Service Charge Booklet Buckingham Gate. Cover - Text Anchor SHAPING THE FUTURE OF LONDON FOR GOOD

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1 Service Charge Booklet Cover - Text Anchor SHAPING THE FUTURE OF LONDON FOR GOOD

2 Content - Text Anchor Contents * The appendices are formed of a separate booklet which is available in the supporting documents section of the online customer portal. Land Securities 2

3 Welcome - Text Anchor A Warm Welcome Welcome to the 2017/2018 Service Charge Booklet for. As in previous years, this Booklet has been prepared to provide you, as a valued customer, with a clear account of what makes up the funding that secures the services for the building over the next financial year. We have tried to set out the information within this Booklet in an informative manner, to ensure that what we are providing is of value and use to you. 2016/2017 was another busy year at. The property became fully occupied this year. Our Front of House team noticed the uplift in visitors and customer numbers throughout the year, and continue to work hard to maintain and improve the customer experience. Work to get the property s Combined Heating & Power (CHP) unit optimised against the current building load progressed well, with customers remaining involved and informed throughout. We will be working closely with our service partners to provide customers with considered efficiencies and seek new ways to deliver exceptional levels of service to the building. One such project is to increase the shower facilities, with usage increasing across the board, subject to a feasibility study. We are constantly looking for innovations and initiatives to provide an even better service to our customers. If you have any suggestions from a customer perspective then this is something we would welcome further discussion on at our next quarterly customer meeting. I hope you find this Booklet useful and informative. Should you have any queries concerning the content, please do not hesitate to contact me. Yours sincerely Jack Kelly Jack Kelly Operations Manager Land Securities PLC 16 Palace Street, London SW1E 5JD D/L: +44 (0) Mobile: +44 (0) Jack.Kelly@landsecurities.com Declaration Service Charge Period: 1 April 2017 to 31 March 2018 Property: I hereby certify that, according to the information available to me, the attached statement of service charge expenditure report and accompanying information records the true cost to the Landlord of providing services to the property for the period 01/04/17-31/03/18, in accordance with the terms of the lease and, where practicable, the RICS Code of Practice Service Charges in Commercial Property, Third Edition. Signed: Position: Operations Manager Date: 31 January 2017 Land Securities 3

4 Introduction - Text Anchor Service Charge Booklet Introduction Land Securities 4

5 Creating Jobs and Opportunities To ensure that we have a skilled workforce for the future, we work to help people living in our community access training, job opportunities and apprenticeships on our development sites and properties. In response our activities are focused on community employment, education, charity partnerships and volunteering. Inside this document Our Obligations As a responsible Landlord we have a duty of care to act with professional care, diligence, integrity and objectivity in managing the provision of services within the property. For best practice, we endeavour to provide our customers with the following key elements; Service Charge Customer Statement Service Charge Expenditure Report Service Charge Allocation and Apportionment Service Charge Operational Overview of Variances The Budget This report has been produced by Land Securities and relates to the service charge period of 1 April 2017 to 31 March Royal Institute of Chartered Surveyors (RICS) Code of Practice, Third Edition This report has been produced having regard to the best practice guidelines for service charges in commercial property and endorses the principles set out in the third edition of the RICS Code of Practice. Both Land Securities and the Tenant are still bound by the existing lease terms, which take precedence over the Code of Practice but would encourage our customers, like ourselves, to be guided by The Code wherever possible. Schedule of Assumptions and Exclusions Empty Unit Voids and Caps - Land Securities pays the service charge for any void or unlet unit and any service charge contribution is reduced as a result of any form of concession or capping. Service Charge Exclusions - The service charge costs will NOT include: Initial costs in relation to the original design and construction. Setting up costs that are part of the original development Improvement costs above normal maintenance, repair or replacement except where an improvement can be justified to provide benefit to the customers. Redevelopment costs Costs which relate to individual customers. Payment of Interest - It is our policy not to apply interest to on-account service charge contributions. However we do not apply any of our bank charges back to the service charge. Customer Service Charge Statement Both the customer service charge statement and the first quarterly invoice will be issued together on 1 March Contacts Jack Kelly Operations Manager Land Securities PLC 16 Palace Street, London SW1E 5JD D/L: +44 (0) Mobile: +44 (0) Jack.Kelly@landsecurities.com Andy Slatter General Manager Land Securities PLC 16 Palace Street, London SW1E 5JD D/L: +44 (0) Mobile: +44 (0) andy.slatter@landsecurities.com Ann-Marie Khan Operations Director Land Securities PLC 100 Victoria Street, London SW1E 5JL D/L: +44 (0) Mobile: +44 (0) ann-marie.khan@landsecurities.com Land Securities 5

