In this Group business review we set out how we are working to shape the future of property.

This review looks at actions we took during the year to strengthen our business, culture and commitments. We work with a wide range of businesses and organisations, from occupiers of our properties to joint venture partners, suppliers, investors and financial institutions. While what we do affects a range of individuals and organisations, here we focus on four particularly important groups – our customers, our employees, our community and our environment. This is consistent with the way we report on Corporate Responsibility.

Our business model

We are the largest Real Estate Investment Trust (REIT) in the UK by market capitalisation. We own, develop and manage commercial property through two business divisions – the Retail Portfolio and the London Portfolio.

Table 24 – Top 5 UK REITs

Rank Company name Mkt cap
£m
1 Land Securities Group PLC 5,647.7
2 British Land Co. PLC 4,893.9
3 Capital Shopping Centres Group PLC 3,290.1
4 Hammerson PLC 3,160.4
5 Segro PLC 2,384.1
  • Source: Datastream, as at 31 March 2011.

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Our customers

Across the Group, Government is our largest customer, accounting for 7.8% of the rental income on our combined portfolio. We expect the Government’s share of our rental income to reduce over the next few years as they vacate older buildings in Victoria which we are proposing to redevelop into new and attractive locations for businesses.

Our second largest customer is Accor Hotels, representing 4.5% of the combined portfolio, and our largest retail customer is Sainsbury’s, representing 2.0%. Overall, we have seen a reduction in the number of retailers facing insolvency, but market conditions remain challenging for some retailers. We have continued to help our retail customers find new and better ways to address tough commercial conditions. Our Clearlet leases are helping to simplify leasing activity, and our Brand Empire venture is helping to improve occupier mix at our centres by bringing new retailers to the UK. A new initiative has been the introduction of service charge presentations to retailers during the budgeting process. This enables us to discuss our plans before budgets are finalised, which provides retailers with an opportunity to query and influence the final costs and related matters. These sessions have been very well received. One immediate change we have put into place is a new way to distribute service charge booklets, which used to be posted out on a CD. They are now made available through a dedicated website and retailers can access them when they need to.

During the year we renamed and extended our On Brand training scheme. We originally developed this to ensure that all of our employees at the White Rose shopping centre in Leeds could talk about the latest promotions, offers and events in their centre. Now called Customer Service DNA, we have rolled out the programme to seven of our centres. In addition to updating employees on centre news, we have used workshops to define the points of difference at each centre so our employees can help bring the benefits alive, helping to improve the shopping experience for consumers and further supporting our retail occupiers. We plan to roll out the programme to smaller centres during 2011.

In London, we have reorganised the way our teams operate to further enhance how we support and serve occupiers. We now have dedicated occupier teams based in Victoria (Cardinal Place, SW1), Mid-town (New Street Square, EC4) and West End and City (One New Change, EC4). Each team draws together individuals from financial management and property management, which means occupiers get access to a seamless service. We also have an open door policy, with meeting rooms available so occupiers can come in at any time to discuss issues or make suggestions. This initiative recognises the value of face-to-face meetings and the initial response from occupiers has been extremely positive.

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Customer satisfaction

This year we again carried out a Real Service survey of retailers at shopping centres to understand their perception of our service levels. We had good scores which improved on those achieved last year. Some of the key figures included:

  • Overall satisfaction as a retailer up at 4.07 (4.04 last year)
  • Communication up at 4.05 (3.95)
  • Responsiveness up at 4.21 (3.95)
  • Willingness to recommend up at 98% (97%)
  • Understanding needs up at 4.03 (3.94).

We also achieved some very strong customer satisfaction scores in London. Here, some of the key figures included:

  • Overall satisfaction up at 83.6% (74.8% last year)
  • Communication up at 84.7% (76.0%)
  • Responsiveness up at 80.3% (72.2%)
  • Understanding the needs of the business up at 89.6% (72.8%)
  • Willingness to recommend marginally down at 80% (81%).

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Our people

Our objective is to attract, retain and develop the brightest and best people in our industry, enabling them to maximise their potential and make the greatest possible contribution to the Company. We place great emphasis on the development of talent, we work to provide excellent career opportunities and career development, we encourage open dialogue at all levels, and we support any employee who volunteers to provide additional support to local communities.

Once again, our annual employee engagement survey saw a good overall response rate of 82%. Key findings from the survey included:

  • 96% of respondents said ‘I enjoy my job’
  • 96% of respondents said ‘In my team, we deliver excellence’
  • 96% of respondents said ‘Overall, I am proud to work for Land Securities’
  • 95% of respondents said ‘My manager treats me with respect’
  • 95% of respondents said ‘I am confident the Group will meet its objectives’.

In addition to the benefits we provide to our own employees, we also have a major effect on those employed by suppliers and contractors. By starting development early in 2010 we have helped to create many jobs in the construction sector. This, in turn, will lead to further employment opportunities once our new schemes have opened. We work with our key suppliers to ensure their people are appropriately trained and we expect all of our partners to uphold our high standards for health and safety, and our values.

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Our communities

Our aspiration is that our buildings should be part of – not apart from – the area and community in which they are located. We want to be more than a good neighbour; by investing in well-integrated and lasting employment, education and enterprise opportunities – as well as buildings – we aim to help make our communities brighter, stronger and more sustainable.

With each major development or asset management initiative, we take the time to consult with all interested parties well before the first brick is laid. We also engage with local authorities, community agencies and voluntary groups to help us to deliver effective employment, education and enterprise opportunities. These range from running educational workshops and helping people get back into employment to offering space in our shopping centres so that charities can promote their work.

Land Securities’ people like to do their bit too, whether it’s donating or raising money or volunteering their time. In the process, they act as ambassadors for our business, and we help their efforts through the Land Securities Foundation. This provides support for employees who volunteer, awards bursaries towards equipment for local communities, and runs our Give As You Earn scheme to encourage charitable donations from employees.

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Our environment

Our brief from the Chief Executive is to be the most sustainable property company in Britain. No other property developer sets such tough targets. No other developer has pioneered so many environmental initiatives. We want to lead the way on sustainability, and be regarded as a key partner to local and national Government.

We were the first company in our sector to have an Energy Manager and first to have an Environment Manager. We were the first to publish a standard environment report, and the only property company to take part in the Voluntary Emissions Trading Scheme. We were the first to get the Carbon Trust Standard, and first to qualify for Environmental Management Standard 14001. For the last four years we have also been at the top end of Dow Jones’s global super sector leaders table.

During the year we became a Planet Positive business. This accreditation acknowledges the seriousness with which we approach sustainability issues, particularly the need to reduce carbon emissions from buildings. We were also one of the first companies to sign up to the 10:10 campaign for carbon emission reductions. We also donated one day of free advertising at Piccadilly Lights to the campaign. We continue to focus on achieving BREEAM ratings in our developments and on achieving a 30% reduction in emissions by 2020 in each of the areas of offices, shopping centres and retail parks. To help achieve this, we are working with occupiers in multi-tenanted buildings to create shared agreements on emission reductions. We are also working closely with a number of universities on research and education initiatives.

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Corporate Responsibility

How we support our customers, our employees, our community and our environment helps set Land Securities apart. We are proud of our record on Corporate Responsibility and take our commitments very seriously. Read more about our approach to Corporate Responsibility and our performance this year.

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