LONDON & ASSOCIATED PROPERTIES
ANNUAL REPORT 2015
CONTENTS
OVERVIEW
2 LAP AT A GLANCE
4
CHAIRMAN AND CHIEF EXECUTIVE’S STATEMENT
STRATEGIC REPORT
12 FINANCIAL REVIEW
18 PRINCIPAL ACTIVITY, STRATEGY & BUSINESS MODEL
20 RISK AND UNCERTAINTIES
23 KEY PERFORMANCE INDICATORS
24 CORPORATE RESPONSIBILITY
GOVERNANCE
30 DIRECTORS & ADVISORS
31 DIRECTORS’ REPORT
34 CORPORATE GOVERNANCE
36 GOVERNANCE STATEMENT BY THE CHAIRMAN
OF THE REMUNERATION COMMITTEE
37 ANNUAL REMUNERATION REPORT
42 REMUNERATION POLICY
44 AUDIT COMMITTEE REPORT
45 DIRECTORS’ RESPONSIBILITY STATEMENT
46 INDEPENDENT AUDITOR’S REPORT
FINANCIAL STATEMENTS
48 CONSOLIDATED INCOME STATEMENT
49 CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
50 CONSOLIDATED BALANCE SHEET
51 CONSOLIDATED STATEMENT OF CHANGES IN
SHAREHOLDERS’ EQUITY
52 CONSOLIDATED CASH FLOW STATEMENT
54 GROUP ACCOUNTING POLICIES
60 NOTES TO THE FINANCIAL STATEMENTS
84 COMPANY FINANCIAL STATEMENTS
94 FIVE YEAR FINANCIAL SUMMARY
financial calendar
ANNUAL GENERAL MEETING 9 JUNE 2016
ANNOUNCEMENT OF HALF YEAR RESULTS TO 30 JUNE 2016 LATE AUGUST 2016
ANNOUNCEMENT OF ANNUAL RESULTS FOR 2016 LATE APRIL 2017
OVERVIEW
2
4
LAP at a glance
Chairman and Chief Executive’s statement
London & Associated Properties PLC 2015 1
OVERVIEW
LAP AT A GLANCE
London & Associated Properties PLC (“LAP”) is a main
market listed group which invests in UK shopping
centres and retail property whilst also managing
property assets for institutional clients. LAP owns
and manages £246m of property investments.
The Group also holds a substantial investment in Bisichi
Mining PLC, which operates coal mines in South Africa
and owns UK property investments (as a result of IFRS
10 the figures for Bisichi have been consolidated in
the group accounts).
LOOKING TO CREATE ENVIRONMENTS WHERE
RETAILERS CAN THRIVE.
FINANCIAL HIGHLIGHTS
IFRS NET ASSETS
PORTFOLIO VALUATION*
£49.7m
2014: £53.4m
£246m
2014: £244m
*Including properties under management
FULLY DILUTED NET
ASSETS PER SHARE
47.26p
2014: 50.35p
2 London & Associated Properties PLC 2015
OVERVIEW LAP AT A GLANCE
OVERALL PORTFOLIO SPLIT
PORTFOLIO BY RENTAL INCOME
55%
38%
55%
38%
7%
7%
WHOLLY OWNED
KEY PROJECTS
Orchard Square,
Sheffield
Market Row and
Brixton Village
Brixton
King Square,
West Bromwich
JOINT VENTURES
AND
MANAGEMENT
INVESTMENTS
AND
MANAGEMENT
KEY PROJECTS
KEY PROJECTS
Langney Shopping
Centre
Eastbourne
Kingsgate Centre,
Dunfermline
The Rushes Centre,
Loughborough
The Vancouver
Quarter Centre
Kings Lynn
HIGHLIGHT
HIGHLIGHT
HIGHLIGHT
A number of value
enhancing lettings
at Orchard Square,
Sheffield
Joint venture with
Columbus Capital in
Langney. Investment
in joint venture sold
in March 2016
Co-investment
with Oaktree Capital
Management and
manage three of
their shopping
centres
COAL PRODUCTION
In South Africa, Black Wattle produced 1.58 million
metric tonnes of Run of Mine Coal in 2015
(2014: 1.53 million metric tonnes)
London & Associated Properties PLC 2015 3
OVERVIEW
CHAIRMAN AND
CHIEF EXECUTIVE’S
STATEMENT
The Group loss for the year attributable to equity
holders of the Company was £1.9 million (2014:
£7.1 million). The Group loss for the year before
taxation of £2.1 million (2014: £2.7 million)
includes non-cash items of £2.95 million (2014:
£1.49 million), mainly consisting of finance costs
amortisation, mine depreciation and exchange
losses. A full breakdown of group income/(loss)
before taxation by sector is included in the
Financial review on page 15 and in the segmental
analysis in Note 1 to the accounts.
Before reporting on our current portfolio,
shareholders will be pleased to hear that we have
settled a long standing dispute with the buyers of
King Edward Court, Windsor. This dispute related to
the late completion of the sale in January 2014
by our subsidiary, Analytical Properties (“APL”).
Following a series of preliminary hearings and a
court hearing at first instance during 2014, APL
was vindicated by the Court of Appeal in
December 2014. As a result, we have been able
to release in 2016 from escrow £515,000 and
also had a cost award in our favour. This money
has been added to our cash reserves.
Our directly owned properties were valued in 2015
at £104.4 million compared to £103.7 million in
2014. Total property assets under management
at the year-end including those of our joint
venture partners amounted to £246.3 million
(2014: £244.4 million).
2015 was another year of progress
within our property portfolio.
Our intensive management style
was a major factor that contributed
to these satisfactory property results
in the face of a challenging
environment for the bricks-and-
mortar retail world.
During the year the success of online retailing
continued. It is now clear that retail landlords
face a changed future as more sales migrate to
the online format. However, we are not complacent
and feel that going forward the defensive qualities
of our major centres will be a positive factor. We
believe that “bricks and mortar retail” has a
positive contribution to make in the following
sub-sectors: large regional centres and major
cities; centres offering a differentiated shopping
experience; and convenience retail. As shareholders
will see from our portfolio review, the retained core
of our estate falls within this description.
Investor demand for shopping centres and other
retail property remained constant throughout
2015, particularly for those assets demonstrating
resilient cash flow and tenant demand. However
the market is likely to be more cautious over the
next few months as macro-economic concerns and
the June referendum on Britain’s membership of
the European Union cause investors to pause
before committing further funds to the sector.
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London & Associated Properties PLC 2015
OVERVIEW CHAIRMAN ANd CHIEf ExECuTIVE’S STATEMENT
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London & Associated Properties PLC 2015 5
OVERVIEW CHAIRMAN ANd CHIEf ExECuTIVE’S STATEMENT
BRIXTON MARKET
We now draw your attention to
some of our property portfolio’s
highlights from 2015.
ORCHARD SQUARE, SHEFFIELD
We completed a number of value enhancing
lettings at Orchard Square. The largest of these
was the double unit which we let to Virgin
Money at a combined rent of £345,000 per
annum for an unbroken term of 15 years. Virgin
Money is in the process of amalgamating and
fitting out the units which will incorporate a
bowling alley, a cinema and meeting rooms
with full connectivity for customers, as well
as traditional banking facilities.
Within the Centre, we leased a unit to Costa
coffee at £75,000 per annum that had previously
been occupied by a fashion retailer. We have also
split a double unit that was previously occupied
by a jeweller on the outside of the Centre. One
half of this has been let to Humpit Hummus, an
award-winning street food retailer, and we are under
offer to a contemporary barber shop on a small
second unit, which is our only vacant retail unit.
BRIXTON
Our markets at Brixton continue to go from
strength to strength. The waiting list for traders
remains lengthy and gross rental income is
growing every year.
In 2015 Lambeth Council granted planning consent
for a major redevelopment in Somerleyton Road,
across the road from the rear of Brixton Village.
This development will have over 300 flats, a theatre,
theatre school, chef school and other community
facilities. Construction is being funded by Lambeth
Council and construction is due to commence in
2016. There will be significant benefits to our
markets as, in addition to being destinations in
their own right, footfall will be boosted as the
markets will also provide the principal link from
the development through to the rest of Brixton
town centre and the transport network.
Lambeth Council has also secured separate funding
to refurbish Electric Avenue which is adjacent to
Market Row, our other market. Works are underway.
In addition the Council is consulting on a revised
Masterplan that will see a number of tired
buildings and land on the other side of Brixton
Village redeveloped to further enhance the town
centre. All of these initiatives will have a positive
impact on our markets.
In July 2015 we obtained a planning consent to
redevelop a nightclub that forms part of our
Brixton holdings into three apartments plus a
ground floor shop. The nightclub operator, whose
lease has expired, is seeking a judicial review of
the planning decision. This review is scheduled
for later this year. We are optimistic that our
planning consent will be ratified and will update
shareholders as matters progress.
WEST BROMWICH
At Kings Square, we have completed a number
of lettings as this Centre continues to recover from
competition created by the opening of a large, new
centre recently developed within the town. As
reported previously, the owner of this new centre
was actively enticing our tenants away with
incentives that we were unwilling to match.
The largest letting within our Centre is to Your Only
Choice Ltd, a Midlands-based discount retailer.
This unit has recently opened in a unit formerly
occupied by Store Twenty One. Although it is
early days, the new shop is proving very popular
with the West Bromwich shoppers and has led to
a footfall increase in that part of the Centre.
Similarly, Pep & Co, the discount fashion retailer
owned by Pepkor of South Africa who opened
over 50 shops last autumn, is trading far ahead
of expectations at our Centre. The Kings Square
unit is one of their two best performing shops in
the Midlands, and was featured in a television
documentary about the success of the chain.
6
London & Associated Properties PLC 2015
OVERVIEW CHAIRMAN ANd CHIEf ExECuTIVE’S STATEMENT
Elsewhere in the Centre, we have completed
lettings to Virgin Media and Card Factory, and
the main mall remains fully let. Additionally we
have recently completed a lease renewal with an
existing retailer who had also opened a second
store in the new scheme, and we are currently
negotiating a second lease renewal with a
different existing tenant who had similarly
opened a second store. We see this as positive
evidence that our centre has retained its role as
the value location and therefore has a strong
position within West Bromwich’s retail hierarchy.
We are confident that this type of Centre will
also continue to have a place alongside online
retail. It also benefits from excellent transport
links as well as the value-oriented offer that
matches the demographics of the town.
OTHER
In July 2014 we acquired a shop in New Kings
Road, Parsons Green. At the time of acquisition
it was producing a rent of £42,500 per annum,
which we believed to be below market rental
value. We have recently re-let the shop to a
luxury hairdresser and beauty parlour at a rent
of £60,000 per annum.
The rest of our portfolio continues to trade well,
and our Group portfolio has a void level of just
2.07% (2014: 5.92%)
JOINT VENTURES:
LANGNEY
This joint venture with Schroders entered its 5th
and final year in 2016. In March 2016 LAP and
Bisichi disposed of their combined 25% interest
in Langney Shopping Centre Unit Trust, the
owner of Langney Shopping Centre, Eastbourne.
The price achieved reflected a property value of
£19.2 million compared to an acquisition cost in
2011 of £16.5 million plus costs.
During our ownership, we obtained planning
consent to extend the shopping centre by 30,000
sq ft. Having pre-let the anchor unit of the
extension to Poundland and established a good
level of interest from retailers in the remaining
proposed units, we and Schroders, our joint
venture partners, collectively felt that this was a
good time to wind up the joint venture.
The cash proceeds post repayment of debt
amount to some £2.4 million shared equally
between LAP and Bisichi. This money has been
added to our cash reserves following the year
end.
E A S T B O U R N E
L A N G N E Y ,
HARROGATE PORTFOLIO
This joint venture with Oaktree Capital
Management comprises three shopping centres.
Loughborough
The Rushes remains fully let, following deals with
Subway, Poundworld and World 108 Buffet in the
last 15 months. This Centre no longer offers sufficient
opportunities to meet the joint venture’s criteria
and, in conjunction with Oaktree, we will probably
seek a buyer during the course of this coming year.
Kings Lynn
We have achieved lettings with a combined rental
income of £160,000 per annum at this shopping
centre over last year. These included letting shops
to Cards Direct, BB’s Coffee and Muffins, and
Yours Clothing. We are pleased to report that
the shopping centre is now approaching full
occupancy, which has not been the case for many
years.
In conjunction with Kings Lynn Council as
freeholder we are developing a number of asset
management initiatives that we are confident
will add significant value and we will update
shareholders in due course.
dunfermline
Kingsgate Shopping Centre had a positive year.
We have secured lettings to Pep & Co, Poundworld
and Carphone Warehouse over the last year.
Some of these units had never been let before.
Following these lettings, the Centre is close to
being fully let and will assist us in establishing
rental growth going forward.
London & Associated Properties PLC 2015 7
OVERVIEW CHAIRMAN ANd CHIEf ExECuTIVE’S STATEMENT
Finally, we would like to thank our
staff and all our advisers for their
hard work during the year.
Sir Michael Heller,
Chairman
John Heller,
Chief Executive
28 April 2016
BLACK WATTLE COLLIERY, SOUTH AFRICA
DIVIDEND
Your directors are pleased to recommend a
dividend of 0.16p, an increase of 3% over 2014.
Following the challenging trading conditions that
all investors in shopping centres have experienced
over the last few years, we are starting to feel
that the portfolio is again moving upwards and
we are optimistic that shareholders will enjoy
the benefits of this over the coming years.
BISICHI MINING PLC
Bisichi is a separately listed mining company
independently managed by its own Board of
Directors. During 2015 international coal prices
continued to weaken, and the average weekly
price per metric tonne of Free on Board (FOB)
coal from Richards Bay Coal Terminal in South
Africa, fell below US $50 by the end of the year
compared to US $64 at the beginning of the year
and US $120 achieved in 2011.
In these depressed market conditions, Bisichi’s
management continues to focus on keeping
production costs low while ensuring adequate
levels of production are achieved. In the last four
months of 2015, this strategy, and in particular
production levels at Black Wattle in South Africa,
were hampered by delays in obtaining the
necessary regulatory blasting permissions.
However, all the necessary approvals have now
been obtained. As part of Black Wattle’s production
plan for the year, the mine will look to combine
production from new opencast areas opened at
Black Wattle with coal received from the opencast
reserve already being mined at Blue Nightingale.
As previously reported, the coal delivered from
Blue Nightingale is part of an agreement to
purchase Run of Mine coal from an opencast
reserve nearby to Black Wattle. Blue Nightingale,
is a South African black owned and managed
mining company.
The company’s UK retail property portfolio, which
underpins the group and which is managed by LAP,
continues to perform well. In October 2015, Bisichi
acquired a new retail property in Northampton
for a total cost of £960,000 in cash.
Bisichi has decided to hold the dividend at the
2014 level and is recommending a final dividend
of 3p (2014: 3p) making the total for the year
4p (2014: 4p). LAP’s cash share of this is
£177,000 (2014: £177,000).
8
London & Associated Properties PLC 2015
OVERVIEW CHAIRMAN ANd CHIEf ExECuTIVE’S STATEMENT
London & Associated Properties PLC 2015 9
OVERVIEW CHAIRMAN ANd CHIEf ExECuTIVE’S STATEMENT
10
London & Associated Properties PLC 2015
STRATEGIC
REPORT
12 FINANCIAL REVIEW
18 PRINCIPAL ACTIVITY,
STRATEGY & BUSINESS MODEL
20 RISK AND UNCERTAINTIES
23 KEY PERFORMANCE INDICATORS
24 CORPORATE RESPONSIBILITY
London & Associated Properties PLC 2015 11
STRATEGIC REPORT
FINANCIAL REVIEW
K
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The financial statements for 2015
have been prepared to reflect the
requirements of IFRS 10. This means
that the accounts of Bisichi Mining
PLC (a London Stock Exchange
main market quoted company
– BISI) (“Bisichi”), have been
consolidated with those of LAP.
Bisichi continues to operate as a fully independent
company and currently LAP owns only 41.52% of
the issued ordinary share capital. However, because
related parties also have shareholdings in Bisichi and
there is a wide disposition of other shareholdings,
LAP is deemed under IFRS 10 to have effective
control of Bisichi for accounting purposes. This
treatment means that the income and net assets
of Bisichi are disclosed in full and the value
attributable to the “non-controlling interest”
(58.48%) is shown as a net liability. There is no
impact on the net assets attributable to LAP
shareholders.
Dragon Retail Property Limited (“Dragon”), our
50:50 joint venture with Bisichi is also consolidated.
LOANS
Long term debt of LAP (excluding Bisichi and
Dragon), consists of the £45 million facility expiring
in July 2019 and two debentures: one of £10
million expiring in August 2022 and another of
£3.75 million with staged repayments to August
2018. All loans and debentures are secured on
core property and are covenant compliant.
LAP’s five year £35 million non-recourse loan
from Santander, as senior lender, is supported by
a £10 million loan from Europa Capital
Mezzanine Limited, as mezzanine lender. The
senior loan facility is fully hedged with 50% of
the loan being swapped at a rate of 2.25% and
the remaining 50% being covered by an interest
cap swaption at 2.25%. This gives a blended
current interest rate of 4.79% for the total £45
million debt. Since the year end the interest cap
swaption (which expired) was been replaced by
an interest cap at 2.25%.
CASH FLOW
The Group cash inflow from operating activities
improved to £4.4 million (2014: £2.9 million).
During the year we repaid £1.25 million of the
original £5 million debenture, leaving £750,000
to be repaid in August 2017 and the balance of
£3 million in August 2018. The early repayment
break costs were £158,000 but this cost is outweighed
by the saving in interest costs over the term.
Group interest paid was reduced to £4.0 million
(2014: £4.8 million).
Our investment with Oaktree Capital Management
(HRGT Shopping Centres LP), remains profitable and
generates management fees for our wholly owned
management subsidiary (London & Associated
Management Services Limited). We also received
£201,000 as a partial repayment of our loan.
At the year end, LAP, excluding Bisichi and
Dragon, had £3.2 million (2014: £6.3 million) of
cash and cash equivalent balances.
Since the year end, LAP, excluding Bisichi has sold
its investment in Langney Shopping Centre Unit
Trust for £1.14 million in cash. Additionally we
received £30,000 in dividends and £63,500 for
loan repayment.
12
London & Associated Properties PLC 2015
STRATEGIC REPORT FINANCIAL REVIEW
London & Associated Properties PLC 2015 13
STRATEGIC REPORT FINANCIAL REVIEW
BRIXTON MARKET
14
London & Associated Properties PLC 2015
STRATEGIC REPORT FINANCIAL REVIEW
INCOME STATEMENT
The full group results (including Bisichi and Dragon)
before taking account of revaluation and other
movements show an improvement over last year
(loss of £2.3 million as against £3.6 million in
2014). This is mainly due to lower overheads and
finance expenses, which are offset by higher
exchange losses in Bisichi.
As reported last year, the repayment of the RBS
loans and interest rate swaps and their replacement
with new Santander loans reduced the cost of
finance for LAP. The finance expenses have been
reduced to £4.2 million (2014: £4.9 million).
Our property portfolio of £104.4 million decreased on
revaluation by only £185,000.
The results before tax show a loss of £2.1 million
(2014: £2.7 million). The segmental analysis in
note 1 to the financial statements shows the
split position, after excluding inter-company
transactions.
As previously stated the Group’s income statement
includes the income of Bisichi and Dragon on a
consolidated basis. The table below gives a clearer
summary of Group results.
(LOSS)/PROFIT BEFORE TAXATION
LAP
Bisichi
Dragon
Group (loss)/profit before taxation
Note: The figures exclude inter-company revenue.
2015
£’000
(1,886)
(217)
10
(2,093)
2014
£’000
(4,305)
1,531
81
(2,693)
BALANCE SHEET
Taking account of the changes required by IFRS 10 (see table below) LAP has group net assets of £49.7
million (2014: £53.4 million).
Net assets attributable to equity shareholders at the year-end were 47.26p per share (2014: 50.35p
per share).
2015
Investment properties
Other fixed assets
Investments in associate
Investments and loans in joint ventures and assets held for sale
Other non current assets
Current assets
Current liabilities
Non-current liabilities
Net assets
2014
Investment properties
Other fixed assets
Investments in associate
Investments and loans in joint ventures and assets held for sale
Other non current assets
Current assets
Current liabilities
Non-current liabilities
Net assets
LAP
ORIGINAL
GROUP
£’000
93,510
148
6,359
2,041
4,385
5,534
(8,605)
(62,992)
40,380
93,563
178
7,184
2,276
4,520
8,497
(10,560)
(62,812)
42,846
BISICHI
MINING PLC
GROUP
£’000
12,994
5,374
–
3,266
14
9,467
(6,501)
(8,983)
15,631
11,770
6,064
–
3,938
152
12,289
(7,148)
(9,346)
17,719
DRAGON
RETAIL
PROPERTIES
£’000
2,668
30
–
–
–
2,548
(2,199)
(1,300)
1,747
CONSOLIDATION
ADJUSTMENTS
£’000
–
–
(6,359)
(1,747)
–
(4,531)
4,531
–
(8,106)
3,110
15
–
–
–
2,693
(1,984)
(2,102)
1,732
–
–
(7,184)
(1,740)
–
(4,755)
4,755
–
(8,924)
LAP
NET ASSETS
£’000
109,172
5,552
–
3,560
4,399
13,018
(12,774)
(73,275)
49,652
108,443
6,257
–
4,474
4,672
18,724
(14,937)
(74,260)
53,373
London & Associated Properties PLC 2015 15
STRATEGIC REPORT FINANCIAL REVIEW
VA N C O U V E R Q U A R T E R , K I N G ’ S LY N N
BISICHI MINING PLC
Although the results of Bisichi Mining PLC have
been consolidated in these financial statements,
the Board of LAP has no direct influence over the
management of Bisichi. The comments below are
based on the published accounts of Bisichi.
The Bischi group results are stated in full in its
published 2015 financial statements which are
available on its website: www.bisichi.co.uk.
The Bisichi group achieved earnings before
interest, tax, depreciation and amortisation
(EBITDA) of £1.7 million (2014: £4.3 million).
Loss for the year after tax was £0.2 million
(2014: profit £1.2 million). Bisichi has two core
revenue streams – investment in retail property
in the UK and coal mining in South Africa.
The coal mining in South Africa was profitable in
the first half of the year, but the mine operated at
a loss in the second half. Due to the weakness of
the Rand against UK Sterling, substantial exchange
losses of £1.1 million (2014: £0.1 million) have
arisen on translation of the South African net assets
into sterling for the UK Bisichi group Balance Sheet.
Exchange losses of £0.5 million (2014: £0.1
million) also impacted the Income Statement.
The UK retail property portfolio was valued at
the year end at £12.8 million (2014: £11.6 million).
In October 2015 Bisichi acquired a retail property
in Northampton for £0.96 million in cash. The
property portfolio is actively managed by LAP and
generates rental income of £1 million (2014:
£0.9 million).
In South Africa, a subsidiary of Bisichi signed an
increase in the structured trade finance facility
from R60 million to R80 million (South African
Rand). This facility is renewable annually.
In the UK, the Bisichi group signed a £6 million
five-year term loan with Santander in December
2014. This loan is secured against UK investment
property.
The Bisichi group’s cash and cash equivalents at
the year-end were £1.6 million (2014: £2.8 million).
In March 2016, like LAP, Bisichi also sold its
interest in Langney Shopping Centre Unit Trust
for £1.14 million in cash.
Bisichi’s net assets at 31 December 2015 were
£15.6 million (2014: £17.7 million).
16
London & Associated Properties PLC 2015
STRATEGIC REPORT FINANCIAL REVIEW
DIVIDENDS
The directors are proposing a final dividend of
0.16p per ordinary share payable in July 2016.
This is an increase of 3% compared to the 2014
dividend, and continues to reflect the Group’s
confidence in its trading and future outlook.
DRAGON RETAIL PROPERTIES LIMITED
The company repaid its £1.9 million NatWest
bank loan replacing it with a five year secured
Santander bank loan of £1.25 million and
through the sale of a long lease for the upper
parts of its property in Bristol for £0.4 million.
The remainder of the repayment was funded
equally by the two joint venture partners.
ACCOUNTING JUDGEMENTS
AND GOING CONCERN
The most significant judgements made in
preparing these accounts relate to the carrying
value of the properties, investments and interest
rate hedges. The hedges have been valued by the
hedge provider. The group uses external property
valuers to determine the fair value of its
properties. Under IFRS10 the group has included
Bisichi Mining PLC from 2014 in the consolidated
accounts, as it is deemed to be under the
effective control of LAP and has therefore been
treated as a subsidiary.
The Directors exercise their commercial
judgement when reviewing the Group’s cash flow
forecasts and the underlying assumptions on
which the forecasts are based. The Group’s
business activities, together with the factors
likely to affect its future development, are set
out in the Chairman and Chief Executive’s
Statement and in this review. In addition, the
Directors consider that note 23 to the financial
statements sets out the Group’s objectives,
policies and processes for managing its capital;
its financial risk management objectives; details of
its financial instruments and hedging activities; and
its exposure to credit risk, liquidity risk and other
risks.
With a quality property portfolio comprising a
majority of tenants with long leases supported
by suitable financial arrangements, the Directors
believe the company is well placed to manage its
business risks successfully, despite the continuing
uncertain economic climate. The Directors
therefore have a reasonable expectation that the
company has adequate resources to continue in
operational existence for the foreseeable future.
Thus they continue to adopt the going concern
basis of accounting in preparing the annual
financial statements.
London & Associated Properties PLC 2015 17
STRATEGIC REPORT
PRINCIPAL ACTIVITY, STRATEGY
& BUSINESS MODEL
The Group’s principal business model is the
investment in and management of town centre
retail property through direct investment and
joint ventures, where we manage the property
ourselves and on behalf of our partners.
The principal activity of Bisichi Mining PLC is coal
mining in South Africa. Further information is
available in its 2015 Financial Statements which
are available on their web site: www.bisichi.co.uk
STRATEGIC PRIORITIES ARE
OUR STRATEGY IS
MAXIMISING INCOME
CREATING QUALITY PROPERTY
CAPITAL STRENGTH
By achieving an appropriate tenant mix and shopping
experience we can increase footfall through the centres,
hence increase tenant demand for space and enhance
income.
We look to improve the consumer experience at all our
centres by achieving an appropriate tenant mix and a
vibrant trading environment through investment activity,
enhancement, refurbishment and development.
We operate within a prudent and flexible financial structure.
Our gearing, which has been substantially reduced, provides
financial stability whilst giving capacity and flexibility to
look for further investments.
MAINTAIN THE VALUE OF
INVESTMENT IN BISICHI
By encouraging the Bisichi management to maximise
sustainable profits and cash distributions.
18
London & Associated Properties PLC 2015
STRATEGIC REPORT
THE RUSHES, LOUGHBOROUGH
London & Associated Properties PLC 2015
19
STRATEGIC REPORT
RISK AND UNCERTAINTIES
DESCRIPTION OF RISK
DESCRIPTION OF IMPACT
MITIGATION
ASSET MANAGEMENT:
TENANT FAILURE
Financial loss.
LEASES NOT RENEWED
Financial loss.
Initial and subsequent assessment of tenant covenant strength
combined with an active credit control function.
Lease expiries regularly reviewed. Experienced in house teams with
strong tenant and market knowledge who manage appropriate tenant
mix.
ASSET LIQUIDITY (SIZE AND
GEOGRAPHICAL LOCATION)
Assets may be illiquid and affect
flexing of balance sheet.
Regular reporting of current and projected position to the Board with
efficient treasury management.
PEOPLE:
RETENTION AND RECRUITMENT
OF STAFF
Unable to retain and attract the
best people for the key roles.
Nomination Committee and senior staff review skills gaps and
succession planning. Training and development offered.
REPUTATION:
BUSINESS INTERRUPTION
Loss in revenue.
Documented Recovery Plan in place.
Impact on footfall.
Adverse publicity.
Potential for criminal/
civil proceedings.
General and terrorism insurance policies in place and risks
monitored by trained security staff.
Health and Safety policies in place.
CCTV in centres.
FINANCING:
FLUCTUATION IN PROPERTY
VALUES
Impact on covenants and other loan
agreement obligations.
Secure income flows.
Regular monitoring of LTV and IC covenants and other obligations.
REDUCED AVAILABILITY OF
BORROWING FACILITIES
Insufficient funds to meet existing
debts/interest payments and
operational payments.
LOSS OF CASH AND DEPOSITS
Financial loss.
FLUCTUATION OF INTEREST RATES
Uncertainty of interest rate costs.
Focus on quality assets.
Efficient treasury management.
Loan facilities extended where possible.
Regular reporting of current and projected position to the Board.
Only use a spread of banks and financial institutions which have a
strong credit rating.
Manage derivative contracts to achieve a balance between hedging
interest rate exposure and minimising potential cash calls.
20
London & Associated Properties PLC 2015
STRATEGIC REPORT RISK AND UNCERTAINTIES
BISICHI RISK & UNCERTAINTIES
Bisichi Mining PLC, which we consolidate under
IFRS 10 has a number of key risks and
uncertainties relating to mining for coal.