6 Creating Jobs & Opportunities Community Employment Programme This programme aims to narrow skills gaps in property-related sectors such as construction, facilities management and hospitality. Together with partners, Land Securities ring-fences jobs and facilitates training for those furthest from the jobs market. Target groups include long-term unemployed, the homeless, women (into construction), young people not in education, employment or training, people with learning disabilities and ex-offenders. We are always looking for new opportunities to collaborate with our customers and their suppliers to open up work placements and jobs. Education Programme Land Securities partners with local schools, colleges and universities around our developments. We offer a range of opportunities from single careers fairs and skills workshops to work experience placements, mentoring relationships and in-depth challenges including a Retail Challenge and Pop-Up Food Stall Challenge. There are lots of opportunities (both one off and longer term) for our customers to collaborate and participate in these programmes with full support provided by our education social enterprise partners. These activities are an excellent way of providing employee professional development. Charity Partnerships We have numerous partnerships with local charities operating close to our centres as well as a portfolio-wide national charity partnership with Barnardo s. These partnerships deliver on our Jobs and Opportunities theme and involve grants, fundraising, pro-bono support, one-off volunteering days and longer term volunteering opportunities for example mentoring homeless people or trusteeships. We collaborate with our customers and suppliers to increase support for local charities and we are open to exploring new partnerships together. If you would like any further information or details on how to become involved with our sustainability programme, please contact your Operations Manager. Land Securities 6

7 Schedule - Text Anchor Service Charge Booklet Explanation of Schedules Land Securities 7

8 Explanation of the Schedules The schedule shows the budget for the service charge year and it identifies the apportionment of this new forecast across the various elements of the property. There are various schedules and there is a separate column on the schedule for each. This is because not all of the customers at the property will benefit from the same services. Schedules There are two schedules of costs enclosed for your information. The first schedule provides an indication of cost comparisons. It shows the forecast for the year ending 31 March 2018 compared with the forecast for the year ending 31 March It also details the actual reconciled service charge costs for the year ending 31 March A percentage variance is shown between the two forecasts and an explanation of the major variances is provided later in the Booklet. The second schedule shows the forecast service charge for the year ending 31 March 2018 and explains the apportionment of this new forecast across the various elements of the property. The service charge schedules are set out as follows; OFFICES ESTATE RETAIL CAR PARK Services which benefit all office customers. Services which benefit both retail and office. Services which benefit all retail customers. Services which benefit office customers. Land Securities 8

9 Budget Forecast - Text Anchor Service Charge Booklet Budget Land Securities 9

10 Budget - % Allocations Year Ending 31 March 2018 Total Budget: 2,598,261 Management and Insurance 479, % Utilities 442, % Soft Services 992, % Hard Services 659, % Exceptional Expenditure 24, % 25.4% 659, % 24, % 479, % 442, % 992,499 Figures rounded to the nearest percent. Land Securities 10

11 Budget Forecast - Expenditure Summary Year Ending 31 March 2018 Service Charge Budget Budget ( ) Budget ( ) Actual ( ) Variance ( ) Variance % Management Management Fees 75,717 84,840 (9,123) (10.8%) 83,430 Site Management Resources 376, ,519 35, % 309,098 Health, Safety & Environmental 13,669 15,646 (1,977) (12.6%) 18,722 Management Sub-Total 465, ,005 24, % 411,250 Utilities Electricity 327, ,776 19, % 288,084 Gas 72,710 68,370 4, % 32,892 Fuel Oil (Heating) 10,000 10, % 0 Water 32,312 31,000 1, % 19,608 Utilities Sub-Total 442, ,146 24, % 340,584 Soft Services Security 605, ,856 29, % 544,140 Cleaning & Environmental 387, ,382 22, % 349,382 Marketing & Promotions % 1,490 Soft Services Sub-Total 992, ,418 52, % 895,012 Hard Services Mechanical & Electrical Service 563, ,626 24, % 535,096 Lift & Escalators 45,397 43,509 1, % 44,918 Suspended Access Equipment 5,206 4,084 1, % 3,785 Fabric Repairs & Maintenance 44,736 45,542 (806) (1.8%) 40,801 Hard Services Sub-Total 659, ,761 26, % 624,601 Insurance Engineering Insurance 13,921 8,110 5, % 11,665 Insurance Sub-Total 13,921 8,110 5, % 11,665 Exceptional Expenditure Major Works 10,000 38,966 (28,966) (74.3%) 14,925 Service Partner Costs 14, , % 0 Exceptional Expenditure Sub-Total 24,925 38,966 (14,041) (36.0%) 14,925 TOTAL 2,598,261 2,478, , % 2,298,036 Land Securities 11

