Planning and the business cycle
A Land Securities Group case study

Page 1: Introduction

Land Securities is the UK's leading property company. It is quoted on the London Stock Exchange and is a member of the FTSE 100. Land Securities owns more than £12 billion worth of property across the UK. The company is responsible for over seven million square metres of commercial accommodation. Its main objective is to maximise returns for shareholders on the money they have invested...
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Page 2: The Business Cycle

The UK economy has experienced an unusually long period of growth over the past few years, following a period of serious decline in the early 1990s. Businesses have generally enjoyed a robust period of growth on the back of strong growth in sales. However many economists and financial analysts are now predicting that we are about to experience a downturn with the worst predicting a global...
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Page 3: The property cycle - why is it different?

When the economy experiences a boom, businesses see the increased demand for products and services- in response to increased demand prices can rise. Inflation is the enemy of most businesses. It drives up costs and discourages customers from buying items that are too highly priced. It indicates the beginning of a new downturn or recession. Land Securities' main business is acquiring, developing...
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Page 4: Planning - monitoring the environment

Land Securities has a rolling five-year plan and is therefore always looking forward. At the end of each six month period the plan is reviewed, updated, and implemented by the Board of Directors. The planning cycle draws upon information from inside and outside the business. The directors use a five year financial business planning process together with a system called 'balance scorecard'. This is...
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Page 5: Mangement risk and investment

Land Securities seeks to achieve long-term sustainable returns for its shareholders. It knows that to do this it must consider inherent risks. Risk management and the ability to take measured risk is the secret to the success of any business. Land Securities have a clearly defined risk management process, covering a broad spectrum of business risks. Land Securities formally reviews the performance...
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Page 6: Conclusion

The Chairman, in his 2005 Annual Report, stated that in the past financial year performance had been outstanding with a higher level of growth than usual. The company predicts sustained demand from investors for commercial property. Clearly Land Securities will continue to monitor macro economic conditions and the progress of the business cycle. Many predict it is in a declining phase. This...
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