REGULATORY RISK
The group’s South African operations are subject
to the government Mining Charter and scorecard
which primarily seeks to:
ENVIRONMENTAL RISK
The group’s South African mining operations are
required to adhere to local environmental
regulations.
HEALTH & SAFETY RISK
The group’s South African mining operations are
required to adhere to local Health and Safety
regulations.
LABOUR RISK
The group’s mining operations and coal washing
plant facility are labour intensive and unionised.
Any labour disputes, strikes or wage negotiations
may disrupt production and impact earnings.
CASHFLOW RISK AND PROPERTY
We seek to balance the high risk of our mining
operations with a dependable cash flow from our
UK property investment operations. Fluctuations
in property values, which are reflected in the
Consolidated Income Statement and Balance
Sheet, are dependent on an annual valuation of
commercial properties. A fall in UK commercial
property can have a marked effect on the
profitability and the net asset value of the group.
However, due to the long term nature of the
leases, the effect on cash flows from property
investment activities are expected to remain
stable as long as tenants remain in operation.
COAL PRICE RISK
The group’s South African mining operational
earnings are largely dependent on movements in
both the export and domestic coal price.
COAL WASHING
The group’s mining operation’s earnings are
highly sensitive to coal washing, therefore a
stoppage or disruption to the process could
significantly impact earnings. However, there is
scope to raise earnings substantially if the yield
from the washing process is improved even
marginally.
MINING RISK
Attached to mining there are inherent health and
safety risks. Any such safety incidents disrupt
operations, and can slow or even stop production.
The group has a comprehensive Health and
Safety programme in place to mitigate this. As
with many mining operations, the reserve that is
mined has the risk of not having the qualities and
accessibility expected from geological and
environmental analysis.
CURRENCY RISK
The group’s South African operations are sensitive
to currency movements, especially those between
the South African Rand, US Dollar and British
Pound.
NEW RESERVES AND MINING
PERMISSIONS
The life of the mine, acquisition of additional
reserves, permissions to mine and new mining
opportunities in South Africa generally are
contingent on a number of factors outside of the
group’s control, e.g. approval by the Department
of Mineral Resources and the Department of
Water Affairs and Forestry.
• Promote equitable access to South Africa’s
mineral resources for all people in South Africa;
• Expand opportunities for historically
disadvantaged South Africans (HDSAs),
including women, to enter the mining and
minerals industry and benefit from the
extraction and processing of the country’s
resources;
• Utilise the existing skills base for the
empowerment of HDSAs;
• Expand the skills base of HDSAs in order to
serve the community;
• Promote employment and the social and
economic welfare of mining communities and
areas supplying mining labour; and
• Promote beneficiation of South Africa’s mineral
commodities beyond mining and processing,
including the production of consumer goods.
The group continues to make good progress
towards meeting the Charter requirements.
However any regulatory changes to these, or
failure to meet existing targets, could adversely
affect the mine’s ability to retain its mining rights
in South Africa.
TRANSPORT RISK
At present the government owned Transnet Freight
Rail (TFR) is the sole rail freight provider for coal in
South Africa. The group’s South African operations
are therefore reliant on TFR for delivery of its
export quality coal directly or indirectly via the
Southern African ports to its end customers.
POWER SUPPLY RISK
The current utility provider for power supply in
South Africa is the government run Eskom. Eskom
continues to undergo capacity problems resulting in
power cuts and lack of provision of power supply
to new projects. The group’s mining operations
have to date not been affected by power cuts.
FLOODING RISK
The group’s mining operations are susceptible to
seasonal flooding which could disrupt production.
Management monitors water levels on an
ongoing basis and various projects have been
completed, including the construction of
additional dams, to mitigate this risk.
London & Associated Properties PLC 2015 21
STRATEGIC REPORT
V A N C O U V E R Q U A R T E R ,
K I N G ’ S L Y N N
22
London & Associated Properties PLC 2015
STRATEGIC REPORT
KEY PERFORMANCE INDICATORS
VOIDS
6.0
4.0
2.0
%
0.0
The Group’s Key Performance Indicators are selected to ensure clear alignment between its strategy and shareholder interests.
The KPIs are calculated using data from management reporting systems.
2014 2015
STRATEGIC PRIORITY
KPI
PERFORMANCE
VOIDS
MAXIMISING INCOME – LIKE FOR LIKE PROPERTY INCOME
TO INCREASE THE LIKE-FOR-LIKE
INCOME FROM THE PROPERTY YEAR ON
YEAR.
Like-for-like rental income
as a percentage of the
prior year rental.
The like-for-like rental income
has increased by £0.15m.
MAXIMISING INCOME – OCCUPANCY
WE AIM TO MAXIMISE THE TOTAL
INCOME IN OUR PROPERTIES BY
ACHIEVING FULL OCCUPANCY.
The ERV of the empty units
as a percentage
of our total income.
Void levels have improved
significantly.
CAPITAL STRENGTH – GROWTH IN NET ASSET VALUE PER SHARE
THE NET ASSETS PER SHARE IS THE
PRINCIPAL MEASURE USED BY THE
GROUP FOR MONITORING ITS
PERFORMANCE AND IS AN INDICATOR
OF THE LEVEL OF RESERVES AVAILABLE
FOR DISTRIBUTION BY WAY OF
DIVIDEND.
Movement in the net assets
per share.
The net assets per share fell
by 3.09 pence per share or
6.1%.
However the strength and
quality of NAV continues to
stabilise as a result of the
re-financing.
%
%
6.0
4.0
2.0
2.0
0.0
0.0
-4.0
-8.0
e
r
a
h
s
%
%
r
e
p
e
c
n
e
p
V
A
N
6.0
2.0
75.0
4.0
0.0
50.0
2.0
-4.0
25.0
-8.0
0.0
0.0
e
r
a
h
s
r
e
p
e
c
n
e
p
V
A
N
%
75.0
50.0
25.0
2.0
0.0
0.0
-4.0
-8.0
e
r
a
h
s
r
e
p
e
c
n
e
p
V
A
N
75.0
50.0
25.0
0.0
LIKE-FOR-LIKE INCOME
2014 2015
2014 2015
VOIDS
LIKE-FOR-LIKE INCOME
NET ASSETS PER SHARE
2014 2015
2014 2015
2014 2015
NET ASSETS PER SHARE
LIKE-FOR-LIKE INCOME
2014 2015
2014 2015
NET ASSETS PER SHARE
2014 2015
London & Associated Properties PLC 2015 23
STRATEGIC REPORT
CORPORATE RESPONSIBILITY
GREENHOUSE GAS REPORTING
We have reported on all of the emission sources
required under the Companies Act 2006 (Strategic
Report and Directors’ Reports) Regulations 2013
for the reporting period 1st January 2015 to
31st December 2015. The emissions are detailed
in tables 1, 2, 3 and 4 below.
We have employed the Financial Control
definition to outline our carbon footprint
boundary reporting Scope 1 & 2 emissions only.
Emissions from landlord & tenant controlled areas
of LAP owned shopping centres and facilities that
fall within the footprint boundary. LAP has
landlord controlled areas in Kings Square, Orchard
Square, Brewery Street, Shipley and Bridgend.
Excluded from our footprint boundary are:
properties that we manage on behalf of others
or are not wholly owned by LAP and emissions
considered non material by the business.
and onsite mining processes for Black Wattle
Colliery. Excluded from the footprint boundary
are emission sources considered non material by
Bisichi Group, including refrigerant use onsite.
Emissions for landlord controlled areas have
been calculated based on actual consumption
information collected from each shopping
centre. Emissions from tenant controlled areas
have been calculated based on floor area and
energy consumption benchmarks for general
retail services in the UK.
The Bisichi Group has employed the Operational
Control boundary definition to outline the carbon
footprint boundary. Included within that boundary
are Scope 1 & 2 emissions from coal extraction
We have used the GHG Protocol Corporate
Accounting and Reporting Standard (revised
edition) and guidance provided by UK’s
Department of Environment and Rural Affairs
(DEFRA) on voluntary and mandatory carbon
reporting. Emission factors were used from UK
Government’s GHG Conversion Factors for
Company Reporting 20151.
As well as reporting Scope 1 and Scope 2 emissions,
legislation requires that at least one intensity
ratio is reported for the given reporting period.
TABLE1. LANDLORD & TENANT CONTROLLED AREAS
EMISSIONS SOURCE
SCOPE 1 EMISSIONS
Natural gas (tCO2e)
SCOPE 2 EMISSIONS
Electricity (tCO2e)
Total tCO2e
Intensity ratio (tCO2e/£thousand)
TABLE 2. LAP CONTROLLED AREAS
EMISSIONS SOURCE
SCOPE 1 EMISSIONS
Natural gas (tCO2e)
SCOPE 2 EMISSIONS
Electricity (tCO2e)
Total tCO2e
TABLE 3. TENANT CONTROLLED AREAS
EMISSIONS SOURCE
SCOPE 1 EMISSIONS
Natural gas (tCO2e)
SCOPE 2 EMISSIONS
Electricity (tCO2e)
Total tCO2e
1 2015 Guidelines to DEFRA/DECC’s GHG Conversion Factors for Company Repiorting”, Department for environment,
Food and Rural Affairs (DEFRA) and Department for Energy and Climate Change (DECC)
24
London & Associated Properties PLC 2015
2015
106
3,907
4,013
0.65
2015
106
256
362
2015
-
3,651
3,651
2014
129
4,386
4,515
0.70
2014
129
346
475
2014
-
4,040
4,040
STRATEGIC REPORT CORPORATE RESPONSIBILITY
B R I X T O N M A R K E T
London & Associated Properties PLC 2015 25
STRATEGIC REPORT CORPORATE RESPONSIBILITY
K
I
N
G
S
G
A
T
E
,
D
U
N
F
E
R
M
L
I
N
E
26
London & Associated Properties PLC 2015
STRATEGIC REPORT CORPORATE RESPONSIBILITY
TABLE 4. COAL MINING CARBON FOOTPRINT
EMISSIONS SOURCE:
Scope 1 Combustion of fuel & operation of facilities
Scope 1 Emissions from coal mining activities
Scope 2 Electricity, heat, steam and cooling purchased for own use
Total
INTENSITY:
Intensity 1 Tonnes of CO2 per pound sterling of revenue
Intensity 2 Tonnes of CO2 per pound of coal produced
2015
CO2E
TONNES
10,571
27,789
7,571
45,931
0.00179
0.0291
2014
CO2E
TONNES
14,867
26,872
8,300
50,039
0.00189
0.0327
ENVIRONMENT
The Group’s principal UK activity is property
investment, which involves renting premises to
retail businesses. We seek to provide those tenants
with good quality premises from which they can
operate in an efficient and environmentally friendly
manner. Where possible, improvements, repairs
and replacements are made in an environmentally
efficient manner and waste re-cycling arrangements
are in place at all of the Company’s locations.
EMPLOYEE, SOCIAL, COMMUNITY AND
HUMAN RIGHTS
The Group’s principal UK activity is to attract
staff and motivate employees by offering
competitive terms of employment. The Group
provides equal opportunities to all employees
and prospective employees including those who
are disabled.
DIRECTOR, EMPLOYEES AND GENDER
REPRESENTATION
At the year end the company had 6 directors
(6 male, 0 female), 2 senior managers (2 male,
0 female) and 18 employees (9 male, 9 female).
BISICHI MINING PLC
Bisichi Mining PLC’s principal activity in the UK
is property investment and in South Africa is coal
mining. The employment terms and conditions
of their UK office employees and South Africa
Mining employees are regulated and operated in
compliance with all relevant national legislation.
Bisichi Mining PLC’s group at the year end had
6 directors (6 male, 0 female), 7 senior managers
(6 male,1 female) and 205 employees (154 male,
51 female).
Detailed information relating to Bisichi Strategic
Report is available in its 2015 financial
statements.
Approved on behalf of the board of directors
Anil Thapar,
Finance Director
28 April 2016
London & Associated Properties PLC 2015 27
28
London & Associated Properties PLC 2015
E
C
N
A
N
R
E
V
O
G
30 DIRECTORS & ADVISORS
31 DIRECTORS’ REPORT
34 CORPORATE GOVERNANCE
36 GOVERNANCE STATEMENT BY THE CHAIRMAN
OF THE REMUNERATION COMMITTEE
37 ANNUAL REMUNERATION REPORT
42 REMUNERATION POLICY
44 AUDIT COMMITTEE REPORT
45 DIRECTORS’ RESPONSIBILITY
STATEMENT
46 INDEPENDENT AUDITOR’S REPORT
London & Associated Properties PLC 2015 29
GOVERNANCE
DIRECTORS & ADVISORS
EXECUTIVE DIRECTORS
Sir Michael Heller MA FCA*
(Chairman)
John A Heller LLB MBA
(Chief Executive)
Anil K Thapar FCCA
(Finance Director)
NON-EXECUTIVE DIRECTORS
Howard D Goldring BSC (ECON) ACA †
Howard Goldring has been a member of the board since July 1992, he is
a global asset allocation specialist and has over 30 years’ experience in the
real estate market. He is Executive Chairman of Delmore Asset Management
Limited which specialises in the management of investment portfolios for
private clients, charities, family trusts and pension funds. He also acts as an
advisor providing high level asset allocation advice to family offices and
pension schemes, including among others, Tesco Pension Investment Ltd.
From 1997-2003 he was consultant director on global asset allocation to
Liverpool Victoria Asset Management Limited.
Clive A Parritt FCA CF FIIA #†
Clive Parritt joined the board on 1 January 2006. He is a chartered
accountant with over 30 years’ experience of providing strategic, financial
and commercial advice to businesses of all sizes. He is Chairman of BG
Training Limited, Finance Director of Audiotonix Limited, as well as a
director of Baronsmead Venture Trust plc and Jupiter US Smaller Companies
plc. Clive Parritt was President of the Institute of Chartered Accountants in
England and Wales in 2011-12. He is Chairman of the Audit Committee
and as Senior Independent Director he chairs the Nomination and
Remuneration Committees.
Robin Priest MA
Robin Priest joined the board on 31 July 2013. He is a Managing Director
of Alvarez & Marsal Real Estate Advisory Services LLP (A&M) and has more
than 30 years’ experience in real estate and structured finance. He advises
private sector and public sector clients on both operational and financial
real estate matters. Prior to joining A&M, Robin Priest was lead partner for
Real Estate Corporate Finance in London with Deloitte LLP and before this
he founded and ran a property company backed by private equity.
He is also a trustee of London’s Oval House Theatre.
* Member of the nomination committee
# Senior independent director
† Member of the audit, remuneration and nomination committees
SECRETARY & REGISTERED OFFICE
Anil K Thapar FCCA
24 Bruton Place
London W1J 6NE
AUDITOR
RSM UK Audit LLP (formerly Baker Tilly UK Audit LLP)
PRINCIPAL BANKERS
Santander UK plc
Abbey National Treasury Services plc
Europa Capital Mezzanine Ltd
SOLICITORS
Olswang LLP
Pinsent Masons LLP
STOCKBROKER
Stockdale Securities Limited
REGISTRARS & TRANSFER OFFICE
Capita Asset Services
Shareholder Services
The Registry
34 Beckenham Road
Beckenham
Kent
BR3 4TU
UK telephone: 0871 664 0300
International telephone: +44 (0) 20 8639 3399
(Calls cost 12p per minute plus your phone company’s access charge.
Calls outside the United Kingdom will be charged at the applicable
international rate).
Lines are open between 9.00am to 5.30pm, Monday to Friday,
excluding public holidays in England and Wales.
Website: www.capitaregistrars.com
Email: shareholderenquiries@capita.co.uk
Company registration number
341829 (England and Wales)
WEBSITE
www.lap.co.uk
E-MAIL
admin@lap.co.uk
30
London & Associated Properties PLC 2015
GOVERNANCE
DIRECTORS’ REPORT
The Directors submit their report and the audited
accounts, for the year ended 31 December 2015.
Strategic report
A comprehensive review and assessment of the Group’s activities during
the year as well as its position at the year end and prospects for the
forthcoming year are included in the Chairman and Chief Executive’s
Statement and the Strategic Report. These reports can be found on pages 4
to 27 and should be read in conjunction with this report.
Activities
The principal activities of the Group during the year were property
investment and development, as well as investment in joint ventures and
an associated company. The associated company is Bisichi Mining PLC
(Bisichi) in which the Company holds a 42 per cent interest. Bisichi is listed
on the main market of the London Stock Exchange and operates in England
and South Africa with subsidiaries which are involved in overseas mining
and mining investment. The results, together with the assets and liabilities,
of Bisichi are consolidated with those of LAP in accordance with the terms
of IFRS 10 even though the Group only has a minority interest – under IFRS
10 the 58% majority interest is disclosed as a “non-controlling interest”.
Business review
Review of the Group’s development and performance
A review of the Group’s development and performance can be found below
and should be read in conjunction with the Strategic Report on pages 12 to 27.
Property activities
The Group is a long-term investor in property. It acquires retail properties,
actively manages those assets to improve rental income, and thus seeks to
enhance the value of its properties over time. In reviewing performance,
the principal areas regularly monitored by the Group include:
• Rental income – the aim of the Group is to maximise the maintainable
income from each property by careful tenant management supported by
sympathetic and revenue enhancing development. Whilst income may be
affected adversely by the inability of tenants to pay their rent, rent collection
and tenant quality are monitored carefully. Risk is also minimised by a
diversified tenant base, which should limit the impact of the failure of
any individual tenant.
• Cash flow – allowing for voids, acquisitions, development expenditure,
disposals and the impact of operating costs and interest charges, the
Group aims to maintain a positive cash flow.
• Financing costs – the exposure of the Group to interest rate movements
is managed partly by the use of swap arrangements (see note 23 on page
75 for full details of the contracts in place) and also by using loans with
fixed terms and interest rates. These arrangements are designed to ensure
that our interest costs are known in advance and are always covered by
anticipated rental income. Details of key estimates that have been
adopted are contained in the accounting policies note on page 54.
• Property valuations – market sentiment and economic conditions have a
direct effect on property valuations, which can vary significantly (upwards or
downwards) over time. Bearing in mind the long term nature of the Group’s
business, valuation changes have little direct effect on the ongoing activities or
the income and expenditure of the Group. Tenants generally have long term
leases, so rents are unaffected by short term valuation changes. Borrowings are
secured against property values and if those values fall very significantly, this
could limit the ability of the Group to develop the business using external
borrowings. The risk is minimised by trying to ensure that there is adequate
cover to allow for fluctuations in value on a short term basis.
It continues to be the policy of the Group to realise property assets when
the valuation of those assets reaches a level at which the directors consider
that the long-term rental yield has been reached. The Group also seeks to
acquire additional property investments on an opportunistic basis when the
potential rental yields offer scope for future growth.
Investment activities
The investments in joint ventures and Bisichi are for the long term.
LAP manages the UK property assets of Bisichi. However, the principal activity of
Bisichi is overseas mining investment (principally in South Africa). While IFRS 10
requires the consolidation of Bisichi, the investment is held to generate income
and capital growth over the longer term. It is managed independently of LAP and
should be viewed by shareholders as an investment not a subsidiary. The other
listed investments are held as current assets to provide the liquidity needed to
support the property activities while generating income and capital growth.
Investments in property are made through joint ventures when the financing
alternatives and spreading of risk make such an approach desirable.
Dividend policy
The directors are recommending payment of a final dividend for 2015 of
0.16p per share (2014 0.156p per share).
Subject to shareholder approval, the ordinary final dividend will be payable
on Friday 15 July 2016 to shareholders registered at the close of business
on Friday 17 June 2016.
The company’s ordinary shares held in treasury
At 31 December 2015, 734,816 (2014: 1,032,991) ordinary shares were
held in Treasury with a market value of £181,867 (2014: £400,284). At the
Annual General Meeting (AGM) in June 2015 members renewed the
authority for the Company to purchase up to 10 per cent of its issued
ordinary shares. The Company will be asking members to renew this
authority at the next AGM to be held on Thursday 9 June 2016.
MOVEMENTS IN TREASURY SHARES DURING THE YEAR:
Treasury shares held at 1 January 2015
Issued for directors’ bonuses (431,476 shares at 37.75p)
Issued for staff bonuses (111,678 shares at 37.75p)
Issued for Share Incentive Plan (Directors 7,947 shares at 37.75p)
Issued for Share Inventive Plan (Staff 47,271 shares at 37.75p)
Purchase of shares (133,333 shares at 37.5p)
Purchase of shares (166,864 shares at 36p)
Treasury shares held at 31 December 2015
NUMBER OF
SHARES
1,032,991
(431,476)
(111,678)
(7,947)
(47,271)
133,333
166,864
734,816
Treasury shares are not included in issued share capital for the purposes of
calculating earnings per share or net assets per share and they do not
qualify for dividends payable.
Following the year-end, 1,936 ordinary shares were transferred from Treasury
to enable the issue of shares in connection with an approved HMRC Share
Incentive Plan. The shares were issued at 25p on 8 January 2016. A further
284,518 ordinary shares were transferred from Treasury to enable the issue
of shares in connection with an approved HMRC Share Incentive Plan and
Directors’ and Staff bonuses. The shares were issued at 24.5p on
18 January 2016.
London & Associated Properties PLC 2015 31
GOVERNANCE DIRECTORS’ REPORT
Investment properties
The freehold and long leasehold properties of the Company, its subsidiaries
and Bisichi were revalued as at 31 December 2015 by independent
professional firms of chartered surveyors – Allsop LLP, London (83.44 per
cent of the portfolio), Carter Towler, Leeds (12.26 per cent) – and by the
Directors (4.30 per cent). The valuations, which are reflected in the financial
statements, amount to £104.39 million (2014: £103.65 million).
Taking account of prevailing market conditions, the valuation of the
properties at 31 December 2015 resulted in a decrease of £0.18 million
(2014: increase of £0.85 million). The impact of property revaluations on
the Company’s joint venture (Langney Shopping Centre Unit Trust) was a
decrease of £0.31 million (2014: increase of £3.98 million). The proportion
of this revaluation attributable to the Group (net of taxation) is reflected in
the consolidated income statement and the consolidated balance sheet.
Financial instruments
Note 23 to the financial statements sets out the risks in respect of financial
instruments. The board reviews and agrees overall treasury policies, delegating
appropriate authority for applying these policies to the Chief Executive and
Finance Director. Financial instruments are used to manage the financial risks
facing the Group and speculative transactions are prohibited. Treasury
operations are reported at each board meeting and are subject to weekly
internal reporting. Hedging arrangements are in place for the Company, its
subsidiaries and joint ventures in order to limit the effect of higher interest
rates upon the Group. Where appropriate hedging arrangements are covered
in the Chairman and Chief Executive’s Statement and the Financial Review.
Directors
Sir Michael Heller, J A Heller, A K Thapar, H D Goldring, C A Parritt and
R Priest were Directors of the company for the whole of 2015.
Sir M Heller and H D Goldring are retiring by rotation at the Annual General
Meeting in 2016 and offer themselves for re-election.
Brief details of the Directors offering themselves for re-election, are as follows:
Sir Michael Heller is Executive Chairman and has been a Director since
1971. He has a contract of service determinable upon six months’ notice.
Sir Michael Heller is a chartered accountant and a member of the
nomination committee. He is Executive Chairman of Bisichi Mining PLC,
our associate company. The board has considered the re-appointment of
Sir Michael Heller and recommends his re-election as a Director.
Howard Goldring has been a Director since 1992 and has a contract of service
determinable upon three months’ notice. He is an Independent Director and a
member of the audit, nomination and remuneration committees. Howard
Goldring is a chartered accountant and global asset allocation specialist. He is
Executive Chairman of Delmore Asset Management Limited. His specialised
economic knowledge and broad commercial experience are of significant
benefit to the business. The board has considered the re-appointment of
Howard Goldring and recommends his re-election as a Director.
Directors’ interests
The interests of the Directors in the ordinary shares of the Company,
including family and trustee holdings, where appropriate, can be found on
page 39 of the Annual Remuneration Report.
Substantial shareholdings
At 31 December 2015 Sir Michael Heller and his family had an interest in 47.8
million shares of the Company, representing 56.4 per cent of the issued share
capital net of treasury shares (2014: 47.6 million shares representing 56.3 per
cent). Cavendish Asset Management Limited had an interest in 8,280,434
shares representing 9.76 per cent of the issued share capital of the Company
(2014: 7,705,611 shares representing 9.12 per cent). James Hyslop had an
interest in 3,856,258 shares representing 4.55 per cent of the issued share
capital of the Company (2014: 3,856,258 shares representing 4.56 per cent).
The Company does not consider that the Heller family have a controlling share
interest irrespective of the number of shares held as no individual party holds a
majority and there is no legal obligation for shareholders to act in concert. The
Directors do not consider that any party has control.
The Company is not aware of any other holdings exceeding 3 per cent of the
issued share capital. After the year-end and at the date of this report Sir
Michael Heller and his family’s interest was 47.8 million shares of the
Company representing 56.2 per cent of the issued share capital net of treasury
shares. Also after the year end and at the date of this report, James Hyslop’s
interest increased to 4,256,258 shares of the Company representing over
5 per cent of the issued share capital net of treasury shares.
Takeover directive
The Company has one class of share capital, namely ordinary shares.
Each ordinary share carries one vote. All the ordinary shares rank pari passu.
There are no securities issued in the Company which carry special rights
with regard to control of the Company.
The identity of all significant direct or indirect holders of securities in the
Company and the size and nature of their holdings is shown in “Substantial
Shareholdings” above.
The rights of the ordinary shares to which the HMRC approved Share Incentive
Plan relates, are exercisable by the trustees on behalf of the employees.
There are no restrictions on voting rights or on the transfer of ordinary shares
in the Company, save in respect of treasury shares. The rules governing the
appointment and replacement of Directors, alteration of the articles of
association of the Company and the powers of the Company’s Directors
accord with usual English company law provisions. Each Director is re-elected
at least every three years. The Company has requested authority from
shareholders to buy back its own ordinary shares and there will be a
resolution to renew the authority at this year’s AGM (Resolution 10).
The Company is not party to any significant agreements that take effect,
alter or terminate upon a change of control of the Company following a
takeover bid. The Company is not aware of any agreements between holders
of its ordinary shares that may result in restrictions on the transfer of its
ordinary shares or on voting rights.
There are no agreements between the Company and its Directors or
employees providing for compensation for loss of office or employment
that occurs because of a takeover bid.
Statement as to disclosure of information to the auditor
The Directors in office at the date of approval of the financial statements have
confirmed that, so far as they are aware, there is no relevant audit information of
which the auditor is unaware. Each of the Directors has confirmed that they have
taken all the steps that they ought to have taken as a Director in order to make
them aware of any relevant audit information and to establish that it has been
communicated to the auditor.
Directors and officers liability insurance
The Group maintains Directors and officers insurance, which is reviewed annually
and is considered to be adequate by the Company and its insurance advisers.
Donations
No political donations were made during the year (2014: £Nil). No donations
for charitable purposes were made during the year (2014: £1,005).
Greenhouse Gas Reporting
Details of the Group’s Greenhouse Gas Reporting for the year ended
31 December 2015 can be found on page 24 of the Strategic Report.
32
London & Associated Properties PLC 2015
GOVERNANCE DIRECTORS’ REPORT
Going concern
The directors have reviewed the cash flow forecasts of the Group and the
underlying assumptions on which they are based. The Group’s business
activities, together with the factors likely to affect its future development,
are set out in the Chairman’s and Chief Executive’s Statement and Financial
Review. In addition, note 23 to the financial statements sets out the
Company’s objectives, policies and processes for managing its capital; its
financial risk management objectives; details of its financial instruments
and hedging activities; and its exposure to credit risk and liquidity risk.
With secured long term banking facilities, sound financial resources and
long term leases in place the Directors believe it remains appropriate to
adopt the going concern basis of accounting in preparing the annual
financial statements.
Corporate Governance
The Corporate governance report can be found on page 34 of the
annual report and accounts.
Annual General Meeting
The Annual General Meeting will be held at 24 Bruton Place, London W1J 6NE
on Thursday 9 June 2016 at 10.30 a.m. Items 1 to 8 will be proposed as ordinary
resolutions. More than 50 per cent. of shareholders’ votes cast at the meeting
must be in favour for those ordinary resolutions to be passed. Items 9 to 11 will
be proposed as special resolutions. At least 75 per cent. of shareholders’ votes cast
at the meeting must be in favour for those special resolutions to be passed. The
Directors consider that all of the resolutions to be put to the meeting are in the
best interests of the Company and its shareholders as a whole and accordingly
the board unanimously recommends that shareholders vote in favour of all of the
resolutions, as the Directors intend to do in respect of their own beneficial
holdings of ordinary shares. Please note that the following paragraphs are only
summaries of certain of the resolutions to be proposed at the Annual General
Meeting and do not represent the full text of the resolutions. You should therefore
read this section in conjunction with the full text of the resolutions contained in
the notice of Annual General Meeting which accompanies this Directors’ Report.
