched

in April 2023 we have:

•

supported 3,182 people in moving towards

the world of work, through employability

programmes, bursaries and internships

•

invested over £860k in 25 employability

partners at 18 locations

•

committed £200k of community grants,

supporting over 120 community groups

and charities in 19 locations

•

helped raise awareness of real estate

opportunities for young people, improved

employability skills, and provided

training opportunities and pathways

into real estate jobs for adults facing

significant barriers

•

helped our charity partners expand

their reach and impact through in-kind

donations of space in our buildings.

Landsec Futures was recognised at the

2023 Social Mobility Awards where we

won Organisation of the Year. This award

celebrates businesses making an outstanding

commitment to social mobility issues,

making a tangible difference to the life

chances of others.

INCLUSIVE PLACES

We recognise that employing a diverse mix

ofpeople makes us a stronger and more

sustainable business, and one that reflects

the diverse society around us. Landsec

Futures and our new Diversity and Inclusion

strategy, both launched last year, are playing

an important role in helping us increase

diversity both in our business and within the

wider industry. See more on our approach

todiversity and inclusion in the People and

Culture section on pages 25-27.

ENHANCING WELLBEING

This year, to support the wellbeing of those

that use our spaces, we have continued

toroll out the International WELL Building

Institute’s (IWBI) WELL Portfolio programme

across our operational assets. This year, we

achieved WELL Core Platinum on eight assets

(80-100 Victoria Street, Dashwood House,

4& 6 New Street Square, One New Change,

16 Palace Street, 123 Victoria Street,

62Buckingham Gate and Nova) and

WELLCore Gold on The Zig Zag Building.

Additionally, we were awarded WELL

EquityRating and WELL H&S Rating at

16ofour assets.

TO FIND OUT MORE ABOUT OUR APPROACH

TOCREATING INCLUSIVE PLACES AND HOW

WE ARE SUPPORTING OUR COLLEAGUES’

WELLBEING, PLEASE SEE PAGE 26

2,553

HOURS VOLUNTEERED BY LANDSEC

EMPLOYEES, HELPING CREATE £28M

OFSOCIAL VALUE IN 2023/24

LANDSEC

INTERNSHIPS

Our six-month paid internships

support people, who meet social

mobility criteria, in building their

skills, confidence and work experience

at the start of their careers. Since

April 2023, we have welcomed nine

interns, with several continuing their

careers at Landsec.

Rosa completed a Landsec Futures

Internship in 2023 in our retail team,

where she worked on community

events and marketing campaigns.

She has since secured a role at

Landsec in the People team.

“The opportunity to be part

ofspaces that I didn’t know

existed or were open to me has

helped me greatly. The support

I’ve been given has made me

feel welcome and capable in

these spaces. I think this leads

into what can be changed in

theindustry, which is genuine

inclusion and opportunities

forgrowth.”

LANDSEC ANNUAL REPORT 2024STRATEGIC REPORT

BUSINESS ETHICS

This year, we have refreshed our employee

code of conduct, updating our policies and

content on harassment and bullying, inside

information, buying and selling Landsec

shares, staying cyber-secure and speaking up.

300+

SUPPLIERS SIGNED UP TO OUR SUPPLY CHAIN

COMMITMENT, WHICH INCLUDES ALMOST

80% OF OUR STRATEGIC SUPPLIERS

EMBEDDING SUSTAINABILITY

ENHANCING OUR SUSTAINABILITY

TRAINING

Building on our existing sustainability

training modules, this year we enhanced

sustainability training across our business,

further upskilling our colleagues on relevant

ESG themes. In addition to our mandatory

modern slavery e-learning, in September

2023, we introduced mandatory climate

change training through the Supply Chain

Sustainability School (SCSS). This has already

been completed by 60% of colleagues.

DOING THE BASICS

BRILLIANTLY

SUSTAINABLE PROCUREMENT

We continue to work with our suppliers to

achieve our sustainability commitments and

support positive change beyond our own

business. Since publishing Our Supply Chain

Commitment in 2022, over 300 suppliers

have signed up. Our Sustainable Procurement

Guide is helping our employees make the

right decisions when buying consumables

or business services, and to spend money

wisely and effectively while supporting our

corporate and sustainability commitments.

TACKLING MODERN SLAVERY

In addition to rolling out our mandatory

modern slavery training to our employees,

this year we ran a modern slavery workshop

through the SCSS focused on training our

development supply partners. For more

information on our approach to modern

slavery, see our Modern Slavery Statement

atlandsec.com.

CREATING HEALTHY,

SAFE AND SECURE SPACES

This year we maintained our ISO 45001

certification, having undergone a full

certification re-assessment by independent

auditors. We continued to focus our safety

improvements on areas where we can

havethe biggest impact, including reducing

the risk of significant occupational-safety

hazards, such as working at height, asbestos

management, and the permit to work

process. We undertook a project during

theyear to identify whether reinforced

autoclaved aerated concrete (RAAC) was

present in our portfolio. It was found in

two assets and action was taken to mitigate

therisk. We continue to work with other

companies in our sector to establish

consistency in measuring and reporting

health and safety data, to enable

performance benchmarking with our

peergroup.

Fire safety remains one of our priority focus

areas, and we have continued our work to

ensure we meet new government initiatives

and legislation. We have also maintained

our fire-safety management-system

certification to the BS 9997 standard.

All high-rise residential buildings above

11 metres in our portfolio have been

examined by independent fire engineers

to ensure they remain safe for occupation,

and meet stringent new building regulations.

OUR APPROACH TO SUSTAINABILITY

CONTINUED

STRATEGIC REPORTLANDSEC ANNUAL REPORT 2024 33

Landsec has a strong record of leadership on

climate action and reporting, where we recognise

the risks and opportunities posed by climate

change in our business model and strategy.

In 2017, we were one of the first companies

toreport our approach to the recommended

disclosures of the TCFD, and we introduced

climate change as a principal risk in 2020.

Over the past year, we have continued

toevolve our approach to identifying,

assessing and managing climate-related

risks, and we are developing our transition

plan in line with the Transition Plan Task Force

Disclosure Framework.

We continue to progress our Net Zero

Transition Investment Plan (NZTIP), and are

on track with what we need to do to meet

our science-based carbon reduction target,

and have incorporated this into our financial

statement, as described within the Notes to

the financial statements on page 111.

This statement is consistent with the

requirements of the London Stock Exchange

(LSE) Listing Rule 9.8.6 R and all 11 TCFD

Recommendations and Recommended

Disclosures, and we can confirm we have

made climate-related financial disclosures

for the year ended 31 March 2024 in relation

to governance, strategy, risk management,

and metrics and targets.

GOVERNANCE

KEY ACTIVITIES IN THE YEAR

Decision-making: Remuneration

Committee approved recommendations for

ESG metrics in remuneration as part of new

Remuneration Policy, which is to be approved

by shareholders at 2024 AGM. Board approved

our revised approach to nature, Let Nature

In, which we launched in March 2024.

Training: Board received training on recent

and upcoming sustainability reporting

requirements. Sustainability Forum has

received training on various ESG topics

throughout the year, including biodiversity

crisis, occupier and investor interest in ESG

risks, and ESG benchmark recommendations.

Reporting: ELT and Sustainability Forum

receive quarterly ESG reports showing

progress towards our sustainability targets.

TASK FORCE ON CLIMATE-RELATED FINANCIAL

DISCLOSURES (TCFD) STATEMENT

BOARD OF DIRECTORS

Responsible for overseeing our approach to

climate-related risks and opportunities affecting the

business, with our CEO having overall responsibility.

Receives updates on sustainability and climate-

related performance twice a year, and this year has

focused on the progress of our sustainability strategy

and targets, approach to reducing embodied carbon

across our developments, progress of our NZTIP,

reviewing our approach to procurement of renewable

electricity and our approach to green spaces and

nature. These sessions also help to increase their

knowledge on relevant climate-related risk.

As climate change is a principal risk, the Board

considers the impact of climate risks when discussing

Landsec’s strategy and long-term success, including

significant investment decisions. This includes

discussion of new acquisitions’ exposure to climate

risks and impact to portfolio.

Board oversight

AUDIT COMMITTEE

Supports the Board in managing risk, and

isresponsible for reviewing our principal

riskregister, and the effectiveness of our

riskmanagement and internal control

processes. Reviews and approves our

TCFDstatement.

REMUNERATION COMMITTEE

Sets and monitors climate-related targets

linked to Executive remuneration.

The Long-Term Incentive Plan (LTIP)

forExecutive Directors and senior

management includes an operational

carbon reduction target aligned with

ourscience-based target.

Annual Bonus Plan for Executive Directors

and all employees includes energy efficiency

and embodied carbon targets.

CEO

Overall responsibility and management for all elements of strategy, including climate-related risks.

Chairs the Executive Leadership Team (ELT).

ELT

Responsible for setting and monitoring the progress of the sustainability strategy to ensure it addresses

our relevant environmental, social and governance (ESG) risks and opportunities, including those

pertaining to climate change.

Discusses sustainability and climate risks quarterly, or more often if required.

SUSTAINABILITY FORUM

Supports the ELT in executing our sustainability strategy and mitigating climate risks.

Senior representatives responsible for programmes of work that contribute to meeting our

sustainability targets, and for mitigating climate risks across our business.

SUSTAINABILITY TEAM

Recommends approach to sustainability, including addressing climate risks.

Co-ordinates the sustainability strategy and climate risks, collaborating with all areas of the business to

ensure appropriate mitigation and adaptation plans are in place.

Reports on progress towards our targets.

Management roles, responsibilities and accountability

LANDSEC GOVERNANCE STRUCTURE

IS FURTHER DISCUSSED ON PAGES 56-59

AND ON OUR WEBSITE GOVERNANCE

AND POLICIES | LANDSEC

LANDSEC ANNUAL REPORT 2024STRATEGIC REPORT

TASK FORCE ON CLIMATE-RELATED FINANCIAL

DISCLOSURES (TCFD) STATEMENT CONTINUED

STRATEGY

IDENTIFYING AND ASSESSING CLIMATE-

RELATED RISKS AND OPPORTUNITIES

In accordance with the TCFD

recommendations, we have identified

climate change risks and opportunities for

(1) transition risks related to the transition

to a low-carbon economy and (2) physical

risks related to the physical impacts of

climate change. We have considered these

over the short (<1 year), medium (until 2030)

and long term (beyond 2030) for two

science-based scenarios – below 2

C (aligned

with Shared Socioeconomic Pathways (SSPs)

SSP1-2.6) and exceeding 4

C (aligned with

SSP5-8.5).

We continue using MSCI’s Climate Value

atRisk (VaR) methodology to assess our

portfolio exposure to climate risks. We assess

physical risks based on the location of assets

and their exposure to individual hazards as

aconsequence of climate change. The VaR

represents the combined discounted physical

risks costs (extreme cold, extreme heat,

flooding, windstorms, tropical cyclones

andwildfire) based on probable change

inphysical climate risks to the year 2100

expressed as a percentage of the

portfolio’svalue.

We assess transition risks based on alignment

of assets to relevant regulations (e.g. Minimum

Energy Efficiency Standards (MEES)) and

market demand.

Based on the risks identified in our scenario

analysis, and following our Group risk

management framework and methodology,

we have assessed these for:

Likelihood

Low: <10%

High: >20%

Financial impact

Low: <£5m P&L / <£150m Capital

High: >£15m P&L / >£500m Capital

Reputational impact

Low: minor reputational impact

High: significant impact leading to loss

oftrust in the company

We have identified and assessed risks

acrossall areas of our business, including

investments, divestments, development

andoperations. Mitigation of these risks

isdiscussed in the section below.

Our assessment concluded that our current

portfolio is not highly exposed to physical

risks given the location of our assets, and the

impact of physical risks to our portfolio will

only become more relevant in the long term,

under a >4ºC scenario. Conversely, transition

risks are material in the short and medium

term as we expect increasing mitigation

toreduce emissions, such as policy and

regulation changes. Alongside this, there

isan opportunity for us to benefit from

increasing customer and investor demand

forgreen, low-carbon buildings.

IMPACT OF CLIMATE-RELATED RISKSAND

OPPORTUNITIES ONOURSTRATEGY

We are addressing these risks and

opportunities through three priorities,

allcritical elements of our approach to

sustainability – Build well, Live well, Act well:

´ Decarbonising our portfolio

´ Developing net zero carbon buildings

´ Building resilience to a changing climate

Decarbonising our portfolio

We will achieve net zero carbon across our

value chain by 2040. This commitment has

been approved by the Science Based Targets

initiative (SBTi) and includes a near-term

target to reduce our absolute Scope 1, 2 and

3 emissions by 47% by 2030 from a 2019/20

baseline, and a long-term target to reduce

our absolute emissions by 90% by 2040 from

a 2019/20 baseline.

Through our £135m Net Zero Transition

Investment Plan (NZTIP), launched in 2021,

we are ensuring we meet our near-term

science-based target and stay ahead of

impending 2030 MEES requirements of

minimum EPC B. To date we have committed

£8.2m of expenditure. We will recover a

portion of this investment through the

service charge as part of the normal process

of life-cycle replacement. We also expect to

derive energy efficiency benefits and related

cost savings as a result. We provide further

details on the progress of our NZTIP and

science-based target on pages 28-29.

We continue to operate our buildings in

accordance with our company-wide

environmental and energy management

system, which is certified to ISO 14001 and ISO

50001, having energy reduction plans (ERPs)

and action plans for all our assets, which

outline how we will reduce the energy use and

carbon emissions of each asset effectively.

The ERPs form part of the operational

financial planning for each asset.

As we continue to build relationships with

oursuppliers, the climate-related information

they provide (such as carbon emissions,

energy consumption and relevant climate-

related targets) allows us to better

understand their operations and prioritise

future engagement activity.

POTENTIAL FINANCIAL IMPACT

Income statement

Research shows buildings that have high

sustainability credentials attract higher average

rents, improving leasing and occupancy rates.

Improved energy efficiency should also improve

service charges payable by tenants.

Conversely, older, less sustainable assets will

ultimately see longer voids for retrofits and a

loss of rental income where they do not meet

the minimum EPC requirements.

Balance sheet

Through our £135m NZTIP, we are electrifying

heating and improving energy efficiency across

the portfolio, improving the capital value of the

affected assets, which have shown more

resilience to yield pressures than assets without

a clear ESG strategy. This is demonstrated by

the CBRE Sustainability Index, which shows a

more resilient total property return for energy

efficient assets, including a 90bps gap in ERV

growth compared with inefficient ones.

The NZTIP is considered in our asset valuations,

alongside expected uplift in ERVs. The cost of

our NZTIP will fluctuate over the next 6 years

aswe account for changes in inflation and

portfolio composition with the expenditure

profile weighted to 2024/25 and 2025/26.

FOR FURTHER INFORMATION ON HOW

WEARE DECARBONISING OUR PORTFOLIO

VISIT OUR WEBSITE

STRATEGIC REPORTLANDSEC ANNUAL REPORT 2024 35

<2ºC SCENARIO

Proactive and sustained action to halve emissions by 2030 and reach net zero

by 2050 – strong policy and regulatory responses; rapid investment

andadoption of low-carbon technology, and sustainable business and

lifestyle practices.

UK climate is marginally higher temperatures all year round, lower

precipitation in summer; flooding and windstorms within current variability.

C SCENARIO

Limited action taken to mitigate climate change – there

is a push for economic and social development coupled

with continuing exploitation of fossil fuels.

UK climate will experience an increase in severe weather

events (flash-flooding); increased summer and winter

temperatures; drier summers and wetter winters.

Short-term (<1 year)

Our immediate

business planning and

budgeting occurs

annually, so it is

important we identify

appropriate resources

for mitigating and

adapting to climate

change each year and

include these in annual

budgets.

Low physical risks as only a small proportion of our portfolio (1.3% VaR) is

exposed to aggregated physical risks (extreme cold, extreme heat, flooding,

windstorms and wildfire). The most significant physical risk to our portfolio

is from coastal flooding (0.9% VaR). These risks are constantly monitored and

we ensure all assets have appropriate mitigation plans in place.

Medium transition risks associated with:

• Existing regulations, such as current MEES requiring all non-domestic

properties to have a minimum EPC E. Risk is considered low, as all our assets

already comply. We continue monitoring this risk to ensure all spaces have

avalid EPC.

• Local planning requirements favouring low embodied carbon development

schemes. Risk is considered medium, as costs to meet embodied carbon

targets are highly dependent on design and nature of developments.

Opportunity associated with:

• Increasing occupier and investor interest in assets with high sustainability

credentials, including BREEAM and EPC, presents a medium opportunity

forus as our portfolio transitions to net zero and we continue to complete

net zero carbon buildings. 61% of portfolio is BREEAM-certified and 49%

isEPC A-B.

Low physical risks as only a small proportion of our

portfolio (4.5% VaR) is exposed to aggregated physical

risk. The most significant physical risk to our portfolio

is from coastal flooding (3.5% VaR). We monitor these

risks constantly and ensure all assets have appropriate

mitigation plans in place.

Medium transition risks, as current risks are the same

as under <2

C scenario.

Medium (until 2030)

We are taking action

now until 2030 to meet

our near-term

science-based carbon

reduction target.

Physical risks remain the same as the short term.

High transition risks associated with:

• Emerging regulations, such as proposed MEES requiring all non-domestic

properties to meet a minimum of EPC B by 2030. Risk is considered high,

affecting 51% of our current portfolio that has an EPC below B.

• More stringent planning requirements, including operational and embodied

carbon obligations. For instance, Greater London Authority requires

projected operational energy emission shortfalls to be offset,

recommending a price of £95/tCO

e. Risk is considered high, potentially

affecting all our new developments.

Opportunity associated with:

• Continued increase in occupier and investor demand for assets with high

sustainability credentials. As these stakeholders set net zero commitments

and are required to report on the sustainability outcomes of their

investments, there is growing demand for green building certifications

(e.g.BREEAM) and high energy efficiency determined by EPC ratings.

JLL suggests that BREEAM certified buildings benefit from 20.6% capital

value premium and 11.6% rent premium, and single step EPC improvement

contributes to 3.7% capital value premium and 4.2% rent premium. This

presents a high opportunity for us as our portfolio transitions to net zero,

and we continue to complete net zero carbon buildings.

Physical and transition risks remain the same as the

short term.

Long (beyond 2030)

Many of our assets

have a design lifespan

of over 60 years –

therefore, identifying

long-term risks beyond

2030 is important for

our investment and

development decisions,

to ensure our portfolio

remains resilient in the

long term.

Slight increase in physical risks, but no significant change to overall

portfolio exposure to climate risks. For instance, slightly warmer summers

are expected but these don’t pose significant risk of heat stress.

Transition risks remain high as further mitigation actions and legislative

changes are expected to continue reducing carbon emissions, including:

• Carbon tax – potential for the built environment to be included in the UK

Emissions Trading Scheme. Risk is considered high, due to high degree of

uncertainty at this stage. We keep monitoring emerging discussions on this

topic, while reducing carbon emissions across our portfolio to minimise

potential impact to our business.

• Achieving our science-based net zero commitment by 2040. Risk is considered

high, as significant reduction beyond achievement of 2030 near-term target

will be required, demanding capital expenditure and investment in new

technologies, and innovative low-carbon materials and processes.

Significant increase in physical risks from hotter,

drier summers; warmer, wetter winters and more

frequent severe weather events. Sea-level rise puts

additional strain on the Thames Barrier and increase in

river peak flows has potential for flood-defence failures

across the UK, leading to higher portfolio exposure.

According to Swiss Re, climate risk could worsen

weather-related insured catastrophe losses, such

as floods and wildfires. Property insurance premiums

will reflect this augmented risk from climate change,

potentially increasing by 33-41% by 2040.

Significant increase in transition risks as adaptation

measures are adopted to cope with changes in climate

and associated physical risks.

LANDSEC ANNUAL REPORT 2024STRATEGIC REPORT

TASK FORCE ON CLIMATE-RELATED FINANCIAL

DISCLOSURES (TCFD) STATEMENT CONTINUED

Developing net zero carbon buildings

We design and build net zero carbon

buildings in accordance with the UKGBC Net

Zero Carbon Buildings framework definition,

ensuring low upfront embodied carbon

emissions, low operational emissions and

fossil fuel free assets powered by renewable

electricity. This commitment forms a key

part of our Sustainable Development

Toolkit– a comprehensive guide for our

development teams and external partners

toensure they consider sustainability

throughout the life-cycle of our schemes,

andthat it is a key consideration in our

gateway approval process.

For each development, we aim to reduce

emissions associated with construction by

exploring structural retention and material

reuse, adopting efficient design and modern

methods of construction, and specifying

low-carbon materials, ensuring we balance

upfront carbon with whole-life carbon, to

ensure our design decisions do not negatively

affect the longer-term operational and

maintenance carbon emissions of our assets.

We set energy-use intensity (EUI) targets

foreach development, modelling the design

to optimise operational energy efficiency.

Developments are also designed to be 100%

electric and target maximum use of on-site

renewables as possible.

POTENTIAL FINANCIAL IMPACT

Income statement

Strong and increasing market demand for net

zero properties, especially in the office market,

is outstripping supply, which is likely to lead to

rent and value premiums for these assets.

Balance sheet

Increased demand for low-carbon materials,

many of which are still nascent markets, could

increase the construction costs of our

development pipeline.

The cost of reducing upfront embodied carbon

on developments is highly dependent on the

strategy adopted. We are modelling this across

our live developments and are finding that

retention on one project saves 2.8% on Total

Development Cost (TDC) whereas relying on

low-carbon materials increases TDC by 1.8%

ona different project.

We issued a £400m Green Bond in March 2023

tofund the development of green buildings

asdetailed below.

Building resilience to a changing climate

Although we assessed that our current

portfolio is not highly exposed to physical

risks given the location of our assets, we

stillact to mitigate these risks through

physical measures, insurance and business-

continuity planning.

In our development pipeline, we are

designing and constructing high-quality

buildings and spaces capable of achieving

operational resilience over their lifetime,

considering how the UK’s climate will change

in the coming decades. We manage the

impact of physical risks, such as higher

cooling costs and lower heating demand, by

adapting building services design, reducing

heating capacity and maintaining summer

cooling capacity to cope with heatwaves.

The performance of our façade and fabric

materials is designed to address the expected

higher temperatures by minimising energy

demand, as well as to withstand extreme

temperatures and increased wind speeds,

toavoid maintenance issues or damage to

buildings in future. We target operational

energy intensities in line with industry net

zero carbon benchmarks, wherever available.

Our drainage strategies are designed to

mitigate foreseen rain levels and flood risks

using physical and nature-based solutions.

Asdetailed in our nature strategy, Let Nature

In, we consider nature-based solutions for

reducing energy use and adapting to future

climate scenarios such as façade and rooftop

greening, sustainable urban drainage and

permeable surfaces.

Across our operational portfolio, assets in

areas highly exposed to physical risks have

developed plans to ensure they have

adequate protection and mitigation,

including business-continuity and emergency-

response plans. These mitigation actions and

our appropriate risk management practices

also help us to reduce the risk of increase in

insurance premiums related to climate risks.

Our Responsible Property Investment Policy

details how we assess climate risks during the

sale and acquisition of assets. We conduct

thorough due diligence, understanding the

asset’s performance metrics, including

energy consumption, EPCs and other

sustainability credentials, and assessing flood

risk and embodied carbon, and we work with

MSCI to use their Climate Risk Due Diligence

Analysis platform for acquisitions.

POTENTIAL FINANCIAL IMPACT

Income statement

The changing environment has direct cost

implications, especially for assets located in high-

risk flood zones (4.5% VaR at >4

C scenario)

dueto potential cost of repairs, cost of business

interruption and increased insurance costs.

Additionally, there may be cost implications for

the built environment to be included in the UK

Emissions Trading Scheme resulting in carbon

taxes and increased energy costs to counteract

more extreme seasonal trends.

Balance sheet

Increased capital investment to maintain

compliance with legal requirements, such as

improving EPC ratings across the portfolio,

and also to protect our assets at risk from

physical climate change. Failure to do so

would negatively affect the long-term capital

values of these assets.

To support our strategy, in March 2023 we

published our updated Green Financing

Framework and issued our inaugural £400m

Green Bond, due 2034. All net proceeds from

this bond have been fully allocated to four

eligible green projects, within the category

Green Buildings – Construction of new

developments, including The Forge, n2,

Lucent and Timber Square. Further

information on the allocation of proceeds

and climate-related impact of these projects

are available within the Green Bond Report.

RESILIENCE OF OUR STRATEGY

AND BUSINESS MODEL

We are confident our strategy to decarbonise

our portfolio, develop net zero carbon

buildings and build resilience to a changing

climate will support the transition to a

low-carbon economy, while managing

the impact of climate-related risks to our

portfolio. This is consistent with the Group’s

going concern and viability assessment.

We recognise our strategy and adaptation

measures may need to evolve in the long term,

particularly under a >4

C scenario. In this

scenario, changes to our strategy and financial

planning are likely to be required, including

divestment of assets that are less resilient to

extreme heat and rainfall, or investment in

infrastructure to limit the impact of flooding

and coastal surge. This scenario could also

result in changes to our customers’ and supply

chain partners’ businesses, including business

failures, or supply chain disruption. We would

need increased due diligence in supply chain

selection, particularly considering the sourcing

STRATEGIC REPORTLANDSEC ANNUAL REPORT 2024 37

of construction materials that may be

processed or manufactured in countries

where the effects of climate change are

more extreme.

RISK MANAGEMENT

Climate change is identified as one of

Landsec’s ten principal risks, and is therefore

governed and managed in line with our risk

management and control framework. We

identify, assess and manage climate-related

risks through the framework – with the risks

clearly defined and owned. We score risks on

a gross and net basis, following evaluation of

the mitigating controls in place, as described

in the Managing Risk section on pages 38-40.

Furthermore, Landsec has defined its appetite

for each risk, including climate-related risks,

and this is overlaid when considering any

residual risks.

As part of its overall responsibility for risk,

theBoard undertakes an annual assessment,

taking account of risks that would threaten

our business model, future performance,

solvency or liquidity, as well as the Group’s

strategic objectives. We use scenario-

modelling, including the climate scenario

analysis described above, to better

understand the impact of these risks on our

business model when placed under varying

degrees of stress, enabling us to consider

interdependencies and test plausible

mitigation plans.

The primary responsibility for, and

management of, each risk is assigned

to aspecific member of the ELT, who is

accountable for ensuring the operating

effectiveness of the internal control systems

and for implementing key risk mitigation

plans. Risks are also assigned a secondary

owner – usually a Senior Leader – who is

responsible for ensuring we mitigate the

riskappropriately.

The primary responsibility for climate risk sits

with our Managing Director, Corporate Affairs

& Sustainability, with the Head of ESG and

Sustainability having secondary responsibility.

Our climate change principal risk includes

both transition and physical climate risks as

detailed above, and is monitored quarterly

using a series of key risk indicators as detailed

in the metrics and targets section.

OUR RISK MANAGEMENT PROCESS TO ADDRESS

OUR PRINCIPAL RISKS AND UNCERTAINTIES,

INCLUDING CLIMATE CHANGE, IS DETAILED

FURTHER ON PAGES 38-45

METRICS AND TARGETS

TARGETS

To address climate change risks, we have set ambitious climate-related targets – the headlines

of which are summarised below:

DECARBONISING OUR PORTFOLIO

Achieve net zero greenhouse gas (GHG) emissions across the value chain by 2040 from

a 2019/20 baseline

Near-term target: Reduce absolute Scope 1, 2 and 3 GHG emissions by 47% by 2030 from

a 2019/20 baseline

Long-term target: Reduce absolute Scope 1, 2 and 3 GHG emissions by 90% by 2040 from

a 2019/20 baseline

Reduce energy intensity by 52% by 2030 from a 2019/20 baseline

Source 85% of total energy (electricity, gas, heating and cooling) consumption from

renewable sources by 2030

DEVELOPING NET ZERO CARBON BUILDINGS

Reduce upfront embodied carbon across our developments by 50% compared with a typical

building

, by 2030

BUILDING RESILIENCE TO A CHANGING CLIMATE

Ensure all assets in areas highly exposed to climate risks have adaption measures in place

1. Residual 10% emissions that cannot be reduced by 2040 will be offset through permanent emissions removals in line

with SBTi guidance.

2. Typical buildings from GLA Whole Life Carbon Guidance – Typical offices: 1,000kgCO

e/m

GIA and typical residential:

850kgCO

e/m

GIA.

METRICS

In addition to targets, we also monitor a number of climate-related metrics that support our

risk assessment, as provided below:

Metrics

2023/24 2022/23

Reduction in energy intensity from 2019/20 baseline 18% 18%

Total energy from renewable sources 68% 68%

Percentage of portfolio that is BREEAM-certified (by value)

61% 55%

Percentage of portfolio that is already EPC B or above (by ERV) 49% 36%

Percentage of portfolio that is EPC E or above (by ERV) 100% 100%

Investment in energy-efficiency measures implemented in the year £5.9m £2.2m

Estimated annual savings from energy initiatives implemented inthe year £0.5m £0.7m

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

4.5% 5.4%

3. 2022/23 BREEAM figure has been restated. Further information in our Sustainability Performance and Data Report.

4. The VaR represents the combined discounted physical risks costs (extreme cold, extreme heat, flooding, windstorms,

tropical cyclones and wildfire) based on probable change in physical climate risks to the year 2100 expressed as a

percentage of the portfolio’s value in a 5°C scenario.

Methodology and performance against Metrics and Targets are detailed in our Sustainability

Performance and Data Report. Additionally, our Streamlined Energy and Carbon Reporting

(SECR) on pages 170-172 provides details of our energy consumption and carbon emissions.

LANDSEC ANNUAL REPORT 2024STRATEGIC REPORT

RISK MANAGEMENT FRAMEWORK

AND GOVERNANCE

Landsec operates a Group-wide risk

management framework in order to

supportthe identification, evaluation and

management of our principal risks. Whilst

our approach is well-established, we are

continuously reviewing our risk management

procedures to ensure that they are fit for

purpose, as our business, and the environment

we operate in, evolve. Working to further

embed our risk management practices has

therefore been a key priority during 2023/24,

and it will continue to be a priority as we

move into 2024/25 and beyond.

The key components and stakeholders of

ourrisk management framework are:

•

The Board: accountable and have overall

responsibility for overseeing risk and

ensuring that a robust risk management

and internal control system is in place

andoperating

•

The Audit Committee: responsible for

reviewing the effectiveness of the risk

management and internal control system

during the year

•

The Executive Leadership Team:

responsiblefor day-to-day monitoring

and management of the Group-wide

principal risks, ensuring that a consolidated

view ofthe key risks is formed to inform

theirprioritisation

•

Workplace and Lifestyle Boards and Excos:

monitoring and managing the specific risks

relevant to their business areas, as well as

ensuring there is appropriate reporting

upwards onthe status and implications

ofkey risks

•

Risk owners: accountable for the day-to-

day management, tracking and reporting

of the individual risks within their

respectiveareas

•

Risk Champions: Individuals with

responsibility to advocate effective risk

management practices within each of

their respective business areas and to

support risk owners

•

The Head of Risk and Controls: A central

role to manage the framework itself,

providing support to risk owners, Risk

Champions and others throughout the

business, and to act as coordinator and

interface between the top-down and

bottom-up approaches

RISK APPETITE

Taking risk is an essential and inherent part

of operating any business. As such, Landsec’s

risk management strategy is not to eliminate

all risk but to ensure that appropriate

strategies are in place to identify, evaluate

and manage the key risks we face. It is

therefore essential that our appetite for risk

isappropriately considered across each of

our risk categories, so that we understand

the level or risk we are willing to take, in the

drive to reap the associated rewards.

The Board is responsible for defining the

riskappetite of the Group, and ensuring it

remains in line with our strategy. Landsec’s

risk appetite differs for each risk, however

‘rule of thumb’ principles apply, with a

minimalist appetite for legal and compliance

related risks, a cautious appetite for

operational risks and a flexible appetite

forstrategic risks. The risk appetite reflects

Landsec’s risk management philosophy

anddetermines the extent to which risk

ismanaged or monitored for changes.

Toembed risk appetite effectively in the

business we have established key risk

indicators associated with each risk and

setlimits that are aligned to our appetite.

Scenario planning also assists in setting

thesethresholds.

The existence of an embedded risk management

framework is at the heart of how we look to manage

our business and our assets, to support sustainable

growth and to deliver on our strategic aims.

MANAGING RISK

OUR KEY SUCCESSES

IN 2023/24

•

Work programme initiated to

furtherembed risk management

within the business

•

Key to this has been the integration

of the risk management process

within the Group’s Strategic and

Business Planning processes

•

Development of a decentralised

riskmanagement approach, with

theallocation of Risk Champions,

tosupport risk management

considerations within day-to-day

activities

•

Enhancements to Principal Risk

andalignment of strategic and

operational risks, as well as risk

appetite considerations

OUR KEY PRIORITIES

IN 2024/25

•

Continued embedding of the

decentralised risk management

framework, and in particular,

strengthening the interactions

between the ‘top down’ and ‘bottom

up’ risk management processes

•

Further integration of Key Risk

Indicators (KRIs) into Management

Reporting

•

Further training and development

ofRisk Champions, including

development of a Risk Champion

community

STRATEGIC REPORTLANDSEC ANNUAL REPORT 2024 39

RISK MANAGEMENT FRAMEWORK

TOP-DOWN

Oversight,

identification,

assessment and

mitigation of risk

ata Group level

RISK

GOVERNANCE

BOARD

•

Set strategy and objectives

•

Set the risk culture

•

Monitor risk exposure

(including emerging risks)

•

Define and approve risk appetite

AUDIT COMMITTEE

•

Support the Board in monitoring

risk exposure

•

Review the effectiveness of our

risk management and internal

control system

1ST LINE OF DEFENCE 2ND LINE OF DEFENCE 3RD LINE OF DEFENCE

RISK

MANAGEMENT

ELT AND BUSINESS

AREA LEADERSHIP

TEAMS

•

Define the risk appetite

•

Identify the principal

and emerging risks

•

Evaluate response

strategies against risk

appetite

•

Design, implement

andevaluate the risk

management and

internal control system

RISK MANAGEMENT

•

Create a common risk

framework and

language and provide

direction on applying

•

Assist with the

identification and

assessment of principal

and emerging risks

•

Monitor risks and risk

response plans against

risk appetite

•

Aggregate risk

information

•

Provide guidance and

training

•

Facilitate risk

escalations and

acceptance

INTERNAL AUDIT

•

Provide independent

assurance on the risk

programme, testing

ofkey controls and risk

response plans for

significant risks

BOTTOM-UP

Identification,

assessment and

mitigation of riskat

business unit and

functional level

RISK

OWNERSHIP

BUSINESS UNITS

•

Identify and assess risks

•

Respond to risks

•

Monitor risks and risk

response

•

Ensure operating

effectiveness of key

controls

SUPPORT FUNCTIONS

•

Provide guidance/

support to the Risk

team and business units

LANDSEC ANNUAL REPORT 2024STRATEGIC REPORT

IDENTIFYING AND EVALUATING RISKS

Landsec operates annual Strategic Planning

and Business Planning processes. During

these processes, the Board undertakes an

assessment of risks that would threaten

our business model, future performance,

solvency or liquidity, or the Group’s strategic

objectives. We use scenario-modelling to

better understand the impact of these risks

on our business model when it is placed

under varying degrees of stress, enabling

usto consider interdependencies and

test plausible mitigation plans. Senior

management, teams and stakeholders

across the business input into these

processes, supported by the Head of Risk

andControls, to identify the strategic,

operational, and legal and compliance risks

facing each area of our business, alongside

the required mitigations.

Each of the key risks are scored using a risk

scoring matrix, which rates risk according to

the likelihood of the risk materialising, as well

as its potential impact. When we evaluate

risk, we first consider the inherent risk

(beforeany mitigating action), followed

bythe residual risk (after mitigating actions

and controls). The difference between the

inherent risk and residual risk score gives

usvisibility as to the extent to which we

areable to control the risk. From the ratings,

we identify principal risks (current risks

withrelatively high impact and probability).

We also track emerging risks (risks where

theextent and implications are not yet fully

understood or are increasing over time).

Wetrack these risks by monitoring the

velocity of change in the risk score.

The risk waterfall on page 41 outlines the

principal risks faced by Landsec, also showing

the appetite for these risks, as well as the

inherent and residual risk ratings. However,

Landsec also maintains a number of risk

registers, including the Group Risk Register,

which includes Landsec’s Principal Risks.

TheAudit Committee reviews our Principal

Risks at least twice a year, before presenting

them to the Board for review and inclusion

within external reporting.

MANAGEMENT AND ASSURANCE

OFRISKS

Landsec operates a Three Lines of Defence

(“3LoD”) risk model in respect of structuring

risk management and assurance activities.

The First Line of Defence are the risk and

control owners, who are responsible for the

day-to-day ownership and management of

their respective risks. These individuals are

also responsible for ensuring any control

mechanisms they have in place to manage

risks are operating effectively. For the

Principal Risks, each of the risks are assigned

to individual members of the Executive

Leadership Team.

The Second Line of Defence includes the risk

and compliance functions at Landsec, which

set the policies and standards to be met by

the business in relation to risk management,

as well as the internal assurance systems

designed to challenge the business to ensure

that risks are effectively being managed. This

includes forums such as Executive Leadership

Team meetings, Workplace and Lifestyle

Boards and Excos and other management

teams. The principal operational risks,

including health and security, and information

security and cyber threat are managed by

dedicated second-line functions that define

and implement policy and mitigating

controls, and undertake assurance activities.

In addition, the Head of Risk and Controls

manages Landsec’s Key Controls Toolkit.

TheToolkit is a set of clearly defined controls

that are self-certified by control owners

within the business, to provide ongoing

assurance and coverage of key risk areas.

TheAudit Committee monitors the results of

this process. This supports the Committee’s

evaluation of the control environment and

the adequacy of assurance activity. The

Committee also receives a summary report

at each meeting, describing key second and

third-line assurance activities, including

internal audits, actions agreed and the

status of open risk mitigation actions.

Landsec’s Third Line of Defence is

predominantly delivered through the

provision of Internal Audit, which provides

independent assurance over key controls and

processes to management and the Audit

Committee. An annual planning exercise is

carried out to identify the areas for inclusion

on a risk basis, including the areas where

the impact of controls is greatest i.e. where

there is a relatively high inherent risk and

relatively low residual risk. This helps to focus

the work of Internal Audit and other

assurance providers.

FOR MORE INFORMATION REFER TO THE

AUDITCOMMITTEE REPORT ON PAGES 62-69

MANAGING RISK

CONTINUED

STRATEGIC REPORTLANDSEC ANNUAL REPORT 2024 41

Our principal risks consist of the ten most

significant group risks. During the year, we

have reviewed the ten principal risks and

re-categorised them according to their

current strategic and operational focus.

Asaresult, we have five strategic and five

operational risks. The strategic risks relate

tothe macro-economic environment; our

keymarkets – office and retail; capital

allocation; and development. The operational

risks are cyber threat; change projects;

health and safety; people and skills; and

climate change.

Our principal risks are reflected in the risk

waterfall below. The risk waterfall allows

usto show the gross risk score (without

mitigations applied) alongside the net risk

scores (the rating following consideration

ofthe mitigations in place). These scores for

both gross and net risk score are calculated

as afunction of impact and likelihood.

The box on each risk reflects the Group’s risk

appetite for these risks. The appetite range

isa view which outlines the desired risk the

Group wishes to take in respect of each risk.

Appetite ranges are: ‘Open’ (where we are

focused on maximising opportunities);

‘Flexible’ (willing to consider all options);

‘Cautious’ (where we are willing to tolerate

adegree of risk); ‘Minimalist’ (preferring

options with low inherent risk); and ‘Averse’

(where we avoid risk and uncertainty).

Where the net risk sits within the appetite

box, the risk is considered to be managed

within appetite. At year end, there are no

netrisks currently above appetite, though

some are below. The tables on the following

pages describe each principal risk in detail,

including mitigating controls, KRIs and

changes in the year.

PRINCIPAL RISKS AND UNCERTAINTIES

Our Principal Risks and Uncertainties are

monitored throughout the year, to assess

our changing risk landscape and so that

the Board can make informed decisions.

PRINCIPAL RISKS

MINOR

MODERATE

SIGNIFICANT

CRITICAL

OPENFLEXIBLECAUTIOUSMINIMALISTAVERSE

Macroeconomic

outlook

Office occupier

market

Retail and

hospitality

occupier market

Information

security and

cyber threat

Capital

allocation

Change projects

failto deliver

Development

strategy

Health and

safety

People and skills

Climate change

transition

Gross risk Net risk Appetite range Strategic risk Operational risk

LANDSEC ANNUAL REPORT 2024STRATEGIC REPORT

PRINCIPAL RISKS AND UNCERTAINTIES

CONTINUED

1 MACROECONOMIC OUTLOOK EXECUTIVE RESPONSIBLE | MARK ALLAN APPETITE: FLEXIBLE

Changes in the macroeconomic environment

result in reduction indemand for space or

deferral ofdecisions by retail and office

occupiers. Due to the length of build projects,

the prevailing economic climate at initiation

may be vastly different from that at

completion.

EXAMPLE KRIs

•

UK Gross Domestic Product

•

UK household spending levels

•

Inflation rate

•

Interest rates

•

Business confidence

•

Employment intentions

MITIGATION

•

Key risk indicators monitored

•

Scenario-based modelling of plausible

economic trajectories

•

Our Research team prepares a report for ELT

and Area Boards on macroeconomic and

internal risk metrics

•

Twice-yearly Market Monitor produced,

analysing macroeconomic, political and

market-risk factors – which is also used for

budget and forecasting assumptions

•

Business portfolios prepare quarterly reporting

to review sector and market risks

CHANGE IN YEAR | DECREASING

The UK economy has continued to be challenging

during 2023/24, with interest rates remaining high

and high inflation also having an impact through

much of the period.

Whilst the operating environment is still affected

by the implications of the recent economic

environment, the outlook is considered to be

positive, with interest rates expected to start

falling during 2024/25. As such, the risk score has

been reduced during the period. The risk remains

within appetite.

2 OFFICE OCCUPIER MARKET EXECUTIVE RESPONSIBLE | MARCUS GEDDES APPETITE: FLEXIBLE

Structural changes in customer expectations

leading to changes indemand for office space

and theconsequent impact on income and

asset values. Further, the risk encompasses

the inability to identify or adapt to changing

markets in a timely manner.

EXAMPLE KRIs

•

Office usage percentages

•

Percentage of lease expiries over our

five-year plan

•

Void rates across our portfolio

•

Like-for-like rental income metrics

•

Customer and space churn

MITIGATION

•

Customer relationship management monitor

our customer base

•

Office leadership team review KRIs monthly

•

Management accounts monitoring key risk

indicators

•

ESG programme to decarbonise office portfolio

and strengthen prime property portfolio by

meeting changing occupier needs

•

Customer satisfaction measured regularly

•

Forward-looking market intelligence reviewed

regularly

•

Market-led demand and customer expectations

for environmentally sustainable office space are

closely monitored

•

Strict credit policy and process and review of

customers at risk

•

Future of Work forum hosted by our Insight

team, examining disruption themes and

megatrends in ways of working

CHANGE IN YEAR | NO CHANGE

The outlook in respect of the office occupancy

market is positive, with increased demand and

social appetite for office working continuing to

strengthen.

Whilst the current macroeconomic environment

is also looking positive, it currently continues to

apply pressure in respect of the buoyancy of the

market meaning this risk is considered to have

remained stable over the period.

The residual risk at year end was below our

‘flexible’ appetite however over the course of our

Strategic Plan we expect this risk to be brought

into appetite through opportunities for stronger

leasing terms.

3 RETAIL AND HOSPITALITY OCCUPIER MARKET EXECUTIVE RESPONSIBLE | BRUCE FINDLAY APPETITE: FLEXIBLE

Structural changes in customer expectations

leading to changes in demand for retail or

hospitality space and the consequent impact

on income and asset values.

EXAMPLE KRIs

•

Asset guest numbers

•

UK net retail openings and asset-vacancy rates

•

Portfolio void rates

•

Percentage of lease expiries over five years

•

Customer credit risk and tenant

counterpartyrisk

MITIGATION

•

Monitoring of key risk indicators by retail

leadership

•

Management accounts monitoring key risk

indicators

•

Customer relationship management monitors

customer base performance

•

Data-led development of asset and sector

strategies, promoting proactive leasing

•

Brand Account, Asset Management and Guest

Experiences teams established

•

Customer satisfaction surveys

•

Credit policy and process defines acceptable

level of credit risk

•

Finance reviews customers at risk and agrees

the best plan of action

CHANGE IN YEAR | NO CHANGE

Similar to the office occupier market, the outlook

in respect of the retail and hospitality occupier

market is positive but this risk is currently

considered to have remained stable throughout

the period as the economic environment

continues to have had an impact.

Our Strategic Plan and Business Plans outline

initiatives to further commercialise the use of our

assets, expand customer experience and raise

awareness of our retail centres. Whilst diversifying

the offerings to our customers acts as a risk

mitigation, the risk to be taken in respect of

potential yields for these initiatives, and the

onboarding of customers, will increase the overall

risk, bringing these risks into appetite.

STRATEGIC REPORTLANDSEC ANNUAL REPORT 2024 43

4 CAPITAL ALLOCATION EXECUTIVE RESPONSIBLE | MARK ALLAN APPETITE: FLEXIBLE

Capital allocated to specific assets, sectors or

locations does not yield the expected returns

i.e.we are not effective in placing capital or

recycling.

SPECIFICALLY:

•

Mixed-use urban neighbourhood developments

do not yield expected returns

•

Development of assets not matched to

expected demand

•

Retaining assets with low yields that should

berecycled

EXAMPLE KRIs

•

Committed development pipeline

•

Portfolio liquidity

•

Loan to value

•

Headroom over development capital

expenditure

•

Speculative development, pre-development

and trading property risk exposure

•

Group hedging

•

Net debt

MITIGATION

•

Monthly monitoring of capital disciplines and

KRIs by Workplace and Lifestyle Boards, ELT

and PLC Board

•

Detailed market and product analysis to enable

optimal investment decisions

•

Rigorous and established governance and

approval processes through the business

boards, ELT and PLC Board

•

Investment Appraisal Guidelines define the

key investment criteria, the risk-assessment

process, key stakeholders and the delegations

of authority

•

Stress-testing of scenarios as part of decision-

making

CHANGE IN YEAR | INCREASING

In line with our Strategic and Business Plans,

we are anticipating increased development

exposure leading to this risk to have increased.

Our strategy remains to introduce third-party

capital into a number of our projects however

we continue to have flexibility to seek to resize

our development to be appropriate for our own

balance sheet as required.

5 DEVELOPMENT STRATEGY EXECUTIVE RESPONSIBLE | MIKE HOOD APPETITE: FLEXIBLE

We may be unable to generate expected

returns as a result of changes in the occupier

market for a given asset during the course of

the development, or cost or time overruns on

the scheme.

EXAMPLE KRIs

•

Take-up level for offices

•

Tender-price inflation

•

Monitor build-to-sell and build-to-rent ratios

to determine phasing

MITIGATION

•

Development strategy addresses risks that

could adversely affect underlying income and

capital performance

•

A detailed appraisal is undertaken by business-

area boards and PLC Board before committing

to a scheme

•

Financial modelling and scenario-planning

to determine expected yields

•

Tested project-management approach and

highly experienced development team

•

Control processes over key risk areas including:

project organisation and reporting; financial

management; quality; schedule; change; risk

and contingency management; health and

safety; and project objectives

•

Each project is supported by internal

stakeholders in Operations, Sustainability and

Tech, as evidenced through key monitoring

reviews and gateway sign-offs

•

Strong community involvement in the design

process for our developments

•

Early engagement and strong relationships

with planning authorities

CHANGE IN YEAR | INCREASING

The external factors that influence this risk,

such as market conditions and inflation, have

remained stable over the year.

However, we are expecting to invest in a number

of new developments during the upcoming year

which will increase this risk to be closer to our

flexible appetite.

LANDSEC ANNUAL REPORT 2024STRATEGIC REPORT

PRINCIPAL RISKS AND UNCERTAINTIES

CONTINUED

6 INFORMATION SECURITY AND CYBER THREAT EXECUTIVE RESPONSIBLE | NISHA MANAKTALA APPETITE: CAUTIOUS

Data loss or disruption to business processes,

corporate systems or building-management

systems resulting in a negative reputational,

operational, regulatory or financial impact.

EXAMPLE KRIs

•

Speed of threat and vulnerability detection

(against agreed penetration testing/external

assurance schedule)

•

Speed of threat and vulnerability resolution

•

Number of major cyber incidents or data-loss

events

•

Incident Response and Recovery Plan reviewed

and tested

•

Completion rates on cyber security and

data-protection training

•

Number of critical, strategic or infosec partners

without current cyber-security diligence

MITIGATION

•

IT security policies set out our standards for

security and penetration testing, vulnerability

and patch management, data disposal and

access control

•

Quarterly assessment of key IT controls

•

Monitored mandatory cyber security and GDPR

training

•

Third-party IT providers subject to information-

security vendor assessment

•

Close working with IT service partners to

manage risk and improve technical standards

•

Defined technical IT standards for all building

systems

•

Extensive use of cloud-based systems

•

Business continuity, crisis management and IT

disaster-recovery plans in place for all assets,

including regular testing

•

Established penetration testing and

vulnerability-management across our IT estate

CHANGE IN YEAR | NO CHANGE

Significant investment and operational

strengthening has been made over recent years,

most recently including the onboarding of a new

Chief Data & Technology Officer during the year.

The emphasis is now focused on continuous

improvement of the processes and controls.

The current position of this risk remains within

theoverall Cautious risk appetite alignment for

operational risks.

7 CHANGE PROJECTS EXECUTIVE RESPONSIBLE | ELT APPETITE: CAUTIOUS

Landsec is engaging in a number ofimportant

internal change programmes. These projects

aim todeliver important benefits, both

operationally and culturally. There is a risk

that these projects fail to deliver the benefits

identified in a timely manner and to budget.

EXAMPLE KRIs

•

Key project milestones missed

•

Number of projects operating without

appropriate governance

•

Number of success criteria achieved at

post-implementation reviews and audits

MITIGATION

•

Board and ELT oversight

•

Project governance methodology

•

Qualified project managers used on all large

projects

•

Benefits cases documented and agreed

•

Company-wide communication of Project

Major supported by regular town halls and

Senior Leadership Team engagement.

•

Regular reporting of project progress to

project boards

•

Alignment of Finance and UK Governance

regime workstreams

CHANGE IN YEAR | NO CHANGE

Landsec has various technology and operational

change programmes underway, such as the

upgrade and improvement of the ERP system.

Whilst cultural change programmes are

drawingto a close, we continue to get deeper

into the operational change programmes.

Assuch, the overall risk has remained stable.

Thecurrent position of this risk, remains within

the overall Cautious risk appetite alignment for

operational risks.

8 HEALTH AND SAFETY EXECUTIVE RESPONSIBLE | MARINA THOMAS APPETITE: CAUTIOUS/MINIMALIST

Failure to identify, mitigate or react effectively

to major health or safety incidents, leading to:

•

Serious injury, illness or loss of life

•

Criminal or civil proceedings

•

Loss of stakeholder confidence

•

Delays to building projects and access

restrictions to our properties, resulting in loss

ofincome

•

Inadequate response to regulatory changes

•

Reputational impact

EXAMPLE KRIs

•

Number of reportable health and safety

incidents

•

Health and safety training completion

•

Control reviews and follow up to completion

MITIGATION

•

Regular reviews by the Board, ELT and Health,

Safety and Security Committee (chaired by

theCEO)

•

Health and safety management system

accredited to ISO 45001 standard

•

Fire-safety management system accredited

tothe BS 9997 standard

•

Task force of internal experts and independent

fire-engineering firm progressing cladding

project quickly

•

Audits by Internal Audit, plus annual

programme of data-led and second-line audits

by the Health and Safety team

•

Legal and best practice compliance monitored

in real time

•

Strict standards applied to the selection of

keyservice and construction partners; assessed

by KPIs and regular reviews

CHANGE IN YEAR | NO CHANGE

During the period, the risks associated with the

use of reinforced autoclaved aerated concrete

(RAAC) have been assessed, with action plans

inplace where necessary, however the overall

implications on our health and safety

environment are considered immaterial.

The likelihood of a major health, safety or

security incident has remained constant

throughout the year and within appetite.

STRATEGIC REPORTLANDSEC ANNUAL REPORT 2024 45

9 PEOPLE AND SKILLS EXECUTIVE RESPONSIBLE | KATE SELLER APPETITE: CAUTIOUS

Inability to attract, retain and develop the

right people and skills to meet our strategic

objectives, grow enterprise value and meet

shareholder expectations.

EXAMPLE KRIs

•

Employee turnover levels

•

High-potential employee turnover

•

Employee engagement score

•

Succession planning up to date

•

Time to hire

MITIGATION

•

Executive remuneration and long-term

incentive plans in place, which are

benchmarked, overseen by the Remuneration

Committee and aligned to the Group and

individual performance

•

Regular review of succession plans for senior

and critical roles

•

Remuneration plans for other key roles are

benchmarked annually

•

The talent-management programme identifies

high-potential individuals

•

Clear employee objectives and development

plans

•

Health and Wellbeing Statement of Practice

•

Regular employee engagement surveys

CHANGE IN YEAR | NO CHANGE

In recent years, this risk had increased due to

acombination of attrition due t o ongoing

transformation programmes as well as the

buoyant employment market at the time.

However, these pressures have now stabilised

leading to this risk remaining unchanged overall

and within appetite over the period.

10 CLIMATE CHANGE TRANSITION EXECUTIVE RESPONSIBLE | CHRIS HOGWOOD APPETITE: CAUTIOUS

Climate change risk has twoelements:

 Our near and long-term science-based

carbon reduction targets by 2030 and 2040

are not met in time or are achieved at a

significantly higher cost than expected,

leading to regulatory, reputational and

commercial impact.

 Failure to ensure all new developments are

net zero in construction and operation, as

defined by the emerging net zero standard

for assets, leads to an inability to service

market demand for high-quality assets

thatmeet the highest environmental and

wellbeing standards.

EXAMPLE KRIs

•

Energy intensity

•

Renewable electricity

•

EPC ratings

•

Operational carbon emissions

•

Embodied carbon for new developments

•

Portfolio natural-disaster risk

MITIGATION

•

Climate risks and opportunities for potential

acquisitions assessed by our Responsible

Property Investment Policy and ESG acquisition

appraisal framework

•

Developments designed to be resilient to

climate change and net zero both in

construction and operation

•

All properties comply with ISO 14001 and

ISO50001 Environmental and Energy

Management System

•

Continued monitoring of portfolio exposure to

physical climate risks, and we review mitigation

actions for sites located in high-risk areas

•

Early engagement with supply chain for

procurement of air-source heat pumps and

solar PVs ensuring appropriate due diligence

CHANGE IN YEAR | NO CHANGE

Operational and supply chain issues are

impacting the availability and cost ofsustainable

resources, which are key to meeting the business’s

embodied carbon targets. This is under regular

review, however the overall risk position is

considered to have remained stable over the year,

currently sitting just below the Cautious risk

appetite target.

LANDSEC ANNUAL REPORT 2024STRATEGIC REPORT

The impact of international and domestic

political and economic events over the course

of the year has resulted in the UK facing

a prolonged period of high inflation, rising

interest rates and minimal GDP growth.

Therefore, the Directors have continued to

place additional focus on the appropriateness

of adopting the going concern assumption

in preparing the financial statements for the

year ended 31 March 2024. The Group’s going

concern assessment considers changes in

the Group’s principal risks (see pages 41-45)

and is dependent on a number of factors,

including our financial performance and

continued access to borrowing facilities.

Access to our borrowing facilities is

dependent on our ability to continue to

operate the Group’s secured debt structure

within its financial covenants, which are

described in note 22.

In order to satisfy themselves that the Group

has adequate resources to continue as a

going concern for the foreseeable future, the

Directors have reviewed base case, downside

and reverse stress test models, as well as a

cash flow model which considers the impact

of pessimistic assumptions on the Group’s

operating environment (the ‘mitigated

downside scenario’). This mitigated downside

scenario reflects unfavourable macro-

economic conditions, and a deterioration

inour ability to collect rent and service

charge from our customers and removes

uncommitted capital expenditure,

acquisitions, disposals and developments.

The Group’s key metrics from the mitigated

downside scenario as at the end of the going

concern assessment period, which covers

the 16 months to 30 September 2025, are

shown below alongside the actual position

at 31 March 2024.

KEY METRICS

TABLE 17

31 March 2024

Mitigated

downside

scenario

30 September

2025

Security Group LTV 37.0% 42.8%

Adjusted net debt £3,517m £3,885m

EPRA net tangible

assets

£6,398m £5,559m

Available financial

headroom

£1.9bn £0.9bn

In our mitigated downside scenario, the

Group has sufficient cash reserves, with

our Security Group LTV ratio remaining less

than 65% and interest cover above 1.45x,

for a period of 16 months from the date of

authorisation of these financial statements.

Under this scenario, the Security Group’s

asset values would need to fall by a further

34% from the sensitised values forecasted at

30 September 2025 to be non-compliant with

the LTV covenant. This equates to a 43% fall

in the value of the Security Group’s assets

from the 31 March 2024 values for the LTV

to reach 65%. The Directors consider the

likelihood of this occurring over the going

concern assessment period to be remote.

The Security Group also requires earnings

before interest of at least £198m in the full year

ending 31 March 2025 and at least £232m in

the full year ending 31 March 2026 for interest

cover to remain above 1.45x in the mitigated

downside scenario, which would ensure

compliance with the Group’s covenant

through to the end of the going concern

assessment period. Security Group earnings

post year end 31 March 2024 are above the

level required to meet the interest cover

covenant for the year ended 31 March 2025.

The Directors do not anticipate a reduction in

Security Group earnings over the period ending

30 September 2025 to a level that would result

in a breach of the interest cover covenant.

The Directors have also considered a reverse

stress-test scenario which assumes no

further rent will be received, to determine

when our available cash resources would be

exhausted. Even under this extreme scenario,

although breaching the interest cover

covenant, the Group continues to have

sufficient cash reserves to continue in

operation throughout the going concern

assessment period.

Based on these considerations, together

withavailable market information and the

Directors’ knowledge and experience of

theGroup’s property portfolio and markets,

the Directors have adopted the going

concern basis in preparing the financial

statements of the Group and parent for

theyear ended 31 March 2024.

VIABILITY STATEMENT

THE VIABILITY ASSESSMENT PERIOD

The Directors have assessed the viability of

the Group over a five-year period to March

2029, taking account of the Group’s current

financial position and the potential impact

of our principal risks.

PROCESS

Our financial planning process comprises

a budget for two financial years and the

strategic plan. Generally, the budget has

a greater level of certainty and is used to

set near-term targets across the Group. The

strategic plan is less certain than the budget

but provides a longer-term outlook against

which strategic decisions can be made.

The financial planning process considers the

Group’s profitability, capital values, gearing,

cash flows and other key financial metrics

reflecting conservative adjustments to the

strategic plan over the plan period. These

metrics are subject to sensitivity analysis,

in which a number of the main underlying

assumptions are flexed and tested to consider

alternative macro-economic environments.

Additionally, the Group also considers the

impact of potential structural changes to

the business in light of varying economic

conditions, such as significant additional

sales and acquisitions or refinancing. These

assumptions are then adapted further to

GOING CONCERN AND VIABILITY

The Directors outline their assessment of the

Group’s ability to operate as a going concern

and its long-term viability, taking into account

the impact of the Group’s principal risks.

STRATEGIC REPORTLANDSEC ANNUAL REPORT 2024 47

assess the impact of considerably worse

macro-economic conditions than are

currently expected, which forms the basis

ofthe Group’s ‘Viability scenario’.

Given the recent unfavourable macro-

economic conditions in which the Group

hasbeen operating, additional stress-testing

has been carried out on the Group’s ability

tocontinue in operation under extremely

unfavourable operating conditions. While

theassumptions we have applied in these

scenarios are possible, they do not represent

our view of the likely outturn. The Directors

have also considered reverse stress-test

scenarios including one in which we are

unable to collect any rent for an extended

period of time. The results of these tests help

to inform the Director’s assessment of the

viability of the Group.

KEY RISKS

The table below sets out those of the

Group’sprincipal risks (see pages 41-45

forfull details of the Group’s principal risks)

that could impact its ability to remain in

operation and meet its liabilities as they

falldue and how we have taken these into

consideration when making our assessment

of the Group’s viability.

PRINCIPAL RISK VIABILITY SCENARIO ASSUMPTION

Macroeconomic outlook

Changes in the macroeconomic environment

result in reduction in demand for space or deferral

of decisions by retail and office occupiers.

