LANDSEC
ANNUAL REPORT 2021
Landsec // Annual Report 2021 » Strategic Report
Resilient and responsive
In 2020/21, the global pandemic caused extraordinary upheaval and changed our world, probably forever. It had a significant impact on our business, our customers, and our other stakeholders.
However, we took a proactive and responsible approach to the challenges, establishing business resilience by staying true to our purpose. We remained responsive and supportive to all our customers and communities.
But looking ahead...
...we see opportunities. People will still work, shop, play, live life. The spaces we create are forward-looking, bright, airy, safe and healthy
- built with these essential activities in mind. With our scale, experience, skills and portfolio, we can help shape the new landscape.
More than that, we have a positive purpose as an ambition. We believe it will attract more customers, talented people, valued partners.
With this as its foundation, our new strategy aims to grow value for Landsec and all our stakeholders. And, full circle, the more we grow, the closer we will come to truly achieving our purpose.
In this way we will grow, with purpose.
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CONTENTS
STRATEGIC REPORT
02 Responding to the present, planning for the future
06 Chairman's statement
- Chief Executive's statement
- Our market
- Our stakeholders
- Our business model
- Our strategy for growth
- Our strategy: summary
- Key performance indicators
- Our culture
- Operating and portfolio review
- Financial review
- Our approach to sustainability
- Social review
- Environmental review
- Managing risk
- Our principal risks and uncertainties
- Going concern and viability
- Non-financialinformation statement
GOVERNANCE
- Introduction from the Chairman
- Board of Directors
- Executive Leadership Team
- Our governance structure
- Board activities
- The Board and our stakeholders
- Our investors
- Governance and culture
- Introduction from the Chairman of the Nomination Committee
- Report of the Nomination Committee
- Introduction from the Chairman of the Audit Committee
- Report of the Audit Committee
- Directors' Remuneration Report - Chairman's Annual Statement
- Remuneration at a glance
- Annual Report on Remuneration
- Directors' Remuneration Policy
- Directors' Report
FINANCIAL STATEMENTS
145 Statement of Directors' Responsibilities
146 Independent Auditor's Report
154 Income statement
154 Statement of comprehensive income
155 Balance sheets
156 Statements of changes in equity
- Statement of cash flows
- Notes to the financial statements
ADDITIONAL INFORMATION
205 Business analysis - EPRA disclosures
210 Business analysis - Group
214 Business analysis - Central London
- Business analysis - Regional retail
- Business analysis - Urban opportunities
- Business analysis - Subscale sectors
- Sustainability performance
224 Combined Portfolio analysis
226 Lease lengths
226 Development pipeline
227 Alternative performance measures
228 Reconciliation of segmental information note to statutory reporting
230 Ten year summary
232 Subsidiaries, joint ventures and associates
235 Shareholder information
238 Key contacts and advisers
239 Glossary
IBC Cautionary statement
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 PORTFOLIO
CENTRAL LONDON
This includes all of our assets in central London where we have a high-quality,best-in-class portfolio comprising offices, retail and Piccadilly Lights.
£7.3bn
Valuation
6.2m sq ft
Floorspace
REGIONAL RETAIL | URBAN OPPORTUNITIES |
Not all parts of the retail sector | Assets within our portfolio, or |
are the same. Our portfolio of | potential investments, that can |
regional shopping centres and | provide a blank canvas for new, |
outlets includes some of the | balanced mixed-use communities |
most attractive retail in the UK. | in suburban London or other major |
UK cities. |
£1.8bn | £0.4bn |
Valuation | Valuation |
8.1m sq ft | 1.8m sq ft |
Floorspace | Floorspace |
Read more on pages 36-45
SUBSCALE SECTORS
This category includes our leisure, hotels and retail parks. Good businesses fundamentally, but sectors where we have little scale or competitive advantage.
£1.3bn
Valuation
7.4m sq ft
Floorspace
Landsec // Annual Report 2021 » Strategic Report
OUR PERFORMANCE | 2020 | 2021 | |||||||||
VALUATION | REVENUE PROFIT | GROUP LOAN-TO-VALUE | |||||||||
% | |||||||||||
.2 | |||||||||||
2 | |||||||||||
3 | |||||||||||
% | |||||||||||
.7 | |||||||||||
0 | |||||||||||
3 | |||||||||||
£12.8bn £10.8bn | £414m | £251m | |||||||||
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Page 2
Responding to the present, planning for the future
The past year brought unprecedented challenges for everyone. In response, we focused on two clear outcomes. The first was to do everything we could to ensure Landsec emerged from Covid-19 in as strong a position as possible.
Landsec // Annual Report 2021 » Strategic Report
The second was to re-examine the purpose, strategy and culture that will position us to achieve growth and make the most of Landsec's undoubted potential. Here we describe what we did in these two areas of focus.