Ordinary resolutions
Resolution 8 – Authority to allot securities
Paragraph 8.1.1 of Resolution 8 would give the Directors the authority to allot
shares in the Company and grant rights to subscribe for or convert any security
into shares in the Company up to an aggregate nominal value of £2,836,478.
This represents approximately 1/3 (one third) of the ordinary share capital of
the Company in issue (excluding treasury shares) as at 20 April 2016 (being the
last practicable date prior to the publication of this Directors’ Report).
In line with guidance issued by the Investment Association (‘IA’) paragraph 8.1.2
of Resolution 8 would give the directors the authority to allot shares in the
Company and grant rights to subscribe for or convert any security into shares in
the Company up to a further aggregate nominal value of £2,836,478, in
connection with an offer by way of a rights issue. This amount represents
approximately 1/3 (one third) of the ordinary share capital of the Company in
issue (excluding treasury shares) as at 20 April 2016 (being the last practicable
date prior to the publication of this Directors’ Report).
The Directors’ authority will expire on 31 August 2017 or if earlier the next
AGM. The Directors do not currently intend to make use of this authority.
However, if they do exercise the authority, the Directors intend to follow best
practice as recommended by the Investment Association regarding its use
(including as regards the Directors standing for re-election in certain cases).
Special resolutions
The following special resolutions will be proposed at the Annual General Meeting:
Resolution 9 – Disapplication of pre-emption rights
Under English company law, when new shares are allotted or treasury shares
are sold for cash (otherwise than pursuant to an employee share scheme) they
must first be offered at the same price to existing shareholders in proportion to
their existing shareholdings. This special resolution gives the Directors authority,
for the period ending on the date of the next annual general meeting to be held
in 2017, to: (a) allot shares of the Company and sell treasury shares for cash in
connection with a rights issue or other pre-emptive offer; and (b) otherwise
allot shares of the Company, or sell treasury shares, for cash up to an aggregate
nominal value of £425,472 representing, in accordance with institutional
investor guidelines, approximately 5 per cent. of the total ordinary share capital in
issue as at 20 April 2016 (being the last practicable date prior to the publication
of this Directors’ Report) in each case as if the pre-emption rights in English
company law did not apply.
Save in respect of issues of shares in respect of employee share schemes and
share dividend alternatives, the Directors do not currently intend to make use
of these authorities. The board intends to adhere to the provisions in the
Pre-emption Group’s Statement of Principles not to allot shares for cash on a
non-pre-emptive basis in excess of an amount equal to 7.5 per cent. of the
Company’s ordinary share capital within a rolling three-year period without
prior consultation with shareholders. The Directors’ authority will expire on
31 August 2017 or if earlier the date of next AGM.
Resolution 10 – Purchase of own ordinary shares
The effect of Resolution 10 would be to renew the Directors’ current authority
to make limited market purchases of the Company’s ordinary shares of 10
pence each. The power is limited to a maximum aggregate number of
8,509,435 ordinary shares (representing approximately 10 per cent. of the
Company’s issued share capital as at 20 April 2016 (being the latest practicable
date prior to publication of this Directors’ Report)). The minimum price
(exclusive of expenses) which the Company would be authorised to pay for
each ordinary share would be 10 pence (the nominal value of each ordinary
share). The maximum price (again exclusive of expenses) which the Company
would be authorised to pay for an ordinary share is an amount equal to 105 per
cent. of the average market price for an ordinary share for the five business
days preceding any such purchase. The authority conferred by Resolution 10
will expire at the conclusion of the Company’s next annual general meeting to
be held in 2017 or 15 months from the passing of the resolution, whichever is
the earlier. Any purchases of ordinary shares would be made by means of
market purchases through the London Stock Exchange.
If granted, the authority would only be exercised if, in the opinion of the Directors,
to do so would result in an increase in earnings per share or asset values per
share and would be in the best interests of shareholders generally. In exercising
the authority to purchase ordinary shares, the Directors may treat the shares
that have been bought back as either cancelled or held as treasury shares
(shares held by the Company itself). No dividends may be paid on shares which
are held as treasury shares and no voting rights are attached to them.
Other matters
RSM UK Audit LLP (formerly Baker Tilly UK Audit LLP) has expressed its
willingness to continue in office as auditor. A proposal will be made at the
Annual General Meeting for its reappointment.
By order of the board
Anil Thapar
Secretary
28 April 2016
24 Bruton Place
London
W1J 6NE
London & Associated Properties PLC 2015 33
GOVERNANCE
CORPORATE GOVERNANCE
The Company has adopted the Corporate Governance
Code for Small and Mid-Size Quoted Companies (the
QCA Code) published by the Quoted Companies Alliance.
The QCA Code provides governance guidance to small
and mid-size quoted companies. The paragraphs below
set out how the Company has applied this guidance
during the year. The Company has complied with the
QCA Code throughout the year.
Principles of corporate governance
The board promotes good corporate governance in the areas of risk
management and accountability as a positive contribution to business
prosperity. The board endeavours to apply corporate governance principles
in a sensible and pragmatic fashion having regard to the circumstances of
the business. The key objective is to enhance and protect shareholder value.
Board structure
During the year the board comprised the Chairman, the Chief Executive,
one other executive Director and three non-executive Directors. Their
details appear on page 30. The board is responsible to shareholders for the
proper management of the Group.
The Directors’ responsibility statement in respect of the accounts is set out on
page 45. The non-executive Directors have a particular responsibility to ensure
that the strategies proposed by the executive Directors are fully considered. To
enable the board to discharge its duties, all Directors have full and timely access
to all relevant information and there is a procedure for all Directors, in furtherance
of their duties, to take independent professional advice, if necessary, at the
expense of the Group. The board has a formal schedule of matters reserved to it
and normally has eleven regular meetings scheduled each year. Additional
meetings are held for special business when required.
The board is responsible for overall Group strategy, approval of major capital
expenditure and consideration of significant financial and operational matters.
The board committees, which have written terms of reference, deal with
specific aspects of the Group’s affairs:
• The nomination committee is chaired by C A Parritt and comprises one
other non-executive Director and the executive Chairman. The committee
is responsible for proposing candidates for appointment to the board,
having regard to the balance and structure of the board. In appropriate
cases recruitment consultants are used to assist the process. All Directors
are subject to re-election at a maximum of every three years.
• The remuneration committee is responsible for making
recommendations to the board on the Company’s framework of
executive remuneration and its cost. The committee determines the
contract terms, remuneration and other benefits for each of the
executive directors, including performance related bonus schemes,
pension rights and compensation payments. The board itself determines
the remuneration of the non-executive Directors. The committee
comprises two non-executive Directors and it is chaired by C A Parritt.
The executive Chairman of the board is normally invited to attend. The
Annual Remuneration Report is set out on pages 37 to 41.
• The audit committee comprises two non-executive Directors and is
chaired by C A Parritt. The audit committee report is set out on page 44.
Board and board committee meetings held in 2015
The number of regular meetings during the year and attendance was as follows:
A K Thapar
H D Goldring
Sir Michael Heller
J A Heller
C A Parritt
R Priest
Board
Audit committee
Board
Audit committee
Nomination committee
Remuneration committee
Board
Nomination committee
Remuneration committee
Board
Audit committee
Board
Audit committee
Nomination committee
Remuneration committee
Board
MEETINGS
HELD
11
2
11
2
1
1
11
1
1
11
2
11
2
1
1
11
MEETINGS
ATTENDED
11
2
11
2
1
1
11
1
1
10
2
11
2
1
1
11
Performance evaluation – board, board committees
and directors
The performance of the board as a whole and of its committees and the
non-executive Directors is assessed by the Chairman and the Chief Executive
and is discussed with the senior non-executive independent Director. Their
recommendations are discussed at the nomination committee prior to
proposals for re-election being recommended to the board. The performance
of executive Directors is discussed and assessed by the remuneration
committee. The senior independent Director meets regularly with the
Chairman, executive and non-executive Directors individually outside of
formal meetings. The Directors will take outside advice in reviewing
performance but have not found this to be necessary to date.
Independent directors
The senior independent non-executive Director is C A Parritt. The other
independent non-executive Directors are H D Goldring and R Priest. Delmore
Asset Management Limited (Delmore) is a Company in which H D Goldring is the
majority shareholder and a Director. Delmore provides consultancy services to
the Company on a fee paying basis. Alvarez and Marsal Real Estate Advisory
Services (A&M) is a Company in which R Priest is a Managing Director. A&M
provides consultancy and advisory services to the Company on a fee paying basis.
C A Parritt also provides some advisory services as part of his accounting practice.
The board encourages all three non-executive Directors to act independently
and does not consider that length of service of any individual non-executive
Director, nor any connection with the above mentioned consultancy and
advisory companies has resulted in the inability or failure to act
independently. In the opinion of the board the three non-executive Directors
continue to fulfil their roles as independent non-executive Directors.
The independent Directors exchange views regularly between board
meetings and meet when required to discuss corporate governance and
other issues concerning the Group.
34
London & Associated Properties PLC 2015
GOVERNANCE CORPORATE GOVERNANCE
Internal control
The Directors are responsible for the Group’s system of internal control and
for reviewing its effectiveness at least annually, and for the preparation and
review of its financial statements. The board has designed the Group’s system
of internal control in order to provide the Directors with reasonable assurance
that assets are safeguarded, that transactions are authorised and properly
recorded and that material errors and irregularities are either prevented or
would be detected within a timely period. However, no system of internal
control can eliminate the risk of failure to achieve business objectives or
provide absolute assurance against material misstatement or loss. The key
elements of the control system in operation are:
• The board meets regularly on full notice with a formal schedule of matters
reserved for its decision and has put in place an organisational structure
with clearly defined lines of responsibility and with appropriate
delegation of authority;
• There are established procedures for planning, approval and monitoring
of capital expenditure and information systems for monitoring the
Group’s financial performance against approved budgets and forecasts;
• The departmental heads are required annually to undertake a full
assessment process to identify and quantify the risks that face their
departments and functions, and assess the adequacy of the prevention,
monitoring and modification practices in place for those risks. In addition,
regular reports about significant risks and associated control and monitoring
procedures are made to the executive Directors. The process adopted by
the Group accords with the guidance contained in the document
“Internal Control Guidance for Directors on the Combined Code” issued
by the Institute of Chartered Accountants in England and Wales. The
audit committee receives reports from external auditors and from executive
Directors of the Group. During the period the audit committee has
reviewed the effectiveness of the system of internal control as described
above. The board receives periodic reports from all committees.
• There are established procedures for the presentation and review of the
financial statements and the Group has in place an organisational structure
with clearly defined lines of responsibility and with appropriate
delegation of authority.
There are no internal control issues to report in the annual report and
financial statements for the year ended 31 December 2015. Up to the date
of approval of this report and the financial statements, the board has not
been required to deal with any related material internal control issues. The
Directors confirm that the board has reviewed the effectiveness of the
system of internal control as described during the period.
Communication with shareholders
Prompt communication with shareholders is given high priority. Extensive
information about the Group and its activities is provided in the Annual
Report. In addition, a half-year report is produced for each financial year
and published on the Company’s website. The Company’s website www.lap.
co.uk is updated promptly with announcements and Annual Reports upon
publication. Copies from previous years are also available on the website.
The Company’s share price is published daily in the Financial Times.
The share price history and market information can be found at http://
www.londonstockexchange.com/prices-and-markets/markets/prices.htm.
The company code is LAS.
There is a regular dialogue with the Company’s stockbrokers and
institutional investors. Enquiries from individuals on matters relating to
their shareholdings and the business of the Group are dealt with promptly
and informatively.
The Company’s website is under continuous development to enable better
communication with both existing and potential new shareholders.
The Bribery Act 2010
The Company is committed to acting ethically, fairly and with integrity
in all its endeavours and compliance with the code is monitored closely.
London & Associated Properties PLC 2015 35
GOVERNANCE
GOVERNANCE STATEMENT BY THE
CHAIRMAN OF THE REMUNERATION
COMMITTEE
The remuneration committee is pleased to present its
report for the year ended 31 December 2015. The report
is presented in two parts in accordance with the
regulations.
The first part is the Annual Remuneration Report which details remuneration
awarded to Directors and non-executive Directors during the year. The
shareholders will be asked to approve the Annual Remuneration Report as
an ordinary resolution (as in previous years) at the AGM in June 2016
(resolution 2). The second part is the Remuneration Policy which details the
remuneration policy for Directors. This policy was subject to a binding vote
by shareholders at the AGM in 2014 and approved for a 3 year period
commencing from then. The committee reviewed the existing policy and
deemed that no changes were necessary to the current arrangements.
Both of the above reports have been prepared in accordance with The Large
and Medium-sized Companies and Groups (Accounts and Reports)
(Amendment) Regulations 2013.
The Company’s auditor, RSM UK Audit LLP is required by law to audit
certain disclosures and where disclosures have been audited they are
indicated as such.
C A Parritt
Chairman, Remuneration Committee
28 April 2016
36
London & Associated Properties PLC 2015
GOVERNANCE
ANNUAL REMUNERATION REPORT
The following information has been audited
SINGLE TOTAL FIGURE OF REMUNERATION FOR THE YEAR ENDED 31 DECEMBER 2015
SALARY AND FEES
£’000
BONUSES
£’000
BENEFITS
£’000
PENSIONS
£’000
TOTAL
BEFORE SHARE
OPTIONS
£’000
SHARE OPTIONS
£’000
TOTAL 2015
£’000
Executive Directors
Sir Michael Heller*
J A Heller
A K Thapar
Non-executive Directors
H D Goldring*+
C A Parritt *+
R Priest *
7
333
130
470
-
366
55
421
47
38
63
148
618
-
-
-
-
421
42
30
8
80
5
-
-
5
85
-
33
40
73
-
-
-
-
73
49
762
233
1,044
52
38
63
153
1,197
n/a
n/a
n/a
-
n/a
n/a
n/a
-
-
49
762
233
1,044
52
38
63
153
1,197
Total
* Note 28 “Related party transactions”
+ Members of the remuneration committee for year ended 31 December 2015
Benefits include the provision of car, health and other insurance and subscriptions
SINGLE TOTAL FIGURE OF REMUNERATION FOR THE YEAR ENDED 31 DECEMBER 2014
SALARY AND FEES
£’000
BONUSES
£’000
BENEFITS
£’000
PENSIONS
£’000
TOTAL
BEFORE
SHARE OPTIONS
£’000
SHARE OPTIONS
£’000
TOTAL 2014
£’000
Executive Directors
Sir Michael Heller*
J A Heller
R J Corry
Non-executive Directors
H D Goldring*+
C A Parritt*+
R Priest*
7
333
180
520
91
442
-
533
40
24
25
89
-
36
33
69
43
32
63
138
658
-
-
-
-
- - -
-
69
-
533
5
94
5
-
138
835
238
1,211
48
32
63
143
1,354
n/a
n/a
n/a
-
n/a
n/a
n/a
-
-
138
835
238
1,211
48
32
63
143
1,354
Total
* Note 28 “Related party transactions”
+ Members of the remuneration committee for year ended 31 December 2014
Benefits include the provision of car, health and other insurance and subscriptions
Sir Michael Heller is a director of Bischi Mining PLC, (a subsidiary for IFRS
10 purposes) and received a salary from that company of £75,000 (2014:
£75,000) for services.
H D Goldring’s company, Delmore Asset Management Limited provides
consultancy services to the Group. This is detailed in Note 28 to the
financial statements.
Although Sir Michael Heller receives reduced remuneration in respect of his
services to the Group, the Group does supply office premises, property
management, general management, accounting and administration services for a
number of companies in which Sir Michael Heller has an interest. The board
estimates that the value of these services, if supplied to a third party, would have
been £300,000 (2014: £300,000) for the year. Further details of these services are
set out in Note 28 “Related party transactions” to the financial statements.
John Heller is a director of Dragon Retail Properties Limited, (a subsidiary
for IFRS 10 purposes from this year) and received benefits from that
company of £7,250 (2014: £7,250) for services.
C A Parritt provides consultancy services to the Group as part of his
accounting practice. This is detailed in Note 28 to the financial statements.
R Priest is a managing director of Alvarez & Marsal Real Estate Advisory
Services who provide consultancy services to the Group. This is detailed in
Note 28 to the financial statements.
R J Corry resigned as a director on 31 December 2014 and A K Thapar was
appointed a director on 1 January 2015.
London & Associated Properties PLC 2015 37
GOVERNANCE ANNuAL REMuNERATION REPORT
Summary of directors’ terms
Executive Directors
Sir Michael Heller
John Heller
Anil Thapar
Non-executive Directors
H D Goldring
C A Parritt
R Priest
DATE OF CONTRACT UNEXPIRED TERM
NOTICE PERIOD
1 January 1971
1 May 2003
1 January 2015
1 July 1992
1 January 2006
31 July 2013
Continuous
Continuous
Continuous
Continuous
Continuous
Continuous
6 months
12 months
6 months
3 months
3 months
3 months
Total pension entitlements
Two directors had benefits under money purchase schemes. Under their contracts of employment, they were entitled to a regular employer contribution
(currently £33,000 and £40,000 a year). There are no final salary schemes in operation. No pension costs are incurred on behalf of non-executive Directors.
Share Incentive Plan (SIP)
In 2006 the Directors set up an HMRC approved share incentive plan (SIP). The purpose of the plan, which is open to all eligible LAP executive Directors
and head office based staff, is to enable them to acquire shares in the Company and give them a continuing stake in the Group. The SIP comprises four
types of share – (1) free shares under which the Company may award shares of up to the value of £3,000 each year, (2) partnership shares, under which
members may save up to £1,500 per annum to acquire shares, (3) matching shares, through which the Company may award up to two shares for each
share acquired as a partnership share, and (4) dividend shares, acquired from dividends paid on shares within the SIP.
1. Free shares: 55,218 free shares were awarded in 2015 in respect of 2014 bonuses (see below as 2014). Additionally, 61,220 shares were awarded in
January 2016 relating to 2015 bonuses and these are shown below as 2015.
Free shares awarded:
Directors:
J A Heller
A K Thapar
Staff
Total at 31 December
NUMBER OF MEMBERS
NUMBER OF SHARES
VALUE OF SHARES
2015
2014
2015
2014
1
1
3
5
1
n/a
6
7
12,244
12,244
36,732
61,220
7,947
n/a
47,271
55,218
2015
£
3,000
3,000
9,000
15,000
2014
£
3,000
n/a
17,845
20,845
2. Partnership shares: No partnership shares were issued between November 2014 and October 2015.
3. Matching shares: The partnership share agreements for the year to 31 October 2015 provide for two matching shares to be awarded free of charge for
each partnership share acquired. No partnership shares were acquired in 2015 (2014: nil). Matching shares will usually be forfeited if a member leaves
employment in the Group within 5 years of their grant.
4. Dividend shares: Dividends on shares acquired under the SIP will be utilised to acquire additional shares. Accumulated dividends received on shares
in the SIP to 31 December 2015 amounted to £485 (2014: £759).
Dividend shares issued:
Directors:
J A Heller
A K Thapar
Staff
Total at 31 December
38
London & Associated Properties PLC 2015
NUMBER OF MEMBERS
NUMBER OF SHARES
VALUE OF SHARES
2015
2014
2015
2014
1
1
8
10
1
n/a
10
11
255
331
1,350
1,936
253
n/a
1,665
1,918
2015
£
64
83
337
484
2014
£
100
n/a
658
758
GOVERNANCE ANNuAL REMuNERATION REPORT
The SIP is set up as an employee benefit trust. The trustee is London &
Associated Securities Limited, a wholly owned subsidiary of LAP, and all
shares and dividends acquired under the SIP will be held by the trustee until
transferred to members in accordance with the rules of the SIP.
Share Option Schemes
The Company has an HMRC approved scheme (Approved Scheme). It was
set up in 1986 in accordance with HMRC rules to gain HMRC approved
status which gave the members certain tax advantages. There are no
performance criteria for the exercise of options under the Approved Scheme,
as this was set up before such requirements were considered to be necessary.
No Director has any options outstanding under the Approved Scheme nor
were any options granted under the Approved Scheme for the year ended
31 December 2015.
A share option scheme known as the “Non-approved Executive Share Option
Scheme” (Unapproved Scheme) which does not have HMRC approval was
set up during 2000. At 31 December 2015 there were no options to subscribe
for ordinary shares outstanding. The exercise of options under the Unapproved
Scheme is subject to the satisfaction of objective performance conditions
specified by the remuneration committee which conforms to institutional
shareholder guidelines and best practice provisions. Further details of this
scheme are set out in Note 26 “Share Capital” to the financial statements.
Payments to past directors
No payments were made to past Directors in the year ended 31 December 2015.
Payments for loss of office
No payments for loss of office were made in the year ended 31 December 2015.
Statement of directors’ shareholding and share interest
Directors’ interests
The interests of the Directors in the ordinary shares of the Company, including family and trustee holdings, where appropriate, were as follows:
Sir Michael Heller
H D Goldring
J A Heller
C A Parritt
R Priest
A K Thapar
BENEFICIAL INTERESTS
NON-BENEFICIAL INTERESTS
31 DEC 15
6,353,541
19,819
1,630,022
36,168
-
150,047
1 JAN 15
6,421,089
19,819
1,668,976
36,168
-
96,372
31 DEC 15
19,277,931
-
†14,073,485
-
-
-
1 JAN 15
19,277,931
-
†14,073,485
-
-
-
†These non-beneficial holdings are duplicated with those of Sir Michael Heller.
The beneficial holdings of Directors shown above include their interests in the Share Incentive Plan.
LAS TSR 5Y
FTSE All Share TSR 5Y
The following information is unaudited:
The graph illustrates the Company’s performance as compared
with a broad equity market index over a five year period.
Performance is measured by total shareholder return. The
directors have chosen the FTSE All Share – Total Return Index as
a suitable index for this comparison as it gives an indication of
performance against a large spread of quoted companies.
The middle market price of London & Associated Properties PLC
ordinary shares at 31 December 2015 was 25p (2014: 38.75p).
During the year the share middle market price ranged between
25p and 41.5p.
180
160
140
120
100
80
60
40
20
0
Jan 2011
Jul 2011
Jan 2012
Jul 2012
Jan 2013
Jul 2013
Jan 2014
Jul 2014
Jan 2015
Jul 2015
London & Associated Properties PLC 2015 39
GOVERNANCE ANNuAL REMuNERATION REPORT
Remuneration of the Chief Executive over the last ten years
YEAR
2015
2014
2013
2012
2011
2010
2009
2008
2007
2006
CEO
J A Heller
J A Heller
J A Heller
J A Heller
J A Heller
J A Heller
J A Heller
J A Heller
J A Heller
J A Heller
CHIEF EXECUTIVE SINGLE TOTAL FIGURE
OF REMUNERATION
£’000
762
835
716
417
671
577
982
688
1,032
981
ANNUAL BONUS PAYOUT
AGAINST MAXIMUM OPPORTUNITY*
%
41 %
49 %
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
LONG-TERM INCENTIVE VESTING RATES
AGAINST MAXIMUM OPPORTUNITY*
%
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
*There were no formal criteria or conditions to apply in determining the amount of bonus payable or the number of shares to be issued prior to 2014.
Percentage change in Chief Executive’s Remuneration (audited)
The table below shows the percentage change in Chief Executive remuneration for the prior year compared to the average percentage change for all other
Head Office based employees. To provide a meaningful comparison, the same group of employees (although not necessarily the same individuals) appear
in the 2014 and 2015 group. The remuneration committee chose Head Office based employees as the comparator group as this group forms the closest
comparator group.
CHIEF EXECUTIVE
£’000
HEAD OFFICE EMPLOYEES
£’000
Base salary
Taxable benefits
Annual bonus
Total
2015
333
30
366
729
2014
333
24
442
799
% CHANGE
0%
25%
(17%)
(9%)
2015
691
67
126
884
Relative importance of spend on pay
The total expenditure of the Group on remuneration to all employees (Note 29 refers) is shown below:
Employee Remuneration
Distributions to shareholders
2014
848
113
235
1,196
2015
£’000
7,219
133
% CHANGE
(18%)
(41%)
(46%)
(26%)
2014
£’000
7,786
106
40
London & Associated Properties PLC 2015
GOVERNANCE ANNuAL REMuNERATION REPORT
Statement of implementation of remuneration policy
The policy was approved at the AGM in June 2014 and was effective from
10 June 2014. The vote on the remuneration policy is binding in nature. The
Company may not then make a remuneration payment or payment for loss
of office to a person who is, is to be, or has been a director of the Company
unless that payment is consistent with the approved remuneration policy,
or has otherwise been approved by a resolution of members. Unless
changed it will be presented next for approval at the AGM in 2017.
Consideration by the directors of matters relating to
directors’ remuneration
The Remuneration Committee considered the executive Directors’
remuneration and the board considered the non-executive Directors’
remuneration in the year ended 31 December 2015. Increases were
awarded and no external advice was taken in reaching this decision.
Shareholder voting
At the Annual General Meeting on 24 June 2015, there was an advisory
vote on the resolution to approve the Remuneration Report, other than the
part containing the remuneration policy.
In addition, on 10 June 2014, there was a binding vote on the resolution to
approve the Remuneration Policy. The results are detailed below:
Resolution to approve the Remuneration Report (24 June 2015)
Resolution to approve the Remuneration Policy (10 June 2014)
% OF VOTES
FOR
85.63
99.12
% OF VOTES
AGAINST
0.56
0.67
NUMBER OF VOTES
WITHHELD
8,042,312
66,918
London & Associated Properties PLC 2015 41
GOVERNANCE
REMUNERATION POLICY
Set out below is an extract of the Group policy on
Directors’ remuneration. This policy was approved at
the 2014 AGM and it is effective from 10 June 2014.
Unless changed it will be presented next for approval
at the AGM in 2017.
A copy of the full policy can be found at www.lap.co.uk.
In setting the policy, the Remuneration Committee has taken the
following into account:
• The need to attract, retain and motivate individuals of a calibre who will
ensure successful leadership and management of the Company
FuTuRE POLICY TABLE
ELEMENT
EXECuTIVE DIRECTORS
Base salary
PURPOSE
To recognise:
Skills
Responsibility
Accountability
Experience
Value
To provide competitive retirement benefits
Pension
Benefits
To provide a competitive benefits package
Annual Bonus
To reward and incentivise
Share Options
To provide executive Directors with a
long-term interest in the Company
POLICY
OPERATION
OPPORTUNITY AND PERFORMANCE CONDITIONS
Considered by remuneration committee on appointment
Reviewed annually whenever there is a change of role or
There is no prescribed maximum salary or maximum rate of increase
Set at a level considered appropriate to attract, retain, motivate
and reward the right individuals
operational responsibility
Paid monthly in cash
No specific performance conditions are attached to base salaries
Company contribution offered at up to 10% of base salary as
part of overall remuneration package
Contractual benefits include:
Car or car allowance
Group health cover
Death in service cover
Permanent health insurance
In assessing the performance of the executive team, and in
particular to determine whether bonuses are merited the
remuneration committee takes into account the overall
performance of the business, as well as individual contribution to
the business in the period
Bonuses are generally offered in cash or shares
Granted under existing schemes (see page 39)
The contribution payable by the Company is included in
Company contribution offered at up to 10% of base salary as part of overall
the Director’s contract of employment
Paid into money purchase schemes
remuneration package
No specific performance conditions are attached to pension contributions
The committee retains the discretion to approve changes in
The costs associated with benefits offered are closely controlled and reviewed on an
contractual benefits in exceptional circumstances or where
annual basis
factors outside the control of the Group lead to increased
costs (e.g. medical inflation)
No specific performance conditions are attached to contractual benefits
The value of benefits for each Director for the year ended 31 December 2015 is shown
in the table on page 37
The remuneration committee determines the level of bonus
The current maximum bonus will not exceed 200% of base salary in any one year but the
on an annual basis applying such performance conditions
remuneration committee reserves the power to award up to 300% in an exceptional year
and performance measures as it considers appropriate
Performance conditions will be assessed on an annual basis
Offered at appropriate times by the remuneration committee Entitlement to share options granted under the Approved Option scheme are not subject
Share Incentive Plan
(SIP)
To offer a shorter term incentive in the Company
and to give Directors a stake in the Group
Offered to executive Directors and head office staff
Maximum participation levels are set by HMRC
Of any bonus awarded, Directors may opt to have maximum of £3,000 of per year paid
NON-EXECuTIVE DIRECTORS
Base salary
To recognise:
Skills
Experience
Value
Pension
Benefits
Share Options
Notes to the Future Policy Table
Considered by the board on appointment
Reviewed annually
There is no prescribed maximum salary or maximum rate of increase
Set at a level considered appropriate to attract, retain and
motivate the individual
Experience and time required for the role are considered on
appointment
No pension offered
No benefits offered except to one non-executive Director who is
eligible for health cover (see annual remuneration report page 37)
Non-executive Directors do not participate in the share option schemes
The committee retains the discretion to approve changes in
The costs associated with benefits offered are closely controlled and reviewed on an
contractual benefits in exceptional circumstances or where
annual basis
factors outside the control of the Group lead to increased
costs (e.g. medical inflation)
No specific performance conditions are attached to contractual benefits
The remuneration committee considers the performance measures outlined in the table above to be appropriate measures of performance.