Due to the length of build projects, the prevailing

economic climate at initiation may be vastly

different from that at completion.

•

Declines in capital values and outward yield

movements across all assets within the portfolio

•

Additional impact of a higher inflationary

market captured within costs

•

No issuance of additional fixed term bonds

through the assessment period

•

Additional impact of increased interest rates

onservicing debt

Office occupier market

Structural changes in customer expectations leading

to changes in demand for office space and the

consequent impact on income and asset values.

Further, the risk encompasses the inability to identify

or adapt to changing markets in a timely manner.

•

Reduced demand leads to increased void

periods, negative valuation movements and

downward pressure on rental values over the

whole assessment period

Retail and hospitality occupier market

Structural changes in customer expectations leading

to changes in demand for retail or hospitality

spaceand the consequent impact on income

and asset values.

•

Increased customer failures lead to increased

void periods, negative valuation movements

anddownward pressure on rental values over

theperiod

Capital allocation

Capital allocated to specific assets, sectors or

locations does not yield the expected returns i.e.

we are not effective in placing capital or recycling.

•

Capital that is accretive to the portfolio but not

essential has been removed

•

Any uncommitted budgeted acquisitions,

disposals and developments do not take place

due to reduced liquidity

Development strategy

We may be unable to generate expected returns

asa result of changes in the occupier market for

agiven asset during the course of the development,

or cost or time overruns on the scheme.

•

A reduction in recognised development profits

for committed schemes that will continue to be

advanced over the viability assessment period

We considered our other Principal Risks, including climate change transition, and their possible

impact on our assessment of the Group’s viability. We concurred that as we have fully costed

and committed to invest £135m to achieve our science-based target by 2030, this mitigated

the climate change transition risk sufficiently.

IMPACT ON KEY METRICS

We have assessed the impact of these

assumptions on the Group’s key financial

metrics over the assessment period, including

profitability, net debt, loan-to-value ratios

and available financial headroom.

The viability scenario represents a

contraction in the size of the business over

the five-year period considered, with the

Security Group LTV at 49.5% in March 2029,

its highest point in the assessment period.

The Group maintains a positive financial

headroom from March 2024 through to

September 2025 and the Group will only be

required to secure new funding from March

2026. The Directors expect the Group to be

able to secure new funding, given the strong

relationships and engagement the Group

has with its existing banking group and on

the basis of the recent bond issuances in

March 2023 and March 2024 that were well

supported by investors.

KEY METRICS

TABLE 18

Actuals

31 March 2024

Mitigated

downside

scenario

31 March 2029

Security Group LTV 37.0% 49.5%

Adjusted net debt £3,517m £4,016m

EPRA net tangible

assets per share

859p 655p

Available financial

headroom

£1.9bn (£2.3bn)

CONFIRMATION OF VIABILITY

Based on this assessment the Directors have

a reasonable expectation that the Group will

continue in operation and meet its liabilities

as they fall due over the period to March 2029.

LANDSEC ANNUAL REPORT 2024STRATEGIC REPORT

NON-FINANCIAL AND SUSTAINABILITY

INFORMATION STATEMENT

TOPIC OUR POLICIES AND STANDARDS THAT GOVERN OUR APPROACH

WHERE INFORMATION CAN

BE FOUND IN THIS REPORT

ENVIRONMENTAL

MATTERS AND

CLIMATE-RELATED

FINANCIAL

DISCLOSURE

REQUIREMENTS

•

Sustainability policy: sets out our sustainability vision and associated commitments

as detailed in our Build well, Live well, Act well strategy

•

Environment and energy policy: how we manage our business activities with minimal

impact on the natural environment and strive to reduce our climate change impact

•

Materials brief: sets out the materials we prohibit use of in our construction activities

based on health impacts, responsible sourcing, embodied carbon impact and

resource efficiency considerations

•

Responsible property investment policy: our commitment and approach to

managing aspects of sustainability throughout the acquisition and disposal of assets

•

Sustainable Development Toolkit: translates our sustainability vision into a guide to

ensure that we design and develop our new schemes and refurbishments sustainably

•

Nature strategy: details our approach to incorporating nature and green spaces

into our business activities as a real estate company who creates value by buying,

developing, managing and selling properties

•

Build well, Live well, Act well site action plans: plans that guide our site teams to

operate and manage our standing assets sustainably

—

BUILD WELL ON PAGES 28-30

—

TCFD STATEMENT ON PAGES 33-37

—

SECR REPORTING ON PAGES 170-172

EMPLOYEES

•

Employee Code of Conduct: sets out how we behave internally and externally, in line

with our purpose, values and behaviours

•

Equal opportunities policy: how we treat our employees, based on merit and ability,

in a fair and transparent way, building a diverse and inclusive workplace

•

Harassment and bullying policy and procedure: our commitment to stop and prevent

behaviour that causes offence or distress in the workplace

•

Health and safety policy: how we manage health and safety throughout our

operations and assets

•

Health and wellbeing policy: investing in improving the health and wellbeing of our

employees, encouraging a healthy work-life balance

•

Mental health first aider policy: sets out how we manage our trained mental health

support network

—

OUR PEOPLE AND CULTURE ON

PAGES 25-27

—

ACT WELL ON PAGE 32

RESPECT FOR

HUMANRIGHTS

•

Human rights policy: our commitment and core principles to respect the human

rights of all those who work for Landsec and on our behalf

•

Modern Slavery Statement: we are committed to ensuring that all work in our supply

chain associated with our projects and contracts is voluntary and fair and that the

health, safety and security of all workers is a priority

•

Supply Chain Commitment: our commitment to build long-lasting partnerships

withsuppliers who uphold the same ethical principles as us and work together for

asustainable future for all

•

Right to work policy: provides best practice guidance to those assigned responsibility

for performing right to work checks across our supply chain

—

DIRECTORS’ REPORT ON

PAGES92-94

—

ACT WELL ON PAGE 32

This section of our Strategic Report constitutes Landsec’s

Non-financial Information Statement. This is intended to

help stakeholders understand our position on these key

non-financial matters. The table below highlights our

policies and standards and where you can find more

information in this report.

YOU CAN FIND OUR POLICIES ON OUR

WEBSITE: LANDSEC.COM/SUSTAINABILITY/

GOVERNANCE-POLICIES, LANDSEC.COM/

ABOUT/CORPORATE-GOVERNANCE

STRATEGIC REPORTLANDSEC ANNUAL REPORT 2024 49

TOPIC OUR POLICIES AND STANDARDS THAT GOVERN OUR APPROACH

WHERE INFORMATION CAN

BE FOUND IN THIS REPORT

SOCIAL MATTERS

•

Diversity and inclusion: our D&I strategy, Diverse Talent, Inclusive Culture and

Inclusive Places sets out our vision to design, develop and manage more inclusive,

commercially successful places through attracting and nurturing diverse talent

within a culture that enables everyone to reach their full potential

•

Board Diversity Policy: sets out the specific responsibilities of the Board in relation to

the diversity of its membership and its role in setting a culture of inclusive leadership

from the top

•

Community Charter: our commitment to engage our communities throughout the

development process and beyond

•

Stakeholder Engagement policy: outlines our commitment and approach to inclusive

stakeholder engagement

—

OUR PEOPLE AND CULTURE ON

PAGES 25-27

—

GOVERNANCE REPORT – BOARD

DIVERSITY ON PAGE 58

—

OUR STAKEHOLDERS ON

PAGES 22-24

—

LIVE WELL ON PAGE 31

ANTI-BRIBERY

AND CORRUPTION

•

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

of bribery or corruption

•

Conflicts of interest and anti-competitive behaviours: our employees must act

in thebest interests of the Company and not make decisions for personal gain

•

Speak Up Policy: how we encourage those who work for Landsec and on our behalf

to ask questions, raise concerns or report incidents of any impropriety or wrongdoing

•

Sustainable Procurement Guidance: sets out six procurement principles to ensure

that we procure goods and services responsibly, securely, timely, smartly, ethically

and positively in accordance with the law and in compliance with relevant legislation

•

Tax strategy: we act with integrity and excellence when dealing with taxes and

engage with government for a fair taxation system

—

ACT WELL ON PAGE 32

—

REPORT OF THE AUDIT COMMITTEE

PAGES 62-69

DESCRIPTION OF

PRINCIPAL RISKS

AND IMPACT OF

BUSINESS

ACTIVITY

•

We consider both external and internal risks, evaluate them, assess the impact

and put in place mitigating actions and controls

—

MANAGING RISK ON PAGES 38-40

—

PRINCIPAL RISKS AND

UNCERTAINTIES ON

PAGES 41-45

—

REPORT OF THE AUDIT COMMITTEE

ON PAGES 62-69

DESCRIPTION OF

BUSINESSMODEL

•

To create value, we buy, develop, manage and sell property, drawing on a range

of financial, physical and social resources

—

OUR BUSINESS MODEL ON PAGE 7

NON-FINANCIAL

KEY

PERFORMANCE

INDICATORS

•

In addition to our financial performance metrics, we set ourselves a range of KPIs

forthe year including sustainability targets

—

KEY PERFORMANCE INDICATORS

PAGE 10

This Strategic Report was approved by the Board of Directors on 16 May 2024 and signed on its behalf by:

MARK ALLAN, CHIEF EXECUTIVE

LANDSEC ANNUAL REPORT 2024GOVERNANCE

INTRODUCTION TO THE CORPORATE

GOVERNANCE REPORT FROM THE CHAIR

As Chair of Landsec, I’m pleased to

presentour Corporate Governance Report.

During the year our Board has continued

toadvance the long-term, sustainable

success of the Company. Our effective

governance processes underpin Board

activities and ensure we effectively consider

the risks, uncertainties and opportunities

thebusiness faces.

THE YEAR IN REVIEW

In 2023/24, the Board continued to address

challenges arising from macroeconomic and

geopolitical conditions, including the effects

of increased inflation and interest rates on

property values. The increased cost of capital

and capital allocation more broadly was

a significant consideration. These external

factors continued to shape our discussions

throughout the year, guiding decisions that

sought to prioritise the Company’s best

interests in both the short and long term.

Despite these challenges, we achieved

another year of robust operational

performance. This success is a result of

the focus on our three key competitive

advantages: our high quality portfolio; the

strength of our customer relationships; and

our ability to unlock complex opportunities.

BOARD SUCCESSION AND DIVERSITY

The Board and Nomination Committee have

continued to focus on succession planning

and Board composition.

During the year, as well the retirement of

Cressida Hogg, and my transition to Chair

on16 May 2023, we announced other

changes to the Board. Nicholas Cadbury,

ourAudit Committee Chair, left the Board

on31 December 2023, and Edward Bonham

Carter, our Senior Independent Director

announced that he would leave the Board

atour AGM on 11 July 2024. As a result,

we have welcomed James Bowling as our

new Audit Committee Chair in September

2023 and Moni Mannings who joined the

Board inDecember 2023 and became

Senior Independent Director in April 2024.

We continue to review and evolve our skills

matrixto ensure we have the skills needed

onour Board.

We remain committed to having a Board

that is diverse in all respects. As at the date

of this report we comply with the Listing

Rules requirements relating to diversity:

(i) 40% of our Board are women, (also

meeting the FTSE Women Leaders target);

(ii) two ofour senior Board roles are held by

women(CFO and SID); and (iii) we have two

directors on the Board from minority ethnic

backgrounds (also meeting Parker Review

targets). During the year we approved

a Board Diversity Policy. Importantly, across

the wider business, we made progress against

our diversity targets (see pages 26-27), but

inorder that diversity and inclusion remains

akey priority we are going to include it in

ourexecutive incentive programmes from

2024/25 onwards (see page 71).

STAKEHOLDER ENGAGEMENT

Landsec’s success is dependent on the

Boardtaking decisions for the benefit of our

shareholders and in doing so having regard

to all our stakeholders.

Each year we write to our larger shareholders,

offering them the opportunity to meet

privately and discuss their thoughts on the

Company and the wider market with the

Chair or the Senior Independent Director.

Since this was my first year as Chair I had

anumber of these meetings and valuable

feedback from those meetings was discussed

by the Board. Our stakeholder engagement

activity is described in more detail on

pages22-24.

CULTURE

The Board understands the importance

ofculture and setting the tone of the

organisation from the top and embedding

itthroughout Landsec. Our culture is a key

component for continuing to make progress

with our strategic plans. The aim of our

people strategy is to create a high-performing

and inclusive culture. During the year the

Board has monitored our culture with regular

updates from our Chief People Officer on

ourpeople, our culture, talent and succession

planning, diversity and inclusion activities

and engagement survey, and direct

engagement activities with the workforce.

BOARD EVALUATION

This year our Board evaluation was carried

out internally. The Board was satisfied

withits own performance, with all Board

members rating performance as good or

excellent. For more detail see page 61.

UK CORPORATE GOVERNANCE CODE

In respect of the year ended 31 March 2024

Landsec was subject to the UK Corporate

Governance Code 2018 (the ‘Code’, available

from frc.org.uk). The Board is pleased

toconfirm that Landsec applied the principles

and complied with all the provisions of the

Code throughout the year. We are also

preparing for the changes required under

theUK Corporate Governance Code 2024.

CONCLUSION

I would like to take this opportunity to

recognise the hard work and commitment

ofall our people during the year and to thank

them for their continued efforts to ensure

thefuture success of the business. I would

also like to conclude by thanking members

ofthe Board for their continued support and

commitment over the past year.

SIR IAN CHESHIRE, CHAIR

DEAR SHAREHOLDER

I am pleased to introduce

thegovernance section for

the year ended 31 March 2024

LANDSEC ANNUAL REPORT 2024 51GOVERNANCE

BOARD OF DIRECTORS

SIR IAN CHESHIRE, CHAIR* MONI MANNINGS OBE, NON-EXECUTIVE DIRECTOR

ANDSENIOR INDEPENDENT DIRECTOR*

EDWARD BONHAM CARTER,

NON-EXECUTIVE DIRECTOR*

BOARD TENURE

One year

Sir Ian joined the Landsec Board as Non-executive

Director and Chair Designate on 23 March 2023

and assumed the role of Chair on 16 May 2023.

COMMITTEES

Nomination Committee (Chair),

RemunerationCommittee

ROLE

Leads the Board, responsible for governance, major

shareholder and other stakeholder engagement.

SKILLS AND EXPERIENCE

Sir Ian brings extensive general management and

board experience in customer-facing organisations

across a range of sectors. His executive roles

include senior leadership and commercial roles

in customer-focused businesses, latterly as Group

Chief Executive of Kingfisher plc from 2008 to 2015.

He previously held FTSE 100 Non-executive Director

roles at Barclays Plc (and as Chairman of Barclays

Bank UK), Whitbread Plc, where he was Senior

Independent Director and BT Group Plc where

he was Chair of the Remuneration Committee,

Debenhams and Maison Du Monde. He was lead

Non-executive Director at the UK Cabinet Office

and Department for Work and Pensions. He was

also Chairman of the British Retail Consortium,

Chairman of the Prince of Wales Corporate Leaders

Group on Climate Change, President of the Business

Disability Forum President’s Group and chaired the

Ecosystem Markets Task Force and GR Task Force.

Sir Ian was knighted in the 2014 New Year Honours

for services to Business, Sustainability and the

Environment and is a Chevalier of the Ordre

National du Mérite of France.

OTHER CURRENT APPOINTMENTS

Chair of Channel 4 and Spire Healthcare Group

plc. Non-executive Director of Menhaden Resource

Efficiency Plc. Chair of the King Charles III

Charitable Fund and We Mean Business Coalition.

BOARD TENURE

6 months

Moni joined the Board in December 2023 and

became Senior Independent Director in April 2024.

COMMITTEES

Nomination Committee, Remuneration Committee

ROLE

A sounding board for the Chair anda trusted

intermediary for other Directors and shareholders.

SKILLS AND EXPERIENCE

From 2000 until 2016, Moni was a Partner and

Head of the International Banking and Finance

Division of Olswang LLP, before which she held

senior positions in other leading law firms.

Until 2017, Moni was Chief Operating Officer of

Aistemos Limited. Previous Non-executive Director

positions include Polypipe Group plc, Dairy Crest

Group plc, Breedon Group plc, Investec Bank plc

and Cazoo Group Ltd.

OTHER CURRENT APPOINTMENTS

Independent Non-executive Director of

Hargreaves Lansdown plc, Non-executive Director

and Chair of the Remuneration Committee of

easyJet plc, Non-executive Director and Senior

Independent Director of Co-operative Group.

A Member of the Takeover Panel. Moni also

founded EPOC, a not-for-profit network that

seeks to increase the number of people of colour

on boards and is a member of the Parker Review

Committee and a trustee on the Board of the

StMarks Hospital Foundation charity.

BOARD TENURE

Ten years

Edward is retiring from the Board at the AGM

inJuly 2024.

COMMITTEES

Nomination Committee, Remuneration

Committee

SKILLS AND EXPERIENCE

Edward has significant experience of general

management as a former CEO of a private equity

backed and listed company. Having been a fund

manager for many years, he has a comprehensive

understanding of global stock markets and

investor expectations which is beneficial to

theCompany when it considers its engagement

with investors.

OTHER CURRENT APPOINTMENTS

Senior Independent Director, ITV plc. Trustee and

Chair of Investment Committee, Esmée Fairbairn

Foundation. Non-executive Chairman, Netwealth

Investments Ltd.

RNRN RN

COMMITTEES

Audit Committee

Nomination Committee

Remuneration Committee

*Independent as per the UK Corporate

Governance Code.

LANDSEC ANNUAL REPORT 2024GOVERNANCE

BOARD OF DIRECTORS

CONTINUED

JAMES BOWLING, NON-EXECUTIVE DIRECTOR* MADELEINE COSGRAVE, NON-EXECUTIVE DIRECTOR* CHRISTOPHE EVAIN, NON-EXECUTIVE DIRECTOR*

BOARD TENURE

9 months

James joined the Board in September 2023.

COMMITTEES

Audit Committee (Chair)

SKILLS AND EXPERIENCE

James was Chief Financial Officer of Severn

Trent Plc from 2015 until retirement in July 2023,

and remained on the Seven Trent Plc Executive

Committee until December 2023 as a Senior

Advisor. James has relevant financial experience

as a Fellow of the Institute of Chartered

Accountants in England and Wales and as an

experienced listed company CFO who has

successfully applied his skills across a number

of sectors. He has broad experience in financial

reporting, enterprise risk management, long-term

capital investment models and a range of

corporate activity, including M&A.

OTHER CURRENT APPOINTMENTS

Non-independent Non-executive Director of Water

Plus Group Ltd. Chair of Audit Committee and

Non-executive Director at Porterbrook Leasing

Company Limited.

BOARD TENURE

Five years

COMMITTEES

Audit Committee

SKILLS AND EXPERIENCE

Madeleine has extensive experience in the

property industry; she is a member of the Royal

Institution of Chartered Surveyors and former

chair of the INREV Investor Platform. She is an

independent member of the CBRE IM EMEA

Investment Committee, senior advisor to ICG Real

Estate and has mentoring roles with IntoUniversity

andGAIN (Girls Are Investors). Madeleine was

previously Managing Director and Regional Head,

Europe at GIC Real Estate, Singapore’s Sovereign

Wealth Fund. She held this position from 2016

untilshe stepped down in June 2021 and was

responsible for the investment strategy, portfolio

and team. She led the GIC real estate business

inEurope and was a voting member of GIC RE’s

Global Investment Committee.

Madeleine is a chartered surveyor and started

hercareer in 1989 with JLL as a graduate trainee.

She went on to hold roles in valuation, fund

management, leasing and development in both

London and Sydney, before joining GIC in 1999.

OTHER CURRENT APPOINTMENTS

Independent Member of CBRE IM EMEA

Investment Committee. Senior Advisor to ICG

RealEstate.

BOARD TENURE

Five years

COMMITTEES

Remuneration Committee (Chair), Nomination

Committee

SKILLS AND EXPERIENCE

Christophe has extensive investment experience

inprivate equity, debt and other alternative

assetclasses. As the former CEO of a UK listed

company, he also has management and

leadership strengths, having successfully led the

transformation of Intermediate Capital Group PLC

(ICG) from a principal investment business into a

diversified alternative asset management group.

Christophe’s broad experience, both as a business

leader and an investor, is a valuable asset to the

Board. Having started his career in banking,

holding various positions at NatWest and Banque

de Gestion Privée, he joined ICG in 1994 as an

investment professional, became CEO in 2010

andstepped down from that position in 2017.

During this time he held various investment

andmanagement roles, founded the Group’s

businesses in Paris, the Asia-Pacific region and

North America, and was instrumental in adding

various additional businesses, including a UK

property lending business.

OTHER CURRENT APPOINTMENTS

Chair, Bridges Fund Management. Non-executive

Director, Quilvest Capital Partners.

A N R

LANDSEC ANNUAL REPORT 2024 53GOVERNANCE

MILES ROBERTS, NON-EXECUTIVE DIRECTOR* MANJIRY TAMHANE, NON-EXECUTIVE DIRECTOR*

BOARD TENURE

18 months

COMMITTEES

Audit Committee

SKILLS AND EXPERIENCE

Miles is currently Group Chief Executive of

DS Smith Plc, the international packaging group,

andhas held this position since 2010. It has been

announced that Miles will step down from the

Board of DS Smith Plc by 30 November 2025.

Priorto his role at DS Smith Plc, he was Chief

Executive at McBride plc from 2005 to 2010.

Miles brings a wide level of Board experience,

together with specific experience of large,

long-term capital projects, alongside a particular

focus on sustainability. Miles is a qualified

chartered accountant.

OTHER CURRENT APPOINTMENTS

Chief Executive, DS Smith Plc.

BOARD TENURE

Three years

COMMITTEES

Remuneration Committee

SKILLS AND EXPERIENCE

Manjiry brings over 20 years of client and agency

side experience inthe data, technology and

advanced analytics industry gained from working

in marketing, customer insight and strategy roles.

She is Global Chief Executive Officer of Gain

Theory, a global foresight consultancy, a subsidiary

of WPP plc. Manjiry was part of a team which

founded Gain Theory in 2015, having previously

been Managing Director of another of WPP’s

consultancies also focused on data and analytics,

Ohal Ltd. Prior tothat, Manjiry spent the first part

of her career in the retail sector, latterly as Head

of Customer Insight and Strategy at Debenhams.

In 2017, Manjiry was named as one of the top 20

Women in Data & Technology, led by The Female

Lead and Women in Data.

OTHER CURRENT APPOINTMENTS

Chief Executive Officer, Gain Theory, a subsidiary

ofWPP plc. Advisory Board member, Saracens

Women’s Rugby.

THE ROLE OF OUR NON-EXECUTIVE

DIRECTORS

Our Non-executive Directors are

responsible forbringing an external

perspective, sound judgement and

objectivity to the Board’s deliberations

and decision making. They support and

constructively challenge the Executive

Directors using their broad range of

experience and expertise and monitor

thedelivery of the agreed strategy

within the risk management

framework set by the Board.

Our Non-executive Directors have

adiverse skill set and background

including property, investment, asset

management, retail and hospitality,

and data and analytics. This expertise

enables the Board to constructively

challenge management and encourages

diversity of thought in thedecision

making process.

COMPANY SECRETARY

Marina Thomas is our Company

Secretary. Marina provides advice and

support to the Board, its Committees

and the Chair, is responsible for

governance and compliance across

theGroup, and is a member of our

Executive Leadership Team.

The appointment and removal of

theCompany Secretary is a matter

fortheBoard.

A R

LANDSEC ANNUAL REPORT 2024GOVERNANCE

BOARD OF DIRECTORS

CONTINUED

CURRENT GENDER DIVERSITY

OFBOARD (ALL DIRECTORS)

CHART 19

Male

60%

Female

40%

CURRENT BOARD TENURE

(NON-EXECUTIVE DIRECTORS

INCLUDING CHAIR)

CHART 20

6 years

12%

3+ to

6 years

38%

0 to

3 years

50%

MARK ALLAN,

CHIEF EXECUTIVE, EXECUTIVE DIRECTOR

VANESSA SIMMS,

CHIEF FINANCIAL OFFICER, EXECUTIVE DIRECTOR

BOARD TENURE

Four years

ROLE

Responsible for the leadership of the Group,

development and implementation of strategy,

managing overall business performance and

leading the Executive Leadership Team.

SKILLS AND EXPERIENCE

Mark brings extensive knowledge and experience

of the property sector combined with strong

operational leadership and financial and strategic

management skills tothe Board. Prior to joining

Landsec, Mark was Chief Executive of St. Modwen

Properties PLC for three years. Prior to that he was

Chief Executive of The Unite Group plc from 2006

until 2016. He moved to Unite in 1999 from KPMG

and held a number of financial and commercial

roles in the business, including Chief Financial

Officer from 2003 to 2006. A qualified Chartered

Accountant, Mark is also a member of the Royal

Institution ofChartered Surveyors.

OTHER CURRENT APPOINTMENTS

Mark is President of the British Property

Federationand an Independent Trustee at

theUniversity of Bristol.

MANAGEMENT COMMITTEES

Chair of theGroup’s Executive Leadership Team.

Mark isinvited to attend the Audit, Remuneration

andNomination Committees at the invitation

ofthe Chairs.

BOARD TENURE

Three years

ROLE

Works closely with the Chief Executive in

developing and implementing vision and strategy.

Responsible for Group financial performance,

financial planning, management of risk and

assurance, group legal and group procurement.

SKILLS AND EXPERIENCE

Vanessa brings extensive experience to Landsec

from the property sector in the UK. She has over

25 years of experience in finance and extensive

knowledge of UK real estate holding a number of

senior positions at other UK property companies.

Vanessa has a valuable combination of expertise

and experience in leading and implementing

strategic change in businesses and substantial

experience in senior finance leadership roles in

alisted environment.

Prior to joining Landsec in June 2021, Vanessa was

CFO of Grainger plc, a role she held since February

2016, and immediately prior to joining Grainger

held a number of senior positions within The Unite

Group plc, including Deputy Chief Financial

Officer. Prior to that Vanessa was UK finance

director at SEGRO plc. Vanessa is a Chartered

Certified Accountant (FCCA) and hasan executive

MBA (EMBA) from Ashridge Business School.

OTHER CURRENT APPOINTMENTS

Vanessa has resigned from the Board of Drax

Group Plc (where she is Audit Chair and Non-

executive Director) effective 18 June 2024 and will

join the Board of Rotork plc as a Non-executive

Director on 21 June 2024.

MANAGEMENT COMMITTEES

A member of theGroup’s Executive Leadership

Team and chairs our Disclosure Committee.

Vanessa attends Audit Committee meetings

attheinvitation of the Committee Chair.

LANDSEC ANNUAL REPORT 2024 55GOVERNANCE

Our Executive Leadership Team is made

up of our Executive Directors and our

business unit and enabling function leaders

and is chaired by the Chief Executive.

EXECUTIVE LEADERSHIP TEAM

REMCO SIMON,

CHIEF STRATEGY & INVESTMENT OFFICER

MARCUS GEDDES,

MANAGING DIRECTOR, WORKPLACE

MARINA THOMAS, HEAD OF GOVERNANCE

AND COMPANY SECRETARY

NISHA MANAKTALA,

CHIEF DATA & TECHNOLOGY OFFICER

KATE SELLER, CHIEF PEOPLE OFFICER

BRUCE FINDLAY, MANAGING DIRECTOR, RETAIL

MIKE HOOD, CEO OF LANDSEC U+I

CHRIS HOGWOOD, MANAGING DIRECTOR,

CORPORATE AFFAIRS & SUSTAINABILITY

BIOGRAPHIES FOR THE

ELT CAN BE FOUND ON

OUR WEBSITE

LANDSEC ANNUAL REPORT 2024GOVERNANCE

GOVERNANCE REPORT

*We also operate a Disclosure Committee, chaired by the CFO, which oversees compliance with market abuse requirements and manages inside information.

BOARD OF DIRECTORS

Responsible for the

long-term success

oftheGroup

Provides leadership and

direction to the Group

onits culture, values

andethics

Sets strategy

andoversees

its implementation

Agrees risk appetite

andisresponsible

forriskoversight

Responsible for

corporategovernance

Responsible for the

overall financial

performance of

theGroup

Appointment of

Executive Directors

Approves property

and investment decisions

and other commitments

above£150m

CHIEF EXECUTIVE

Leads the Group

Articulates vision,

valuesandpurpose

Develops and

implementsstrategy

Responsible for

overallperformance

ofthebusiness

Manages the Executive

Leadership Team

AUDIT COMMITTEE

Responsible for oversight

of the Group’s financial

andnarrative

reportingprocesses

Responsible for the integrity

of financial statements

andinternalcontrol

Supports the Board

inriskidentification

andmanagement

Ensures transparency

and financial governance

REMUNERATION

COMMITTEE

Recommends to the Board

the Directors’

Remuneration Policy

Determines remuneration

packages of the Executive

Directors and the Executive

Leadership Team

Oversight of remuneration

practices for all employees

NOMINATION COMMITTEE

Reviews structure, size and

composition of the Board

and itsCommittees

Oversees succession planning

of Directors andthe

Executive Leadership Team

Leads Board

appointmentprocesses

Recommends appointments

to the Board

Board committees*

BUSINESS UNIT (WORKPLACE, RETAIL, LANDSEC U+I)

EXECUTIVE COMMITTEES

EXECUTIVE

LEADERSHIP TEAM

Management committees

Approve

property

investment

decisions

£10m to

£150m

Develop

and oversee

the delivery

of strategic

plans

Focus on

external

perspectives

and trends

Assess

and

manage

strategic

risks

Shadow

Boards were

introduced

in 2023

andare

described in

more detail

on page 57

WORKPLACE AND LIFESTYLE BOARDS

AND THEIR SHADOW BOARDS

Monitor

performanceand

organisational

health

Develop and oversee

the Group’s people

and culture strategy

Oversight of

sustainability and

datastrategies, risk

andcompliance

Develop

andexecute

business plans

Assess and

manage

operational risks

Deliver

financial

performance

Talent

development

OUR GOVERNANCE STRUCTURE

LANDSEC ANNUAL REPORT 2024 57GOVERNANCE

OUR GOVERNANCE STRUCTURE

The Board and Committees continue to

oversee governance and assurance. They are

supported by our Executive Leadership Team,

which is responsible for oversight of strategy,

organisational health and the Group’s people

agenda. Our governance model is centred

around our two different business areas:

(i)our Workplace Board and Executive

Committee cover our office activity; and (ii)

our Lifestyle Board together with the Retail

and LandsecU+I Executive Committees cover

the retail and mixed-use business areas.

Decisions that can only be made by the

Board, together with the terms of reference

for our Board Committees are on our

website. Our Delegation of Authorities

framework sets out levels of authority for

decision making throughout the business.

Decision-making on investments and

commercial agreements, including the

acquisition, disposal and development of

assets, is delegated according to financial

values. Our investment appraisal guidelines

include the principles in Section 172 of the

Companies Act requiring consideration of

allstakeholders.

ATTENDANCE

There were seven scheduled meetings this

year. All Board members attended those

meetings. The Chair held meetings with

theNon-executive Directors without the

Executive Directors present at the end of

every scheduled Board meeting.

BOARD ACTIVITIES

Our Board is responsible for the overall

leadership of the Group and throughout

theyear, Board activities and discussion

havecontinued to focus on the Company’s

strategic priorities. The Board oversees the

Company’s strategic direction and supports

the ELT with its delivery of the strategy

withina transparent governance framework.

Alongside the strategic priorities and business

financial and operational performance,

theBoard has considered topics including

executive succession, diversity and inclusion,

data and technology, compliance and

governance. Further detail on these topics

isset out on page 59.

KEY STAKEHOLDERS ARE CONSIDERED IN

DECISION MAKING IN ACCORDANCE WITH

SECTION 172 OF THE COMPANIES ACT 2006

(SEE PAGES 22-24)

STRATEGY DAY

The Board strategy day which took place

inJanuary 2024 was focused on mixed-use

developments and included a tour of the

successful Kings Cross mixed-use project,

presentations on mixed-use market themes

and dynamics and specific discussions on

Landsec’s mixed-use portfolio.

TRAINING AND DEVELOPMENT

Directors received regular market updates

intheir Board papers, facilitating greater

awareness and understanding of the

contextof the Group’s business and strategy.

The Board also received a detailed briefing

onthe Group’s new nature strategy which

was launched during the year. Details of all

ofthe activities undertaken by the Board are

in the table on page 59.

INDUCTION

Our induction plan is delivered on appointment

and aims to enable a new Director to assume

their responsibilities as quickly as possible and

feel able to contribute to business and strategy

discussions, with sufficient knowledge to

provide effective challenge.

OUR NEW SHADOWBOARDS

In 2023, we established two Shadow

Boards, which shadow our Workplace and

Lifestyle Boards. These Shadow Boards are

made up of employees who participate in

shadow board meetings and then formal

Workplace and Lifestyle Board meetings to

provide new perspectives and ideas and to

gain experience in board procedures and

board level decision-making. The Shadow

Boards do not have formal authority inside

the organisation.

We established our Shadow Boards to help

us make better decisions by broadening our

current community of decision-makers to

ensure wider diversity of thought, and to

create impactful career-development

opportunities to help our future industry

leaders realise their potential. This builds

new skill-sets for the members, and provides

a forum to challenge the status quo and

consider diverse perspectives. This will help

ensure the long-term quality and success of

our business, so we can continue to lead the

industry in making sure we best represent

the customers and places we serve.

Applications for the Shadow Board positions

were open to all Landsec colleagues, from

any business area or enabling function,

nomatter what stage of their career.

Nearly 80 Landsec colleagues applied for

these roles, using a written application

form. An interview with a selection panel

followed for those shortlisted. The panel

was formed of ELT, People team and

Affinity network members. The main

considerations for the selection panel were

to ensure candidates had a clear interest

in matters of strategic significance to

Landsec and the wider real estate industry,

as well as the desire to contribute to

decision-making at Board level and the

capacity to take on the role.

Of the applicants, we selected ten for their

attitude, skill-set, experience and potential

– five for the Lifestyle Board and five for

the Workplace Board. As a result the

Shadow Boards comprise colleagues

fromdiverse areas including operations,

communications, finance, development,

leasing, procurement and project

management. The members underwent

formal training involving mentoring,

meeting management, personal impact

and technical training on how to read and

understand financial information.

The process also revealed many candidates

who demonstrated potential, allowing us

to put some others forward for alternative

opportunities, or help guide and mentor

their career ambitions.

The Shadow Boards meet formally six

times a year, in advance of the respective

Lifestyle and Workplace Board meetings,

to review, discuss and agree papers and

recommendations. They receive the same

board papers as the Boards they shadow,

and are supported by the MDs of Landsec

U+I, Retail and Workplace. They discuss

matters amongst themselves before

appointing two representatives to attend

the Board meetings, in rotation, to

represent each Shadow Board’s collective

perspectives.

The Shadow Boards have also met

separately in early 2024 with two Non-

executive Directors to provide their

feedback on the Shadow Board experience

and gain insights from our Non-executives

on working at PLC Board level. At both

sessions feedback provided was

overwhelmingly positive.

LANDSEC ANNUAL REPORT 2024GOVERNANCE

GOVERNANCE REPORT

CONTINUED

An induction plan was put in place for Sir Ian

Cheshire upon joining as a Non-executive

Director in January 2023, and this continued

throughout 2023. James Bowling and Moni

Mannings are currently going through their

induction schedules.

Our induction programmes for Ian, James

and Moni were designed to:

•

support their understanding of Landsec’s

business and financial position, strategy,

culture, risks and opportunities

•

enable a good understanding of our Board

processes and dynamics

•

help them form relationships with the

Board, the ELT and other key individuals

atLandsec and key external advisers

•

help the Directors learn about our business

first hand, by site visits across our retail,

workplace and mixed-use portfolio. Ian,

Moni and James have all visited or are due

to visit our sites in Manchester, Bluewater,

Gunwharf Quays, Victoria, Southwark,

O2and Lewisham.

In our 2023/24 Board evaluation, our

Directors rated our in-depth induction

programme highly.

CONFLICTS OF INTEREST AND

EXTERNAL APPOINTMENTS

The Board has a policy to identify and

manage Directors’ conflicts or potential

conflicts of interest and will (i) approve any

such disclosed conflicts, and(ii) determine

any mitigating actions deemed appropriate

to ensure that all Boardmeetings and

decisions are conducted solely with a view

topromoting the success of Landsec.

Directors’ conflicts of interest are reviewed by

the Board annually, with new conflicts arising

between meetings dealt with by the Chair

and Company Secretary.

Details of Non-executive Directors’ other

appointments are included on pages 51-53.

Non-executive Directors’ letters of

appointment set out the time commitments

expected from them. Following consideration,

the Nomination Committee has concluded

that all the Non-executive Directors continue

to devote sufficient time to discharging their

duties to the required high standard.

We generally adhere to the Institutional

Shareholder Services (ISS) proxy voting

guidelines on overboarding and accordingly

deem all of our Non-executive Directors to

bewithin these guidelines.

Our policy is to allow Executive Directors

totake one non-executive directorship at

another FTSE company, subject to Board

approval. During the year, Vanessa Simms

disclosed that she had resigned from Drax

Group plc and would take on a non-executive

role at Rotork plc, with both changes being

effective from June 2024. The Board

considered this change and was satisfied

that Vanessa’s time commitment to her role

would not be impacted.

BOARD DIVERSITY

During the year the Board formally adopted

a Board Diversity Policy (available on our

website). This Policy sets out the specific

responsibilities of the Board in relation to

thediversity of its membership and its role

insetting a culture of inclusive leadership

from the top.

Our latest gender and ethnic diversity data

at Board level and below as required under

the Listing Rules is detailed below. Further

diversity data for the wider workforce is

onpages 26-27 and in our Sustainability

Performance and Data Report.

Landsec was pleased to be ranked 16th in

theFTSE Women Leaders Review published

in2024. The Board acknowledges the need

tomake more progress on ethnic diversity

below Board level and has set a target of

9%ethnic diversity in our senior leadership

population by 2027 as required under the

Parker Review. We have 2030 targets for

gender and ethnic diversity which are

available on our website. To ensure the

Groupis working towards these targets,

diversity and inclusion measures are being

included in our executive bonus and long-

term incentive plans for the first time this

year (see page 71).

BOARD AND EXECUTIVE LEADERSHIP DIVERSITY

TABLE 21

Number of

Board

members

Percentage

of the

Board

Number of

senior

positions on

the Board

(CEO, CFO, SID

and Chair)

Number in

Executive

Leadership

Team

Percentage

of Executive

Leadership

Team

Gender diversity

Men 6 60% 2 6 60%

Women 4 40% 2 4 40%

Not specified/prefer not to say – – – – –

Ethnic diversity

White British or other White (including minority-white groups) 8 80% 3 9 90%

Mixed/Multiple Ethnic Groups – – – – –

Asian/Asian British 2 20% 1 1 10%

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

Other ethnic group, including Arab – – – – –

Not specified/prefer not to say – – – – -

1. Data disclosed as at the date of this report. The data is collected from individuals when joining the Company. Individuals are asked to select from a series of options on both gender

and ethnic diversity. Gender and ethnicity data is shared with the Executive Leadership Team and the Board regularly.

LANDSEC ANNUAL REPORT 2024 59GOVERNANCE

STRATEGY

•

Retail, Workplace and LandsecU+I business reviews

•

Acquisitions and disposals

•

Defence overview, valuations and market reviews

•

Mixed-use strategy day held in Kings Cross

•

Optimum capital recycling and capital allocation

•

Review and approval of treasury strategies

•

Gunwharf Quays site visit and presentation on future plans

for the asset and across the wider retail portfolio

•

Tour of Myo New Street Square offices and review of wider

area plans

•

Approval of the Group strategic plan (five-year view)

withintegrated view of risk management

•

Approval of Group business plan for FY25

•

Capital Markets Day held at our London office

developments, Lucent at Piccadilly Circus and n2 in Victoria

•

Approval of the sale of the hotel portfolio

•

Disposals of other non-core assets

•

Discussed mixed-use development strategy and

priorityprojects

•

Discussion of Myo expansion plans and later purchase

ofRegents Quarter in Kings Cross for the Myo portfolio

FINANCIAL

•

Capital allocation

•

Macroeconomic environment consideration in higher

interest rate and development cost environment

•

Budgets

•

Key business targets

•

Dividends, results and reports

•

Going concern and viability statement

•

Portfolio valuation

•

Source of funding and gearing levels

•

Third Party Capital fund updates

•

Finance systems transformation

•

Preliminary results, Annual Report and half-year

resultsapproved

•

Dividends approved and paid

•

New bond issuance in March 2024

•

Annual Tax Strategy approved and published

•

Regular updates on financial systems

transformationproject

OPERATIONAL

•

Development pipeline and pre-let activity

•

Market and sector trends

•

Acquisitions and disposals

•

Sustainability progress updates and nature strategy

•

Corporate affairs updates

•

Health and safety including fire safety and RAAC,

physicalsecurity

•

Data and technology

•

Board’s continued focus on the use of data and technology

throughout the business to make informed decisions on

customer and market trends and to provide the best

service to customers

•

Update on net zero transition plan progress

•

Progress across the Build well, Live well, Act well strategy

and towards 2030 targets

•

Introduction of core nature requirements for new

developments and nature action plans for existing sites

•

Cyber security updates and presentation of new data and

technology strategy, including impacts of AI

PEOPLE AND

ORGANISATION

•

Succession planning

•

Talent management

•

Diversity and inclusion

•

Culture, talent and engagement

•

Employee engagement

•

Appointment of two additional Non-executive Directors

•

Refreshed approach to talent and succession planning,

focused on a high-performance culture journey and new

development programmes

•

Approval of Landsec Board Diversity Policy

•

Set up of Shadow Boards

•

Spotlight Awards to celebrate employee achievements

•

Embedding of diversity and inclusion strategy

•

Reverse mentoring commencement for ELT members

•

Gender and Ethnicity Pay Gap Reports

•

Office refreshed with more collaborative space

GOVERNANCE

•

Risk identification, management and internal control

•

Meeting reports from Chairs of Audit, Remuneration and

Nomination Committees

•

Modern slavery

•

Board and Committee effectiveness

•

Legal and litigation updates

•

Whistleblowing

•

Share register analysis

•

Board employee engagement plan

•

FTSE Women Leaders Review and Parker Review on Ethnic

Diversity

•

Corporate broker review

•

Risk appetite

•

Internal Board and Committee evaluation and actions

•

Annual General Meeting

•

Approval of Modern Slavery Statement

•

Remuneration Committee Chair meeting with

EmployeeForum on executive remuneration

•

Regular meetings between employees and

Non-executiveDirectors

•

Appointment of two new corporate brokers to join

theexisting broker

BOARD DISCUSSIONS DURING THE YEAR

TOPICS/ACTIVITIES OUTCOMES

LANDSEC ANNUAL REPORT 2024GOVERNANCE

INTRODUCTION FROM THE

CHAIROFTHENOMINATION COMMITTEE

COMMITTEE MEMBERS

Sir Ian Cheshire (Chair)

Edward Bonham Carter

James Bowling

(from11 December 2023)

Christophe Evain

Moni Mannings

(from11 December 2023)

HIGHLIGHTS

•

Appointment of new

Non-executive Directors

KEY RESPONSIBILITIES

•

Skills matrix and composition

ofthe Board and Committees

•

Succession planning

•

Board appointment processes

MEETINGS

•

Three scheduled meetings and

one unscheduled

•

All members of the Committee

attended all meetings during

their membership

DEAR SHAREHOLDER

I am pleased to present the

report from the Nomination

Committee for the year.

The Committee has continued to assess

thecomposition, succession plan and skills

ofthe Board and its Committees and

promote diversity.

BOARD AND COMMITTEE CHANGES

At the start of the financial year the role

ofChair transitioned from Cressida Hogg

tomyself (and this selection process

wasdescribed in the last Annual Report).

Thisyear, we announced the retirement

ofour Audit Committee Chair and Senior

Independent Director. As a result, the

Committee has run two selection processes

for new Non-executive Directors, which are

described further below.

BOARD EVOLUTION AND DIVERSITY

IN BOARD APPOINTMENTS

A balanced and diverse Board with a mix

ofskills, expertise, background, and tenure

iscritical to the success of the Company.

Thecomposition of the Board underpins

thequality of debate and challenge

duringdiscussions.

The process for Board appointments is led

bythe Nomination Committee which makes

recommendations to the Board for its

approval. It is the Nomination Committee’s

responsibility to keep Board composition

under review, including reviewing director

independence and tenure. During the year

the Committee continued to review the

composition and skills of the Board and

itsplan for Board succession.

The Nomination Committee works with

executive search consultants to ensure they

support our approach to diversity in providing

a diverse selection of candidates for Board

appointments and the selection can then

bebased upon merit and objective criteria.

The Board believes that diversity at Board

level sets the tone for diversity throughout

the business. We promote diversity in the

broadest sense, not just gender or ethnicity

but also experience, skills, professional

background and tenure. During the year,

aBoard Diversity Policy was approved and

this is available on our website.

The Nomination Committee monitors our

talent pipeline to ensure we have a diverse

pool of talent being developed at all levels of

the business. Maintaining a diverse workforce

is as important as diverse recruitment and

we continue to assess and promote this.

FURTHER INFORMATION ON DIVERSITY AT

LANDSEC CAN BE FOUND ON PAGES 26-27

INTERNAL BOARD EVALUATION

We follow the standard three-yearly cycle

forBoard evaluations. Our last externally

facilitated evaluation was in 2021/22 and the

next one will be 2024/25. The evaluations for

last year and the current year were therefore

undertaken internally, overseen by myself

and our Senior Independent Director, using

questionnaires and follow up discussion.

Theprocess went well and the outcomes

aredescribed in more detail in this report.

This Committee’s effectiveness was also

assessed as part of the internal review.

TheCommittee was satisfied with its own

effectiveness as a whole and was pleased

with the outcome of the Non-executive

succession processes.

The review identified that the skills matrix

should continue to be reviewed to ensure

wehave the right Board composition for the

needs of the Company and recent changes

to the Board.

SIR IAN CHESHIRE, CHAIR

LANDSEC ANNUAL REPORT 2024 61GOVERNANCE

REPORT OF THE

NOMINATIONCOMMITTEE

NON-EXECUTIVE DIRECTOR

CHANGES

During the year, Cressida Hogg retired on

16 May 2023 (and Sir Ian Cheshire became

Chair on the same date). Nicholas Cadbury

and Edward Bonham Carter announced

theirintention to retire on 31 December 2023

and at our AGM on 11 July 2024 respectively.

The Committee appointed an independent

search firm, the Lygon Group (‘Lygon’), to

recruit additional non-executive directors

with Audit Committee and Senior Independent

Director experience. Both processes were

runby Lygon, who have no other connection

to Landsec.

The first recruitment process involved a long

list and then short list of diverse candidates

being considered to replace our Audit

Committee Chair. As a result of this robust

selection process, James Bowling was

appointed on 7 September 2023. James, a

Chartered Accountant, was Chief Financial

Officer of Severn Trent Plc from 2015 until

recently retiring from this role. Prior to that,

James held senior financial roles at Shire plc.

James is a highly experienced FTSE Chief

Financial Officer who has successfully

transferred his skills across sectors and has

broad experience overseeing long-term

capital investment models. James succeeded

Nicholas as Audit Committee Chair on

18 September 2023 and joined the

Nomination Committee on 11 December 2023.

The second recruitment process which also

involved a long and short list of diverse

candidates was for a non-executive director

to replace our longstanding Senior

Independent Director, Edward Bonham

Carter. As a result of this selection process,

Moni Mannings OBE was appointed to the

Board on 11 December 2023, joining this

Committee and the Remuneration

Committee on the same day and becoming

Senior Independent Director on 1 April 2024.

Moni is currently an Independent Non-

executive Director of Hargreaves Lansdown

plc, Non-executive Director and Chair of the

Remuneration Committee of easyJet plc,

Non-executive Director and Senior

Independent Director of Co-operative Group

and a Member of the Takeover Panel. Moni

also founded EPOC, a not-for-profit network

that seeks to increase the number of people

of colour on boards and is a member of the

Parker Review Committee. From 2000 until

2016, Moni was a Partner and Head of the

International Banking and Finance Division

ofOlswang LLP, before which she held senior

positions in other leading law firms. Moni

haspreviously held a number of other

non-executive director roles and is a highly

experienced and respected City lawyer with

extensive property financing experience.

Shealso brings her experience of being a

Senior Independent Director and committee

chair from other non-executive roles.

INDEPENDENCE AND RE-ELECTION

TO THE BOARD

The independence, effectiveness, and

commitment of each of the Non-executive

Directors has been reviewed by the

Committee. The Committee is satisfied

withthe contributions and time commitment

of all the Non-executive Directors during

theyear.

The Committee will always discuss the

additional commitments of all directors

(including the Chair) before recommending

their approval to the Board. It also considers

potential conflict issues as part of that

assessment.

James Bowling and Moni Mannings are

standing for initial election by shareholders

at the AGM in July 2024, with all other

Directors standing for re-election with the

support of the Board, with the exception

ofEdward Bonham Carter who is stepping

down from the Board at that time.

BOARD EVALUATION

BOARD EVALUATION PROCESS 2023/24

Our Board evaluation provides the Board

andits Committees with an opportunity to

reflect on effectiveness and performance.

We carried out the review of the Board’s

effectiveness internally via questionnaire.

Thequestions focused on key themes and

topics which had arisen during the year and

areas of focus identified from the evaluation

last year.

OUTCOMES

Overall, the Board was satisfied with its

performance during the year. The following

areas were highlighted:

•

The Chair had undertaken an extensive

induction programme and had been well

supported by the Board in getting to know

the business during the year

•

There had been good non-executive hires

during the year and the induction

programmes for new non-executives were

highly rated

•

Executive succession planning and talent

management was considered to have

advanced significantly under the leadership

of the Chief People Officer

•

The employee engagement programme

fornon-executives was viewed positively

•

Board papers had improved

•

Support from the executive and Company

Secretary was valued

•

The Board felt it had performed well in the

areas of strategy and risk

•

Board culture and relationships between

executives and non-executives were

viewedpositively

Key areas of focus as a result of the

evaluation were as follows:

•

The Board had an excellent employee

engagement programme but would

benefit from spending additional time

withELT and senior leaders

•

Themes identified as a priority for the

coming year were: capital allocation

inahigher cost of capital environment,

strategy execution, unlocking further

growth opportunities and succession

planning, talent and diversity

The Board Committees also reviewed and

were satisfied with their own effectiveness.

The Audit and Remuneration Committee

Reports contain a summary of their

ownreviews.

LANDSEC ANNUAL REPORT 2024GOVERNANCE

INTRODUCTION FROM THE

CHAIROFTHE AUDIT COMMITTEE

COMMITTEE MEMBERS

James Bowling

(from 7 September 2023 and

Chair from 18 September 2023)

Nicholas Cadbury

(Chair until 18 September 2023

and member until 31 December

2023)

Madeleine Cosgrave

Miles Roberts

HIGHLIGHTS

•

Integrity of reporting process

•

Effectiveness of the risk

management and internal

controls process

•

Cyber and information security

•

Financial systems transformation

•

Accounting treatment of various

financial matters

•

Impact of the changes to the

governance regime

•

Financial impact of Health and

Safety matters

•

Climate related governance

KEY RESPONSIBILITIES

•

Reliability of the financial

statements and internal controls

•

Effective risk identification and

management

•

Overall transparency and

financial governance

NUMBER OF MEETINGS

ANDATTENDANCE

•

Four scheduled meetings

•

100% attendance from all

members during their

membership

DEAR SHAREHOLDER

Having succeeded Nicholas

Cadbury as the Chair of

theAudit Committee in

September 2023 I am pleased

to present my first report of

the Audit Committee.

During the financial year the Committee

hascontinued to play a key oversight role for

the Board on the reliability of the financial

statements, the integrity of the reporting

process and the Company’s system of

internal controls, risk identification and

management, audit and valuation processes,

effective compliance with laws, regulations

and ethical codes of practice, and overall

financial governance.

RISK FOCUS

As the Committee plays an important role

forthe Board in risk management and

identification, there has been focus on the

Group risk management framework to ensure

that this continues to be fit for purpose and

well embedded into day-to-day operations.

Whilst considering these improvements the

Committee has maintained its monitoring

ofrisks throughout the year.

The ten principal risks have been re-categorised

during the year into strategic and operational

risks and reflected in a risk waterfall.

Information security and cyber threat,

change projects failing to deliver and health

and safety are the most significant

operational risks. The Committee has had

regular oversight of the significant work

undertaken to mitigate these risks and

willcontinue to consider updates and

monitorprogress.

Although its risk score has decreased

duringthe year, the macroeconomic outlook

remains the most significant strategic risk.

The risk management strategy in place to

mitigate against this risk includes the regular

monitoring of key risk indicators, scenario-

based modelling of plausible economic

trajectories and extensive research and review

of sector and market risks. No emerging

riskshave been identified through the risk

management process.

CLIMATE RELATED GOVERNANCE

The Committee has continued to receive

updates from the sustainability team and

advisers on the requirements of the Task

Force on Climate-related Financial Disclosure

(TCFD) as well as the Task Force on Nature-

related Financial Disclosure (TNFD), the

evolving reporting landscape for climate

governance and our approach to climate

riskidentification, assessment and strategy.

Our disclosures remain consistent with

theTCFD recommendations. We are also

considering our readiness and response to

TNFD recommendations and will continue

tomonitor these. Our TCFD disclosures can

be found on pages 33-37.

HEALTH AND SAFETY

Health and safety is a key priority of the

Board and the Committee continues to

support the Board by reviewing the impacts

of health and safety measures including the

Building Safety Act 2022 and the presence

ofreinforced autoclaved aerated concrete

(RAAC). The Committee is regularly updated

on work to assess our liability for any

remediation works required and the wider

financial impact arising from such issues

andhow this is disclosed.

FINANCIAL STATEMENTS

The Group’s financial statements are of

critical importance to investors and wider

stakeholders and the Committee monitors

the integrity of the Group’s reporting process

and financial management. It scrutinises

thefull and half-yearly financial statements

before proposing them to the Board for

approval. The Committee reviews in detail

the work of the external auditor and

externalvaluers and any significant financial

judgements and estimates made by

management to ensure that it is satisfied

with the outcome.

LANDSEC ANNUAL REPORT 2024 63GOVERNANCE

ASSET VALUATION

The valuation of our assets is a significant

constituent of our financial results and

measurement of our performance. This is the

second year that we have used two valuers,

CBRE and JLL, to value the office and retail

portfolios respectively (with some small

exceptions). Both CBRE and JLL are industry-

leading agencies with extensive expertise

andappropriate knowledge who provide us

with an external valuation of our portfolio

twice a year, in accordance with the relevant

industry standards. The Committee will be

considering in the forthcoming year the Royal

Institute of Chartered Surveyors Red Book

UKSupplement which includes a mandatory

rotation policy for valuers.

The valuation process requires the valuers

toevaluate the likely future financial

performance of each individual asset and

apply recent and relevant transactional

evidence to determine an appropriate value

at the period end. The Committee analyses,

challenges and debates the valuations

prepared by the valuers who attend

Committee meetings for this purpose at the

half and full year-end. The external valuation

process and the values ascribed to specific

assets are also reviewed independently by

our auditor, EY, as part of its audit scope.

ACQUISITIONS, DISPOSALS

ANDDEVELOPMENT

Landsec remains on track with its strategy

toaccelerate growth through recycling

capital into higher return opportunities,

eventhough the investment market activity

has remained subdued throughout the year.

Anumber of non-core assets have been

sold,and Regents Quarter at Kings Cross

was acquired. The Committee considered

theaccounting treatment and disclosures

ofthese transactions and concluded that

they were appropriate.

PROVISIONS FOR BAD DEBT

The Committee has continued to closely

monitor the cash collections of rents across

the whole portfolio together with required

provisions. The rent collection statistics are

strong at pre-Covid levels. The bad debt

provisions have decreased from last year.

INTERNAL AUDIT

KPMG have completed their first full year

asinternal auditor and have successfully

completed audits on IT Applications,

RetailCentre Management, Workforce

Planning, The Forge Handover, ESG,

Treasuryand Cash Management along with

monitoring that teams have closed out audit

actions from previous reports. This is in line

with their Internal Audit Plan for 2022-2024.

The Audit Committee has agreed KPMG’s

proposed Internal Audit Plan for the year

ended 31 March 2025 which will include

amongst others, internal audits for Data

Privacy, Business Continuity Planning and

Mayfield Development.

FAIR, BALANCED AND

UNDERSTANDABLE

The Committee considered the Company’s

2024 Annual Report in the round and

concluded and recommended to the Board

that, taken as a whole, the 2024 Annual

Report is fair, balanced and understandable.

GOING CONCERN AND

VIABILITYSTATEMENT

The Committee considers the appropriateness

of adopting the going concern assumption

inpreparing the financial statements and

thegoing concern statement is set out on

pages 46 and 47, along with the viability

statement and the rationale behind the

chosen five-year time horizon.

CORPORATE GOVERNANCE

CODEAND GUIDANCE

The Committee considered its compliance

with the 2018 UK Corporate Governance

Code (the ‘Code’) and the FRC Guidance on

Audit Committees and continues to believe

that we have addressed both the spirit and

the requirements of each. In addition, the

Committee continues to regularly monitor

the changes to the new corporate

governance regime, and despite the delays

to the introduction of the new regime, is well

advanced in preparing for its implementation,

including financial and IT controls reviews

and an assurance mapping exercise.

COMMITTEE CHANGES

ANDEFFECTIVENESS

The internal Board evaluation undertaken

during the year indicated that the Committee

continues to operate effectively. Iwould like

to take the opportunity to continue to

improve the high standards of the Committee

set by Nicholas Cadbury during his time as

Audit Chair. Myself and the Committee

would like to thank Nicholas for his

commitment, valued perspective and

leadership of the Committee.

I would also like to say thank you for the

warm welcome and support from the other

members of the Audit Committee,

management and the key advisers EY, KPMG,

CBRE and JLL during my first six months as

amember and Chair of the Committee.

JAMES BOWLING, CHAIR

LANDSEC ANNUAL REPORT 2024GOVERNANCE

REPORT OF THE AUDIT COMMITTEE

STRUCTURE AND OPERATIONS

The Audit Committee’s structure and

operations are governed by terms of

reference, which are reviewed annually and

approved by the Board. These were last

approved in March 2023 and will be reviewed

again when the changes to the corporate

governance regime are closer to

implementation later in the year.

THE TERMS OF REFERENCE ARE AVAILABLE

ONOUR WEBSITE: LANDSEC.COM/

ABOUTCORPORATE-GOVERNANCE/

BOARD-COMMITTEES

The table on the left sets out Committee

members as well as those who regularly

attend Audit Committee meetings. Their

attendance at the meetings ensures that

effective communication between all

relevant parties is maintained regularly

andthat the Committee is fully supported

byrelevant experts.

The Committee members are all

independent non-executive directors and

collectively have a broad range of financial,

commercial and property sector expertise

that enables them to provide oversight of

both financial and risk matters, and to advise

the Board accordingly. The Board determined

that both Nicholas Cadbury and James

Bowling, during their times as Chair of the

Committee, have recent and relevant

financial experience for the purposes of

satisfying the Code. Details of the experience

of all members of the Committee can be

found on pages 52 and 53.

The Audit Committee continued to focus this

year on the framework and monitoring of

riskassessment and management, internal

controls and financial reporting processes,

together with additional focus on cyber

security and financial systems.

AUDIT COMMITTEE MEETINGS

ATTENDEES AT

MEETINGS TO

SUPPORT THE

COMMITTEE

•

Chair of the Board

•

Chief Executive

•

Chief Financial

Officer

•

Head of

Governance and

Company

Secretary

•

Deputy Company

Secretary

•

Head of Risk and

Controls

•

Members of the

senior finance

team

•

Representatives of

the EY external

audit team

•

Representatives of

the KPMG internal

audit team

PROPERTY

VALUATION

PRESENTATIONS

•

All Directors are

invited to attend

meetings when

CBREand JLL

property valuation

presentations

aremade

COMMITTEE

PRIVATESESSIONS

•

CBRE valuation

team

•

JLL valuation team

•

EY external

auditteam

•

KPMG internal

auditteam

LANDSEC ANNUAL REPORT 2024 65GOVERNANCE

The Committee works to a structured

programme of activities and meetings

tocoincide with key events around our

financial calendar and, on behalf of the

Board, provides oversight of the Group’s

riskmanagement process. Following each

meeting, the Committee Chair reports

onthe main discussion points and findings

tothe Board.

RISK MANAGEMENT

The Board is accountable and has overall

responsibility for overseeing risk and

ensuringthat a robust risk management

andinternal control system is in place and

operating effectively.

