Service Charge Expenditure Report Buckingham Gate, London. Cover - Text Anchor SHAPING THE FUTURE OF LONDON FOR GOOD

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1 Service Charge Expenditure Report , London Cover - Text Anchor SHAPING THE FUTURE OF LONDON FOR GOOD

2 Content - Text Anchor Contents Land Securities 2

3 Welcome - Text Anchor Final Thoughts Welcome to the Service Charge Booklet for. As with previous years, this booklet has been prepared to provide occupiers with details of actual service charge expenditure over the last financial year. Overall the Service Charge for the year ending 31 March 2015 is 12.1% under forecasted budget. The main areas of variance are outlined within this booklet (page 13 section 2). From an operational perspective there have been a few changes in how we ensure delivery of service to our occupiers across the buildings we manage in Victoria, as always we will continue to drive this forward throughout and work closely with all our customers to support their business requirements, deliver on objectives and drive further efficiencies. Customer satisfaction will continue to be a focus and your participation in our customer survey is invaluable to ensuring we are continually delivering outstanding services to our customers. I hope you will find our new interactive reconciliation booklets more specific to your requirements and needs. However if you have any questions regarding anything contained within this booklet please do not hesitate to contact me. Yours sincerely Jason Collett Jason Collett Operations Manager Land Securities PLC 16 Palace Street, London SW1E 5JD D/L: +44 (0) Mobile: +44 (0) jason.collett@landsecurities.com Certifi cation Certification Period: 1 April 2014 to 31 March 2015 Landlord: Land Securities Building: I hereby certify that, the attached statement of reconciled service charge expenditure records the true cost to the Landlord of providing the services to the property for the period 01/04/2014 to 31/03/2015, in accordance with the terms of the lease and, where practicable, the RICS Code of Practice Service Charges in Commercial Property (Third Edition). Signed: Paul Alexander F.C.C.A Finance Manager - London Land Securities Group PLC Land Securities 3

4 Introduction - Text Anchor Service Charge Expenditure Report Introduction Land Securities 4

5 It s all gone green Everything that we all do has an impact on the environment, however small. As a responsible company, Land Securities are always striving to reduce our impact on the environment, which is why this year s Service Charge Expenditure Report will be provided exclusively in an electronic version via our Customer Service Charge Portal. While doing this, we have taken the opportunity to refresh the look and feel of the document, making it more engaging and easier to use. 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 Actuals This report has been produced by Land Securities, the Landlord of the property, and relates to the service charge period of 1 April 2014 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 occupiers, 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 empty 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 occupiers Redevelopment costs Costs which relate to individual occupiers 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. VAT All service charge expenditure is shown exclusive of VAT. VAT will be charged at the appropriate rate on all service charge payments demanded/ invoiced by the Landlord. Contacts Jason Collett Operations Manager Land Securities PLC 16 Palace Street, London SW1E 5JD D/L: +44 (0) Mobile: +44 (0) jason.collett@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 Catherine Emmott Operations Director Land Securities PLC 16 Palace Street, London SW1E 5JD D/L: +44 (0) catherine.emmott@landsecurities.com Land Securities 5

6 Forecast - Text Anchor Service Charge Expenditure Report Actuals Land Securities 6

7 Actuals - % Allocations Year Ending 31 March 2015 Total Actuals: 2,079,847 Management 383,920 (18%) Utilities 311,305 (15%) Soft Services 797,380 (38%) Hard Services 579,874 (28%) Insurance 7,369 (1%) 28% 579,874 1% 7,369 18% 383,920 15% 311,305 38% 797,380 Figures rounded to the nearest decimal point. Land Securities 7

8 Actuals - Expenditure Summary Year Ending 31 March 2015 Service Charge Expenditure Schedule Variance (%) ( ) Management Management Fees 81, % 81,000 74,250 Site Management Resources 284,896-91, % 376, ,055 Health, Safety & Environment 18,024-2, % 20,420 9,626 Management Sub-Total 383,920-93, % 477, ,931 Utilities Electricity 259,447 43, % 215, ,233 Gas 33,381-92, % 126,000 19,567 Fuel Oil 0-10, % 10,000 0 Water 18,476-30, % 49,000 8,725 Utilities Sub-Total 311,305-89, % 400, ,525 Soft Services Security 541,462-13, % 554, ,204 Cleaning & Environmental 255,503-92, % 348, ,142 Marketing & Promotions 415-1, % 1,500 0 Soft Services Sub-Total 797, , % 904, ,346 Hard Services Mechanical & Electrical Services 493,442 10, % 482, ,514 Lifts & Escalators 38,580-3, % 42,047 39,534 Suspended Access Equipment 3, % 3,731 1,328 Fabric Repairs & Maintenance 44,145 6, % 37,883 7,319 Hard Services Sub-Total 579,874 13, % 566, ,695 Insurance Engineering Insurance 7,369-6, % 13,500 14,000 Insurance Sub-Total 7,369-6, % 13,500 14,000 Exceptional Expenditure Major Works 0-4, % 4,680 0 Exceptional Expenditure Sub-Total 0-4, % 4,680 0 TOTAL 2,079, , % 2,366,954 1,516,497 Land Securities 8