42
London & Associated Properties PLC 2015
The performance measures applied may be financial, non-financial, corporate, divisional or
individual and in such proportion as the remuneration committee considers appropriate
to performance criteria. Share Options granted under the Unapproved Scheme are subject
to the performance criteria specified in the Scheme rules
Share options will be offered by the remuneration committee as appropriate
There are no maximum levels for share options offered
in ‘Free Shares’ under the SIP scheme rules
Full detail of the SIP can be found on page 38
No performance conditions are attached to base salaries
GOVERNANCE REMuNERATION POLICY
• The Group’s general aim of seeking to reward all employees fairly
• The need to be flexible and adjust with operational changes throughout
according to the nature of their role and their performance
the term of this policy
• Remuneration packages offered by similar companies within the
same sector
• The need to align the interests of shareholders as a whole with
the long-term growth of the Group
The remuneration of non-executive Directors is determined by the board,
and takes into account additional remuneration for services outside the
scope of the ordinary duties of non-executive Directors.
POLICY
OPERATION
OPPORTUNITY AND PERFORMANCE CONDITIONS
Considered by remuneration committee on appointment
Set at a level considered appropriate to attract, retain, motivate
and reward the right individuals
Reviewed annually whenever there is a change of role or
operational responsibility
There is no prescribed maximum salary or maximum rate of increase
No specific performance conditions are attached to base salaries
Paid monthly in cash
Pension
To provide competitive retirement benefits
Company contribution offered at up to 10% of base salary as
part of overall remuneration package
The contribution payable by the Company is included in
the Director’s contract of employment
Company contribution offered at up to 10% of base salary as part of overall
remuneration package
Benefits
To provide a competitive benefits package
Contractual benefits include:
Car or car allowance
Group health cover
Death in service cover
Permanent health insurance
In assessing the performance of the executive team, and in
particular to determine whether bonuses are merited the
remuneration committee takes into account the overall
performance of the business, as well as individual contribution to
the business in the period
Bonuses are generally offered in cash or shares
Granted under existing schemes (see page 39)
Paid into money purchase schemes
The committee retains the discretion to approve changes in
contractual benefits in exceptional circumstances or where
factors outside the control of the Group lead to increased
costs (e.g. medical inflation)
The remuneration committee determines the level of bonus
on an annual basis applying such performance conditions
and performance measures as it considers appropriate
No specific performance conditions are attached to pension contributions
The costs associated with benefits offered are closely controlled and reviewed on an
annual basis
No specific performance conditions are attached to contractual benefits
The value of benefits for each Director for the year ended 31 December 2015 is shown
in the table on page 37
The current maximum bonus will not exceed 200% of base salary in any one year but the
remuneration committee reserves the power to award up to 300% in an exceptional year
Performance conditions will be assessed on an annual basis
The performance measures applied may be financial, non-financial, corporate, divisional or
individual and in such proportion as the remuneration committee considers appropriate
Offered at appropriate times by the remuneration committee Entitlement to share options granted under the Approved Option scheme are not subject
to performance criteria. Share Options granted under the Unapproved Scheme are subject
to the performance criteria specified in the Scheme rules
Share Incentive Plan
To offer a shorter term incentive in the Company
Offered to executive Directors and head office staff
Maximum participation levels are set by HMRC
(SIP)
and to give Directors a stake in the Group
Share options will be offered by the remuneration committee as appropriate
There are no maximum levels for share options offered
Of any bonus awarded, Directors may opt to have maximum of £3,000 of per year paid
in ‘Free Shares’ under the SIP scheme rules
Full detail of the SIP can be found on page 38
Considered by the board on appointment
Reviewed annually
There is no prescribed maximum salary or maximum rate of increase
No performance conditions are attached to base salaries
The remuneration committee considers the performance measures outlined in the table above to be appropriate measures of performance.
London & Associated Properties PLC 2015 43
The committee retains the discretion to approve changes in
contractual benefits in exceptional circumstances or where
factors outside the control of the Group lead to increased
costs (e.g. medical inflation)
The costs associated with benefits offered are closely controlled and reviewed on an
annual basis
No specific performance conditions are attached to contractual benefits
Set at a level considered appropriate to attract, retain and
motivate the individual
Experience and time required for the role are considered on
appointment
No pension offered
No benefits offered except to one non-executive Director who is
eligible for health cover (see annual remuneration report page 37)
Non-executive Directors do not participate in the share option schemes
FuTuRE POLICY TABLE
ELEMENT
PURPOSE
EXECuTIVE DIRECTORS
Base salary
To recognise:
Skills
Responsibility
Accountability
Experience
Value
Annual Bonus
To reward and incentivise
Share Options
To provide executive Directors with a
long-term interest in the Company
NON-EXECuTIVE DIRECTORS
Base salary
To recognise:
Skills
Value
Experience
Pension
Benefits
Share Options
Notes to the Future Policy Table
GOVERNANCE
AUDIT COMMITTEE REPORT
The committee’s terms of reference have been
approved by the board and follow published guidelines,
which are available on request from the company
secretary.
At the year end the audit committee comprised two of the non-executive
directors – H D Goldring and C A Parritt, both of whom are Chartered
Accountants.
Meetings
The committee meets at least twice prior to the publication of the annual
results and discusses and considers the half year results prior to their
approval by the board. The audit committee meetings are attended by the
external audit partner, chief executive, finance director and company
secretary. During the year the members of the committee also meet on an
informal basis to discuss any relevant matters which may have arisen.
Additional formal meetings may be held as necessary.
The audit committee’s primary tasks are to:
During the past year the committee:
• review the scope of external audit, to receive regular reports from RSM
UK Audit LLP and to review the half-yearly and annual accounts before
they are presented to the board, focusing in particular on accounting
policies and areas of management judgement and estimation;
• monitor the controls which are in force to ensure the integrity of the
information reported to the shareholders;
• met with the external auditors, and discussed their reports to the audit
committee;
• approved the publication of annual and half year financial results;
• considered and approved the annual review of internal controls;
• decided that there was no current need for an internal audit function;
• act as a forum for discussion of internal control issues and contribute to
the board’s review of the effectiveness of the Group’s internal control
and risk management systems and processes;
• agreed the independence of the auditors and approved their fees for
both audit and non-audit services as set out in note 2 to the financial
statements; and
• to review the risk assessments made by management, consider key risks
with action taken to mitigate these and to act as a forum for discussion
of risk issues and contribute to the board’s review of the effectiveness of
the Group’s risk management control and processes;
• consider once a year the need for an internal audit function;
• advise the board on the appointment of the external auditors, the
rotation of the audit partner every five years and on their remuneration
for both audit and non-audit work; discuss the nature and scope of their
audit work and undertake a formal assessment of their independence
each year, which includes:
• the chairman of the audit committee has also had separate meetings
and discussions with the external audit partner.
External Auditor
RSM UK Audit LLP held office throughout the period under review. In the
United Kingdom London & Associated Properties PLC provides extensive
administration and accounting services to Bisichi Mining PLC, which has its
own audit committee and employs BDO LLP, a separate and independent
firm of registered auditor.
i)
ii)
a review of non-audit services provided to the Group and related
fees;
C A Parritt
Chairman – Audit Committee
discussion with the auditors of their written report detailing all
relationships with the Company and any other parties that could
affect independence or the perception of independence;
28 April 2016
iii) a review of the auditors’ own procedures for ensuring the
independence of the audit firm and partners and staff involved in the
audit, including the regular rotation of the audit partner; and
iv) obtaining a written confirmation from the auditors that, in their
professional judgement, they are independent.
44
London & Associated Properties PLC 2015
GOVERNANCE
DIRECTORS’ RESPONSIBILITY
STATEMENT
Directors’ statement pursuant to the Disclosure and
Transparency Rules
Each of the directors, whose names and functions are listed on page 30,
confirm that to the best of each person’s knowledge:
a. the financial statements, prepared in accordance with the applicable set
of accounting standards, give a true and fair view of the assets, liabilities,
financial position and profit of the Company and the undertakings
included in the consolidation taken as a whole; and
b. the Strategic Report contained in the Annual Report includes a fair
review of the development and performance of the business and the
position of the Company and the undertakings included in the
consolidation taken as a whole, together with a description of the
principal risks and uncertainties that they face.
The Directors are responsible for the maintenance and integrity of the
corporate and financial information included on the London & Associated
Properties PLC website.
Legislation in the United Kingdom governing the preparation and
dissemination of financial statements may differ from legislation in other
jurisdictions.
The Directors are responsible for preparing the
Strategic Report and the Directors’ Report, the
Directors’ Remuneration Report and the financial
statements in accordance with applicable law and
regulations.
English company law requires the Directors to prepare Group and Company
financial statements for each financial year. The Directors are required
under the Listing Rules of the Financial Conduct Authority to prepare Group
financial statements in accordance with International Financial Reporting
Standards (“IFRS”) as adopted by the European Union (“EU”) and have
elected under English company law to prepare the Company financial
statements in accordance with United Kingdom Generally Accepted
Accounting Practice (United Kingdom Accounting Standards and applicable
law) including FRS101 ‘Reduced Disclosure Framework’.
The Group financial statements are required by law and IFRS adopted
by the EU to present fairly the financial position and performance of the
Group; the Companies Act 2006 provides in relation to such financial
statements that references in the relevant part of that Act to financial
statements giving a true and fair view are references to their achieving
a fair presentation.
Under English company law the Directors must not approve the financial
statements unless they are satisfied that they give a true and fair view of
the state of affairs of the Group and the Company and of the profit or
loss of the Group for that period.
In preparing each of the Group and Company financial statements, the
Directors are required to:
a. select suitable accounting policies and then apply them consistently;
b. make judgements and accounting estimates that are reasonable and
prudent;
c. for the Group financial statements, state whether they have been
prepared in accordance with IFRSs adopted by the EU and for the
company financial statements state whether applicable UK accounting
standards have been followed, subject to any material departures
disclosed and explained in the company financial statements; and
d. prepare the financial statements on the going concern basis unless it is
inappropriate to presume that the Group and the Company will continue
in business.
The Directors are responsible for keeping adequate accounting records that
are sufficient to show and explain the Group’s and the Company’s
transactions and disclose with reasonable accuracy at any time the
financial position of the Group and the Company and enable them to
ensure that the financial statements and the Directors’ Remuneration
Report comply with the Companies Act 2006 and, as regards the Group
financial statements, Article 4 of the IAS Regulation. They are also
responsible for safeguarding the assets of the Group and the Company and
hence for taking reasonable steps for the prevention and detection of fraud
and other irregularities.
London & Associated Properties PLC 2015 45
GOVERNANCE
INDEPENDENT AUDITOR’S REPORT
to the members of London & Associated Properties PLC
We have audited the Group and parent Company
financial statements (“the financial statements”) on
pages 48 to 93. The financial reporting framework that
has been applied in the preparation of the group
financial statements is applicable law and International
Financial Reporting Standards (IFRSs) as adopted by
the European Union. The financial reporting framework
that has been applied in the preparation of the parent
company financial statements is applicable law and
United Kingdom Accounting Standards (United
Kingdom Generally Accepted Accounting Practice)
including FRS 101 ‘Reduced Disclosure Framework’.
This report is made solely to the Company’s members, as a body, in
accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our
audit work has been undertaken so that we might state to the Company’s
members those matters we are required to state to them in an auditor’s
report and for no other purpose. To the fullest extent permitted by law, we
do not accept or assume responsibility to anyone other than the Company
and the Company’s members as a body, for our audit work, for this report,
or for the opinions we have formed.
Respective responsibilities of directors and auditor
As more fully explained in the Directors’ Responsibilities Statement set out
on page 45 the Directors are responsible for the preparation of the financial
statements and for being satisfied that they give a true and fair view. Our
responsibility is to audit and express an opinion on the financial statements
in accordance with applicable law and International Standards on Auditing
(UK and Ireland). Those standards require us to comply with the Auditing
Practices Board’s (APB’s) Ethical Standards for Auditors.
Scope of the audit of the financial statements
A description of the scope of an audit of financial statements is provided
on the Financial Reporting Council’s website at http://www.frc.org.uk/
auditscopeukprivate
Opinion on financial statements
In our opinion
• the financial statements give a true and fair view of the state of the
group’s and of the parent Company’s affairs as at 31 December 2015 and
of the group’s loss for the year then ended;
• the group financial statements have been properly prepared in
accordance with IFRSs as adopted by the European Union;
• the parent company financial statements have been properly prepared in
accordance with United Kingdom Generally Accepted Accounting
Practice; and
• the financial statements have been prepared in accordance with the
requirements of the Companies Act 2006 and, as regards the group
financial statements, Article 4 of the IAS Regulation.
Opinion on other matters prescribed by the
Companies Act 2006
In our opinion:
• the part of the Directors’ Remuneration Report to be audited has been
properly prepared in accordance with the Companies Act 2006; and
• the information given in the Strategic Report and the Directors’ Report
for the financial year for which the financial statements are prepared is
consistent with the financial statements.
Matters on which we are required to report by
exception
We have nothing to report in respect of the following matters where the
Companies Act 2006 requires us to report to you if, in our opinion:
• adequate accounting records have not been kept by the parent company,
or returns adequate for our audit have not been received from branches
not visited by us; or
• the parent company financial statements and the part of the Directors’
Remuneration Report to be audited are not in agreement with the
accounting records and returns; or
• certain disclosures of Directors’ remuneration specified by law are not
made; or
• we have not received all the information and explanations we require for
our audit.
Geoff Wightwick BA FCA (Senior Statutory Auditor)
For and on behalf of
RSM UK AUDIT LLP (formerly Baker Tilly UK Audit LLP)
Statutory Auditor
Chartered Accountants
25 Farringdon Street
London EC4A 4AB
28 April 2016
46
London & Associated Properties PLC 2015
s
t
n
e
m
e
t
a
t
S
l
a
i
c
n
a
n
i
F
48 CONSOLIDATED INCOME STATEMENT
49 CONSOLIDATED STATEMENT OF
COMPREHENSIVE INCOME
50 CONSOLIDATED BALANCE SHEET
51 CONSOLIDATED STATEMENT OF CHANGES
IN SHAREHOLDERS’ EQUITY
52 CONSOLIDATED CASH FLOW STATEMENT
54 GROUP ACCOUNTING POLICIES
60 NOTES TO THE FINANCIAL STATEMENTS
84 COMPANY FINANCIAL STATEMENTS
94 FIVE YEAR FINANCIAL SUMMARY
London & Associated Properties PLC 2015 47
FINANCIAL STATEMENTS
CONSOLIDATED INCOME STATEMENT
for the year ended 31 December 2015
Group revenue
Operating costs
Income from listed investments held for trading
Operating profit
Finance income
Finance expenses
Debenture/interest rate derivative break cost
Result before revaluation and other movements
Non–cash changes in valuation of assets and liabilities and other movements
(Decrease)/increase in value of investment properties
Loss on disposal of investment properties
Decrease in trading investments
(Decrease)/increase in value of other investments
Adjustment to interest rate derivative
Share of profit of joint ventures, net of tax
Loss on reclassification of asset as held for sale
Result including revaluation and other movements
Profit from discontinued operations
Loss for the year before taxation
Income tax credit/(charge)
Loss for the year
Attributable to:
Equity holders of the Company
Non–controlling interest
Loss for the year
Earnings per share
Loss per share – basic and diluted – continuing operations
Profit per share – basic and diluted – discontinued operations
Total
NOTES
1
3
5
5
23
23
12
12
7
2
6
27
9
9
9
2015
£’000
32,666
(30,675)
3
1,994
123
(4,221)
(158)
(2,262)
(185)
(32)
(1)
(11)
84
71
(276)
(2,612)
519
(2,093)
47
(2,046)
(1,899)
(147)
(2,046)
2014
£’000
33,526
(31,237)
3
2,292
115
(4,875)
(1,117)
(3,585)
853
–
(86)
1
(1,086)
1,124
–
(2,779)
86
(2,693)
(3,702)
(6,395)
(7,140)
745
(6,395)
(2.85)p
0.61p
(2.24)p
(8.55)p
0.10p
(8.45)p
48
London & Associated Properties PLC 2015
FINANCIAL STATEMENTS
CONSOLIDATED STATEMENT OF
COMPREHENSIVE INCOME
for the year ended 31 December 2015
Loss for the year
Other comprehensive (expense)/income:
Items that may be subsequently recycled to the income statement:
Exchange differences on translation of Bisichi Mining PLC foreign operations
Transfer of (loss)/gain on available for sale investments
Taxation
Other comprehensive expense for the year net of tax
Total comprehensive expense for the year net of tax
Attributable to:
Equity shareholders
Non–controlling interest
2015
£’000
(2,046)
(1,167)
(201)
41
(1,327)
(3,373)
(2,414)
(959)
(3,373)
2014
£’000
(6,395)
(121)
56
(15)
(80)
(6,475)
(7,168)
693
(6,475)
London & Associated Properties PLC 2015 49
FINANCIAL STATEMENTS
CONSOLIDATED BALANCE SHEET
at 31 December 2015
Non–current assets
Market value of properties attributable to Group
Present value of head leases
Property
Mining reserves, plant and equipment
Investments in joint ventures
Loan to joint venture
Held to maturity investments
Other investments
Deferred tax
Current assets
Inventories
Assets held for sale
Trade and other receivables
Interest rate derivatives
Corporation tax recoverable
Available for sale investments
Investments held for trading
Cash and cash equivalents
Total assets
Current liabilities
Trade and other payables
Borrowings
Current tax liabilities
Non–current liabilities
Borrowings
Interest rate derivatives
Present value of head leases on properties
Provisions
Deferred tax liabilities
Total liabilities
Net assets
Equity attributable to the owners of the parent
Share capital
Share premium account
Translation reserve (Bisichi Mining PLC)
Capital redemption reserve
Retained earnings (excluding treasury shares)
Treasury shares
Retained earnings
Total equity attributable to equity shareholders
Non – controlling interest
Total equity
Net assets per share
Diluted net assets per share
NOTES
2015
£’000
2014
£’000
10
31
11
12
13
17
17
24
16
14
18
23
19
19
20
21
21
23
31
22
25
26
26
27
9
9
104,388
4,784
109,172
5,552
325
900
1,995
14
2,390
120,348
1,049
2,335
6,502
15
29
594
20
4,809
15,353
135,701
(10,497)
(2,267)
(10)
(12,774)
(64,951)
(587)
(4,784)
(847)
(2,106)
(73,275)
(86,049)
49,652
8,554
4,866
(1,145)
47
28,238
(482)
27,756
40,078
9,574
49,652
47.26p
47.26p
103,655
4,788
108,443
6,257
3,434
1,040
2,196
152
2,324
123,846
1,760
–
6,774
–
35
796
122
9,237
18,724
142,570
(11,323)
(3,590)
(24)
(14,937)
(65,476)
(656)
(4,788)
(930)
(2,410)
(74,260)
(89,197)
53,373
8,554
4,866
(696)
47
30,659
(883)
29,776
42,547
10,826
53,373
50.35p
50.35p
These financial statements were approved by the board of directors and authorised for issue on 28th April 2016 and signed on its behalf by:
Sir Michael Heller
Director
London & Associated Properties PLC 2015
50
Anil Thapar
Director
Company Registration No. 341829
FINANCIAL STATEMENTS
CONSOLIDATED STATEMENT OF CHANGES
IN SHAREHOLDERS’ EQUITY
for the year ended 31 December 2015
Balance at 1 January 2014
(Loss)/profit for year
Other comprehensive (expense)/ income:
Currency translation
Gain on available for sale investments
(net of tax)
Total other comprehensive expense
Total comprehensive (expense)/ income
Transaction with owners:
Share options issued
Shares issued to non–controlling
interests
Dividends – equity holders
Dividends – non–controlling interests
Change in equity held by LAP
Acquisition of own shares
Disposal of own shares
Loss on transfer of own shares
Transactions with owners
Balance at 31 December 2014
Loss for year
Other comprehensive expense:
Currency translation
Gain on available for sale investments
(net of tax)
Total other comprehensive expense
Total comprehensive expense
Transaction with owners:
Share options issued
Share options cancelled
Dividends – equity holders
Dividends – non–controlling interests
Change in equity held by LAP
Acquisition of own shares
Disposal of own shares
Loss on transfer of own shares
Transactions with owners
Balance at 31 December 2015
SHARE
CAPITAL
£’000
8,554
–
SHARE
PREMIUM
£’000
4,866
–
TRANSLATION
RESERVES
£’000
(658)
–
CAPITAL
REDEMPTION
RESERVE
£’000
47
–
TREASURY
SHARES
£’000
(1,159)
–
RETAINED
EARNINGS
EXCLUDING
TREASURY
SHARES
£’000
38,084
(7,140)
TOTAL
EXCLUDING
NON–
CONTROLLING
INTERESTS
£’000
49,734
(7,140)
NON–
CONTROLLING
INTERESTS
£’000
TOTAL
EQUITY
£’000
10,001 59,735
(6,395)
745
–
–
–
–
–
–
–
–
–
–
–
–
–
8,554
–
–
–
–
–
–
–
–
–
–
–
–
–
–
8,554
–
–
–
–
–
–
–
–
–
–
–
–
–
4,866
–
–
–
–
–
–
–
–
–
–
–
–
–
–
4,866
(45)
–
(45)
(45)
–
–
–
–
7
–
–
–
7
(696)
–
(449)
–
(449)
(449)
–
–
–
–
–
–
–
–
–
(1,145)
–
–
–
–
–
–
–
–
–
–
–
–
–
47
–
–
–
–
–
–
–
–
–
–
–
–
–
–
47
–
–
–
–
–
–
–
–
–
(88)
229
135
276
(883)
–
–
–
–
–
–
–
–
–
–
(111)
226
286
401
(482)
–
17
(45)
17
(76)
24
(121)
41
17
(7,123)
(28)
(7,168)
(52)
693
(80)
(6,475)
27
–
(106)
–
(88)
–
–
(135)
(302)
30,659
(1,899)
–
(66)
(66)
(1,965)
13
(45)
(133)
–
(5)
–
–
(286)
(456)
28,238
27
–
–
313
27
313
(106)
–
(81)
(88)
229
–
(19)
42,547
(1,899)
(449)
(66)
(515)
(2,414)
13
(45)
(133)
–
(5)
(111)
226
–
(55)
40,078
–
(292)
111
–
–
–
132
(106)
(292)
30
(88)
229
–
113
10,826 53,373
(2,046)
(147)
(718)
(94)
(1,167)
(160)
(812)
(959)
(1,327)
(3,373)
18
(64)
–
(250)
3
–
–
–
(293)
31
(109)
(133)
(250)
(2)
(111)
226
–
(348)
9,574 49,652
London & Associated Properties PLC 2015 51
FINANCIAL STATEMENTS
CONSOLIDATED CASH FLOW STATEMENT
for the year ended 31 December 2015
Operating activities
Operating profit – continuing operations
– discontinued operations
Depreciation
Profit on disposal of non-current assets
Share based payment expense
Gain on investment held for trading
Exchange adjustments
Decrease/(increase) in inventories
Decrease in receivables – continuing operations
Increase in receivables – discontinued operations
Decrease in payables
Cash generated from operations
Income tax paid
Cash inflows from operating activities
Investing activities
Disposal of shares and loans held to maturity
Acquisition of investment properties, mining reserves, plant and equipment
Sale of investment properties, plant and equipment – continuing operations
Sale of investment properties – discontinued operations
Interest received – continuing operations
– discontinued operations
Dividend received from joint ventures
Cash (outflows)/inflows from investing activities
Financing activities
Purchase of treasury shares
Sale of treasury shares
Interest paid – continuing operations
Interest paid – discontinued operations
Interest obligation under finance leases – continuing operations
Interest obligation under finance leases – discontinued operations
Debenture stock break costs paid
Interest derivatives paid – continuing operations
Interest derivatives break costs paid – continuing operations
Interest derivatives break costs paid – discontinued operations
Receipt of bank loan – Bisichi Mining PLC
Repayment of bank loan – Bisichi Mining PLC
Receipt of bank loan – Dragon Retail Properties Ltd
Repayment of bank loan – Dragon Retail Properties Ltd
Receipt of bank loan – continuing operations
Repayment of bank loan – continuing operations
Repayment of bank loan – discontinued operations
Repayment of debenture stocks
Equity dividends paid
Equity dividends paid – non-controlling interests
Net proceeds from issue of ordinary shares – non-controlling interests
Cancelled share options – Bisichi Mining PLC
Cash outflows from financing activities
Net (decrease)/increase in cash and cash equivalents
Cash and cash equivalents at beginning of year
Exchange adjustment
Cash and cash equivalents at end of year
2015
£’000
1,994
8
1,329
–
31
122
497
393
581
(424)
(156)
4,375
(1)
4,374
201
(3,339)
368
–
88
87
210
(2,385)
(111)
226
(3,996)
–
(247)
–
(158)
–
–
–
18
(66)
1,250
(1,900)
–
(201)
–
(1,250)
(133)
(250)
–
(109)
(6,927)
(4,938)
7,118
395
2,575
2014
£’000
2,292
250
2,732
(43)
65
–
143
(4)
2,922
–
(5,396)
2,961
(26)
2,935
300
(2,601)
58
102,663
121
7
–
100,548
(88)
229
(4,790)
(623)
(292)
(544)
–
(430)
(10,686)
(14,599)
5,902
(5,000)
–
–
45,002
(44,452)
(70,000)
–
(106)
(250)
13
–
(100,714)
2,769
4,299
50
7,118
The cash flows above relate to continuing and discontinued operations. See Note 7 for information on discontinued operations.
52
London & Associated Properties PLC 2015
FINANCIAL STATEMENTS CONSOLIDATED CASH FLOw STATEMENT
CASH AND CASH EQUIVALENTS
For the purpose of the cash flow statement, cash and cash equivalents comprise the following balance sheet amounts:
Cash and cash equivalents (before bank overdrafts)
Bank overdrafts
Cash and cash equivalents at end of year
£30,000 of cash deposits at 31 December 2015 was charged as security to a debenture stock.
2015
£’000
4,809
(2,234)
2,575
2014
£’000
9,237
(2,119)
7,118
London & Associated Properties PLC 2015 53
FINANCIAL STATEMENTS
GROUP ACCOUNTING POLICIES
The following are the principal Group accounting policies:
Basis of accounting
The Group financial statements are prepared in accordance with
International Financial Reporting Standards (IFRS), as adopted by the
European Union and with those parts of the Companies Act 2006 applicable
to companies reporting under IFRS.
The Company has elected to prepare the parent company’s financial
statements in accordance with Financial Reporting Standard 101 ’Reduced
Disclosure Framework’ (FRS 101) and Companies Act 2006 and these are
presented in Note 33. The financial statements are prepared under the
historical cost convention, except for the revaluation of freehold and
leasehold properties and financial assets held for trading as well as fair
value of interest derivatives.
The Group financial statements are presented in Pounds Sterling and all
values are rounded to the nearest thousand pounds (£’000) except when
otherwise stated.
The functional currency for each entity in the Group, and for joint
arrangements, is the currency of the country in which the entity has been
incorporated. Details of which country each entity has been incorporated can
be found in note 15 for subsidiaries and Note 12 for joint arrangements.
London & Associated Properties PLC, the parent company, is a listed public
company incorporated and domiciled in England and quoted on the London
Stock Exchange. The Company registration number is 341829.
Going concern
The directors have reviewed the cash flow forecasts of the Group and the
underlying assumptions on which they are based. The Group’s business
activities, together with the factors likely to affect its future development,
are set out in the Chairman and Chief Executive’s Statement and Financial
Review. In addition Note 23 to the financial statements sets out the
Group’s objectives, policies and processes for managing its capital; its
financial risk management objectives; details of its financial instruments
and hedging activities; and its exposure to credit risk and liquidity risk.
The directors believe that the Group has adequate resources to continue in
operational existence for the foreseeable future and that the Group is well
placed to manage its business risks. Thus they continue to adopt the going
concern basis of accounting in preparing the annual financial statements.
Key judgements and estimates
The preparation of the financial statements requires management to make
assumptions and estimates that may affect the reported amounts of assets
and liabilities and the reported income and expenses, further details of
which are set out below. Although management believes that the
assumptions and estimates used are reasonable, the actual results may
differ from those estimates. Further details of the estimates are contained
in the Directors’ Report.
MINING OPERATIONS
LIFE OF MINE AND RESERVES
The directors consider the judgements and estimates surrounding the life of
the mine and its reserves have the most significant effect on the amounts
recognised in the financial statements and to be the area where the
financial statements are at most risk of a material adjustment due to
estimation uncertainty. The Group’s coal reserves are subject to assessment
by an independent Competent Person and impact assessments are made of
54
London & Associated Properties PLC 2015
the carrying value of property, plant and equipment, depreciation calculations
and rehabilitation and decommissioning provisions. There are numerous
uncertainties inherent in estimating coal reserves and changes to these
assumptions may result in restatement of reserves. These assumptions
include factors such as commodity prices, production costs and yield.