An overview of Landsec’s risk management

framework and governance, risk appetite,

identification of risks, management and

assurance of risks, as well as the principal

risks and uncertainties are included on

pages 38-45. The risk management

framework is operated on a Group-wide

basisand includes:

•

the Board’s overall responsibility for a

robust risk management and internal

control system

•

the Committee’s review of the

effectiveness of that system

•

the Executive Leadership Team’s day-to-

day monitoring and management of the

Group-wide principal risks

•

embedding of the management of risks

throughout the Group via the Workplace

and Lifestyle Boards and Executive

Committees, and risk owners and

champions.

A risk waterfall uses indicators to highlight

whether each risk is within our appetite. This

allows the Committee to consider whether

principal risks are changing and whether the

risk appetite remains appropriate.

Primary responsibility for the operation

oftheCompany’s internal control and risk

management systems, which extend to

include financial, operational and compliance

controls and accord with the FRC’s 2014

‘Guidance on Risk Management, Internal

Control and Related Financial and Business

Reporting’, has been delegated to

management and risk and control owners.

They are responsible for the management

oftheir respective risks and the associated

control mechanisms.

These risk management and internal control

systems have been designed to ensure

thatappropriate strategies are in place to

identify, evaluate and manage, rather than

eliminate risk.

RISK ASSURANCE AND

INTERNALCONTROL

As part of the Three Lines of Defence Risk

Model (as outlined on pages 39-40), the

Committeemonitors the results of the

keycontrols process, evaluates the control

environment and considers the adequacy

ofassurance activity. The risk model also

includes independent assurance over key

controls and processes to management

andthe Committee via internal audits.

Internal audits are carried out by KPMG in

accordance with an agreed annual assurance

plan and reviewed by the Committee

throughout the year.

KPMG have provided assurance to the

Committee on key controls and programme

assurance and identified improvements in

key financial processes.

The key elements of the Group’s risk

management and internal control systems

are as follows:

•

an embedded decentralised risk

management framework supported

byRiskChampions

•

a Head of Risk & Controls to manage

therisk framework and to provide

supporton risk and controls matters

throughout Landsec

•

an established organisational structure

with clear lines of responsibility, approval

levels and delegated authorities

•

a disciplined internal governance structure

which facilitates regular performance

review and decision making

•

a comprehensive strategic and business

planning review

•

a robust budgeting, forecasting and

financial reporting process

•

various policies, procedures and guidelines

underpinning the development, asset

management and financing operations

ofthe business

•

a compliance certification process

conducted in relation to the half-yearly

andfull-year results, and business

activitiesgenerally

•

a quarterly key controls self-certification

bymanagement

•

a focused post-acquisition review and

integration programme to ensure the

Group’s governance, procedures, standards

and control environment are implemented

effectively and on time

•

a financial and property information

management system

•

a whistleblowing process that enables

concerns to be reported confidentially

andon an anonymous basis and for

thoseconcerns to be investigated.

Additionally, the Committee discusses on

aregular basis:

•

the Group’s significant and emerging

risks,and how exposures and appetite

havechanged during the period, and

reviews theprincipal risks for external

reporting purposes

•

the effectiveness of internal processes

atmitigating those risks

•

internal audit reports, summary reports

offindings and recommendations from

completion of the internal audit plan

•

progress against completion of agreed

actions from the internal audit reports.

The Committee was satisfied that the

system of risk management and internal

controls has been effective throughout

theyear.

EXTERNAL AUDITOR

EY is Landsec’s external auditor and is

engaged to conduct a statutory audit

andexpress an opinion on the Company’s

and the Group’s financial statements.

Acompetitive tender was last carried out

in2022 (as EY were approaching being in

office for ten years having performed their

first audit for Landsec for the year end

31 March 2014). Shareholders confirmed

theappointment of EY at our 2023 Annual

General Meeting following this competitive

tender process.

LANDSEC ANNUAL REPORT 2024GOVERNANCE

REPORT OF THE AUDIT COMMITTEE

CONTINUED

Its audit scope includes a review of the

property valuation process and methodology

using its own chartered surveyors (more

details below), to the extent necessary to

express an audit opinion.

When carrying out its statutory audit work,

EY also has access to a broader range of

employees and different parts of the

business. If it picks up any information as

part of this process, it would report to the

Audit Committee anything that it believes

the Committee should know in order to fulfil

its duties and responsibilities. As audit

partner, Julie Carlyle is authorised to contact

the Committee Chair directly at any time

toraise any matter of concern.

In addition to considering the effectiveness

ofthe Committee, the internal Board

evaluation also considered the effectiveness

of the external audit with the results and

recommendations reported to the

Committee. This is supported by regular

meetings between EY and the CFO and

senior finance team members which have

driven continuous improvements to the

external audit process.

AUDIT PLAN

EY presented its proposed audit plan as

reviewed by senior management to the

Committee for discussion. The audit scope

and approach was appropriate with

consideration as to the Group’s structure

andstrategy.

The Committee is keen to ensure that its

auditor feels able to challenge management,

to provide observations or recommendations

to management and the Audit Committee.

These matters may be financial or non-

financial and may be based on fact or

opinion (including any concern over culture

or behaviour).

EY attends each Committee meeting,

supported by other meetings held during the

year with the Committee or the Committee

Chair without management being present.

EY can raise any matter of concern to the

Committee Chair at any time without going

through management. These regular

discussions were useful to the Committee

but no matters of concern emerged.

INDEPENDENCE AND OBJECTIVITY

The Committee is responsible for monitoring

and reviewing the objectivity and

independence of the external auditor.

Inundertaking its annual assessment,

theCommittee took into account the

UKEthical Independence Standards.

The Committee reviewed:

•

the confirmation from EY that it maintains

appropriate internal safeguards in line

withapplicable professional standards,

together with an explanation of the due

diligence process followed to provide such

aconfirmation

•

the mitigation actions taken in seeking

tosafeguard EY’s independent status,

including the operation of policies designed

to regulate the amount of non-audit

services provided by EY and the

employment of former EY employees

•

the tenure of the audit engagement

partner (not being greater than five years);

Julie Carlyle was appointed as EY audit

partner to the Group in July 2022

•

the internal performance and effectiveness

review of EY referred to above.

No Committee member has any connection

with the current auditor.

Taking the above review into account, the

Committee concluded that EY remained

objective and independent in its role as

external auditor.

EY will be appointed for the 31 March 2025

financial year at this year’s Annual General

Meeting, subject to shareholder approval.

The Company has complied with the

Statutory Audit Services Order 2014 for

theyear under review.

AUDIT FEE

The audit fees payable to EY for 2023/24

(including the audit of the statutory

accounts and the Group’s joint ventures)

are£2.6m (2022/23: £1.8m). This fee includes

£0.5m of fees paid which relate to the audit

for the years ended 31 March 2022 and

31 March 2023.

NON-AUDIT SERVICES

To help safeguard EY’s objectivity and

independence, we operate a non-audit

services policy that sets out the

circumstances and financial limits within

which EY may be permitted to provide

certain non-audit services.

AUDIT VS. NON-AUDIT FEES 2023/24

(INCLUDING THE AUDIT OF THE GROUP’S JOINT VENTURES

13.8% non-audit fees as a ratio to Group audit fee (excluding the audit of the Group’s joint ventures).

CHART 22

Non-audit

13.3%

Audit

86.7%

LANDSEC ANNUAL REPORT 2024 67GOVERNANCE

The Committee monitors compliance with

the policy, including the prior approvals

required for non-audit services, and approval

levels are as follows:

TABLE 23

Per

assignment

(£)

Aggregate

during the year

(£)

Chief

Financial

Officer

0–25,000 <100,000

Audit

Committee

Chair

25,000–

100,000

100,000–

900,000*

Committee >100,000 >900,000*

*50% of the prior year audit fee.

All approvals are noted at the Audit

Committee meetings.

EY was engaged during the year to provide

non-audit services to the Group relating

tothe Company’s half-yearly review, the

assurance statement on sustainability

reporting review, non-statutory audit of

theSecurity Group, work in relation to

theupdate of the bond programme

documentation and reporting on the Green

bond. The Committee decided that it would

be in the interest of the Company to use

EYfor these services, recognising that the

use ofaudit firms for non-audit work should

generally be kept to a minimum and the

services were not considered to impact EY’s

independence and objectivity. Total fees for

non-audit services amounted to £419,500.

Details of the fees charged by EY during

theyear can be found in note 8 to the

financial statements.

No non-audit fees were approved or paid

ona contingent basis.

EXTERNAL VALUATIONS AND

VALUERS

The valuation of the Group’s property

portfolio, including properties held within

thedevelopment programme and in joint

arrangements, is undertaken by external

valuers. The Group provides input, such as

source data, and support to the valuation

process. CBRE has been the Company’s

principal valuer since 2015 and Jones Lang

LaSalle Limited (JLL) was appointed in 2022

as joint valuer to undertake the valuation

ofa large part of the retail and mixed-use

urban portfolio whilst CBRE value the office

portfolio and some of the retail portfolio.

The valuation helps to determine a significant

part of the Group’s total property return and

net asset value, which have consequential

implications for the Group’s reported

performance and the level of variable

remuneration received by senior management

through bonus and long-term incentive

schemes. Accordingly, the scrutiny of each

valuation and the valuer’s objectivity and

effectiveness represent an important part

ofthe Committee’s work.

Valuations for the half-year results and

full-year results were presented to the

Committee by CBRE and JLL. These were

reviewed and challenged by the Committee,

with reference to each valuer’s approach,

methodology, valuation basis and underlying

property and market assumptions. Other

Non-executive Directors attended the full

and half-year presentations. The Committee

Chair and other members of the Committee

also had separate meetings with the

valuers’as part of this process to provide

anopportunity to test and challenge the

valuation outcomes and the principles and

evidence used in the determination.

Additionally, CBRE and JLL met with EY

andexchanged information independently

ofmanagement as part of EY’s review of

thevaluations. EY has experienced chartered

surveyors on its team who consider the

valuer’s qualifications and assess and

challenge the valuation approach,

assumptions and judgements made by

them. Their audit procedures are targeted

ataddressing the risks in respect of the

valuations and the potential for any undue

management influence in arriving at them.

This year 37 properties (77% of the portfolio)

were identified for substantive review by its

valuation experts primarily on the basis of

their value, type, risk profile, commitments

toESG and location. The Committee

reviewed the auditor’s findings.

An internal evaluation of the valuers’

performance and effectiveness was

conducted as part of the Committee’s

internal valuation with the results

andrecommendations reported to

theCommittee.

The Committee was updated on the Royal

Institute of Chartered Surveyors Red Book

UKSupplement which implements a

mandatory rotation policy for valuers and

willconsider a proposal to comply with this

inthe coming months.

The Committee has considered the

independence of CBRE and JLL. Both valuers

have appropriate systems in place to check

for conflicts of interest and must seek

approval for non-valuation activities. Their

valuation departments operate separately

from other advisory activity, and their

valuation remuneration is not linked to other

non-valuation work that they undertake.

A fixed-fee arrangement (subject to

adjustment for acquisitions and disposals)

isin place with the valuers for the valuation

of the Group’s properties and, given the

importance of their work, we have disclosed

the fees paid to them in note 9 to the

financial statements. These fees reflect the

valuers’ work on the year-end and half-yearly

valuations as well as other work on agency

services including investment activity. The

total valuation fees paid by the Company

toCBRE and JLL during the year represented

less than 5% of their total fee income from

all clients for the year.

SIGNIFICANT FINANCIAL MATTERS

The Committee reviewed two significant

financial matters in connection with the

financial statements, namely the valuation

of the Group’s property portfolio and

revenuerecognition.

FURTHER DETAILS ARE SET OUT IN THE TABLE

ON PAGE 69

These items were considered to be

significant, taking into account the level

ofmateriality and the degree of judgement

exercised by management and, in respect

ofthe valuation, the external valuers.

LANDSEC ANNUAL REPORT 2024GOVERNANCE

REPORT OF THE AUDIT COMMITTEE

CONTINUED

In addition, the Committee considered,

andmade onward recommendations to the

Board, as appropriate, in respect of other key

matters including acquisitions and disposals,

impairment of trade receivables (including

lease incentive balances and loans to joint

ventures), provisions, development contracts,

pensions, maintenance of the Group’s REIT

status, financial systems transformation

(including controls, processes and system

upgrades and improvements), going concern,

provisions for health & safety remediation,

contingent liabilities, accounting for non-

current assets held for sale and other specific

areas of individual property and audit focus.

The Committee was satisfied that all issues

had been fully and adequately addressed

and that the judgements made were

reasonable and appropriate and had been

reviewed and debated with the external

auditor who concurred with the approach

taken by management.

NON-FINANCIAL MATTERS

The Committee understands the level of

reliance that is placed by shareholders on

thestatutory audit and the report of the

external auditor.

We report on alternative performance

measures on page 173. The Committee

debated and discussed these measures

andagreed that they were appropriate

forthe business.

FAIR, BALANCED AND

UNDERSTANDABLE

The Committee applied the same due

diligence approach adopted in previous years

in order to assess whether the Annual Report

is fair, balanced and understandable, one of

the key Code requirements. The Committee

received assurance from the verification

process carried out on the content of the

Annual Report to ensure consistent reporting

and the existence of appropriate links

between key messages and relevant sections

of the Annual Report.

Taking the above into account, together with

the views expressed by EY, the Committee

recommended, and in turn the Board

confirmed, that the 2024 Annual Report,

taken as a whole, is fair, balanced and

understandable and provides the necessary

information for shareholders to assess the

Company’s position, performance, business

model and strategy.

WHISTLEBLOWING POLICY

The Audit Committee provides a regular

whistleblowing update to the Board, which

has overall responsibility for whistleblowing.

The Audit Committee reviews the Group’s

Speak Up policy which allows employees

andthird parties to report concerns about

suspected impropriety or wrongdoing

(whether financial or otherwise) on a

confidential basis, and anonymously if

preferred. This includes an independent

third-party reporting facility comprising a

telephone hotline and an alternative online

process. Any matters reported are initially

investigated by the Head of Governance

andCompany Secretary and reported to

theAudit Committee Chair and Manjiry

Tamhane, the Non-executive Director who

became responsible for whistleblowing

during the year and escalated to the

Committee and Board, as appropriate.

During the year two whistleblowing incidents

were reported. Both matters were investigated

and no concerns or action were required

following conclusion of the investigation.

Thematter which was reported close to

thelast year-end was fully investigated and

resulted in some positive recommendations

on cyber security and websites which have

now been implemented.

We monitor whistleblowing awareness and

remind employees that a dedicated hotline

exists should they ever need to ‘blow the

whistle’. The arrangements also form part

ofthe induction programme for new

employees. Details of the whistleblowing

hotline are included in our Supply Chain

Commitment, Sustainable Development

Toolkit, procurement tender documentation,

onourwebsite, and at our assets and

development sites.

LANDSEC ANNUAL REPORT 2024 69GOVERNANCE

SIGNIFICANT FINANCIAL MATTERS

SIGNIFICANT FINANCIAL MATTERS – WHAT IS THE RISK? HOW THE COMMITTEE ADDRESSED THE MATTERS

Valuation of the Group’s property portfolio

(including investment properties, investment

properties held in joint ventures)

The valuation of the Group’s property portfolio is a

majordeterminant of the Group’s performance and

drives an element of the variable remuneration for

seniormanagement. Although the portfolio valuation is

conducted by an external valuer, valuation estimates are

inherently subjective and require significant judgements

to be made by management and valuers.

Significant assumptions and judgements made by the

valuer in determining valuations may include the

appropriate yield (based on recent market evidence),

changes to market rents (ERVs), what will occur at the

end of each lease, the level of non-recoverable costs and

alternative uses. Development valuations also include

assumptions around costs to complete the development,

the level of letting at completion, incentives, lease terms

and the length of time the space remains void.

The Audit Committee adopts a formal approach by which the

valuation process, methodology, assumptions and outcomes are

reviewed and robustly challenged. This includes separate review and

scrutiny by management, the Committee Chair and the Committee

itself. The Group uses CBRE and JLL, both leading firms in the UK

property market, as its principal valuers. It also involves EY as the

external auditor which is assisted by its own specialist team of

chartered surveyors who are familiar with the valuation approach

andthe UK property market.

EY met with the valuers separately from management and has noted,

as part of their procedures, no undue influence being exerted by

management in relation to the valuers arriving at their valuations.

CBRE and JLL submit their valuation reports to the Committee as part

of the half-yearly and full-year results process. Both valuers were asked

to attend and present their reports to the Board and to highlight any

significant judgements made or disagreements which existed between

them and management. There were no disagreements identified and

the valuations were accepted for reporting purposes.

Based on the degree of oversight and challenge applied to the

valuation process, the Committee concluded that the valuations had

each been conducted appropriately, objectively and in accordance with

the valuer’s professional standards.

Revenue recognition (including the timing of revenue

recognition and the treatment of lease incentives)

Certain transactions require management to make

judgements asto whether and to what extent they

should be recognised as revenue in the year. Market

expectations and EPRA earnings targets may place

pressure on management to distort revenue recognition.

This may result in overstatement or deferral of revenues

to assist in meeting current or future targets or

expectations, including through incorrect treatment

oflease incentives.

The Committee and EY considered the main areas of judgement

exercised by management in accounting for matters related to revenue

recognition, including timing and treatment of rents, incentives,

surrender premiums and other property-related revenue.

In its assessment, the Committee considered all relevant facts,

challenged the recoverability of occupier incentives, the options that

management had in terms of accounting treatment and the

appropriateness of the judgements made by management. These

matters had themselves been the subject of prior discussion between

EY and management.

The Committee, having considered the views of EY, concurred with the

judgements made by management and was satisfied that the revenue

reported for the year had been appropriately recognised.

The above description of the significant financial matters should be read in conjunction with the Independent Auditor’s Report on pages 96-104

and the significant accounting policies disclosed in the notes to the financial statements.

LANDSEC ANNUAL REPORT 2024GOVERNANCE

DEAR SHAREHOLDER

I am pleased to present,

on behalf of the Board,

the Directors’ Remuneration

Report for the year ended

31 March 2024.

This report is split into three sections being:

(i) this Annual Statement; (ii) the Annual

Report on Remuneration; and (iii) our

Directors’ Remuneration Policy for which

shareholder support will be sought at the

2024 AGM.

ACTIVITIES DURING THE YEAR

During the course of 2023/24, the

Committeewas engaged in a number

ofkeymatters including:

•

reviewing the Directors’ Remuneration

Policy and undertaking an extensive

shareholder consultation exercise

•

reviewing salaries for Executive Directors

and the Executive Leadership Team and

taking intoaccount salary rises across the

widerworkforce

•

setting, reviewing and finalising targets

and outcomes of bonus plans and long-

term incentives and reviewing variable

payarrangements below Executive

Director level

•

consideration of the cascade of incentive

schemes across senior management levels

and agreeing award levels for bonus plans

and long-term incentives

•

monitoring compliance with shareholding

requirements applicable to directors

•

monitoring market developments and

shareholder sentiment on remuneration

•

oversight of gender and ethnicity pay

gapreporting

•

oversight of share plans activity including

SAYE awards, the launch of the new Share

Incentive Plan for Landsec employees

(including Executive Directors and

Executive Leadership Team) and the

proposed new Land Securities Omnibus

Share Plan

DIRECTORS’ REMUNERATION POLICY

We have continued to operate under the

Remuneration Policy approved by shareholders

at our 2021 AGM. As the Committee considers

that the existing approach to Directors’

remuneration remains appropriate for

Landsec, only one minor change is proposed

to the Policy in respect of Non-executive

Directors at the 2024 AGM. However, a

number of changes to the implementation

ofthe Policy for the Executive Directors have

been implemented, to ensure remuneration

remains closely aligned to Landsec’s strategy

and reflects shareholder feedback received

since the current Policy was approved at

the2021 AGM and these are explained on

pages 78-79. We consulted with our top 15

shareholders and leading proxy advisers

between November 2023 and January 2024

and the conclusions of the Policy review are

included in this report. Overall, shareholders

were supportive of our proposals.

PERFORMANCE FOR THE 2023/24

FINANCIAL YEAR

Overall, our results which are reported

inmore detail in this Annual Report,

demonstrate Landsec’s continued

operational strength as values for the best

assets begin to stabilise. For the full year,

EPRA earnings remained stable at £371m

with like-for-like earnings growth offsetting

the impact of material disposals in the prior

year, and TRE improved to (4.0%) (2022/23:

(8.3%)) with the outlook for return on equity

turning more positive. Balance sheet

strength has been preserved at 7.4x net

debt/EBITDA and, pro-forma for disposals

post year-end, a 32.3% Group LTV.

These results are considered by the Committee

to be reflected in the variable pay awarded to

the Executive Directors described below.

ANNUAL BONUS

Annual bonus for 2023/24 was awarded at

47% of the maximum for the Chief Executive

(CEO) and 49% of the maximum for the

Chief Financial Officer (CFO).

This equates to around 70% of salary for

theCEO and around 73% of salary for the

CFO. As set out in detail in the Annual

Reporton Remuneration, both of the EPRA

earnings targets were between target and

maximum, TRE was below threshold and

good progress was made against the ESG

and personal targets.

DIRECTORS’ REMUNERATION REPORT –

CHAIRMAN’S ANNUAL STATEMENT

COMMITTEE MEMBERS

Christophe Evain

(CommitteeChair)

Edward Bonham Carter

Moni Mannings (from

11 December 2023)

Manjiry Tamhane

Sir Ian Cheshire

KEY RESPONSIBILITIES

•

Reviewing the link between

rewardand the Group’s purpose

and strategy

•

Oversight of the Directors’

Remuneration Policy and reward

matters across the Group

•

Maintaining a strong connection

between returns to shareholders

and reward for executives

MEETINGS AND ADVISERS

•

Four scheduled and one

unscheduled meetings with full

attendance from members

atallmeetings

•

Meetings are normally also

attended by the Chief Executive,

Chief People Officer and Group

Reward Manager

•

FIT Remuneration Consultants

LLP provide advice to the

Committee

LANDSEC ANNUAL REPORT 2024 71GOVERNANCE

EMPLOYEE VOICE

In March 2024, I took the opportunity to

meetwith members of our Employee Forum

(representing the wider Landsec workforce).

This is an important activity and I was pleased

to answer a number of questions posed by

theforum on remuneration quantum and

structure (including the new Directors’

Remuneration Policy) for the Executive

Directors, the scope of the Committee and

the benchmarks it uses, ESG in bonus and

LTIPplans, TRE and retention and succession.

COMMITTEE EFFECTIVENESS

At the end of the year as part of the Board

evaluation process which was run internally

using questionnaires, the Committee

reviewed its effectiveness. The outcomes

were positive, and there was good feedback

on the Policy review process. The Committee

also reviewed its adviser, FIT, and confirmed

itcontinued to be satisfied with its

performance.

CONCLUSION

I am grateful for the engagement and

support provided by our shareholders and

welcome your feedback.

Unless otherwise stated in this report,

narrative and tables are unaudited.

CHRISTOPHE EVAIN,

CHAIR, REMUNERATION COMMITTEE

operate as follows: (a) relative TSR targets

measured against our FTSE 350 sector peers

(weighting unchanged at 40%); (b) TRE

(percentage change in EPRA Net Tangible

Assets per share plus dividends) (weighting

decreased slightly from 40% to 35%); (c) ESG

measures at 25% including carbon reduction

targets (15%) and newly introduced diversity

and inclusion targets (10%). The rationale for

these changes is explained on page 79).

Any awards which vest will be subject to

atwo-year post-vesting holding period.

REMUNERATION ADVICE

The Committee received advice on

remuneration and ancillary share plan

matters from FIT. FIT is a member of the

Remuneration Consultants Group and is

asignatory to its Code of Conduct, which

requires their advice to be impartial. The

Committee is satisfied that their advice

isindependent and objective. Aside from

some support on senior leader remuneration

matters, FIT has no other connection with

theGroup. For the financial year under

review, FIT received fees of £126,028 for

advisory services to the Committee

(2022/23:£75,676).

LAND SECURITIES OMNIBUS

SHAREPLAN

The Company’s existing Long Term Incentive

Plan 2015 is due to expire next year, when it

comes to the end of its ten-year life. As a

result shareholders will be asked to approve

areplacement arrangement, the Land

Securities Group Omnibus Share Plan 2024,

at the 2024 AGM. A summary of the terms

ofthe Omnibus Plan is set out in the Notice

of the 2024 AGM, which can be found on

ourwebsite: landsec.com/agm.

REMUNERATION ACROSS

THECOMPANY

The Committee oversees all remuneration

policies and practices across the organisation,

and is regularly briefed by theChief People

Officer. TheCommittee takes account of

theinterests of all internal and external

stakeholders when making any decisions

onremuneration matters. During the

yearended 31 March 2024, we continued

togrant LTIP awards to our senior leaders

below the Executive Leadership Team,

moreclosely aligning those who execute our

strategy on a daily basis with the interests

ofour shareholders.

LONG-TERM INCENTIVE PLAN

Vesting of the 2021 LTIP in 2024 is based

onperformance against relative TSR versus

the FTSE 350 Real Estate Sector, TRE and

performance against environmental targets.

On the basis of performance over the three

years to 31 March 2024, these awards will

vestat 60%.

DISCRETION

No discretion was exercised in theyear

ended31 March 2024 in respect of the

Executive Directors.

EXECUTIVE REMUNERATION 2024/25

1. BASE SALARY

From 1 June 2024, Executive Director salaries

will increase by 3%. Pay rises across the wider

workforce will generally be in the range of

3.25% and 3.75%.

2. PENSION AND BENEFITS

Executive Director pension contributions will

continue to be aligned to the wider workforce

at 10.5% of salary. No changes will be made

to benefit provision.

3. ANNUAL BONUS

For the year ending 31 March 2025,

ExecutiveDirectors will continue to be

eligible for an annual bonus of up to 150%

ofsalary. Alongside our Policy consultation

we discussed changes to the measures

andweightings in our annual bonus with

shareholders and the feedback was generally

positive. On this basis our 2024/25 bonus

scheme is amended as follows (a) the

weighting on financial performance

(previously 60% of potential) has been

increased to 70% of bonus potential; (b) the

70% has been split equally between EPRA

earnings and like-for-like Net Rental Income

Growth (which replaces TRE); (c) the

remaining 30% has been based on strategic

targets which will always include ESG

targets. The rationale for these changes

isset out on pages 78-79).

4. LONG-TERM INCENTIVE PLAN

We intend to grant awards under the

LTIPinJune 2024 which will be subject

toperformance conditions measured

overathree-year performance period.

Alongside our Policy consultation we

discussed minor changes to the weightings

and measures in our LTIP with shareholders

and their feedback was generally positive.

On this basis our 2024 LTIP award will

LANDSEC ANNUAL REPORT 2024GOVERNANCE

The Annual Report on Remuneration describes how the Directors’ Remuneration Policy has been applied in the financial year ended 31 March

2024 and how the Policy will operate in the financial year ending 31 March 2025.

1. REMUNERATION OUTCOMES FOR DIRECTORS DURING THE YEAR

1.1 DIRECTORS’ EMOLUMENTS (AUDITED)

SINGLE FIGURE OF REMUNERATION FOR EACH EXECUTIVE DIRECTOR (£K)

TABLE 24

Base

salary

Benefits

Pension

allowance

Annual

bonus

paid in

cash4

Annual

bonus

deferred

into shares4 LTIPs5 Other6 Total

Total

fixed

pay

Total

variable

pay

Executive Directors

Mark Allan 2023/24 851 15 89 426 174 1,345 – 2,900 955 1945

2022/23 820 30 86 410 205 1,077 – 2,628 936 1,692

Vanessa Simms

6,8

2023/24 522 82 55 261 122 824 1,866 659 1,207

2022/23 502 31 53 251 126 – 372 1,335 586 749

Former Directors

Colette O’Shea

2023/24–––– ––––––

2022/23 245 9 26 184 – 539 – 1,003 280 723

1. Base salary earned during the year ended 31 March 2024 (with prior year comparatives).

2. The benefits consisted of a car/travel allowance and private medical insurance.

3. The pension contribution for Mark Allan, Vanessa Simms and Colette O’Shea was a cash allowance of 10.5% of base salary.

4. Further details of the bonus awards are set out in section 1.3 below.

5. Further details of the estimated LTIP vesting values in respect of the 2021 LTIP Awards are set out in section 1.4 below. LTIP values in respect of the prior year have been updated

toreflect actual values at vesting rather than the estimates presented last year. Calculation based on a closing share price of £6.518 on the 24 July 2023 vesting date.

6. Vanessa Simms joined Landsec’s Board as CFO designate on 4 May 2021, taking up the post of CFO on 1 June 2021. The ‘Other’ column relates to the vesting value of the 2021

buyout award granted to Vanessa Simms based on two years of performance to 31 March 2023 (see last year’s Annual Report for further details). Calculation based on a closing

share price of £5.634 on the 25 June 2023 vesting date.

7. Colette O’Shea left the Board on 30 September 2022.

8. In addition to the above, Vanessa Simms participated in the Sharesave at the maximum monthly savings limit (£500) and participated in the Share Incentive Plan from February 2024.

SINGLE FIGURE OF REMUNERATION FOR EACH NON-EXECUTIVE DIRECTOR (£K)

TABLE 25

Fees

Benefits

Pension

allowance

Annual

bonus LTIPs Total

Total

fixed

pay

Total

variable

pay

Non-executive Directors

Sir Ian Cheshire

2023/24 375––––375375–

2022/23 10––––1010–

Moni Mannings

2023/24 22––––2222–

Edward Bonham Carter 2023/24 87––––8787–

2022/23 85––––8585–

James Bowling

2023/24 52––––5252–

Madeleine Cosgrave 2023/24 72––––7272–

2022/23 70––––7070–

Christophe Evain 2023/24 92––––9292–

2022/23 90 - – – – 90 90 –

Miles Roberts 2023/24 72––––7272–

2022/23 38 - – – – 38 38 –

Manjiry Tamhane 2023/24 72––––7272–

2022/23 70––––7070–

Nicholas Cadbury

2023/24 63––––6363–

2022/23 90––––9090–

Cressida Hogg

2023/24 49––––4949–

2022/23 375––––375375–

1. Fees paid to Directors during the year ended 31 March 2024 (with prior year comparatives).

2. Sir Ian Cheshire joined the Board on 23 March 2023. Moni Mannings joined the Board on 11 December 2023. James Bowling joined the Board on 7 September 2023.

3. Nicolas Cadbury left the Board on 31 December 2023. Cressida Hogg left the Board on 16 May 2023.

ANNUAL REPORT ON REMUNERATION

LANDSEC ANNUAL REPORT 2024 73GOVERNANCE

1.2 PAYMENTS TO FORMER DIRECTORS

As announced on 9 September 2022, Colette O’Shea ceased to be a director of the Company on 30 September 2022, stepped down from her role

as Chief Operating Officer on 31 March 2023 and continued to be an employee until the end of her 12-month notice period on 8 September 2023.

Other than as set out on page 102 of the Annual Report 2023 and as per page 72 of this Annual Report in respect of updating the single figure

table for the actual rather than estimated value of her 2020 LTIP awards which vested in 2023, no further payments have been made inrespect

of the period from 1 April 2023 to cessation of employment.

1.3 ANNUAL BONUS OUTTURN

In the year under review, Executive Directors had the potential to receive a maximum annual bonus of up to 150% of base salary. Of this, 120%

of salary was dependent on meeting Group targets and 30% of salary was dependent on meeting personal objectives. All targets were set at

the beginning of the year. The following table confirms the targets and their respective outcomes.

ANNUAL BONUS PERFORMANCE SUMMARY FOR 2023/24

TABLE 26

Measure Weighting Description Performance outcome

Threshold Target Maximum Actual

Outturn

(% of target)

Outturn

(% of max)

EPRA 15% Actual EPRA earnings targets £360m £369m £387m £371m 113.9% 56.9%

LFL EPRA 15% LFL EPRA earnings targets £326m £331m £339m £335m 152.5% 76.2%

TRE 30% Delivery of EPRA NTA (adjustedfor

dividends) through proactive asset

management.

0% 4.7% 8% (4.0%) 0% 0%

ESG 20% Milestone carbon reduction targets

relating to Energy andDevelopments

(10% each).

25%

2 targets

50%

3 targets

100%

4 targets

Between

target and

maximum

75%

Personal objectives 20% A mix of individual goals set at the

beginning of the year.

Between

target and

maximum

60 to 70%

Total annual bonus 100% 25% 50% 100% 46.98 to

48.98%

The EPRA target ranges were set at the start of the financial year in light of the budgeted performance and, reflecting Landsec’s commitment to be a net seller in the market, were

considered to be appropriately challenging at threshold, target and maximum when disposals are factored in.

ESG – ENERGY (10%)

TABLE 27

Target Detail Committee assessment

Outturn

(% of max)

Energy

reduction

3% like-for-like energy reduction compared with

previous year 2022/23.

Objective met. Achieved a 3.7% energy intensity

reduction through energy efficiencies measures.

Achieved

ASHP Installation of ASHPs is started at two assets, detailed

design (stage 3) is started for two assets and

feasibility study is completed for one additional asset.

Objective met. Achieved

Customer

engagement

Progress customer engagement programme,

engaging a total of 30 customers by year end,

including follow-up with 20 customers from previous

year’s programme.

Objective met. 38 customers have been engaged,

including follow-ups with customers from previous

year’s programme.

Achieved

On-site

SolarPower

Commence on-site installation of additional solar PV

attwo retail assets and complete enabling feasibility

study for further two assets.

Objective not met. On-site solar PV installation has

commenced at one retail asset. Installation has been

delayed at the other asset, due to JV ownership

consolidation. Enabling feasibility studies have been

completed for additional two assets.

Not achieved

Total 50%

Threshold (25%): at least two outcomes are achieved/Target (50%): at least three outcomes are achieved/Maximum (100%): all four outcomes are achieved.

LANDSEC ANNUAL REPORT 2024GOVERNANCE

ESG – DEVELOPMENTS (10%)

TABLE 28

Target Detail Committee assessment

Outturn

(% of max)

Embodied

carbon

reduction

All new developments not already on site (design stage) to target average portfolio

embodied carbon reduction of 40% from typical buildings

, striving for 600kgCO

e/m

for office and 500 kgCO

e/m

for residential.

Objective met. Achieved

Low carbon

solutions

All new developments in pre-RIBA Stage 4 to investigate the use of at least one

innovative low carbon process or material.

Objective met. Achieved

Circular

economy in

developments

and

refurbishments

All new developments and major refurbishments to undertake a pre-deconstruction/

pre-refurbishment materials audit by the end of RIBA Stage 2, setting project

specifictargets on material reused, repurposed and material directed back into

thesupply chain.

Objective met. Achieved

NABERS/

BREEAM/WELL

or other relevant

certification

All new developments to target: NABERS 5 stars or above (45kWh/m

energy intensity

for residential); BREEAM Outstanding and/or WELL Core Gold or above for offices/

BREEAM Excellent or above for retail/Home Quality Mark or equivalent for residential.

Objective met. Achieved

Total 100%

Threshold (25%): at least two outcomes are achieved/Target (50%): at least three outcomes are achieved/Maximum (100%): all four outcomes are achieved.

1. Reduction compared with typical buildings from GLA Whole Life Carbon Guidance (office: 1,000 kgCO

e/m

GIA and residential: 850kgCO

e/m

GIA).

SUMMARY OF PERSONAL OBJECTIVES (20%)

TABLE 29

Target Detail Committee assessment

Business

performance

and strategy

delivery

Oversee successful delivery of the Group business plan, budget

andKPIs

Above target. Strong first year of business plan and

scorecards drove performance.

Milestones for longer-term projects met in line with plan Above target. Good progress on milestone planning and

mixed-use strategy.

Maintain portfolio recycling momentum Partially met. Good progress with acquisition and disposal

targets in a difficult investment market.

Deliver refreshed strategic plan to the Board for approval On target. Approved by the Board.

Review long-term financing and capital structure strategy On target. Review undertaken and proposals approved

bythe Board.

Identify, and if appropriate pursue, M&A opportunities that help

accelerate strategy delivery

On target. Numerous opportunities evaluated by

theBoard.

Organisation

and culture

Support introduction of new Annual Performance Planning

framework as a foundation for a high performing culture

On target. Annual Performance Planning framework

rolled out and high performance programme launched.

Maintain positive levels of employee engagement through ongoing

cultural change work

Above target. Latest engagement score increased by

+12points.

Support the successful introduction of a refreshed people plan,

embraced by the business

On target. Talent framework progressed and presented

tothe Board.

Champion the new D&I strategy such that it is embedded in the

business with clear progress against KPIs

On target. Refreshed strategy launched and embedded.

Champion a data and tech enabled culture with targeted

interventions

On target. Major programmes on track.

Total CEO: 12 out of 20. CFO: 14 out of 20

The personal objectives were considered by the Committee to have been largely met. On assessment, they delivered an outcome of 12% out

of20% against the CEO’s personal and shared targets and 14% out of 20% against the CFO’s personal and shared targets. These results are

consistent with the Group’s performance delivered in 2023/24.

ANNUAL REPORT ON REMUNERATION

CONTINUED

LANDSEC ANNUAL REPORT 2024 75GOVERNANCE

TOTAL ANNUAL BONUS ACHIEVEMENT

TABLE 30

Director

EPRA

earnings

(15%)

EPRA

earnings LFL

(15%)

TRE

(30%)

ESG

Energy

(10%)

ESG

Developments

(10%)

Personal

(20%)

Total % of max

(% of salary)

Total

£k

Mark Allan

56.9%

of max

76.2%

of max

50%

of max

100%

of max

60% of max

46.98% of max

(70.47% of salary) £600

Vanessa Simms 70% of max 48.98% of max

(73.47% of salary)

£383

In line with our Policy, any bonus between 50% and 100% of salary will be deferred into shares for one year.

1.4 LONG-TERM INCENTIVE PLAN OUTTURNS

The table below summarises how we have assessed performance in respect of the 2021 LTIP awards granted on 25 June 2021 to Executive

Directors over the three years to 31 March 2024.

TABLE 31

Measure Weighting Description Performance outcome

Outturn

(% of max)

Total Shareholder

Return (TSR)

40% TSR relative to the constituents of the FTSE 350 Real

Estate Index, measured over a three-year period, from

1 April 2021

Threshold

(8%)

Median

Maximum

(40%)

Upper

Quartile

Actual

Above

maximum

(+9% TSR)

100%

Total Return on

Equity (TRE)

40% Growth in EPRA NTA per share over the performance

period as adjusted for dividends

Threshold

(8%)

4% p.a.

Maximum

(40%)

10% p.a.

Actual

Below

threshold

(-0.6% TRE)

ESG 20% Reduction of carbon emissions over the performance

period aligned to 2030 science-based targets

Threshold

(4%)

15%

Maximum

(20%)

20% p.a.

Actual

Above

maximum

(26%carbon

reduction)

100%

Total 100% 20% 100% 60%

The value of these awards shown in the single figure table for Mark Allan and Vanessa Simms as follows:

TABLE 32

Shares granted

Number of shares

thatwilllapse

Number of shares

thatwill vest

Estimated value of

shares vesting

2,5

(£k)

Face value of shares

expected to vest

(£k)

Impact of share

price atvesting

(£k)

Mark Allan 345,125 138,050 207,075 1,345 1,439 -94

Vanessa Simms 211,389 84,556 126,833 824 881 -57

1. 2021 LTIP award granted on 25 June 2021.

2. Based on the average three-month share price to 31 March 2024 (649.6 pence).

3. Based on the prevailing share price at the relevant grant date (695 pence).

4. The difference between the value of the shares under awards vesting and the value of the shares at grant.

5. Dividend equivalents accrue on 2021 LTIP awards during the vesting and during the holding period (or to the date of exercise if sooner). These will be included in the actual value

ofthe LTIPs at the vesting date which will be presented in next year’s Annual Report on Remuneration.

The Committee reviewed the estimated LTIP vesting values set out above and concluded that the vesting values do not represent unjustified

windfall gains, noting Landsec’s strong operational performance over the three years to 31 March 2024, proactive execution of the strategy

(which includes a number of material asset disposals) notwithstanding challenging market conditions, balance sheet strength (one of the

strongest in the sector) and strong relative share price performance over the three years to 31 March 2024. Therefore no discretion was applied

to amend the formulaic outcome.

LANDSEC ANNUAL REPORT 2024GOVERNANCE

2. DIRECTORS’ INTERESTS

2.1 TOTAL SHAREHOLDING (AUDITED)

Details of the Directors’ interests, including those of their immediate families and connected persons, in the issued share capital of the Company

at the beginning and end of the year, together with confirmation of whether the required shareholding has been met or whether a director is still

building their holding, are set out in the table below.

Executive Directors are expected to meet the minimum shareholding requirements within five years of appointment to the Board. Wherethe

minimum level is not met, the Executive Director is expected to retain 100% of the shares acquired, net of tax, under any share plan awarded

bythe Company. The current Policy requires Non-executive Directors to meet minimum shareholding requirements within three years of

appointment to the Board. As detailed in the Remuneration Policy Section, an amendment to the Non-executive Directors shareholding

requirement in our Policy is being proposed at the 2024 AGM.

DIRECTORS’ SHARES

TABLE 33

Name

Salary/

base fee at

31 March 2024

(£)

Minimum

shareholding

requirements

(% of salary/

base fee)4

Required

holding

value

(£)

Holding

(ordinary

shares)

1 April 2023

Holding

(ordinary

shares)

31 March 2024

Deferred

bonus shares

under holding

period

Value of

holding

(£)

Met requirement

or building2

Mark Allan 856,960 300% 2,570,880 229,203 348,528 100,826 2,605,919 Met

Vanessa Simms 524,888 200% 1,049,776 51,400 108,150

53,143 876,242 Building

Edward Bonham Carter 81,100 100% 70,000 9,375 9,375 – 61,706 Met4

Sir Ian Cheshire3 375,000 100% 375,000 – 14,840 – 97,677 Building

Madeleine Cosgrave 72,100 100% 70,000 10,535 10,535 – 69,341 Met4

Christophe Evain 92,100 100% 70,000 8,000 8,000 – 52,656 Met4

James Bowling3 92,100 100% 92,100 – 4,557 – 29,994 Building

Moni Mannings3 72,100 100% 72,100 – – – – Building

Miles Roberts 72,100 100% 70,000 – 3,645 – 23,991 Building

Manjiry Tamhane 72,100 100% 70,000 4,473 4,473 – 29,441 Building

1. Using the closing share price of 658.2p on 28 March 2024 and including the value of any deferred bonus shares, net of notional tax and employee NIC.

2. A Policy amendment is being proposed at the 2024 AGM which requires Non-executive Directors to own shares within one year of appointment.

3. Sir Ian Cheshire joined the Board on 23 March 2023. James Bowling joined the Board on 7 September 2023. Moni Mannings joined the Board on 11 December 2023.

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

5. Figure includes partnership and matching shares under SIP.

2.2 OUTSTANDING SHARE AWARDS HELD BY EXECUTIVE DIRECTORS (AUDITED)

The table below shows share awards granted and vested during the year, together with the outstanding and unvested awards at the year end.

LTIP awards are granted in the form of nil cost options, which may be exercised from the third anniversary of the date of grant, until their expiry

on the tenth anniversary of the date of grant.

OUTSTANDING SHARE AWARDS AND THOSE WHICH VESTED DURING THE YEAR

TABLE 34

Award date

Market price

at award date

(p)

Options

awarded

Options

vested

Market price at

date of vesting

(p) Vesting date

Mark Allan LTIP

24/07/2020 547.2 438,596 165,307 656.15 24/07/2023

25/06/2021

695.4 345,125 25/06/2024

24/06/2022 694.3 356,042 24/06/2025

08/06/2023 625.2 411,209 08/06/2026

Deferred bonus 25/06/2021 695.4 26,959 25/06/2024

24/06/2022 694.3 57,611 57,611 560.08 24/06/2023

24/06/2022 694.3 41,008 24/06/2024

08/06/2023 625.2 32,859 08/06/2024

Vanessa Simms Buyout 18/05/2021 526.2 110,160 66,096 560.08 25/06/2023

LTIP 25/06/2021

695.4 211,389 25/06/2024

24/06/2022 694.3 218,075 24/06/2025

08/06/2023 625.2 251,865 08/06/2026

Deferred bonus 25/05/2021 713.4 10,122 25/05/2024

24/06/2022 694.3 32,165 32,165 560.08 24/06/2023

24/06/2022 694.3 22,895 24/06/2024

08/06/2023 625.2 20,126 08/06/2024

1. See section 1.4 in respect of the vesting of the 2021 LTIP awards over three-year performance to 31 March 2024.

ANNUAL REPORT ON REMUNERATION

CONTINUED

LANDSEC ANNUAL REPORT 2024 77GOVERNANCE

2.3 SHARE AWARDS GRANTED IN THE YEAR ENDED 31 MARCH 2024

Awards were granted under the LTIP in June 2023, subject to three performance conditions measured over a three-year performance period.

Awards may normally be exercised between 8 June 2026 and 8 June 2033 and a two-year post-vesting holding period applies.

TABLE 35

Number of awards Share price (p)

Face value

Mark Allan 411,209 625.2 £2,570,879

Vanessa Simms 251,865 625.2 £1,574,660

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

The performance targets attached to the 2023 LTIP awards were as follows:

LTIP 2023-2026: AWARDS CAPPED AT 300% OF SALARY

TABLE 36

Measure Weighting Description Performance range

TSR 40% TSR relative to the constituents of the FTSE 350 Real Estate Index,

measured over a three-year period, from 1 April 2023.

Threshold (8%)

Median

Maximum (40%)

Upper quartile

TRE 40% Growth in EPRA NTA per share over the three-year

performanceperiod as adjusted for dividends.

Threshold (0%)

2% p.a.

Maximum (40%)

10% p.a.

ESG

20% Reduction of carbon emissions over the three-year

performanceperiod.

Threshold (4%)

28.6%

Maximum (20%)

35.0%

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

2. Following the publication of the Annual Report 2022/23, the carbon emissions targets were increased from the proposed targets set out on page 109 of last year’s Annual Report

onRemuneration.

Awards were granted under the Deferred Share Bonus Plan in June 2023. Awards may normally be exercised between 8 June 2024 and

8 June 2028.

TABLE 37

Number of awards Vesting date Share price (p)

Total face value

Mark Allan 32,859 08/06/2024 625.2 £205,434

Vanessa Simms 20,126 08/06/2024 625.2 £125,828

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

2.4 DIRECTORS’ OPTIONS OVER ORDINARY SHARES (AUDITED)

The options over shares set out below relate to the Land Securities Group PLC Sharesave scheme (Sharesave).

OUTSTANDING GRANTS AND THOSE WHICH WERE EXERCISED DURING THE YEAR

TABLE 38

Number of

options at

1 April 2023

Exercise price

per share

(p)

Number of

options granted

in year to

31 March 2024

Number

options

exercised/

lapsed

Market price

at exercise

(p)

Number of

options at

31 March 2024 Exercisable dates

Vanessa Simms 3,082 584 – – – 3,082 08/2024-02/2025

1. The exercise price for the Sharesave awards was determined based on a three-day average mid-market share price prior to the invitation date of the scheme, discounted by 20%.

2.5 DIRECTORS’ SERVICE CONTRACTS AND LETTERS OF APPOINTMENT

DATES OF APPOINTMENT FOR DIRECTORS

TABLE 39

Name Date of appointment

Date of contract/Letter of

Appointment

Executive Directors

Mark Allan 14 April 2020 21 November 2019

Vanessa Simms 4 May 2021 27 October 2020

Non-executive Directors

Sir Ian Cheshire 23 March 2023 19 January 2023

Moni Mannings 11 December 2023 8 December 2023

Edward Bonham Carter 1 January 2014 13 May 2015

James Bowling 7 September 2023 26 July 2023

Madeleine Cosgrave 1 January 2019 22 November 2018

Christophe Evain 1 April 2019 14 March 2019

Miles Roberts 19 September 2022 1 August 2022

Manjiry Tamhane 1 March 2021 29 January 2021

LANDSEC ANNUAL REPORT 2024GOVERNANCE

3. APPLICATION OF POLICY FOR 2024/25

3.1 EXECUTIVE DIRECTORS’ BASE SALARIES

TABLE 40

Name

Current salary

(£k)

New salary

(£k)

Percentage

increase

Mark Allan 857 883 3%

Vanessa Simms 525 541 3%

1. From 1 June 2024.

From 1 June 2024, Executive Director salaries will increase by 3%. Pay rises across the wider workforce will generally be in the range of 3.25%

and3.75%.

3.2 NON-EXECUTIVE DIRECTORS’ FEES

The fees for the Chair and the Non-executive Directors for 2024/25 are presented below. Base fees for the Chair and the Non-executive Directors

willincrease from 1 June 2024 by 3% (aligned to the level of increase for Executive Directors and below the level of the wider workforce). In line with

the Committee’s Terms of Reference, no individual was involved in the decisions relating to their own remuneration.

TABLE 41

Current

Base fee

(£k)

New

Base fee

(£k)

Percentage

increase

Chair 375 386 3%

Non-executive Director 72 74 3%

Additional fees

Audit/Remuneration Committee Chair 20 20 0%

Senior Independent Director 15 15 0%

1. From 1 June 2024.

3.3 PERFORMANCE TARGETS FOR THE COMING YEAR

Performance metrics and weightings in respect of the annual bonus are set out below.

Following the Policy review, the weighting on financial performance (currently 60% of potential) was increased to 70% of bonus potential to

ensure a greater focus on our key financial performance metrics.

The 70% was split equally between EPRA Earnings (as currently operated for 30% of bonus potential) which remains a key performance

indicator for Landsec; and LFL Net Rental Income Growth, which replaces the Total Return on Equity (previously referred to as Total Accounting

Return) metric used for 30% of last year’s bonus potential. This change reflects both the importance of delivering like-for-like operational

performance in the context of a higher for longer interest rate environment and shareholder feedback around the risk of double counting

giventhat Total Return on Equity was used for both the 2023/24 annual bonus (30%) and the 2021 to 2023 long-term incentive awards (40%).

The remaining 30% is based on strategic targets rather than last year’s approach whereby non-financial targets were split equally between

ESG(20% of potential) and personal objectives (20% of potential). This change simplifies target setting, assessment and communication.

Thenumber of strategic objectives will normally be limited to no more than seven objectives (albeit six will operate for 2024/25), with at least

three relating to Landsec’s ESG agenda (delivering on our environmental and D&I strategies) with the remaining objectives relating to other

aspects of Landsec’s balanced scorecard.

ANNUAL REPORT ON REMUNERATION

CONTINUED

LANDSEC ANNUAL REPORT 2024 79GOVERNANCE

Challenging sliding scale targets will operate and the Remuneration Committee will retain discretion to ensure any payouts against the targets

reflect the underlying performance of the Company. Performance targets are considered to be commercially sensitive although will be disclosed

in full, together with the performance and the resulting bonus awards, in next year’s Directors’ Remuneration Report.

ANNUAL BONUS 2024/25 PERFORMANCE CRITERIA: AWARDS CAPPED AT 150% OF SALARY

TABLE 42

Measure Weighting Description

EPRA earnings 35% EPRA earnings performance versus budgeted performance

LFL net rental income 35% LFL net rental income percentage growth targets

Strategic objectives 30% Six individual objectives including two covering environmental targets and one on diversity and inclusion

The approach for the 2024 LTIP awards reflects both Landsec’s focus on delivering returns to shareholders combined with our approach

tosustainability and our ambition to be a net zero carbon business. Reflecting Landsec’s:

•

continued focus on delivering returns to shareholders through the cycle we will continue to operate: (i) relative Total Shareholder Return

targets against FTSE 350 sector peers albeit agencies will be excluded from the group from 2024 onwards (with the weighting unchanged

at40%), and (ii) Total Return on Equity, being the percentage change in EPRA Net Tangible Assets per share plus dividends, targets albeit

with the weighting decreased slightly from 40% to 35% from the prior year

•

industry-leading approach to ESG, carbon reduction targets will continue to operate based on our ambitious, science-based, plans to

transition to net zero across the value chain by 2040, albeit with the weighting decreased slightly from 20% to 15% from the prior year;

andD&I targets will be introduced for 10% of awards. Targets will be aligned to Landsec’s recently refreshed D&I strategy, which focuses

ourbusiness not only on building a diverse and inclusive workforce, but also on our teams creating truly inclusive places for our customers

andlocal communities, and are based on our Board approved 2030 gender and ethnicity targets.

LTIP 2024-2027 PERFORMANCE CRITERIA: AWARDS CAPPED AT 300% OF SALARY

TABLE 43

Measure Weighting Description Performance range

TSR (%) 40% TSR relative to the selected constituents of the FTSE 350 Real Estate

Index (excluding agencies), measured over a three-year period, from

1 April 2024.

Threshold (8%)

Median

Maximum (40%)

Upper quartile

TRE (%) 35% Growth in EPRA NTA per share over the three-year performance

period as adjusted for dividends.

Threshold (7%)

4% p.a.

Maximum (35%)

11% p.a.

ESG – Carbon

Emissions

15% Reduction of carbon emissions over the three-year performance

period aligned to achieve our updated science-based target by 2030.

Threshold (3%)

18.6%

Maximum (15%)

25%

ESG – D&I 5% Delivery of our refreshed D&I strategy based on our Board approved

2030 gender targets – female representation at Leader level in 2027.

Threshold (1%)

38%

Maximum (5%)

43%

5% Delivery of our refreshed D&I strategy based on our Board approved

2030 ethnicity targets – ethnic minority representation at Leader level

in 2027.

Threshold (1%)

Maximum (5%)

16%

Total LTIP 100%

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

4. TOTAL SHAREHOLDER RETURN AND CHIEF EXECUTIVE PAY

The following graph illustrates the performance of the Company measured by TSR (share price growth plus dividends paid) against a

‘broadequity market index’. As the Company is a constituent of the FTSE 350 Real Estate Index, this is considered to be the most appropriate

benchmark for the purposes of the graph. An additional line to illustrate the Company’s performance compared with the FTSE 100 Index over

the previous ten years is also included.

This graph shows the value, by 31 March 2024, of £100 invested in Landsec on 31 March 2014, compared with the value of £100 invested inthe

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

LANDSEC ANNUAL REPORT 2024GOVERNANCE

TOTAL SHAREHOLDER RETURN

CHART 44

Land Securities Group PLC FTSE 100 FTSE 350 Real Estate

100

150

200

Mar-14 Mar-15 Mar-16 Mar-17 Mar-18 Mar-19 Mar-20 Mar-22 Mar-24Mar-23Mar-21

Value (£) (rebased)

106.3

100.7

124.3 124.5

134.1

109.4

133.4

154.9

163.2

176.9

126.3

114.1

113.0

104.8

107.9

68.5

87.2

103.8

87.0

98.3

122.8

115.0

114.6

123.6

123.3

105.4

124.7

106.5

116.5

150.7

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

CHIEF EXECUTIVE REMUNERATION OVER TEN YEARS

TABLE 45

Year Chief Executive

Single figure

of total

remuneration

(£k)

Annual bonus

payment

(% of maximum)

Long-term

incentive vesting

(% of maximum)

2024 Mark Allan 2,900 47.0 60.0

2023 Mark Allan 2,628

50.0 37.7

2022 Mark Allan 2,000 90.4 0.0

2021 Mark Allan 2,920

16.2 n/a

2020 Robert Noel 1,569 43.8 0.0

2019 Robert Noel 1,624 50.5 0.0

2018 Robert Noel 1,693 58.8 0.0

2017 Robert Noel 2,692 58.8 50.0

2016 Robert Noel 2,011 67.5 13.1

2015 Robert Noel 4,776 94.5 84.7

1. LTIP values in respect of the prior year have been updated to reflect actual values at vesting rather than the estimates presented last year. Calculation based on a closing share

price of £6.518 on the 24 July 2023 vesting date.

2. Includes £1,692,042 in relation to buyout awards made on appointment.

5. THE CONTEXT OF PAY AT LANDSEC

5.1 PAY ACROSS THE GROUP

A. SENIOR MANAGEMENT

For the year under review, bonus payments to our 37 most senior employees (excluding the Executive Directors) ranged from 22%to 69%

ofsalary (2022/23: 27% to 72%), equating to 84% to 124% of target. The average bonus was 38% of salary (2022/23: 33.9%), equating to 101%

oftarget.

B. ALL OTHER EMPLOYEES

From 1 June 2023, Executive Director salaries increased by 4%. The pay rise across the wider workforce was 6.75% (5% of which was accelerated

and paid on 1 January 2023 to assist employees with the cost of living crisis), the remainder of which was paid on 1 June 2023. Pay rises across

the wider workforce will generally be in the range of 3.25% and 3.75%.

As at 31 March 2024, the ratio of the base salary of the Chief Executive to the average base salary across the Group (excluding Executive

Directors) was 11:1 (£856,960:£80,479).

ANNUAL REPORT ON REMUNERATION

CONTINUED

LANDSEC ANNUAL REPORT 2024 81GOVERNANCE

C. PERCENTAGE CHANGE IN REMUNERATION BETWEEN DIRECTORS AND EMPLOYEES

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

to all employees.

TABLE 46

2020/21 2021/22 2022/23 2023/24

Salary/

fee

change

(%)

Benefits

change

(%)

Bonus

change

(%)

Salary/

fee

change

(%)

Benefits

change

(%)

Bonus

change

(%)

Salary/

fee

change

(%)

Benefits

change

(%)

Bonus

change

(%)

Salary/

fee

change

(%)

Benefits

change

(%)

Bonus

change

(%)

EXECUTIVE DIRECTORS

Mark Allan – – – 9 (75) 479 3 (3) (43) 4 (50) (3)

Vanessa Simms

––––––1324(38) 4 161 2

Colette O’Shea2 3 (3) (65) 5 0 389 (49) (50) (71) –––

NON-EXECUTIVE DIRECTORS

Sir Ian Cheshire

––––––––––––

Cressida Hogg

(5) – – 5 – – 0 – ––––

Moni Mannings

––––––––––––

Edward Bonham Carter (15) – – 3 – – 0 – –2 – –

James Bowling

––––––––––––

Nicholas Cadbury

(5) – – 5 – – 0 – ––––

Madeleine Cosgrave (5) – – 5 – – 0 – –3 – –

Christophe Evain 16 – – 7 – – 0 – –2 – –

Miles Roberts ––––––0–––––

Manjiry Tamhane ––––––0––3 – –

AVERAGE EMPLOYEE

7 6 (49) (1) 2 219 15 2

(12) 6 (5) 2

1. Vanessa Simms joined the Board during 2021/22.

2. Colette O’Shea stepped down from the Board on 30 September 2022 therefore comparing part-year (2022/23) with full year prior (2021/22).

3. Sir Ian Cheshire joined the Board on 23 March 2023. James Bowling joined the Board on 7 September 2023. Moni Mannings joined the Board on 11 December 2023.

4. Cressida Hogg left the Board on 16 May 2023. Nicholas Cadbury left the Board on 31 December 2023.

5. The benefits change % for 2022/23 has been updated as it was incorrectly stated in the prior year’s report.

6. Reflects the increase to base fees for Non-executive Directors awarded in 2023 for those serving in the full year 2022/23 and 2023/24.

D. CEO PAY RATIO

The tables below show how pay for the CEO compares to employees at the lower, median and upper quartiles (calculated on a full-time

equivalent basis). The ratios have been calculated in accordance with Option A of The Companies (Miscellaneous Reporting) Regulations 2018,

which uses the total pay and benefits for all employees, and is the same methodology that is used to calculate the CEO’s single figure of

remuneration table on page 72. Figures are calculated by reference to 31 March 2024 using actual pay data from April 2023 to March 2024.

Excluded from our analysis are joiners, leavers and long-term absentees from the Company during the year. As the CEO has a larger proportion

of his total remuneration linked to business performance than other employees in the UK workforce, the ratio has increased versus last year

primarily as a result of the 2021 LTIP vesting at 60% of the maximum compared to the 2020 LTIP which vested at 38% of the maximum. This

more than offset the reduction in the bonus award (47% of maximum compared to 50% of maximum for the prior year). Given the alignment

of incentive arrangements which are cascaded below Board level, theRemuneration Committee believes the pay ratios are consistent with the

pay, reward and progression policies for the Group’s UK employees taken as a whole.

TABLE 47

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

2023/24 Option A 51:1 32:1 21:1

2022/23

Option A 47:1 29:1 18:1

2021/22 Option A 40:1 25:1 16:1

2020/21 Option A 22:1 14:1 10:1

2019/20 Option A 36:1 23:1 15:1

CEO pay P25 pay P50 pay P75 pay

Salary £851,467 £42,832 £67,235 £99,259

Total pay

£2,901,303 £57,313 £90,810 £135,816

1. The CEO pay ratios for 2022/23 have been updated to reflect the actual value at vesting for the CEO as detailed in section 1.1.