A global pandemic may not seem the best time to reconsider strategy, but Covid-19 has accelerated trends in retail and offices that otherwise may have taken many years to play out. We have formed a strategy that responds to these trends, and we have already started to implement it.
But while we planned for the future at Landsec, we also focused on the present challenges of Covid-19. Our response for our customers was rapid, flexible and always with safety at its heart. Inevitably, the impact on our customers and our business was still significant. Our like-for-like net rental income was down 30.4% and revenue profit was 39.4% lower at £251m. However, the action we have taken means our business remains healthy, we have retained strong relationships with our customers, and have a clear strategy for growth.
OUR RESPONSE TO COVID-19
1 OUR CUSTOMERS
We were in regular contact with our customers to support them through the pandemic. We provided information packs and advice on how to establish safe working environments, and we explained what we would do to ensure our assets were Covid-secure. At each phase of lockdown and subsequent easing of restrictions, we worked with our customers to help them respond and operate in a safe and effective way.
In early April 2020, we established a customer support fund of £80m for occupiers who most needed our help to survive. To date,
we have agreed £42m of rent concessions for customers. In other cases, we allowed some customers to pay their rent monthly to help with cash flow, or deferred payment to a later date.
2 OUR PEOPLE
The health and wellbeing of our people remains our priority. Communication is crucial,
so we established a business resilience team to guide our people during the year, with regular updates on how our offices and assets would operate, mental health and wellbeing support, additional advice for line managers to help them support their teams, and resource planning to ensure everyone could take their holidays and not miss out on vital family time. Throughout the pandemic, our recruitment remained focused on maintaining an inclusive workplace.
3 OUR COMMUNITIES
We continued with our community employment and education programmes throughout the last year. In addition, we gave grants totalling £500,000 to our
existing charity partners who were most in need.
Our directors waived 20% of their base salaries or fees for three months of the year, and we used this money to supplement these grants.
4 OUR PARTNERS
Our on-site developments are controlled and operated by our contractors. We remained in constant communication with them throughout the year, to ensure our developments could progress while maintaining the safety of their people.
We provided financial help too, paying £0.9m in topped-up furlough funds to service partners to allow them to pay 100% of wages.
Fresh thinking to address new opportunities
WE ARE FOCUSED
ON A CLEAR
PURPOSE...
"Sustainable places. Connecting Communities. Realising potential."
2021 IN NUMBERS
27.0p | 33.9p |
Dividend, up 16.4% | Adjusted diluted |
earnings per share | |
(2020: 55.9p) |
985p | -15.9% |
EPRA net tangible | Total business return |
assets per share, | (2020: -8.2%) |
down 17.4% | |
£(1,393)m | 11.5 years |
Loss before tax | Weighted average |
(2020: £(837)m) | maturity of debt |
32.2% | £6.5m |
Group loan-to-value | Social value created |
during the year | |
55% | £11.7bn |
Reduction in carbon | Total contribution to |
emissions (tCO2e) | the UK economy each |
compared with | year from people |
2013/14 baseline | based at our assets |
100% | 100% |
We continue to | We continue to divert |
procure 100% | 100% of waste from |
renewable electricity | landfill across our |
across our portfolio | operational activities |
Our purpose encompasses a set | |
of principles we live by in our | |
business decisions and our desire | ALLAN EXECUTIVE |
to create great experiences for | |
people, now and in the future. | |
Marrying these principles with | MARK CHIEF |
our competitive advantages | |
and market drivers, we have | |
developed a new strategy to | |
grow our business. And by | |
growing our business, we get | |
daily closer to achieving our | |
purpose. Growth with purpose. |
I am confident we are well placed to capitalise on opportunities as they emerge."
MARK ALLAN
CHIEF EXECUTIVE
...THAT SHAPES OUR NEW
STRATEGY...
Our strategy focuses on four priorities: "Optimise" our central London business; "Reimagine" our retail business; "Grow" through Urban opportunities; and "Realise" capital from Subscale sectors. By working towards these priorities, we will position Landsec for growth.
…AND HAVE THE RIGHT TEAM AND CULTURE IN PLACE
Culture is as important as strategy - after all, it is our people who will pursue the strategy and our culture that will enable them to do so. We have engaged with our people to create a culture that is authentic, supportive and built on empowerment and accountability.
Organisational structure is also important. We have created a leaner, more agile organisation with a flatter structure; one which promotes cross-functional team work, collaboration and innovation. And we have established an Executive Leadership Team (ELT) to oversee the execution of our strategy.
Read more about the ELT on pages 88-89
Landsec // Annual Report 2021 » Strategic Report
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Land Securities Group plc published this content on 08 June 2021 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 08 June 2021 15:42:05 UTC.