DEPRECIATION, AMORTISATION OF MINERAL RIGHTS, MINING
DEVELOPMENT COSTS AND PLANT & EQUIPMENT
The annual depreciation/amortisation charge is dependent on estimates,
including coal reserves and the related life of the mine, expected
development expenditure for probable reserves, the allocation of certain
assets to relevant ore reserves and estimates of residual values of the
processing plant. The charge can fluctuate when there are significant
changes in any of the factors or assumptions used, such as estimating
mineral reserves which in turn affects the life of mine or the expected life
of reserves. Estimates of proven and probable reserves are prepared by an
independent Competent Person. Assessments of depreciation/amortisation
rates against the estimated reserve base are performed regularly. Details of
the depreciation/amortisation charge can be found in note 11.
PROVISION FOR MINING REHABILITATION INCLUDING RESTORATION
AND DE-COMMISSIONING COSTS
A provision for future rehabilitation including restoration and
decommissioning costs requires estimates and assumptions to be made
around the relevant regulatory framework, the timing, extent and costs of
the rehabilitation activities and of the risk free rates used to determine the
present value of the future cash outflows. The provisions, including the
estimates and assumptions contained therein, are reviewed regularly by
management. The Group engages an independent expert to assess the cost
of restoration and decommissioning annually as part of management’s
assessment of the provision. Details of the provision for mining
rehabilitation can be found in note 22.
MINING IMPAIRMENT
Property, plant and equipment representing the Group’s mining assets in
South Africa are reviewed for impairment whenever events or changes in
circumstances indicate that the carrying value may not be fully recoverable.
The impairment test is performed using the approved Life of Mine plan and
those future cash flow estimates are discounted using asset specific
discount rates and are based on expectations about future operations. The
impairment test requires estimates about production and sales volumes,
commodity prices, proven and probable reserves (as assessed by the
Competent Person), operating costs and capital expenditures necessary to
extract reserves in the approved Life of Mine plan. Changes in such
estimates could impact recoverable values of these assets. Details of the
carrying value of property, plant and equipment can be found in note 11.
The impairment test indicated significant headroom as at 31 December 2015
and therefore no impairment is considered appropriate. The key assumptions
include: coal prices, including domestic coal prices based on recent pricing
and assessment of market forecasts for export coal; production based on
proven and probable reserves assessed by the independent Competent Person
and an increase in yield associated with new mining areas based on
assessments by the Competent Person and empirical data. A 5.5% decrease in
yield below expectation would be required to create a break even scenario.
However, the assumptions used are considered appropriate.
FINANCIAL STATEMENTS GROUP ACCOUNTING POLICIES
CARRYING VALUE OF EZIMBOKEDwINI JOINT VENTURE
The Group holds £1,225,000 (2014: £1,722,000) of loans and joint venture
investment in Ezimbokedwini Mining (Pty) Limited (“Ezimbokedwini”), as in
note 12 and 13, the recoverability of which is dependent upon the
completion of the acquisition of the Pegasus coal project in South Africa.
The carrying value of the underlying project is supported by its coal
reserves and Life of Mine plan and is considered appropriate given the
underlying economic value of the project.
PROPERTY OPERATIONS
FAIR VALUE MEASUREMENTS OF INVESTMENT PROPERTIES AND
INVESTMENTS
An assessment of the fair value of certain assets and liabilities, in particular
investment properties, is required to be performed. In such instances, fair
value measurements are estimated based on the amounts for which the
assets and liabilities could be exchanged between market participants. To
the extent possible, the assumptions and inputs used take into account
externally verifiable inputs. However, such information is by nature subject
to uncertainty. The directors note that the fair value measurement of the
investment properties may be considered to be less judgemental where
external valuers have been used and as a result of the nature of the
underlying assets.
DEFERRED TAX
The calculation of deferred tax involves the excersise of judgement in
relation to the amount of income and gains which will be realised in future
to support the recognition of a deferred tax asset in respect of unrelieved
losses.
INTEREST RATE HEDGES
All interest rate hedges are held at fair value as valued by the hedge
provider.
Further detail is provided in notes 21 and 23.
Basis of consolidation
The Group accounts incorporate the accounts of London & Associated
Properties PLC and all of its subsidiary undertakings, together with the
Group’s share of the results and net assets of its joint ventures.
Non–controlling interests in subsidiaries are presented separately from the
equity attributable to equity owners of the parent company. When changes
in ownership in a subsidiary do not result in a loss of control, the non–
controlling shareholders’ interests are initially measured at the non–
controlling interests’ proportionate share of the subsidiaries net assets.
Subsequent to this, the carrying amount of non–controlling interests is the
amount of those interests at initial recognition plus the non–controlling
interests’ share of subsequent changes in equity. Total comprehensive
income is attributed to non–controlling interests even if this results in the
non–controlling interests having a deficit balance.
Bisichi Mining PLC
The directors are required to consider the implications of IFRS 10 on the
LAP investment in Bisichi Mining PLC (“Bisichi”). Related parties also have
shareholdings in Bisichi. When combined with the 42% held by LAP and,
taking account of the wide disposition of other shareholders, there is
potential for LAP and these related parties to exercise voting control over
Bisichi. IFRS 10 makes it clear that possible voting control is of more
significance than actual management control.
For this reason the directors have concluded that there is a requirement to
consolidate Bisichi with LAP. While, in theory, they could achieve control, in
practice they do not get involved in the day to day operations of Bisichi.
The directors have presented consolidated accounts using the published
accounts of Bisichi but it is important to note that any figures, risks and
assumptions attributable to that company are the responsibility of the
Bisichi Board of directors who are independent from LAP.
As a result of treating Bisichi as a subsidiary, Dragon Retail Properties
Limited also becomes a subsidiary for accounting purposes, as LAP and
Bisichi each own 50% of that joint venture business.
The following accounting policies solely relate to mining operations in Bisichi:
MINING REVENUE
Revenue is recognised when the customer has a legally binding obligation
to settle under the terms of the contract and has assumed all significant
risks and rewards of ownership.
Revenue is only recognised on individual sales of coal when all of the significant
risks and rewards of ownership have been transferred to a third party. Export
revenue is generally recognised when the product is delivered to the export
terminal location specified by the customer, at which point the customer
assumes risks and rewards under the contract. Domestic coal revenues are
generally recognised on collection by the customer from the mine when loaded
into transport, where the customer pays the transportation costs.
MINING RESERVES, PLANT AND EQUIPMENT
The cost of property, plant and equipment comprises its purchase price and
any costs directly attributable to bringing the asset to the location and
condition necessary for it to be capable of operating in accordance with
agreed specifications. Freehold land is not depreciated. Other property, plant
and equipment is stated at historical cost less accumulated depreciation.
Heavy surface mining and other plant and equipment is depreciated at
varying rates depending upon its expected usage.The depreciation rates
generally applied are 5-10 per cent per annum, but the shorter of its useful
life or the life of the mine.
Other non–current assets, comprising motor vehicles and office equipment,
are depreciated at a rate of between 10% and 33% per annum which is
calculated to write off the cost, less estimated residual value of the assets,
on a straight line basis over their expected useful lives.
MINE INVENTORIES
Inventories are stated at the lower of cost and net realisable value. Cost includes
materials, direct labour and overheads relevant to the stage of production. Net
realisable value is based on estimated selling price less all further costs to
completion and all relevant marketing, selling and distribution costs.
MINE PROVISIONS
Provisions are recognised when the Group has a present obligation as
a result of a past event which it is probable will result in an outflow of
economic benefits that can be reliably estimated.
A provision for rehabilitation of the mine is initially recorded at present
value and the discounting effect is unwound over time as a finance cost.
Changes to the provision as a result of changes in estimates are recorded as
an increase/decrease in the provision and associated decommissioning
asset. The decommissioning asset is depreciated in line with the Group’s
depreciation policy over the life of mine. The provision includes the
restoration of the underground, opencast, surface operations and de-
commissioning of plant and equipment. The timing and final cost of the
rehabilitation is uncertain and will depend on the duration of the mine life
and the quantities of coal extracted from the reserves.
London & Associated Properties PLC 2015 55
FINANCIAL STATEMENTS GROUP ACCOUNTING POLICIES
MINE IMPAIRMENT
Whenever events or changes in circumstance indicate that the carrying
amount of an asset may not be recoverable that asset is reviewed for
impairment. A review involves determining whether the carrying amounts
are in excess of the recoverable amounts.
An asset’s recoverable amount is determined as the higher of its fair value
less costs of disposal and its value in use. Such reviews are undertaken on
an asset-by-asset basis, except where assets do not generate cash flows
independent of other assets, in which case the review is undertaken on a
company or group level.
If the carrying amount of an asset exceeds its recoverable amount an asset’s
carrying value is written down to its estimated recoverable amount (being
the higher of the fair value less cost to sell and value in use). Any change in
carrying value is recognised in the comprehensive income statement.
MINE RESERVES AND DEVELOPMENT COST
The purpose of mine development is to establish secure working conditions
and infrastructure to allow the safe and efficient extraction of recoverable
reserves. Depreciation on mine development is not charged until production
commences or the assets are put to use. On commencement of full
commercial production, depreciation is charged over the life of the associated
mine reserves extractable using the asset on a unit of production basis. The
unit of production calculation is based on tonnes mined as a ratio to proven
and probable reserves and also includes future forecast capital expenditure.
POST PRODUCTION STRIPPING
In surface mining operations, the Group may find it necessary to remove
waste materials to gain access to coal reserves prior to and after production
commences. Prior to production commencing, stripping costs are
capitalised until the point where the overburden has been removed and
access to the coal seam commences. Subsequent to production, waste
stripping continues as part of the extraction process as a run of mine
activity. There are two benefits accruing to the Group from stripping
activity during the production phase: extraction of coal that can be used to
produce inventory and improved access to further quantities of material
that will be mined in future periods. Economic coal extracted is accounted
for as inventory. The production stripping costs relating to improved access
to further quantities in future periods are capitalised as a stripping activity
asset, if and only if, all of the following are met:
• it is probable that the future economic benefit associated with the
stripping activity will flow to the Group;
• the Group can identify the component of the ore body for which access
has been improved; and
• the costs relating to the stripping activity associated with that
component or components can be measured reliably.
In determining the relevant component of the coal reserve for which access
is improved, the Group componentises its mine into geographically distinct
sections or phases to which the stripping activities being undertaken within
that component are allocated. Such phases are determined based on
assessment of factors such as geology and mine planning.
The Group depreciates deferred costs capitalised as stripping assets on a
unit of production method, with reference the tons mined and reserve of
the relevant ore body component or phase.
International Accounting Standards (IAS/IFRS)
The financial statements are prepared in accordance with International
Financial Reporting Standards and Interpretations in force at the reporting date.
These are prepared under the historic cost basis as modified by the revaluation
of investment properties and held for trading and available for sale investments.
Annual Improvements to IFRSs 2011–2013 Cycle were mandatory for the
accounting period but were not relevant to the operations of the Group.
The Group has not adopted any standards or interpretations in advance of
the required implementation dates. The following new or revised standards
that are applicable to the Group were issued but not yet effective:
• Annual Improvements to IFRSs 2010–2012 Cycle
• Amendments to IAS 19: Defined Benefit Plans
• Amendments to IAS 16 and IAS 41: Bearer Plants
• Amendments to IFRS 11: Accounting for Acquisitions of Interests in Joint
Operations
• Amendments to IAS 16 and IAS 38: Clarification of Acceptable Methods
of Depreciation and Amortisation
• Annual Improvements to IFRSs 2012–2014 Cycle
• Amendments to IAS 1: Disclosure Initiative
• Amendments to IAS 27: Equity Method in Separate Financial Statements
• Amendments to IFRS 10 and IAS 28: Sale or Contribution of Assets
between an Investor and its Associate or Joint Venture
• Amendments to IFRS 10, IFRS 12 and IAS 28: Investment Entities
– Applying the Consolidation Exception
• IFRS 9 – Financial instruments
• IFRS 14 Regulatory Deferral Accounts
• IFRS 15 – Revenue from Contracts with Customers
• IFRS 16 Leases
It is not expected that adoption of any standards or interpretations which
have been issued by the International Accounting Standards Board but have
not been adopted will have a material impact on the financial statements.
Subsidiaries
Subsidiaries are entities controlled by the Group. The Group controls an
entity when it is exposed to, or has rights to, variable returns from its
involvement with the entity and has the ability to affect those returns
through its power over the entity. Under IFRS 10 Bisichi is accounted for as
a subsidiary. Subsidiaries acquired during the year are consolidated using
the acquisition method. Their results are incorporated from the date that
control passes.
All intra Group transactions, balances, income and expenses are eliminated
on consolidation. Details of Group’s trading subsidiary companies are set
out in Note 15.
Joint ventures
Investments in joint ventures, being those entities over whose activities the
Group has joint control, as established by contractual agreement, include
the appropriate share of the results and net assets of those undertakings.
56
London & Associated Properties PLC 2015
FINANCIAL STATEMENTS GROUP ACCOUNTING POLICIES
Goodwill
Goodwill arising on acquisition is recognised as an intangible asset and
initially measured at cost, being the excess of the cost of the acquired
entity over the Group’s interest in the fair value of the assets and liabilities
acquired. Goodwill is carried at cost less accumulated impairment losses.
Goodwill arising from the difference in the calculation of deferred tax for
accounting purposes and fair value in negotiations is judged not to be an
asset and is accordingly impaired on completion of the relevant acquisition.
Revenue
Revenue comprises sales of coal, property rental income and property
management fees.
RENTAL INCOME
Rental income arises from operating leases granted to tenants. An operating lease
is a lease other than a finance lease. A finance lease is one whereby substantially
all the risks and rewards of ownership are passed to the lessee. Rental income is
recognised in the Group income statement on a straight–line basis over the term
of the lease. This includes the effect of lease incentives to tenants, which are
normally in the form of rent free periods. Contingent rents, being the difference
between the rent currently receivable and the minimum lease payments, are
recognised in property income in the periods in which they are receivable. Rent
reviews are recognised when such reviews have been agreed with tenants.
REVERSE SURRENDER PREMIUMS
Payments received from tenants to surrender their lease obligations are
recognised immediately in the income statement.
DILAPIDATIONS
Dilapidations monies received from tenants in respect of their lease
obligations are recognised immediately in the income statement.
OTHER REVENUE
Revenue in respect of listed investments held for trading represents
investment dividends received and profit or loss recognised on realisation.
Dividends are recognised in the income statement when the dividend
is received.
Property operating expenses
Operating expenses are expensed as incurred and any property operating
expenditure not recovered from tenants through service charges is charged
to the income statement.
Employee benefits
SHARE BASED REMUNERATION
The Company operates a long–term incentive plan and two share option
schemes. The fair value of the conditional awards on shares granted under
the long–term incentive plan and the options granted under the share
option scheme is determined at the date of grant. This fair value is then
expensed on a straight–line basis over the vesting period, based on an
estimate of the number of shares that will eventually vest. At each
reporting date, the fair value of the non–market based performance criteria
of the long–term incentive plan is recalculated and the expense is revised.
In respect of the share option scheme, the fair value of options granted is
calculated using a binomial method.
PENSIONS
The Company operates a defined contribution pension scheme. The
contributions payable to the scheme are expensed in the period to which
they relate.
Foreign currencies
Monetary assets and liabilities are translated at year end exchange rates
and the resulting exchange rate differences are included in the consolidated
income statement within the results of operating activities if arising from
trading activities and within finance cost / income if arising from financing.
For consolidation purposes, income and expense items are included in the
consolidated income statement at average rates, and assets and liabilities
are translated at year end exchange rates. Translation differences arising on
consolidation are recognised in other comprehensive income. Where foreign
operations are sold or closed, the cumulative exchange differences
attributable to that foreign operation are recognised in the consolidated
income statement when the gain or loss on disposal is recognised.
Transactions in foreign currencies are translated at the exchange rate ruling
on transaction date.
Financial instruments
INVESTMENTS
Held to maturity investments are stated at amortised cost using the
effective interest rate method.
Investments held for trading are included in current assets at fair value. For
listed investments, fair value is the bid market listed value at the balance
sheet date. Realised and unrealised gains or losses arising from changes in fair
value are included in the income statement of the period in which they arise.
TRADE AND OTHER RECEIVABLES
Trade and other receivables are recognised initially at fair value. A provision
for impairment of trade receivables is made when there is evidence that the
Group will not be able to collect all amounts due.
TRADE AND OTHER PAYABLES
Trade and other payables are non-interest bearing and are stated at their
nominal value.
BANK LOANS AND OVERDRAFTS
Bank loans and overdrafts are included as financial liabilities on the Group
balance sheet net of the unamortised discount and costs of issue. The cost
of issue is recognised in the Group income Statement over the life of the
bank loan. Interest payable on those facilities is expensed as a finance cost
in the period to which it relates.
DEBENTURE LOANS
The debenture loans are included as a financial liability on the balance
sheet net of the unamortised costs on issue. The cost of issue is recognised
in the Group income statement over the life of the debenture. Interest
payable to debenture holders is expensed in the period to which it relates.
London & Associated Properties PLC 2015 57
FINANCIAL STATEMENTS GROUP ACCOUNTING POLICIES
FINANCE LEASE LIABILITIES
Finance lease liabilities arise for those investment properties held under a
leasehold interest and accounted for as investment property. The liability is
calculated as the present value of the minimum lease payments, reducing
in subsequent reporting periods by the apportionment of payments to the
lessor. Lease payments are allocated between the liability and finance
charges so as to achieve a constant financing rate. Contingent rents
payable, such as rent reviews or those related to rental income, are charged
as an expense in the period in which they are incurred.
INTEREST RATE DERIVATIVES
The Group uses derivative financial instruments to hedge the interest rate risk
associated with the financing of the Group’s business. No trading in such
financial instruments is undertaken. At each reporting date, these interest rate
derivatives are recognised at their fair value to the business, being the Net
Present Value of the difference between the hedged rate of interest and the
market rate of interest for the remaining period of the hedge.
ORDINARY SHARES
Shares are classified as equity when there is no obligation to transfer cash
or other assets. Incremental costs directly attributable to the issue of new
shares are shown in equity as a deduction, net of tax, from the proceeds.
TREASURY SHARES
When the Group’s own equity instruments are repurchased, consideration
paid is deducted from equity as treasury shares until they are cancelled.
When such shares are subsequently sold or reissued, any consideration
received is included in equity.
Investment properties
VALUATION
Investment properties are those that are held either to earn rental income
or for capital appreciation or both, including those that are undergoing
redevelopment. They are reported on the Group balance sheet at fair value,
being the amount for which an investment property could be exchanged
between knowledgeable and willing parties in an arm’s length transaction.
The directors’ property valuation is at fair value.
The external valuation of properties is undertaken by independent valuers who
hold recognised and relevant professional qualifications and have recent
experience in the locations and categories of properties being valued. Surpluses
or deficits resulting from changes in the fair value of investment property are
reported in the Group income statement in the period in which they arise.
CAPITAL EXPENDITURE
Investment properties are measured initially at cost, including related
transaction costs. Additions to capital expenditure, being costs of a capital
nature, directly attributable to the redevelopment or refurbishment of an
investment property, up to the point of it being completed for its intended
use, are capitalised in the carrying value of that property. The redevelopment
of an existing investment property will remain an investment property
measured at fair value and is not reclassified. Capitalised interest is calculated
with reference to the actual rate payable on borrowings for development
purposes, or for that part of the development costs financed out of
borrowings the capitalised interest is calculated on the basis of the average
rate of interest paid on the relevant debt outstanding.
DISPOSAL
The disposal of investment properties is recorded on completion of the
contract. On disposal, any gain or loss is calculated as the difference
between the net disposal proceeds and the valuation at the last year end
plus subsequent capitalised expenditure in the period.
DEPRECIATION AND AMORTISATION
In applying the fair value model to the measurement of investment
properties, depreciation and amortisation are not provided in respect of
investment properties.
Other assets and depreciation
The cost, less estimated residual value, of other property, plant and
equipment is written off on a straight–line basis over the asset’s expected
useful life. Residual values and useful lives are reviewed, and adjusted if
appropriate, at each balance sheet date. Changes to the estimated residual
values or useful lives are accounted for prospectively. The depreciation rates
generally applied are:
Motor vehicles
Office equipment
25–33 per cent per annum
10–33 per cent per annum
Assets held for sale
Non-current assets, or disposal groups comprising assets and liabilities, are
classified as held-for-sale if it is highly probable that they will be recovered
primarily through sale rather through continuing use. Such assets, or disposal
groups, are generally measured at the lower of their carrying amount and fair
value less costs of sale. Any impairment loss on a disposal group is allocated first
to goodwill, and then to the remaining assets and liabilities on a pro rata basis,
except that no loss is allocated to inventories, financial assets, deferred tax assets,
employee benefit assets, investment property which continue to be measured in
accordance with the Group’s other accounting policies. Impairment losses on
initial classification as held-for-sale and subsequent gains and losses on
remeasurement are recognised in profit or loss. Once classified as held-for-sale,
intangible assets and property, plant and equipment are no longer amortised or
depreciated, and any equity-accounted investment is no longer equity accounted.
Available for sale investments
Financial assets available for sale are measured at fair value and movements
in fair value are charged/credited to the statement of comprehensive
income in the period.
Income taxes
The charge for current taxation is based on the results for the year as
adjusted for disallowed or non–assessable items. Tax payable upon
realisation of revaluation gains recognised in prior periods is recorded as a
current tax charge with a release of the associated deferred tax. Deferred
tax is the tax expected to be payable or recoverable on differences between
the carrying amounts of assets and liabilities in the financial statements
and the corresponding tax bases used in the tax computations, and is
recorded using the balance sheet liability method. Deferred tax liabilities
are generally recognised for all taxable temporary differences and deferred
tax assets are recognised to the extent that it is probable that taxable
profits will be available against which deductible temporary differences can
be utilised. In respect of the deferred tax on the revaluation surplus, this is
calculated on the basis of the chargeable gains that would crystallise on the
sale of the investment portfolio as at the reporting date.
58
London & Associated Properties PLC 2015
FINANCIAL STATEMENTS GROUP ACCOUNTING POLICIES
The calculation takes account of indexation on the historic cost of
properties and any available capital losses. Deferred tax is calculated at the
tax rates that are expected to apply in the period when the liability is
settled or the asset is realised. Deferred tax is charged or credited in the
Group income statement, except when it relates to items charged or
credited directly to equity, in which case it is also dealt with in equity.
DIVIDENDS
Dividends payable on the ordinary share capital are recognised as a liability
in the period in which they are approved.
Cash and cash equivalents
Cash comprises cash in hand and on demand deposits, net of bank
overdrafts. Cash equivalents comprise short–term, highly liquid investments
that are readily convertible to known amounts of cash and which are
subject to an insignificant risk of changes in value and original maturities of
three months or less.
Segmental reporting
For management reporting purposes, the Group is organised into business
segments distinguishable by economic activity. The Group’s business
segments are LAP operations, Bisichi operations and Dragon operations.
These business segments are subject to risks and returns that are different
from those of other business segments and are the primary basis on which
the Group reports its segmental information. This is consistent with the
way the Group is managed and with the format of the Group’s internal
financial reporting. Significant revenue from transactions with any
individual customer, which makes up 10 per cent or more of the total
revenue of the Group, is separately disclosed within each segment.
London & Associated Properties PLC 2015 59
FINANCIAL STATEMENTS
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 December 2015
1. RESULTS FOR THE YEAR AND SEGMENTAL ANALYSIS
Operating Segments are based on the internal reporting and operational management of the Group. LAP is focused primarily on property activities (which
generate trading income), but it also holds and manages investments. IFRS 10 requires the Group to treat Bisichi as a subsidiary and it therefore is
consolidated from 2014, rather than being included in the accounts as an associate using the equity method. The Group has also consolidated Dragon
from 2014, a company which the Company jointly controls with Bisichi; Bisichi is a coal mining company with operations in South Africa and also holds
investment property in the United Kingdom and derives income from property rentals. Dragon is a property investment company and derives its income
from property rentals. These operating segments (LAP, Bisichi and Dragon) are each viewed separately and have been so reported below.
BUSINESS SEGMENTS
BUSINESS ANALYSIS
Rental income
Management income from third party properties
Mining
Group Revenue
Direct property costs
Direct mining costs
Overheads
Exchange losses
Depreciation
Operating profit/(loss) before listed investments held for trading
Listed investments held for trading
Operating profit/(loss)
Finance income
Finance expenses
Debenture break costs
Result before valuation movements
Other segment items
Net (decrease)/increase on revaluation of investment properties
Decrease in value of other investments
Net decrease on revaluation of investments held for trading
Loss on sale of investment property
Adjustment to interest rate derivative
Share of loss in joint ventures, net of tax
Loss on reclassification of asset as held for sale
Result including revaluation and other movements
Profit from discontinued operations
Loss for the year before taxation
Segment assets
- Non-current assets – property
- Non-current assets – plant & equipment
- Cash & cash equivalents
- Non-current assets – other
- Non-current assets – deferred tax asset
- Current assets – others
Total assets excluding investment in joint ventures and assets held for sale
Segment liabilities
Borrowings
Current liabilities
Non-current liabilities
Total liabilities
Net assets
Investment in joint ventures non segmental
Assets held for sale
Net assets as per balance sheet
Major customers
Customer A
This customer is for mining revenue in South Africa.
60
London & Associated Properties PLC 2015
2015
LAP
£000
6,129
696
–
6,825
(1,530)
–
(3,301)
–
(39)
1,955
1
1,956
16
(3,714)
(158)
(1,900)
(368)
–
(1)
–
69
(67)
(138)
(2,405)
519
(1,886)
93,510
148
3,192
1,995
2,390
2,355
103,590
(57,815)
(6,390)
(5,177)
(69,382)
34,208
–
–
–
BISICHI
£000
1,014
–
24,640
25,654
(110)
(19,177)
(4,651)
(497)
(1,284)
(65)
–
(65)
107
(473)
–
(431)
225
(11)
–
–
–
138
(138)
(217)
–
(217)
12,994
5,374
1,608
14
–
5,794
25,784
(8,207)
(3,918)
(3,043)
(15,168)
10,616
–
–
–
DRAGON
£000
187
–
–
187
(13)
–
(67)
–
(6)
101
2
103
–
(34)
–
69
(42)
–
–
(32)
15
–
–
10
–
10
2,668
30
9
–
–
60
2,767
(1,196)
(199)
(104)
(1,499)
1,268
–
–
–
TOTAL
£000
7,330
696
24,640
32,666
(1,653)
(19,177)
(8,019)
(497)
(1,329)
1,991
3
1,994
123
(4,221)
(158)
(2,262)
(185)
(11)
(1)
(32)
84
71
(276)
(2,612)
519
(2,093)
109,172
5,552
4,809
2,009
2,390
8,209
132,141
(67,218)
(10,507)
(8,324)
(86,049)
46,092
1,225
2,335
49,652
–
14,126
–
14,126
FINANCIAL STATEMENTS NOTES TO THE FINANCIAL STATEMENTS
1. RESULTS FOR THE YEAR AND SEGMENTAL ANALYSIS CONTINUED
GEOGRAPHIC ANALYSIS
Revenue
Operating profit
Non-current assets excluding investments
Total net assets
Capital expenditure
BUSINESS ANALYSIS
Rental income
Management income from third party properties
Mining
Group Revenue
Direct property costs
Direct mining costs
Overheads
Exchange losses
Depreciation
Operating profit before listed investments held for trading
Listed investments held for trading
Operating profit
Finance income
Finance expenses
Interest rate derivative costs
Result before valuation movements
Other segment items
Net increase/(decrease) on revaluation of investment properties
Net increase in value of other investments
Net decrease on revaluation of investments held for trading
Adjustment to interest rate derivative
Share of profit of joint ventures, net of tax
Result including revaluation and other movements
Profit from discontinued operations
(Loss)/profit for the year before taxation
Segment assets
- Non – current assets – property
- Non – current assets – plant and equipment
- Cash and cash equivalents
- Non – current assets – other
- Non – current assets – deferred tax asset
- Current assets – others
Total assets excluding investment in joint ventures
Segment liabilities
Borrowings
- Current liabilities
- Non-current liabilities
Total liabilities
Net assets
Investment in joint ventures non segmental
Net assets as per balance sheet
Major customers
Customer A
Customer B
These customers are for mining revenue in South Africa.