2. Employees may now participate in our Share Incentive Plan, however this has not been included in the calculations above.

LANDSEC ANNUAL REPORT 2024GOVERNANCE

ANNUAL REPORT ON REMUNERATION

CONTINUED

E. TOTAL PAY AND BENEFITS

TABLE 48

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

Year Method

Total Pay

andBenefits

Total

Salary

Total Pay

andBenefits

Total

Salary

Total Pay

andBenefits

Total

Salary

2023/24 A £57,313 £42,832 £90,810 £67,235 £135,816 £99,259

2022/23 A £55,502 £43,811 £89,395 £64,851 £147,119 £104,813

2021/22 A £50,620 £38,038 £79,746 £58,083 £122,832 £77,600

2020/21 A £45,752 £39,000 £73,212 £55,776 £105,848 £77,000

2019/20 A £44,140 £29,785 £69,393 £58,565 £104,438 £79,203

5.2 THE RELATIVE IMPORTANCE OF SPEND ON PAY

The table below shows the total spend on pay for all Landsec employees, compared with our returns to shareholders in the form of dividends.

TABLE 49

March 2024

(£m)

March 2023

(£m)

change

Spend on pay

71 65 9

Dividend paid2 291 288 1

1. Including base salaries for all employees, bonuses and share-based payments.

2. Dividend paid represents dividends declared for the year. See note 11 to the financial statements.

6. DILUTION

Awards granted under the Company’s long-term incentive arrangements (LTIP, Deferred Share Bonus Plan, Restricted Share Plan and the ESOP)

are satisfied through the funding of an Employee Benefit Trust (administered by an external trustee) which acquires existing Land Securities

Group PLC shares in the market. The Employee Benefit Trust held 3,119,107 ordinary shares at 31 March 2024 (2022/23: 3,831,399). The exercise

ofshare options under the Land Securities Group PLC Sharesave, which is open to all employees who have completed more than one month’s

service with the Group, can be satisfied by the allotment of newly issued shares. At 31 March 2024, the total number of shares which could be

allotted under this Scheme was 538,608 shares (2022/23: 565,439), which represents less than 0.07% (2022/23: 0.08%) of the issued share

capital of the Company.

7. SHAREHOLDER VOTING

TABLE 50

% of votes

For

% of votes

Against

Number of votes

withheld

Directors’ Remuneration Policy (2021 AGM) 96.4 3.6 286,920

Annual Report on Remuneration (2023 AGM) 92.2 7.8 3,555,938

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

The Directors’ Remuneration Report was approved by the Board on 16 May 2024 and signed on its behalf by:

CHRISTOPHE EVAIN, CHAIR, REMUNERATION COMMITTEE

LANDSEC ANNUAL REPORT 2024 83GOVERNANCE

OUR NEW POLICY

In approaching the renewal of the Directors’

Remuneration Policy (the Policy), the

Remuneration Committee (the Committee)

thought carefully about the behaviours

and outcomes it wishes to see and how the

remuneration structure will support them.

When setting the pay policy for Executive

Directors, the Committee also considered

pay practices and policies of the wider

workforce in order to ensure the revised

policy is proportionate and aligned with

Landsec’s culture. The review was

approached with the following main aims:

•

remuneration should be clearly linked

to the Group’s purpose of creating

Sustainable places, Connecting

communities, Realising potential

•

remuneration should reward and drive

theright behaviours and outcomes

andreflect strategic, personal and

financial achievements

•

remuneration should be designed in a

manner that is clear for all stakeholders

and reflects their expectations

•

remuneration should be easy to explain

and be viewed as fair

•

remuneration should be based on

apay-for-performance model

REMUNERATION PRINCIPLES

Our remuneration principles, which we also

aim to cascade throughout the business,

underpin our Policy. These principles are

thatour remuneration should:

•

support the long-term success of the

business and sustainable long-term

shareholder value

•

materially differentiate reward according

to performance

•

be relevant, stretching and aligned to

the business strategy and achievement

of planned business goals

•

be compatible with Landsec’s risk

policies and systems, with malus and

clawback provisions in place for all

forms ofvariable pay

•

provide a balance between attracting,

retaining and motivating talented people

as well as supporting equal opportunity

and diversity of talent

•

ensure that performance-related pay

constitutes a proportion of the overall

package appropriate to each level of

the organisation

•

be clear and explainable to appropriate

stakeholders, avoiding paying more than

the Committee considers necessary

CONSIDERATION OF

SHAREHOLDERVIEWS

The Committee values the views of Landsec’s

shareholders and guidance from the main

shareholder representative bodies. As such,

the Committee proactively consults with

ourmajor shareholders to ensure that their

views are represented in discussions on

remuneration matters. As part of the process

for renewing the Policy, the Committee

consulted with Landsec’s top 15 shareholders

as well as the major shareholder representative

bodies on a set of draft proposals. Reflecting

the feedback received from major investors

and representative bodies during the course

of the engagement process, which was

generally very positive, no changes were

made to the original proposals.

PROPOSED POLICY CHANGES

On the basis that our strategy remains

unchanged, no changes are proposed in

respect of the Remuneration Policy for

Executive Directors. We are however

proposing one minor change to the Policy

forNon-executive Directors.

The current Remuneration Policy states

thatNon-executive Directors are expected

tomeet a minimum shareholding guideline

of 100% of their relevant annual fee within

three years of appointment. However, going

forward, while the purchase and retention of

Landsec’s shares by Non-executive Directors

will continue to be expected, we are

proposing to remove the 100% of fee within

three years expectation as this is currently

considered to be overly restrictive in respect

of appointing new Non-executive Directors

from more diverse backgrounds. As such,

inthis proposed Policy, Non-executive

Directors will not be subject to a minimum

shareholding expectation but will be

requiredto have made a purchase of a

number of Landsec shares within one year

ofappointment.

DIRECTORS’ REMUNERATION POLICY

LANDSEC ANNUAL REPORT 2024GOVERNANCE

DIRECTORS’ REMUNERATION POLICY

CONTINUED

As part of its review of the Policy, the Committee has considered the factors set out in provision 40 of the UK Corporate Governance Code.

Inthe Committee’s view, the proposed Policy addresses those factors as set out below:

FACTOR DESCRIPTION APPROACH

Clarity Remuneration arrangements should be

transparent and promote effective

engagement with shareholders and the

workforce and link to strategy

•

The Policy and arrangements are clearly disclosed in the Annual Report

•

The Committee proactively seeks engagement with shareholders on remuneration matters

•

The Committee is regularly updated on Landsec’s workforce pay and benefits

•

The Committee regularly receives updates on the key performance indicators of

the business

•

The Committee Chairman proactively seeks engagement with Landsec’s Employee Forum

on remuneration matters

Simplicity Remuneration structures should avoid

complexity and their rationale and operation

should be easy to understand

•

Our remuneration structure comprises fixed and variable remuneration, with the

performance conditions for variable elements clearly communicated to, and understood

by, participants

•

Remuneration principles are published and clearly linked to strategy

Risk Remuneration arrangements should ensure

reputational and other risks from excessive

rewards, and behavioural risks that can arise

from target-based incentive plans, are

identified and mitigated

•

The rules of the remuneration plans provide discretion to the Committee to reduce award

levels (see page 91)

•

Awards are subject to malus and clawback provisions (see pages 87-88)

•

The Committee has overriding discretion to reduce awards to mitigate against

any reputational or other risk from such awards being considered excessive

Predictability The range of possible reward values to

individual directors and any other limits or

discretions should be identified and

explained at the time of approving the policy

•

See scenario charts on page 87

•

Maximum award levels and discretions are set out in the Policy Table on pages 85-86

Proportionality The link between individual awards, the

delivery of strategy and the long-term

performance of the company should be

clear. Outcomes should not reward poor

performance

•

As shown in the scenario charts on page 87, variable performance related elements

represent a significant proportion of the total remuneration opportunity for our

ExecutiveDirectors

•

The Committee considers the appropriate financial and personal performance measures

each year to ensure that there is a clear link to strategy

•

Discretions available to the Committee ensure that awards can be reduced if necessary

to ensure that outcomes do not reward poor performance

Alignment

toculture

Incentive schemes should drive behaviours

consistent with company purpose, values

and strategy

•

The Committee seeks to ensure that personal performance measures under the annual

bonus plan incentivise behaviours consistent with Landsec’s culture, purpose and values

•

Long-term incentives will align Executive Director interests with those of shareholders by

ensuring a focus on delivering against strategy and purpose to generate long-term value

for shareholders

The Committee will operate within the prevailing Remuneration Policy. It will also operate the various incentive plans and schemes according to their respective

rules and consistent with normal market practice, the UK Corporate Governance Code and, as applicable, the Listing Rules. Within the Policy, the Committee

will retain the discretion to look at performance ‘in the round’, including withholding or deferring payments in certain circumstances where the outcomes for

Directors are not considered to be aligned with the outcomes for shareholders. Any specific circumstances which necessitate the use of discretion will be explained

clearly in the relevant Directors’ Remuneration Report.

LANDSEC ANNUAL REPORT 2024 85GOVERNANCE

PROPOSED REMUNERATION POLICY

1. EXECUTIVE DIRECTORS

BASE SALARY

Purpose and link

tostrategy

•

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

•

To reflect the value of their experience, skills and knowledge, and importance to the business

Operation Normally reviewed annually, with effect from 1 June, and reflects:

•

Increases throughout the rest of the business

•

Market benchmarking exercises undertaken periodically to ensure salaries are set at around the median of the market competitive

level for people in comparable roles with similar levels of experience, performance and contribution

•

Changes in the scope of an Executive Director’s role

Opportunity The maximum annual salary increase will not normally exceed the average increase across the rest of the workforce. Higher increases

will be exceptional, and may be made in specific circumstances, including:

•

Where there is an increase in responsibilities or scope of the role

•

To apply salary progression for a newly appointed Executive Director

•

Where the Executive Director’s salary has fallen below the market positioning

Performance measures

•

Individual and Company performance is taken into account when determining appropriate salary increases

BENEFITS

Purpose and link

tostrategy

•

To provide protection and market competitive benefits to aid recruitment and retention of high performing

Executive Directors

Operation Typical benefits include, but are not limited to:

•

Car allowance

•

Private medical insurance

•

Life assurance

•

Ill health income protection

•

Holiday and sick pay

•

Eligibility to participate in all-employee share incentive plans

•

Professional advice in connection with their directorship

•

Travel, subsistence and accommodation as necessary

•

Occasional gifts, for example appropriate long service or leaving gifts

Opportunity

•

The value of benefits may vary from year to year depending on the cost to the Company

Performance measures

•

n/a

PENSION

Purpose and link

tostrategy

•

To help recruit and retain high performing Executive Directors

•

To reward continued contribution to the business by enabling Executive Directors to build retirement benefits

Operation

•

Participation in a defined contribution pension scheme or cash equivalent

Opportunity

•

10.5% of salary, in line with the maximum employer contribution for all employees in the Company’s Group Personal Pension Plan

Performance measures

•

n/a

LANDSEC ANNUAL REPORT 2024GOVERNANCE

DIRECTORS’ REMUNERATION POLICY

CONTINUED

ANNUAL BONUS

Purpose and link

tostrategy

•

Incentivises Executive Directors and senior management to achieve specific, predetermined goals during a one-year period,

orlessRewards financial and individual performance linked to the Company’s strategy

•

Deferred proportion of bonus, awarded in shares, provides a retention element and additional alignment of interest

with shareholders

Operation

•

The annual bonus operates by reference to financial and personal performance measures normally set and assessed over one year

•

Any bonus payment is determined by the Committee after the year end, based on performance against challenging targets which

are reviewed annually

•

The achievement of on-target performance should normally result in a payment of up to 50% of the maximum opportunity

•

Bonuses up to 50% of salary are normally paid in cash. Any amounts in excess of 50% of salary are normally deferred into shares

for one year. Any amounts in excess of 100% of salary are normally deferred into shares for two years

•

Deferred shares are potentially forfeitable if the individual leaves prior to the share release date

•

Dividend equivalents may be awarded on deferred shares between grant and vesting to the extent that awards vest

•

Bonus payments are not pensionable

•

Malus and clawback provisions apply

•

The level of payout at threshold performance for each performance measure is set annually, but will typically be no more than 25%

of maximum

•

The Committee retains discretion to amend the payout level (up or down) where it considers it to be appropriate, but not so as

toexceed the maximum bonus potential and will fully disclose the exercise of any discretion in the relevant Directors’

Remuneration Report

Opportunity

•

150% of salary

Performance measures

•

The performance measures applied may be financial, non-financial, or individual, and in such proportions as the Remuneration

Committee considers appropriate, although individual measures will form a minority of the potential

•

Performance measures will be aligned to the Company’s strategy. The Committee reserves the right to change measures

(and their weightings) for each financial year to ensure the metrics chosen are appropriate means of assessing the performance

of the Executive Directors

•

Once set, performance measures and targets will generally remain unchanged for the year, exceptionally targets may be adjusted

by the Committee to take account of significant transactions such as acquisitions and/or disposals or in other exceptional

circumstances such as timing of transactions that have a material impact on the business plan

LONG-TERM INCENTIVE

Purpose and link

tostrategy

•

Incentivises value creation over the long-term

•

Rewards execution of our strategy

•

Aligns the long-term interests of Executive Directors and shareholders

•

Promotes retention

Operation

•

The Committee may make an annual award of shares under the LTIP

•

Vesting is determined on the basis of the Group’s achievements against stretching performance targets, normally over a three-year

period and continued employment

•

The Committee reviews the measures, their relative weightings and targets prior to each award

•

For each measure, no awards vest for performance below threshold

•

Up to 20% of an award may vest for threshold performance

•

Each measure is capped at 100% vesting, which represents a stretching target

•

Executive Directors are required to hold vested awards (net of tax/NI where relevant) for a further two years

(includingpost-cessation) following vesting

•

Dividend equivalents may be awarded between grant and the expiry of any holding period to the extent that the award vests

•

Malus and clawback provisions apply

Opportunity

•

300% of salary

Performance measures

•

The performance measures applied may be share price related, financial, non-financial, corporate or strategic and in such

proportions as the Remuneration Committee considers appropriate

•

The measures may be based on a mixture of relative and absolute financial performance as well as one or more measures to

recognise the Company’s broader strategic ESG commitment

LANDSEC ANNUAL REPORT 2024 87GOVERNANCE

NOTES TO POLICY TABLE:

PERFORMANCE MEASURES AND

TARGETSETTING

Full details of the performance conditions

and targets applying for each award will be

disclosed in the relevant Annual Report on

Remuneration. Where targets are considered

to be too sensitive to disclose in advance for

commercial reasons, full disclosure of the

original targets, and the extent to which they

have been achieved, will be provided on a

retrospective basis at the end of the relevant

performance period.

PRIOR POLICY ARRANGEMENTS

In approving the Policy, authority is given to

the Company to honour any commitments

entered into with current or former

Directorsthat have been disclosed previously

to shareholders.

REWARD SCENARIOS FOR THE CEO AND CFO (£000)

TABLE 51

Mark Allan

Chief Executive

Vanessa Simms

Chief Financial Officer

1,000

5,000

4,000

3,000

6,000

7,000

2,000

1,006

Minimum Target Maximum Max+

34%

22%

44%

2,992

20%

27%

53%

4,978

16%

21%

42%

21%

6,302

Minimum Target Maximum Max+

683

36%

21%

43%

1,900

22%

26%

52%

3,116

16%

21%

42%

21%

3,927

Element of pay

Minimum

(£000)

Target

(£000)

Maximum

(£000)

Max+

(£000)

Minimum

(£000)

Target

(£000)

Maximum

(£000)

Max+

(£000)

Fixed pay

1,006 1,006 1,006 1,006 683 683 683 683

Annual bonus

– 662 1,324 1,324 – 406 811 811

LTIP

– 1,324 2,648 2,648 – 811 1,622 1,622

Share price appreciation

– – – 1,324 – – – 811

Total remuneration

1,006 2,992 4,978 6,302 683 1,900 3,116 3,927

Assumptions used in determining the level of

payout under given scenarios are as follows:

•

Minimum remuneration comprises base

salary at 1 June 2024, estimated annual

benefits and 10.5% of salary pension

contribution (fixed pay)

•

Target remuneration comprises fixed pay,

50% of the 2024/25 annual bonus and 50%

vesting of the 2024 LTIP awards

•

Maximum remuneration comprises fixed

pay, 100% of the 2024/25 annual bonus

and 100% vesting of the 2024 LTIP award

based on a face value of 300% of salary

•

Maximum+ comprises maximum pay

plus50% share price appreciation on

LTIPawards

2. STATEMENT OF CONSIDERATION

OF EMPLOYMENT CONDITIONS

ELSEWHERE IN THE COMPANY

The proposed 2024 Policy is designed in line

with the remuneration principles outlined on

page 83 above. In setting the remuneration

of the Executive Directors, the Committee

takes into account the overall approach

to reward for employees in the Group.

Landsec operates in a number of different

environments and has many employees who

carry out diverse roles across a number of

locations. All employees, including Directors,

are paid by reference to the market rate

andbase salary levels are reviewed regularly.

When considering salary increases for

Executive Directors, the Company pays close

attention to pay and employment conditions

across the wider workforce. The Chief People

Officer regularly updates the Committee on

pay and conditions applying to the wider

workforce. During 2023/24, the Committee

received specific updates on Gender Pay

Reporting and pay ratios. The Committee

does not formally consult with employees on

the executive remuneration policy, although

the Committee Chair met with the Employee

Forum to discuss the proposed Policy

changes. The Company also holds regular

forums with employee groups and conducts

regular employee engagement surveys, the

results of which are presented to the Board.

Remuneration arrangements for employees

below Board level reflect the seniority of

the role.

3. MALUS AND CLAWBACK

PROVISIONS

All incentive scheme rules contain malus

and/or clawback provisions that allow the

Committee to reduce or retrieve a payment

or an award.

LANDSEC ANNUAL REPORT 2024GOVERNANCE

DIRECTORS’ REMUNERATION POLICY

CONTINUED

MALUS

Malus is the adjustment of annual bonus

payments or unvested share awards

becauseof the occurrence of one or more

circumstances listed below. The adjustment

may result in the value being reduced to nil.

CLAWBACK

Clawback is the recovery of payments

madeunder the annual bonus plan or vested

share awards as a result of the occurrence

ofone or more circumstances listed below.

Clawback may apply to all or part of an

Executive Director’s payment/award and

may be effected, among other means, by

requiring the transfer of shares, payment

of cash or reduction of awards or bonuses.

The Remuneration Committee may apply

malus/clawback when there are exceptional

circumstances. Such exceptional

circumstances include (without limitation):

•

a material mis-statement in the published

results of the Group or one of its members

•

an error in assessing any applicable

performance condition or the number

of shares subject to an award

•

misconduct on the part of the Executive

Director concerned

•

where, as a result of an appropriate

reviewof accountability, the Remuneration

Committee determines that the Executive

Director has caused wholly or in part a

material loss for the Group as a result of

(i)reckless, negligent or wilful actions or

omissions; or (ii) inappropriate behaviour

•

where, as a result of an appropriate

reviewof accountability, the Remuneration

Committee determines that the Executive

Director has caused wholly or in part

a corporate failure of the Group or one

of its members

•

a Group member being censured by

aregulatory body

•

events or behaviour on the part of the

Executive Director leading to significant

reputational damage to the Group

•

any other events that the Remuneration

Committee considers specifically relevant

to Landsec, e.g. a serious health and safety

event or an exceptional negative event

4. NON-EXECUTIVE DIRECTORS

BASE FEE

Purpose and

link to strategy

•

To aid the recruitment, retention and motivation of Non-executive Directors of appropriate calibre and experience

•

To reflect the time commitment given by Non-executive Directors to the business

Operation

•

The Chairman is paid a single fee for all Board duties and the other Non-executive Directors receive a basic Board fee, with supplementary

fees payable for additional responsibilities

•

Non-executive Director fees are reviewed (but not necessarily changed) annually by the Board, having regard to independent advice and

published surveys

•

The Chairman’s fee is reviewed (but not necessarily changed) annually by the Remuneration Committee without the Chairman present

Opportunity

•

Any increases reflect relevant benchmark data for Non-executive Directors in companies of a similar size and complexity, and the time

commitment required

ADDITIONAL FEES

Purpose and

link to strategy

•

To reflect the additional time commitment required from Non-executive Directors in chairing various Board sub-committees or becoming

the Board’s Senior Independent Director

•

Occasionally awarded to a Non-executive Director who completes a specific additional piece of work on behalf of the Board

Operation

•

Reviewed (but not necessarily changed) annually by the Board, having regard to independent advice and published surveys

Opportunity

•

The opportunity depends on which, if any, additional roles are assumed by an individual Non-executive Director over the course of

their tenure

•

Any increases reflect relevant benchmark data for Non-executive Directors in companies of a similar size and complexity, and the time

commitment required

OTHER INCENTIVES AND BENEFITS

Operation

•

Expenses in relation to Company business will be reimbursed (including any tax thereon, where applicable)

•

If deemed necessary, and in the performance of their duties, Non-executive Directors may take independent professional advice at

the Company’s expense

•

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

Opportunity

•

n/a

LANDSEC ANNUAL REPORT 2024 89GOVERNANCE

5. SHARE OWNERSHIP GUIDELINES

SHARE OWNERSHIP DURING

EMPLOYMENT

The Executive Directors are expected to

accumulate and maintain a holding in

ordinary shares in the Company equivalent

to no less than 300% of base salary for the

CEO and 200% for other Executive Directors.

Executive Directors are normally expected

tomeet the minimum shareholding

requirements within five years of appointment

to the Board. Where the minimum level is not

met, or where the value of shareholding falls

below the required level due to movements

inthe share price, the Executive Director

isexpected to retain 100% of the shares

acquired, net of tax, under any share plan

awarded by the Company.

An annual calculation as a percentage of

salary is made against the guidelines for

each Executive Director as at 31 March each

year based on the closing middle market

quotation of the share price on the last

business day in March.

SHARE OWNERSHIP POST CESSATION

On leaving the Board, Executive Directors

areexpected to maintain a shareholding

equivalent to their in-employment

shareholding requirement for a period

of two years from the date of cessation.

Shares acquired by the Executive are

excluded from this calculation.

NON-EXECUTIVE DIRECTOR

SHAREOWNERSHIP

Non-executive Directors are expected

toacquire shares within one year of

appointment to the Board.

6. DIRECTORS’ SERVICE AGREEMENTS

AND LETTERS OF APPOINTMENT

EXECUTIVE DIRECTORS’ LETTERS

OF APPOINTMENT

The Executive Directors have Service

Agreements with the Company which

normally continue until the Director’s agreed

retirement date or such other date as the

parties agree. In line with Group policy, the

Executive Directors’ employment can be

terminated at any time by either party on

giving 12 months’ prior written notice.

The Company allows Executive Directors to

hold external non-executive directorships,

subject to the prior approval of the Board,

and to retain fees from these roles.

CHAIRMAN AND NON-EXECUTIVE

DIRECTORS’ LETTERS OF APPOINTMENT

The Chairman and the Non-executive

Directors do not have Service Agreements

with the Company. Instead, each of them

has a Letter of Appointment which sets out

the terms of their appointment, including the

three months’ prior written notice on which

their appointment can be terminated by

either party at any time. The dates of the

current Letters of Appointment are shown

in the Annual Report on Remuneration and

these, together with the Executive Directors’

Service Agreements, are available for

inspection at the Company’s registered office.

On appointment, the fee arrangements

for a new Non-executive Director are

setin accordance with the approved

remuneration policy in force at that time.

Full details of the terms of appointment

of each Director can be found on page 77

ofthe Remuneration Report.

7. TERMINATION PROVISIONS

FOREXECUTIVE DIRECTORS

The Company’s policy is for Executive

Directors’ Service Agreements to be

terminable on 12 months’ notice by either

party. Service Agreements contain non-

compete and non-solicit clauses with key

suppliers and employees. In the event of early

termination, any payment in lieu of notice

would be limited to 12 months’ basic salary,

normally payable on a phased basis and

subject to mitigation.

In addition to the scenarios below, an

Executive Director’s Service Agreement may

be terminated without notice and without

further payment or compensation, except for

sums earned up to the date of termination,

on the occurrence of certain events such as

gross misconduct.

The Committee retains discretion to determine

the exact termination arrangements of any

Executive Director, having regard to all the

relevant facts and circumstances available to

them at the time.

The table on page 90 sets out the general

position and range of approaches in respect

of incentive arrangements. In accordance

with the terms of the relevant incentive plan

rules, based on the circumstances of any

departure, the Committee has discretion

to determine how an Executive Director

should be categorised for each element and

determine payout/vesting levels accordingly

based on the range as shown.

LANDSEC ANNUAL REPORT 2024GOVERNANCE

Provision Default leaver Good leaver

Salary

•

12 months’ basic salary normally payable in instalments and

subject to mitigation

•

12 months’ basic salary normally payable in instalments and subject

to mitigation

Benefits

•

Cease upon termination of employment contract

•

No compensation for loss of benefits

•

Cease upon termination of employment contract

•

No compensation for loss of benefits

Pension allowance

•

Ceases upon termination of employment contract

•

The Company does not make any arrangements that

guarantee pensions with limited or no abatement on severance

or early retirement

•

Ceases upon termination of employment contract

•

The Company does not make any arrangements that guarantee

pensions with limited or no abatement on severance or early

retirement

Annual bonus

•

No entitlement following date notice served

•

Unvested deferred bonus shares lapse on cessation

•

Bonus may be payable subject to performance

•

Bonus is normally pro-rated based on the period worked during the

financial year

•

Payment usually occurs following the financial year end, in line with

the wider workforce

•

Deferred share awards normally vest on the scheduled date, unless

the Committee determines that awards should vest earlier

LTIP

•

Awards lapse in full

•

Unvested awards normally vest at the normal time subject to

performance unless the Committee determines otherwise

•

Awards are normally pro-rated by reference to the proportion of the

performance period that has elapsed up to cessation, unless the

Committee determines otherwise

•

Awards remain subject to any applicable retention period

All-employee

share schemes

•

Operate in line with HMRC rules

•

Operate in line with HMRC rules

Termination

support

•

None

•

One-off payments in respect of legal fees and/or outplacement

assistance may be payable

Compensation for

loss of office

•

None

•

None

Consistent with market practice, the

Company may pay reasonable legal fees

(and any associated tax costs) on behalf

of the Executive Director for entering into

a statutory settlement agreement and,

additionally, may make a reasonable

contribution towards fees for outplacement

services as part of a negotiated settlement.

In the case of a corporate transaction,

the Company may agree to pay reasonable

legal fees (and any associated tax costs)

on behalf of the Executive Director for advice

on the effect of the corporate transaction on

the Executive Director’s personal position as

a director (including, where appropriate, as

to the terms of their employment). The

Company may agree to pay reasonable legal

fees (and any associated tax costs) on behalf

of the Executive Director for advice related to

any proposed changes to their terms and

conditions of employment during their period

of employment.

8. CHANGE OF CONTROL

PROVISIONS

On a change of control, unvested LTIP

awards will normally vest subject to

performance and time pro-rating (although

the Committee may allow a greater number

of shares to vest than if pro-rating is applied

where appropriate) and unvested deferred

bonus shares vest in full. The contracts of

theExecutive Directors do not provide for

anyenhanced payments in the event of a

change of control of the Company or for

liquidated damages.

9. REMUNERATION OF NEWLY

APPOINTED EXECUTIVE DIRECTORS

The remuneration package for a new

externally appointed Executive Director will

be set in accordance with the terms of the

Company’s approved Policy in force at the

time of appointment.

FIXED PAY

•

The Committee has the flexibility to set

thebase salary of a new hire at the market

level or at a discount to the market level

initially, with a series of planned increases

implemented over the following few years

(subject to performance in the role) to

bring the salary to the desired positioning

•

In exceptional circumstances the salary of

a newly appointed Executive Director may

exceed the market median benchmark for

the role

VARIABLE PAY

•

The annual bonus will operate in

accordance with the terms of the approved

Policy, with the opportunity pro-rated for

the period of employment in the first year

•

Depending on the timing and

responsibilities of the appointment, it may

be necessary to set revised performance

measures and targets initially

•

The LTIP will also operate in accordance

with the approved Policy

DIRECTORS’ REMUNERATION POLICY

CONTINUED

LANDSEC ANNUAL REPORT 2024 91GOVERNANCE

The maximum level of variable pay that may

be offered to a new Executive Director is an

aggregate maximum of 450% of salary, but

it may be lower. This limit does not include

the value of any buy-out arrangements

(asdescribed below) deemed appropriate.

In addition to the elements of the

remuneration package covered by the policy,

the Committee may ‘buy out’ certain

existing remuneration arrangements of an

incoming Executive Director through the

offer of either additional cash and/or

share-based elements when it considers

these to be in the best interests of the

Company. Any such payments will be based

solely on remuneration lost when leaving the

former employer and will take into account

the existing delivery mechanism (i.e. cash,

shares, options), time horizons and

performance conditions.

In the case of an internally appointed

Executive Director, any variable pay element

awarded in respect of the prior role would

bepaid out according to its terms, adjusted

as relevant to take into account the

appointment. In addition, any other ongoing

remuneration obligations existing prior to

appointment will continue, provided that

they are put to shareholders for approval at

the earliest opportunity.

RELOCATION ALLOWANCE

For external and internal appointments, the

Committee may agree that the Company

will meet certain relocation expenses, for

a limited period only, as appropriate.

Where aDirector is recruited from overseas,

flexibility is retained to provide benefits that

take account of market practice in their

country of residence. The Company may

offer a cash amount on recruitment,

payment of which may be staggered over

a period of up to two years, to reflect the

value of benefits a new recruit may have

received from a former employer.

LEGAL FEES

On recruitment of an Executive Director,

theCompany may make a contribution

towards legal fees in connection with

agreeing employment terms and drawing

upa service contract.

Shareholders will normally be informed

of the remuneration package and all

additional payments to newly-appointed

Executive Directors at the time of their

appointment.

10. DISCRETIONS RETAINED

BY THE COMMITTEE

The Committee operates the Group’s various

incentive plans according to their respective

rules and in accordance with HMRC

regulations where relevant. To ensure the

efficient administration and appropriate

governance of all remuneration

arrangements the Committee may apply

certain operational discretions, within the

limits of the Directors’ Remuneration Policy

and relevant plan rules. These include, but

are not limited to, the following:

•

selecting the participants in the plans

•

determining the timing of awards and/or

payments

•

determining the quantum of awards and/

or payments

•

selecting appropriate performance criteria

and determining weightings, and adjusting

these if necessary

•

setting performance targets for the various

criteria, and adjusting these if necessary

•

adjusting the constituents of the

comparator groups in respect of relative

performance measures, if necessary

•

determining the extent of payment/vesting

based on the assessment of performance

•

determining ‘good leaver’ status and the

extent of payment/vesting in the case of

the bonus and share-based plans

•

determining the treatment of awards

under share-based plans in the event of

a change of control

•

making the appropriate adjustments

required in certain circumstances

(e.g. rights issues, corporate restructuring

events, variation of capital, special

dividends etc.)

In all cases, the Committee retains its

absolute discretion to override formulaic

outcomes in the bonus, LTIP and any other

remuneration arrangements should the

payouts not reflect underlying Company

performance.

LANDSEC ANNUAL REPORT 2024GOVERNANCE

DIRECTORS’ REPORT

The Directors present their report for the year

ended 31 March 2024.

ADDITIONAL DISCLOSURES

Other information that is relevant to this

report, and which is also incorporated by

reference, including information required

inaccordance with the Companies Act

2006and Listing Rule 9.8.4R, can be located

as follows:

TABLE 52

Pages

Likely future developments in

thebusiness

2-5

Employee engagement 25-27

Going concern and viability

statement

46-47

Governance 50-94

Capitalised interest 17-18

Financial instruments 144

Credit, market and liquidity risks 145-149

Related party transactions 160-161

Energy and carbon reporting 170-172

Workforce engagement 23

Stakeholders 22-24

Section 172 Statement 22-24

UK CORPORATE GOVERNANCE CODE

The Company has complied throughout the

year with all relevant provisions of the 2018

UK Corporate Governance Code (the Code).

The Code can be found on the FRC’s website:

frc.org.uk

COMPANY STATUS

Land Securities Group PLC is a public limited

liability company incorporated under UK law.

It has a premium listing on the London Stock

Exchange main market for listed securities

(LSE:LAND) and is a constituent member

ofthe FTSE 100 Index.

Landsec is a Real Estate Investment Trust

(REIT). It is expected that the Company,

which has no branches, will continue

to operate as the holding company of

the Group.

DIVIDENDS

The results for the year are set out in the financial statements on pages 105-161.

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

Thefirst interim dividend of 9.0 pence was paid to shareholders in October 2023, a second

interim dividend of 9.2 pence was paid to shareholders in January 2024; and a third interim

dividend of 9.3 pence per share was paid to shareholders in April 2024. A final dividend of

12.1pence per share is being put to shareholders for approval at the AGM in July 2024.

TABLE 53

1st Interim

2023/24

2nd Interim

2023/24

3rd Interim

2023/24

Final 2023/24

(proposed)

Property Income

Distribution (PID)/

Non-PID

9.0 pence (PID) 9.2 pence (PID) 9.3 pence (PID) 12.1 pence

(PID)

Record date 25 August 2023 24 November 2023 23 February 2024 14 June 2024

Payment date 6 October 2023 2 January 2024 12 April 2024 26 July 2024

A Dividend Reinvestment Plan (DRIP)

election is currently available in respect

ofalldividends paid by Landsec.

EVENTS AFTER THE

REPORTINGPERIOD

The following matters are disclosed in note

42 to the Financial Statements as events

occurring after the reporting period.

On 8 May 2024, the Group sold its interest

inLS Hotels Limited for a headline price of

£400m. No other significant events occurred

after the reporting period but before the

financial statements were authorised for

issue. See note 42.

DIRECTORS

The names and biographical details of the

current Directors and the Board Committees

of which they are members are set out on

pages 51-54.

All the Directors proposed for election

andre-election held office during the year.

The Service Agreements for our Executive

Directors and the Letters of Appointment

forour Non-executive Directors are available

for inspection at Landsec’s registered office.

A SUMMARY OF THESE DOCUMENTS IS

ALSOINCLUDED IN THE DIRECTORS’

REMUNERATION POLICY ON PAGES 83-91

APPOINTMENT AND REMOVAL

OFDIRECTORS

The appointment and replacement of

Directors is governed by Landsec’s Articles

ofAssociation (Articles), the Code, the

Companies Act 2006 (Act) and related

legislation.

The Board may appoint a Director either to

fill a vacancy or as an addition to the Board

so long as the total number of Directors

doesnot exceed the limit prescribed in the

Articles. An appointed Director must retire

and seek election to office at the next

Landsec AGM. In addition to any power of

removal conferred by the Act, Landsec may

by ordinary resolution remove any Director

before the expiry of their period of office and

may, subject to the Articles, by ordinary

resolution appoint another person who is

willing to act as a Director in their place.

Inline with the Code it is the Board’s policy

that all Directors are required to stand for

re-election at each AGM.

LANDSEC ANNUAL REPORT 2024 93GOVERNANCE

DIRECTORS’ POWERS

The Board manages the business of Landsec

under the powers set out in the Articles.

These powers include the Directors’ ability

toissue or buy back shares.

Shareholders’ authority to empower the

Directors to make market purchases of

upto10% of the Company’s own ordinary

shares is sought atthe AGM each year.

TheArticles can only be amended, or new

Articles adopted, by a resolution passed by

shareholders in general meeting and being

approved by at least three quarters of the

votes cast.

DIRECTORS’ INTERESTS

Save as disclosed in the Directors’

Remuneration Report, none of the Directors,

nor any person connected with them, has

any interest in the share or loan capital of

Landsec or any of its subsidiaries. At no time

during the year ended 31 March 2024 did

anyDirector hold a material interest, directly

or indirectly, in any contract of significance

with Landsec or any subsidiary other than

the Executive Directors in relation to their

Service Agreements.

DIRECTORS’ INDEMNITIES

ANDINSURANCE

Landsec has agreed to indemnify each

Director against any liability incurred in

relation to acts or omissions arising in the

ordinary course of their duties. The indemnity

applies only to the extent permitted by law.

A copy of the deed of indemnity is available

for inspection at Landsec’s registered office.

Landsec has appropriate Directors’ & Officers’

Liability insurance cover in respect of

potential legal action against its Directors.

SHARE CAPITAL

Landsec has a single class of share capital

which is divided into ordinary shares of

nominal value 102⁄3p each ranking pari passu.

No other securities have been issued by the

Company. At 31 March 2024, there were

751,676,657 ordinary shares in issue and fully

paid. As at 31 March 2024 the number of

shares held by the Company in Treasury

is6,789,236. The voting rights and dividend

entitlements have been waived for the

sharesheld by Treasury and the Employee

Benefit Trust.

No shares were bought back during the year.

Further details relating to share capital,

including movements during the year, are set

out in note 37 to the financial statements.

At the Company’s AGM held on 6 July 2023,

shareholders authorised the Company to

make market purchases of ordinary shares

representing up to 10% of its issued share

capital at that time and to allot shares

withincertain limits approved by shareholders.

These authorities will expire at the 2024

AGMand a renewal of that authority will

besought.

The Company received no other DTR

notifications by way of change to the

information in the substantial shareholders

table during the period from 1 April to 16 May

2024, being the period from the year end

through to the date on which this report has

been signed. Information provided to the

Company under the DTR is publicly available

to view via the Investor section on the

Company’s website.

EMPLOYEE BENEFIT TRUST

Equiniti Trust (Jersey) Limited continues

astrustee (Trustee) of Landsec’s Employee

Benefit Trust (EBT). The EBT is used to

purchase Land Securities Group PLC ordinary

shares in the market from time to time for

the benefit of employees, including to satisfy

outstanding awards under Landsec’s various

employee share plans.

The EBT did not purchase any shares in the

market during the year (2023: nil). The EBT

released 712,292 shares during the year to

satisfy vested share plan awards. At 31 March

2024 the EBT held 3,119,107 ordinary shares.

A dividend waiver is in place from the Trustee

in respect of all dividends payable by Landsec

on shares which the EBT holds. Further details

regarding the EBT, and of shares issued

pursuant to Landsec’s various employee

share plans during the year, are set out in

notes 36-38 to the financial statements.

SUBSTANTIAL SHAREHOLDERS

As at 31 March 2024, the Company had been notified under the Disclosure and Transparency

Rules (DTR 5) of the following holdings of voting rights in its issued share capital:

SHAREHOLDERS HOLDING 3% OR MORE OF THE COMPANY’S ISSUED SHARE CAPITAL

TABLE 54

Shareholder name Number of

ordinary shares

Percentage of total voting rights

attaching to issued share capital

BlackRock, Inc. 93,919,579 12.61

The Vanguard Group, Inc. 37,455,092 5.03

State Street Corporation 33,635,535 4.52

Government of Norway 33,505,630 4.50

Schroders Plc 32,166,591 4.32

Legal & General Group 31,311,786 4.20

Jupiter Investment Management Holdings 26,039,105 3.50

1. Total number of voting rights attaching to the issued share capital of the Company on 31 March 2024 was

744,887,421.

LANDSEC ANNUAL REPORT 2024GOVERNANCE

DIRECTORS’ REPORT

CONTINUED

SHAREHOLDER VOTING RIGHTS

ANDRESTRICTIONS ON TRANSFER

OFSHARES

All the issued and outstanding ordinary

shares of Landsec have equal voting rights

with one vote per share. There are no special

control rights attached to them save that

the control rights of ordinary shares held in

the EBT can be directed by the Company to

satisfy the vesting of outstanding awards

under its various employee share plans.

In relation to the EBT, the Trustee has agreed

not to vote any shares held in the EBT at any

general meeting. If any offer is made to all

shareholders to acquire their shares in

Landsec, the Trustee will not be obliged to

accept or reject the offer in respect of any

shares which are at the time subject to

subsisting awards, but will have regard to the

interests of the award holders and will have

power to consult them to obtain their views

on the offer. Subject to the above, the

Trustee may take such action with respect

toan offer as it thinks fit.

Landsec is not aware of any agreements or

control rights between existing shareholders

that may result in restrictions on the transfer

of securities or on voting rights. The rights,

including full details relating to voting of

shareholders and any restrictions on transfer

relating to Landsec’s ordinary shares, are set

out in the Articles and in the explanatory

notes that accompany the Notice of the

2024 AGM. These documents are available

onLandsec’s website at: landsec.com/agm.

CHANGE OF CONTROL

There are a number of agreements that take

effect, alter or terminate upon a change of

control of the Company following a takeover.

None of these are considered significant.

TheCompany’s share plans contain provisions

that take effect in such an event but do not

entitle participants to a greater interest in

the shares of the Company than created by

the initial grant or award under the relevant

plan. There are no agreements between the

Company and its Directors or employees

providing for compensation for loss of office

or employment or otherwise that occurs

specifically because of a takeover.

HUMAN RIGHTS AND EQUAL

OPPORTUNITIES

Landsec operates a Human Rights Policy

which aims to recognise and safeguard the

human rights of all citizens in the business

areas under our control. We support the

principles set out within both the UN

Universal Declaration of Human Rights and

the International Labour Organization’s

Declaration on Fundamental Principles and

Rights at Work. Our Policy is built on these

foundations including, without limitation, the

principles of equal opportunities, collective

bargaining, freedom of association and

protection from forced or child labour.

The Policy takes account of the Modern

Slavery Act that came into force in October

2015 and requires Landsec to report annually

on its workforce and supply chain, specifically

to confirm that workers are not enslaved or

trafficked. Landsec’s Modern Slavery

Statement was last approved by the Board

inJuly 2023 and is available on our website.

Landsec is an equal opportunities employer

and our range of employment policies and

guidelines reflects legal and employment

requirements in the UK and safeguards the

interests of employees, potential employees

and other workers. We do not condone unfair

treatment of any kind and offer equal

opportunities in all aspects of employment

and advancement regardless of race,

nationality, gender, age, marital status,

sexual orientation, disability, religious or

political beliefs.

Landsec recognises that it has clear

obligations towards all its employees and the

community at large to ensure that disabled

people are afforded equal opportunities to

enter employment and progress. Landsec

has therefore established procedures

designed to provide fair consideration and

selection of disabled applicants and to

satisfy their training and career development

needs. If an employee becomes disabled,

wherever possible Landsec takes steps to

provide reasonable adjustments to their

existing employment arrangements, or by

redeployment and providing appropriate

retraining to enable continued employment

in the Group. Further information can be

found on pages 25-27.

POLITICAL DONATIONS

The Company did not make any political

donations or expenditure in the year that

require disclosure (2023: nil).

AUDITOR AND DISCLOSURE OF

INFORMATION TO THE AUDITOR

So far as the Directors are aware, there is no

relevant audit information that has not been

brought to the attention of the Company’s

auditor. Each Director has taken all

reasonable steps to make himself or herself

aware of any relevant audit information and

to establish that such information was

provided to the auditor.

A resolution to confirm the reappointment

ofErnst & Young LLP (EY) as auditor of the

Company will be proposed at the 2024 AGM.

The reappointment has been recommended

to the Board by the Audit Committee and

EYhas indicated its willingness to remain

inoffice.

2024 ANNUAL GENERAL MEETING

This year’s AGM is scheduled to be held

at2.30 pm on Thursday, 11 July 2024 at

80Victoria Street, London SW1E 5JL.

A separate circular, comprising a letter

fromthe Chair, Notice of Meeting and

explanatory notes in respect of the

resolutions proposed, can be found on

ourwebsite: landsec.com/agm.

DISCLAIMER

The purpose of this Annual Report is to

provide information to the members of the

Company and it has been prepared for, and

only for, the members of the Company as a

body, and no other persons. The Company,

its Directors and employees, agents and

advisers do not accept or assume

responsibility to any other person to whom

this document is shown or into whose hands

it may come and any such responsibility or

liability is expressly disclaimed.

A cautionary statement in respect of

forward-looking statements contained in this

Annual Report appears on the inside back

cover of this document.

The Directors’ Report was approved by the

Board on 16 May 2024.

By Order of the Board.

MARINA THOMAS, COMPANY SECRETARY

Land Securities Group PLC

Company number 4369054

LANDSEC ANNUAL REPORT 2024 95FINANCIAL STATEMENTS

The Directors are responsible for preparing

the Annual Report and the financial

statements in accordance with applicable

law and regulations.

Company law requires the Directors to

prepare financial statements for each

financial year. Under that law the Directors

have prepared the Group and the Company

financial statements in accordance with the

requirements of the Companies Act 2006.

Under the Financial Conduct Authority’s

Disclosure Guidance and Transparency

Rules and company law, group financial

statements are required to be prepared in

accordance with UK adopted international

accounting standards (IFRSs and IFRICs).

Directors must not approve the financial

statements unless they are satisfied that

they give a true and fair view of the state

ofaffairs of the Group and the Company

andof the profit and loss of the Group and

the Company for that period.

In preparing these financial statements,

theDirectors are required to:

•

select suitable accounting policies in

accordance with IAS 8 ‘Accounting Policies,

Changes in Accounting Estimates and

Errors’ and then apply them consistently;

•

make judgements and accounting

estimates that are reasonable and

prudent;

•

present information, including accounting

policies, in a manner that provides

relevant, reliable, comparable and

understandable information;

•

in respect of the Group financial

statements, state whether international

accounting standards in conformity with

the requirements of the Companies Act

2006 (and UK adopted international

accounting standards) have been followed,

subject to any material departures

disclosed and explained in the financial

statements;

•

in respect of the Company financial

statements, state whether international

accounting standards in conformity with

the requirements of the Companies Act

2006 have been followed, subject to

anymaterial departures disclosed and

explained in the financial statements;

•

provide additional disclosures when

compliance with the specific requirements

of UK adopted international accounting

standards is insufficient to enable users

tounderstand the impact of particular

transactions, other events and conditions

on the Group’s and Company’s financial

position and performance; and

•

prepare the Group’s and Company’s

financial statements on a going concern

basis, unless it is inappropriate to do so.

The Directors are responsible for keeping

adequate accounting records that are

sufficient to show and explain the Group’s

and Company’s transactions and disclose

with reasonable accuracy at any time the

financial position of the Group and the

Company, and to enable them to ensure

thatthe Annual Report complies with the

Companies Act 2006 and as regards the

Group financial statements, Article 4 of

theIAS regulation. They are also responsible

for safeguarding the assets of the Group

andthe Company and hence for taking

reasonable steps for the prevention and

detection of fraud and other irregularities.

DIRECTORS’ RESPONSIBILITY

STATEMENT UNDER THE DISCLOSURE

AND TRANSPARENCY RULES

Each of the Directors, whose names and

functions appear below, confirm to the best

of their knowledge:

•

the Group financial statements, which

have been prepared in accordance with

international accounting standards in

conformity with the requirements of the

Companies Act 2006 (and UK adopted

international accounting standards);

•

give atrue and fair view of the assets,

liabilities, financial position, performance

and cash flows of the Company and

Group as a whole; and

•

the Strategic Report contained in the

Annual Report includes a fair review of

thedevelopment and performance of the

business and the position of the Group and

the Company, together with a description

of the principal risks and uncertainties

faced by the Group and Company.

DIRECTORS’ STATEMENT UNDER THE

UK CORPORATE GOVERNANCE CODE

Each of the Directors confirm that to the

best of their knowledge the Annual Report

taken as a whole is fair, balanced and

understandable and provides the information

necessary for shareholders to assess the

Group’s and Company’s position,

performance, business model and strategy.

A copy of the financial statements of the

Group is placed on the Company’s website.

The Directors are responsible for the

maintenance and integrity of statutory

andaudited information on the Company’s

website at landsec.com. Information

published on the internet is accessible

inmany countries with different legal

requirements. Legislation in the United

Kingdom governing the preparation and

dissemination of financial statements may

differ from legislation in other jurisdictions.

The Directors of Land Securities Group PLC

asat the date of this announcement are as

set out below:

•

Sir Ian Cheshire, Chairman*

•

Mark Allan, Chief Executive

•

Vanessa Simms, Chief Financial Officer

•

Edward Bonham Carter, Senior

Independent Director*

•

James Bowling*

•

Madeleine Cosgrave*

•

Christophe Evain*

•

Moni Mannings*

•

Miles Roberts*

•

Manjiry Tamhane*

*Non-executive Directors

The Statement of Directors’ Responsibilities

was approved by the Board of Directors on

16 May 2024 and is signed on its behalf by:

MARK ALLAN,

CHIEF EXECUTIVE

VANESSA SIMMS,

CHIEF FINANCIAL OFFICER

STATEMENT OF DIRECTORS’ RESPONSIBILITIES

LANDSEC ANNUAL REPORT 2024FINANCIAL STATEMENTS

OPINION

In our opinion:

•

Land Securities Group PLC’s Group financial statements and Parent Company financial statements (the “financial statements”) give a

trueand fair view of the state of the Group’s and of the Parent Company’s affairs as at 31 March 2024 and of the group’s loss for the year

then ended;

•

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

•

the Parent Company financial statements have been properly prepared in accordance with UK adopted international accounting standards

as applied in accordance with section 408 of the Companies Act 2006; and

•

the financial statements have been prepared in accordance with the requirements of the Companies Act 2006.

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

ended 31 March 2024 which comprise:

Group Parent Company

Consolidated balance sheet as at 31 March 2024 Balance sheet as at 31 March 2024

Consolidated income statement for the year then ended Statement of changes in equity for the year then ended

Consolidated statement of comprehensive income for the year then ended Statement of cash flows for the year then ended

Consolidated statement of changes in equity for the year then ended Related notes 1 to 42 to the financial statements including material

accounting policy information

Consolidated statement of cash flows for the year then ended

Related notes 1 to 42 to the financial statements, including material

accounting policy information.

The financial reporting framework that has been applied in the preparation of the Group financial statements is applicable law and UK adopted

international accounting standards and as regards the Parent Company financial statements, as applied in accordance with section 408 of the

Companies Act 2006.

BASIS FOR OPINION

We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under

those standards are further described in the Auditor’s responsibilities for the audit of the financial statements section of our report. We believe

that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

INDEPENDENCE

We are independent of the Group and Parent in accordance with the ethical requirements that are relevant to our audit of the financial

statements in the UK, including the FRC’s Ethical Standard as applied to listed public interest entities, and we have fulfilled our other ethical

responsibilities in accordance with these requirements.

The Non-Audit services prohibited by the FRC’s Ethical Standard were not provided to the Group or the Parent Company and we remain

independent of the Group and the Parent Company in conducting the audit.

CONCLUSIONS RELATING TO GOING CONCERN

In auditing the financial statements, we have concluded that the Directors’ use of the going concern basis of accounting in the preparation

ofthe financial statements is appropriate. Our evaluation of the Directors’ assessment of the Group and Parent Company’s ability to continue

to adopt the going concern basis of accounting included:

•

assessing the risk around going concern in planning our audit, at the interim and again at the year-end phase.

•

confirming our understanding of the Group’s going concern assessment process and reviewing management’s related Board papers.

•

assessing and challenging the appropriateness of the duration of the going concern review period to the end of September 2025 and

considering whether there are any known events or conditions that will occur in the short-term following the going concern period which

would impact our considerations.

•

challenging the key assumptions and inputs used by management within the base case and downside scenarios modelled by management

by comparing to corroborative evidence and searching out independent contradictory evidence.

•

challenging whether sustainability costs identified by management associated with the Net Zero Transition Investment Plan have been

appropriately considered within the base case and downside scenarios modelled by management.

•

assessing and challenging management’s consideration of downside sensitivities taking into account current events and market

conditions.We have applied further sensitivities on income, inflation and interest assumptions where appropriate to stress test the impact

onboth liquidity and covenants. As part of our sensitivity testing, we considered the perspective of our chartered surveyors on forecast

valuation movements.

INDEPENDENT AUDITOR’S REPORT

TO THE MEMBERS OF LAND SECURITIES GROUP PLC

LANDSEC ANNUAL REPORT 2024 97FINANCIAL STATEMENTS

•

checking the integrity of the models developed by management for the base case cash flow, liquidity forecasts and covenant calculations

covering the going concern review period to September 2025 and the additional downside scenarios. This has included re-performing

calculations and testing the formulas being applied throughout.

•

checking that the terms and conditions of the debt agreements with lenders had been appropriately incorporated into the going concern

scenarios and modelling, including the maturity profile of the Group’s borrowings, the impact of the Security Group structure (as defined

in the Glossary on page 188) and the tiered operating covenant regime.

•

performing testing to evaluate whether the covenant requirements of the debt facilities would be breached under either the base case or

the downside scenarios through the going concern period.

•

challenging the conclusions that both the levels of decline required to breach the covenants and the reverse stress test prepared can be

considered as remote by obtaining external market outlooks in relation to future valuations and reviewing previous declines observed in results.

•

testing on key assumptions and considered the likelihood of outcomes including controllable mitigating actions, which include uncommitted

capital expenditure, acquisitions, disposals and developments, over and above the scenarios modelled.

•

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

•

reviewing the disclosures in the financial statements relating to going concern with a view to confirming that they appropriately disclose the

risk, the impact on the Group’s operations and results and potential mitigating actions.

The results of the severe but plausible downside scenarios modelled by management indicate that the Group would maintain available facility

and covenant headroom to be able to withstand the impact of plausible downside sensitivities throughout the period of the going concern

assessment to 30 September 2025.

Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually

orcollectively, may cast significant doubt on the Group and Parent Company’s ability to continue as a going concern for a period to

30 September 2025.

In relation to the Group and Parent Company’s reporting on how they have applied the UK Corporate Governance Code, we have nothing

material to add or draw attention to in relation to the Directors’ statement in the financial statements about whether the Directors considered

it appropriate to adopt the going concern basis of accounting.

Our responsibilities and the responsibilities of the Directors with respect to going concern are described in the relevant sections of this report.

However, because not all future events or conditions can be predicted, this statement is not a guarantee as to the Group’s ability to continue as

a going concern.

OVERVIEW OF OUR AUDIT APPROACH

Audit scope

•

The Group operates in the United Kingdom through four segments: Central London, Major retail, Mixed-use urban and Subscale sectors.

•

We have identified the Group as one component and perform full scope procedures across the entire Group. The Group audit team also

performed audit procedures on joint venture balances included within the Group financial statements.

Key audit

matters

•

The valuation of property, including investment properties and investment properties held in joint ventures.

•

Revenue recognition, including service charge income and the treatment of lease incentives.

Materiality

•

Overall Group materiality of £96m which represents 0.9% of total assets in the Group balance sheet at 31 March 2024. Overall

materiality is applied to account balances related to investment properties and trading properties (either wholly owned or within the

Joint Venture) and loans and borrowings (excluding the related finance expense).

•

Specific materiality of £19m, which represents 5% of EPRA Earnings before tax. Specific materiality is applied to account balances which

are not account balances related to investment properties, trading properties (either wholly owned or within the Joint Venture) and

loans and borrowings.

•

Parent Company materiality of £51m, which represents 0.9% of total assets in the Parent Company balance sheet. Parent Company

materiality is applied to all balances within the Parent Company.

LANDSEC ANNUAL REPORT 2024FINANCIAL STATEMENTS

AN OVERVIEW OF THE SCOPE OF THE PARENT COMPANY AND GROUP AUDITS

TAILORING THE SCOPE

Our assessment of audit risk, our evaluation of materiality and our allocation of performance materiality determine our audit scope for each

company within the Group. Taken together, this enables us to form an opinion on the consolidated financial statements. We take into account

size, risk profile, the organisation of the Group and effectiveness of Group-wide controls, changes in the business environment, the potential

impact of climate change and other factors such as recent Internal audit results when assessing the level of work to be performed at each

company.

CLIMATE CHANGE

Stakeholders are increasingly interested in how climate change will impact Land Securities Group PLC. The Group has determined that the most

significant future impacts from climate change on their operations will be from failure to meet their 2040 science-based net zero target leading

to regulatory, reputational and commercial impact and failure to mitigate physical impact on the Group’s assets. These are explained in the

required Task Force On Climate Related Financial Disclosures and on pages 41 to 45 in the principal risks and uncertainties. They have also

explained their climate commitments on pages 28-32. All of these disclosures form part of the “Other information,” rather than the audited

financial statements. Our procedures on these unaudited disclosures therefore consisted solely of considering whether they are materially

inconsistent with the financial statements or our knowledge obtained in the course of the audit or otherwise appear to be materially misstated,

in line with our responsibilities on “Other information”.

In planning and performing our audit we assessed the potential impacts of climate change on the Group’s business and any consequential

material impact on its financial statements.

The Group has explained in the basis of preparation note within the financial statements how they have reflected the impact of climate change

in their financial statements including how this aligns with their commitment to achieve net zero emissions by 2040. The impact of climate

change on significant judgements and estimates are included in note 2.

Our audit effort in considering the impact of climate change on the financial statements was focused on evaluating management’s

assessment of the impact of climate risk, physical and transition, their climate commitments, the effects of material climate risks disclosed on

pages 41 to 45 and the significant judgements and estimates disclosed in note 2 and whether these have been appropriately reflected in the

valuation of the investment properties, investment properties held in joint ventures and trading properties or have any other material impact

on the financial statements. As part of this evaluation, we performed our own risk assessment, supported by our climate change internal

specialists, to determine the risks of material misstatement in the financial statements from climate change which needed to be considered in

our audit.

We also challenged the Directors’ considerations of climate change risks in their assessment of going concern and viability and associated

disclosures. Where considerations of climate change were relevant to our assessment of going concern, these are described above.

Based on our work, whilst we have not identified the impact of climate change on the financial statements to be a standalone key audit

matter, we have considered the impact on the valuation of property, including investment properties and investment properties held in joint

ventures key audit matter. Details of the impact, our procedures and findings are included in our explanation of key audit matter below.

KEY AUDIT MATTERS

Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the financial statements of

the current period and include the most significant assessed risks of material misstatement (whether or not due to fraud) that we identified.

These matters included those which had the greatest effect on: the overall audit strategy, the allocation of resources in the audit; and directing

the efforts of the engagement team. These matters were addressed in the context of our audit of the financial statements as a whole, and in

our opinion thereon, and we do not provide a separate opinion on these matters.

INDEPENDENT AUDITOR’S REPORT

CONTINUED

LANDSEC ANNUAL REPORT 2024 99FINANCIAL STATEMENTS

Risk Our response to the risk

Key observations

communicated to the

Audit Committee

The valuation of property,

including investment properties

and investment properties held

in joint ventures

2024: £9,330m in investment

properties and £585m (the Group’s

share) in investment properties

held in joint ventures (2023:

£9,658m in investment properties

and £601m (the Group’s share)

ininvestment properties held in

joint ventures)

Refer to the Report of the Audit

Committee (pages 64-69);

Accounting policies (page 125-126);

Note 14 & 16 of the Financial

statements (pages 127-136).

The valuation of property,

includinginvestment properties,

development properties and

investment properties held in

jointventures, requires significant

judgement and estimation by

Management and their external

valuers. Inaccuracies in inputs

orunreasonable bases used in

these judgements (including the

estimated rental value, yield profile

applied and development costs

tocomplete) could result in a

material misstatement of the

income statement and balance

sheet. There is also a risk that

management could inappropriately

influence the input data and/or

thesignificant judgements and

estimates in respect of property

valuations in order to meet market

expectations or bonus targets.

Our audit procedures over the valuation of property included:

We obtained an understanding of the Group’s processes and controls around the

valuation of properties.

We evaluated the competence of the Group’s external valuers, CBRE and JLL which

included consideration of their qualifications and expertise.

We attended meetings between management and CBRE and management and

JLLtoassess for evidence of undue management influence and we obtained

confirmation from CBRE and JLL that they had not been subject to undue influence

from management.

We met with CBRE and JLL to challenge their valuation approach and the judgements

they made in assessing the property valuation. Such judgements included the

estimated rental value, yield profile and other significant assumptions that impact

thevalue.

We selected a sample of investment properties based on a number of factors including

size, risk (including climate), representation across asset classes and segments. Our

sample includes selections not testing in prior years. Our sample comprised 77% of the

market value of investment properties (including investment properties held in joint

ventures). For this sample of properties, we tested source documentation provided by

the Group to CBRE and JLL. This included agreeing a sample back to underlying lease

data and vouching costs incurred to date in respect of development properties.

We assessed and challenged the judgements made by CBRE and JLL, including

through inspection of comparable market evidence.