9 Actuals - Expenditure Summary Year Ending 31 March 2015 Allocation of Costs (1 of 2) TOTAL CARPARK ESTATE OFFICES RETAIL Management Management Fees 81, ,500 56,095 1,275 Management Fees 81, ,500 56,095 1,275 Site Management Resources 284, ,378 61,518 0 Staff Costs 138, , Site Offices / Accommodation 105, ,948 20,371 0 Postroom Costs 39, ,499 0 Catering 1, ,648 0 Health, Safety & Environmental 18, , Health & Safety 18, , Management Sub-Total 383, , ,502 1,275 Utilities Electricity 259,447 12,277 15, ,807 0 Electricity - Lighting 198,574 9,597 12, ,643 0 Electricity - Lifts & Escalators 44,865 1,905 2,069 40,891 0 Electricity Tax CRC 16, ,273 0 Gas 33, ,381 0 Gas 30, ,811 0 Gas Tax CRC 2, ,570 0 Water 18, ,107 0 Water 18, ,107 0 Utilities Sub-Total 311,305 12,647 15, ,295 0 Soft Services Security 541,462 3, , ,331 15,565 Security 541,462 3, , ,331 15,565 Cleaning & Environmental 255,503 6,180 19, ,402 2,539 Cleaning 195,873 6,180 18, ,995 0 Waste Management 14, ,262 2,330 Housekeeping / Sundry Costs 28, ,877 0 Landscaping (External) 6, , Seasonal Decorations 10, ,075 0 Marketing & Promotions Marketing & Promotions Soft Services Sub-Total 797,380 9, , ,148 18,104 Continued on next page Land Securities 9

10 Actuals - Expenditure Summary Year Ending 31 March 2015 Allocation of Costs (2 of 2) TOTAL CARPARK ESTATE OFFICES RETAIL Hard Services Mechanical & Electrical Services 493,442 5,107 29, ,372 14,465 Fire Precautions Maintenance 30, ,489 23,923 2,481 Fire Precautions Repairs 2, , General Engineering Maintenance 311,481 4,573 23, ,195 10,659 General Engineering Repairs 3, ,423 0 Lighting / Electrical Maintenance 19, ,359 0 Lighting / Electrical Repairs 1, ,326 0 Heating / Air Conditioning / Comfort Cooling Maintenance 116, , , Heating / Air Conditioning / Comfort Cooling Repairs 8, , Lifts & Escalators 38,580 2, ,455 0 Lift / Escalator Maintenance 35,849 2, ,723 0 Lift / Escalator Repair 2, ,732 0 Suspended Access Equipment 3, ,689 0 Suspended Access Equipment 3, ,689 0 Fabric Repairs & Maintenance 44, ,043 37,819 1,713 Internal Maintenance 29, ,560 26,209 1,277 External Maintenance 4, ,950 3,002 0 External Repairs 9, , Hard Services Sub-Total 579,874 8,527 33, ,334 16,178 Insurance Engineering Insurance 7, , Lift / Escalator Insurance 4, ,419 0 Heating / Air Conditioning / Comfort Cooling Insurance 2, , Insurance Sub-Total 7, , SUB TOTAL 2,079,847 31, ,989 1,398,311 35,879 TOTAL 2,079,847 31, ,989 1,398,311 35,879 GRAND TOTAL 2,079,847 31, ,989 1,398,311 35,879 Land Securities 10

11 Variances - Text Anchor Service Charge Expenditure Report Summary of Variances Land Securities 11

12 Summary of Variances Service Charge Actuals 2,366,954 2,079, % Forecast ( ) Actuals ( ) % Variance against forecast Land Securities 12

13 Summary of Variances There are positive and negative variances contained within the summary schedule, the major financial variances are explained as follows: - 2,396 18,024 20,420-91, , ,269 Site Management Resources A restructure within the Land Securities West End portfolio and a review of the way in which our management resources are allocated, this has resulted in a saving against forecast. Health, Safety & Environment Following the resource realignment noted above the reduced resource resulted in a reduced requirement for health and safety training resulting in a saving against forecast. - 10, ,000 43, , ,618 Electricity Electricity is overspent due to increased consumption caused by increased demand on landlord services which now have an established profile in line with occupancy levels. However the overspend is largely offset by savings made on the gas and water lines. Fuel Oil Monitoring of fuel levels have shown no requirement to replenish, therefore no costs were attributed to this budget line. Land Securities 13

14 Summary of Variances There are positive and negative variances contained within the summary schedule, the major financial variances are explained as follows: - 30,524 18,476 49,000-92,619 33, ,000 Gas We report an underspend on gas due to relatively small demand for consumption throughout the year. Water Water is significantly under spent due to relatively low consumption levels during the year as well as on site rain water harvesting reducing the demand on mains water. - 1, ,500-92, , ,060 Cleaning & Environment Significant savings have been made on waste management as a result of the number of collections being lower than anticipated. There has also been a retender of the cleaning service which has led to improvements to the services on site. Marketing & Promotions As the building was only part occupied for part of the budget year the cost of the website hosting and updating was minimised resulting in an underspend. Land Securities 14

15 Summary of Variances There are positive and negative variances contained within the summary schedule, the major financial variances are explained as follows: 6,262 44,145 37,883-3,467 38,580 42,047 Lifts & Escalators This financial year a review of fees associated with the delivery of the lift and escalator maintenance was undertaken and has resulted in a cost reduction. Fabric Repairs & Maintenance There was an overspend within the fabric repairs and maintenance budget as a result of some additional works within the loading bay to improve pedestrian and delivery driver safety. - 4, ,680-6,131 7,369 13,500 Engineering Insurance Within year one of the service charge budget, i.e , an accrual was made to account for engineering insurance. It has been confirmed that this accrual is no longer required and therefore the funds have been returned to the service charge resulting in a saving. Major Works An allowance was made to decorate stairwells following fit out activities within the building, careful management and inspections have confirmed these works were not required. Land Securities 15

16 Land Securities Group PLC 5 Strand, London WC2N 5AF T +44 (0) E investor.relations@landsecurities.com W Service Charge Expenditure Report , London Publication No SCE14/15