UNITED
KINGDOM
£’000
8,058
2,779
111,759
47,588
1,349
BISICHI
£’000
930
–
25,536
26,466
(63)
(18,244)
(3,783)
(143)
(2,682)
1,551
–
1,551
97
(593)
–
1,055
(6)
1
(82)
–
563
1,531
–
1,531
11,770
6,064
2,838
152
–
7,277
28,101
(8,152)
(4,566)
(3,333)
(16,051)
12,050
SOUTH
AFRICA
£’000
24,608
(785)
5,355
2,064
1,990
DRAGON
£’000
180
–
–
180
(31)
–
(30)
–
(4)
115
2
117
–
(34)
–
83
–
–
(2)
–
–
81
–
81
3,110
15
113
–
–
137
3,375
(1,900)
(79)
(202)
(2,181)
1,194
2014
LAP
£’000
6,000
880
–
6,880
(1,468)
–
(4,743)
–
(46)
623
1
624
18
(4,248)
(1,117)
(4,723)
859
–
(2)
(1,086)
561
(4,391)
86
(4,305)
93,563
178
6,286
2,196
2,324
2,073
106,620
(59,014)
(6,702)
(5,249)
(70,965)
35,655
–
–
12,607
6,455
–
–
2015
TOTAL
£’000
32,666
1,994
117,114
49,652
3,339
TOTAL
£’000
7,110
880
25,536
33,526
(1,562)
(18,244)
(8,556)
(143)
(2,732)
2,289
3
2,292
115
(4,875)
(1,117)
(3,585)
853
1
(86)
(1,086)
1,124
(2,779)
86
(2,693)
108,443
6,257
9,237
2,348
2,324
9,487
138,096
(69,066)
(11,347)
(8,784)
(89,197)
48,899
4,474
53,373
12,607
6,455
London & Associated Properties PLC 2015 61
FINANCIAL STATEMENTS NOTES TO THE FINANCIAL STATEMENTS
1. RESULTS FOR THE YEAR AND SEGMENTAL ANALYSIS CONTINUED
GEOGRAPHIC ANALYSIS
Revenue
Operating profit
Non–current assets excluding investments
Total net assets
Capital expenditure
UNITED
KINGDOM
£’000
7,990
1,571
110,994
48,077
724
SOUTH
AFRICA
£’000
25,536
721
6,030
5,296
1,877
2014
TOTAL
£’000
33,526
2,292
117,024
53,373
2,601
Group revenue is external to the Group and the directors consider that inter segmental revenues are not material. Revenue includes contingent rents of
£0.3 million (2014: £0.1 million).
Operating profit excludes the share of profit and losses of joint ventures, finance income and expenses, movement on revaluation of investment properties
and investments held for trading and the movement on interest rate derivatives.
2. LOSS BEFORE TAXATION
Loss before taxation is stated after charging/(crediting):
Staff costs (see note 29)
Depreciation on tangible fixed assets – owned assets
Operating lease rentals – land and buildings
Exchange loss
Profit on disposal of motor vehicles and office equipment
Amounts payable to the auditor in respect of both audit and non-audit services
Audit services
Statutory – Company and consolidation
Subsidiaries
Further assurance services
Other services
Staff costs are included in overheads.
3. LISTED INVESTMENTS HELD FOR TRADING
Dealing loss
Dividends receivable
Net profit from listed investments
4. DIRECTORS’ EMOLUMENTS
Emoluments
Defined contribution pension scheme contributions
Details of directors’ emoluments and share options are set out in the remuneration report.
62
London & Associated Properties PLC 2015
2015
£’000
7,219
1,329
422
497
–
115
61
15
–
191
2015
£’000
(6)
9
3
2015
£’000
1,199
73
1,272
2014
£’000
7,786
2,732
610
143
(43)
87
78
8
28
201
2014
£’000
–
3
3
2014
£’000
1,367
69
1,436
FINANCIAL STATEMENTS NOTES TO THE FINANCIAL STATEMENTS
5. FINANCE INCOME AND EXPENSES
Finance income
Finance expenses
Interest on bank loans and overdrafts
Unwinding of discount (Bisichi)
Other loans
Interest on derivatives
Interest on obligations under finance leases
Total finance expenses
6. INCOME TAX
Current tax
Corporation tax on profit of the period
Corporation tax on profit of previous periods
Total current tax
Deferred tax
Origination of timing differences
Revaluation of investment properties
Accelerated capital allowances
Fair value of interest derivatives
Adjustment in respect of prior years
Total deferred tax (notes 24 and 25)
Tax on profit on ordinary activities
2015
£’000
123
(2,258)
(79)
(1,359)
(295)
(230)
(4,221)
(4,098)
2015
£’000
10
(20)
(10)
864
(1,035)
(97)
22
209
(37)
(47)
FACTORS AFFECTING TAX CHARGE FOR THE YEAR
The corporation tax assessed for the year is different from that at the effective rate of corporation tax in the United Kingdom of 20.25 per cent
(2014: 21.5 per cent). The differences are explained below:
Loss for the year before taxation
Taxation at 20.25 per cent (2014: 21.5 per cent)
Effects of:
Other differences
Joint ventures
Adjustment in respect of prior years
Deferred tax rate adjustment
Income tax (credit)/charge for the year
2015
£’000
(2,093)
(424)
(701)
94
189
795
(47)
2014
£’000
115
(2,366)
(87)
(1,508)
(655)
(259)
(4,875)
(4,760)
2014
£’000
17
29
46
(1,554)
192
299
4,702
17
3,656
3,702
2014
£’000
(2,693)
(579)
4,051
(14)
46
198
3,702
The main component of other differences in the reconciliation relates to capital gains of £1.1 million (2014: (£0.1 million)), indexation allowances of
(£0.1 million) (2014: (£0.5 million)), fair value of interest derivatives of £Nil (2014: (£4.7 million)) and others (£0.3 million) (2014: £Nil).
FACTORS THAT MAY AFFECT FUTURE TAX CHARGES:
Based on current capital expenditure plans, the Group expects to continue to be able to claim capital allowances in excess of depreciation in future years,
but at a slightly lower level than in the current year.
A deferred tax provision has been made for gains on revaluing investment properties. At present it is not envisaged that any tax will become payable in the
foreseeable future.
London & Associated Properties PLC 2015 63
FINANCIAL STATEMENTS NOTES TO THE FINANCIAL STATEMENTS
7. DISCONTINUED OPERATIONS
A. DISPOSALS
As part of the Group’s strategy to focus on core assets, the Group disposed of King Edward Court, Windsor in 2013. The profits and losses arising from this
disposal were classified as discontinued operations. Contracts for the sale of King Edward Court had been exchanged in 2013 and completion took place in
January 2014. Following the settlement of a dispute additional proceeds are payable to the Group as below.
B. RESULT FOR THE YEAR OF DISCONTINUED OPERATIONS
Gross property income
Direct property costs
Net property income
Overheads
Net revenue from property
Profit on sale of investment properties
Finance expenses
Profit before tax attributable to shareholders
C. CASH FLOWS FROM DISCONTINUED OPERATIONS
Cash flows from operating activities
Cash flows from investing activities
Cash flows from financing activities
Net cash inflow from discontinued operations
8. DIVIDEND
Dividends paid during the year relating to the prior period
Dividends to be paid:
Proposed final dividend for
9. (LOSS)/PROFIT PER SHARE AND NET ASSETS PER SHARE
(Loss)/ profit per share has been calculated as follows:
2015
£’000
–
–
–
8
8
424
432
87
519
2015
£’000
432
–
87
519
2015
PER SHARE
0.156p
0.16p
£’000
133
136
2014
PER SHARE
0.125p
0.156p
2014
£’000
464
(144)
320
(70)
250
–
250
(164)
86
2014
£’000
250
102,670
(85,766)
17,154
£’000
106
133
Loss for the year for the purposes of basic and diluted profit per share (£’000)
Weighted average number of ordinary shares in issue for the purpose of basic profit per share (’000)
Basic loss per share
Weighted average number of ordinary shares in issue for the purpose of diluted profit per share (’000)
Fully diluted loss per share
Weighted average number of shares in issue is calculated after excluding treasury shares of 734,816 (2014: 1,032,991).
2015
(1,899)
84,951
(2.24)p
84,951
(2.24)p
2014
(7,140)
84,500
(8.45)p
84,500
(8.45)p
The loss for continuing operations was £2,418,000 (2014: £7,226,000) and the profit for discontinued operations was £519,000 (2014: £86,000).
Net assets per share have been calculated as follows:
Net assets (£’000)
Shares in issue (’000)
Basic net assets per share
Net assets diluted (£’000)
Shares in issue (’000)
Diluted net assets per share
64
London & Associated Properties PLC 2015
2015
40,078
84,808
47.26p
40,078
84,808
47.26p
2014
42,547
84,510
50.35p
42,547
84,510
50.35p
FINANCIAL STATEMENTS NOTES TO THE FINANCIAL STATEMENTS
10. INVESTMENT PROPERTIES
Cost or valuation at 1 January 2015
Acquisition of property
Additions in year
Disposals
Decrease in present value of head leases
Increase/ (decrease) on revaluation
At 31 December 2015
Representing assets stated at:
Valuation
Present value of head leases
At 31 December 2015
At 31 December 2014
Cost or valuation at 1 January 2014
Reclassification
Additions
Decrease in present value of head leases
Increase/(decrease) on revaluation
Cost or valuation at 31 December 2014
Representing assets stated at:
Valuation
Present value of head leases
At 1 January 2014
At 31 December 2014
TOTAL
£000
108,443
960
357
(400)
(3)
(185)
109,172
104,388
4,784
109,172
109,172
108,443
TOTAL
£’000
106,911
–
684
(4)
852
108,443
103,655
4,788
108,443
106,911
108,443
FREEHOLD
£000
85,080
960
210
(400)
–
618
86,468
86,468
–
86,468
86,468
85,080
FREEHOLD
£’000
82,644
–
684
–
1,752
85,080
85,080
–
85,080
82,644
85,080
LEASEHOLD
OVER 50 YEARS
£000
21,591
–
147
–
–
(678)
21,060
LEASEHOLD
UNDER 50 YEARS
£000
1,772
–
–
–
(3)
(125)
1,644
16,920
4,140
21,060
21,060
21,591
LEASEHOLD
OVER
50 YEARS
£’000
23,986
(1,493)
–
(2)
(900)
21,591
17,450
4,141
21,591
23,986
21,591
1,000
644
1,644
1,644
1,772
LEASEHOLD
UNDER
50 YEARS
£’000
281
1,493
–
(2)
–
1,772
1,125
647
1,772
281
1,772
The leasehold and freehold properties, excluding the present value of head leases and directors’ valuations, were valued as at 31 December 2015 by
external professional firms of chartered surveyors. The valuations were made at fair value. The directors’ property valuations were made at fair value.
Allsop LLP
Carter Towler
Directors’ valuations
Add: present value of headleases
2015
£’000
87,095
12,800
4,493
104,388
4,784
109,172
2014
£’000
87,145
11,575
4,935
103,655
4,788
108,443
London & Associated Properties PLC 2015 65
FINANCIAL STATEMENTS NOTES TO THE FINANCIAL STATEMENTS
10. INVESTMENT PROPERTIES CONTINUED
The historical cost of investment properties, including total capitalised interest of £1,161,000 (2014: £1,161,000) was as follows:
Cost at 1 January
Reclassification
Acquisition of property
Additions
Disposals
Cost at 31 December
2015
LEASEHOLD
OVER 50
YEARS
£000
17,506
–
–
147
–
17,653
LEASEHOLD
UNDER 50
YEARS
£000
1,939
–
–
–
–
1,939
FREEHOLD
£000
71,601
–
960
210
(220)
72,551
2014
LEASEHOLD
OVER 50
YEARS
£000
18,660
(1,154)
–
–
–
17,506
LEASEHOLD
UNDER 50
YEARS
£000
785
1,154
–
–
–
1,939
FREEHOLD
£000
70,917
–
–
684
–
71,601
Each year external valuers are appointed by the Executive Directors on behalf of the Board. The valuers are selected based upon their knowledge,
independence and reputation for valuing assets such as those held by the Group.
Valuations are performed annually and are performed consistently across all properties in the Group’s portfolio. At each reporting date appropriately qualified
employees of the Group verify all significant inputs and review the computational outputs. Valuers submit their report to the Board on the outcome of each valuation.
Valuations take into account tenure, lease terms and structural condition. The inputs underlying the valuations include market rent or business profitability,
likely incentives offered to tenants, forecast growth rates, yields, EBITDA, discount rates, construction costs including any specific site costs (for example
section 106), professional fees, developer’s profit including contingencies, planning and construction timelines, lease regear costs, planning risk and sales
prices based on known market transactions for similar properties to those being valued.
Valuations are based on what is determined to be the highest and best use. When considering the highest and best use the valuer will consider, on a
property by property basis, its actual and potential uses which are physically, legally and financially viable. Where the highest and best use differs from the
existing use, the valuer will consider the cost and likelihood of achieving and implementing this change in arriving at its valuation.
There are often restrictions on Freehold and Leasehold property which could have a material impact on the realisation of these assets. The most significant
of these occur when planning permission or lease extension and renegotiation of use are required or when a credit facility is in place. These restrictions are
factored in the property’s valuation by the external valuer.
The methods of fair value measurement are classified into a hierarchy based on the reliability of the information used to determine the valuation, as follows:
Level 1:
valuation based on inputs on quoted market prices in active markets.
Level 2:
valuation based on inputs other than quoted prices included within level 1 that maximise the use of observable data directly or from market
prices or indirectly derived from market prices.
Level 3: where one or more inputs to valuations are not based on observable market data.
CLASS OF PROPERTY
LEVEL 3
Freehold – external valuation
CARRYING /
FAIR VALUE
2015
£’000
81,975
VALUATION TECHNIQUE
Income capitalisation
Leasehold over 50 years – external valuation
16,920
Income capitalisation
Leasehold under 50 years – external valuation
1,000
Income capitalisation
Freehold – Directors’ valuation
4,493
Income capitalisation
KEY UNOBSERVABLE
INPUTS
Estimated Rental Value
Per sq ft p.a
Equivalent Yield
Estimated Rental Value
Per sq ft p.a
Equivalent Yield
Estimated Rental Value
Per sq ft p.a
Equivalent Yield
Estimated Rental Value
Per sq ft p.a
Equivalent Yield
RANGE (wEIGHTED AVERAGE)
2015
£5 – £37
(£18)
5% – 15%
(8%)
£5 – £11
(£10)
7% –18%
(11%)
£4 – £5
(£4)
23% – 26%
(25%)
£5 – £24
(£16)
6% – 6%
(6%)
At 31 December 2015
104,388
There are interrelationships between all these inputs as they are determined by market conditions. The existence of an increase in more than one input
would be to magnify the input on the valuation. The impact on the valuation will be mitigated by the interrelationship of two inputs in opposite directions,
for example, an increase in rent may be offset by an increase in yield.
66
London & Associated Properties PLC 2015
FINANCIAL STATEMENTS NOTES TO THE FINANCIAL STATEMENTS
10. INVESTMENT PROPERTIES CONTINUED
The table below illustrates the impact of changes in key unobservable inputs on the carrying / fair value of the Group’s properties.
Freehold – external valuation
Leasehold over 50 years – external valuation
Leasehold under 50 years – external valuation
Freehold – Directors’ valuation
11. MINING RESERVES, PLANT AND EQUIPMENT
Cost at 1 January 2015
Exchange adjustment
Additions
Disposals
At 31 December 2015
Accumulated depreciation at 1 January 2015
Exchange adjustment
Charge for the year
Disposals in year
Accumulated depreciation at 31 December 2015
Net book value at 31 December 2015
Cost at 1 January 2014
Exchange adjustment
Additions
Disposals
Cost at 31 December 2014
Accumulated depreciation at 1 January 2014
Exchange adjustment
Charge for the year
Disposals
Accumulated depreciation at 31 December 2014
Net book value at 31 December 2014
12. INVESTMENT IN JOINT VENTURES
SHARES IN JOINT VENTURES:
At 1 January
Share of (loss)/profit after tax (Langney)
Dividends received (Langney)
Loss on reclassification of asset held for sale (Langney)
Exchange adjustment
Transfer to assets held for sale (Langney) (note 14)
At 31 December
ESTIMATED RENTAL VALUE
10% INCREASE OR (DECREASE)
£’000
8,064/(8,064)
1,692/(1,692)
100/(100)
443/(443)
EQUIVALENT YIELD
25 BASIS POINT CONTRACTION
OR (EXPANSION)
£’000
3,288/(3,027)
440/(418)
10/(10)
183/(169)
TOTAL
£’000
19,536
(4,361)
2,022
(9)
17,188
13,279
(2,963)
1,329
(9)
11,636
5,552
18,985
(600)
1,917
(766)
19,536
11,667
(369)
2,732
(751)
13,279
6,257
MINING
RESERVES
£’000
1,266
(271)
–
–
995
1,149
(256)
56
–
949
46
1,310
(44)
–
–
1,266
1,184
(38)
3
–
1,149
117
MINING
EQUIPMENT
£’000
17,539
(4,048)
1,964
(2)
15,453
11,705
(2,679)
1,177
(2)
10,201
5,252
16,328
(550)
1,838
(77)
17,539
9,470
(329)
2,641
(77)
11,705
5,834
2015
£’000
3,434
71
(210)
(276)
(359)
(2,335)
325
OFFICE
EQUIPMENT
AND MOTOR
VEHICLES
£’000
731
(42)
58
(7)
740
425
(28)
96
(7)
486
254
1,347
(6)
79
(689)
731
1,013
(2)
88
(674)
425
306
2014
£’000
2,310
1,124
–
–
–
–
3,434
London & Associated Properties PLC 2015 67
FINANCIAL STATEMENTS NOTES TO THE FINANCIAL STATEMENTS
12. INVESTMENT IN JOINT VENTURES CONTINUED
RESULTS OF JOINT VENTURES:
Turnover
(Loss)/profit before tax
(Loss)/profit after taxation
Balance sheet
Non-current assets
Current assets
Current liabilities
Non-current liabilities
Share of net assets at 31 December
Reconciliation to amounts included in the financial statements:
GROUP SHARE OF:
Net assets at 1 January
Profit/(loss) before and after taxation
Share of net assets at 31 December
Investment not represented by net assets
Shares in joint venture
LANGNEY
25%
£’000
344
(204)
(204)
EZIMBOKODWENI
49%
£’000
–
–
–
4,572
204
(92)
(2,349)
2,335
895
2
(897)
–
–
EZIMBOKODWENI
49.00%
£’000
–
–
–
325
325
2015
£’000
344
(204)
(204)
5,467
206
(989)
(2,349)
2,335
2015
£’000
–
–
–
325
325
2014
£’000
1,048
4,496
4,496
21,808
3,086
(3,502)
(10,392)
11,000
2014
£’000
1,626
1,124
2,750
684
3,434
Ezimbokodweni Mining (Pty) Limited (Ezimbokodweni) – unlisted coal production company. The Group owns, via Bisichi Mining PLC, 49% of the issued
share capital. The company is incorporated in South Africa. It has issued share capital of 100 (2014: 100) ordinary shares of ZAR1 each.
Langney Shopping Centre Unit Trust (Langney) – Prior to 11 March 2016, the Group owned 25% of the units of Langney Shopping Centre Unit Trust, an
unlisted property unit trust incorporated in Jersey. 25% of the units in the trust were held by London & Associated Properties PLC and 75% were held by Columbus
UK GP limited, a partner acting on behalf of Columbus UK Real Estate Fund. On the 11 March 2016, the Group disposed of its investment in Langney Shopping
Centre Unit Trust. The net proceeds from the sale were £2,335,000 which includes £60k dividends repaid post year end. At 31 December 2015, the investment was
transferred from investment in joint ventures to assets held for sale in the balance sheet. At year end, the share of the net assets of the trust held by the Group
were £2,335,000 (2014: £2,750,000) which includes a loss on the reclassification of the asset to held for sale in the amount of £276,000.
13. LOAN TO JOINT VENTURE
Loan to Ezimbokodweni Mining (Pty) Limited
At 1 January
Exchange adjustment
Additions
At 31 December
14. ASSETS HELD FOR SALE
Investment in Langney Shopping Centre Unit Trust
At 1 January
Transfer from investment in joint venture (note 12)
At 31 December
2015
£’000
1,040
(235)
95
900
2015
£’000
–
2,335
2,335
2014
£’000
984
(36)
92
1,040
2014
£’000
–
–
–
On the 11 March 2016, the Group disposed of its investment in Langney Shopping Centre Unit Trust, an unlisted property unit trust incorporated in Jersey.
At year end, the company owned 25% of the units of the trust. The net proceeds from the sale were £2,335,000 (including dividend). At year end, the
Group’s share of the net assets of the trust was £2,335,000 (2014: £2,750,000).
68
London & Associated Properties PLC 2015
FINANCIAL STATEMENTS NOTES TO THE FINANCIAL STATEMENTS
15. SUBSIDIARY COMPANIES
In accordance with Section 409 of the Companies Act 2006 a full list of subsidiaries, the principal activity, the country of incorporation and the percentage
of equity owned, as at 31 December 2015 is disclosed below:
ENTITY
Analytical Investments Limited
Analytical Portfolios Limited
Analytical Properties Holdings Limited
Analytical Properties Limited
Analytical Ventures Limited
Analytical Ventures (Halifax) Limited
24 Bruton Place Limited
24 BPL (Harrogate) Limited
24 BPL (Harrogate ) Two Limited
Brixton Village Limited
Market Row Limited
Newincco 1243 Limited
Newincco 1244 Limited
Newincco 1245 Limited
Newincco 1299 Limited
Newincco 1300 Limited
LAP Ocean Holdings Limited
London & Associated Limited
London & Associated (Rugeley) Limited
London & Associated Securities Limited
London & Associated Management Services Limited
London & African Investments Limited
Orchard Chambers Residential Limited
Bisichi Mining PLC (note D)
Mineral Products Limited (note A)
Bisichi (Properties) Limited (note A)
Bisichi Mining (Exploration) Limited (note A)
Black Wattle Colliery (Pty) Limited (note A)
Bisichi Coal Mining (Pty) Limited (note A)
Urban First (Northampton) Limited (note A)
Bisichi Trustee Limited (note A)
Bisichi Mining Management Services Limited (note A)
Ninghi Marketing Limited (note A)
Bisichi Northampton Limited (note A)
Amandla Ehtu Mineral Resource Development (Pty) Limited (note A)
Ezimbokodweni Mining (Pty) Limtied (note A)
Black Wattle Klipfontein (Pty) Limited (note A)
Dragon Retail Properties Limited (note B)(note D)
Newincco 1338 Limited (note C)
ACTIVITY
Dormant
Dormant
Property
Property
Property
Property
Dormant
Investment
Investment
Property
Property
Property
Property
Property Management Services
Property
Property
Property
Dormant
Dormant
Dormant
Property Management Services
Dormant
Dormant
Coal mining
Share dealing
Property
Holding company
Coal mining
Coal mining
Dormant
Property
Dormant
Dormant
Property
Dormant
Dormant
Coal mining
Property
Property
PERCENTAGE OF
SHARE CAPITAL
100%
100%
100%
100%
100%
100%
100%
88%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
41.52%
100%
100%
100%
62.5%
100%
100%
100%
100%
90.1%
100%
70%
49%
62.5%
50%
100%
COUNTRY OF
INCORPORATION
England and Wales
England and Wales
England and Wales
England and Wales
England and Wales
England and Wales
England and Wales
England and Wales
England and Wales
England and Wales
England and Wales
England and Wales
England and Wales
England and Wales
England and Wales
England and Wales
England and Wales
England and Wales
England and Wales
England and Wales
England and Wales
England and Wales
England and Wales
England and Wales
England and Wales
England and Wales
England and Wales
South Africa
South Africa
England and Wales
England and Wales
England and Wales
England and Wales
England and Wales
South Africa
South Africa
South Africa
England and Wales
England and Wales
Details on the non–controlling interest in subsidiaries are shown under note 27.
Note A: these companies are owned by Bisichi and the equity shareholdings disclosed relate to that company.
Note B: this entity is a joint venture owned 50% by LAP and 50% by Bisichi.
Note C: this company is owned by Dragon and the equity shareholdings disclosed relate to that company.
Note D: these entities are included in the consolidated financial statements from 2014 as a result of the adoption of IFRS 10.
London & Associated Properties PLC 2015 69
FINANCIAL STATEMENTS NOTES TO THE FINANCIAL STATEMENTS
16. INVENTORIES
Coal
Washed
Run of mine
Work in progress
Other
2015
£’000
778
110
122
39
1,049
17. HELD TO MATURITY INVESTMENTS AND OTHER INVESTMENTS
Held to maturity investments:
At 1 January
Reclassification
Repayments
At 31 December
2015
TOTAL
£000
2,196
–
(201)
1,995
UNLISTED
SHARES
£000
1
–
–
1
LOAN
STOCK
£000
2,195
–
(201)
1,994
2014
TOTAL
£000
2,200
300
(304)
2,196
UNLISTED
SHARES
£000
2,200
(2,199)
–
1
2014
£’000
606
1,070
45
39
1,760
LOAN
STOCK
£000
2,499
(304)
2,195
The Group owns a 6.95% interest in the equity and loans of HRGT Shopping Centres LP (HRGT), a limited partnership set up in England to acquire and
own 3 shopping centres in Dunfermline, Kings Lynn and Loughborough. 92.10% of the equity and loans are owned by Oaktree Capital Management and
0.95% by Gooch Cunliffe Whale LLP. London & Associated Management Services Limited has a management contract to manage the properties on behalf
of HRGT.
OTHER INVESTMENTS:
Net book and market value of investments listed on overseas stock exchange
Net book value of unquoted investments
18. TRADE AND OTHER RECEIVABLES
Trade receivables
Amounts due from joint ventures
Other receivables
Prepayments and accrued income
The directors consider that the carrying amount of trade and other receivables approximates to their fair value.
19. INVESTMENTS AVAILABLE FOR SALE AND HELD FOR TRADING
Market bid value of the listed investment portfolio – available for sale
Market bid value of the listed investment portfolio – held for trading
Unrealised (loss)/gain of market value over cost
Listed investment portfolio at cost
2015
£’000
14
–
14
2015
£’000
4,129
–
1,385
988
6,502
2015
£’000
594
20
(146)
760
2014
£’000
26
126
152
2014
£’000
4,790
338
669
977
6,774
2014
£’000
796
122
54
763
Investments are listed on the London Stock Exchange with the exception of £26,000 (2014: £38,000) listed outside Great Britain.
70
London & Associated Properties PLC 2015
FINANCIAL STATEMENTS NOTES TO THE FINANCIAL STATEMENTS
20 TRADE AND OTHER PAYABLES
Trade payables
Amounts owed to joint venture
Other taxation and social security costs
Other payables
Accruals and deferred income
The directors consider that the carrying amount of trade and other payables approximates to their fair value.
21. BORROWINGS
Other loans (Bisichi)
£1.25 million term bank loan (secured) repayable for 2020 (Dragon)*
£3.75 million first mortgage debenture stock 2018 at 11.6 per cent
Bank overdrafts (secured) (Bisichi)
£1 million term bank loan (unsecured)
£10 million first mortgage debenture stock 2022 at 8.109 per cent*
Other loans (Bisichi)
£6 million term bank loan (secured) repayable by 2019 (Bisichi)*
£1.9 million revolving credit facility term bank loan (secured) (Dragon)
£34.897 million term bank loan (secured) repayable by 2019*
£10.105 million term bank loan (secured) repayable by 2019*
2015
£’000
CURRENT
33
–
–
2,234
–
–
–
–
–
–
–
2,267
2015
£’000
NON-CURRENT
–
1,196
3,750
–
–
9,888
–
5,940
–
34,296
9,881
64,951
2015
£’000
2,289
–
661
2,687
4,860
10,497
2014
£’000
CURRENT
20
–
1,250
2,119
201
–
–
–
–
–
–
3,590
2014
£’000
1,905
7
896
3,229
5,286
11,323
2014
£’000
NON-CURRENT
–
–
3,750
–
–
9,871
111
5,902
1,900
34,124
9,818
65,476
* The £10 million debenture and bank loans are shown after deduction of un-amortised issue costs.
Interest payable on the term bank loans is variable being based upon the London inter–bank offered rate (LIBOR) plus margin.
During the year the Group repaid early £1.25 million of the £5 million first mortgage debenture stock 2018, at an additional cost of £158,000.
First Mortgage Debenture Stocks August 2018 and 2022 and the £34.897 million and £10.105 million term bank loans repayable in July 2019 are secured
by way of a charge on specific freehold and leasehold properties which are included in the financial statements at a value of £87.1 million.
The Bisichi United Kingdom bank loans and overdraft are secured by way of a first charge over the investment properties in the UK which are included in
the financial statements at a value of £11.6 million.
The Bisichi South African bank loans are secured by way of a first charge over specific pieces of mining equipment, inventory and the debtors of the
relevant company which holds the loan which are included in the financial statements at a value of £4.8 million.
The £1.9 million bank loan (Dragon) was repaid in 2015. A new bank loan of £1.25 million which is repayable in November 2020 is secured by way of a
first charge on specific freehold property and which is included in the financial statements at a value of £2.6 million.
The Group’s objectives when managing capital are:
– To safeguard the Group’s ability to continue as a going concern, so that it may provide returns for shareholders and benefits for other stakeholders; and
– To provide adequate returns to shareholders by ensuring returns are commensurate with the risk.