We included chartered surveyors on our audit team who reviewed and challenged the

valuation approach and assumptions for the same sample of properties. Our chartered

surveyors compared the yields applied to each property to an expected range of yields

taking into account available market data and asset specific considerations. They

challenged whether the other assumptions applied by the external valuers, such as the

estimated rental values, voids, tenant incentives and development costs to complete

were supported by available data. They also challenged whether other market

transactions contradict the assumptions used in the valuation.

Together with our chartered surveyors, we met with the external valuers to further

discuss the findings from our audit work described above and to seek further

explanations as required.

We challenged whether sustainability costs identified by management as part of the

Net Zero Investment Plan have been appropriately considered within the valuation.

Aspart of this, we assessed and challenged judgements made by CBRE and JLL for

costs associated with climate change.

We performed analytical procedures on the properties not included in the sample

reviewed in detail by our chartered surveyors by comparing assumptions and the value

of those properties by reference to our understanding of the UK real estate market,

external market data and asset specific considerations to evaluate the appropriateness

of the valuations adopted by the Group. Where values or assumptions were not in line

with our expectations, we challenged these further by discussing with management,

CBRE, JLL and our chartered surveyors and, where appropriate, obtaining further

evidence to support the movement in values.

We performed 7 site visits. Where properties are under development, this enabled us

totest existence of the property and challenge whether the status of the development

was consistent with what we were told by management. We challenged development

directors and project managers for major properties in the development programme

on the project costs, progress of development and leasing status. We challenged the

reasonableness of forecast costs to complete included in the valuations as well as

theidentified contingencies and the exposure to remaining risks, by comparing the

total forecast costs to contractual arrangements and other supporting evidence.

Wechallenged forecast cost and cost to complete for evidence of overruns through

risks identified during our development meetings, review of meeting minutes and other

supporting information. We challenged the information provided by the development

directors and the project managers through our review of cost analysis as well as the

valuation outcome.

We assessed the adequacy of the disclosures of estimates and valuation assumptions

in note 14 including those required by IFRS 13 – Fair Value Measurement.

Scope of our procedures

We performed full scope audit procedures over the valuation of properties, including

investment properties and investment properties held in joint ventures.

We have tested the

inputs, assumptions

and methodology

used by CBRE and JLL.

We have concluded

that the methodology

applied is reasonable

and that the external

valuations are a

reasonable assessment

of the market value of

investment properties

at 31 March 2024.

We concluded that

the sample of

properties reviewed

byour chartered

surveyors was

withinthe reasonable

range of values as

assessed by them.

Weconcluded that

climate change has

been appropriately

considered within

thevaluations where

appropriate.

We consider that

management provided

an appropriate level of

review and challenge

over the valuations,

and we did not

identify evidence of

undue management

influence.

We have reviewed

thedisclosures in the

financial statements

including the

significant accounting

estimates and

sensitivities and

consider them to

beappropriate.

LANDSEC ANNUAL REPORT 2024FINANCIAL STATEMENTS

Risk Our response to the risk

Key observations

communicated to the

Audit Committee

Revenue recognition, including

service charge income and the

treatment of lease incentives.

2024: £622m rental income

(2023:£612m rental income)

2024: £117m service charge

income(2023: £91m service

chargeincome)

Refer to the Report of the Audit

Committee (pages 64-69);

Accounting policies (pages

116-117); Note 6 of the Financial

statements (pages 116-117).

Market expectations and EPRA

earnings-based targets (which

include management

compensation) may place pressure

on management to distort revenue

recognition. This may result in

overstatement or understatement

of rental income and service

charge income to assist in meeting

current or future targets or

expectations, including through

themanipulation of timing of

revenue recognition of lease

incentives (straight line rent),

inappropriate income recovered

through the service charge and

fictitious revenues being recorded

via topside journals.

Our audit procedures over revenue recognition included:

We selected a sample of new, existing and amended lease agreements in the year

andagreed the key lease terms to Group’s property information management system

(PIMS), including lease incentive clauses.

We tested certain manual controls governing approvals and changes to lease terms

and the upload of this information to PIMS. We also performed testing of certain

manual controls over the billings process.

We performed data analytics procedures to set an expectation of rental income across

the whole population of leases in the Group’s portfolio; this also covers the straight-

lining rent adjustment for lease incentives.

We obtained the schedules used to calculate straight-lining of revenue in accordance

with IFRS 16 Leases. We tested the arithmetical accuracy of these schedules and that

the straight lining was calculated in accordance with the guidance. For a sample of

leases we agreed the lease information per the schedules back to lease agreements.

We performed additional substantive testing procedures over a sample of variable

turnover rents by recalculating the expected turnover revenue based on evidence

received from tenants and PIMS. We further agreed invoices issued to cash collections

received for each of these samples.

We have performed testing in relation to service charge income. This has included

vouching a sample of income recognised to both invoice and cash collection, and

performing an analytical review to challenge unexpected or unusual variances.

Wehave also performed testing on the service charge expense in the year, including

the accrual at year end to test cut-off.

We performed audit procedures specifically designed to address the risk of management

override of controls including topside consolidation adjustments and journal entries

which impact revenue.

Scope of our procedures

The Group was subject to full scope audit procedures over revenue.

Based upon the

auditprocedures

performed, we

concluded that

revenue has been

recognised on an

appropriate basis

inthe year.

OUR APPLICATION OF MATERIALITY

We apply the concept of materiality in planning and performing the audit, in evaluating the effect of identified misstatements on the audit and

in forming our audit opinion.

MATERIALITY

The magnitude of an omission or misstatement that, individually or in the aggregate, could reasonably be expected to influence the economic

decisions of the users of the financial statements. Materiality provides a basis for determining the nature and extent of our audit procedures.

The table below sets out the materiality, performance materiality and threshold for reporting audit differences applied on our audit:

Basis Materiality Performance materiality Audit differences

Overall – all account balances related

toinvestment properties and trading

properties (either wholly owned or

withinthe Joint Venture) and loans

andborrowings (excluding the related

finance expense)

0.9% of total assets

(2023: 0.9% of total assets)

£96m

(2023: £99m)

£72m

(2023: £74m)

£5m

(2023: £5m)

Specific – all account balances which

arenot account balances related to

investment properties, trading

properties (either wholly owned or

withinthe Joint Venture) and loans

andborrowings

5% of EPRA Earnings before tax

(2023: 5% EPRA Earnings

beforetax)

£19m

(2023: £19m)

£14m

(2023: £14m)

£1m

(2024: £1m)

Parent Company 0.9% of total assets

(2023: 0.9% of total assets)

£51m

(2023: £56m)

£38m

(2023: £42m)

£3m

(2023: £3m)

INDEPENDENT AUDITOR’S REPORT

CONTINUED

100

LANDSEC ANNUAL REPORT 2024 101FINANCIAL STATEMENTS

When establishing our overall audit strategy, we determined a magnitude of uncorrected misstatements that we judged would be material

forthe financial statements as a whole. We determined that an asset-based measure would be the most appropriate basis for determining

overall materiality given that key users of the Group’s financial statements are primarily focused on the valuation of the Group’s assets.

Basedon this, we determined that it is appropriate to set the overall materiality at 0.9% of total assets (2023: 0.9% of total assets).

Weappliedoverall materiality to the investment properties and trading properties balances (either wholly owned or within the Joint Venture)

and loans and borrowings (excluding the related finance expense) as the value of loans and borrowings which are secured against the Group’s

investment properties.

This provided a basis for determining the nature, timing and extent of risk assessment procedures, identifying and assessing the risk of material

misstatement and determining the nature, timing and extent of further audit procedures.

We determined that for other account balances not related to investment properties, trading properties (either wholly owned or held within

joint ventures) or loans and borrowings, a misstatement of less than overall materiality for the financial statements as a whole could influence

the economic decisions of users. We believe that it is most appropriate to use a profit-based measure as profit is also a focus of users of the

financial statements.

We determined that materiality for these areas should be based upon 5% of EPRA earnings before tax. EPRA earnings is considered an

important performance metric and aligned with industry earnings measures.

During the course of our audit, we reassessed initial materiality which resulted in a reduction to our overall materiality as a result of total assets

having decreased from our initial materiality assessment.

PERFORMANCE MATERIALITY

The application of materiality at the individual account or balance level. It is set at an amount to reduce to an appropriately low level the

probability that the aggregate of uncorrected and undetected misstatements exceeds materiality.

On the basis of our risk assessments, together with our assessment of the Group’s overall control environment, our judgement was that

performance materiality was 75% (2023: 75%) of our planning materiality. We have set performance materiality at this percentage due

toourpast experience of the audit that indicates a lower risk of misstatements, both corrected and uncorrected.

REPORTING THRESHOLD

An amount below which identified misstatements are considered as being clearly trivial.

We agreed with the Audit Committee that we would report to them all uncorrected audit differences in excess of £5m (2023: £5m), which is

setat 5% of planning materiality, as well as differences below that threshold that, in our view, warranted reporting on qualitative grounds.

We evaluate any uncorrected misstatements against both the quantitative measures of materiality discussed above and in light of other

relevant qualitative considerations in forming our opinion.

OTHER INFORMATION

The other information comprises the information included in the annual report, including the Strategic Report and Governance section set out

on pages 1-94, other than the financial statements and our auditor’s report thereon. The Directors are responsible for the other information

contained within the annual report.

Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in this report,

we do not express any form of assurance conclusion thereon.

Our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the

financial statements or our knowledge obtained in the course of the audit or otherwise appears to be materially misstated. If we identify such

material inconsistencies or apparent material misstatements, we are required to determine whether this gives rise to a material misstatement

in the financial statements themselves. If, based on the work we have performed, we conclude that there is a material misstatement of the

other information, we are required to report that fact.

We have nothing to report in this regard.

LANDSEC ANNUAL REPORT 2024FINANCIAL STATEMENTS

OPINIONS ON OTHER MATTERS PRESCRIBED BY THE COMPANIES ACT 2006

In our opinion, the part of the Directors’ remuneration report to be audited has been properly prepared in accordance with the

CompaniesAct2006.

In our opinion, based on the work undertaken in the course of the audit:

•

the information given in the Strategic Report and the Directors’ Report for the financial year for which the financial statements are prepared

is consistent with the financial statements and those reports have been prepared in accordance with applicable legal requirements;

•

the information about internal control and risk management systems in relation to financial reporting processes and about share capital

structures, given in compliance with rules 7.2.5 and 7.2.6 in the Disclosure Rules and Transparency Rules sourcebook made by the Financial

Conduct Authority (the FCA Rules), is consistent with the financial statements and has been prepared in accordance with applicable legal

requirements; and

•

information about the Company’s corporate governance statement and practices and about its administrative, management and

supervisory bodies and their committees complies with rules 7.2.2, 7.2.3 and 7.2.7 of the FCA Rules.

MATTERS ON WHICH WE ARE REQUIRED TO REPORT BY EXCEPTION

In the light of the knowledge and understanding of the Group and the Parent Company and its environment obtained in the course of the

audit, we have not identified material misstatements in:

•

the strategic report or the directors’ report; or

•

the information about internal control and risk management systems in relation to financial reporting processes and about share capital

structures, given in compliance with rules 7.2.5 and 7.2.6 of the FCA Rules

We have nothing to report in respect of the following matters in relation to which the Companies Act 2006 requires us to report to you if,

inouropinion:

•

adequate accounting records have not been kept by the Parent Company, or returns adequate for our audit have not been received from

branches not visited by us; or

•

the parent company financial statements and the part of the Directors’ Remuneration Report to be audited are not in agreement with the

accounting records and returns; or

•

certain disclosures of Directors’ remuneration specified by law are not made; or

•

we have not received all the information and explanations we require for our audit; or

•

a Corporate Governance Statement has not been prepared by the Company.

CORPORATE GOVERNANCE STATEMENT

We have reviewed the directors’ statement in relation to going concern, longer-term viability and that part of the Corporate Governance

Statement relating to the Group and Company’s compliance with the provisions of the UK Corporate Governance Code specified for our review

by the Listing Rules.

Based on the work undertaken as part of our audit, we have concluded that each of the following elements of the Corporate Governance

Statement is materially consistent with the financial statements or our knowledge obtained during the audit:

•

Directors’ Statement with regards to the appropriateness of adopting the going concern basis of accounting and any material uncertainties

identified set out on pages 46-47 and 95;

•

Directors’ explanation as to its assessment of the Company’s prospects, the period this assessment covers and why the period is appropriate

set out on pages 46-47;

•

Director’s Statement on whether it has a reasonable expectation that the Group will be able to continue in operation and meets its liabilities

set out on page 95;

•

Directors’ statement on fair, balanced and understandable set out on page 95;

•

Board’s confirmation that it has carried out a robust assessment of the emerging and principal risks set out on pages 41-45;

•

The section of the annual report that describes the review of effectiveness of risk management and internal control systems set out on

pages 38-45; and;

•

The section describing the work of the Audit Committee set out on pages 62-69.

RESPONSIBILITIES OF DIRECTORS

As explained more fully in the Directors’ responsibilities statement set out on page 95, the directors are responsible for the preparation of the

financial statements and for being satisfied that they give a true and fair view, and for such internal control as the directors determine is

necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the financial statements, the directors are responsible for assessing the Group and Parent Company’s ability to continue as a going

concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either

intend to liquidate the Group or the Parent Company or to cease operations, or have no realistic alternative but to do so.

INDEPENDENT AUDITOR’S REPORT

CONTINUED

102

LANDSEC ANNUAL REPORT 2024 103FINANCIAL STATEMENTS

AUDITOR’S RESPONSIBILITIES FOR THE AUDIT OF THE FINANCIAL STATEMENTS

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement,

whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance,

butisnot a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists.

Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected

to influence the economic decisions of users taken on the basis of these financial statements.

EXPLANATION AS TO WHAT EXTENT THE AUDIT WAS CONSIDERED CAPABLE OF DETECTING IRREGULARITIES,

INCLUDING FRAUD

Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our responsibilities,

outlined above, to detect irregularities, including fraud. The risk of not detecting a material misstatement due to fraud is higher than the risk of

not detecting one resulting from error, as fraud may involve deliberate concealment by, for example, forgery or intentional misrepresentations,

or through collusion. The extent to which our procedures are capable of detecting irregularities, including fraud is detailed below.

However, the primary responsibility for the prevention and detection of fraud rests with both those charged with governance of the Company

and management.

•

We obtained an understanding of the legal and regulatory frameworks that are applicable to the Group and determined that the most

significant are those that relate to the reporting framework (UK adopted international accounting standards, the Companies Act 2006 and

UK Corporate Governance Code), Listing Rules, the relevant tax regulations in the United Kingdom, including the UK REIT regulations, the UK

General Data Protection Regulation (GDPR), Health & Safety Regulations, Building Safety Act and the Bribery Act. There are no significant

industry specific laws or regulations that we considered in determining our approach.

•

We understood how Land Securities Group PLC is complying with those frameworks through enquiry with management, and by identifying

the Group’s policies and procedures regarding compliance with laws and regulations. We also identified those members of management who

have the primary responsibility for ensuring compliance with laws and regulations, and for reporting any known instances of non-compliance

to those charged with governance. We corroborated our enquiries through our review of board minutes and papers provided to the board

andthe Audit Committee, as well as consideration of the results of our audit procedures across the Group to either corroborate or provide

contrary evidence which was then followed up. Our assessment included the tone from the top and the emphasis on a culture of honest and

ethical behaviour.

•

We assessed the susceptibility of the Group’s financial statements to material misstatement, including how fraud might occur by reviewing

the Company’s risk register and enquiry with management and the Audit Committee during the planning and execution phases of our audit.

We considered the programmes and controls that the Group has established to address risks identified, or that otherwise prevent, deter and

detect fraud; and how management monitors those programmes and controls.

•

Based on this understanding we designed our audit procedures to identify non-compliance with such laws and regulations.

Ourproceduresinvolved:

—

Enquiry of management, and when appropriate, those charged with governance regarding their knowledge of any non-compliance

orpotential non-compliance with laws and regulations that could affect the financial statements;

—

Understanding of management’s internal controls designed to prevent and detect irregularities;

—

Designing audit procedures to incorporate unpredictability around the nature, timing and extent of our testing;

—

Performing analytical procedures to identify any unusual or unexpected relationships that may indicate risks of material misstatement

dueto fraud;

—

Reading minutes of meetings of those charged with governance, including those of the Risk Committee and the Audit Committee;

—

Reading of internal audit reports;

—

Obtaining electronic confirmations from the Group’s banking providers to vouch the existence of cash balances and completeness of loans,

borrowings and other treasury positions such as derivatives;

—

Obtaining and reading correspondence from legal and regulatory bodies, including the FRC and HMRC;

—

Challenging assumptions and judgements made by management in their significant accounting estimates, in particular in relation to

thevaluation of investment property and the fair value of the acquired assets and liabilities of Land Securities Group PLC (see key audit

matters set out earlier in this report); and

—

Journal entry testing, with a focus on manual journals and journals indicating large or unusual transactions based on our understanding

the business.

A further description of our responsibilities for the audit of the financial statements is located on the Financial Reporting Council’s website at

frc.org.uk/auditorsresponsibilities. This description forms part of our auditor’s report.

LANDSEC ANNUAL REPORT 2024FINANCIAL STATEMENTS

INDEPENDENT AUDITOR’S REPORT

CONTINUED

OTHER MATTERS WE ARE REQUIRED TO ADDRESS

•

Following the recommendation from the Audit Committee we were appointed by the Company on 18 July 2013 to audit the financial

statements for the year ending 31 March 2014 and subsequent financial periods.

•

Following the conclusion of a formal tender process led by the Audit Committee, we were appointed to continue as auditor for the financial

year ending31 March 2024.

•

The period of total uninterrupted engagement including previous renewals and reappointments is 11 years, covering the years ending 31 March

2014 to 31 March 2024.

•

The audit opinion is consistent with the additional report to the Audit Committee.

USE OF OUR REPORT

This report is made solely to the Company’s members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006.

Ouraudit work has been undertaken so that we might state to the company’s members those matters we are required to state to them

inanauditor’s report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone

other than the Company and the Company’s members as a body, for our audit work, for this report, or for the opinions we have formed.

JULIE CARLYLE, SENIOR STATUTORY AUDITOR

for and on behalf of Ernst & Young LLP, Statutory Auditor

London

16 May 2024

104

LANDSEC ANNUAL REPORT 2024 105FINANCIAL STATEMENTS

				2024			2023
			Capital			Capital
		EPRA	and other		EPRA	and other
		earnings	items	Total	earnings	items	Total
	Notes	£m	£m	£m	£m	£m	£m
Revenue	6	766	58	824	726	65	791
Costs	7	(325)	(84)	(409)	(289)	(93)	(382)
		441	(26)	415	437	(28)	409
Share of post-tax profit/(loss) from joint ventures	16	21	(19)	2	29	(30)	(1)
Loss on disposal of investment properties		–	(16)	(16)	–	(144)	(144)
Net deficit on revaluation of investment properties	14	–	(628)	(628)	–	(827)	(827)
Loss on changes in finance leases		–	–	–	–	(6)	(6)
Operating profit/(loss)		462	(689)	(227)	466	(1,035)	(569)
Finance income	10	11	1	12	11	23	34
Finance expense	10	(102)	(24)	(126)	(84)	(3)	(87)
Profit/(loss) before tax		371	(712)	(341)	393	(1,015)	(622)
Taxation	12			–			–
Loss for the year				(341)			(622)
Attributable to:
Shareholders of the parent				(319)			(619)
Non-controlling interests				(22)			(3)
				(341)			(622)
Loss per share attributable to shareholders of the parent:
Basic (loss)/earnings per share	5			(43.0)p			(83.6)p
Diluted (loss)/earnings per share	5			(43.0)p			(83.6)p

STATEMENT OF COMPREHENSIVE INCOME

FOR THE YEAR ENDED 31 MARCH 2024

		2024	2023
		Total	Total
	Notes	£m	£m
Loss for the year		(341)	(622)
Items that may be subsequently reclassified to the income statement:
Movement in cash flow hedges		(1)	(1)
Items that will not be subsequently reclassified to the income statement:
Net remeasurement loss on defined benefit pension scheme	35	(5)	(12)
Deferred tax credit on remeasurement above	12	4	3
Other comprehensive loss for the year		(2)	(10)
Total comprehensive loss for the year		(343)	(632)
Attributable to:
Shareholders of the parent		(321)	(629)
Non-controlling interests		(22)	(3)
		(343)	(632)

INCOME STATEMENT

FOR THE YEAR ENDED 31 MARCH 2024

LANDSEC ANNUAL REPORT 2024FINANCIAL STATEMENTS

			Group		Company
		2024	2023	2024	2023
	Notes	£m	£m	£m	£m
Non-current assets
Investment properties	14	9,330	9,658	–	–
Intangible assets	20	3	6	–	–
Net investment in finance leases	19	21	21	–	–
Investments in joint ventures	16	529	533	–	–
Investments in associates	17	–	3	–	–
Investments in subsidiary undertakings	29	–	–	5,659	6,229
Trade and other receivables	27	159	146	–	–
Other non-current assets	30	48	67	–	–
Total non-current assets		10,090	10,434	5,659	6,229
Current assets
Trading properties	15	100	118	–	–
Trade and other receivables	27	379	365	–	–
Monies held in restricted accounts and deposits	23	6	4	–	–
Cash and cash equivalents	24	78	41	2	2
Other current assets	31	11	4	–	–
Total current assets		574	532	2	2
Total assets		10,664	10,966	5,661	6,231
Current liabilities
Borrowings	22	(975)	(315)	–	–
Trade and other payables	28	(348)	(306)	(2,251)	(2,821)
Provisions	34	(30)	–	–	–
Other current liabilities	32	–	(24)	–	–
Total current liabilities		(1,353)	(645)	(2,251)	(2,821)
Non-current liabilities
Borrowings	22	(2,805)	(3,223)	–	–
Trade and other payables	28	(4)	(17)	–	–
Provisions	34	(42)	–	–	–
Other non-current liabilities	33	(13)	(9)	–	–
Total non-current liabilities		(2,864)	(3,249)	–	–
Total liabilities		(4,217)	(3,894)	(2,251)	(2,821)
Net assets		6,447	7,072	3,410	3,410
Equity
Capital and reserves attributable to shareholders
Ordinary shares	37	80	80	80	80
Share premium		319	318	319	318
Other reserves		23	13	23	13
Merger reserve		–	–	374	374
Retained earnings		5,980	6,594	2,614	2,625
Equity attributable to shareholders of the parent		6,402	7,005	3,410	3,410
Equity attributable to non-controlling interests		45	67
Total equity		6,447	7,072

The profit for the year of the Company was £280m (2023: £381m).

The financial statements on pages 105 to 161 were approved by the Board of Directors on 16 May 2024 and were signed on its behalf by:

MARK ALLAN

DIRECTORS

VANESSA SIMMS

BALANCE SHEETS

AT 31 MARCH 2024

106

LANDSEC ANNUAL REPORT 2024 107FINANCIAL STATEMENTS

STATEMENTS OF CHANGES IN EQUITY

FOR THE YEAR ENDED 31 MARCH 2024

						Attributable to shareholders of the parent		Group
							Non-
		Ordinary	Share	Other	Retained		controlling	Total
		shares	premium	reserves	earnings	Total	interests	equity
	Notes	£m	£m	£m	£m	£m	£m	£m
At 1 April 2022		80	317	9	7,511	7,917	74	7,991
Total comprehensive loss for the financial year		–	–	–	(629)	(629)	(3)	(632)
Transactions with shareholders
of the parent:
Share-based payments	36	–	1	4	2	7	–	7
Dividends paid to shareholders of the parent	11	–	–	–	(290)	(290)	–	(290)
Total transactions with shareholders		–	1	4	(288)	(283)	–	(283)
of the parent
Dividends paid to non-controlling interests		–	–	–	–	–	(4)	(4)
Total transactions with shareholders		–	1	4	(288)	(283)	(4)	(287)
At 31 March 2023		80	318	13	6,594	7,005	67	7,072
Total comprehensive loss for the financial year		–	–	–	(321)	(321)	(22)	(343)
Transactions with shareholders
of the parent:
Share-based payments	36	–	1	10	(2)	9	–	9
Dividends paid to shareholders of the parent	11	–	–	–	(291)	(291)	–	(291)
Total transactions with shareholders		–	1	10	(293)	(282)	–	(282)
of the parent
At 31 March 2024		80	319	23	5,980	6,402	45	6,447

Attributable to shareholders Company

Notes

Ordinary

£m

premium

£m

Other

reserves

£m

Merger

reserve

£m

Retained

earnings

£m

Total

equity

£m

At 1 April 2022 80 317 9 374 2,532 3,312

Total comprehensive income for the financial year – – – – 381 381

Transactions with shareholders:

Share-based payments 36 – 1 4 – 2 7

Dividends paid to shareholders 11 – – – – (290) (290)

Total transactions with shareholders – 1 4 – (288) (283)

At 31 March 2023 80 318 13 374 2,625 3,410

Total comprehensive income for the financial year – – – – 280 280

Transactions with shareholders:

Share-based payments 36 – 1 10 – – 11

Dividends paid to shareholders 11 – – – – (291) (291)

Total transactions with shareholders – 1 10 – (291) (280)

At 31 March 2024 80 319 23 374 2,614 3,410

1. Available for distribution.

LANDSEC ANNUAL REPORT 2024FINANCIAL STATEMENTS

			Group		Company
		2024	2023	2024	2023
	Notes	£m	£m	£m	£m
Cash flows from operating activities
Net cash generated from operations	13	429	356	–	–
Interest received		24	16	–	–
Interest paid		(101)	(92)	–	–
Rents paid		(14)	(13)	–	–
Capital expenditure on trading properties		(19)	(6)	–	–
Disposal of trading properties		18	18	–	–
Development income proceeds received		–	54	–	–
Other operating cash flows		1	9	–	–
Net cash inflow from operating activities	13	338	342	–	–
Cash flows from investing activities
Investment property development expenditure		(202)	(253)	–	–
Other investment property related expenditure		(126)	(102)	–	–
Acquisition of investment properties, net of cash acquired		(137)	(94)	–	–
Disposal of investment properties		176	1,269	–	–
Cash distributions from joint ventures	16	17	14	–	–
Net cash (outflow)/inflow from investing activities		(272)	834	–	–
				–	–
Cash flows from financing activities
Net proceeds from new borrowings (net of finance fees)	22	708	394	–	–
Repayment of borrowings	22	(427)	(1,407)	–	–
Net cash (outflow)/inflow from derivative financial instruments	22	(18)	25	–	–
Dividends paid to shareholders of the parent	11	(291)	(289)	–	–
Dividends paid to non–controlling interests		–	(4)	–	–
Increase in monies held in restricted accounts and deposits		(2)	–	–	–
Other financing cash flows		1	–	–	–
Net cash outflow from financing activities		(29)	(1,281)	–	–
Increase/(decrease) in cash and cash equivalents for the year		37	(105)	–	–
Cash and cash equivalents at the beginning of the year		41	146	2	2
Cash and cash equivalents at the end of the year	24	78	41	2	2

STATEMENTS OF CASH FLOWS

FOR THE YEAR ENDED 31 MARCH 2024

108

LANDSEC ANNUAL REPORT 2024 109FINANCIAL STATEMENTS

SECTION 1 – GENERAL

This section contains a description of the Group’s significant accounting policies that relate to the financial statements as a whole. A description

of accounting policies specific to individual areas (e.g. investment properties) is included within the relevant note to the financial statements.

This section also includes a summary of new accounting standards, amendments and interpretations that have been applied in the year and

those not yet adopted, and their actual or expected impact on the reported results of the Group.

1 › BASIS OF PREPARATION AND CONSOLIDATION

BASIS OF PREPARATION

These financial statements have been prepared on a going concern basis and in accordance with UK adopted international accounting

standards (IFRSs and IFRICs), and as regards the Parent Company financial statements, as applied in accordance with the provisions of

the Companies Act 2006. The financial statements have been prepared in Pounds Sterling (rounded to the nearest one million), which is the

presentation currency of the Group (Land Securities Group PLC and all its subsidiary undertakings), and under the historical cost convention

as modified by the revaluation of investment property, financial assets at fair value through profit or loss, derivative financial instruments and

pension assets. As applied by the Group and the Company, there are no material differences between UK adopted international accounting

standards and EU IFRS.

The preparation of financial statements in conformity with generally accepted accounting principles (GAAP) requires the use of estimates and

assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of

revenues and expenses during the reporting period. Although these estimates are based on management’s best knowledge of the amount,

event or actions, actual results ultimately may differ from those estimates.

Land Securities Group PLC (the Company) has not presented its own statement of comprehensive income (and separate income statement),

as permitted by Section 408 of Companies Act 2006. The Merger reserve arose on 6 September 2002 when the Company acquired 100% of

the issued share capital of Land Securities PLC. The Merger reserve represents the excess of the cost of acquisition over the nominal value

of the shares issued by the Company to acquire Land Securities PLC. The Merger reserve does not represent a realised or distributable profit.

Other reserves includes the Capital redemption reserve, which represents the nominal value of cancelled shares, the Share-based payment

reserve and Own shares held by the Group.

GOING CONCERN

The impact of international and domestic political and economic events over the course of the year has resulted in the UK facing a prolonged

period of high inflation, rising interest rates and minimal GDP growth. Therefore, the Directors have continued to place additional focus on

the appropriateness of adopting the going concern assumption in preparing the financial statements for the year ended 31 March 2024.

The Group’s going concern assessment considers changes in the Group’s principal risks (see pages 41-45) and is dependent on a number

of factors, including our financial performance and continued access to borrowing facilities. Access to our borrowing facilities is dependent

on our ability to continue to operate the Group’s secured debt structure within its financial covenants, which are described in note 22.

In order to satisfy themselves that the Group has adequate resources to continue as a going concern for the foreseeable future, the Directors

have reviewed base case, downside and reverse stress test models, as well as a cash flow model which considers the impact of pessimistic

assumptions on the Group’s operating environment (the ‘mitigated downside scenario’). This mitigated downside scenario reflects unfavourable

macroeconomic conditions, a deterioration in our ability to collect rent and service charge from our customers and removes uncommitted

capital expenditure, acquisitions, disposals and developments.

The Group’s key metrics from the mitigated downside scenario as at the end of the going concern assessment period, which covers the 16 months

to 30 September 2025, are shown below alongside the actual position at 31 March 2024.

		Mitigated downside
		scenario
Key metrics	31 March 2024	30 September 2025
Security Group LTV	37.0%	42.8%
Adjusted net debt	£3,517m	£3,885m
EPRA net tangible assets	£6,398m	£5,559m
Available financial headroom	£1.9bn	£0.9bn

NOTES TO THE FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 MARCH 2024

LANDSEC ANNUAL REPORT 2024FINANCIAL STATEMENTS

NOTES TO THE FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 MARCH 2024 CONTINUED

In our mitigated downside scenario, the Group has sufficient cash reserves, with our Security Group LTV ratio remaining less than 65%

and interest cover above 1.45x, for a period of 16 months from the date of authorisation of these financial statements. Under this scenario,

the Security Group’s asset values would need to fall by a further 34% from the sensitised values forecasted at 30 September 2025 to be

non-compliant with the LTV covenant. This equates to a 43% fall in the value of the Security Group’s assets from the 31 March 2024 values

for the LTV to reach 65%. The Directors consider the likelihood of this occurring over the going concern assessment period to be remote.

The Security Group also requires earnings before interest of at least £198m in the full year ending 31 March 2025 and at least £232m in the full

year ending 31 March 2026 for interest cover to remain above 1.45x in the mitigated downside scenario, which would ensure compliance with

the Group’s covenant through to the end of the going concern assessment period. Security Group earnings post year end 31 March 2024 are

above the level required to meet the interest cover covenant for the year ended 31 March 2025. The Directors do not anticipate a reduction

in Security Group earnings over the period ending 30 September 2025 to a level that would result in a breach of the interest cover covenant.

The Directors have also considered a reverse stress-test scenario which assumes no further rent will be received, to determine when our

available cash resources would be exhausted. Even under this extreme scenario, although breaching the interest cover covenant, the Group

continues to have sufficient cash reserves to continue in operation throughout the going concern assessment period.

Based on these considerations, together with available market information and the Directors’ knowledge and experience of the Group’s property

portfolio and markets, the Directors have adopted the going concern basis in preparing the financial statements of the Group and parent for the

year ended 31 March 2024.

BASIS OF CONSOLIDATION

The consolidated financial statements for the year ended 31 March 2024 incorporate the financial statements of the Company and all its

subsidiary undertakings. Subsidiary undertakings are those entities controlled by the Company. Control exists where an entity is exposed to

variable returns and has the ability to affect those returns through its power over the investee.

The results of subsidiaries and joint ventures acquired or disposed of during the year are included from the effective date of acquisition or to the

effective date of disposal. Accounting policies of subsidiaries and joint ventures which differ from Group accounting policies are adjusted on

consolidation.

Where instruments in a subsidiary held by third parties are redeemable at the option of the holder, these interests are classified as a financial

liability, called the redemption liability. The liability is carried at fair value; the value is reassessed at the balance sheet date and movements are

recognised in the income statement.

Where equity in a subsidiary is not attributable, directly or indirectly, to the shareholders of the parent, this is classified as a non-controlling

interest. Total comprehensive income or loss and the total equity of the Group are attributed to the shareholders of the parent and to the

non-controlling interests according to their respective ownership percentages.

Joint arrangements are those entities over whose activities the Group has joint control, established by contractual agreement. Interests in joint

arrangements are accounted for as either a joint venture or a joint operation. A joint arrangement is accounted for as a joint venture when the

Group, along with the other parties that have joint control of the arrangement, have rights to the net assets of the arrangement. Interests in

joint ventures are equity accounted. The equity method requires the Group’s share of the joint venture’s post-tax profit or loss for the year to be

presented separately in the income statement and the Group’s share of the joint venture’s net assets to be presented separately in the balance

sheet. A joint arrangement is accounted for as a joint operation when the Group, along with the parties that have joint control of the

arrangement, have rights to the assets and obligations for the liabilities relating to the arrangement. Joint operations are accounted for by

including the Group’s share of the assets, liabilities, income and expenses on a line-by-line basis.

Intra-group balances and any unrealised gains and losses arising from intra-group transactions are eliminated in preparing the consolidated

financial statements. Unrealised gains arising from transactions with joint ventures are eliminated to the extent of the Group’s interest in the

joint venture concerned. Unrealised losses are eliminated in the same way, but only to the extent that there is no evidence of impairment.

1 › BASIS OF PREPARATION AND CONSOLIDATION CONTINUED

110

LANDSEC ANNUAL REPORT 2024 111FINANCIAL STATEMENTS

2 › SIGNIFICANT ACCOUNTING JUDGEMENTS AND ESTIMATES

The preparation of financial statements in conformity with IFRS requires management to exercise judgement in applying the Group’s

accounting policies. The areas where the Group considers the judgements to be most significant involve assumptions or key estimates in respect

of future events, where actual results may differ from these estimates. These key estimates are deemed to have a significant risk of causing a

material adjustment to the carrying amounts of assets and liabilities within the next financial year. Other sources of estimation uncertainties

identified below are estimates deemed to have a lower risk of causing a material adjustment to the carrying amounts of assets and liabilities

within the next financial year.

JUDGEMENTS

•

Recognising revenue where property management activities are performed by a third party (note 6)

•

Compliance with the Real Estate Investment Trust (REIT) taxation regime and the recognition of deferred tax assets and liabilities (note 12)

•

Accounting for certain property acquisitions and disposals (note 14)

KEY ESTIMATES

•

Valuation of investment properties (note 14)

OTHER SOURCES OF ESTIMATION UNCERTAINTIES

•

Valuation of trading properties (note 15)

•

Impairment of trade receivables (note 27)

•

Estimation of provisions (note 34)

In preparing the financial statements, the Group has considered the impact of climate change, taking into account the relevant disclosures in

the Strategic Report, including those made in accordance with the recommendations of the Task Force on Climate-related Financial Disclosures.

These considerations included the limited exposure in terms of our investment properties, as we fully costed and committed to invest £135m

to achieve our science-based target by 2030 (note this cost will fluctuate year on year as we account for changes in inflation and portfolio

composition). Related capital expenditure and the expected impact on ERVs associated with this commitment have been factored within

property valuations. On this basis, the Group has concluded that climate change did not have a material impact on the financial reporting

judgements and estimates, consistent with the assessment that this is not expected to have a significant impact on the Group’s going concern

or viability assessment.

3 › CHANGES IN ACCOUNTING POLICIES AND STANDARDS

The accounting policies used in these financial statements are consistent with those applied in the last annual financial statements, as amended

where relevant to reflect the adoption of new standards, amendments and interpretations which became effective in the year as listed below:

•

Amendments to IAS 1 and IFRS Practice Statement 2 – Disclosure of accounting policies

•

Amendments to IAS 8 – Definition of Accounting Estimates

•

Amendments to IAS 12 – Deferred tax related to assets and liabilities arising from a single transaction

•

Amendments to IAS 12 – International tax reform – Pillar Two model rules

•

IFRS 17 – Insurance Contracts

There has been no material impact on the financial statements of adopting any new standards, amendments and interpretations.

LANDSEC ANNUAL REPORT 2024FINANCIAL STATEMENTS

NOTES TO THE FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 MARCH 2024 CONTINUED

AMENDMENTS TO IFRS

A number of new standards, amendments to standards and interpretations have been issued but are not yet effective for the Group as listed below:

•

Amendments to IAS 1 – Classification of liabilities as current or non-current

•

Amendments to IAS 1 – Non-current Liabilities with Covenants

•

Amendments to IAS 7 and IFRS 7 – Disclosures: Supplier finance arrangements

•

Amendments to IFRS 10 and IAS 28 – Sale or contribution of assets between an investor and its associate or joint venture

•

Amendments to IFRS 16 – Lease liability in a sale and leaseback

•

Amendments to IAS 21 – Lack of exchangeability

•

IFRS 18 – Presentation and Disclosure in Financial Statements

The Group has yet to assess the full outcome of these new standards, amendments and interpretations, however with the exception of IFRS 18

these other new standards, amendments and interpretations are not expected to have a significant impact on the Group’s financial statements.

SECTION 2 – PERFORMANCE

This section focuses on the performance of the Group for the year, including segmental information, earnings per share and net assets per

share, together with further details on specific components of the income statement and dividends paid.

Our property portfolio is a combination of properties that are wholly owned by the Group, part owned through joint arrangements and

properties owned by the Group but where a third party holds a non-controlling interest. Internally, management review the results of the Group

on a basis that adjusts for these different forms of ownership to present a proportionate share. The Combined Portfolio, with assets totalling

£10.0bn, is an example of this approach, reflecting the economic interest we have in our properties regardless of our ownership structure. The

Combined Portfolio comprises the investment properties of the Group’s subsidiaries, on a proportionately consolidated basis when not wholly

owned, together with our share of investment properties held in our joint ventures (see note 14). We consider this presentation provides further

understanding to stakeholders of the activities and performance of the Group, as it aggregates the results of all of the Group’s property

interests which under IFRS are required to be presented across a number of line items in the statutory financial statements.

The same principle is applied to many of the other measures we discuss and, accordingly, a number of our financial measures include the results

of our joint ventures and subsidiaries on a proportionate basis. Measures that are described as being presented on a proportionate basis include

the Group’s share of joint ventures on a line-by-line basis and are adjusted to exclude the non-owned elements of our subsidiaries. This is in

contrast to the Group’s statutory financial statements, where the Group’s interest in joint ventures is presented as one line on the income

statement and balance sheet, and all subsidiaries are consolidated at 100% with any non-owned element being adjusted as a non-controlling

interest or redemption liability, as appropriate. Our joint operations are presented on a proportionate basis in all financial measures.

EPRA earnings is an alternative performance measure and is the Group’s alternative measure of the underlying pre-tax profit of the property

rental business. EPRA earnings excludes all items of a capital nature, such as valuation movements and profits and losses on the disposal of

investment properties, as well as exceptional items. The Group believes that EPRA earnings provides additional understanding of the Group’s

operational performance to shareholders and other stakeholder groups. A full definition of EPRA earnings is given in the Glossary. The

components of EPRA earnings are presented on a proportionate basis in note 4.

Our income statement has two key components: the income we generate from leasing our investment properties net of associated costs

(including interest expense), which we refer to as EPRA earnings, and items not directly related to the underlying rental business, principally

valuation changes, profits or losses on the disposal of properties, refinancing activity and exceptional items, which we refer to as Capital and

other items. Our income statement is presented in a columnar format, split into those items that relate to EPRA earnings and Capital and other

items. The total column represents the Group’s results presented in accordance with IFRS; the other columns provide additional information.

We believe EPRA earnings provides further understanding of the results of the Group’s operational performance to stakeholders as it focuses

on the rental income performance of the business and excludes Capital and other items which can vary significantly from year to year.

3 › CHANGES IN ACCOUNTING POLICIES AND STANDARDS CONTINUED

112

LANDSEC ANNUAL REPORT 2024 113FINANCIAL STATEMENTS

4 › SEGMENTAL INFORMATION

The Group’s operations are all in the UK and are managed across four operating segments, being Central London, Major retail destinations

(Major retail), Mixed-use urban neighbourhoods (Mixed-use urban) and Subscale sectors.

The Central London segment includes all assets geographically located within central London. Major retail destinations includes all regional

shopping centres and shops outside London and our outlets. The Mixed-use urban segment includes those assets where we see the most

potential for capital investment. Subscale sectors mainly includes assets that will not be a focus for capital investment and consists of leisure

and hotel assets and retail parks.

Management has determined the Group’s operating segments based on the information reviewed by Senior Management to make strategic

decisions. The chief operating decision maker is the Executive Leadership Team (ELT), comprising the Executive Directors and the Managing

Directors. The information presented to ELT includes reports from all functions of the business as well as strategy, financial planning, succession

planning, organisational development and Group-wide policies.

The Group’s primary measure of underlying profit before tax is EPRA earnings. However, Segment net rental income is the lowest level to

which the profit arising from the ongoing operations of the Group is analysed between the four segments. The administrative costs, which are

predominantly staff costs for centralised functions, are all treated as administrative expenses and are not allocated to individual segments.

The Group manages its financing structure, with the exception of joint ventures and non-wholly owned subsidiaries, on a pooled basis.

Individual joint ventures and non-wholly owned subsidiaries may have specific financing arrangements in place. Debt facilities and finance

expenses, including those of joint ventures, are managed centrally and are therefore not attributed to a particular segment. Unallocated

income and expenses are items incurred centrally which are not directly attributable to one of the segments.

All items in the segmental information note are presented on a proportionate basis.

SEGMENTAL RESULTS

EPRA EARNINGS					2024					2023
	Central	Major	Mixed-use	Subscale		Central	Major	Mixed-use	Subscale
	London	retail	urban	sectors	Total	London	retail	urban	sectors	Total
	£m	£m	£m	£m	£m	£m	£m	£m	£m	£m
Rental income	294	188	58	112	652	313	179	58	107	657
Finance lease interest	–	–	–	1	1	–	–	–	2	2
Gross rental income	294	188	58	113	653	313	179	58	109	659
(before rents payable)
Rents payable	(3)	(7)	(1)	(1)	(12)	(3)	(8)	(1)	–	(12)
Gross rental income	291	181	57	112	641	310	171	57	109	647
(after rents payable)
Service charge income	59	53	11	–	123	46	42	10	–	98
Service charge expense	(63)	(60)	(14)	(2)	(139)	(47)	(50)	(12)	(1)	(110)
Net service charge expense	(4)	(7)	(3)	(2)	(16)	(1)	(8)	(2)	(1)	(12)
Other property related income	20	11	4	3	38	15	10	3	3	31
Direct property expenditure	(43)	(42)	(16)	(18)	(119)	(34)	(44)	(14)	(16)	(108)
Movement in bad and doubtful debts	(1)	8	–	(1)	6	(1)	3	1	–	3
provision
Segment net rental income	263	151	42	94	550	289	132	45	95	561
Other income					1					3
Administrative expense					(74)					(82)
Depreciation					(4)					(5)
EPRA earnings before interest					473					477
Finance income					11					11
Finance expense					(102)					(84)
Joint venture net finance expense					(11)					(11)
EPRA earnings attributable to shareholders of the parent					371					393

1. Included within rents payable is lease interest payable of £4m (2023: £4m) across the four segments.

2. A reconciliation from the Group income statement to the information presented in the segmental results table for the year ended 31 March 2023 is included in table 77.

LANDSEC ANNUAL REPORT 2024FINANCIAL STATEMENTS

NOTES TO THE FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 MARCH 2024 CONTINUED

The following table reconciles the Group’s income statement to the segmental results.

RECONCILIATION OF SEGMENTAL INFORMATION NOTE TO STATUTORY REPORTING

						Year ended 31 March 2024
			Adjustment
	Group		for non-			Capital
	income	Joint	wholly owned		EPRA	and other
	statement	ventures	subsidiaries 2	Total	earnings	items
	£m	£m	£m	£m	£m	£m
Rental income	622	38	(8)	652	652	–
Finance lease interest	1	–	–	1	1	–
Gross rental income (before rents payable)	623	38	(8)	653	653	–
Rents payable	(11)	(1)	–	(12)	(12)	–
Gross rental income (after rents payable)	612	37	(8)	641	641	–
Service charge income	117	8	(2)	123	123	–
Service charge expense	(133)	(9)	3	(139)	(139)	–
Net service charge expense	(16)	(1)	1	(16)	(16)	–
Other property related income	35	3	–	38	38	–
Direct property expenditure	(114)	(6)	1	(119)	(119)	–
Movement in bad and doubtful debts provision	6	–	–	6	6	–
Segment net rental income	523	33	(6)	550	550	–
Other income	1	–	–	1	1	–
Administrative expenses	(73)	(1)	–	(74)	(74)	–
Depreciation, including amortisation of software	(4)	–	–	(4)	(4)	–
EPRA earnings before interest	447	32	(6)	473	473	–
Share of post-tax profit/(loss) from joint ventures	2	(2)	–	–	–	–
Loss on disposal of investment properties	(16)	–	–	(16)	–	(16)
Net deficit on revaluation of investment properties	(628)	(19)	22	(625)	–	(625)
Net development contract and transaction expenditure	(18)	–	–	(18)	–	(18)
Fair value gain on remeasurement of investment	3	–	–	3	–	3
Impairment of amounts due from joint ventures	(2)	–	–	(2)	–	(2)
Impairment of goodwill	(1)	–	–	(1)	–	(1)
Impairment of trading properties	(11)	–	–	(11)	–	(11)
Depreciation	(2)	–	–	(2)	–	(2)
Other costs	(1)	–	–	(1)	–	(1)
Operating (loss)/profit	(227)	11	16	(200)	473	(673)
Finance income	12	–	–	12	11	1
Finance expense	(126)	(11)	6	(131)	(113)	(18)
(Loss)/profit before tax	(341)	–	22	(319)	371	(690)
Taxation	–	–	–	–
(Loss)/profit for the year	(341)	–	22	(319)

1. Reallocation of the share of post-tax profit from joint ventures reported in the Group income statement to the individual line items reported in the segmental results table.

2. Removal of the non-wholly owned share of results of the Group’s subsidiaries. The non-wholly owned subsidiaries are consolidated at 100% in the Group’s income statement,

but only the Group’s share is included in EPRA earnings reported in the segmental results table. The non-owned element of the Group’s subsidiaries are included in the ‘Capital

and other items’ column presented in the Group’s income statement, together with items not directly related to the underlying rental business such as investment properties

valuation changes, profits or losses on the disposal of investment properties, the proceeds from, and costs of, the sale of trading properties, income from and costs associated

with development contracts, amortisation and impairment of intangibles, and other attributable costs, arising on business combinations.

3. Included in the loss on disposal of investment properties is a £2m charge (2023: £9m charge) related to the provision for fire safety remediation works on properties no longer

owned by the Group but for which the Group is responsible for remediating under the Building Safety Act 2022.

4 › SEGMENTAL INFORMATION CONTINUED

114

LANDSEC ANNUAL REPORT 2024 115FINANCIAL STATEMENTS

5 › PERFORMANCE MEASURES

In the tables below, we present earnings per share attributable to shareholders of the parent, calculated in accordance with IFRS, and net

assets per share attributable to shareholders of the parent together with certain measures defined by the European Public Real Estate

Association (EPRA), which have been included to assist comparison between European property companies. Three of the Group’s key financial

performance measures are EPRA earnings per share, EPRA Net Tangible Assets per share and Total return on equity. Refer to table 57 in the

Business Analysis section for further details on these alternative performance measures.

EPRA earnings, which is a tax adjusted measure of underlying earnings, is the basis for the calculation of EPRA earnings per share. We believe

EPRA earnings and EPRA earnings per share provide further insight into the results of the Group’s operational performance to stakeholders as

they focus on the rental income performance of the business and exclude Capital and other items which can vary significantly from year to year.

EARNINGS PER SHARE

		Year ended		Year ended
		31 March 2024		31 March 2023
	Loss for	EPRA	Loss for	EPRA
	the year	earnings	the year	earnings
	£m	£m	£m	£m
Loss attributable to shareholders of the parent	(319)	(319)	(619)	(619)
Valuation and loss on disposals	–	650	–	1,016
Net finance expense/(income) (excluded from EPRA earnings)	–	20	–	(21)
Impairment of goodwill	–	1	–	5
Other	–	19	–	12
(Loss)/profit used in per share calculation	(319)	371	(619)	393
	IFRS	EPRA	IFRS	EPRA
Basic (loss)/earnings per share	(43.0)p	50.1p	(83.6)p	53.1p
Diluted (loss)/earnings per share	(43.0)p	50.1p	(83.6)p	53.1p

1. In the year ended 31 March 2024, share options are excluded from the weighted average diluted number of shares when calculating IFRS and EPRA diluted (loss)/earnings per share

because they are not dilutive.

2. Underlying EPRA EPS excluding the benefit of increased surrender premiums in the prior year was 50.1p.

NET ASSETS PER SHARE

			31 March 2024			31 March 2023
	Net assets	EPRA NDV	EPRA NTA	Net assets	EPRA NDV	EPRA NTA
	£m	£m	£m	£m	£m	£m
Net assets attributable to shareholders of the parent	6,402	6,402	6,402	7,005	7,005	7,005
Shortfall of fair value over net investment in finance leases book value	–	(5)	(5)	–	(6)	(6)
Deferred tax liability on intangible asset	–	–	–	–	–	1
Goodwill on deferred tax liability	–	–	–	–	(1)	(1)
Other intangible asset	–	–	(2)	–	–	(2)
Fair value of interest-rate swaps	–	–	(22)	–	–	(42)
Excess of fair value of trading properties over book value	–	25	25	–	12	12
Shortfall of fair value of debt over book value (note 22)	–	313	–	–	324	–
Net assets used in per share calculation	6,402	6,735	6,398	7,005	7,334	6,967
	IFRS	EPRA NDV	EPRA NTA	IFRS	EPRA NDV	EPRA NTA
Net assets per share	863p	n/a	n/a	945p	n/a	n/a
Diluted net assets per share	859p	904p	859p	942p	986p	936p

LANDSEC ANNUAL REPORT 2024FINANCIAL STATEMENTS

NOTES TO THE FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 MARCH 2024 CONTINUED

NUMBER OF SHARES

		2024		2023
	Weighted		Weighted
	average	31 March	average	31 March
	million	million	million	million
Ordinary shares	751	752	751	751
Treasury shares	(7)	(7)	(7)	(7)
Own shares	(3)	(3)	(4)	(3)
Number of shares – basic	741	742	740	741
Dilutive effect of share options	3	3	4	3
Number of shares – diluted	744	745	744	744

Total return on equity is calculated as the cash dividends per share paid in the year plus the change in EPRA NTA per share, divided by the opening

EPRA NTA per share. We consider this to be a useful measure for shareholders as it gives an indication of the total return on equity over the year.

TOTAL RETURN ON EQUITY BASED ON EPRA NTA

	Year ended	Year ended
	31 March	31 March
	2024	2023
	pence	pence
Decrease in EPRA NTA per share	(77)	(127)
Dividend paid per share in the year (note 11)	39	39
Total return (a)	(38)	(88)
EPRA NTA per share at the beginning of the year (b)	936	1,063
Total return on equity (a/b)	(4.0)%	(8.3)%

6 › REVENUE

ACCOUNTING POLICY

Rental income, including fixed rental uplifts, is recognised in the income statement on a straight-line basis over the term of the lease. Lease

incentives being offered to occupiers to enter into a lease, such as an initial rent-free period or a cash contribution to fit out or similar costs, are

an integral part of the net consideration for the use of the property and are therefore recognised on the same straight-line basis. Where the

total consideration due under a lease is modified, for example, where a concession is granted to a tenant prior to the date the conceded rent

falls due, the revised total amount due under the lease is recognised on a straight-line basis over the remaining term of the lease.

Contingent rents, being lease payments that are not fixed at the inception of a lease, for example turnover rents as well as surrender premiums

net of dilapidations, are considered as variable consideration and are recorded as income in the year in which they are earned. Where a single

payment is received from a tenant to cover both rent and service charge, the service charge component is separated and reported as service

charge income.

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

trading property sales proceeds and development contract income.

Service charge income and management fees are recorded as income over time in the year in which the services are rendered. Revenue is

recognised over time because the tenants benefit from the services as soon as they are rendered by the Group. The actual service provided

during each reporting period is determined using cost incurred as the input method.

Other property related income includes development and asset management fees. These fees are recognised over time, using time elapsed

as the input method which measures the benefit simultaneously received and consumed by the customer, over the period the development

or asset management services are provided.

Proceeds received on the sale of trading properties are recognised when control of the property transfers to the buyer, i.e. the buyer has the

ability to direct the use of the property and the right to the cash inflows and outflows generated by it. This generally occurs on unconditional

exchange or on completion. If completion is expected to occur significantly after exchange or if the Group has significant outstanding

obligations between exchange and completion, the Group assesses whether there are multiple performance obligations in the contract and

recognises revenue as each performance obligation is satisfied.

5 › PERFORMANCE MEASURES CONTINUED

116

LANDSEC ANNUAL REPORT 2024 117FINANCIAL STATEMENTS

When property is let under a finance lease, the Group recognises a receivable equal to the net investment in the lease at inception of the

lease. Rentals received are accounted for as repayments of principal and finance income as appropriate. Finance income is allocated to each

period during the lease term so as to produce a constant periodic rate of interest on the remaining net investment in the finance lease and

is recognised within revenue.

Revenue on development contracts is recognised over time over the period of the contract as the Group creates or enhances an asset that

the customer controls. Progress towards completion of the development, by reference to the value of work completed using the costs incurred

to date as a proportion of total costs expected to be incurred over the term of the contract is used as the input method.

SIGNIFICANT ACCOUNTING JUDGEMENT

For those properties where the property management activities are performed by a third party, the Group considers the third party to be

the principal delivering the service. The key factors considered by the Group when making this judgement include the following responsibilities

of the third party:

•

selecting suppliers and ensuring all services are delivered

•

establishing prices and seeking efficiencies

•

risk management and compliance

In addition, the residual rights residing with the Group are generally protective in nature.

All revenue is classified within the ‘EPRA earnings’ column of the income statement, with the exception of proceeds from the sale of trading

properties, income from development contracts or transactions and the non-owned element of the Group’s subsidiaries which are presented

in the ‘Capital and other items’ column.

			2024			2023
		Capital			Capital
	EPRA	and other		EPRA	and other
	earnings	items	Total	earnings	items	Total
	£m	£m	£m	£m	£m	£m
Rental income (excluding adjustment for lease incentives)	598	8	606	606	8	614
Adjustment for lease incentives	16	–	16	(2)	–	(2)
Rental income	614	8	622	604	8	612
Service charge income	115	2	117	88	3	91
Trading property sales proceeds	–	26	26	–	22	22
Other property related income	35	–	35	29	–	29
Finance lease interest	1	–	1	2	–	2
Development contract and transaction income	–	22	22	–	32	32
Other income	1	–	1	3	–	3
Revenue per the income statement	766	58	824	726	65	791

The following table reconciles revenue per the income statement to the individual components of revenue presented in note 4.

				2024				2023
			Adjustment				Adjustment
			for non-				for non-
		Joint	wholly owned			Joint	wholly owned
	Group	ventures	subsidiaries	Total	Group	ventures	subsidiaries	Total
	£m	£m	£m	£m	£m	£m	£m	£m
Rental income	622	38	(8)	652	612	53	(8)	657
Service charge income	117	8	(2)	123	91	10	(3)	98
Other property related income	35	3	–	38	29	2	–	31
Finance lease interest	1	–	–	1	2	–	–	2
Other income	1	–	–	1	3	–	–	3
Revenue in the segmental	776	49	(10)	815	737	65	(11)	791
information note
Development contract and transaction income	22	–	–	22	32	–	–	32
Trading property sales proceeds	26	–	–	26	22	–	–	22
Revenue including Capital and other items	824	49	(10)	863	791	65	(11)	845

LANDSEC ANNUAL REPORT 2024FINANCIAL STATEMENTS

NOTES TO THE FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 MARCH 2024 CONTINUED

7 › COSTS

ACCOUNTING POLICY

The carrying amounts of the Group’s non-financial assets, other than investment properties, are reviewed at each reporting date to determine

whether there is any indication of impairment. If any such indication exists, the asset’s recoverable amount is estimated. An impairment loss

is recognised in the income statement whenever the carrying amount of an asset exceeds its recoverable amount. The recoverable amount of

an asset is the greater of its fair value less costs to sell and its value in use. The value in use is determined as the net present value of the future

cash flows expected to be derived from the asset, discounted using a pre-tax discount rate that reflects current market assessments of the time

value of money and the risks specific to the asset. An impairment loss is reversed if there has been a change in the estimates used to determine

the recoverable amount. An impairment loss is reversed only to the extent that the asset’s carrying amount after the reversal does not exceed

the amount that would have been determined, net of applicable depreciation, if no impairment loss had been recognised.

Rents payable reflect amounts due under head leases. Where rents payable are variable, and do not depend on an index or rate, the payments

are recognised in the income statement as incurred. Where these rents are fixed, or in-substance fixed, at the inception of the agreement, or

become fixed or in-substance fixed at some point over the life of the agreement, an asset representing the right to use the underlying land and

a corresponding liability for the present value of the minimum future lease payments are recognised on the Group’s balance sheet within

Investment properties and borrowings respectively.

All costs are classified within the ‘EPRA earnings’ column of the income statement, with the exception of the cost of sale of trading properties,

costs arising on development contracts or transactions, amortisation and impairments of intangible assets, and other attributable costs, arising

on business combinations and the non-owned element of the Group’s subsidiaries which are presented in the ‘Capital and other items’ column.

			2024			2023
		Capital			Capital
	EPRA	and other		EPRA	and other
	earnings	items	Total	earnings	items	Total
	£m	£m	£m	£m	£m	£m
Rents payable	11	–	11	10	–	10
Service charge expense	130	3	133	98	2	100
Direct property expenditure	113	1	114	98	2	100
Movement in bad and doubtful debts provision	(6)	–	(6)	(2)	–	(2)
Administrative expenses	73	–	73	80	–	80
Impairment of trading properties	–	11	11	–	19	19
Cost of trading property disposals	–	26	26	–	21	21
Development contract and transaction expenditure	–	40	40	–	41	41
Depreciation, including amortisation of software	4	2	6	5	3	8
Impairment of amounts due from joint ventures	–	2	2	–	–	–
Impairment of goodwill	–	1	1	–	5	5
Fair value gain on remeasurement of investment	–	(3)	(3)	–	–	–
Other costs	–	1	1	–	–	–
Total costs per the income statement	325	84	409	289	93	382

118

LANDSEC ANNUAL REPORT 2024 119FINANCIAL STATEMENTS

The following table reconciles costs per the income statement to the individual components of costs presented in note 4.

				2024				2023
			Adjustment				Adjustment
			for non-				for non-
		Joint	wholly owned			Joint	wholly owned
	Group	ventures	subsidiaries	Total	Group	ventures	subsidiaries	Total
	£m	£m	£m	£m	£m	£m	£m	£m
Rents payable	11	1	–	12	10	2	–	12
Service charge expense	133	9	(3)	139	100	12	(2)	110
Direct property expenditure	114	6	(1)	119	100	10	(2)	108
Administrative expenses	73	1	–	74	80	2	–	82
Depreciation, including amortisation	4	–	–	4	5	–	–	5
of software
Movement in bad and doubtful debts	(6)	–	–	(6)	(2)	(1)	–	(3)
provision
Costs in the segmental information note	329	17	(4)	342	293	25	(4)	314
Impairment of trading properties	11	–	–	11	19	–	–	19
Cost of trading property disposals	26	–	–	26	21	–	–	21
Development contract and transaction	40	–	–	40	41	–	–	41
expenditure
Depreciation	2	–	–	2	3	–	–	3
Impairment of amounts due from joint	2	–	–	2	–	–	–	–
ventures
Impairment of goodwill	1	–	–	1	5	–	–	5
Fair value gain on remeasurement	(3)	–	–	(3)	–	–	–	–
of investment
Other costs	1	–	–	1	–	–	–	–
Costs including Capital and other items	409	17	(4)	422	382	25	(4)	403

The Group’s costs include employee costs for the year of £83m (2023: £76m), of which £7m (2023: £5m) is within service charge expense, £62m

(2023: £58m) is within administrative expenses and £14m (2023: £13m) is within direct property expenditure.