12 Budget Forecast - Expenditure Summary Year Ending 31 March 2018 Allocation of Costs (1 of 2) TOTAL CARPARK ESTATE OFFICES RETAIL Management Management Fees 75, ,967 52,437 1,191 Management Fees 75, ,967 52,437 1,191 Site Management Resources 376, , ,031 2,916 Staff Costs 113, ,780 1,000 2,916 Site Offices/Accommodation 200, ,534 77,833 0 Postroom Costs 58, ,197 0 Catering 4, ,000 0 Health, Safety & Environmental 13, ,669 0 Health & Safety 13, ,669 0 Management Sub-Total 465, , ,137 4,108 Utilities Electricity 327,000 15,613 19, ,979 0 Electricity Lighting 251,138 12,278 15, ,210 0 Electricity - Lifts/Escalators 57,513 2,442 2,653 52,419 0 CRC Electricity 18, ,105 16,350 0 Gas 72, ,710 0 Gas 64, ,361 0 CRC Gas 8, ,349 0 Fuel Oil (Heating) 10, ,000 0 Fuel Oil (Heating) 10, ,000 0 Water 32, ,666 0 Water 32, ,666 0 Utilities Sub-Total 442,022 16,260 19, ,355 0 Soft Services Security 605,214 3, , ,541 17,279 Security 605,214 3, , ,541 17,279 Cleaning & Environmental 387,105 7, , ,801 10,204 Cleaning 291,766 7, , ,474 0 Waste Management 44, ,143 10,204 Housekeeping / Sundry Costs 31, ,184 0 Landscaping (External) 14, ,000 6,000 0 Seasonal Decorations 6, ,000 0 Marketing & Promotions Marketing/Promotions Soft Services Sub-Total 992,499 11, , ,522 27,484 Continued on next page >>> Land Securities 12

13 Budget Forecast - Expenditure Summary Year Ending 31 March 2018 Allocation of Costs (2 of 2) TOTAL CARPARK ESTATE OFFICES RETAIL Hard Services Mechanical & Electrical Services 563,908 5,158 42, ,219 13,381 Fire Precautions Maintenance 33, ,649 26,136 0 Fire Precautions Repairs 1, ,000 0 General Engineering Maintenance 392,391 5,135 32, ,962 12,060 General Engineering Repairs 7, ,000 0 Lighting/Electrical Maintenance 21, ,171 0 Lighting/Electrical Repairs 2, ,000 0 General Machinery 2, ,400 0 Heat/Air Con/Comfort Cooling Maintenance 96, ,267 92,550 1,321 Heat/Air Con/Comfort Cooling Repairs 8, ,000 0 Lift & Escalators 45,397 3,479 2,217 39,701 0 Lift/Escalator Maintenance 43,397 3, ,701 0 Lift/Escalator Repairs 2, , Suspended Access Equipment 5, , Suspended Access Equipment 5, , Fabric Repairs & Maintenance 44, ,000 34,899 1,378 Internal Maintenance 31, ,682 28,399 1,378 Internal Repairs 1, ,500 0 External Maintenance 6, , External Repairs 5, ,000 0 Hard Services Sub-Total 659,248 9,097 57, ,324 14,758 Insurance Engineering Insurance 13, ,921 0 General Engineering Insurance/Inspection 13, ,921 0 Insurance Sub-Total 13, ,921 0 Exceptional Expenditure Major Works 10, , Major Building Works 10, , Service Partner Costs 14, ,925 0 IS Costs - Service Partner 14, ,925 0 Exceptional Expenditure Sub-Total 24, ,000 14,925 0 TOTAL 2,598,261 36, ,084 1,749,184 46,349 Land Securities 13