London & Associated Properties PLC 2015 71
FINANCIAL STATEMENTS NOTES TO THE FINANCIAL STATEMENTS
22. PROVISIONS
At 1 January
Exchange adjustment
Unwinding of discount
At 31 December
The above provision relates to mine rehabilitation costs in Bisichi.
23. FINANCIAL INSTRUMENTS
TOTAL FINANCIAL ASSETS AND LIABILITIES
The Group’s financial assets and liabilities and their fair values are as follows:
Cash and cash equivalents
Assets held for sale
Investments held to maturity
Loan to joint venture
Other investments
Investments held for trading
Available for sale investments
Derivative assets
Other assets
Derivative liabilities
Bank overdrafts
Bank loans
Present value of head leases on properties
Other liabilities
Total financial liabilities before debentures
FAIR VALUE OF DEBENTURE STOCKS
Fair value of the Group’s debenture liabilities:
Debenture stocks
Tax at 20 per cent (2014: 20 per cent)
Post tax fair value adjustment
Post tax fair value adjustment – basic pence per share
2015
£’000
930
(162)
79
847
2014
£’000
874
(31)
87
930
FAIR
VALUE
£’000
4,809
2,335
1,995
900
14
20
594
15
5,480
(587)
(2,234)
(52,286)
(4,784)
(5,603)
(49,332)
2015
CARRYING
VALUE
£’000
4,809
2,335
1,995
900
14
20
594
15
5,480
(587)
(2,234)
(51,346)
(4,784)
(5,603)
(48,392)
FAIR
VALUE
£’000
9,237
–
2,196
1,040
152
918
–
–
5,485
(656)
(2,119)
(53,137)
(4,788)
(5,689)
(47,361)
2014
CARRYING
VALUE
£’000
9,237
–
2,196
1,040
152
918
–
–
5,485
(656)
(2,119)
(52,076)
(4,788)
(5,689)
(46,300)
BOOK
VALUE
£’000
(13,750)
FAIR
VALUE
£’000
(17,325)
2015
FAIR VALUE
ADJUSTMENT
£’000
(3,575)
715
(2,860)
(3.3)p
2014
FAIR VALUE
ADJUSTMENT
£’000
(4,320)
864
(3,456)
(4.0)p
There is no material difference in respect of other financial liabilities or any financial assets.
The fair values were calculated by the directors as at 31 December 2015 and reflect the replacement value of the financial instruments used to manage
the Group’s exposure to adverse rate movements.
The fair values of the debentures are based on the net present value at the relevant gilt interest rate of the future payments of interest on the debentures.
The bank loans and overdrafts are at variable rates and there is no material difference between book values and fair values.
72
London & Associated Properties PLC 2015
FINANCIAL STATEMENTS NOTES TO THE FINANCIAL STATEMENTS
23. FINANCIAL INSTRUMENTS CONTINUED
Investments held for trading and available for sale fall under level 1 of the fair value hierarchy into which fair value measurements are recognised in
accordance with the levels set out in IFRS 7. Other investments are held at cost. The directors are of the opinion that the difference in value between cost
and fair value of other investments is not significant or material. The comparative figures for 2014 fall under the same category of financial instrument as
2015.
TREASURY POLICY
The Group enters into derivative transactions such as interest rate swaps and forward exchange contracts in order to help manage the financial risks arising
from the Group’s activities. The main risks arising from the Group’s financing structure are interest rate risk, liquidity risk and market price risk, credit risk,
commodity price risk and foreign exchange risk. The policies for managing each of these risks and the principal effects of these policies on the results are
summarised below.
SENSITIVITY ANALYSIS
As all variable interest term debt has been covered by derivatives it is not considered that there is any material sensitivity for the Group to changes in interest rates.
INTEREST RATE RISK
Treasury activities take place under procedures and policies approved and monitored by the Board to minimise the financial risk faced by the Group. The
£34.897 million bank loan and Bisichi United Kingdom bank loans and overdraft are secured by way of a first charge on certain fixed assets. The rates of
interest vary based on LIBOR in the UK.
The £10.105 million term bank loan is secured by way of a second charge on certain fixed assets. This loan is based on a fixed interest rate.
The Bisichi South African bank loans are secured by way of a first charge over specific pieces of mining equipment, inventory and the debtors of the
relevant company which holds the loan. The rates of interest vary based on PRIME in South Africa.
The £1.25 million bank loan (Dragon) is secured by way of a first charge on specific freehold property. The rate of interest varies based on LIBOR in the UK.
LIQUIDITY RISK
The Group’s policy is to minimise refinancing risk by balancing its exposure to interest risk and to refinancing risk. In effect the Group seeks to borrow for
as long as possible at the lowest acceptable cost. Efficient treasury management and strict credit control minimise the costs and risks associated with this
policy which ensures that funds are available to meet commitments as they fall due. Cash and cash equivalents earn interest at rates based on LIBOR in
the UK. These facilities are considered adequate to meet the Group’s anticipated cash flow requirements for the foreseeable future.
In South Africa, an increase in the structured trade facility from R60 million (South African Rand) to R80 million was signed by Black Wattle Colliery (Pty)
Limited with Absa Bank Limited, a South African subsidiary of Barclays Bank PLC. The facility is renewable annually at 30 June and is secured against
inventory, debtors and cash that are held by Black Wattle Colliery (Pty) Limited.
The table below analyses the Group’s financial liabilities into maturity Groupings and also provides details of the liabilities that bear interest at fixed,
floating and non–interest bearing rates.
Bank overdrafts (floating)
Debentures (fixed)
Bank loans (fixed)
Bank loans (floating)*
Trade and other payables (non–interest)
Bank overdrafts (floating)
Debentures (fixed)
Bank loans (fixed)
Bank loans (floating)*
Trade and other payables (non–interest)
2015
TOTAL
£’000
2,234
13,638
9,881
41,465
6,646
73,864
2014
TOTAL
£’000
2,119
14,871
9,818
42,258
6,572
75,638
LESS THAN
1 YEAR
£’000
2,234
–
–
33
5,776
8,043
LESS THAN
1 YEAR
£’000
2,119
1,250
–
221
5,689
9,279
2–5 YEARS
£’000
–
3,750
9,881
41,432
737
55,800
2–5 YEARS
£’000
–
3,750
9,818
42,037
749
56,354
OVER
5 YEARS
£’000
–
9,888
–
–
133
10,021
OVER
5 YEARS
£’000
–
9,871
–
–
134
10,005
The Group would normally expect that sufficient cash is generated in the operating cycle to meet the contractual cash flows as disclosed above through
effective cash management.
*Certain bank loans are fully hedged with appropriate interest derivatives. Details of all hedges are shown below.
London & Associated Properties PLC 2015 73
FINANCIAL STATEMENTS NOTES TO THE FINANCIAL STATEMENTS
23. FINANCIAL INSTRUMENTS CONTINUED
MARKET PRICE RISK
The Group is exposed to market price risk through interest rate and currency fluctuations.
CREDIT RISK
At the balance sheet date there were no significant concentrations of credit risk. The maximum exposure to credit risk is represented by the carrying
amount of each financial asset in the balance sheet. The Group only deposits surplus cash with well–established financial institutions of high quality credit
standing.
COMMODITY PRICE RISK
Commodity price risk is the risk that the Group’s future earnings will be impacted adversely by changes in the market of commodities. Bisichi is exposed to
commodity price risk as its future revenues will be derived based on a contract with a physical off–take partner at prices that will be determined by
reference to market prices of coal at the delivery date.
From time to time Bisichi may manage its exposure to commodity price risk by entering into forward sales contracts with the goal of preserving future
revenue streams.
FOREIGN EXCHANGE RISK
Only Bisichi is subject to this risk. For Bisichi all trading is undertaken in the local currencies. Funding is also in local currencies other than inter–company
investments and loans and it is not the Group’s policy to obtain forward contracts to mitigate foreign exchange risk on these amounts. During 2015 and
2014 the Group did not hedge its exposure of foreign investments held in foreign currencies.
The table below shows the Bisichi currency profiles of cash and cash equivalents:
Sterling
South African Rand
US Dollar
Cash and cash equivalents earn interest at rates based on LIBOR in Sterling and Prime in Rand.
The tables below shows the Bisichi currency profiles of net monetary assets and liabilities by functional currency:
2015:
Sterling
South African Rand
US Dollar
2014:
Sterling
South African Rand
US Dollar
2015
£’000
1,135
470
3
1,608
UK
£’000
(3,221)
89
13
(3,119)
UK
£’000
(2,515)
153
20
(2,342)
2014
£’000
1,697
1,138
3
2,838
SOUTH
AFRICA
£’000
–
(136)
–
(136)
SOUTH
AFRICA
£’000
–
618
–
618
The directors consider there to be no significant risk from exchange rate movements of foreign currencies against the functional currencies of the reporting
companies within the Group. As such no sensitivity analysis is prepared.
74
London & Associated Properties PLC 2015
FINANCIAL STATEMENTS NOTES TO THE FINANCIAL STATEMENTS
23. FINANCIAL INSTRUMENTS CONTINUED
BORROWING FACILITIES
At 31 December 2015 the Group was within its bank borrowing facilities and was not in breach of any of the covenants. Term loan repayments are as set
out below. Details of other financial liabilities are shown in Notes 20 and 21.
INTEREST RATE AND HEDGE PROFILE
Fixed rate borrowings
Floating rate borrowings
– Subject to interest rate swap
Average fixed interest rate
Weighted average swapped interest rate
Weighted average cost of debt on overdrafts, bank loans and debentures
Average period for which borrowing rate is fixed
Average period for which borrowing rate is swapped
2015
£’000
23,855
36,148
60,003
9.24%
3.41%
5.71%
4.8 years
3.5 years
2014
£’000
25,105
34,898
60,003
9.36%
4.79%
5.90%
5.5 years
4.5 years
The Group’s floating rate debt bears interest based on LIBOR for the term bank loans and bank base rate for the overdraft.
At 31 December 2015 the Group had hedges totalling £35 million to cover the £34.9 million bank loan. These consisted of a 5 year swap for £17.5 million,
taken out in July 2014 at 2.25% and a £17.5 million cap agreement taken out in July 2014 at 2.25% until 29 January 2016 and a swaption at 2.25% on
the capped portion from 29 January 2016 to 1 July 2019. Since the year end the swaption was not exercised and was replaced in January 2016 with a
£17.4 million cap agreement to 1 July 2019.
Under IFRS 13 the hedges are not deemed to be eligible for hedge accounting and any movement in the value of the hedges is therefore charged directly
to the consolidated income statement.
At the year end the fair value liability in the accounts was £587,000 (2014: £656,000) as valued by the hedge provider.
At 31 December 2015, Dragon had hedges of £1.25 million to cover the £1.25 million bank loan. This consists of a 5 year £1.25 million cap agreement
taken out in November 2015 at 2.5%. At the year end, the fair value asset in the accounts was £15,000, as valued by the hedge provider.
FAIR VALUE OF FINANCIAL INSTRUMENTS
FAIR VALUE ESTIMATION
The Group has adopted the amendment to IFRS 7 for financial instruments that are measured in the balance sheet at fair value. This requires the methods
of fair value measurement to be classified into a hierarchy based on the reliability of the information used to determine the valuation, as follows:
– Quoted prices (unadjusted) in active markets for identical assets or liabilities (level 1).
– Inputs other than quoted prices included within level 1 that are observable for the asset or liability, either directly (that is, as prices) or indirectly (that is,
derived from prices) (level 2).
– Inputs for the asset or liability that are not based on observable market data (that is unobservable inputs) (level 3).
London & Associated Properties PLC 2015 75
FINANCIAL STATEMENTS NOTES TO THE FINANCIAL STATEMENTS
23. FINANCIAL INSTRUMENTS CONTINUED
Financial assets
Other financial assets held for trading and available for sale
Quoted equities
Derivative financial instruments
Interest rate swaps
Financial liabilities
Derivative financial instruments
Interest rate swaps
Financial assets
Other financial assets held for trading and available for sale
Quoted equities
Financial liabilities
Derivative financial instruments
Interest rate swaps
LEVEL 1
£’000
LEVEL 2
£’000
LEVEL 3
£’000
TOTAL
£’000
614
–
15
–
587
–
–
614
15
587
LEVEL 1
£’000
LEVEL 2
£’000
LEVEL 3
£’000
TOTAL
£’000
2015
GAIN/LOSS
TO INCOME
STATEMENT
£’000
(12)
–
84
2014
LOSS
TO INCOME
STATEMENT
£’000
918
–
–
656
–
–
918
(86)
656
(1,086)
CAPITAL STRUCTURE
The Group sets the amount of capital in proportion to risk. It ensures that the capital structure is commensurate to the economic conditions and risk
characteristics of the underlying assets. In order to maintain or adjust the capital structure, the Group may vary the amount of dividends paid to
shareholders, return capital to shareholders, issue new shares or sell assets to reduce debt.
The Group considers its capital to include share capital, share premium, capital redemption reserve, translation reserve and retained earnings, but excluding
the interest rate derivatives.
Consistent with others in the industry, the Group monitors its capital by its debt to equity ratio (gearing levels). This is calculated as the net debt (loans
less cash and cash equivalents) as a percentage of the equity calculated as follows:
Total debt
Less cash and cash equivalents
Net debt
Total equity
2015
£’000
67,218
(4,809)
62,409
49,652
125.7%
2014
£’000
69,066
(9,237)
59,829
53,598
111.6%
The Group does not have any externally imposed capital requirements.
FINANCIAL ASSETS
The Group’s principal financial assets are bank balances and cash, trade and other receivables and investments. The Group has no significant concentration
of credit risk as exposure is spread over a large number of counterparties and customers. The credit risk in liquid funds and derivative financial instruments
is limited because the counterparties are banks with high credit ratings assigned by international credit–rating agencies. The Group’s credit risk is primarily
attributable to its trade receivables. The amounts presented in the balance sheet are net of allowances for doubtful receivables, estimated by the Group’s
management based on prior experience and the current economic environment.
76
London & Associated Properties PLC 2015
FINANCIAL STATEMENTS NOTES TO THE FINANCIAL STATEMENTS
23. FINANCIAL INSTRUMENTS CONTINUED
FINANCIAL ASSETS MATURITY
Cash and cash equivalents all have a maturity of less than three months.
Cash at bank and in hand
2015
£’000
4,809
2014
£’000
9,237
These funds are primarily invested in short term bank deposits maturing within one year bearing interest at the bank’s variable rates.
FINANCIAL LIABILITIES MATURITY
Repayment of borrowings
Bank loans and overdrafts:
Repayable on demand or within one year
Repayable between two and five years
Debentures:
Repayable within one year
Repayable between two and five years
Repayable in more than five years
2015
£’000
2014
£’000
2,267
51,313
53,580
–
3,750
9,888
67,218
2,340
51,855
54,195
1,250
3,750
9,871
69,066
2014
£’000
5,651
(3,327)
2,324
(3,211)
(1,052)
131
(143)
6,599
2,324
Certain borrowing agreements contain financial and other conditions that if contravened by the Group, could alter the repayment profile.
24. DEFERRED TAX ASSET
Balance at 1 January
Transferred to consolidated income statement
Balance at 31 December
The deferred tax balance comprises the following:
Revaluation of properties
Accelerated capital allowances
Fair value of interest derivatives
Short-term timing differences
Loss relief
Deferred tax asset provision at end of period:
2015
£’000
2,324
66
2,390
(2,226)
(952)
111
(131)
5,588
2,390
The directors consider the temporary differences arising in connection with the interests in joint ventures are insignificant. There is no time limit in respect
of the Group tax loss relief.
London & Associated Properties PLC 2015 77
FINANCIAL STATEMENTS NOTES TO THE FINANCIAL STATEMENTS
25. DEFERRED TAX LIABILITIES
Balance at 1 January
Transferred to consolidated income statement
Transferred to other comprehensive income
Exchange adjustment
Balance at 31 December
The deferred tax balance comprises the following:
Revaluation of properties
Accelerated capital allowances
Short-term timing differences
Fair value of interest derivatives
Deferred tax liability provision at end of period:
26. SHARE CAPITAL
Authorised: ordinary shares of 10p each
Allotted, issued and fully paid share capital
Less: held in Treasury (see below)
“Issued share capital” for reporting purposes
The Company has one class of ordinary shares which carry no right to fixed income.
TREASURY SHARES
NUMBER OF
ORDINARY 10P
SHARES
2015
NUMBER OF
ORDINARY 10P
SHARES
2014
110,000,000
85,542,711
(734,816)
84,807,895
110,000,000
85,542,711
(1,032,991)
84,509,720
2015
£’000
2,410
29
(41)
(292)
2,106
724
1,490
(111)
3
2,106
2015
£’000
11,000
8,554
(73)
8,481
2014
£’000
2,070
378
–
(38)
2,410
929
1,421
60
–
2,410
2014
£’000
11,000
8,554
(103)
8,451
NUMBER OF ORDINARY
10P SHARES
COST/ISSUE VALUE
Shares held in Treasury at 1 January
Issued to meet directors bonuses (Jan 2015 – 37.75p) 2014: (Feb 14 – 58.25p)
Issued to meet staff bonuses (Jan 2015 – 37.75p) 2014: (Feb 14 – 58.25p)
Issued for new directors share incentive plan (Jan 2015 – 37.75p) 2014: (Feb 14 – 58.25p)
Issued for new staff share incentive plan (Jan 2015 – 37.75p) 2014: (Feb 14 – 58.25p)
Purchase of shares (Jun 2015 – 37.69p) 2014: (Apr 14 – 50.65p)
Purchase of shares (Oct 2015 – 36.18p)
Issued to meet staff bonuses (Dec 14 – 39.5p)
Shares held in Treasury at 31 December
2015
1,032,991
(431,476)
(111,678)
(7,947)
(47,271)
133,333
166,864
–
734,816
2014
1,254,738
(264,257)
(91,728)
(5,150)
(30,368)
171,674
–
(1,918)
1,032,991
2015
£’000
883
(369)
(95)
(7)
(40)
50
60
–
482
2014
£’000
1,159
(244)
(84)
(5)
(28)
87
–
(2)
883
78
London & Associated Properties PLC 2015
FINANCIAL STATEMENTS NOTES TO THE FINANCIAL STATEMENTS
26. SHARE CAPITAL CONTINUED
SHARE OPTION SCHEMES
Employees’ share option scheme (Approved scheme)
At 31 December 2015 there were no options to subscribe for ordinary shares outstanding, issued under the terms of the Employees’ Share Option Scheme.
This share option scheme was approved by members in 1986, and has been approved by Her Majesty’s Revenue and Customs (HMRC).
There are no performance criteria for the exercise of options under the Approved scheme, as this was set up before such requirements were considered to be necessary.
A summary of the shares allocated and options issued under the scheme up to 31 December 2015 is as follows:
Shares issued to date
Shares allocated over which options have not been granted
Total shares allocated for issue to employees under the scheme
CHANGES DURING THE YEAR
AT 1
JANUARY
2015
2,367,604
1,549,955
3,917,559
OPTIONS
EXERCISED
–
–
–
OPTIONS
GRANTED
–
–
–
OPTIONS
LAPSED
–
–
–
AT 31
DECEMBER
2015
2,367,604
1,549,955
3,917,559
Non–approved Executive Share Option Scheme (Unapproved scheme)
A share option scheme known as the “Non–approved Executive Share Option Scheme” which does not have HMRC approval was set up during 2000. At 31
December 2015 there were no options to subscribe for ordinary shares outstanding.
The exercise of options under the Unapproved scheme is subject to the satisfaction of objective performance conditions specified by the remuneration
committee which confirms to institutional shareholder guidelines and best practice provisions.
A summary of the shares allocated and options issued under the scheme up to 31 December 2015 is as follows:
Shares issued to date
Shares allocated over which options have not yet been granted
Total shares allocated for issue to employees under the scheme
THE BISICHI MINING PLC UNAPPROVED OPTION SCHEMES
Details of the share option schemes in Bisichi are as follows:
CHANGES DURING THE YEAR
AT 1
JANUARY
2015
450,000
550,000
1,000,000
OPTIONS
EXERCISED
–
–
–
OPTIONS
GRANTED
–
–
–
OPTIONS
LAPSED
–
–
–
AT 31
DECEMBER
2015
450,000
550,000
1,000,000
YEAR OF GRANT
2006
2010
2012
2015
SUBSCRIPTION
PRICE PER SHARE
237.5p
202.5p
34.0p
87.0p
PERIOD WITHIN
WHICH OPTIONS
EXERCISABLE
Oct 2009 – Oct 2016
Aug 2013 – Aug 2020
Oct 2012 – Sep 2022
Sep 2015 – Sep 2025
NUMBER OF SHARES
FOR WHICH OPTIONS
OUTSTANDING AT
31 DECEMBER 2014
325,000
80,000
193,000
–
NUMBER OF
SHARE OPTIONS
ISSUED/EXERCISED/
(CANCELLED)
DURING YEAR
–
–
(193,000)
300,000
NUMBER OF SHARES
FOR wHICH OPTIONS
OUTSTANDING AT
31 DECEMBER 2015
325,000
80,000
–
300,000
The exercise of options under the Unapproved Share Option Schemes, for certain option issues, is subject to the satisfaction of objective performance
conditions specified by the remuneration committee, which will confirm to institutional shareholder guidelines and best practice provisions in force from time
to time. The performance conditions for the 2010 scheme, agreed by members on 31 August 2010 respectively, requires growth in net assets over a three year
period to exceed the growth of the retail prices index by a scale of percentages. There are no performance or service conditions attached to the other schemes.
The 2015 options were valued at £118,000 at date of grant using the Black-Scholes-Merton model with the following assumptions:
Expected volatility
Expected life
Risk free rate
Expected dividends
36.30%
4 years
0.994%
4.47%
Expected volatility was determined by reference to the historical volatility of the share price over a period commensurate with the option’s expected life.
The expected life used in the model is used on the risk-average balance likely to be required by the option holders.
London & Associated Properties PLC 2015 79
FINANCIAL STATEMENTS NOTES TO THE FINANCIAL STATEMENTS
26. SHARE CAPITAL CONTINUED
Outstanding at 1 January
Granted during year
Cancelled during the year
Exercised during the year
Outstanding at 31 December
Exercisable at 31 December
27. NON–CONTROLLING INTEREST (“NCI”)
As at 1 January
Share of (loss)/profit for the year
Share of gain on available for sale investments
Dividends received
Shares issued
Shares cancelled
Exchange movement
Other changes in equity
As at 31 December
The following subsidiaries had material NCI:
Bisichi Mining PLC
Black Wattle Colliery (Pty) Ltd
2015
wEIGHTED
AVERAGE
EXERCISE PRICE
167.1p
87.0p
34.0p
0.0p
133.1p
133.1p
2015
NUMBER
598,000
300,000
(193,000)
–
705,000
705,000
2014
WEIGHTED
AVERAGE
EXERCISE PRICE
157.7p
–
(149.0p)
(34.0p)
167.1p
167.1p
2014
£’000
10,001
745
24
(292)
313
–
(76)
111
10,826
2014
NUMBER
718,000
–
(80,000)
(40,000)
598,000
598,000
2015
£’000
10,826
(147)
(94)
(250)
18
(64)
(718)
3
9,574
Summarised financial information for these subsidiaries is set out below. The information is before inter–company eliminations with other companies in the Group.
BISICHI MINING PLC
Revenue
Profit for the year attributable to owners of the parent
Profit for the year attributable to NCI
Profit for the year
Other comprehensive income attributable to owners of the parent
Other comprehensive income attributable to NCI
Other comprehensive income for the year
Balance sheet
Non–current assets
Current assets
Total assets
Current liabilities
Non–current liabilities
Total liabilities
Net current assets at 31 December
Cash flows
From operating activities
From investing activities
From financing activities
Net cash flows
80
London & Associated Properties PLC 2015
2015
£’000
25,655
(259)
4
(255)
(1,241)
(87)
(1,328)
20,480
10,635
31,115
(6,501)
(8,983)
(15,484)
15,631
1,979
(2,773)
(947)
(1,741)
2014
£’000
26,500
458
745
1,203
(67)
(13)
(80)
21,924
12,289
34,213
(7,148)
(9,346)
(16,494)
17,719
3,406
(1,903)
488
1,991
FINANCIAL STATEMENTS NOTES TO THE FINANCIAL STATEMENTS
27. NON–CONTROLLING INTEREST (“NCI”) CONTINUED
The non–controlling interest comprises of a 37.5% shareholding in Black Wattle Colliery (Pty) Ltd, a coal mining company incorporated in South Africa.
Summarised financial information reflecting 100% of the underlying subsidiary’s relevant figures, is set out below.
BLACK WATTLE COLLIERY (PTY) LIMITED (“BLACK WATTLE”)
Revenue
Expenses
Profit for the year
Total comprehensive income for the year
Balance sheet
Non–current assets
Current assets
Current liabilities
Non–current liabilities
Net assets at 31 December
2015
£’000
24,608
(24,582)
26
26
5,355
5,932
(7,156)
(1,988)
2,143
2014
£’000
25,536
(24,866)
670
670
6,030
8,054
(9,125)
(2,260)
2,699
The non–controlling interest relates to the disposal of a 37.5% shareholding in Black Wattle in 2010. The total issued share capital in Black Wattle Colliery
(Pty) Ltd was increased from 136 shares to 1,000 shares at par of ZAR1 (South African Rand) through the following shares issue:
– a subscription for 489 ordinary shares at par by Bisichi Mining (Exploration) Limited increasing the number of shares held from 136 ordinary shares to a
total of 675 ordinary shares;
– a subscription for 110 ordinary shares at par by Vunani Mining (Pty) Ltd;
– a subscription for 265 “A” shares at par by Vunani Mining (Pty) Ltd
Bisichi Mining (Exploration) Limited is a wholly owned subsidiary of Bisichi Mining PLC incorporated in England and Wales.
Vunani Mining (Pty) Ltd is a South African Black Economic Empowerment company and minority shareholder in Black Wattle.
The “A” shares rank pari passu with the ordinary shares save that they will have no dividend rights until such time as the dividends paid by Black Wattle
Colliery (Pty) Ltd on the ordinary shares subsequent to 30 October 2008 will equate to ZAR832,075,000.
A non–controlling interest of 15% in Black Wattle is recognised for all profits distributable to the 110 ordinary shares held by Vunani Mining (Pty) Ltd from
the date of issue of the shares (18 October 2010). An additional non–controlling interest will be recognised for all profits distributable to the 265 “A”
shares held by Vunani Mining (Pty) Ltd after such time as the profits available for distribution, in Black Wattle Colliery (Pty) Ltd, before any payment of
dividends after 30 October 2008, exceeds ZAR832,075,000.
28. RELATED PARTY TRANSACTIONS
Related party:
Langney Shopping Centre Unit Trust
Current account
Loan account
Simon Heller Charitable Trust
Current account
Loan account
Directors and key management
M A Heller and J A Heller
H D Goldring (Delmore Asset Management Limited)
C A Parritt
R Priest (A & M Europe LLP)
Ezimbokodweni Mining (Pty) Limited
Totals at 31 December 2015
Totals at 31 December 2014
Nature of costs recharged – (i) Property management fees (ii) Consultancy fees.
COST RECHARGED
TO (BY) RELATED
PARTY
£’000
AMOUNTS OWED
BY (TO) RELATED
PARTY
£’000
ADVANCED TO
(BY) RELATED
PARTY
£’000
99
–
(63)
–
6
(30)
(19)
(34)
94
53
65
(i)
(i)
(ii)
(ii)
(ii)
12
127
–
(700)
4
–
–
–
897
340
702
–
(208)
–
–
–
–
–
–
–
(208)
(128)
London & Associated Properties PLC 2015 81
FINANCIAL STATEMENTS NOTES TO THE FINANCIAL STATEMENTS
28. RELATED PARTY TRANSACTIONS CONTINUED
LANGNEY SHOPPING CENTRE UNIT TRUST (JOINT VENTURE)
Langney Shopping Centre Unit Trust (Langney) is owned 12.5 per cent by the Company and 12.5 per cent by Bisichi Mining PLC. The remaining 75 per cent is owned by
Columbus Capital Management LLP. At the year-end LAP and Bisichi each had a loan of £63,500 repayable and which has been received since the year-end.
The Company provides property management services to Langney. The investment was sold since the year end and is shown as an asset available for sale
in the Balance Sheet.
EZIMBOKODwENI MINING (PTY) LIMITED (JOINT VENTURE)
Ezimbokodweni Mining is a Bisichi joint venture and is treated as a non-current asset investment. It is a prospective coal production company based in South Africa.
DIRECTORS
London & Associated Properties PLC provides office premises, property management, general management, accounting and administration services for a
number of private property companies in which Sir Michael Heller and J A Heller have an interest. Under an agreement with Sir Michael Heller no charge is
made for these services on the basis that he reduces by an equivalent amount the charge for his services to London & Associated Properties PLC. The board
estimates that the value of these services, if supplied to a third party, would have been £300,000 for the year (2014: £300,000).