EMPLOYEE COSTS

	2024	2023
	£m	£m
Salaries and wages	63	59
Employer payroll taxes	8	7
Other pension costs (note 35)	4	4
Share-based payments (note 36)	8	6
	83	76

	2024	2023
	Number	Number
The average monthly number of employees during the year was:
Indirect property or contract and administration	382	385
Direct property or contract services:
Full-time	204	180
Part-time	12	12
	598	577

With the exception of the Executive Directors who are employed by Land Securities Group PLC, all employees are employed by subsidiaries of

the Group. The employee costs for Land Securities Group PLC are borne by another Group company.

During the year, none (2023: none) of the Executive Directors had retirement benefits accruing under the defined benefit scheme. Information

on Directors’ emoluments, share options and interests in the Company’s shares is given in the Directors’ Remuneration Report on pages 72 to 82.

Details of the employee costs associated with the Group’s key management personnel are included in note 40.

LANDSEC ANNUAL REPORT 2024FINANCIAL STATEMENTS

NOTES TO THE FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 MARCH 2024 CONTINUED

8 › AUDITOR REMUNERATION

	2024	2023
	£m	£m
Services provided by the Group’s auditor
Audit fees:
Audit of parent company and consolidated financial statements	1.3	1.0
Audit of subsidiary undertakings	1.2	0.6
Audit of joint ventures	0.1	0.2
	2.6	1.8
Non-audit fees:
Other assurance services	0.4	0.4
	3.0	2.2

1. The audit fee recognised in the year includes £0.5m of fees paid which relate to the audit for the years ended 31 March 2023 and 31 March 2022 (2023: £0.0m).

It is the Group’s policy to employ the Group’s auditor on assignments additional to their statutory duties where their expertise and experience

with the Group are important. Where appropriate the Group seeks tenders for services. If fees for an assignment are expected to be greater

than £25,000, they are pre-approved by the Audit Committee.

9 › EXTERNAL VALUERS REMUNERATION

	2024	2023
	£m	£m
Services provided by the Group’s external valuers
Year end and half-yearly valuations – Group	1.2	0.9
– Joint ventures	0.1	0.1
Other consultancy and agency services – CBRE	2.6	2.5
– JLL	0.8	0.7
	4.7	4.2

CBRE Limited (CBRE) and Jones Lang LaSalle Limited (JLL) are the Group’s principal valuers. The fee arrangements with CBRE and JLL for the

valuation of the Group’s properties is fixed, subject to an adjustment for acquisitions and disposals. The fees of both CBRE and JLL have been

included in the table above. CBRE and JLL undertake other consultancy and agency work on behalf of the Group. CBRE and JLL have confirmed

to us that the total fees paid by the Group represented less than 5% of their total revenues from all clients in both the current and prior year.

120

LANDSEC ANNUAL REPORT 2024 121FINANCIAL STATEMENTS

10 › NET FINANCE EXPENSE

			2024			2023
		Capital			Capital
	EPRA	and other		EPRA	and other
	earnings	items	Total	earnings	items	Total
	£m	£m	£m	£m	£m	£m
Finance income
Interest receivable from joint ventures	11	–	11	11	–	11
Fair value movement on interest-rate swaps	–	–	–	–	23	23
Other interest receivable	–	1	1	–	–	–
	11	1	12	11	23	34
Finance expense
Bond and debenture debt	(85)	–	(85)	(68)	–	(68)
Bank and other short-term borrowings	(35)	(2)	(37)	(38)	(2)	(40)
Fair value movement on interest-rate swaps	–	(22)	(22)	–	–	–
Other interest payable	(1)	–	(1)	–	(1)	(1)
	(121)	(24)	(145)	(106)	(3)	(109)
Interest capitalised in relation to properties under development	19	–	19	22	–	22
	(102)	(24)	(126)	(84)	(3)	(87)
Net finance (expense)/income	(91)	(23)	(114)	(73)	20	(53)
Joint venture net finance expense	(11)			(11)
Net finance expense included in EPRA earnings	(102)			(84)

Lease interest payable of £4m (2023: £4m) is included within rents payable as detailed in note 4.

11 › DIVIDENDS

ACCOUNTING POLICY

Interim dividend distributions to shareholders are recognised in the financial statements when paid. Final dividend distributions are recognised

as a liability in the period in which they are approved by shareholders.

All significant cash payments for the parent company, including dividend payments, are made by the Group’s treasury function in accordance

with the Group’s financial risk management policy.

DIVIDENDS PAID

				Pence per share	Year ended 31 March
					2024	2023
	Payment date	PID	Non-PID	Total	£m	£m
For the year ended 31 March 2022:
Third interim	7 April 2022	8.50	–	8.50		63
Final	22 July 2022	13.00	–	13.00		96
For the year ended 31 March 2023:
First interim	7 October 2022	8.60	–	8.60		64
Second interim	3 January 2023	9.00	–	9.00		67
Third interim	6 April 2023	9.00	–	9.00	67
Final	21 July 2023	12.00	–	12.00	89
For the year ended 31 March 2024:
First interim	6 October 2023	9.00	–	9.00	67
Second interim	2 January 2024	9.20	–	9.20	68
Gross dividends					291	290
Dividends in the statement of changes in equity					291	290
Timing difference on payment of withholding tax					–	(1)
Dividends in the statement of cash flows					291	289

LANDSEC ANNUAL REPORT 2024FINANCIAL STATEMENTS

NOTES TO THE FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 MARCH 2024 CONTINUED

The third quarterly interim dividend of 9.3p per ordinary share, or £69m in total (2023: 9.0p or £67m in total), was paid on 12 April 2024 as a

Property Income Distribution (PID). The Board has recommended a final dividend for the year ended 31 March 2024 of 12.1p per ordinary share

(2023: 12.0p) to be paid as a PID. This final dividend will result in a further estimated distribution of £90m (2023: £90m). Subject to shareholders’

approval at the Annual General Meeting, the final dividend will be paid on 26 July 2024 to shareholders registered at the close of business on

14 June 2024.

The total dividend paid and recommended in respect of the year ended 31 March 2024 is 39.6p per ordinary share (2023: 38. 6p) resulting

in a total estimated distribution of £294m (2023: £288m).

The first quarterly dividend for the year ending 31 March 2025 will be paid in October 2024 and will be announced in due course.

A Dividend Reinvestment Plan (DRIP) has been available in respect of all dividends paid during the year. The last day for DRIP elections for

the final dividend is close of business on 28 June 2024.

12 › INCOME TAX

ACCOUNTING POLICY

Income tax on the profit or loss for the year comprises current and deferred tax. Current tax is the tax payable on the taxable income for the

year and any adjustment in respect of previous years. Deferred tax is provided in full using the balance sheet liability method on temporary

differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes.

Deferred tax is determined using tax rates that have been enacted or substantively enacted by the reporting date and are expected to apply

when the asset is realised, or the liability is settled.

No provision is made for temporary differences (i) arising on the initial recognition of assets or liabilities, other than on a business combination,

that affect neither accounting nor taxable profit and (ii) relating to investments in subsidiaries to the extent that they will not reverse in the

foreseeable future.

SIGNIFICANT ACCOUNTING JUDGEMENT

The Group is a Real Estate Investment Trust (REIT). As a result, the Group does not pay UK corporation tax on its profits and gains from the

qualifying rental business in the UK. Non-qualifying profits and gains of the Group continue to be subject to corporation tax as normal. In order

to maintain group REIT status, certain ongoing criteria must be met. The main criteria are as follows:

•

at the start of each accounting period, the assets of the tax exempt business must be at least 75% of the total value of the Group’s assets;

•

at least 75% of the Group’s total profits must arise from the tax exempt business; and

•

at least 90% of the notional taxable profit of the property rental business must be distributed.

The Directors intend that the Group should continue as a REIT for the foreseeable future, with the result that deferred tax is no longer

recognised on temporary differences relating to the property rental business.

Deferred tax assets and liabilities require management judgement in determining the amounts, if any, to be recognised. In particular, judgement

is required when assessing the extent to which deferred tax assets should be recognised, taking into account the expected timing and level of

future taxable income. Deferred tax assets are only recognised when management believes it is probable that future taxable profits will be

available against which the deductible temporary differences can be utilised.

There is no income tax charge in the income statement (2023: none). There is a deferred tax credit of £4m (2023: £3m credit) included within

other comprehensive income.

11 › DIVIDENDS CONTINUED

122

LANDSEC ANNUAL REPORT 2024 123FINANCIAL STATEMENTS

The tax for the year is lower than the standard rate of corporation tax in the UK of 25% (2023: 19%). The differences are explained in the table below.

	2024	2023
	£m	£m
Loss before tax	(341)	(622)
Loss before tax multiplied by the rate of corporation tax in the UK of 25% (2023: 19%)	(85)	(118)
Adjustment for exempt property rental losses and revaluations in the year	91	130
	6	12
Effects of:
Timing difference on repurchase of medium term notes	(14)	(11)
Interest rate fair value movements and other temporary differences	4	(3)
Non-allowable expenses and non-taxable items	4	1
Movement in unrecognised tax losses	–	1
Total income tax charge in the income statement	–	–

	2024	2023
	£m	£m
The Group’s deferred tax liability is analysed as follows:
Arising on business combination	–	1
Arising on pension surplus	–	3
Total deferred tax liability	–	4

Deferred tax is calculated at the rate substantively enacted at the balance sheet date of 25% (2023: 25%). The movement in the deferred tax

liability arising on the remeasurement loss on the defined benefit pension scheme surplus is included within other comprehensive income in the

Statement of comprehensive income.

There are unrecognised deferred tax assets on the following items due to the high degree of uncertainty as to their future utilisation by non-REIT

qualifying activities.

	2024	2023
	£m	£m
Revenue losses	264	245
Capital losses	267	272
Other unrecognised temporary differences	7	239
Total unrecognised items	538	756

The other unrecognised temporary differences in the prior year relate primarily to the premium paid on the redemption of the Group’s medium

term notes. The premium paid was expensed in full in prior years, whereas a tax deduction is taken over the remaining term.

LANDSEC ANNUAL REPORT 2024FINANCIAL STATEMENTS

NOTES TO THE FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 MARCH 2024 CONTINUED

13 › NET CASH GENERATED FROM OPERATIONS

RECONCILIATION OF OPERATING LOSS TO NET CASH GENERATED FROM OPERATIONS

		Group		Company
	2024	2023	2024	2023
	£m	£m	£m	£m
Operating loss	(227)	(569)	(605)	(26)
Adjustments for:
Net deficit on revaluation of investment properties	628	827	–	–
Loss on changes in finance leases	–	6	–	–
Profit on disposal of trading properties	–	(1)	–	–
Loss on disposal of investment properties	16	144	–	–
Share of (profit)/loss from joint ventures	(2)	1	–	–
Share-based payment charge	8	6	–	–
Impairment of goodwill	1	5	–	–
Impairment of amounts due from joint ventures	2	–	–	–
Fair value gain on remeasurement of investment	(3)	–	–	–
Non-cash development contract and transaction expenditure	26	–	–	–
Impairment/(reversal of impairment) of investment in subsidiary	–	–	578	(1)
Rents payable	11	10	–	–
Depreciation and amortisation	4	5	–	–
Impairment of trading properties	11	19	–	–
	475	453	(27)	(27)
Changes in working capital:
Increase in receivables	(32)	(17)	–	–
(Decrease)/increase in payables and provisions	(14)	(80)	27	27
Net cash generated from operations	429	356	–	–

RECONCILIATION TO ADJUSTED NET CASH INFLOW FROM OPERATING ACTIVITIES

		Group		Company
	2024	2023	2024	2023
	£m	£m	£m	£m
Net cash inflow from operating activities	338	342	–	–
Joint ventures net cash inflow from operating activities	15	17	–	–
Adjusted net cash inflow from operating activities	353	359	–	–

1. Includes cash flows relating to the interest in MediaCity which is not owned by the Group but is consolidated in the Group numbers.

124

LANDSEC ANNUAL REPORT 2024 125FINANCIAL STATEMENTS

SECTION 3 – PROPERTIES

This section focuses on the property assets which form the core of the Group’s business. It includes details of investment properties, investments

in joint ventures and trading properties.

Our property portfolio is a combination of properties that are wholly owned by the Group, part owned through joint arrangements and properties

owned by the Group but where a third party holds a non-controlling interest. In the Group’s IFRS balance sheet, wholly owned properties and

properties owned by the Group but where a third party holds a non-controlling interest are presented as either ‘Investment properties’ or

‘Trading properties’. The Group applies equity accounting to its investments in joint ventures, which requires the Group’s share of properties

held by joint ventures to be presented within ‘Investments in joint ventures’.

Internally, management review the results of the Group on a basis that adjusts for these forms of ownership to present a proportionate share.

The Combined Portfolio, with assets totalling £10.0bn, is an example of this proportionate share, reflecting the economic interest we have in

our properties regardless of our ownership structure. We consider this presentation provides further insight to stakeholders about the activities

and performance of the Group, as it aggregates the results of all of the Group’s property interests which under IFRS are required to be presented

across a number of line items in the statutory financial statements.

The Group’s investment properties are carried at fair value and trading properties are carried at the lower of cost and net realisable value.

Both of these values are determined by the Group’s external valuers. The combined value of the Group’s total investment property portfolio

(including the Group’s share of investment properties held through joint ventures) is shown as a reconciliation in note 14.

ACCOUNTING POLICY

INVESTMENT PROPERTIES

Investment properties are properties, either owned or leased by the Group, that are held either to earn rental income or for capital appreciation,

or both. Investment properties are measured initially at cost including related transaction costs, and subsequently at fair value. Fair value is

based on market value, as determined by a professional external valuer at each reporting date. The difference between the fair value of an

investment property at the reporting date and its carrying amount prior to re-measurement is included in the income statement as a valuation

surplus or deficit. Investment properties are presented on the balance sheet within non-current assets.

Some of the Group’s investment properties are owned through long-leasehold arrangements, as opposed to the Group owning the freehold.

Where the Group is a lessee, a right-of-use asset is recognised at the commencement date of the lease and accounted for as investment

property. Initially, the cost of investment properties held under leases includes the amount of lease liabilities recognised, initial direct costs

incurred, and lease payments made at or before the commencement date less any lease incentives received. The investment properties held

under leases are subsequently carried at their fair value. A corresponding liability is recorded within borrowings. Each lease payment is allocated

between repayment of the liability and a finance charge to achieve a constant interest rate on the outstanding liability .

TRADING PROPERTIES

Trading properties are those properties held for sale, or those being developed with a view to sell. Trading properties are recorded at the lower

of cost and net realisable value. The net realisable value of a trading property is determined by a professional external valuer at each reporting

date. If the net realisable value of a trading property is lower than its carrying value, an impairment loss is recorded in the income statement.

If, in subsequent periods, the net realisable value of a trading property that was previously impaired increases above its carrying value, the

impairment is reversed to align the carrying value of the property with the net realisable value. Trading properties are presented on the balance

sheet within current assets.

ACQUISITION OF PROPERTIES

Properties are treated as acquired when the Group assumes control of the property.

CAPITAL EXPENDITURE AND CAPITALISATION OF BORROWING COSTS

Capital expenditure on properties consists of costs of a capital nature, including costs associated with developments and refurbishments.

Where a property is being developed or undergoing major refurbishment, interest costs associated with direct expenditure on the property are

capitalised. Where borrowings are specifically used to finance any capital expenditure on the properties, the actual borrowing costs incurred are

capitalised. However, where borrowings are used generally to finance the operations of the Group, the interest capitalised is calculated using the

Group’s weighted average cost of borrowings. Interest is capitalised from the commencement of the development work until the date of practical

completion. Certain internal staff and associated costs directly attributable to the management of major schemes are also capitalised. The total

staff and associated costs are capitalised based on the proportion of time spent on the relevant scheme. Internal staff costs are capitalised from

the date the Group determines it is probable that the development will progress until the date of practical completion.

LANDSEC ANNUAL REPORT 2024FINANCIAL STATEMENTS

NOTES TO THE FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 MARCH 2024 CONTINUED

TRANSFERS BETWEEN INVESTMENT PROPERTIES AND TRADING PROPERTIES

When the Group begins to redevelop an existing investment property for continued future use as an investment property, the property continues

to be held as an investment property. When the Group begins to redevelop an existing investment property with a view to sell, the property

is transferred to trading properties and held as a current asset. The property is remeasured to fair value as at the date of the transfer with any

gain or loss being taken to the income statement. The remeasured amount becomes the deemed cost at which the property is then carried

in trading properties.

DISPOSAL OF PROPERTIES

Properties are treated as disposed when control of the property is transferred to the buyer. Typically, this will either occur on unconditional

exchange or on completion. Where completion is expected to occur significantly after exchange, or where the Group continues to have

significant outstanding obligations after exchange, the control will not usually transfer to the buyer until completion.

The profit on disposal is determined as the difference between the sales proceeds and the carrying amount of the asset at the beginning of

the accounting period plus capital expenditure to the date of disposal. The profit on disposal of investment properties is presented separately

on the face of the income statement. Proceeds received on the sale of trading properties are recognised within Revenue, and the carrying value

at the date of disposal is recognised within Costs.

SIGNIFICANT ACCOUNTING JUDGEMENT

ACQUISITION AND DISPOSAL OF PROPERTIES

Property transactions can be complex in nature and material to the financial statements. To determine when an acquisition or disposal should

be recognised, management consider whether the Group assumes or relinquishes control of the property, and the point at which this is

obtained or relinquished. Consideration is given to the terms of the acquisition or disposal contracts and any conditions that must be satisfied

before the contract is fulfilled. In the case of an acquisition, management must also consider whether the transaction represents an asset

acquisition or business combination.

KEY ACCOUNTING ESTIMATES AND OTHER SOURCES OF ESTIMATION UNCERTAINTY

VALUATION OF THE GROUP’S PROPERTIES

The valuation of the Group’s property portfolio has been undertaken by independent valuers in accordance with the Royal Institution of

Chartered Surveyors (RICS) Valuation – Global Standards and UK Supplement (together the “Red Book”). Real estate by its nature is a complex

asset class with value determined by a range of factors overlaid by interpretation and judgemental assessment of market data; as such it is

classified as a ‘Level 3 asset’ within IFRS. Factors affecting valuation are on an individual property level and include the property type, location,

tenure and tenancy characteristics, quality of the asset and prospects for future rental revenue.

The Group’s investment property valuation has been undertaken by valuers interpreting market evidence as available in reaching their

conclusions on Fair Value, reflecting asset specific data provided by Management, making assumptions that tenure, tenancies, town planning

and condition of buildings are as provided. As a result, the valuations the Group places on its property portfolio are subject to a degree of

uncertainty and are made on the basis of assumptions which may not prove to be accurate, particularly in periods of volatility or low

transaction volume in the property market.

The estimation of the net realisable value of the Group’s trading properties, in particular the development land and infrastructure programmes,

is inherently subjective due to a number of factors, including their complexity, unusually large size, the substantial expenditure required and

long timescales to completion. In addition, as a result of these timescales to completion, the plans associated with these programmes could

be subject to significant market variation over the course of development. As a result, and similar to the valuation of investment properties,

the net realisable values of the Group’s trading properties are subject to a degree of uncertainty and are determined on the basis of

assumptions which may not prove to be accurate.

If the assumptions upon which the external valuer has based its valuations prove to be inaccurate, this may have an impact on the value of the

Group’s investment and trading properties, which could in turn have an effect on the Group’s financial position and results.

126

LANDSEC ANNUAL REPORT 2024 127FINANCIAL STATEMENTS

14 › INVESTMENT PROPERTIES

	2024	2023
	£m	£m
Net book value at the beginning of the year	9,658	11,207
Transfer from joint venture	–	23
Acquisitions of investment properties	144	218
Capital expenditure	374	356
Capitalised interest	19	22
Net movement in head leases capitalised 1	(30)	(16)
Disposals 2	(207)	(1,319)
Net deficit on revaluation of investment properties	(628)	(827)
Transfers to trading properties	–	(6)
Net book value at the end of the year	9,330	9,658

1. See note 22 for details of the amounts payable under head leases and note 4 for details of the rents payable in the income statement.

2. Includes impact of disposals of finance leases.

The market value of the Group’s investment properties, as determined by the Group’s external valuers, differs from the net book value

presented in the balance sheet due to the Group presenting tenant finance leases, head leases and lease incentives separately. The following

table reconciles the net book value of the investment properties to the market value.

				2024				2023
			Adjustment				Adjustment
			for				for
			non-wholly				non-wholly
	Group	Joint	owned	Combined		Joint	owned	Combined
		ventures	subsidiaries	Portfolio	Group	ventures	subsidiaries	Portfolio
	£m	£m	£m	£m	£m	£m	£m	£m
Market value	9,465	616	(118)	9,963	9,743	635	(139)	10,239
Less: properties treated as finance leases	(18)	–	–	(18)	(17)	–	–	(17)
Plus: head leases capitalised	77	1	–	78	107	1	–	108
Less: tenant lease incentives	(194)	(32)	–	(226)	(175)	(35)	–	(210)
Net book value	9,330	585	(118)	9,797	9,658	601	(139)	10,120
Net deficit on revaluation of investment properties	(628)	(19)	22	(625)	(827)	(30)	9	(848)

1. Refer to note 16 for a breakdown of this amount by entity.

The net book value of leasehold properties where head leases have been capitalised is £1,604m (2023: £1,723m).

Investment properties include capitalised interest of £290m (2023: £271m). The average rate of interest capitalisation for the year is 4.8%

(2023: 3.0%). The gross historical cost of investment properties is £8,502m (2023: £8,280m).

VALUATION PROCESS

The fair value of investment properties at 31 March 2024 was determined by the Group’s external valuers, CBRE and JLL. The valuations are

in accordance with RICS standards and were arrived at by reference to market evidence of transactions for similar properties. The valuations

performed by the valuers are reviewed internally by Senior Management and other relevant people within the business. This process includes

discussions of the assumptions used by the valuers, as well as a review of the resulting valuations. Discussions of the valuation process and

results are held between Senior Management, the Audit Committee and the valuers on a half-yearly basis.

The valuers’ opinion of fair value was primarily derived using comparable recent market transactions on arm’s length terms and using

appropriate valuation techniques. The fair value of investment properties is determined using the income capitalisation approach. Under this

approach, forecast net cash flows, based upon current market derived estimated rental values (market rents) together with estimated costs,

are discounted at market derived capitalisation rates to produce the valuers’ opinion of fair value. The average discount rate, which, if applied

to all cash flows would produce the fair value, is described as the equivalent yield.

LANDSEC ANNUAL REPORT 2024FINANCIAL STATEMENTS

NOTES TO THE FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 MARCH 2024 CONTINUED

Properties in the development programme are typically valued using a residual valuation method. Under this methodology, the valuer assesses

the completed development value using income and yield assumptions. Deductions are then made for estimated costs to complete, including

finance and developer’s profit, to arrive at the valuation. Costs include future estimated costs associated with refurbishment or development

(excluding finance costs), together with an estimate of cash incentives to be paid to tenants. As the development approaches completion,

the valuer may consider the income capitalisation approach to be more appropriate.

The Group considers all of its investment properties to fall within ‘Level 3’, as defined by IFRS 13 and as explained in Note 26(III). Accordingly,

there have been no transfers of properties within the fair value hierarchy in the financial year.

The table below summarises the key unobservable inputs used in the valuation of the Group’s wholly owned investment properties, and

properties owned by the Group but where a third party holds a non-controlling interest, at 31 March 2024:

										2024
	Market			Estimated rental value			Equivalent yield			Costs
	value			£ per sq ft			%			£ per sq ft
	£m	Low	Average	High	Low	Average	High	Low	Average	High
Central London
West End offices	2,754	20	85	132	4.3%	5.3%	5.8%	–	51	151
City offices	1,192	56	80	96	5.8%	6.0%	7.5%	–	124	226
Retail and other	956	15	57	121	4.5%	5.0%	6.5%	–	28	113
Total Central London	4,902	15	78	132	4.3%	5.4%	7.5%	–	64	226
Major retail
Shopping centres	1,059	10	17	39	7.0%	7.9%	9.5%	–	5	12
Outlets	605	48	51	53	6.5%	7.0%	8.0%	14	16	17
Total Major retail	1,664	10	29	53	6.5%	7.6%	9.5%	–	9	17
Mixed-use urban
London	191	10	21	27	5.7%	6.6%	10.0%	–	2	2
Major regional cities	600	16	24	47	5.7%	7.7%	9.7%	–	3	13
Total Mixed-use urban	791	10	23	47	5.7%	7.5%	10.0%	–	3	13
Subscale sectors
Leisure	392	9	13	17	6.3%	8.9%	12.1%	–	3	29
Hotels	400	8	19	40	6.3%	7.2%	8.8%	–	–	–
Retail parks	390	13	18	26	6.0%	6.8%	8.5%	–	1	5
Total Subscale sectors	1,182	8	17	40	6.0%	7.6%	12.1%	–	1	29
Developments:	167	60	68	76	5.3%	5.7%	6.3%	–	–	–
income capitalisation method
Developments: residual method	759	73	89	103	5.0%	5.4%	6.2%	–	–	–
Development programme	926	60	85	103	5.0%	5.4%	6.3%	–	–	–
Market value at 31 March 2024 – Group	9,465

1. The calculation for average costs excludes those properties which are assumed by the Group’s external valuer to be substantially refurbished or redeveloped, but which do not yet

form part of the development programme.

14 › INVESTMENT PROPERTIES CONTINUED

128

LANDSEC ANNUAL REPORT 2024 129FINANCIAL STATEMENTS

The sensitivities below illustrate the impact of changes in key unobservable inputs (in isolation) on the fair value of the Group’s properties:

SENSITIVITIES

							2024
			Impact on valuations		Impact on valuations		Impact on valuations
			of 5% change in		of 25 bps change in		of 5% change
	Market		estimated rental value		equivalent yield		in costs
	value	Increase	Decrease	Decrease	Increase	Decrease	Increase
	£m	£m	£m	£m	£m	£m	£m
Total Central London (excluding developments)	4,902	188	(188)	260	(238)	9	(23)
Total Major retail (excluding developments)	1,664	68	(68)	58	(55)	4	(4)
Total Mixed-use urban (excluding developments)	791	24	(22)	22	(20)	4	(3)
Total Subscale sectors (excluding developments)	1,182	47	(45)	82	(41)	–	–
Developments: income capitalisation method	167	13	(13)	15	(14)	4	(4)
Developments: residual method	759	94	(94)	106	(90)	54	(54)
Market value at 31 March 2024 – Group	9,465	434	(430)	543	(458)	75	(88)

The table below summarises the key unobservable inputs used in the valuation of the Group’s wholly owned investment properties, and

properties owned by the Group but where a third party holds a non-controlling interest, at 31 March 2023:

										2023
	Market			Estimated rental value			Equivalent yield			Costs
	value			£ per sq ft			%			£ per sq ft
	£m	Low	Average	High	Low	Average	High	Low	Average	High
Central London
West End offices	2,288	20	64	156	4.0%	4.3%	5.6%	–	38	231
City offices	1,304	56	72	90	5.0%	5.2%	6.6%	–	114	152
Retail and other	1,058	8	49	82	3.5%	4.7%	6.5%	–	27	259
Total Central London	4,650	8	63	156	3.5%	4.7%	6.6%	–	57	259
Major retail
Shopping centres	1,026	12	25	31	6.5%	8.0%	9.2%	3	10	25
Outlets	684	15	47	52	6.4%	7.2%	10.6%	8	12	22
Total Major retail	1,710	12	34	52	6.4%	7.7%	10.6%	3	11	25
Mixed-use urban
London	221	10	21	27	5.6%	6.4%	11.4%	–	–	4
Major regional cities	707	16	22	47	5.5%	6.4%	9.0%	–	–	–
Total Mixed-use urban	928	10	21	47	5.5%	6.4%	11.4%	–	–	4
Subscale sectors
Leisure	439	9	13	19	6.6%	8.5%	10.5%	–	2	25
Hotels	408	8	18	36	5.6%	6.8%	8.2%	–	–	–
Retail parks	418	13	19	25	5.0%	6.4%	8.3%	–	4	18
Total Subscale sectors	1,265	8	17	36	5.0%	7.2%	10.5%	–	2	25
Developments:	167	52	58	80	4.8%	5.3%	5.5%	–	–	–
income capitalisation method
Developments: residual method	1,023	60	47	88	4.7%	4.8%	5.3%	–	–	–
Development programme	1,190	52	49	88	4.7%	4.9%	5.5%	–	–	–
Market value at 31 March 2023 – Group	9,743

1. Restated for changes in sub-segments.

2. The calculation for average costs excludes those properties which are assumed by the Group’s external valuer to be substantially refurbished or redeveloped, but which do not yet

form part of the development programme.

LANDSEC ANNUAL REPORT 2024FINANCIAL STATEMENTS

NOTES TO THE FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 MARCH 2024 CONTINUED

The sensitivities illustrate the impact of changes in key unobservable inputs (in isolation) on the fair value of the Group’s properties:

SENSITIVITIES

							2023
			Impact on valuations		Impact on valuations		Impact on valuations
			of 5% change in		of 25 bps change in		of 5% change
	Market		estimated rental value		equivalent yield		in costs
	value	Increase	Decrease	Decrease	Increase	Decrease	Increase
	£m	£m	£m	£m	£m	£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	(4)
Total Mixed-use urban (excluding developments)	928	30	(29)	33	(32)	1	(1)
Total Subscale sectors (excluding developments)	1,265	47	(46)	16	(13)	2	(2)
Developments: income capitalisation method	167	11	(12)	15	(14)	4	(4)
Developments: residual method	1,023	72	(87)	104	(107)	23	(40)
Market value at 31 March 2023 – Group	9,743	409	(419)	491	(455)	48	(59)

1. Restated for changes in sub-segments.

15 › TRADING PROPERTIES

	Development
	land and
	infrastructure	Residential	Total
	£m	£m	£m
At 1 April 2022	128	17	145
Transfer from investment properties	6	–	6
Capital expenditure	6	(3)	3
Disposals	(17)	–	(17)
(Impairment)/reversal of impairment	(25)	6	(19)
At 31 March 2023	98	20	118
Capital expenditure	6	7	13
Capitalised interest	–	1	1
Disposals	(21)	–	(21)
Impairment	(11)	–	(11)
At 31 March 2024	72	28	100

The cumulative impairment provision at 31 March 2024 in respect of Development land and infrastructure was £36m (2023: £25m);

and in respect of Residential was £nil (2023: £nil).

14 › INVESTMENT PROPERTIES CONTINUED

130

LANDSEC ANNUAL REPORT 2024 131FINANCIAL STATEMENTS

16 › JOINT ARRANGEMENTS

ACCOUNTING POLICY

Joint arrangements are those entities over whose activities the Group has joint control, established by contractual agreement. Interests in joint

arrangements are accounted for as either a joint venture or a joint operation. The treatment as either a joint venture or a joint operation will

depend on whether the Group has rights to the net assets, or a direct interest in the assets and liabilities of the arrangement.

A joint arrangement is accounted for as a joint venture when the Group, along with the other parties that have joint control of the arrangement,

has rights to the net assets of the arrangement. Interests in joint ventures are accounted for using the equity method of accounting. The equity

method requires the Group’s share of the joint venture’s post-tax profit or loss for the year to be presented separately in the income statement

and the Group’s share of the joint venture’s net assets to be presented separately in the balance sheet.

A joint arrangement is accounted for as a joint operation when the Group, along with the parties that have joint control of the arrangement,

has rights to the assets and obligations for the liabilities relating to the arrangement. The Group’s share of jointly controlled assets, related

liabilities, income and expenses are combined with the equivalent items in the financial statements on a line-by-line basis.

The Group’s principal joint arrangements are described below:

	Percentage owned
Joint ventures	& voting rights	Business segment	Year end date	Joint venture partner
Held at 31 March 2024
Nova, Victoria	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,	31 March	The Crown Estate Commissioners
		Subscale sectors
Harvest	50%	Subscale sectors	31 March	J Sainsbury plc
The Ebbsfleet Limited Partnership 7	50%	Subscale sectors	31 March	Ebbsfleet Property Limited
West India Quay Unit Trust	50%	Subscale sectors	31 March	Schroder UK Real Estate Fund
Mayfield	50%	Mixed-use urban	31 March	LCR Limited, Manchester City Council,
				Transport for Greater Manchester
Curzon Park Limited	50%	Subscale sectors	31 March	Derwent Developments (Curzon)
				Limited
Plus X Holdings Limited	50%	Subscale sectors	31 March	Paul David Rostas, Matthew Edmund
				Hunter
Landmark Court Partnership Limited	51%	Central London	31 March	TTL Landmark Court Properties Limited
Opportunities for Sittingbourne Limited	50%	Mixed-use urban	31 March	Swale Borough Council
Cathedral (Movement, Greenwich) LLP	52%	Mixed-use urban	31 March	Mr Richard Upton
Circus Street Developments Limited	50%	Mixed-use urban	31 March	High Wire Brighton Limited

6,7

Joint operation	Ownership interest	Business segment	Year end date	Joint operation partners
Held at 31 March 2024
Bluewater, Kent	48.75%	Major retail	31 March	M&G Real Estate and GIC
				Royal London Asset Management
				Aberdeen Standard Investments

1. Refer to Additional information pages 179-183 for the full list of the Group’s related undertakings.

2. Investments under joint arrangements are not always represented by an equal percentage holding by each partner. In a number of joint ventures that are not considered principal

joint ventures and therefore not included in the table above, the Group holds a majority shareholding but has joint control and therefore the arrangement is accounted for as a

joint venture.

3. The year end date shown is the accounting reference date of the joint arrangement. In all cases, the Group’s accounting is performed using financial information for the Group’s

own reporting year and reporting date.

4. Nova, Victoria includes the Nova Limited Partnership, Nova Residential Limited Partnership, Nova GP Limited, Nova Business Manager Limited, Nova Residential (GP) Limited,

Nova Residential Intermediate Limited, Nova Estate Management Company Limited, Nova Nominee 1 Limited and Nova Nominee 2 Limited.

5. Harvest includes Harvest 2 Limited Partnership, Harvest Development Management Limited, Harvest 2 Selly Oak Limited, Harvest 2 GP Limited and Harvest GP Limited.

6. Mayfield includes Mayfield Development Partnership LP and Mayfield Development (General Partner) Limited.

7. Included within Other in subsequent tables.

LANDSEC ANNUAL REPORT 2024FINANCIAL STATEMENTS

NOTES TO THE FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 MARCH 2024 CONTINUED

All of the Group’s joint arrangements listed above have their principal place of business in the United Kingdom. All of the Group’s principal joint

arrangements own and operate investment property, with the exception of:

•

The Ebbsfleet Limited Partnership and Plus X Holdings Limited, which are holding companies;

•

Harvest, which is engaged in long-term development contracts; and

•

Curzon Park Limited, Landmark Court Partnership Limited, Opportunities for Sittingbourne Limited and Circus Street Developments Limited,

which are companies continuing their business of property development.

The activities of all the Group’s principal joint arrangements are therefore strategically important to the business activities of the Group.

All joint ventures listed above are registered in England and Wales with the exception of Southside Limited Partnership and West India Quay

Unit Trust which are registered in Jersey.

JOINT VENTURES

						Year ended 31 March 2024
			Westgate
		Southside	Oxford
	Nova,	Limited	Alliance			Total
	Victoria	Partnership	Partnership	Other	Total	Group
	100%	100%	100%	100%	100%	share
Comprehensive income statement	£m	£m	£m	£m	£m	£m
Revenue	49	11	35	5	100	49
Gross rental income (after rents payable)	34	11	26	5	76	37
Net rental income	34	10	22	1	67	33
EPRA earnings before interest	32	9	21	1	63	32
Finance expense	(16)	(6)	–	–	(22)	(11)
Net finance expense	(16)	(6)	–	–	(22)	(11)
EPRA earnings	16	3	21	1	41	21
Capital and other items
Net deficit on revaluation of investment properties	(24)	(3)	(1)	(9)	(37)	(19)
(Loss)/profit before tax	(8)	–	20	(8)	4	2
Post-tax (loss)/profit	(8)	–	20	(8)	4	2
Total comprehensive (loss)/income	(8)	–	20	(8)	4	2
Group share of (loss)/profit before tax	(4)	–	10	(4)	2
Group share of post-tax (loss)/profit	(4)	–	10	(4)	2
Group share of total comprehensive (loss)/income	(4)	–	10	(4)	2

1. Revenue includes gross rental income (before rents payable), service charge income, other property related income, trading properties disposal proceeds and income from

long-term development contracts.

16 › JOINT ARRANGEMENTS CONTINUED

132

LANDSEC ANNUAL REPORT 2024 133FINANCIAL STATEMENTS

JOINT VENTURES

							Year ended 31 March 2023
				Westgate
		Southside	St. David’s	Oxford
	Nova,	Limited	Limited	Alliance			Total
	Victoria	Partnership	Partnership	Partnership	Other	Total	Group
	100%	100%	100%	100%	100%	100%	share
Comprehensive income statement	£m	£m	£m	£m	£m	£m	£m
Revenue	49	10	33	34	4	130	65
Gross rental income (after rents payable)	36	10	25	27	4	102	51
Net rental income	36	7	16	22	2	83	42
EPRA earnings before interest	35	6	15	22	2	80	40
Finance expense	(17)	(6)	–	–	–	(23)	(11)
Net finance expense	(17)	(6)	–	–	–	(23)	(11)
EPRA earnings	18	–	15	22	2	57	29
Capital and other items
Net (deficit)/surplus on revaluation of investment properties	(67)	1	6	(8)	8	(60)	(30)
(Loss)/profit before tax	(49)	1	21	14	10	(3)	(1)
Post-tax (loss)/profit	(49)	1	21	14	10	(3)	(1)
Total comprehensive (loss)/income	(49)	1	21	14	10	(3)	(1)
Group share of (loss)/profit before tax	(24)	–	10	7	6	(1)
Group share of post-tax (loss)/profit 2	(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, trading properties disposal proceeds and income from

long-term development contracts.

2. On 24 March 2023 the Group acquired the remaining 50% interest in St David’s Limited Partnership. Results from its operations prior to that date are included as share of profit

or loss from joint ventures.

LANDSEC ANNUAL REPORT 2024FINANCIAL STATEMENTS

NOTES TO THE FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 MARCH 2024 CONTINUED

JOINT VENTURES

						31 March 2024
			Westgate
		Southside	Oxford
	Nova,	Limited	Alliance			Total
	Victoria	Partnership	Partnership	Other	Total	Group
	100%	100%	100%	100%	100%	share
Balance sheet	£m	£m	£m	£m	£m	£m
Investment properties	727	130	223	91	1,171	585
Non-current assets	727	130	223	91	1,171	585
Cash and cash equivalents	32	4	21	4	61	31
Other current assets	58	7	11	85	161	80
Current assets	90	11	32	89	222	111
Total assets	817	141	255	180	1,393	696
Trade and other payables and provisions	(23)	(6)	(16)	(35)	(80)	(40)
Current liabilities	(23)	(6)	(16)	(35)	(80)	(40)
Non-current liabilities	(104)	(147)	–	(19)	(270)	(135)
Non-current liabilities	(104)	(147)	–	(19)	(270)	(135)
Total liabilities	(127)	(153)	(16)	(54)	(350)	(175)
Net assets/(liabilities)	690	(12)	239	126	1,043	521
Comprised of:
Net assets	690	–	239	130	1,059	529
Accumulated losses recognised as net liabilities	–	(12)	–	(4)	(16)	(8)
Market value of investment properties	780	131	230	91	1,232	616
Net cash	32	4	21	4	61	31

1. The difference between the book value and the market value of investment properties is the amount recognised in respect of lease incentives, head leases capitalised and

properties treated as finance leases, where applicable.

2. The Group’s share of accumulated losses of a joint venture interest are recognised as net liabilities (see note 33) where there is an obligation to provide for these losses.

3. Excludes funding provided by the Group and its joint venture partners.

16 › JOINT ARRANGEMENTS CONTINUED

134

LANDSEC ANNUAL REPORT 2024 135FINANCIAL STATEMENTS

JOINT VENTURES

							31 March 2023
				Westgate
		Southside	St. David’s	Oxford
	Nova,	Limited	Limited	Alliance			Total
	Victoria	Partnership	Partnership	Partnership	Other	Total	Group
	100%	100%	100%	100%	100%	100%	share
Balance sheet	£m	£m	£m	£m	£m	£m	£m
Investment properties	748	134	–	225	98	1,205	601
Non-current assets	748	134	–	225	98	1,205	601
Cash and cash equivalents	36	3	–	23	7	69	35
Other current assets	64	9	–	13	68	154	78
Current assets	100	12	–	36	75	223	113
Total assets	848	146	–	261	173	1,428	714
Trade and other payables and provisions	(22)	(10)	–	(14)	(48)	(94)	(48)
Current liabilities	(22)	(10)	–	(14)	(48)	(94)	(48)
Non-current liabilities	(131)	(145)	–	–	–	(276)	(138)
Non-current liabilities	(131)	(145)	–	–	–	(276)	(138)
Total liabilities	(153)	(155)	–	(14)	(48)	(370)	(186)
Net assets/(liabilities)	695	(9)	–	247	125	1,058	528
Comprised of:
Net assets	695	–	–	247	125	1,067	533
Accumulated losses recognised as net liabilities	–	(9)	–	–	–	(9)	(5)
Market value of investment properties	807	134	–	233	98	1,272	635
Net cash	36	3	–	23	7	69	35

1. The difference between the book value and the market value of investment properties is the amount recognised in respect of lease incentives, head leases capitalised and

properties treated as finance leases, where applicable.

2. The Group’s share of accumulated losses of a joint venture interest are recognised as net liabilities (see note 33) where there is an obligation to provide for these losses.

3. Excludes funding provided by the Group and its joint venture partners.

LANDSEC ANNUAL REPORT 2024FINANCIAL STATEMENTS

NOTES TO THE FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 MARCH 2024 CONTINUED

JOINT VENTURES

				Westgate
		Southside	St. David’s	Oxford
	Nova,	Limited	Limited	Alliance
	Victoria	Partnership	Partnership	Partnership
	Group share	Group share	Group share	Group share	Other	Total
	100%	100%	100%	100%	Group share	Group share
Net investment	£m	£m	£m	£m	£m	£m
At 1 April 2022	372	(5)	113	125	90	695
Total comprehensive (loss)/income	(24)	–	10	7	6	(1)
Cash distributions	–	–	(4)	(8)	(2)	(14)
Other distributions	–	–	–	–	(7)	(7)
Disposals and transfers from joint arrangements	–	–	(119)	–	(25)	(144)
Other non-cash movements	–	–	–	–	(1)	(1)
At 31 March 2023	348	(5)	–	124	61	528
Total comprehensive (loss)/income	(4)	–	–	10	(3)	3
Cash and other distributions	–	–	–	(12)	(5)	(17)
Other non-cash movements	–	–	–	(1)	8	7
At 31 March 2024	344	(5)	–	121	61	521
Comprised of:
At 31 March 2023
Non-current assets	348	–	–	124	61	533
Non-current liabilities	–	(5)	–	–	–	(5)
At 31 March 2024
Non-current assets	344	–	–	121	64	529
Non-current liabilities	–	(5)	–	–	(3)	(8)

1. The Group’s share of accumulated losses of a joint venture interest are recognised as net liabilities (see note 33) where there is an obligation to provide for these losses.

16 › JOINT ARRANGEMENTS CONTINUED

136

LANDSEC ANNUAL REPORT 2024 137FINANCIAL STATEMENTS

17 › INVESTMENTS IN ASSOCIATES

ACCOUNTING POLICY

Associates are those entities over whose financial and operating policy decisions the Group has significant influence, established by contractual

agreement, but over which the Group does not have control or joint control over those policies. Interests in associates are accounted for using the

equity method of accounting. The equity method requires the Group’s share of the associate’s post-tax profit or loss for the year to be presented

separately in the income statement and the Group’s share of the associate’s net assets to be presented separately in the balance sheet.

The Group’s principal interests in associates are described below:

Associates	Percentage owned and voting rights	Year end date	Business segment
CDSR Burlington House Developments Limited	20%	31 December	Subscale sectors
Northpoint Developments Limited	42%	31 December	Subscale sectors

1. Refer to Additional information pages 179-183 for the full list of the Group’s related undertakings.

During the year the Group’s investment in YC Shepherds Bush Limited reduced from 18.9% to 14.2% as a result of a dilution of shareholding

caused by capital calls throughout the year. The investment in associate was reclassified to Other Investments as the Group is no longer

considered to have significant control over the operations of the investment. The value of this investment at the time of reclassification was £3m.

Northpoint Developments Limited have their principal place of business in the United Kingdom and they are registered in England and Wales.

CDSR Burlington House Developments Limited operates in Ireland and they are registered in Ireland. The Group’s associates are engaged in

property development.

The investments in CDSR Burlington House Developments Limited and Northpoint Developments Limited were fully impaired on acquisition

of U+I Group PLC.

The Group’s share of profit or loss from its investments in associates was £nil (2023: £nil).

ASSOCIATES

	Total
	Group share
Net investment	£m
At 1 April 2022	4
Disposal	(1)
At 31 March 2023	3
Reclassification to other investments (see note 30)	(3)
At 31 March 2024	–

18 › CAPITAL COMMITMENTS

	2024	2023
	£m	£m
Contracted capital commitments at the end of the year in respect of:
Investment properties	353	153
Trading properties	10	21
Joint ventures (our share)	4	1
Total capital commitments	367	175

Capital commitments include contractually committed obligations to purchase goods or services used in the construction, development, repair,

maintenance or other enhancement of the Group’s properties.

LANDSEC ANNUAL REPORT 2024FINANCIAL STATEMENTS

NOTES TO THE FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 MARCH 2024 CONTINUED

19 › NET INVESTMENT IN FINANCE LEASES

ACCOUNTING POLICY

Where the Group’s leases transfer the significant risks and rewards incidental to ownership of the underlying asset to the tenant, the lease is

accounted for as a finance lease. At the outset of the lease the fair value of the asset is de-recognised from investment property and recognised

as a finance lease receivable. The finance lease receivable is derecognised in the event that the lease is terminated. Lease income is recognised

over the period of the lease, reflecting a constant rate of return. The difference between the gross receivable and the present value of the

receivable is recognised as finance income within Revenue over the lease term.

	2024	2023
	£m	£m
Non-current
Finance leases – gross receivables	37	38
Unguaranteed residual value	3	3
Unearned finance income	(19)	(20)
	21	21
Current
Finance leases – gross receivables	2	2
Unearned finance income	(1)	(1)
	1	1
Net investment in finance leases	22	22
Gross receivables from finance leases due:
No later than one year	2	2
One to two years	2	2
Two to three years	2	2
Three to four years	2	2
Four to five years	1	1
More than five years	30	31
	39	40
Unguaranteed residual value	3	3
Unearned finance income	(20)	(21)
Net investment in finance leases	22	22

1. Included in Other Receivables in note 27.

The Group has leased out several investment properties under finance leases, which range from 20 to 125 years in duration from the inception

of the lease.

138

LANDSEC ANNUAL REPORT 2024 139FINANCIAL STATEMENTS

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 least

annually for impairment. Other intangible assets arising on business combinations are amortised to the income statement over their expected

useful lives. Software assets are stated at cost less accumulated amortisation and are amortised on a straight-line basis over their estimated

useful economic lives, normally three to five years.

			Other
			intangible
	Goodwill	Software	asset	Total
	£m	£m	£m	£m
At 1 April 2022	1	5	2	8
Additions	5	–	–	5
Amortisation	–	(2)	–	(2)
Impairment	(5)	–	–	(5)
At 31 March 2023	1	3	2	6
Amortisation	–	(2)	–	(2)
Impairment	(1)	–	–	(1)
At 31 March 2024	–	1	2	3

The other intangible asset relates to the Group’s acquisition of its interest in Bluewater, Kent in 2014 and represents the estimated fair value

of the management rights for the centre. The fair value at the date of acquisition was £30m and the asset is being amortised over a period

of 20 years. On recognition of the other intangible asset, the Group recognised a deferred tax liability of £6m, and corresponding goodwill of

the same amount. The deferred tax liability is being released to the income statement as the other intangible asset is amortised or impaired,

and the corresponding element of the goodwill is tested for impairment.

In the year ended 31 March 2024, the other intangible asset has been impaired by £nil (2023: £nil). The recoverable amount of the other

intangible asset has been based on its fair value less costs of disposal applying discounted cash flow projections, using a discount rate of 8.0%

with cash flows projected over a period of 10 years and a growth rate applied of 3.1%. In the prior year, the recoverable amount of the other

intangible asset was based on its value in use, using a discount rate of 7.0%.

LANDSEC ANNUAL REPORT 2024FINANCIAL STATEMENTS

NOTES TO THE FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 MARCH 2024 CONTINUED

SECTION 4 – CAPITAL STRUCTURE AND FINANCING

This section focuses on the Group’s financing structure, including borrowings and financial risk management. The total capital of the Group

consists of shareholders’ equity and net debt. The Group’s strategy is to maintain an appropriate net debt to total equity ratio (gearing) and

loan-to-value ratio (LTV) to ensure that asset level performance is translated into enhanced returns for shareholders while maintaining an

appropriate risk reward balance to accommodate changing financial and operating market cycles. The table in note 21 details a number of

theGroup’s key metrics in relation to managing its capital structure.

A key element of the Group’s capital structure is that the majority of our borrowings are secured against a large pool of our assets (the Security

Group). This enables us to raise long-term debt in the bond market, as well as shorter-term flexible bank facilities, both at competitive rates.

Ingeneral, we follow a secured debt strategy as we believe this gives the Group better access to borrowings at a lower cost.

In addition, the Group holds a number of assets outside the Security Group structure (in the Non-restricted Group). By having both the Security

Group and the Non-restricted Group, and considerable flexibility to move assets between the two, we are able to raise the most appropriate

finance for each specific asset or joint venture.

21 › CAPITAL STRUCTURE

				2024				2023
			Adjustment				Adjustment
			for non-				for non-
		Joint	wholly owned			Joint	wholly owned
	Group	ventures	subsidiaries	Combined	Group	ventures	subsidiaries	Combined
	£m	£m	£m	£m	£m	£m	£m	£m
Property portfolio
Market value of investment properties	9,465	616	(118)	9,963	9,743	635	(139)	10,239
Trading properties and long-term contracts	100	–	–	100	118	–	–	118
Total property portfolio (a)	9,565	616	(118)	10,063	9,861	635	(139)	10,357
Net debt
Borrowings	3,703	–	(73)	3,630	3,431	–	(73)	3,358
Monies held in restricted accounts and deposits	(6)	–	–	(6)	(4)	–	1	(3)
Cash and cash equivalents	(78)	(31)	4	(105)	(41)	(35)	2	(74)
Fair value of interest-rate swaps	(23)	–	2	(21)	(44)	–	2	(42)
Fair value of foreign exchange swaps and forwards	(2)	–	–	(2)	6	–	–	6
Net debt (b)	3,594	(31)	(67)	3,496	3,348	(35)	(68)	3,245
Add/(less): Fair value of interest-rate swaps	23	–	(2)	21	44	–	(2)	42
Adjusted net debt (c)	3,617	(31)	(69)	3,517	3,392	(35)	(70)	3,287
Adjusted total equity
Total equity (d)	6,447	–	(45)	6,402	7,072	–	(67)	7,005
Fair value of interest-rate swaps	(23)	–	2	(21)	(44)	–	2	(42)
Adjusted total equity (e)	6,424	–	(43)	6,381	7,028	–	(65)	6,963
Gearing (b/d)	55.7%			54.6%	47.3%			46.3%
Adjusted gearing (c/e)	56.3%			55.1%	48.3%			47.2%
Group LTV (c/a)	37.8%			35.0%	34.4%			31.7%
EPRA LTV				36.3%				33.2%
Security Group LTV	37.0%				33.0%
Weighted average cost of debt	3.3%			3.3%	2.7%			2.7%

1. EPRA LTV differs from Group LTV as it includes net payables and receivables, and includes trading properties at fair value and debt instruments at nominal value rather than

book value.

140

LANDSEC ANNUAL REPORT 2024 141FINANCIAL STATEMENTS

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 difference between the amount initially recognised and the redemption value being recognised

in the income statement over the period of the borrowings, using the effective interest method.

When debt refinancing exercises are carried out, existing liabilities will be treated as being extinguished when the new liability is substantially

different from the existing liability. In making this assessment, the Group will consider the transaction as a whole, taking into account both

qualitative and quantitative characteristics.

							2024			2023
					Nominal/			Nominal/
				Effective	notional	Fair	Book	notional	Fair	Book
		Secured/	Fixed/	interest rate	value	value	value	value	value	value
		unsecured	floating	%	£m	£m	£m	£m	£m	£m
Current borrowings
Commercial paper
Sterling		Unsecured	Floating	Various	15	15	15	–	–	–
Euro		Unsecured	Floating	Various	518	518	518	167	167	167
US Dollar		Unsecured	Floating	Various	148	148	148	145	145	145
Syndicated and bilateral bank debt		Secured	Floating	SONIA + margin	292	292	292	–	–	–
Total current borrowings					973	973	973	312	312	312
Amounts payable under head leases					2	2	2	3	3	3
Total current borrowings including					975	975	975	315	315	315
amounts payable under head leases
Non-current borrowings
Medium term notes (MTN)
A10	4.875% MTN due 2025	Secured	Fixed	0.0	–	–	–	10	10	10
A12	1.974% MTN due 2026	Secured	Fixed	0.0	–	–	–	400	389	400
A4	5.391% MTN due 2026	Secured	Fixed	0.0	–	–	–	17	17	17
A5	5.391% MTN due 2027	Secured	Fixed	5.4	87	86	87	87	87	87
A16	2.375% MTN due 2027	Secured	Fixed	2.5	350	325	349	350	317	348
A6	5.376% MTN due 2029	Secured	Fixed	5.4	65	66	65	65	66	65
A13	2.399% MTN due 2031	Secured	Fixed	2.4	300	270	299	300	263	299
A18	4.750% MTN due 2031	Secured	Fixed	4.9	300	299	297	–	–	–
A7	5.396% MTN due 2032	Secured	Fixed	5.4	77	78	77	77	79	77
A17	4.875% MTN due 2034	Secured	Fixed	5.0	400	403	393	400	406	394
A11	5.125% MTN due 2036	Secured	Fixed	5.1	50	48	50	50	50	50
A14	2.625% MTN due 2039	Secured	Fixed	2.6	500	387	495	500	378	494
A15	2.750% MTN due 2059	Secured	Fixed	2.7	500	309	495	500	312	495
					2,629	2,271	2,607	2,756	2,374	2,736
Syndicated and bilateral bank debt		Secured	Floating	SONIA + margin	123	123	123	383	383	383
Total non-current borrowings					2,752	2,394	2,730	3,139	2,757	3,119
Amounts payable under head leases		Unsecured	Fixed	4.0	75	98	75	104	142	104
Total non-current borrowings					2,827	2,492	2,805	3,243	2,899	3,223
including amounts payable under head leases
Total borrowings including amounts					3,802	3,467	3,780	3,558	3,214	3,538
payable under head leases
Total borrowings excluding amounts					3,725	3,367	3,703	3,451	3,069	3,431
payable under head leases

1. Non-Sterling commercial paper is immediately swapped into Sterling. The interest rate is fixed at the time of the issuance for the duration (1 to 3 months) and tracks SONIA swap rates.

LANDSEC ANNUAL REPORT 2024FINANCIAL STATEMENTS

NOTES TO THE FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 MARCH 2024 CONTINUED

RECONCILIATION OF THE MOVEMENT IN BORROWINGS

	2024	2023
	£m	£m
At the beginning of the year	3,538	4,553
Net proceeds from ECP issuance	378	–
Net proceeds from bank debt	33	–
Repayment of bank debt	–	(1,407)
Repayment of MTNs	(427)	–
Issue of MTNs (net of finance fees)	297	394
Foreign exchange movement on non-Sterling borrowings	(9)	14
Movement in amounts payable under head leases	(30)	(16)
At 31 March	3,780	3,538

RECONCILIATION OF MOVEMENTS IN LIABILITIES ARISING FROM FINANCING ACTIVITIES

						2024
	At the				Non-cash changes
	beginning		Foreign	Other		At the end
	of the		exchange	changes in	Other	of the
	year	Cash flows	movements	fair values	changes	year
	£m	£m	£m	£m	£m	£m
Borrowings	3,538	281	(9)	–	(30)	3,780
Derivative financial instruments	(38)	(18)	10	21	–	(25)
	3,500	263	1	21	(30)	3,755
						2023
Borrowings	4,553	(1,013)	14	–	(16)	3,538
Derivative financial instruments	(26)	25	(14)	(23)	–	(38)
	4,527	(988)	–	(23)	(16)	3,500

MEDIUM TERM NOTES (MTNS)

The MTNs are secured on the fixed and floating pool of assets of the Security Group. The Security Group includes wholly owned investment

properties, development properties and a number of the Group’s investments in other assets, in total valued at £9.2bn at 31 March 2024

(31 March 2023: £9.6bn). The secured debt structure has a tiered operating covenant regime which gives the Group substantial flexibility when

the loan-to-value and interest cover in the Security Group are less than 65% and more than 1.45x respectively. If these limits are exceeded, the

operating environment becomes more restrictive with provisions to encourage a reduction in gearing. The interest rate of each MTN is fixed until

the expected maturity, being two years before the legal maturity date of the MTN. The interest rate for the last two years may either become

floating on a SONIA basis plus an increased margin (relative to that at the time of issue), or subject to a fixed coupon uplift, depending on the

terms and conditions of the specific notes.

The effective interest rate is based on the coupon paid and includes the amortisation of issue costs and discount to redemption value. The MTNs

are listed on the Irish Stock Exchange and their fair values are based on their respective market prices.

During the year, the Group purchased £nil of MTNs (2023: £nil) for a total premium of £nil (2023: £nil).

At 31 March 2024, the Group’s committed facilities totalled £2,907m (31 March 2023: £3,007m).

SYNDICATED AND BILATERAL BANK DEBT

			Authorised		Drawn		Undrawn
	Maturity as
	at 31 March	2024	2023	2024	2023	2024	2023
	2024	£m	£m	£m	£m	£m	£m
Syndicated debt	2024–27	2,682	2,782	415	383	2,267	2,399
Bilateral debt	2026	225	225	–	–	225	225
		2,907	3,007	415	383	2,492	2,624

22 › BORROWINGS CONTINUED

142

LANDSEC ANNUAL REPORT 2024 143FINANCIAL STATEMENTS

All syndicated and bilateral facilities are committed and secured on the assets of the Security Group, with the exception of facilities secured

on the assets at MediaCity (of which £292m was drawn at 31 March 2024 and £292m drawn at 31 March 2023). During the year ended 31 March

2024, the amounts drawn under the Group’s facilities decreased by £32m.

The terms of the Security Group funding arrangements require undrawn facilities to be reserved where syndicated and bilateral facilities mature

within one year, or when commercial paper is issued. Commercial paper in issuance at 31 March 2024 was £681m (31 March 2023: £312m).

The total amount of cash and available undrawn facilities, net of commercial paper, at 31 March 2024 was £1,889m (31 March 2023: £2,353m).

23 › MONIES HELD IN RESTRICTED ACCOUNTS AND DEPOSITS

ACCOUNTING POLICY

Monies held in restricted accounts and deposits represent cash held by the Group in accounts with conditions that restrict the access of these

monies by the Group and, as such, do not meet the definition of cash and cash equivalents.

		Group		Company
	2024	2023	2024	2023
	£m	£m	£m	£m
Short–term deposits	6	4	–	–
	6	4	–	–

The credit quality of monies held in restricted accounts and deposits can be assessed by reference to external credit ratings of the counterparty

where the account or deposit is placed.

		Group		Company
	2024	2023	2024	2023
	£m	£m	£m	£m
Counterparties with external credit ratings
A+	6	4	–	–
	6	4	–	–

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 classified as cash and cash equivalents.

Bank overdrafts that are repayable on demand and form an integral part of the Group’s cash management are deducted from cash and cash

equivalents for the purpose of the statement of cash flows.