14 Allocation - Text Anchor Service Charge Booklet Service Charge Apportionment Land Securities 14

15 Service Charge Apportionment Year Ending 31 March 2018 FACTORS FORECAST ADDRESS CARPARK ESTATE RETAIL OFFICES CARPARK ESTATE RETAIL OFFICES TOTAL SU1 0.00% 1.14% 20.03% 0.00% - 8,766 9,283-18,049 SU2 0.00% 3.58% 62.64% 0.00% - 27,416 29,033-56,449 1st Floor & 1 Car Parking Space 10.00% 7.57% 0.00% 8.03% 3,664 58, , ,173 2nd Floor 10.00% 9.01% 0.00% 9.55% 3,664 69, , ,782 3rd Floor 0.00% 9.03% 0.00% 9.58% - 69, , ,714 4th Floor 10.00% 9.03% 0.00% 9.57% 3,664 69, , ,291 5th Floor Suite B & 1 Car Parking Space 10.00% 5.03% 0.00% 5.33% 3,664 38,514-93, ,445 6th Flr Suite A & 1 C/S & Storeroom B % 4.31% 0.00% 4.57% 3,664 33,045-80, ,732 7th Floor & 1 Car Parking Space 10.00% 8.98% 0.00% 9.52% 3,664 68, , ,041 8th Floor 0.00% 8.94% 0.00% 9.48% - 68, , ,290 9th Floor & 1 Car Parking Space 10.00% 8.89% 0.00% 9.43% 3,664 68, , ,647 10th Floor & 1 Car Parking Space 10.00% 8.83% 0.00% 9.36% 3,664 67, , ,070 11th Floor & 1 Car Parking Space 10.00% 5.99% 0.00% 6.35% 3,664 45, , ,698 SU3 0.00% 0.46% 8.03% 0.00% - 3,516 3,723-7,239 6th Floor Suite B & 1 Car Parking Space 10.00% 4.69% 0.00% 4.98% 3,664 35,951-87, ,675 SU4 0.00% 0.53% 9.30% 0.00% - 4,070 4,310-8,379 5th Floor Suite A 0.00% 3.99% 0.00% 4.23% - 30,566-74, , % 100% 100% 100% 36, ,084 46,349 1,749,184 2,598,261 Land Securities 15

16 Variances - Text Anchor Service Charge Booklet Summary of Variances Land Securities 16

17 Summary of Variances Service Charge Budget Indicative variances are shown based on the current year budget. 2,478,406 2,598, % Budget ( ) Budget ( ) % Increase in budget Land Securities 17

18 Summary of Variances The significant (+/- 5%) financial variances are explained as follows: 465, ,022 Budget ( ) Budget ( ) 24,642 24,876 Variance ( ) Variance ( ) Management Management Fees We conducted a review of total service charge management costs including our management fees and direct costs and are pleased to report a reduction. As a result and whilst recognising an increase in our IT support costs we are pleased be able to report a reduction in the total management costs. Site Management Resources Due to a reapportionment of the management resources across the entire portfolio there has been an uplift on this line. Health, Safety & Environmental The Health & Safety costs have decreased due to a rationalisation of administrative fees for associated works. Utilities Electricity Electricity costs are forecasted to increase for 2017/2018 due to a higher rate per unit of consumption. This increase is driven by non-energy costs which are outside of our control but we continue to manage the wholesale cost of electricity through our flexible purchasing strategy, to help offset these increases. Gas Gas costs are forecast to increase for 2017/2018 in line with higher site consumption. However through full operation of the CHP plant, we anticipate efficiency savings associated with heating and cooling energy. Land Securities 18

19 Summary of Variances The significant (+/- 5%) financial variances are explained as follows: 992, ,248 Budget ( ) Budget ( ) 52,080 26,487 Variance ( ) Variance ( ) Soft Services Security With the announced increase in London Living Wage all qualifying pay rates have been enhanced accordingly. A percentage increase has been factored into the 2017/2018 year to cover increases in these service contracts. Cleaning & Environmental With the announced increase in London Living Wage all qualifying pay rates have been enhanced accordingly. A percentage increase has been factored into the 2017/2018 year to cover increases in these service contracts. Hard Services Mechanical & Electrical Service The increase on this line is due to some incremental increases across our maintenance lines and an allowance for our Aspire service partner scheme. Suspended Access Equipment The increase on this line is a result of additional cradle audit fees being required for 2017/18. Land Securities 19

20 Summary of Variances The significant (+/- 5%) financial variances are explained as follows: 13,921 24,925 Budget ( ) Budget ( ) 5,811 ( 14,041) Variance ( ) Variance ( ) Insurance Insurance This year we are taking a cautious approach to engineering insurance premiums forecasting due in most part to a number of variables that are outside of our control. These being; Wage rises Increased number of claims Insurance Premium Tax With increased costs for wages and the number of claims increasing being self-explanatory, the other main contributing factors is the rise in Insurance Premium Tax (IPT). The Government has announced a further increase in IPT of 2% to 12% of Insurance Premiums from June 2017, and we have aligned the forecast to account for this uplift. Exceptional Expenditure Major Works Following a review of our plant condition, there are no major asset replacement works planned for the 2017/2018 period. However, a provision has been budgeted for ad-hoc plant repairs throughout the year. Land Securities 20

21 Appendices Appendices Document The appendices are formed of a separate booklet which is available in the supporting documents section of the online customer portal. Service Charge in Commercial Property Utilities Overview Sustainability Overview Health & Safety Overview Insurance Overview Customer Satisfaction Procurement Overview Appendices - Text Anchor Land Securities 21

22 Land Securities Group PLC 100 Victoria Street, London SW1E 5JL T +44 (0) E investor.relations@landsecurities.com W Service Charge Booklet Publication No. SCB2017/