The companies for which services are provided are: Barmik Properties Limited, Cawgate Limited, Clerewell Limited, Cloathgate Limited, Ken–Crav
Investments Limited, London & South Yorkshire Securities Limited, Metroc Limited, Penrith Retail Limited, Shop.com Limited, South Yorkshire Property Trust
Limited, Wasdon Investments Limited, Wasdon (Dover) Limited, and Wasdon (Leeds) Limited.
In addition the Company received management fees of £10,000 (2014: £10,000) for work done for two charitable foundations, the Michael & Morven
Heller Charitable Foundation and the Simon Heller Charitable Trust.
The Simon Heller Trust has placed on deposit with LAP £700,000 at an interest rate of 9% which is refundable on demand.
Delmore Asset Management Limited (Delmore) is a Company in which H D Goldring is a majority shareholder and director. Delmore provides consultancy
services to the Company on an invoiced fee basis.
Alvarez & Marsal Real Estate Advisory Services LLP (A&M) is a company in which R Priest is a director. A&M provides consultancy services to the Company
on an invoiced fee basis.
J A Heller received a loan of £30,000, which has been repaid in the year.
In 2012 a loan of £116,000 was made by Bisichi to one of the Bisichi directors – A R Heller. The loan amount outstanding at the year end was £86,000
(2014: £101,000) and a repayment of £15,000 (2014: £15,000) was made during the year.
The directors are considered to be the only key management personnel and their remunerations including employer’s national insurance for the year were £1,341,000
(2014: £1,521,000). All other disclosures required including interest in share options in respect of those directors are included within the remuneration report.
29. EMPLOYEES
The average number of employees, including directors, of the Group during the year was as follows:
Production
Administration
Staff costs during the year were as follows:
Salaries and other costs
Social security costs
Pension costs
Share based payments
30. CAPITAL COMMITMENTS
Commitments for capital expenditure approved but for which contracts have not been placed at the year end
Share of commitment of capital expenditure in joint venture
All the above relates to Bisichi Mining PLC.
82
London & Associated Properties PLC 2015
2015
191
44
235
2015
£’000
6,459
361
368
31
7,219
2015
£’000
306
1,102
2014
213
45
258
2014
£’000
6,843
378
510
55
7,786
2014
£’000
389
1,402
FINANCIAL STATEMENTS NOTES TO THE FINANCIAL STATEMENTS
31. OPERATING AND FINANCE LEASES
OPERATING LEASES ON LAND AND BUILDINGS
At 31 December 2015 the Group had commitments under non–cancellable operating leases on land and buildings expiring as follows:
After five years
Operating lease payments represent rentals payable by the Group for its office premises.
The leases are for an average term of ten years and rentals are fixed for an average of five years.
PRESENT VALUE OF HEAD LEASES ON PROPERTIES
2015
£’000
1,920
2014
£’000
2,160
Within one year
Second to fifth year
After five years
Future finance charges on finance leases
Present value of finance lease liabilities
MINIMUM LEASE
PAYMENTS
PRESENT VALUE OF
MINIMUM LEASE PAYMENTS
2015
£’000
306
1,225
30,142
31,673
(26,889)
4,784
2014
£’000
306
1,226
30,456
31,988
(27,200)
4,788
2015
£’000
306
1,139
3,339
4,784
–
4,784
2014
£’000
306
1,139
3,343
4,788
–
4,788
Finance lease liabilities are in respect of leased investment property. A few leases provide for contingent rent in addition to the rents above, usually a
proportion of rental income.
Finance lease liabilities are effectively secured as the rights to the leased asset revert to the lessor in the event of default.
FUTURE AGGREGATE MINIMUM RENTALS RECEIVABLE
The Group leases out its investment properties to tenants under operating leases. The future aggregate minimum rentals receivable under non–cancellable
operating leases are as follows:
Within one year
Second to fifth year
After five years
2015
£’000
6,491
20,207
35,622
62,320
2014
£’000
6,129
19,479
35,141
60,749
32. CONTINGENT LIABILITIES AND EVENTS AFTER THE REPORTING PERIOD
There were no contingent liabilities at 31 December 2015 (2014: £Nil), except as disclosed in Note 23.
Bank guarantees have been issued by the bankers of Black Wattle Colliery (Pty) Limited on behalf of the Company to third parties. The guarantees are
secured against the assets of the Company and have been issued in respect of the following:
Rail siding & transportation
Rehabilitation of mining land
Water & electricity
2015
£’000
47
1,009
42
1,098
2014
£’000
158
1,114
52
1,324
Following the year end the Group has sold its investment in Langney Shopping Centre Unit Trust and it is shown as an ‘Asset held for Sale’ in the
Consolidated Balance Sheet.
London & Associated Properties PLC 2015 83
FINANCIAL STATEMENTS NOTES TO THE FINANCIAL STATEMENTS
33. COMPANY FINANCIAL STATEMENTS
COMPANY BALANCE SHEET AT 31 DECEMBER 2015
Fixed assets
Tangible assets
Other investments:
Associated company – Bisichi Mining PLC
Subsidiaries and others including Dragon Retail Properties Limited
Current assets
Assets held for sale
Debtors
Deferred tax due after more than one year
Investments
Bank balances
Creditors
Amounts falling due within one year
Net current liabilities
Total assets less current liabilities
Creditors
Amounts falling due after more than one year
Net assets
Capital and reserves
Share capital
Share premium account
Capital redemption reserve
Treasury shares
Retained earnings
Shareholders’ funds
NOTES
33.3
33.4
33.4
33.5
33.6
33.10
33.7
33.8
33.9
33.11
33.11
2015
£’000
2014
£’000
01-JAN-2014
£’000
28,468
28,641
70,509
489
57,472
57,961
86,429
964
1,084
3,055
20
2,233
7,356
(53,769)
(46,413)
40,016
489
57,917
58,406
87,407
–
1,830
4,699
21
3,793
10,343
(53,226)
(42,883)
44,164
489
47,649
48,138
118,647
–
11,730
3,605
23
4,969
20,327
(78,711)
(58,384)
60,263
(18,228)
21,788
(18,214)
25,950
(29,222)
31,041
8,554
4,866
47
(482)
8,803
21,788
8,554
4,866
47
(883)
13,366
25,950
8,554
4,866
47
(1,159)
18,733
31,041
These financial statements were approved by the board of directors and authorised for issue on 28th April 2016 and signed on its behalf by:
Sir Michael Heller
Director
Anil Thapar
Director
Company Registration No. 341829
84
London & Associated Properties PLC 2015
FINANCIAL STATEMENTS NOTES TO THE FINANCIAL STATEMENTS
COMPANY STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED 31 DECEMBER 2015
SHARE
CAPITAL
£’000
8,554
–
–
–
–
–
–
8,554
–
–
–
–
–
–
–
8,554
SHARE
PREMIUM
£’000
4,866
CAPITAL
REDEMPTION
RESERVE
£’000
47
TREASURY
SHARES
£’000
(1,159)
–
–
–
–
–
–
4,866
–
–
–
–
–
–
–
4,866
–
–
–
–
–
–
47
–
–
–
–
–
–
–
47
–
–
(88)
229
135
276
(883)
–
–
–
(111)
226
286
401
(482)
RETAINED
EARNINGS
EXCLUDING
TREASURY
SHARES
£’000
18,733
(5,126)
(5,126)
(106)
–
–
(135)
(241)
13,366
(4,144)
(4,144)
(133)
–
–
(286)
(419)
8,803
TOTAL
EQUITY
£’000
31,041
(5,126)
(5,126)
(106)
(88)
229
–
35
25,950
(4,144)
(4,144)
(133)
(111)
226
–
(18)
21,788
Balance at 1 January 2014
Loss for year
Total comprehensive income
Dividends – equity holders
Acquisition of own shares
Disposal of own shares
Loss on transfer of own shares
Transactions with owners
Balance at 31 December 2014
Loss for year
Total comprehensive income
Dividends – equity holders
Acquisition of own shares
Disposal of own shares
Loss on transfer of own shares
Transactions with owners
Balance at 31 December 2015
£5.9 million of retained earnings (excluding treasury shares) is distributable.
London & Associated Properties PLC 2015 85
FINANCIAL STATEMENTS NOTES TO THE FINANCIAL STATEMENTS
33.1. COMPANY
ACCOUNTING POLICIES
The following are the main accounting policies of the Company:
BASIS OF PREPARATION
The financial statements have been prepared on a going concern basis and in accordance with Financial Reporting Standard 101 ’Reduced Disclosure
Framework’ (FRS 101) and Companies Act 2006. The financial statements are prepared under the historical cost convention as modified to include the
revaluation of freehold and leasehold properties and fair value adjustments in respect of current asset investments and interest rate hedges.
The results of the Company are included in the consolidated financial statements. No profit or loss is presented by the Company as permitted by Section
408 of the Companies Act 2006.
In transition to FRS 101, the Company has applied International Financial Reporting Standard 1 ‘First Time Adoption of International Financial Reporting
Standards’ (IFRS 1) subject to the exemptions available under FRS 101 and listed below.
In these financial statements, the company has applied the exemptions available under FRS 101 in respect of the following disclosures:
• Cash Flow Statement and related notes;
• Comparative period reconciliations for share capital, tangible fixed assets and intangible assets;
• Disclosures in respect of transactions with wholly owned subsidiaries;
• Disclosures in respect of capital management;
• The effects of new but not yet effective IFRSs;
• Disclosures in respect of the compensation of Key Management Personnel.
As the consolidated financial statements include the equivalent disclosures, the Company has also taken the exemptions under FRS 101 available in
respect of the following disclosures:
• IFRS 2 Share Based Payments in respect of group settled share based payments;
• The disclosures required by IFRS 7 and IFRS 13 regarding financial instrument disclosures have not been provided apart from those which are relevant
for the financial instruments which are held at fair value and are not either held as part of trading portfolio or derivatives.
An explanation of how the transition to FRS 101 has affected the reported financial position of the company is provided in note 33.16.
KEY JUDGEMENTS AND ESTIMATES
The preparation of the financial statements requires management to make assumptions and estimates that may affect the reported amounts of assets and
liabilities and the reported income and expenses, further details of which are set out below. Although management believes that the assumptions and
estimates used are reasonable, the actual results may differ from those estimates. Further details of the estimates are contained in the Directors’ Report.
INVESTMENTS IN SUBSIDIARIES, ASSOCIATED UNDERTAKINGS AND JOINT VENTURES
Investments in subsidiaries, associated undertakings and joint ventures are held at cost less accumulated impairment losses.
FAIR VALUE MEASUREMENTS OF INVESTMENT PROPERTIES AND INVESTMENTS
An assessment of the fair value of certain assets and liabilities, in particular investment properties, is required to be performed. In such instances, fair value
measurements are estimated based on the amounts for which the assets and liabilities could be exchanged between market participants. To the extent
possible, the assumptions and inputs used take into account externally verifiable inputs. However, such information is by nature subject to uncertainty. The
directors note that the fair value measurement of the investment properties may be considered to be less judgemental where external valuers have been
used and as a result of the nature of the underlying assets.
The following accounting policies are consistent with those of the Group and are disclosed on page 54 to 59 of the Group financial statements.
• Revenue
• Property operating expenses
• Employee benefits
• Financial instruments
• Investment properties
• Other assets and depreciation
• Assets held for sale
• Income taxes
• Leases
86
London & Associated Properties PLC 2015
FINANCIAL STATEMENTS NOTES TO THE FINANCIAL STATEMENTS
33.2. LOSS FOR THE FINANCIAL YEAR
The Company’s result for the year was a loss of £4,144,000 (2014 loss: £5,126,000). In accordance with the exemption conferred by Section 408 of the
Companies Act 2006, the Company has not presented its own profit and loss account.
33.3. TANGIBLE ASSETS
Cost or valuation at 1 January 2015
Additions
Decrease in present value of head leases
(Decrease)/increase on revaluation
Cost or valuation at 31 December 2015
Representing assets stated at:
Valuation
Cost
Depreciation at 1 January 2015
Charge for the year
Disposals
Depreciation at 31 December 2015
Net book value at 1 January 2015
Net book value at 31 December 2015
INVESTMENT PROPERTIES
FREEHOLD
£’000
7,945
–
–
515
8,460
LEASEHOLD
OVER 50 YEARS
£’000
18,746
148
–
(678)
18,216
LEASEHOLD
UNDER 50 YEARS
£’000
1,772
–
(3)
(125)
1,644
OFFICE
EQUIPMENT
AND MOTOR
VEHICLES
£’000
447
9
–
(7)
449
8,460
–
8,460
–
–
–
–
7,945
8,460
18,216
–
18,216
–
–
–
–
18,746
18,216
1,644
–
1,644
–
–
–
–
1,772
1,644
–
449
449
269
39
(7)
301
178
148
TOTAL
£’000
28,910
157
(3)
(295)
28,769
28,320
449
28,769
269
39
(7)
301
28,641
28,468
The freehold and leasehold properties, excluding the present value of head leases and directors’ valuations, were valued as at 31 December 2015 by
external professional firms of chartered surveyors. The valuations were made at fair value. The directors’ property valuations were made at fair value.
Allsop LLP
Directors’ valuation
Add: Present value of headleases
The historical cost of investment properties was as follows:
Cost at 1 January 2015
Additions
Cost at 31 December 2015
2015
£’000
21,905
1,825
23,730
4,590
28,320
2014
£’000
22,045
1,825
23,870
4,593
28,463
FREEHOLD
£’000
4,861
–
4,861
LEASEHOLD
OVER 50 YEARS
£’000
13,818
148
13,966
LEASEHOLD
UNDER 50 YEARS
£’000
1,939
–
1,939
Long leasehold properties are held on leases with an unexpired term of more than fifty years at the balance sheet date.
London & Associated Properties PLC 2015 87
FINANCIAL STATEMENTS NOTES TO THE FINANCIAL STATEMENTS
33.4. OTHER INVESTMENTS
COST
At 1 January 2015
Additions
Repayments
Reclassified as assets held for sale
Reversal of impairment provision
At 31 December 2015
TOTAL
£’000
58,406
–
–
(964)
519
57,961
SHARES IN
SUBSIDIARY
COMPANIES
£’000
56,789
–
–
–
519
57,308
SHARES IN
JOINT
VENTURES
£’000
1,128
–
–
(964)
–
164
SHARES IN
ASSOCIATE
£’000
489
–
–
–
–
489
SUBSIDIARY COMPANIES
Details of the Company’s subsidiaries are set out in Note 15. As stated on page 55 under IFRS 10 Bisichi Mining Plc and its subsidiaries and Dragon Retail
Properties Limited are accounted for as subsidiaries of the Company.
In the opinion of the directors the value of the investment in subsidiaries is not less than the amount shown in these financial statements.
Details of the joint ventures are set out in Notes 12 and 13.
33.5. ASSETS HELD FOR SALE
Investment in Langney Shopping Centre Unit Trust
At 1 January
Transfer from investment in joint venture (note 12)
At 31 December
2015
£’000
–
964
964
2014
£’000
–
–
–
On the 11 March 2016, the Company disposed of its investment in Langney Shopping Centre Unit Trust, an unlisted property unit trust incorporated in
Jersey. At year end, the company owned 12.5% of the units of the trust. The net proceeds from the sale were £1,168,000 (including dividend). At year end,
the Company’s share of the net assets of the trust was £1,168,000 (2014: £1,375,000).
33.6. DEBTORS
Trade debtors
Amounts due from subsidiary companies
Amounts due from associate and joint ventures
Other debtors
Prepayments and accrued income
33.7. INVESTMENTS
Market value of the listed investment portfolio
Unrealised deficit of market value over cost
Listed investment portfolio at cost
All investments are listed on the London Stock Exchange.
88
London & Associated Properties PLC 2015
2015
£’000
315
–
123
159
487
1,084
2015
£’000
20
(3)
23
2014
£’000
384
390
308
157
591
1,830
2014
£’000
21
(2)
23
FINANCIAL STATEMENTS NOTES TO THE FINANCIAL STATEMENTS
33.8. CREDITORS: AMOUNTS FALLING DUE WITHIN ONE YEAR
Bank loans (unsecured)
Debenture stocks £5 million First Mortgage Debenture Stock 2018 at 11.6 per cent
Amounts owed to subsidiary companies
Amounts owed to joint ventures
Other taxation and social security costs
Other creditors
Accruals and deferred income
2015
£’000
–
–
47,511
2,215
314
1,364
2,365
53,769
2014
£’000
201
1,250
44,947
2,406
536
1,630
2,256
53,226
During the year, the Company repaid early £1.25 million of the £5 million First Mortgage Debenture Stock 2018, at an additional cost of £158,000.
33.9. CREDITORS: AMOUNTS FALLING DUE AFTER MORE THAN ONE YEAR
Present value of head leases on properties
Term Debenture stocks:
£3.75 million First Mortgage Debenture Stock 2018 at 11.6 per cent
£10 million First Mortgage Debenture Stock 2022 at 8.109 per cent*
*The £10 million debenture is shown after deduction of un–amortised issue costs.
Details of terms and security of overdrafts, loans and loan renewal and debentures are set out in note 21.
Repayment of borrowings:
Bank loans and overdrafts:
Repayable within one year
Debentures:
Repayable within one year
Repayable between two and five years
Repayable in more than five years
33.10. DEFERRED TAX ASSET
Deferred Taxation
Balance at 1 January
Transfer to profit and loss account
Balance at 31 December
The deferred tax balance comprises the following:
Accelerated capital allowances
Short–term timing differences
Revaluation of investment properties
Loss relief
Deferred tax asset provision at end of period
2015
£’000
4,590
3,750
9,888
13,638
18,228
2014
£’000
4,593
3,750
9,871
13,621
18,214
–
201
–
3,750
9,888
13,638
2015
£’000
4,699
(1,644)
3,055
(868)
(131)
217
3,837
3,055
1,250
3,750
9,871
15,072
2014
£’000
3,605
1,094
4,699
(955)
(146)
38
5,762
4,699
London & Associated Properties PLC 2015 89
FINANCIAL STATEMENTS NOTES TO THE FINANCIAL STATEMENTS
33.11. SHARE CAPITAL
Details of share capital, treasury shares and share options are set out in Note 26.
33.12. RELATED PARTY TRANSACTIONS
Related party:
Dragon Retail Properties Limited
Current account
Loan account
Langney Shopping Centre Unit Trust
Loan account
Bisichi Mining PLC
Current account
Simon Heller Charitable Trust
Current account
Loan account
Directors and key management
M A Heller and J A Heller
H D Goldring (Delmore Asset Management Limited)
C A Parritt
R Priest (A & M Europe LLP)
Totals at 31 December 2015
Totals at 31 December 2014
COST RECHARGED
TO (BY) RELATED
PARTY
£’000
AMOUNTS OWED
BY (TO) RELATED
PARTY
£’000
ADVANCED TO
(BY) RELATED
PARTY
£’000
(95)
–
–
138
(63)
–
6
(30)
(19)
(34)
(97)
(96)
(i)
(ii)
(i)
(iii)
(iii)
(iii)
(215)
(2,000)
64
59
–
(700)
4
–
–
–
(2,788)
(2,782)
82
–
(104)
–
–
–
–
–
–
–
(22)
836
Nature of costs recharged – (i) Management fees (ii) Property management fees (iii) Consultancy fees
During the period, the company entered into transactions, in the ordinary course of business, with other related parties. The company has taken advantage
of the exemption under paragraph 8(k) of FRS101 not to disclose transactions with wholly owned subsidiaries.
Dragon Retail Properties Limited – ‘Dragon’ is owned equally by the company and Bisichi Mining PLC. During 2012 Dragon lent the company £2 million at
6.875 per cent annual interest.
Langney Shopping Centre Unit Trust – ‘Langney’ is an unlisted property unit trust incorporated in Jersey. It is owned 12.5 per cent by the Company and
12.5 per cent by Bisichi Mining PLC.
Bisichi Mining PLC – The company has 41.52 per cent ownership of ‘Bisichi’.
Other details of related party transactions are given in note 28.
33.13. CAPITAL COMMITMENTS
There were no capital commitments at 31 December 2015 (2014: £Nil).
33.14. OPERATING AND FINANCE LEASES
At 31 December 2015 the Company had commitments under non–cancellable operating leases on land and buildings as follows:
Expiring in more than five years
2015
£’000
1,920
2014
£’000
2,160
In addition, the Company has an annual commitment to pay ground rents on its leasehold investment properties which amount to £246,000
(2014: £299,000).
90
London & Associated Properties PLC 2015
FINANCIAL STATEMENTS NOTES TO THE FINANCIAL STATEMENTS
33.14. OPERATING AND FINANCE LEASES CONTINUED
PRESENT VALUE OF HEAD LEASES ON PROPERTIES
Within one year
Second to fifth year
After five years
Future finance charges on finance leases
Present value of finance lease liabilities
MINIMUM LEASE PAYMENTS
PRESENT VALUE OF MINIMUM
LEASE PAYMENTS
2015
£’000
294
1,177
28,593
30,064
(25,474)
4,590
2014
£’000
294
1,177
28,887
30,358
(25,765)
4,593
2015
£’000
294
1,094
3,202
4,590
–
4,590
2014
£’000
294
1,094
3,205
4,593
–
4,593
Finance lease liabilities are in respect of leased investment property. A few leases provide for contingent rent in addition to the rents above, usually a
proportion of rental income.
Finance lease liabilities are effectively secured as the rights to the leased asset revert to the lessor in the event of default.
FUTURE AGGREGATE MINIMUM RENTALS RECEIVABLE
The Company leases out its investment properties to tenants under operating leases. The future aggregate minimum rentals receivable under non–
cancellable operating leases are as follows:
Within one year
Second to fifth year
After five years
2015
£’000
1,603
3,961
2,316
7,880
2014
£’000
1,870
4,809
2,948
9,627
33.15. CONTINGENT LIABILITIES AND POST BALANCE SHEET EVENTS
There were no contingent liabilities at 31 December 2015 (2014: £Nil).
Following the year end the Company sold its investment in Langney Shopping Centre Unit Trust and is shown as an ‘Asset held for sale’ in the Balance
Sheet.
33.16. TRANSITION TO FRS 101
For all periods up to and including the year ended 31 December 2014 the Company prepared its Financial Statements in accordance with United Kingdom
Generally Accepted Accounting Practice (“UK GAAP”). These Financial Statements for the year ended 31 December 2015 are the first the Company has
prepared in accordance with FRS 101 “Reduced Disclosure Framework”.
The table below shows the restated prior year comparative figures for the Parent Company balance sheet as at 1 January 2014 and 31 December 2014.
The restatement reflects the retrospective adjustments required on first time adoption of FRS 101.
London & Associated Properties PLC 2015 91
FINANCIAL STATEMENTS NOTES TO THE FINANCIAL STATEMENTS
33.16. TRANSITION TO FRS 101 CONTINUED
Fixed assets
Tangible assets
Other investments:
Associated company – Bisichi Mining PLC
Subsidiaries and others including Dragon Retail Properties Limited
Current assets
Debtors
Deferred tax due after more than one year
Investments
Bank balances
Creditors
Amounts falling due within one year
Net current liabilities
Total assets less current liabilities
Creditors
Amounts falling due after more than one year
Net assets
Capital and reserves
Share capital
Share premium account
Capital redemption reserve
Revaluation reserve
Treasury shares
Retained earnings
Shareholders’ funds
31 DECEMBER 2014
1 JANUARY 2014
NOTES
REPORTED
£000
IMPACT OF
FRS 101
RESTATED
£000
REPORTED
£000
IMPACT OF
FRS 101
RESTATED
£000
(1)
24,048
4,593
28,641
65,912
4,597
70,509
489
57,917
58,406
82,454
1,830
4,661
21
3,793
10,305
–
–
–
4,593
_
38
–
–
38
489
57,917
58,406
87,047
1,830
4,699
21
3,793
10,343
489
47,649
48,138
114,050
11,730
3,706
23
4,969
20,428
–
–
–
4,597
_
(101)
–
–
(101)
489
47,649
48,138
118,647
11,730
3,605
23
4,969
20,327
(3)
(53,226)
(42,921)
39,533
–
38
4,631
(53,226)
(42,883)
44,164
(78,711)
(58,283)
55,767
–
(101)
4,496
(78,711)
(58,384)
60,263
(1)
(13,621)
25,912
(4,593)
38
(18,214)
25,950
(24,625)
31,142
(4,597)
(101)
(29,222)
31,041
8,554
4,866
47
3,212
(883)
10,116
25,912
–
–
–
(3,212)
–
3,250
38
8,554
4,866
47
–
(883)
13,366
25,950
8,554
4,866
47
2,151
(1,159)
16,683
31,142
–
–
–
(2,151)
–
2,050
(101)
(2)
(2),(3)
Reconciliation of total comprehensive income for the year ended 31 December 2014.
Loss as previously reported
Impact of FRS 101:
Change in fair value of investment properties
Deferred tax
Restated loss and total comprehensive income
NOTES
(2)
(3)
92
London & Associated Properties PLC 2015
8,554
4,866
47
–
(1,159)
18,733
31,041
£’000
(4,114)
(1,151)
139
(5,126)
FINANCIAL STATEMENTS NOTES TO THE FINANCIAL STATEMENTS
33.16. TRANSITION TO FRS 101 CONTINUED
(1) GROSSING UP OF HEAD LEASE LIABILITIES
IAS 17, Leases, requires that the liability to make future lease payments on a leasehold investment property is provided for in full, based on the present
value of the minimum lease payments. This liability is included within net debt and the investment property is reported gross of the liability.
The rent paid on such leases is re-categorised, split between interest payable and repayment of the lease liability. As the unexpired term of these leasehold
properties decreases, the balance between interest payable and lease liability repayment will begin to reverse. The rent currently payable that exceeds the
minimum payable when the liability was first calculated as a result of, for example, review increases, is referred to as contingent rent and is included within
property outgoings in the income statement.
Previously, leasehold investment properties were reported net of the leasehold liability and the lease payments were reported as ground rents payable
within property outgoings.
(2) REVALUATION SURPLUS ON INVESTMENT PROPERTIES
IAS 40, Investment property, requires that all changes in fair value of investment properties to be recognised in profit or loss. Previously, revaluation
surpluses or deficits, to the extent that any deficit was not permanent, were reported as a movement in the revaluation reserve.
(3) DEFERRED TAX ON THE REVALUATION SURPLUS REPORTED AS PART OF THE TAX CHARGE
IAS 12, Income Taxes, requires deferred tax to be recognised on any difference between the carrying amount of an asset or liability and its tax base. The
movement in this provision in any reporting period is recognised as part of the tax charge. Previously under UK GAAP, FRS 19, Deferred Tax, specifically
prohibited this provision being made in respect of revalued non-monetary assets unless a binding agreement to sell the revalued assets had been entered
into; and the gains and losses expected to arise on sale had been recognised.
London & Associated Properties PLC 2015 93
FINANCIAL STATEMENTS
FIVE YEAR FINANCIAL SUMMARY
Portfolio size
Investment properties–LAP^
Investment properties–joint ventures
Investment properties–Dragon Retail Properties
Investment properties–Bisichi Mining^
PORTFOLIO ACTIVITY
Acquisitions
Disposals
Capital Expenditure
CONSOLIDATED INCOME STATEMENT
Group income
Profit/(loss) before tax
Taxation
Loss/profit attributable to shareholders
Earnings/(loss) per share – basic and diluted
Dividend per share
CONSOLIDATED BALANCE SHEET
Shareholders’ funds attributable to equity shareholders
Net borrowings
Net assets per share – basic
– fully diluted
CONSOLIDATED CASH FLOw STATEMENT
Cash generated from operations
Capital investment and financial investment
Notes:
* Original LAP group – pre IFRS 10 amendments
^ Excluding the present value of head leases
2015
£M
89
19
3
13
124
£M
1.00
(0.40)
0.32
0.92
£M
32.67
(2.09)
0.40
(1.90)
(2.24)p
2014
£M
89
20
3
12
124
£M
0.68
–
–
0.68
£M
33.53
(2.69)
(3.70)
(7.14)
(8.45)p
0.160p
0.156p
£M
40.08
62.39
47.26p
47.26p
£M
4.01
(2.47)
£M
42.55
59.71
50.35p
50.35p
£M
2.96
100.42
2013
£M
87
16
3
12
118
£M
–
(9.47)
–
(9.47)
£M
43.29
1.14
2.55
3.47
4.12p
0.125p
£M
49.73
53.96
59.00p
59.00p
£M
12.23
4.35
2012*
£M
205
27
–
12
244
£M
–
–
0.97
0.97
£M
15.17
7.62
(0.35)
7.27
8.65p
–
£M
46.46
131.27
55.30p
55.29p
£M
12.72
(0.87)
2011*
£M
194
29
–
12
235
£M
–
(0.60)
0.42
(0.18)
£M
16.38
(18.56)
3.74
(14.82)
(17.63)p
0.75p
£M
39.93
133.03
47.53p
45.53p
£M
10.89
(0.50)
94
London & Associated Properties PLC 2015
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