		Group		Company
	2024	2023	2024	2023
	£m	£m	£m	£m
Cash at bank and in hand	78	41	2	2
	78	41	2	2

LANDSEC ANNUAL REPORT 2024FINANCIAL STATEMENTS

NOTES TO THE FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 MARCH 2024 CONTINUED

The credit quality of cash and cash equivalents can be assessed by reference to external credit ratings of the counterparty where the account

or deposit is placed.

		Group		Company
	2024	2023	2024	2023
	£m	£m	£m	£m
Counterparties with external credit ratings
A+	78	34	–	–
A	–	6	2	2
A-	–	1	–	–
	78	41	2	2

The Group’s cash and cash equivalents and bank overdrafts are subject to cash pooling arrangements. The following table provides details of

cash balances and bank overdrafts which are subject to offsetting agreements.

			2024			2023
	Gross	Gross	Net amounts	Gross	Gross	Net amounts
	amounts of	amounts of	recognised in	amounts of	amounts of	recognised in
	financial	financial	the balance	financial	financial	the balance
	assets	liabilities	sheet	assets	liabilities	sheet
	£m	£m	£m	£m	£m	£m
Cash and cash equivalents	230	(152)	78	101	(60)	41
	230	(152)	78	101	(60)	41

25 › DERIVATIVE 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 flows based on the terms

and maturity of each contract and using market rates for similar instruments at the measurement date. The gain or loss on derivatives are

recognised immediately in the income statement, within net finance expense.

CARRYING VALUE OF DERIVATIVE FINANCIAL INSTRUMENTS

	2024	2023
	£m	£m
Current assets	8	3
Non-current assets	22	41
Current liabilities	–	(6)
Non-current liabilities	(5)	–
	25	38
NOTIONAL AMOUNT	2024	2023
	£m	£m
Interest-rate swaps	1,484	1,559
Foreign exchange swaps	664	319
	2,148	1,878

1. At 31 March 2024, the Group held forward starting pay-fixed and receive-floating rate interest-rate swaps with the accreting notional of up to £1,170m (2023: starting notional of

£940m, increasing to £1,940m) which are included in the notional amounts above.

24 › CASH AND CASH EQUIVALENTS CONTINUED

144

LANDSEC ANNUAL REPORT 2024 145FINANCIAL STATEMENTS

26 › FINANCIAL RISK MANAGEMENT

INTRODUCTION

A review of the Group’s objectives, policies and processes for managing and monitoring risk is set out in ’Managing risk’ and ’Our principal risks

and uncertainties’ (pages 38 to 45). This note provides further detail on financial risk management and includes quantitative information

on specific financial risks.

The Group is exposed to a variety of financial risks: market risks (principally interest rate risk), credit risk and liquidity risk. The Group’s overall

risk management strategy seeks to minimise the potential adverse effects of these on the Group’s financial performance and includes the use

of derivative financial instruments to hedge certain risk exposures.

Financial risk management is carried out by the Group’s treasury function under policies approved by the Board of Directors, except where the

relevant arrangements have been put in place by an individual subsidiary or a joint venture level prior to acquisition.

The Group assesses whether it intends to hold its financial assets to collect the contractual cash flows, or whether it intends to sell them before

maturity and classifies its financial instruments into the appropriate categories. The following table summarises the Group’s financial assets

and liabilities into the categories required by IFRS 7 Financial Instruments: Disclosures:

		Group		Company
	2024	2023	2024	2023
	£m	£m	£m	£m
Financial assets at amortised cost	455	450	–	–
Cash and cash equivalents	78	41	2	2
Financial liabilities at amortised cost	(4,003)	(3,750)	(2,820)	(2,821)
Financial instruments at fair value through profit or loss	32	38	–	–
	(3,438)	(3,221)	(2,818)	(2,819)

FINANCIAL RISK FACTORS

(I) CREDIT RISK

The Group’s principal financial assets are cash and cash equivalents, trade and other receivables, net investment in finance leases and amounts

due from joint ventures. Further details concerning the credit risk of counterparties is provided in the note that specifically relates to each type

of asset.

BANK AND FINANCIAL INSTITUTIONS

The principal credit risks of the Group arise from financial derivative instruments and deposits with banks and financial institutions. In line with

the policy approved by the Board of Directors, where the Group manages the deposit, only independently rated banks and financial institutions

with a minimum rating of A- are accepted. For UK banks and financial institutions with which the Group has a committed lending relationship,

the minimum rating is lowered to BBB+. The Group’s treasury function currently performs regular reviews of the credit ratings of all financial

institution counterparties. Furthermore, the treasury function ensures that funds deposited with a single financial institution remain within the

Group’s policy limits.

TRADE RECEIVABLES

Trade receivables are presented in the balance sheet net of allowances for doubtful receivables. The Group assesses on a forward-looking basis

the expected credit losses associated with its trade receivables. A provision for impairment is made for the lifetime expected credit losses on

initial recognition of the receivable. In determining the expected credit losses the Group takes into account any recent payment behaviours and

future expectations of likely default events (i.e. not making payment on the due date) based on individual customer credit ratings, actual or

expected insolvency filings or company voluntary arrangements, likely deferrals of payments due, agreed rent concessions and market

expectations and trends in the wider macro-economic environment in which our customers operate. These assessments are made on a

customer by customer basis.

To limit the Group’s exposure to credit risk on trade receivables, a credit report is usually obtained from an independent rating agency prior to

the inception of a lease with a new counterparty. This report, alongside the Group’s internal assessment of credit risk, is used to determine the

size of the deposit that is required, if any, from the tenant at inception. In general, these deposits represent between three and six months’ rent.

LANDSEC ANNUAL REPORT 2024FINANCIAL STATEMENTS

NOTES TO THE FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 MARCH 2024 CONTINUED

NET INVESTMENT IN FINANCE LEASES

This balance relates to amounts receivable from tenants in respect of tenant finance leases. This is not considered a significant credit risk as the

tenants are generally of good financial standing.

(II) LIQUIDITY RISK

The Group has a well spread maturity profile with expected maturities on its MTNs between 2025 and 2057 and diversified shorter-term maturities

in commercial paper and committed bank facilities, that are designed to ensure that the Group has sufficient available funds for its operations,

committed capital expenditure programme and refinancing of upcoming MTNs.

Management monitors the Group’s available funds as follows:

	2024	2023
	£m	£m
Cash and cash equivalents	78	41
Commercial paper	(681)	(312)
Undrawn facilities	2,492	2,624
Cash and available undrawn facilities	1,889	2,353
As a proportion of drawn debt	50.7%	68.2%

1. Based on nominal values, including MTNs and commercial paper.

The Group’s core financing structure is in the Security Group, although the Non-restricted Group may also secure independent funding.

SECURITY GROUP

The Group’s principal financing arrangements utilise the credit support of a ring-fenced group of assets (the Security Group) that comprises

the majority of the Group’s investment properties, development properties and a number of investments in other assets. These arrangements

operate in ‘tiers’ determined by LTV and interest cover ratio (ICR). This structure is most flexible at lower tiers (with a lower LTV and a higher

ICR) and allows property acquisitions, disposals and developments to occur with relative freedom. In higher tiers, the requirements become

more restrictive. No financial covenant default is triggered until the applicable LTV exceeds 100% or the ICR is less than 1.0x.

As at 31 March 2024, the reported LTV for the Security Group was 37.0% (2023: 33.0%), meaning that the Group was operating in Tier 1 and

benefited from maximum operational flexibility.

Management monitors the key covenants attached to the Security Group on a monthly basis or semi-annual basis, depending on the covenant,

including LTV, ICR, sector and regional concentration and disposals.

NON-RESTRICTED GROUP

The Non-restricted Group obtains funding when required from a combination of inter-company loans from the Security Group, equity and

external bank debt. Bespoke credit facilities are established with banks when required for the Non-restricted Group and joint ventures, usually

on a limited-recourse basis.

26 › FINANCIAL RISK MANAGEMENT CONTINUED

146

LANDSEC ANNUAL REPORT 2024 147FINANCIAL STATEMENTS

The table below analyses the Group’s financial liabilities into relevant maturity groupings based on the remaining period at the balance sheet

date to the expected maturity date. The amounts disclosed in the table are the contractual undiscounted cash flows (inclusive of interest).

					2024
	Less than	Between 1	Between 2	Over
	1 year	and 2 years	and 5 years	5 years	Total
	£m	£m	£m	£m	£m
Borrowings (excluding lease liabilities)	1,161	217	951	2,444	4,773
Derivative financial instruments	–	–	5	–	5
Lease liabilities	4	4	11	441	460
Trade payables	56	–	–	–	56
Capital accruals	48	–	–	–	48
Accruals	90	–	–	–	90
Other payables	25	–	–	–	25
	1,384	221	967	2,885	5,457

					2023
	Less than	Between 1	Between 2	Over
	1 year	and 2 years	and 5 years	5 years	Total
	£m	£m	£m	£m	£m
Borrowings (excluding lease liabilities)	837	463	717	2,476	4,493
Derivative financial instruments	6	–	–	–	6
Lease liabilities	6	6	17	474	503
Trade payables	14	–	–	–	14
Capital accruals	32	–	–	–	32
Accruals	88	–	–	–	88
Other payables	61	–	17	–	78
	1,044	469	751	2,950	5,214

(III) MARKET RISK

The Group is exposed to market risk through interest rates, availability and price of credit and foreign exchange movements.

INTEREST RATES

The Group uses derivative products to manage its interest rate exposure and has a hedging policy that generally requires at least 70% of its

forecast debt from committed cash flows for the coming three years and at least 50% for years four and five. Due to a combination of factors,

including the degree of certainty required under IFRS 9 Financial instruments, the Group does not apply hedge accounting to hedging

instruments used in this context. Specific interest-rate hedges are also used from time to time to fix the interest rate exposure on our debt.

Where specific hedges are used to fix the interest exposure on floating rate debt, these may qualify for hedge accounting.

At 31 March 2024, the Group (including the Group’s share of joint ventures and non-wholly owned subsidiaries) had pay-fixed and receive-

floating interest-rate swaps in place with a nominal value of £864m (2023: £619m) and forward starting pay-fixed and receive-floating interest-

rate swaps with the accreting notional of up to £1,170m (2023: starting notional of £940m, increasing to £1,940m). The Group’s gross debt

(including the Group’s share of joint ventures and non-wholly owned subsidiaries) was 94.2% fixed (2023: 98.3%) and based on the Group’s

debt balances at 31 March 2024, a 1% increase/(decrease) in interest rates would increase/(decrease) the annual net finance expense in the

income statement and reduce/(increase) equity by £2m (2023: £1m). The sensitivity has been calculated by applying the interest rate change

to the floating rate components of borrowings, interest rate swaps as well as cash and cash equivalents.

LANDSEC ANNUAL REPORT 2024FINANCIAL STATEMENTS

NOTES TO THE FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 MARCH 2024 CONTINUED

FOREIGN EXCHANGE

Foreign exchange risk arises when future commercial transactions or recognised assets or liabilities are denominated in a currency that is not

the Group’s functional currency.

As the Group is UK based, foreign exchange exposure from operations is low. The majority of the Group’s foreign currency transactions relate

to foreign currency borrowing under the Group’s commercial paper programme. It is the Group’s policy to hedge 100% of this exposure.

At 31 March 2024, the Group had issued €607m (2023: €190m) and $185m (2023: $180m) of commercial paper, fully hedged through foreign

exchange swaps. A 10% weakening or strengthening of Sterling would therefore have £nil (2023: £nil) impact in the income statement and

equity arising from foreign currency borrowings.

Where additional foreign exchange risk is identified (not linked to borrowings), it is the Group’s policy to assess the likelihood of the risk

crystallising and if deemed appropriate use derivatives to hedge some or all of the risk. At 31 March 2024, the Group had no foreign

currency exposures (other than those linked to borrowings) being managed using foreign currency derivative contracts (2023: £nil exposure).

A 10% weakening or strengthening of Sterling would therefore have no impact on the loss before tax and/or total equity (2023: £nil impact).

FINANCIAL MATURITY ANALYSIS

The interest rate profile of the Group’s borrowings is set out below (based on notional values):

			2024			2023
	Fixed	Floating		Fixed	Floating
	rate	rate	Total	rate	rate	Total
	£m	£m	£m	£m	£m	£m
Sterling	2,706	431	3,137	2,863	383	3,246
Euro	–	519	519	–	167	167
US Dollar	–	147	147	–	145	145
	2,706	1,097	3,803	2,863	695	3,558

The expected maturity profiles of the Group’s borrowings are as follows (based on notional values):

			2024			2023
	Fixed	Floating		Fixed	Floating
	rate	rate	Total	rate	rate	Total
	£m	£m	£m	£m	£m	£m
One year or less, or on demand	86	973	1,059	427	312	739
More than one year but not more than two years	–	123	123	87	292	379
More than two years but not more than five years	715	–	715	415	91	506
More than five years	1,904	–	1,904	1,934	–	1,934
Borrowings	2,705	1,096	3,801	2,863	695	3,558
Effect of hedging	864	(864)	–	619	(619)	–
Borrowings net of interest-rate swaps	3,569	232	3,801	3,482	76	3,558

26 › FINANCIAL RISK MANAGEMENT CONTINUED

148

LANDSEC ANNUAL REPORT 2024 149FINANCIAL STATEMENTS

The expected maturity profiles of the Group’s derivative instruments are as follows (based on notional values):

		2024		2023
	Foreign		Foreign
	exchange	Interest-	exchange	Interest-
	swaps	rate swaps	swaps	rate swaps
	£m	£m	£m	£m
One year or less, on demand	664	669	319	400
More than one year but not more than two years	–	––	494
More than two years but not more than five years	–	1,170	–	665
More than five years	–	–	–	–
	664	1,839	319	1,559

VALUATION HIERARCHY

Derivative financial instruments and financial assets at fair value through profit and loss (other investments) are the only financial instruments

which are carried at fair value. For financial instruments other than borrowings disclosed in note 22, the carrying value in the balance sheet

approximates their fair values. The table below shows the aggregate assets and liabilities carried at fair value by valuation method:

				2024				2023
	Level 1	Level 2	Level 3	Total	Level 1	Level 2	Level 3	Total
	£m	£m	£m	£m	£m	£m	£m	£m
Assets	–	30	7	37	–	44	–	44
Liabilities	–	(5)	–	(5)	–	(6)	–	(6)

Note:

Level 1: valued using unadjusted quoted prices in active markets for identical financial instruments.

Level 2: valued using techniques based on information that can be obtained from observable market data.

Level 3: valued using techniques incorporating information other than observable market data.

The fair value of the amounts payable under the Group’s lease obligations, using a discount rate of 3.3% (2023: 2.7%), is £100m (2023: £145m).

The fair value of the Group’s net investment in tenant finance leases, calculated by the Group’s external valuer by applying a weighted average

equivalent yield of 7. 8% (2023: 7.9%), is £17m (2023: £16m).

The fair values of any floating rate financial liabilities are assumed to be equal to their nominal value. The fair values of the MTNs fall within

Level 1 of the fair value hierarchy, the syndicated and bilateral facilities, commercial paper, interest-rate swaps and foreign exchange swaps fall

within Level 2, and the amounts payable and receivable under leases fall within Level 3.

The fair values of the financial instruments have been determined by reference to relevant market prices, where available. The fair values of the

Group’s outstanding interest-rate swaps have been estimated by calculating the present value of future cash flows, using appropriate market

discount rates. These valuation techniques fall within Level 2.

The fair value of the other investments is calculated by reference to the net assets of the underlying entity. The valuation is not based on

observable market data and therefore the other investments are considered to fall within Level 3.

LANDSEC ANNUAL REPORT 2024FINANCIAL STATEMENTS

NOTES TO THE FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 MARCH 2024 CONTINUED

SECTION 5 – WORKING CAPITAL

This section focuses on our working capital balances, including trade and other receivables and trade and other payables.

27 › TRADE AND OTHER RECEIVABLES

ACCOUNTING POLICY

Trade and other receivables are recognised initially at fair value, subsequently at amortised cost and, where relevant, adjusted for the time

value of money. The Group assesses on a forward-looking basis the expected credit losses associated with its trade receivables. A provision for

impairment is made for the lifetime expected credit losses on initial recognition of the receivable. If collection is expected in more than one year,

the balance is presented within non-current assets.

In determining the expected credit losses, the Group takes into account any recent payment behaviours and future expectations of likely default

events (i.e. not making payment on the due date) based on individual customer credit ratings, actual or expected insolvency filings or company

voluntary arrangements and market expectations and trends in the wider macro-economic environment in which our customers operate.

Where a concession is agreed with a customer after the due date for the rent, this amount is recognised as an impairment of the related

trade receivable.

Trade and other receivables are written off once all avenues to recover the balances are exhausted and the lease has ended. Receivables written

off are no longer subject to any enforcement activity.

SOURCE OF ESTIMATION UNCERTAINTY

IMPAIRMENT OF TRADE RECEIVABLES

The Group’s assessment of expected credit losses is inherently subjective due to the forward-looking nature of the assessments. As a result,

the value of the provisions for impairment of the Group’s trade receivables are subject to a degree of uncertainty and are made on the basis

of assumptions which may not prove to be accurate. See note 26 for further details of the Group’s assessment of the credit risk associated

with trade receivables.

	2024	2023
	£m	£m
Net trade receivables	46	47
Tenant lease incentives (note 14)	195	175
Prepayments	58	46
Accrued income	22	11
Amounts due from joint ventures and associates	17	39
Deferred consideration	16	17
Other receivables	25	30
Total current trade and other receivables	379	365
Non-current amounts due from joint ventures and associates	129	142
Deferred consideration	30	4
Total trade and other receivables	538	511

The accounting for lease incentives is set out in note 6. The value of the tenant lease incentive, included in current trade and other receivables,

is spread over the lease term.

The non-current amounts due from joint ventures have maturity dates ranging from April 2028 to the dissolution of the joint venture.

Interest is charged at rates ranging from 4% to 5% (2023: 4% to 5%).

150

LANDSEC ANNUAL REPORT 2024 151FINANCIAL STATEMENTS

AGEING OF TRADE RECEIVABLES

		Up to	Up to	Up to	More than
	Not	30 days	6 months	12 months	12 months
	past due	past due	past due	past due	past due	Total
	£m	£m	£m	£m	£m	£m
As at 31 March 2024
Not impaired	–	20	16	5	5	46
Impaired	–	–	4	4	31	39
Gross trade receivables	–	20	20	9	36	85
As at 31 March 2023
Not impaired	5	12	18	8	4	47
Impaired	–	–	3	5	37	45
Gross trade receivables	5	12	21	13	41	92

None of the Group’s other receivables are past due and therefore no ageing has been shown (2023: £nil).

MOVEMENT IN TENANT LEASE INCENTIVES

	2024	2023
	£m	£m
At the beginning of the year	175	212
Revenue recognised	15	(3)
Movement in break penalties and other movements	–	3
Capital incentives granted	6	7
Provision for doubtful receivables	–	(5)
Disposal of properties	(2)	(49)
Acquisition of properties	–	10
At 31 March	194	175

28 › TRADE AND OTHER PAYABLES

		Group		Company
	2024	2023	2024	2023
	£m	£m	£m	£m
Trade payables	56	14	–	–
Capital accruals	48	32	–	–
Other payables	20	25	8	8
Accruals	90	88	–	7
Deferred income	129	111	–	–
Contract liabilities	5	22	–	–
Amounts owed to joint ventures	–	14	–	–
Loans from Group undertakings	–	–	2,243	2,806
Total current trade and other payables	348	306	2,251	2,821
Non-current other payables	–	17	–	–
Deferred income	4	–	–	–
Total trade and other payables	352	323	2,251	2,821

Capital accruals represent amounts due for work completed on investment properties but not paid for at the year end. Deferred income

principally relates to rents received in advance.

The Loans from Group undertakings are repayable on demand with no fixed repayment date. Interest is charged at 4.9% per annum (2023: 4.3%).

LANDSEC ANNUAL REPORT 2024FINANCIAL STATEMENTS

NOTES TO THE FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 MARCH 2024 CONTINUED

SECTION 6 – OTHER REQUIRED DISCLOSURES

This section gives further disclosure in respect of other areas of the financial statements, together with mandatory disclosures required in

accordance with IFRS.

29 › INVESTMENTS IN SUBSIDIARY UNDERTAKINGS

ACCOUNTING POLICY

Investments in subsidiary undertakings are stated at cost in the Company’s balance sheet, less any provision for impairment in value.

In accordance with IFRS 2 Share Based Payments the equity settled share-based payment charge for the employees of the Company’s

subsidiaries is treated as an increase in the cost of investment in the subsidiaries, with a corresponding increase in the Company’s equity.

	2024	2023
	£m	£m
At the beginning of the year	6,229	6,222
Capital contributions relating to share-based payments (note 36)	8	6
Impairment (charge)/reversal	(578)	1
At 31 March	5,659	6,229

A full list of subsidiary undertakings at 31 March 2024 is included in Additional information on pages 179-183. This includes those which are exempt

from the requirement of the Companies Act 2006 (the Act) relating to the audit of individual accounts by virtue of Section 479A of the Act.

In the year ended 31 March 2024, there has been an impairment charge on the Company’s investment in its subsidiaries of £578m (2023: reversal

of £1m) as a result of a decrease in net assets held in those subsidiary companies. The recoverable amount of the investments has been based

on the fair value of each of the subsidiaries at 31 March 2024 as determined by their individual net asset values at that date, totalling £5,659m

(2023: £6,229m).

30 › OTHER NON-CURRENT ASSETS

	2024	2023
	£m	£m
Other property, plant and equipment	7	9
Net pension surplus (note 35)	11	16
Derivative financial instruments (note 25)	22	41
Other investments	8	1
Total other non-current assets	48	67

1. During the year the Group’s investment ownership percentage in YC Shepherds Bush Limited reduced to 14.2% because of a dilution of shareholding. The investment in associate

was reclassified to other investments as the Group is no longer considered to have significant influence over the operations of the entity. In the year ended 31 March 2024,

£3m (2023: £nil) has been recognised in the income statement for the fair value gain of the investment in line with IAS 28. The investment is categorised as Level 3 in the fair

value hierarchy. The recoverable amount has been based on the fair value less costs of disposal of the entity at 31 March 2024 as determined by its net asset value at that date.

31 › OTHER CURRENT ASSETS

	2024	2023
	£m	£m
Derivative financial instruments (note 25)	8	3
Other investments	–	1
Current tax assets	3	–
Total other current assets	11	4

152

LANDSEC ANNUAL REPORT 2024 153FINANCIAL STATEMENTS

32 › OTHER CURRENT LIABILITIES

	2024	2023
	£m	£m
Derivative financial instruments (note 25)	–	6
Provisions (note 34)	–	18
Total other current liabilities	–	24

33 › OTHER NON-CURRENT LIABILITIES

	2024	2023
	£m	£m
Deferred tax liability (note 12)	–	4
Net liabilities incurred on behalf of joint ventures 1 (note 16)	8	5
Derivative financial instruments (note 25)	5	–
Total other non-current liabilities	13	9

1. The Group’s share of accumulated losses of a joint venture interest are recognised as net liabilities (see note 16) where there is an obligation to provide for these losses.

34 › PROVISIONS

ACCOUNTING POLICY

Provisions are recognised when the Group has a present obligation (legal or constructive) as a result of a past event, it is probable that an

outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount

of the obligation. Provisions are estimated considering various possible outcomes and determining the most likely outcome. When the Group

expects some or all of a provision to be reimbursed, the reimbursement is recognised as a separate asset, but only when the reimbursement is

virtually certain. The expense relating to a provision is presented in the income statement net of any reimbursement.

If the effect of the time value of money is material, provisions are discounted using a current pre-tax rate that reflects, when appropriate, the

risks specific to the liability. When discounting is used, the increase in the provision due to the passage of time is recognised as a finance cost.

			2024
	Building and	Transaction
	fire safety	and contract
	remediation	related	Total
	£m	£m	£m
At 1 April 2023	–	–	–
Transfer from other current liabilities (note 32)	14	4	18
Charge for the year	12	45	57
Reversed during the year	(3)	–	(3)
At 31 March 2024	23	49	72
Current	23	7	30
Non-current	–	42	42
At 31 March 2024	23	49	72

BUILDING AND FIRE SAFETY REMEDIATION PROVISIONS

Management have assessed their legal and constructive obligations arising from the Building Safety Act 2022 and other associated fire

regulations and remediation works for identified reinforced autoclaved aerated concrete. Where an obligation exists, including for properties

no longer owned by the Group but for which the Group is responsible for remediation works, a provision is recorded on the Group’s balance

sheet. £13m of the provision recorded at 31 March 2024 relates to properties no longer owned by the Group. Moreover, a receivable of £5m

has been recorded in note 27 where the Group is virtually certain that the provision recorded will be reimbursed by the original developer of

the property for such remediation works.

LANDSEC ANNUAL REPORT 2024FINANCIAL STATEMENTS

NOTES TO THE FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 MARCH 2024 CONTINUED

TRANSACTION AND CONTRACT RELATED PROVISIONS

Relate to historic or ongoing transactions and contracts that the Group is party to wherein an obligation arises as part of its developer

contractual arrangements, queries received from tax authorities, or contractor claims. These provisions are classed together as they pertain

to past transactions or contracts executed to acquire or dispose of assets or queries arising therefrom. The provisions reflect management’s

best estimate of the costs required to settle these obligations, however owing to the nature of these provisions there is uncertainty over both

the amount and the timing of the potential cash outflows.

35 › NET PENSION SURPLUS

ACCOUNTING POLICY

Contributions to defined contribution schemes are charged to the income statement as incurred.

The pension obligations arising under the Group’s defined benefit pension scheme are measured at discounted present value. The scheme

assets are measured at fair value, except annuities which are valued to match the liability or benefit value. The operating and financing costs

of the scheme are recognised separately in the income statement. Service costs are spread using the projected unit credit method. Past service

costs are recognised immediately in the income statement in the period in which they are identified. Net financing costs are recognised in

the period in which they arise, calculated with reference to the discount rate, and are included in finance income or expense on a net basis.

Remeasurement gains and losses arising from either experience differing from previous actuarial assumptions, or changes to those

assumptions, are recognised immediately in other comprehensive income.

DEFINED CONTRIBUTION SCHEMES

The charge to operating profit for the year in respect of defined contribution schemes was £4m (2023: £3m).

DEFINED BENEFIT SCHEME

The Pension & Assurance Scheme of the Land Securities Group of Companies (the Scheme) is a registered defined benefit final salary scheme

subject to the UK regulatory framework for pensions, including the Scheme Specific Funding requirements. The Scheme is operated under

trust and as such, the Trustees of the Scheme are responsible for operating the Scheme and they have a statutory responsibility to act in

accordance with the Scheme’s Trust Deed and Rules, in the best interest of the beneficiaries of the Scheme and UK legislation (including trust

law). The Trustees and the Group have the joint power to set the contributions that are paid to the Scheme.

In setting contributions to the Scheme, the Trustees and the Group are guided by the advice of a qualified independent actuary on the basis

of triennial valuations using the projected unit credit method. The Scheme is closed to new members (and was closed to future accrual on

31 October 2019). A full actuarial valuation of the Scheme was undertaken on 30 June 2021 by the independent actuaries, Hymans Robertson

LLP. This valuation was updated to 31 March 2024 using, where required, assumptions prescribed by IAS 19 Employee Benefits. The next full

actuarial valuation will be performed as at 30 June 2024.

There have been no employer or employee contributions following the closure of the Scheme to future accrual on 31 October 2019. Prior to this,

the employer contribution rate was 43.1% of pensionable salary to cover the costs of accruing benefits and the employee contributions were

at 8% of monthly pensionable salary. It was also agreed that no further deficit contributions were required from the Group. Employee

contributions were paid by salary sacrifice, and therefore appeared as Group contributions. The Group does not expect to make any employee

or employer contributions to the Scheme in the year to 31 March 2025 (2024: £nil).

All death-in-service and incapacity benefits arising during employment are wholly insured. No post-retirement benefits other than pensions are

made available to employees of the Group.

ANALYSIS OF THE AMOUNTS CHARGED TO THE INCOME STATEMENT

	2024	2023
	£m	£m
Analysis of the amount charged to operating profit
Current service costs	–	–
Past service costs	–	–
Charge to operating profit	–	–
Analysis of amount credited to net finance expense
Interest income on plan assets	(8)	(6)
Interest expense on defined benefit scheme liabilities	8	6
Impact on net finance expense	–	–

34 › PROVISIONS CONTINUED

154

LANDSEC ANNUAL REPORT 2024 155FINANCIAL STATEMENTS

ANALYSIS OF THE AMOUNTS RECOGNISED IN OTHER COMPREHENSIVE INCOME

	2024	2023
	£m	£m
Analysis of gains and losses
Net remeasurement losses on scheme assets	–	(58)
Net remeasurement (losses)/gain on scheme liabilities	(1)	46
Net remeasurement loss related to authorised payments charge due on net pension surplus	(4)	–
Net remeasurement loss	(5)	(12)
Cumulative net remeasurement loss recognised in other comprehensive income	(41)	(36)

The net surplus recognised in respect of the defined benefit scheme can be analysed as follows:

		2024		2023
	%	£m	%	£m
Bonds – Government	–	–	1	2
Proceeds from corporate bond sale	–	–	5	8
Insurance contracts	83	151	90	153
Cash and cash equivalents	17	15	4	6
Fair value of scheme assets	100	166	100	169
Fair value of scheme liabilities		(151)		(153)
Net pension surplus as per IAS 19		15		16
Expected authorised payments charge		(4)		–
Net pension surplus		11		16

In the year ended 31 March 2024, £11m (2023: £9m) of benefits were paid to members.

During the prior year, the Scheme purchased a buy-in policy with Just Retirement for £79m. This insurance contract is valued as an asset using

the same IAS 19 assumptions. Insurance contracts are annuities which are unquoted assets. All other Scheme assets have quoted prices in

active markets. The Scheme assets do not include any directly owned financial instruments issued by the Group. Indirectly owned financial

instruments had a fair value of £nil (2023: £nil).

In the most recent triennial valuation, the defined benefit scheme liabilities were split nil% (2023: nil%) in respect of active scheme participants,

31% (2023: 26%) in respect of deferred scheme participants, and 69% (2023: 74%) in respect of retirees. As the scheme is now closed to future

accrual, there are no longer any active scheme participants. The weighted average duration of the defined benefit scheme liabilities at 31 March

2024 is 11.5 years (2023: 12.0 years).

The assumptions agreed with the Trustees of the Scheme for the triennial valuation at 30 June 2021 have been restated to the assumptions

described by IAS 19 Employee Benefits. The major assumptions used in the valuation were (in nominal terms):

	2024	2023
	%	%
Rate of increase in pensionable salaries	n/a	n/a
Rate of increase in pensions with no cap	3.45	3.50
Rate of increase in pensions with 5% cap	3.30	3.35
Discount rate	4.80	4.75
Inflation – Retail Price Index	3.45	3.50
– Consumer Price Index	2.75	2.80

The mortality assumptions used in this valuation were:

	2024	2023
	Years	Years
Life expectancy at age 60 for current pensioners – Men	26.8	26.7
– Women	29.1	29.0
Life expectancy at age 60 for future pensioners (current age 40) – Men	29.8	29.7
– Women	31.9	31.8

LANDSEC ANNUAL REPORT 2024FINANCIAL STATEMENTS

NOTES TO THE FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 MARCH 2024 CONTINUED

The sensitivities regarding the principal assumptions used to measure the Scheme liabilities are set out below. These were calculated using

approximate methods taking into account the duration of the Scheme liabilities.

Assumption	Change in assumption	Impact on Scheme liabilities
Discount rate	Decrease by 0.5%	Increase by £9m
Life expectancy	Increase by 1 year	Increase by £6m
Rate of inflation	Increase by 0.5%	Increase by £7m

The above sensitivities show the impact on liabilities only and do not reflect the hedging the Scheme has in place. In December 2022, the

Scheme transacted a buy-in policy for £79m covering all remaining uninsured members. As a result, the Group no longer bears any longevity,

interest rate or inflation risk in respect of the pension scheme. The buy-in policy is an investment asset of the Scheme.

The Company did not operate any defined contribution schemes or defined benefit schemes during the financial years ended 31 March 2024

or 31 March 2023.

In June 2023, the UK High Court (Virgin Media Limited v NTL Pension Trustees II Limited) ruled that certain historical amendments for

contracted-out defined benefit schemes were invalid if they were not accompanied by the correct actuarial confirmation. The judgement

is subject to appeal. The Trustees and the Group are monitoring developments and will consider if there are any implications for the Scheme,

if the ruling is upheld.

36 › SHARE-BASED PAYMENTS

ACCOUNTING POLICY

The cost of granting shares, options over shares and other share-based remuneration to employees and Executive Directors is recognised

through the income statement. All awards are equity settled and therefore the fair value is measured at the grant date. Where the awards have

non-market related performance criteria, the Group uses the Black-Scholes option valuation model to establish the relevant fair values. Where

the awards have Total Shareholder Return (TSR) market related performance criteria, the Group has used the Monte Carlo simulation valuation

model to establish the relevant fair values. The resulting values are amortised through the income statement over the vesting period of the

awards. For awards with non-market related criteria, the charge is reversed if it appears probable that the performance or service criteria will

not be met.

The following table analyses the total cost recognised in the income statement for the year between each plan, together with the number of

options outstanding.

		2024		2023
	Charge	Number	Charge	Number
	£m	(millions)	£m	(millions)
Long-Term Incentive Plan	3	3	3	3
Deferred Share Bonus Plan	2	–	1	–
Executive Share Option Scheme	–	1	–	1
Sharesave Plan	–	1	–	1
Restricted Share Plan	3	2	2	2
	8	7	6	7

A summary of the main features of each type of plan is given below. The plans have been split into two categories: Executive plans and Other

plans. For further details on the Executive plans, see the Directors’ Remuneration Report on pages 72 to 82.

35 › NET PENSION SURPLUS CONTINUED

156

LANDSEC ANNUAL REPORT 2024 157FINANCIAL STATEMENTS

EXECUTIVE PLANS:

LONG-TERM INCENTIVE PLAN (LTIP)

The LTIP is open to Executive Directors, Executive Leadership Team and Senior Management members with awards made at the discretion

of the Remuneration Committee. In addition, other than for Executive Directors, an award of ‘matching shares’ could be made where the

individual acquired shares in Land Securities Group PLC and pledged to hold them for a period of three years. The awards are issued at nil

consideration, subject to performance and vesting conditions being met. Awards of LTIP shares and matching shares are subject to the same

performance criteria and normally vest after three years. Awards are satisfied by the transfer of existing shares held by the Employee Benefit

Trust (EBT). The weighted average share price at the date of vesting was 635p (2023: no awards exercised during the year). The estimated fair

value of awards granted during the year under the scheme was £8m (2023: £7m).

DEFERRED SHARE BONUS PLAN (DSBP)

The Executive Directors’ annual bonus is structured in two distinct parts made up of an initial payment and deferred shares. The shares are

usually deferred for one or two years and are not subject to additional performance criteria. Awards are satisfied by the transfer of existing

shares held by the EBT at nil consideration. The weighted average share price at the date of vesting during the year was 565p (2023: 615p).

The estimated fair value of awards granted during the year under the scheme was £1m (2023: £2m).

OTHER PLANS:

EXECUTIVE SHARE OPTION SCHEME (ESOS)

The 2005 ESOS was previously open to managers not eligible to participate in the LTIP, but was largely replaced by the new Restricted Share

Plan in the year ended 31 March 2020. Awards are discretionary and are granted over ordinary shares of the Company at the middle market

price on the three dealing days immediately preceding the date of grant. Awards normally vest after three years and are not subject to

performance conditions. Awards are satisfied by the transfer of shares from the EBT and lapse ten years after the date of grant. There were no

awards exercised during the year (2023: none). The estimated fair value of awards granted during the year under the scheme was £nil (2023: £nil).

SHARESAVE PLAN

Under the Sharesave Plan, Executive Directors and other eligible employees are invited to make regular monthly contributions into a Sharesave

plan operated by Equiniti. On completion of the three or five year contract period, ordinary shares in the Company may be purchased at a price

based upon the middle market price on the three dealing days immediately preceding the date of invitation less 20% discount. The weighted

average share price at the date of exercise for awards exercised during the year was 641p (2023: 717p). The estimated fair value of awards

granted during the year under the scheme was £1m (2023: £1m).

RESTRICTED SHARE PLAN (RSP)

The RSP started in the year ended 31 March 2020. It is open to qualifying management level employees with awards granted as nil cost options.

Awards are discretionary and are granted over ordinary shares of the Company at the middle market price on the day immediately preceding

date of grant. Awards normally vest after three years and are not subject to performance conditions. Awards are satisfied by the transfer of

shares from the EBT and lapse ten years after the date of grant. The weighted average share price at the date of exercise for awards exercised

during the year was 648p (2023: 697p). The estimated fair value of awards granted during the year under the scheme was £2m (2023: £6m).

The aggregate number of awards outstanding, and the weighted average exercise price, are shown below:

		Executive plans				Other plans
						Weighted average
		Number of awards		Number of awards		exercise price
	2024	2023	2024	2023
	Number	Number	Number	Number	2024	2023
	(millions)	(millions)	(millions)	(millions)	Pence	Pence
At the beginning of the year	3	2	3	2	758	805
Granted	2	2	1	1	563	685
Exercised	–	–	(1)	–	540	736
Lapsed	(1)	(1)	–	–	755	699
At 31 March	4	3	3	3	755	768
Exercisable at the end of the year	–	–	1	1	978	2,072
	Years	Years	Years	Years
Weighted average remaining contractual life	1	1	2	2

1. Executive plans are granted at nil consideration.

LANDSEC ANNUAL REPORT 2024FINANCIAL STATEMENTS

NOTES TO THE FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 MARCH 2024 CONTINUED

The number of share awards outstanding for the Group by range of exercise prices is shown below:

				Outstanding at 31 March 2024			Outstanding at 31 March 2023
				Weighted			Weighted
		Weighted		average	Weighted		average
		average		remaining	average		remaining
		exercise	Number of	contractual	exercise	Number of	contractual
Exercise price – range		price	awards	life	price	awards	life
			Number			Number
Pence		Pence	(millions)	Years	Pence	(millions)	Years
Nil		–	6	1	–	5	1
400 – 599		535	–	2	552	1	1
600 – 799		633	–	1	665	–	3
800 – 999		953	–	4	936	–	4
1,000	– 1,199	1,022	1	2	1,022	1	3
1,200 –	1,399	1,328	–	1	1,328	–	2

1. Executive plans are granted at nil consideration.

FAIR VALUE INPUTS FOR AWARDS WITH NON-MARKET PERFORMANCE CONDITIONS

Fair values are calculated using the Black-Scholes option pricing model for awards with non-market performance conditions. The weighted

average inputs into this model for the grants under each plan in the financial year are as follows:

		Long-Term Incentive Plan		Deferred Share Bonus Plan		Restricted Share Plan		Sharesave Plan
Year ended 31 March	2024	2023	2024	2023	2024	2023	2024	2023
Share price at grant date	625p	687p	621p	716p	619p	706p	574p	644p
Exercise price	n/a	n/a	n/a	n/a	n/a	n/a	502p	615p
Expected volatility	33%	39%	35%	39%	35%	39%	35%	39%
Expected life	3 years	3 years	1 year	1.41 years	2.94	3 years	3 to	3 to
					years		5 years	5 years
Risk-free rate	4.36%	2.37%	4.75%	1.92%	4.45%	1.96%	4.66% to	1.65% to
							5.05%	1.71%
Expected dividend yield	Nil	5.47%	Nil	Nil	6.23%	5.25%	6.72%	5.75%

Expected volatility is determined by calculating the historical volatility of the Group’s share price over the previous ten years. The expected

life used in the model has been determined based upon management’s best estimate for the effects of non-transferability, vesting/exercise

restrictions and behavioural considerations. The risk-free rate is the yield at the date of the grant of an award on a gilt-edged stock with

a redemption date equal to the anticipated vesting of that award.

FAIR VALUE INPUTS FOR AWARDS WITH MARKET PERFORMANCE CONDITIONS

Fair values are calculated using the Monte Carlo simulation option pricing model for awards with market performance conditions. Awards made

under the 2015 LTIP include a TSR condition, which is a market-based condition. The weighted average inputs into this model for the scheme are

as follows:

								Expected volatility
		Share price at date		Exercise		Expected volatility		– index of comparator		Correlation
		of grant		price		– Group		companies		– Group vs. index
Year ended 31 March	2024	2023	2024	2023	2024	2023	2024	2023	2024	2023
Long-Term Incentive Plan	625p	689p	n/a	n/a	33%	39%	34%	33%	55%	53%

36 › SHARE-BASED PAYMENTS CONTINUED

158

LANDSEC ANNUAL REPORT 2024 159FINANCIAL STATEMENTS

37 › ORDINARY SHARE CAPITAL

ACCOUNTING POLICY

Ordinary shares are classified as equity. External costs directly attributable to the issue of new shares are shown in equity as a deduction from

the proceeds.

The consideration paid by any Group entity to acquire the Company’s equity share capital, including any directly attributable incremental costs,

is deducted from equity until the shares are cancelled, reissued or sold. Where own shares are sold or reissued, the net consideration received is

included in equity.

		Group and Company
		Allotted and fully paid
	2024	2023
	£m	£m
Ordinary shares of 102⁄3p each	80	80

		Number of shares
	2024	2023
At the beginning of the year	751,381,219	751,328,142
Issued on the exercise of options	295,438	53,077
At 31 March	751,676,657	751,381,219

The number of options over ordinary shares from Executive plans that were outstanding at 31 March 2024 was 5,836,592 (2023: 5,223,270).

If all the options were exercisable at that date then 5,836,592 (2023: 5,223,270) shares would be required to be transferred from the Employee

Benefit Trust (EBT). The number of options over ordinary shares from Other plans that were outstanding at 31 March 2024 was 1,498,647

(2023: 1,636,828). If all the options were exercisable at that date then 538,608 new ordinary shares (2023: 565,439) would be issued and

960,039 shares would be required to be transferred from the EBT (2023: 1,107,389).

Shareholders at the Annual General Meeting have previously authorised the acquisition of shares by the Company representing up to 10%

of its share capital, to be held as treasury shares. There were no treasury shares transferred to the EBT during the year ended 31 March 2024

(2023: none) to satisfy future awards under employee share plans. At 31 March 2024, the Group held 6,789,236 ordinary shares (2023: 6,789,236)

with a market value of £45m (2023: £42m) in treasury. The Company’s voting rights and dividends in respect of the treasury shares, including

those own shares which the EBT holds, continue to be waived.

38 › OWN SHARES

ACCOUNTING POLICY

Shares acquired by the EBT are presented on the Group and Company balance sheets within ‘Other reserves’. Purchases of treasury shares are

deducted from retained earnings.

	Group and Company
	2024	2023
	£m	£m
At the beginning of the year	29	30
Transfer of shares to employees on exercise of share options	(6)	(1)
At 31 March	23	29

Own shares consist of shares in Land Securities Group PLC held by the EBT in respect of the Group’s commitment to a number of its employee

share option schemes (note 36).

The number of shares held by the EBT at 31 March 2024 was 3,119,107 (2023: 3,831,399). The market value of these shares at 31 March 2024 was

£21m (2023: £24m).

LANDSEC ANNUAL REPORT 2024FINANCIAL STATEMENTS

NOTES TO THE FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 MARCH 2024 CONTINUED

39 › CONTINGENCIES

The Group has contingent liabilities in respect of legal claims, contractor claims, remediation for building defects, developer contractual

arrangements, guarantees and warranties arising in the ordinary course of business. A provision for such matters is only recognised to the

extent that the Group has a legal or constructive obligation as a result of a past event and it is probable that an outflow of economic benefit

will be required to settle the obligation.

40 › RELATED PARTY TRANSACTIONS

SUBSIDIARIES

During the year, the Company entered into transactions, in the normal course of business, with related parties as follows:

	2024	2023
	£m	£m
Transactions with subsidiary undertakings 1 :
Recharge of costs	(281)	(288)
Dividends received	1,000	500
Interest paid	(148)	(120)

1. All significant cash payments for the parent company, including dividend payments, are made by the Group’s treasury function in accordance with the Group’s financial risk

management policy.

JOINT ARRANGEMENTS

As disclosed in note 16, the Group has investments in a number of joint arrangements. Details of transactions and balances between the Group

and its joint arrangements are as follows:

		Year ended and as at 31 March 2024						Year ended and as at 31 March 2023
		Net	Amounts	Amounts		Net	Amounts	Amounts
		investments	owed by	owed to		investments	owed by	owed to
	Income/	into joint	joint	joint	Income/	into joint	joint	joint
	(expense)	ventures	ventures	ventures	(expense)	ventures	ventures	ventures
	£m	£m	£m	£m	£m	£m	£m	£m
Nova, Victoria	6	–	54	–	6	–	69	–
Southside Limited Partnership	3	–	74	–	3	–	75	–
St. David’s Limited Partnership	–	–	–	–	(1)	(123)	–	–
Westgate Oxford Alliance Limited Partnership	(2)	(13)	6	–	(2)	(8)	6	–
Other	(1)	4	8	–	–	(33)	23	(14)
	6	(9)	142	–	6	(164)	173	(14)

1. On 24 March 2023, the Group acquired the remaining 50% interest in St David’s. From that date, the results of the operations from St David’s are consolidated together with other

subsidiary undertakings.

ASSOCIATES

Details of transactions and balances between the Group and its associates are as follows:

		Year ended and as at 31 March 2024						Year ended and as at 31 March 2023
		Net				Net
		investments	Amounts	Amounts		investments	Amounts	Amounts
		into	owed by	owed to		into	owed by	owed to
	Income	associates	associates	associates	Income	associates	associates	associates
	£m	£m	£m	£m	£m	£m	£m	£m
Associates	–	–	4	–	–	(1)	6	–

160

LANDSEC ANNUAL REPORT 2024 161FINANCIAL STATEMENTS

REMUNERATION OF KEY MANAGEMENT PERSONNEL

The remuneration of the Directors, who are the key management personnel of the Group and Company, is set out below in aggregate for each

of the applicable categories specified in IAS 24 ‘Related Party Disclosures’. Further information about the remuneration of individual Directors is

provided in the audited part of the Directors’ Remuneration Report on pages 72 to 82.

	2024	2023
	£m	£m
Short-term employee benefits	5	5
Share-based payments	3	4
	8	9

1. Short-term employee benefits include pension allowances.

41 › 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 classified as operating leases.

Payments, including prepayments, received under operating leases (net of any incentives paid) are charged to the income statement on

a straight-line basis over the period of the lease.

At the balance sheet date, the Group had contracted with tenants to receive the following undiscounted future minimum lease payments:

	2024	2023
	£m	£m
Not later than one year	416	455
Later than one year, but not more than two years	395	427
Later than two years, but not more than three years	356	382
Later than three years, but not more than four years	330	333
Later than four years, but not more than five years	286	299
More than five years	2,371	2,595
	4,154	4,491

The total of contingent rents, primarily turnover based rents, recognised as income during the year was £61m (2023: £51m).

42 › EVENTS AFTER THE REPORTING PERIOD

On 8 May 2024, the Group sold its interest in LS Hotels Limited for a headline price of £400m.

No other significant events occurred after the reporting period but before the financial statements were authorised for issue.

LANDSEC ANNUAL REPORT 2024ADDITIONAL INFORMATION

BUSINESS ANALYSIS – EPRA DISCLOSURES

EPRA NET ASSET MEASURES

TABLE 55

31 March 2024

EPRA NRV

£m

EPRA NTA

£m

EPRA NDV

£m

Net assets attributable to shareholders 6,402 6,402 6,402

Shortfall of fair value over net investment in finance lease book value (5) (5) (5)

Deferred tax liability on intangible asset –––

Goodwill on deferred tax liability –––

Other intangible asset – (2) –

Fair value of interest-rate swaps (22) (22) –

Shortfall of fair value of debt over book value (note 22) – – 313

Excess of fair value of trading properties over book value 25 25 25

Purchasers’ costs

605 – –

Net assets used in per share calculation 7,005 6,398 6,735

EPRA NRV EPRA NTA EPRA NDV

Diluted net assets per share 940p 859p 904p

EPRA NET ASSET MEASURES

TABLE 56

31 March 2023

EPRA NRV

£m

EPRA NTA

£m

EPRA NDV

£m

Net assets attributable to shareholders 7,005 7,005 7,005

Shortfall of fair value over net investment in finance lease book value (6) (6) (6)

Deferred tax liability on intangible asset 11 –

Goodwill on deferred tax liability (1) (1) (1)

Other intangible asset – (2) –

Fair value of interest-rate swaps (42) (42) –

Shortfall of fair value of debt over book value (note 22) – – 324

Excess of fair value of trading properties over book value 12 12 12

Purchasers’ costs

617 – –

Net assets used in per share calculation 7,586 6,967 7,334

EPRA NRV EPRA NTA EPRA NDV

Diluted net assets per share 1,020p 936p 986p

1. EPRA NTA and EPRA NDV reflect IFRS values which are net of purchasers’ costs. Purchasers’ costs are added back when calculating EPRA NRV.

162

LANDSEC ANNUAL REPORT 2024 163ADDITIONAL INFORMATION

EPRA PERFORMANCE MEASURES

TABLE 57

31 March 2024

Measure Definition for EPRA measure Notes

EPRA

measure

EPRA earnings Recurring earnings from core operational activity 5 £371m

EPRA earnings per share EPRA earnings per weighted number of ordinary shares 5 50.1p

EPRA diluted earnings per share

EPRA diluted earnings per weighted number of ordinary shares 5 50.1p

EPRA Net Tangible Assets (NTA) Net assets adjusted to exclude the fair value of interest-rate swaps, intangible assets

and excess of fair value over net investment in finance lease book value

5 £6,398m

EPRA Net Tangible Assets per share Diluted Net Tangible Assets per share 5 859p

EPRA net disposal value (NDV) Net assets adjusted to exclude the fair value of debt and goodwill on deferred tax and

to include excess of fair value over net investment in finance lease book value

5 £6,735m

EPRA net disposal value per share Diluted net disposal value per share 5 904p

EPRA loan-to-value (LTV)

Ratio of adjusted net debt, including net payables, to the sum of the net assets, including

net receivables, of the Group, its subsidiaries and joint ventures, all on a proportionate

basis, expressed as a percentage

21 36.3%

Table

EPRA

measure

Voids/vacancy rate ERV of vacant space as a % of ERV of Combined Portfolio excluding the development

programme

58 3.5%

Net initial yield (NIY) Annualised rental income less non-recoverable costs as a % of market value plus

assumed purchasers’ costs

60 5.4%

Topped-up NIY NIY adjusted for rent free periods

60 6.2%

Cost ratio

Total costs as a percentage of gross rental income (including direct vacancy costs)

61 25.0%

Total costs as a percentage of gross rental income (excluding direct vacancy costs)

61 20.3%

1. In the year ended 31 March 2024, share options are excluded from the weighted average diluted number of shares when calculating EPRA diluted earnings per share because they

are not dilutive, based on IFRS loss for the year.

2. EPRA LTV differs from the Group LTV presented in note 21 as it includes net payables and receivables and includes trading properties at fair value and debt instruments at nominal

value rather than book value.

3. This measure reflects voids in the Combined Portfolio excluding only properties under development.

4. This measure relates to the Combined Portfolio, excluding properties currently under development, and is calculated by our external valuer. Topped-up NIY reflects adjustments

of £82m for rent free periods and other incentives.

5. This measure is calculated based on gross rental income after rents payable and excluding costs recovered through rents but not separately invoiced of £9m. Further information

on the Group’s accounting policies pertaining to capitalised costs can be found in section 3 of the financial statements.

EPRA VACANCY RATE

The EPRA vacancy rate is based on the ratio of the estimated market rent for vacant properties versus total estimated market rent, for the

Combined Portfolio excluding properties under development. There are no significant distorting factors influencing the EPRA vacancy rate.

TABLE 58

31 March

2024

£m

ERV of vacant properties 22

ERV of Combined Portfolio excluding properties under development 632

EPRA vacancy rate (%) 3.5

CHANGE IN NET RENTAL INCOME FROM THE LIKE-FOR-LIKE PORTFOLIO

TABLE 59

2024

£m

2023

£m

Change

£m %

Central London 230 229 1 0%

Major retail 131 122 9 7%

Subscale sectors 111 108 3 3%

472 459 13 3%

LANDSEC ANNUAL REPORT 2024ADDITIONAL INFORMATION

EPRA NET INITIAL YIELD (NIY) AND TOPPED-UP NIY

TABLE 60

31 March 2024

£m

Combined Portfolio 9,963

Trading properties 125

Less: Properties under development, trading properties under development and land (1,087)

Like-for-like investment property portfolio, proposed and completed developments, and completed trading properties 9,001

Plus: Allowance for estimated purchasers’ costs 546

Grossed-up completed property portfolio valuation (a) 9,547

EPRA annualised cash passing rental income

603

Net service charge expense

(16)

Void costs and other deductions (73)

EPRA Annualised net rent

(b) 514

Plus: Rent-free periods and other lease incentives (annualised) 82

Topped-up annualised net rents (c) 596

EPRA NIY (b/a) 5.4%

EPRA Topped-up NIY (c/a) 6.2%

1. EPRA annualised cash passing rental income and EPRA annualised net rent as calculated by the Group’s external valuer.

2. Including costs recovered through rents but not separately invoiced.

BUSINESS ANALYSIS – EPRA DISCLOSURES

CONTINUED

164

LANDSEC ANNUAL REPORT 2024 165ADDITIONAL INFORMATION

COST ANALYSIS

TABLE 61

2024 2023

Total

£m

Cost

ratio

Total

£m

Cost

ratio

Gross rental income (before

rents payable)

653 659

Costs recovered through rents

but not separately invoiced

(9) (9)

Adjusted gross rental

income

644 650

Rents payable (12) (12)

EPRA gross rental income 632 638

£m

Gross rental income (before rents payable) 653

Rents payable (12)

Gross rental income (after rents payable) 641

Direct

property

costs

£90m

Managed operations 10 10

Net service charge expense (16)

Tenant default (6) (3)

Net direct property expenditure (81)

Void related costs 30 27

Movement in bad and doubtful debts

provision

Other direct property costs 54 48

Segment net rental income 550 Development expenditure 9 14

Net indirect expenses (77)

Net

indirect

expenses

£77m

Asset management,

administration and

compliance

70 74

Segment profit before finance expense 473

Net finance expense – Group (91)

Net finance expense – joint ventures (11)

EPRA earnings 371

Total (incl. direct

vacancycosts)

167 170

Costs recovered through rents (9) (9)

EPRA costs (incl. direct

vacancy costs)

158 25.0 161 25.2

Less: Direct vacancy costs (30) (27)

EPRA (excl. direct

vacancycosts)

128 20.3 134 21.0

1. Percentages represent costs divided by EPRA gross rental income.

LANDSEC ANNUAL REPORT 2024ADDITIONAL INFORMATION

ACQUISITIONS, DISPOSALS AND CAPITAL EXPENDITURE

TABLE 62

Year ended

31 March

2024

Year ended

31 March

2023

Investment properties

Group (excl.

joint

ventures)

£m

Joint

ventures

£m

Adjustment for

non-wholly

owned

subsidiaries

£m

Combined

Portfolio

£m

Combined

Portfolio

£m

Net book value at the beginning of the year 9,658 601 (139) 10,120 11,833

Transfer from joint venture ––––11

Acquisitions 144 – – 144 223

Capital expenditure 374 3 (1) 376 340

Capitalised interest 19 – – 19 22

Net movement in head leases capitalised (30) – – (30) (25)

Disposals (207) – – (207) (1,430)

Net deficit on revaluation of investment properties (628) (19) 22 (625) (848)

Transfer to trading properties – – – – (6)

Net book value at the end of the year 9,330 585 (118) 9,797 10,120

Loss on disposal of investment properties (16) – – (16) (144)

Trading properties £m £m £m £m £m

Net book value at the beginning of the year 118 – – 118 146

Transfer from investment properties ––––6

Capital expenditure 13 – – 13 3

Capitalised interest 1––1–

Disposals (21) – – (21) (18)

Movement in impairment (11) – – (11) (19)

Net book value at the end of the year 100 – – 100 118

Profit on disposal of trading properties ––––1

ACQUISITIONS, DEVELOPMENT AND OTHER CAPITAL EXPENDITURE

Investment

properties

£m

Trading

properties

£m

Combined

Portfolio

£m

Combined

Portfolio

£m

Acquisitions

144 – 144 223

Development capital expenditure

220 6 226 278

Other capital expenditure 156 7 163 65

Capitalised interest 19 1 20 22

Acquisitions, development and other capital expenditure 539 14 553 588

Disposals

£m £m

Net book value – investment property disposals 207 1,430

Net book value – trading property disposals 21 18

Net book value – other net assets 3 52

Loss on disposal – investment properties (16) (144)

Profit on disposal – trading properties – 1

Other 1 (3)

Total disposal proceeds 216 1,354

1. See EPRA analysis of capital expenditure table on page 167 for further details.

2. Properties acquired in the year.

3. Development capital expenditure for investment properties comprises expenditure on the future development pipeline and completed developments.

BUSINESS ANALYSIS – EPRA DISCLOSURES

CONTINUED

166

LANDSEC ANNUAL REPORT 2024 167ADDITIONAL INFORMATION

EPRA ANALYSIS OF CAPITAL EXPENDITURE

TABLE 63

Year ended 31 March 2024

Other capital expenditure

Capitalised

interest

£m

Total capital

expenditure

– Combined

Portfolio

£m

Total capital

expenditure

– joint

ventures

(Group

share)

£m

Adjustment

for

non-wholly

owned

subsidiaries

£m

Total capital

expenditure

– Group

£m

Acquisitions

£m

Development

capital

expenditure

£m

Incremental

lettable

space

£m

incremental

lettable

space

£m

Tenant

improvements

£m

Total

£m

Central London

West End offices –42 –11 112 7 61 1 – 60

City offices –––66 –66 1 67 – – 67

Retail and other 8––11 –11 – 19 – – 19

Developments 123 155 –– –– 11 289 – – 289

Total Central

London

131 197 – 88 1 89 19 436 1 – 435

Major retail

Shopping centres 2–124 –25 – 27 – – 27

Outlets –––9 110 – 10 – – 10

Total Major

retail

2 – 133 135 –37 – –37

Mixed-use urban

London –11 –1 –1 – 12 – – 12

Major regional

cities

–12 –6 –6 – 18 2 (1) 17

Total Mixed-use

urban

– 23 – 7 – 7 – 30 2 (1) 29

Subscale sectors

Leisure 11 – –16 –16 –27 – –27

Hotels –––2 –2–2 – –2

Retail parks –––7 –7–7 – –7

Total Subscale

sectors

11 – – 25 – 25 – 36 – – 36

Total capital

expenditure

144 220 1 153 2 156 19 539 3 (1) 537

Timing difference between accrual and cash basis (70) 2 – (72)

Total capital expenditure on a cash basis 469 5 (1) 465

1. Investment properties acquired in the year.

2. Expenditure on the future development pipeline and completed developments.

3. Capital expenditure where the lettable area increases by at least 10%.

4. Includes £35m of expenditure relating to Myo.

LANDSEC ANNUAL REPORT 2024ADDITIONAL INFORMATION

BUSINESS ANALYSIS – GROUP

TOP 12 OCCUPIERS AT 31 MARCH 2024

TABLE 64

% of Group

rent

Accor 5.6

Central Government 5.5

Deloitte 2.2

Taylor Wessing 1.6

Cineworld 1.5

Boots 1.4

Peel 1.3

Qube RT 1.3

BBC 1.2

Sainsbury’s 1.0

H&M 1.0

Cheil 0.9

24.5

1. On a proportionate basis.

PROPERTY INCOME DISTRIBUTION (PID) CALCULATION

TABLE 65

Year ended

31 March

2024

£m

Year ended

31 March

2023

£m

Loss before tax per income statement (341) (622)

Accounting loss on residual operations (23) (67)

Prior year adjustment – 77

Loss attributable to tax-exempt operations (364) (612)

Adjustments

Capital allowances (55) (43)

Capitalised interest (20) (22)

Revaluation deficit/(gain) 649 848

Tax exempt disposals 12 142

Capital expenditure 6 5

Other tax adjustments (27) (27)

Goodwill amortisation and impairment – 5

Estimated tax-exempt income for the year 201 296

PID thereon (90%) 181 266

As a REIT, our income and capital gains from qualifying activities are exempt from corporation tax. 90% of this income must be distributed

as a Property Income Distribution and is taxed at the shareholder level to give a similar tax position to direct property ownership. Non-

qualifying activities, such as sales of trading properties, are subject to corporation tax. This year, there was no net tax charge (2023: £nil).

The table above provides a reconciliation of the Group’s loss before tax to its estimated tax exempt income, 90% of which the Company

is required to distribute as a PID to comply with REIT regulations.

168

LANDSEC ANNUAL REPORT 2024 169ADDITIONAL INFORMATION

The Company has 12 months after the year end to make the minimum distribution. Accordingly, PID dividends paid in the year may relate

to the distribution requirements of previous periods. The table below sets out the dividend allocation for the years ended 31 March 2024 and

31 March 2023:

TABLE 66

PID allocation

Ordinary

dividend

Total

dividend

Year ended

31 March 2024

£m

Year ended

31 March 2023

£m

Pre-

31 March 2023

£m £m £m

Dividends paid in year to 31 March 2023 – 156 134 – 290

Dividends paid in year to 31 March 2024 181 110 – – 291

Minimum PID to be paid by 31 March 2025 – –n/an/a –

Total PID required 181 266

The Group has met all the REIT requirements, including the payment by 31 March 2024 of the minimum Property Income Distribution (PID)

for the year ended 31 March 2023. The forecast minimum PID for the year ended 31 March 2024 is £181m, which must be paid by 31 March 2025.

The Group has already made PID dividends relating to 31 March 2024 of £181m.

Our latest tax strategy can be found on our corporate website. In the year, the total taxes we incurred and collected were £136m (2023: £134m),

of which £37m (2023: £38m) was directly borne by the Group including environmental taxes, business rates and stamp duty land tax. The Group

has a low tax risk rating from HMRC.

REIT BALANCE OF BUSINESS

To retain the Group’s REIT status, it must meet conditions from the REIT legislation.At least 75% of the Group’s assets and 75% of the Group’s

income must relate to qualifying activities. The results of these tests at the balance sheet date are below:

TABLE 67

For the year ended 31 March 2024 For the year ended 31 March 2023

Tax-exempt

business

Residual

business

Adjusted

results

Tax-exempt

business

Residual

business

Adjusted

results

Profit before tax (£m)

271 (3) 268 319 (18) 301

Balance of business – 75% profits test

100.0% 0.0% 100.0% 0.0%

Adjusted total assets (£m)

10,063 606 10,669 10,357 609 10,966

Balance of business – 75% assets test

94.3% 5.7% 94.4% 5.6%

1. Calculated according to REIT rules.

ANNUAL NET RENT BREAKDOWN BY OCCUPIER

BUSINESS SECTOR

CHART 68

FLOOR SPACE (MILLION SQ FT

)

CHART 69

Retail trade 27%

Services 27%

Financial services 17%

Public administration 8%

Manufacturing 4%

Transport, communications 3%

Wholesale trade 2%

Other 12%

Central London 5.4

Major retail 7.7

Mixed-use urban 2.8

Subscale sectors 6.9



Total



22.8

1. Joint ventures are reflected at 100% values, not Group share.

LANDSEC ANNUAL REPORT 2024ADDITIONAL INFORMATION

GREENHOUSE GAS REPORTING

In line with requirements set out in the Companies Act 2006 (Strategic Report and Directors’ Report) Regulations 2013 and the Companies

(Directors’ Report) and Limited Liability Partnerships (Energy and Carbon Report) Regulations 2018, and in accordance with the Streamlined

Energy and Carbon Reporting (SECR), this statement reports our GHG emissions for the financial year ending 31 March 2024.

STREAMLINED ENERGY AND CARBON REPORTING (SECR)

Our streamlined energy and carbon reporting figures include energy consumption and carbon emissions associated with all properties

under our operational control (i.e. absolute portfolio). Energy consumption is reported as kWh and no normalisation technique is applied.

Carbon emissions are reported as tonnes of carbon dioxide equivalent (tCO

e). We report our full greenhouse gas (GHG) emissions annually

in accordance to the WRI GHG Protocol.

GHG emissions are broken down into three scopes: Scope 1, 2 and 3.

Scope 1 emissions are direct emissions from activities controlled by us that release emissions into the atmosphere, while Scope 2 emissions

are indirect emissions associated with our consumption of purchased energy.

At Landsec, Scope 1 comprises emissions from natural gas purchased for common areas and shared services and refrigerant gas losses based

on top-ups recorded on our compliance reporting system – Riskwise. Scope 2 emissions are from electricity, heating and cooling purchased

for common areas and shared services. All material sources of Scope 1 and 2 emissions are reported. As the remaining sources (e.g. diesel used

in generator testing) represent such a small proportion of total emissions, we do not report them.

Scope 2 emissions are reported using both the “location-based” and “market-based” accounting methods. Location-based emissions are

reported using the UK Government’s ‘Greenhouse gas reporting: conversion factors 2023’. Scope 2 market-based emissions are reported using

the conversion factor associated with each individual electricity, heating and cooling supply, either obtained directly from the supplier or from

their official company website.

Scope 3 emissions are those that are a consequence of our business activities, but which occur at sources we do not own or control and which

are not classified as Scope 2 emissions. The GHG Protocol identifies 15 categories of which 8 are directly relevant for Landsec. Our Scope 3

reporting methodology is detailed in our Sustainability Performance and Data Report on landsec.com/sustainability/reports-benchmarking.

LANDSEC – SCOPE 1 AND 2 EMISSIONS

TABLE 70

Emissions Unit 2021/22 2022/23

2023/24

Scope 1 tCO

e 7,151 6,950 5,809

Scope 2 (location-based method) tCO

e 18,338 16,798 17,667

Scope 2 (market-based method) tCO

e 2,054 2,954 2,760

Scope 1 and 2 (location-based method) tCO

e 25,489 23,748 23,476

Scope 1 and 2 (market-based method) tCO

e 9,205 9,904 8,569

Intensity Unit 2021/22 2022/23 2023/24

Scope 1 and 2 (location-based method) kgCO

e/m

14.12 12.84 13.01

Scope 1 and 2 (market-based method) kgCO

e/m

5.10 5.36 4.75

1. Scope 1 emissions for 2022/23 have been restated due to a change in the refrigerant gas data collection methodology. This data is now reported based on input date into the

reporting system, whereas previously it was based on delivery date.

SUSTAINABILITY PERFORMANCE

170

LANDSEC ANNUAL REPORT 2024 171ADDITIONAL INFORMATION

LANDSEC SCOPE 1 AND 2 EMISSIONS –

YEAR ON YEAR DRIVING FACTORS

CHART 71

23,748

(297)

(345)

127

(1,039)

1,281

23,475

5,000

10,000

15,000

20,000

25,000

tCO

2022/23

Portfolio

changes

External

temperature

Occupancy

changes

Energy

efficiencies

Emission

factor

2023/24

Scope 1 and 2 GHG emissions using location-based emission factors

have decreased by 1% compared with the previous reporting year.

Thekey reduction driver comes from our energy efficiency initiatives

across our assets however the impact has been offset by the change

of emissions factors, particularly electricity, with a 7% increase

compared with last year.

The detailed breakdown of main factors driving the change in our

Scope 1 and Scope 2 can be seen in the waterfall chart 71. In terms

of market-based emissions, we have seen a reduction of 13% due

to an increase of assets under our operational control supplied with

REGO-backed renewable electricity.

LANDSEC EMISSIONS INVENTORY

TABLE 72

Scope 3 Category Unit 2021/22

2022/23

2023/24

Purchased goods and services (PG&S) tCO

e 21,623 27,516 35,354

Capital goods tCO

e 49,682 52,987 73,355

Fuel- and energy-related activities tCO

e 7,765 6,792 6,575

Upstream transportation and distribution tCO

e Under PG&S Under PG&S Under PG&S

Waste generated in operations tCO

e 516 625 605

Business travel tCO

e 40 135 274

Employee commuting tCO

e 159 104 131

Downstream leased assets tCO

e 89,375 87,551 88,415

Scope 3 tCO

e 169,160 175,710 204,709

Scope 1,2 and 3 (location-based method) tCO

e 194,649 199,458 228,185

Scope 1,2 and 3 (market-based method) tCO

e 178,365 185,614 213,278

1. Capital Goods emissions for 2021/22 and 2022/23 have been restated due to previously double-counting emissions for one development project.

The following Scope 3 emissions are considered not applicable to us thus excluded from the above table: 8. Upstream leased assets; 9. Downstream transportation and distribution;

10. Processing of sold products; 11. Use of sold products; 12. End-of-life treatment of sold products; 14. Franchises and 15. Investments. Further information is detailed in our

Sustainability Performance and Data Report on landsec.com/sustainability/reports-benchmarking.

LANDSEC ANNUAL REPORT 2024ADDITIONAL INFORMATION

LANDSEC EMISSIONS INVENTORY

(% OF TOTAL EMISSIONS)

CHART 73

Capital goods

32%

Downstream

leased assets

39%

Purchased goods

and services (PG&S)

15%

Other

emissions

0.4%

Fuel and

energy-related

activities

Scope 2 (location

based method)

Scope 1

Scope 3

89%

Our emissions inventory can be seen in table 72. The two largest

Scope 3 categories are Capital goods and Downstream leased assets,

making up over 70% of our total emissions, as shown in chart 73.

Capital goods include the emissions associated with the manufacture

and transport of materials used within our development activities

andportfolio projects. Downstream leased assets are those emissions

associated with energy consumed by our customers within our assets.

Emissions from Capital goods have increased by 38% compared with

last year due to a combination of portfolio projects, refurbishment

works across our sites and inflation. Overall higher costs impact the

proportion of our emissions that are estimated based on procurement

spend. We continue making considerable progress in reducing upfront

embodied carbon at our developments, as discussed on page 29.

Our development pipeline performance which includes our target

and performance of upfront embodied carbon is detailed in our

Sustainability Performance and Data Report.

In relation to Downstream leased assets, we continue engaging

ourtenants of our FRI assets and retail brand partners to increase

theshare of primary tenant energy usage data (69% of our total

downstream leased assets data), thereby increasing actual

performance data. The small 1% increase in carbon emissions

compared with last year for this category is explained by a

combination of increase of actual data included in the calculation

and increase in electricity emissions factor compared with last year.

LANDSEC – ENERGY CONSUMPTION

TABLE 74

Unit 2021/22 2022/23 2023/24

Natural Gas kWh for landlord shared services 34,618,470 31,202,547 28,558,903

(sub)metered to tenants 17,627,638 19,526,063 16,912,876

Total Natural Gas consumption 52,246,108 50,728,610 45,471,779

Electricity kWh for landlord shared services 81,414,523 82,227,618 81,052,747

(sub)metered to tenants 48,120,743 51,168,404 50,356,156

Total Electricity consumption 129,535,266 133,396,023 131,408,903

District Heating and Cooling kWh for landlord shared services 5,551,710 4,973,961 5,022,348

(sub)metered to tenants 4,170,874 4,263,285 3,991,868

Total Heating and Cooling consumption 9,722,584 9,237,246 9,014,216

Total Energy Consumption kWh for landlord shared services 121,584,703 118,404,126 114,633,998

(sub)metered to tenants 69,919,255 74,957,753 71,260,900

Total Energy consumption 191,503,958 193,361,879 185,894,898

Energy intensity kWh/m

106 105 103

The table 74 shows the absolute energy consumption with a breakdown by landlord and tenant consumption. This year, absolute energy

intensity has decreased by 1% compared with the previous year.

Despite higher occupancy rates, energy intensity has reduced due to energy efficiencies achieved through a combination of active energy

management, optimisation of building controls, lighting upgrades and our Net Zero Transition Investment Plan (NZTIP). Progress against

our NZTIP is discussed on pages 28-29.

ASSURANCE

Landsec’s auditor, EY, has once again conducted sustainability assurance. This is part of our journey to embed sustainability across the business

and enhance the integrity, quality and usefulness of the information we provide. EY performed a limited assurance engagement on selected

performance data and qualitative statements in the ‘People and Culture’, ‘Our approach to sustainability’, ‘Build well’, ‘Live well’, ‘Act well’

and ‘TCFD’ sections of the Strategic Report pages 25-37; the sustainability content in the ‘Additional Information’ section of the Landsec 2024

Annual Report pages 170-172; and the online Sustainability Performance and Data Report 2024.

This report and the full assurance statement is available at landsec.com/sustainability/reports-benchmarking.

SUSTAINABILITY PERFORMANCE

CONTINUED

172

LANDSEC ANNUAL REPORT 2024 173ADDITIONAL INFORMATION

The Group has applied the European Securities and Markets Authority (ESMA) ‘Guidelines on Alternative Performance Measures’ in these results.

In the context of these results, an alternative performance measure (APM) is a financial measure of historical or future financial performance,

position or cash flows of the Group which is not a measure defined or specified in IFRS.

The table below summarises the APMs included in these results and where the reconciliations of these measures can be found. The definitions

of APMs are included in the Glossary.

TABLE 75

Alternative performance measure Nearest IFRS measure Reconciliation

EPRA earnings Profit/loss before tax Note 4

EPRA earnings per share Basic earnings/loss per share Note 5

EPRA diluted earnings per share Diluted earnings/loss per share Note 5

EPRA Net Tangible Assets Net assets attributable to shareholders Note 5

EPRA Net Tangible Assets per share Net assets attributable to shareholders Note 5

Total return on equity n/a Note 5

Adjusted net cash inflow from operating activities Net cash inflow from operating activities Note 13

Combined Portfolio Investment properties Note 14

Adjusted net debt Borrowings Note 21

Group LTV n/a Note 21

EPRA LTV n/a Note 21

ALTERNATIVE PERFORMANCE MEASURES

LANDSEC ANNUAL REPORT 2024ADDITIONAL INFORMATION

COMBINED PORTFOLIO ANALYSIS

TOTAL PORTFOLIO ANALYSIS

Market value

Valuation movement

Rental income

Annualised rental

income

Net estimated rental

value

31 March

2024

£m

31 March

2023

£m

(Deficit)/

surplus

£m

Surplus/

(deficit)

31 March

2024

£m

31 March

2023

£m

31 March

2024

£m

31 March

2023

£m

31 March

2024

£m

31 March

2023

£m

Central London

West End offices

3,109 2,653 (111) (3.6) 148 140 160 134 186 146

City offices

1,192 1,304 (188) (13.9) 68 76 70 61 93 87

Retail and other

991 1,095 (48) (4.7) 58 76 43 42 55 56

Developments

926 1,190 (102) (9.9) 20 21 8 5 93 57

Total Central London

6,218 6,242 (449) (6.9) 294 313 281 242 427 346

Major retail

Shopping centres

1,226 1,196 1 0.1 131 120 121 114 122 123

Outlets

605 684 (21) (3.3) 57 59 48 56 49 60

Total Major retail

1,831 1,880 (20) (1.1) 188 179 169 170 171 183

Mixed-use urban

London

191 285 (23) (10.3) 17 19 11 16 16 22

Major regional cities

510 530 (93) (15.3) 41 39 37 36 38 35

Total Mixed-use urban

701 815 (116) (14.0) 58 58 48 52 54 57

Subscale sectors

Leisure

423 476 (35) (8.2) 48 51 46 51 42 50

Hotels

400 408 2 0.6 35 30 35 31 29 28

Retail parks

390 418 (7) (1.8) 30 28 27 28 29 30

Total Subscale sectors

1,213 1,302 (40) (3.2) 113 109 108 110 100 108

Combined Portfolio

9,963 10,239 (625) (6.0) 653 659 606 574 752 694

Properties treated as finance leases

– – – – (1) (2)

Combined Portfolio

9,963 10,239 (625) (6.0) 652 657

Represented by:

Investment portfolio

9,347 9,603 (606) (6.2) 613 603 569 536 712 655

Share of joint ventures

616 636 (19) (3.2) 39 54 37 38 40 39

Combined Portfolio

9,963 10,239 (625) (6.0) 652 657 606 574 752 694

174

LANDSEC ANNUAL REPORT 2024 175ADDITIONAL INFORMATION

TOTAL PORTFOLIO ANALYSIS CONTINUED

TABLE 76

Notes:

1. Refer to Glossary for definition.

2. Annualised rental income is annual ‘rental income’ (as defined

in the Glossary) at the balance sheet date, except that car park

and commercialisation income are included on a net basis (after

deduction for operational outgoings). Annualised rental income

includes temporary lettings.

3. Net estimated rental value is gross estimated rental value, as defined

in the Glossary, after deducting expected rent payable.

4. Comprises the development pipeline – refer to Glossary for definition.

5. The prior year data has been restated to align with the updated

categories disclosed.

6. Net initial yield – refer to Glossary for definition. This calculation

includes all properties including those sites with no income.

7. Equivalent yield – refer to Glossary for definition. Future developments

are excluded from the calculation of equivalent yield on the

Combined Portfolio.

8. The like-for-like portfolio – refer to Glossary for definition.

Net initial yield

Equivalent yield

31 March

2024

Movement

in like-for-

bps

31 March

2024

Movement

in like-for-

bps

Central London

West End offices

4.2 24 5.3 37

City offices

3.9 64 6.0 78

Retail and other

4.6 42 4.9 30

Developments

(0.0) n/a 5.4 n/a

Total Central London

4.2 39 5.4 46

Major retail

Shopping centres

8.1 3 8.1 23

Outlets

6.3 13 7.0 17

Total Major retail

7.5 8 7.8 22

Mixed-use urban

London

4.2 (108) 6.6 22

Major regional cities

6.7 64 7.7 106

Total Mixed-use urban

6.1 21 7.3 85

Subscale sectors

Leisure

8.7 51 8.8 26

Hotels

7.3 61 7.2 54

Retail parks

6.0 (63) 6.8 38

Total Subscale sectors

7.4 17 7.6 38

Combined Portfolio

5.4 31 6.2 45

Represented by:

Investment portfolio

5.4 n/a 6.2 n/a

Share of joint ventures

6.0 n/a 6.0 n/a

Combined Portfolio

5.4 n/a 6.2 n/a

LANDSEC ANNUAL REPORT 2024ADDITIONAL INFORMATION

RECONCILIATION OF SEGMENTAL INFORMATION NOTE TO STATUTORY REPORTING

RECONCILIATION OF SEGMENTAL INFORMATION NOTE TO STATUTORY REPORTING FOR THE YEAR ENDED 31 MARCH 2023

TABLE 77

Year ended 31 March 2023

Group

income

statement

£m

Joint

ventures

£m

Adjustment for

non-wholly

owned

subsidiaries

£m

Total

£m

EPRA

earnings

£m

Capital

and other

items

£m

Rental income 612 53 (8) 657 657 –

Finance lease interest 2 – – 2 2 –

Gross rental income (before rents payable) 614 53 (8) 659 659 –

Rents payable (10) (2) – (12) (12) –

Gross rental income (after rents payable) 604 51 (8) 647 647 –

Service charge income 91 10 (3) 98 98 –

Service charge expense (100) (12) 2 (110) (110) –

Net service charge expense (9) (2) (1) (12) (12) –

Other property related income 29 2 – 31 31 –

Direct property expenditure (100) (10) 2 (108) (108) –

Movement in bad and doubtful debt provision 2 1 – 3 3 –

Segment net rental income 526 42 (7) 561 561 –

Other income 3– –33–

Administrative expenses (80) (2) – (82) (82) –

Depreciation (5) – – (5) (5) –

EPRA earnings before interest 444 40 (7) 477 477 –

Share of post-tax loss from joint ventures (1) 1 – – – –

Profit on disposal of trading properties 1 – – 1 – 1

Loss on disposal of investment properties

(144) – – (144) – (144)

Net deficit on revaluation of investment properties (827) (30) 9 (848) – (848)

Net development contract expenditure (9) – – (9) – (9)

Loss on changes in finance leases (6) – – (6) – (6)

Impairment of goodwill (5) – – (5) – (5)

Impairment of trading properties (19) – – (19) – (19)

Depreciation (3) – – (3) – (3)

Operating (loss)/profit (569) 11 2 (556) 477 (1,033)

Finance income 34 – 1 35 11 24

Finance expense (87) (11) – (98) (95) (3)

(Loss)/Profit before tax (622) – 3 (619) 393 (1,012)

Taxation –– ––

(Loss)/Profit for the year (622) – 3 (619)

1. Reallocation of the share of post-tax loss from joint ventures reported in the Group income statement to the individual line items reported in the segmental information note.

2. Removal of the non-wholly owned share of results of the Group’s subsidiaries. The non-wholly owned subsidiaries are consolidated at 100% in the Group’s income statement,

but only the Group’s share is included in EPRA earnings reported in the segmental information note.

3. Included in the loss on disposal of investment properties is a £9m charge related to the provision for fire safety remediation works on properties no longer owned by the Group

but for which the Group is responsible for remediating under the Building Safety Act 2022.

176

LANDSEC ANNUAL REPORT 2024 177ADDITIONAL INFORMATION

TEN YEAR SUMMARY

INCOME STATEMENT

TABLE 78

Year ended and as at 31 March

2024

£m

2023

£m

2022

£m

2021

£m

2020

£m

2019

£m

2018

£m

2017

£m

2016

£m

2015

£m

Revenue 824 791 679 635 741 757 830 781 936 765

Costs (409) (382) (308) (333) (274) (271) (321) (260) (404) (329)

415 409 371 302 467 486 509 521 532 436

Share of post-tax profit/(loss)

from joint ventures

2 (1) 33 (192) (151) (85) 27 69 199 326

(Loss)/profit on disposal of

investment properties

(16) (144) 107 8 (6) – 1 19 75 107

Profit/(loss) on disposal of

investments in joint ventures

– – 2 – – – 66 (2) – 3

Profit on disposal of other

investments

– ––––––13––

Net (deficit)/surplus on revaluation

of investment properties

(628) (827) 416 (1,448) (1,000) (441) (98) (186) 739 1,771

(Loss)/gain on changes in

finance leases

– (6)6–––––––

Operating (loss)/profit (227) (569) 935 (1,330) (690) (40) 505 434 1,545 2,643

Net finance expense (114) (53) (60) (63) (147) (83) (548) (268) (185) (207)

Net gain on business combination – ––––––––2

(Loss)/profit before tax (341) (622) 875 (1,393) (837) (123) (43) 166 1,360 2,438

Taxation – – ––54(1)12 –

(Loss)/profit for the year (341) (622) 875 (1,393) (832) (119) (44) 167 1,362 2,438

Net (deficit)/surplus on

revaluation of investment

properties

Investment portfolio (628) (827) 416 (1,448) (998) (440) (98) (187) 736 1,768

Share of joint ventures (19) (30) (3) (198) (181) (117) 7 40 171 269

Adjustment for non-wholly

owned subsidiaries

22 9(4)–––––––

Total (625) (848) 409 (1,646) (1,179) (557) (91) (147) 907 2,037

EPRA earnings 371 393 355 251 414 442 406 382 362 329

Results per share

Total dividend payable in respect

of the financial year

39.6p 38.6p 37.0p 27.0p 23.2p 45.55p 44.2p 38.55p 35.0p 31.85p

Basic (loss)/earnings per share (43.0)p (83.6)p 117.4p (188.2)p (112.4)p (16.1)p (5.8)p 21.1p 172.4p 308.6p

Diluted (loss)/earnings per share (43.0)p (83.6)p 117.1p (188.2)p (112.4)p (16.1)p (5.8)p 21.1p 171.8p 307.4p

EPRA earnings per share 50.1p 53.1p 48.0p 33.9p 55.9p 59.7p 53.1p 48.4p 45.9p 41.7p

EPRA diluted earnings per share 50.1p 53.1p 47.8p 33.9p 55.9p 59.7p 53.1p 48.3p 45.7p 41.5p

Net assets per share 863p 945p 1,070p 975p 1,182p 1,341p 1,404p 1,418p 1,434p 1,293p

Diluted net assets per share 859p 942p 1,067p 973p 1,181p 1,339p 1,404p 1,416p 1,431p 1,288p

EPRA Net Tangible Assets per share 859p 936p 1,063p 985p 1,192p 1,348p 1,410p 1,422p 1,433p 1,296p

1. Includes our non-wholly owned subsidiaries on a proportionate basis.

2. This represents the interest in MediaCity which we do not own but consolidate in the Group numbers.

LANDSEC ANNUAL REPORT 2024ADDITIONAL INFORMATION

TEN YEAR SUMMARY

CONTINUED

BALANCE SHEET

TABLE 79

As at 31 March

2024

£m

2023

£m

2022

£m

2021

£m

2020

£m

2019

£m

2018

£m

2017

£m

2016

£m

2015

£m

Investment properties 9,330 9,658 11,207 9,607 11,297 12,094 12,336 12,144 12,358 12,158

Intangible assets 3 6 8 8 14 20 34 36 38 35

Net investment in finance leases 21 21 70 152 156 159 162 165 183 185

Loan investments – ––––––––50

Investment in joint ventures 529 533 700 625 824 1,031 1,151 1,734 1,668 1,434

Investment in associates – 34–––––––

Trade and other receivables 159 146 177 170 178 176 165 123 86 53

Other non-current assets 48 67 61 22 32 30 49 51 44 29

Total non-current assets 10,090 10,434 12,227 10,584 12,501 13,510 13,897 14,253 14,377 13,944

Trading properties and long-term

development contracts

100 118 145 36 24 23 24 122 124 222

Trade and other receivables 383 365 368 354 433 437 471 418 445 404

Monies held in restricted accounts

and deposits

6 4 22 10 9 36 15 21 19 10

Cash and cash equivalents 78 41 128 – 1,345 14 62 30 25 14

Other current assets 11 4564814––––

Total current assets 578 532 668 406 1,859 524 572 591 613 650

Non-current assets held for sale – ––––––––283

Borrowings (975) (315) (541) (906) (977) (934) (872) (404) (19) (191)

Trade and other payables (352) (306) (320) (252) (270) (273) (294) (302) (289) (367)

Provisions (30) –––––––––

Other current liabilities – (24) (11) (7) (2) (18) (14) (7) (19) (10)

Total current liabilities (1,357) (645) (872) (1,165) (1,249) (1,225) (1,180) (713) (327) (568)

Borrowings (2,805) (3,223) (4,012) (2,610) (4,355) (2,847) (2,858) (2,859) (3,222) (3,985)

Trade and other payables (4) (17) (8) (1) (1) (1) – (25) (28) (30)

Provisions (42) –––––––––

Other non-current liabilities (13) (9) (12) (2) (5) (5) (8) (9) (47) (45)

Redemption liability – ––––(36) (37) (36) (35) (35)

Total non-current liabilities (2,864) (3,249) (4,032) (2,613) (4,361) (2,889) (2,903) (2,929) (3,332) (4,095)

Net assets 6,447 7,072 7,991 7,212 8,750 9,920 10,386 11,202 11,331 10,214

Net debt

(3,596) (3,348) (4,254) (3,509) (3,942) (3,747) (3,654) (3,219) (3,229) (4,193)

Market value of the Combined

Portfolio

9,963 10,239 12,017 10,791 12,781 13,750 14,103 14,439 14,471 14,031

Adjusted net debt

(3,517) (3,287) (4,179) (3,489) (3,926) (3,737) (3,652) (3,261) (3,239) (4,172)

1. Net debt and adjusted net debt exclude amounts payable under head leases for reporting periods from, and including, the year ended 31 March 2022. Net debt and adjusted

net debt for prior periods included in the table above have not been restated, but would have excluded amounts payable under head leases of £61m (2021), £30m (2020 and 2019),

£31m (2018 and 2017), £14m (2016) and £17m (2015).

178

LANDSEC ANNUAL REPORT 2024 179ADDITIONAL INFORMATION

SUBSIDIARIES, JOINT VENTURES AND ASSOCIATES

As at 31 March 2024, the Company had

a 100% interest, direct or indirect, in the

ordinary share capital of the following

subsidiaries, all of which are registered in the

UK at 100 Victoria Street, London, SW1E 5JL,

except for entities with a footnote indicating

their country of registration and address.

B.M. COM. Lease Extension LLP

Barrack Close Limited

Beyond Green Developments (Broadland)

Limited

Birmingham International Park Limited

Blueco Limited

Bluewater Outer Area Limited

Bluewater Two 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

Dashwood House Limited

Deadhare 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 (Nailsea) Limited

Development Securities (No. 22) Limited

Development Securities (Romford) Limited

Development Securities (Sevenoaks) Limited

Development Securities (Slough) Limited

Development Securities Estates Limited

DS Investment Properties LLP

DS Jersey (Capital Partners) Limited

DS Jersey (Notting Hill) Limited

DS Renewables LLP

DS Robswall Ireland (Residential) Limited

ECC Investments Limited

Elystan Developments Limited

EPD Buckshaw Village Limited

Furlong Shopping Centre Limited

Greenhithe Holdings Limited

Greenhithe Investments Limited

Greenwitch Limited

Gunwharf Quays Limited

HDD Didcot Limited

HDD Lawley Village Limited

HDD Newton Leys Limited

Hendy Wind Farm Limited

Kent Retail Investments Limited

Kingsland Shopping Centre Limited

L.& P. Estates Limited

Land Securities (Finance) Limited

Land Securities Buchanan Street

Developments Limited

Land Securities Capital Markets PLC

Land Securities Development Limited

Land Securities Ebbsfleet 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 1 Limited

Landsec 2 Limited

Landsec 3 Limited

Landsec 4 Limited

Landsec 5 Limited

Landsec 6 Limited

Landsec 7 Limited

Landsec 8 Limited

Landsec 9 Limited

Landsec 10 Limited

Company name Company name

LANDSEC ANNUAL REPORT 2024ADDITIONAL INFORMATION

SUBSIDIARIES, JOINT VENTURES AND ASSOCIATES

CONTINUED

Landsec 11 Limited

Landsec 12 Limited

23,10

Landsec 13 Limited

Landsec 14 Limited

Landsec 15 Limited

Landsec 16 Limited

Landsec 17 Limited

Landsec 18 Limited

Landsec 19 Limited

Landsec 20 Limited

Landsec 21 Limited

32,10

Landsec 22 Limited

Landsec 23 Limited

Landsec Investment Services Limited

Landsec Limited

Landsec U and I Developer Limited

35,10

Landsec Workplace Developer Limited

37,10

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 (Jaguar) GP Investments Limited

LS 1 New Street Square Developer Limited

LS 1 Sherwood Street Developer Limited

LS 1 Sherwood Street Limited

LS 123 Victoria Street Limited

LS 21 Moorfields 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 Bluewater Investments Limited

LS Bracknell Limited

LS Braintree Limited

LS Buchanan Limited

LS Canterbury Limited

LS Cardiff (GP) Investments 2 Limited

LS Cardiff (GP) Investments Limited

LS Cardiff 2 Limited

LS Cardiff Holdings Limited

LS Cardiff Limited

LS Cardinal Limited

LS Chadwell Heath Limited

LS Chesterfield Limited

LS City Gate House Limited

LS Company 31 Limited

LS Company 32 Limited

LS Company 33 Limited

LS Company 34 Limited

LS Company 35 Limited

LS Company 36 Limited

LS Company 37 Limited

LS Company 38 Limited

LS Company 39 Limited

LS Company Secretaries Limited

LS Development Holdings 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 Great North Finchley Limited

LS Gunwharf Limited

LS Harrogate 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 Liverpool 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 MYO St Pauls Limited

LS MYO The Forge 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

LS One New Change Limited

LS Oval 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 Regent Quarter Limited

LS Regent Quarter Residential Limited

42,10

LS Retail Warehouses Limited

LS Rome 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 Workplace Managed Services Limited

41,10

Company name Company name Company name

180

LANDSEC ANNUAL REPORT 2024 181ADDITIONAL INFORMATION

LS Xscape Castleford Limited

LS Xscape Milton Keynes Limited

LS Zig Zag Limited

Luneside East Limited

Mayfield Medlock Limited

Mayfield Poulton Limited

Mayfield Republic Limited

Njord Wind Developments Limited

Nova Developer Limited

Oriana GP Limited

OSB (Holdco 1) Limited

OSB (Holdco 2) Limited

Oxford Castle Apartments Limited

Percy Place DS (Ireland) Limited

Prime London Net Zero Office GP Limited

Prime London Net Zero Office LP

Prime London Net Zero Office REIT Limited

Public Private Partnership (H) Limited

Purplexed LLP

Ravenseft Properties Limited

Retail Property Holdings Trust Limited

Rhoscrowther Wind Farm Limited

Rivella Properties Bicester Limited

Rosefarm Leisure Limited

St David’s (Cardiff 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

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

The X-Leisure Unit Trust

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 Limited

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

8,10

U and I PPP Limited

Westminster Trust Limited(The)

Willett Developments 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. C/O William Fry, 2 Grand Canal Square, Dublin 2,

Ireland, D02 A342.

3. C/O James Cowper Kreston The White Building,

1-4 Cumberland Place, Southampton, SO15 2NP.

4. Fifth Floor, 37 Esplanade, St. Helier, JE1 2TR, Jersey.

5. 44 Esplanade, St Helier, JE4 9WG, Jersey.

6. IFC 5, St Helier, JE1 1ST, Jersey.

7. Prins Bernhardplein 200, 1097 JB Amsterdam, PO Box

990, 1000 AZ Amsterdam, Netherlands.

8. 85 Great Portland Street, First Floor, London, England,

W1W 7LT.

9. Dorey Court, Admiral Park, St Peter Port, Guernsey,

GY1 4AT.

10. Exempt from the requirement of the Companies Act

2006 (the Act) relating to the audit of individual

accounts by virtue of Section 479A of the Act.

11. The name of this company was changed to LS

Bluewater Investments Limited on 30 September

2023.

12. The name of this company was changed to Landsec 1

Limited on 30 June 2023.

13. The name of this company was changed to Landsec 2

Limited on 5 July 2023.

14. The name of this company was changed to Landsec 3

Limited on 5 July 2023.

15. The name of this company was changed to Landsec 4

Limited on 30 June 2023.

16. The name of this company was changed to Landsec 5

Limited on 30 June 2023.

17. The name of this company was changed to Landsec 6

Limited on 30 June 2023.

18. The name of this company was changed to Landsec 7

Limited on 5 July 2023.

19. The name of this company was changed to Landsec 8

Limited on 5 July 2023.

20. The name of this company was changed to Landsec 9

Limited on 5 July 2023.

21. The name of this company was changed to Landsec 10

Limited on 5 July 2023.

22. The name of this company was changed to Landsec 11

Limited on 5 July 2023.

23. The name of this company was changed to Landsec 12

Limited on 5 July 2023.

24. The name of this company was changed to Landsec 13

Limited on 5 July 2023.

25. The name of this company was changed to Landsec 14

Limited on 5 July 2023.

26. The name of this company was changed to Landsec 15

Limited on 5 July 2023.

27. The name of this company was changed to Landsec 16

Limited on 5 July 2023.

28. The name of this company was changed to Landsec 17

Limited on 5 July 2023.

29. The name of this company was changed to Landsec 18

Limited on 5 July 2023.

30. The name of this company was changed to Landsec 19

Limited on 5 July 2023.

31. The name of this company was changed to Landsec 20

Limited on 6 July 2023.

32. The name of this company was changed to Landsec 21

Limited on 5 July 2023.

33. The name of this company was changed to Landsec 22

Limited on 5 July 2023.

34. The name of this company was changed to Landsec 23

Limited on 5 July 2023.

35. The name of this company was changed to Landsec U

and I Developer Limited on 27 May 2023.

36. The name of this company was changed to Landsec

Investment Services Limited on 21 June 2023.

37. The name of this company was changed to Landsec

Workplace Developer Limited on 22 June 2023.

38. The name of this company was changed to LS MYO

The Forge Limited on 29 August 2023.

39. The name of this company was changed to LS MYO

StPauls Limited on 21 November 2023.

40. The name of this company was changed to LS

Liverpool Limited on 30 November 2023.

41. The name of this company was changed to LS

Workplace Managed Services Limited on 6 May 2023.

42. The name of this company was changed to LS Regent

Quarter Residential Limited on 31 January 2024.

43. The name of this company was changed to LS Regent

Quarter Limited on 29 August 2023.

44. The name of this company was changed to LS Rome

Limited on 21 June 2023.

45. The name of this company was changed to Prime

London Net Zero Office GP Limited on 30 November

2023.

46. The name of this company was changed to Prime

London Net Zero Office REIT Limited on 30 November

2023.

47. The name of this company was changed to U and I

Finance Limited on 14 March 2024.

Company name Company name

LANDSEC ANNUAL REPORT 2024ADDITIONAL INFORMATION

SUBSIDIARIES, JOINT VENTURES AND ASSOCIATES

CONTINUED

As at 31 March 2024, the Company had

an interest (as shown), direct or indirect,

in theordinary share capital of the following

subsidiaries, joint ventures and associates.

Allentities included below are registered

inthe UK at 100 Victoria Street, London,

SW1E 5JL, except for entities with a footnote

indicating their country of registration and

address. Where the Group share of ordinary

share capital is from 75% to 100%, these

entities are subsidiaries of the Company.

Where the share of ordinary share capital

isfrom 50% to 74%, these entities are joint

venture interests based on contractually

agreed sharing of control with joint venture

partners. All other holdings are associate

interests.

Bluewater REIT 75%

Cathedral (Movement Greenwich) LLP 53%

CDSR Burlington House Developments

Limited

20%

Central Research Laboratory (Hayes)

Limited

50%

Circus Street Developments Limited 50%

Curzon Park Limited 50%

Ebbsfleet Investment (GP) Limited 50%

Ebbsfleet Nominee No.1 Limited 50%

Harvest 2 GP Limited 50%

Harvest 2 Limited Partnership 50%

Harvest 2 Selly Oak Limited 50%

Harvest Development Management

Limited

50%

Harvest GP Limited 50%

Heart of Slough Management

Company Limited

67%

Kensington & Edinburgh Estates

(SouthWoodham Ferrers) Limited

50%

Landmark Court Partnership Limited 51%

Mayfield Development (General

Partner) Limited

50%

Mayfield Development Partnership LP 50%

Minevote Public Limited Company 50%

Northpoint (No.4) Limited 42%

Northpoint CH Limited 42%

Northpoint Developments Limited 42%

Northpoint KC Limited 42%

Nova Business Manager Limited 50%

Nova Estate Management Company

Limited

64%

Nova GP Limited 50%

Nova Limited Partnership 50%

Nova Nominee 1 Limited 50%

Nova Nominee 2 Limited 50%

NOVA Residential (GP) Limited 50%

NOVA Residential Intermediate Limited 50%

NOVA Residential Limited Partnership 50%

Opportunities for Sittingbourne

Limited

50%

Peel Holdings (Media) 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 Slough Limited

50%

Schofield 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 Ebbsfleet Limited Partnership 50%

TLD (Landmark Court) Limited 99%

TLD Kidbrooke LLP 50%

Triangle London Developments LLP 50%

Victoria Circle Developer Limited 50%

West India Quay Limited 50%

West India Quay Management

Company Limited

50%

Westgate Oxford Alliance GP Limited 50%

Westgate Oxford Alliance Limited

Partnership

50%

Westgate Oxford Alliance Nominee

No.1 Limited

50%

Westgate Oxford Alliance Nominee

No.2 Limited

50%

White Lion Walk Limited

50%

YC Shepherds Bush (Market) Limited 25%

YC Shepherds Bush Limited 14%

Company name Group share % Company name Group share %

182

LANDSEC ANNUAL REPORT 2024 183ADDITIONAL INFORMATION

399 Edgware Road 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

Unit Trusts Group share %

Regent Quarter Unit Trust 100%

Trematon Property Unit Trust 100%

West India Quay Unit Trust 50%

Xscape Castleford Property Unit Trust

100%

Xscape Milton Keynes Property

Unit Trust

100%

1. The name of this company was changed to

Plus X Slough Limited on 2 June 2023.

2. 26 New Street, St Helier, JE2 3RA, Jersey.

3. Venus Building 1 Old Park Lane, Trafford City,

Manchester, England, M41 7HA.

4. 85 Great Portland Street, First Floor, London,

England, W1W 7LT.

5. Ground Floor T3 Trinity Park, Bickenhall Lane,

Birmingham.

6. IFC 5, St Helier, JE1 1ST, Jersey.

7. C/O William Fry, 2 Grand Canal Square, Dublin 2,

Ireland, D02 A342.

Limited by guarantee Group share %

LANDSEC ANNUAL REPORT 2024ADDITIONAL INFORMATION

SHAREHOLDER INFORMATION

FINANCIAL CALENDAR

TABLE 80

2024

Annual General Meeting

11 July

Final dividend payment date

26 July

1. The Annual General Meeting is scheduled to be held at 2:30pm on Thursday 11 July

2024 at 80 Victoria Street, London SW1E 5JL. For further details, please see the Notice

of Meeting which can be found on the Company’s website: landsec.com/agm.

2. The Board has recommended a final dividend of 12.1 pence per ordinary share,

payable wholly as a Property Income Distribution, subject to shareholder approval.

SHARE REGISTER ANALYSIS AS AT 31 MARCH 2024

TABLE 81

Holding range:

Number

of holders

% of

holdings

Number

of shares

% of

1–1,000 5,707 67.23 2,008,874 0.27

1,001–5,000 1,649 19.43 3,360,315 0.45

5,001–10,000 260 3.06 1,807,800 0.24

10,001–50,000 344 4.05 8,465,121 1.13

50,001–100,000 131 1.54 9,424,087 1.25

100,001–500,000 201 2.37 47,272,123 6.28

500,001–highest

197 2.32 679,338,337 90.38

Total 8,489 100 751,676,657 100

SHARE REGISTER ANALYSIS AS AT 31 MARCH 2024

TABLE 82

Held by:

Number of

holders

% of

holders

within Type Balance

% Issued

Capital

Private shareholders 7,199 84.80 7,475,231 0.99

Nominee and

institutional investors

1,290 15.20 744,201,426 99.01

Total 8,489 100 751,676,657 100

1. Including 6,789,236 shares held in treasury by the Company.

ORDINARY SHARES

The Company’s Annual Report, results announcements and

presentations are available to view and download from its website:

landsec.com/investors.

The website also includes information about the latest Landsec

shareprice and dividend information, news about the Company, its

properties, and operations, and how to obtain further information.

REGISTRAR: EQUINITI

Our Registrar, Equiniti, can assist with queries regarding administration

of shareholdings, such as bank account payment details, dividends,

lost share certificates, change of address or personal details,

and amalgamation of accounts. You can contact Equiniti at

shareview.co.uk.

ELECTRONIC COMMUNICATIONS

We encourage shareholders to consider receiving their communications

from the Company electronically. This will enable you to receive

such communications more quickly and securely, whilst supporting

Landsec’ssustainability commitment by communicating in a more

environmentally friendly and cost-effective manner. Registration for

electronic communications is available via our website on the investor

page or on shareview.co.uk.

PAYMENT OF DIVIDENDS TO UK

RESIDENT SHAREHOLDERS

Dividend payments by cheque ceased from October 2020 and

allshareholders are now required to have their dividends paid

directlyinto their personal bank or building society account or

alternatively sign up to our Dividend Reinvestment Plan (see below).

Under this arrangement, dividend confirmations are still sent

to your registered address.

Shareholders who have not already done so should contact the

Registrar (Equiniti) or complete a mandate instruction available on

our website landsec.com/investorsshareholders-equity-investors/

dividend-information

and return it to the Registrar. Alternatively,

these details can be sent via their Equiniti Shareview online account,

which is available on our website on the investors page under

shareholders or directly at Equiniti:

shareview.co.uk.

Further information on UK REITs and the forms required to be

completed to apply for PIDs to be paid gross are available on

the Landsec website or from the Registrar: landsec.com/

investorsshareholders-equity-investors/uk-reit-regime-and-

dividends.

PAYMENT OF DIVIDENDS TO NON-UK

RESIDENTSHAREHOLDERS

As applicable to UK resident shareholders, dividend payments by

cheque ceased from October 2020 and all shareholders are now

required to have their dividends paid directly into their personal bank

or building society account. Payments to overseas accounts are

possible via the Equiniti Overseas Payment Service (OPS) provided

byCitibank. Payments via the OPS are made a few days after the

Company’s dividend payment date – charges are applicable (please

review the terms and conditions available online at shareview.co.uk

for further information).

Shareholders who have not already done so are encouraged to

contact the Registrar (Equiniti) on +44 (0)371 384 2030 for an

Overseas Payment Service application form or to download the

form for their given currency online at shareview.co.uk.

DIVIDEND REINVESTMENT PLAN (DRIP)

The DRIP provides shareholders with the opportunity to use cash

dividends to increase their shareholding in Landsec. It is a convenient

and cost-effective facility provided by Equiniti Financial Services

Limited. Under the DRIP, cash dividends are automatically used to

purchase shares in the market as soon as possible after the dividend

payment. Any residual cash will be carried forward to the next

dividend payment.

Details of the DRIP, including terms and conditions and participation

election forms, are available on our website:

landsec.com/

investorsshareholders-equity-investors/dividend-reinvestment-

plan-drip

184

LANDSEC ANNUAL REPORT 2024 185ADDITIONAL INFORMATION

SHARE DEALING FACILITIES

Equiniti provides both existing and prospective UK shareholders

withan easy to access and simple-to-use share dealing facility for

buying and selling Landsec shares online, by telephone, or post.

Theonline and telephone dealing service allows shareholders to trade

‘real-time’ at a known price that will be given to them at the time

they give their instruction.

For telephone dealing, call +44 (0)345 603 7037¹ between 8.00am

and4.30pm, Monday to Friday (excluding public holidays in England

and Wales). Calls are charged at the standard geographic rate and

will vary by provider. Calls outside the UK will be charged at the

applicable international rate. For online dealing, access is available

atEquiniti’s website:

shareview.co.uk/dealing. For postal dealing,

call+44 (0)371 384 2030¹ to request full details and a dealing

instruction form. Existing shareholders will need to provide the

account/shareholder reference number shown on their share

certificate. Other brokers, banks and building societies also offer

similar share dealing facilities.

SHAREGIFT

Shareholders with a small number of shares, the value of which

wouldmake them uneconomic to sell, may wish to consider

donatingthem to a charity through ShareGift, a registered charity

(No. 1052686) which specialises in using such holdings for charitable

benefit. A ShareGift donation form can be obtained from the

Registrar. Further information about ShareGift is available at:

sharegift.org or help@sharegift.org (Telephone: +44 (0)20 7930 3737)

and postal address: ShareGift 6th Floor, 2 London Wall Place,

LondonEC2Y 5AU.

CAPITAL GAINS TAX

Further details on UK tax on gains on a sale of Landsec shares can be

found on our website: landsec.com/investorsshareholders-equity-

investors/uk-tax-gains-sale-landsec-shares.

DATA PROTECTION

A copy of the Shareholder Privacy Notice can be found on our

website: landsec.com/policies/privacy-policy/shareholders.

SHAREHOLDER SECURITY

Landsec is required by law to make its share register available on

request to other organisations. This may result in the receipt of

unsolicited mail. To limit this, shareholders may register with the

Mailing Preference Service. For more information, or to register,

visitmpsonline.org.uk. Shareholders are also advised to be vigilant

inregard to share fraud which includes telephone calls offering free

investment advice or offers to buy and sell shares at discounted or

highly inflated prices. Further information can be found on the

Financial Conduct Authority’s website fca.org.uk/scams or by calling

the FCA Consumer Helpline on 0800 111 6768.

LANDSEC ANNUAL REPORT 2024ADDITIONAL INFORMATION

KEY CONTACTS AND ADVISERS

REGISTERED OFFICE AND PRINCIPAL UK ADDRESS

Land Securities Group PLC

100 Victoria Street

London SW1E 5JL

Registered in England and Wales

Company No. 4369054

Telephone: +44 (0)20 7413 9000

landsec.com

COMPANY SECRETARY

Marina Thomas

Company Secretary

shareholderenquiries@landsec.com

INVESTOR RELATIONS

Edward Thacker

Head of Investor Relations

enquiries@landsec.com

REGISTRAR

Equiniti

Aspect House

Spencer Road

Lancing

West Sussex BN99 6DA

Telephone: +44 (0)371 384 2128

If calling from outside the UK, please ensure the country code is used.

For deaf and speech impaired customers, Equiniti welcome calls via

Relay UK. Please see relayuk.bt.com for more information.

shareview.co.uk

AUDITOR

Ernst & Young LLP

1 More London Place

London SE1 2AF

Telephone: +44 (0)20 7951 2000

ey.com

EXTERNAL ADVISERS

Principal valuers: CBRE and JLL

Financial advisers: UBS, Robey Warshaw

Solicitors: Slaughter and May

Brokers: UBS, Deutsche Numis, Barclays

186

LANDSEC ANNUAL REPORT 2024 187ADDITIONAL INFORMATION

Adjusted net cash inflow from operating activities

Net cash inflow from operating activities including the

Group’s share of our joint ventures’ net cash inflow from

operating activities.

Adjusted net debt

Net debt excluding cumulative fair value movements on

interest-rate swaps and amounts payable under head

leases. It generally includes the net debt of subsidiaries

and joint ventures on a proportionate basis.

Book value

The amount at which assets and liabilities are reported

in the financial statements.

Combined Portfolio

The Combined Portfolio comprises the investment

properties of the Group’s subsidiaries, on a

proportionately consolidated basis when not wholly

owned, together with our share of investment

properties held in our joint ventures.

Developments/development pipeline

Development pipeline consists of future developments,

committed developments, projects under construction

and developments which have reached practical

completion within the last two years but are not yet

95% let.

Development gross yield on total development cost

Gross ERV, before adjustment for lease incentives,

divided by total development cost. Gross ERV reflects

Landsec’s or the valuer’s view of expected ERV at

completion of the scheme.

EPRA earnings

Profit before tax, excluding profits on the sale of

non-current assets and trading properties, profits

on development contracts, valuation movements,

fair value movements on interest-rate swaps and

similar instruments used for hedging purposes, debt

restructuring charges, and any other items of an

exceptional nature.

EPRA loan-to-value (LTV)

Ratio of adjusted net debt, including net payables,

to the sum of the net assets, including net receivables,

of the Group, its subsidiaries and joint ventures, all on

a proportionate basis, expressed as a percentage.

The calculation includes trading properties at fair

value and debt at nominal value.

EPRA net disposal value (NDV) per share

Diluted net assets per share adjusted to remove the

impact of goodwill arising as a result of deferred tax,

and to include the difference between the fair value and

the book value of the net investment in tenant finance

leases and fixed interest rate debt.

EPRA net initial yield

EPRA net initial yield is defined within EPRA’s Best

Practice Recommendations as the annualised rental

income based on the cash rents passing at the balance

sheet date, less non-recoverable property operating

expenses, divided by the gross market value of the

property. It is consistent with the net initial yield

calculated by the Group’s external valuer.

EPRA Net Reinstatement Value (NRV) per share

Diluted net assets per share adjusted to remove the

cumulative fair value movements on interest-rate swaps

and similar instruments, the carrying value of deferred

tax on intangible assets and to include the difference

between the fair value and the book value of the net

investment in tenant finance leases and add back

purchasers’ costs.

EPRA Net Tangible Assets (NTA) per share

Diluted net assets per share adjusted to remove the

cumulative fair value movements on interest-rate swaps

and similar instruments, the carrying value of goodwill

arising as a result of deferred tax and other intangible

assets, deferred tax on intangible assets and to include

the difference between the fair value and the book

value of the net investment in tenant finance leases.

Equivalent yield

Calculated by the Group’s external valuer, equivalent

yield is the internal rate of return from an investment

property, based on the gross outlays for the purchase

of a property (including purchase costs), reflecting

reversions to current market rent and such items as voids

and non-recoverable expenditure but ignoring future

changes in capital value. The calculation assumes rent

is received annually in arrears.

ERV – Gross estimated rental value

The estimated market rental value of lettable space as

determined biannually by the Group’s external valuer. For

investment properties in the development programme,

which have not yet reached practical completion, the

ERV represents management’s view of market rents.

Gearing

Total borrowings, including bank overdrafts, less

short-term deposits, corporate bonds and cash, at book

value, plus cumulative fair value movements on financial

derivatives as a percentage of total equity. For adjusted

gearing, see note 21.

Gross market value

Market value plus assumed usual purchaser’s costs at

the reporting date.

Interest Cover Ratio (ICR)

A calculation of a company’s ability to meet its interest

payments on outstanding debt. It is calculated using

EPRA earnings before interest, divided by net interest

(excluding the mark-to-market movement on interest-

rate swaps, foreign exchange swaps, capitalised interest

and interest on the pension scheme assets and liabilities).

The calculation excludes joint ventures.

Investment portfolio

The investment portfolio comprises the investment

properties of the Group’s subsidiaries on a proportionately

consolidated basis where not wholly owned.

Lease incentives

Any incentive offered to occupiers to enter into a lease.

Typically, the incentive will be an initial rent-free period,

or a cash contribution to fit-out or similar costs. For

accounting purposes, the value of the incentive is spread

over the non-cancellable life of the lease.

Like-for-like portfolio

The like-for-like portfolio includes all properties which

have been in the portfolio since 1 April 2021 but excluding

those which are acquired or sold since that date.

Properties in the development pipeline and completed

developments are also excluded.

Loan-to-value (LTV)

Group LTV is the ratio of adjusted net debt, including

subsidiaries and joint ventures, to the sum of the market

value of investment properties and the book value of

trading properties of the Group, its subsidiaries and joint

ventures, all on a proportionate basis, expressed as a

percentage. For the Security Group, LTV is the ratio of

net debt lent to the Security Group divided by the value

of secured assets.

Market v

alue

Market value is determined by the Group’s external

valuer, in accordance with the RICS Valuation Standards,

as an opinion of the estimated amount for which

a property should exchange on the date of valuation

between a willing buyer and a willing seller in an

arm’s-length transaction after proper marketing.

Net initial yield

Net initial yield is a calculation by the Group’s external

valuer of the yield that would be received by a purchaser,

based on the Estimated Net Rental Income expressed

as a percentage of the acquisition cost, being the market

value plus assumed usual purchasers’ costs at the

reporting date. The calculation is in line with EPRA

guidance. Estimated Net Rental Income is determined

by the valuer and is based on the passing cash rent

less rent payable at the balance sheet date, estimated

non-recoverable outgoings and void costs including

service charges, insurance costs and void rates.

Net rental income

Net rental income is the net operational income arising

from properties, on an accruals basis, including rental

income, finance lease interest, rents payable, service

charge income and expense, other property related

income, direct property expenditure and bad debts.

Net rental income is presented on a proportionate basis.

Net zero carbon building

A building for which an overall balance has been achieved

between carbon emissions produced and those taken out

of the atmosphere, including via offset arrangements.

This relates to operational emissions for all buildings

while, for a new building, it also includes supply-chain

emissions associated with its construction.

Passing rent

The estimated annual rent receivable as at the reporting

date which includes estimates of turnover rent and

estimates of rent to be agreed in respect of outstanding

rent review or lease renewal negotiations. Passing rent

may be more or less than the ERV (see over-rented,

reversionary and ERV). Passing rent excludes annual rent

receivable from units in administration save to the extent

that rents are expected to be received. Void units at

the reporting date are deemed to have no passing rent.

Although temporary lets of less than 12 months are

treated as void, income from temporary lets is included

in passing rents.

Property Income Distribution (PID)

A PID is a distribution by a REIT to its shareholders paid

out of qualifying profits. A REIT is required to distribute

at least 90% of its qualifying profits as a PID to its

shareholders.

GLOSSARY

LANDSEC ANNUAL REPORT 2024ADDITIONAL INFORMATION

GLOSSARY

CONTINUED

Rental income

Rental income is as reported in the income statement,

on an accruals basis, and adjusted for the spreading

of lease incentives over the term certain of the lease in

accordance with IFRS 16 (previously, SIC-15). It is stated

gross, prior to the deduction of ground rents and without

deduction for operational outgoings on car park and

commercialisation activities.

Reversionary or under-rented

Space where the passing rent is below the ERV.

Reversionary yield

The anticipated yield to which the initial yield will rise

(or fall) once the rent reaches the ERV.

Security Group

Security Group is the principal funding vehicle for the

Group and properties held in the Security Group are

mortgaged for the benefit of lenders. It has the flexibility

to raise a variety of different forms of finance.

Topped-up net initial yield

Topped-up net initial yield is a calculation by the Group’s

external valuer. It is calculated by making an adjustment

to net initial yield in respect of the annualised cash rent

foregone through unexpired rent-free periods and other

lease incentives. The calculation is consistent with EPRA

guidance.

Total return on equity

Dividend paid per share in the year plus the change in

EPRA Net Tangible Assets per share, divided by EPRA Net

Tangible Assets per share at the beginning of the year.

Total cost ratio

Total cost ratio represents all costs included within EPRA

earnings, other than rents payable, financing costs and

provisions for bad and doubtful debts, expressed as a

percentage of gross rental income before rents payable

adjusted for costs recovered through rents but not

separately invoiced.

Total development cost (TDC)

Total development cost refers to the book value of the

site at the commencement of the project, the estimated

capital expenditure required to develop the scheme from

the start of the financial year in which the property is

added to our development programme, together with

capitalised interest, being the Group’s borrowing costs

associated with direct expenditure on the property under

development. Interest is also capitalised on the purchase

cost of land or property where it is acquired specifically

for redevelopment. The TDC for trading property

development schemes excludes any estimated tax

on disposal.

Trading properties

Properties held for trading purposes and shown as

current assets in the balance sheet.

Vacancy rates

Vacancy rates are expressed as a percentage of ERV and

represent all unlet space, including vacant properties

where refurbishment work is being carried out and

vacancy in respect of pre-development properties, unless

the scale of refurbishment is such that the property is not

deemed lettable. The screen at Piccadilly Lights, W1 is

excluded from the vacancy rate calculation as it will

always carry advertising although the number and

duration of our agreements with advertisers will vary.

Valuation surplus/deficit

The valuation surplus/deficit represents the increase or

decrease in the market value of the Combined Portfolio,

adjusted for net investment and the effect of accounting

for lease incentives under IFRS 16 (previously SIC-15). The

market value of the Combined Portfolio is determined

by the Group’s external valuer.

Voids

Voids are expressed as a percentage of ERV and represent

all unlet space, including voids where refurbishment

work is being carried out and voids in respect of

pre-development properties. Temporary lettings for

a period of one year or less are also treated as voids.

The screen at Piccadilly Lights, W1 is excluded from

the void calculation as it will always carry advertising

although the number and duration of our agreements

with advertisers will vary. Commercialisation lettings

are also excluded from the void calculation.

Weighted average unexpired lease term

The weighted average of the unexpired term of all leases

other than short-term lettings such as car parks and

advertising hoardings, temporary lettings of less than

one year, residential leases and long ground leases.

188

This Annual Report and Landsec’s website may contain certain

‘forward-looking statements’ with respect to Land Securities Group

PLC (the Company) and the Group’s financial condition, results of its

operations and business, and certain plans, strategy, objectives, goals

and expectations with respect to these items and the economies and

markets in which the Group operates. All statements other than

statements of historical fact are, or may be deemed to be, forward-

looking statements. Forward-looking statements are sometimes,

but not always, identified by their use of a date in the future or such

words as ‘anticipates’, ‘aims’, ‘ambition’, ‘milestones’, ‘objectives’,

‘outlook’, ‘plan’, ‘probably’, ‘project’, ‘risks’, ‘schedule’, ‘seek’, ‘due’,

‘could’, ‘may’, ‘should’, ‘expects’, ‘believes’, ‘intends’, ‘plans’, ‘targets’,

‘goal’ or ‘estimates’ or, in each case, their negative or other variations

or comparable terminology. Forward-looking statements are not

guarantees of future performance. By their very nature forward-

looking statements are inherently unpredictable, speculative and

involve risk and uncertainty because they relate to events and

depend on circumstances that will occur in the future. Many of

these assumptions, risks and uncertainties relate to factors that

are beyond the Group’s ability to control or estimate precisely. There

are a number of such factors that could cause actual results and

developments to differ materially from those expressed or implied by

these forward-looking statements. These factors include, but are not

limited to, changes in the political conditions, economies and markets

in which the Group operates; changes in the legal, regulatory and

competition frameworks in which the Group operates; changes in

the markets from which the Group raises finance; the impact of legal

or other proceedings against or which affect the Group; changes

in accounting practices and interpretation of accounting standards

under IFRS, and changes in interest and exchange rates.

Any forward-looking statements made in this Annual Report or

Landsec’s website, or made subsequently, which are attributable

to the Company or any other member of the Group, or persons

acting on their behalf, are expressly qualified in their entirety by

the factors referred to above. Each forward-looking statement

speaks only as of the date it is made. Except as required by its

legal or statutory obligations, the Company does not intend to

update any forward-looking statements.

Nothing contained in this Annual Report or Landsec’s website

should be construed as a profit forecast or an invitation to deal

in the securities of the Company.

CAUTIONARY STATEMENT

LAND SECURITIES GROUP PLC

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 certified in

accordance with the FSC

(Forest Stewardship

Council

) and is recyclable and acid-free.

Pureprint Ltd is FSC certified and ISO 14001

certified 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

effect 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

Head Office

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